Involved in fraud in New Jersey?   

Call Fredrick P. Niemann, Esq. when you need a New Jersey

attorney who is experienced in the law of fraud.  

BACKGROUND INFORMATION YOU NEED TO

KNOW ON THE LAW OF FRAUD IN NEW JERSEY

Fraud is a term used by many but what does it really mean?

Legal fraud has five elements. Stated simply, they are

(1) a misrepresentation of an existing or past fact;

(2) knowing it to be false;

(3) with the intention that someone rely on the misrepresentation;

(4) the person did in fact rely on the truthfulness of the misrepresented fact; and

(5) this person suffered economic damage as a result.

LEARN THE FIVE TYPES OF FRAUDULENT TRANSFERS

UNDER THE NJ FRAUDULENT TRANSFER ACT

N.J.S.A. 25:2-25 and N.J.S.A. 25:2-27 are the central provisions of the Fraudulent Transfer Act. These statutes make the following types of transfers fraudulent under New Jersey law:

(A) A transfer made with the actual intent to defraud one's creditors;

(B) A transfer made by a business without receiving a reasonably equal value in exchange and which leaves the business with money, property and assets worth less than their debts;

(C) A transfer without receiving a reasonably equal value in exchange, knowing (or should have known) at the time of the transfer that he/she would incur debts in the future beyond his/her ability to pay them.

THE KEY CONCEPTS IN THE NJ FRAUDULENT TRANSFER

LAW TO UNDERSTAND ARE CONSIDERATION AND

"REASONABLY EQUIVALENT VALUE”

The term "value” is critical when evaluating whether or not there has been a fraudulent transfer in New Jersey. The law also has adopted the concept of "reasonably equivalent value”.

FRAUDULENT TRANSFER: ACTUAL INTENT TO PROVE "FRAUD”

Under the law, a fraudulent act exists when a debtor transfers ownership in property to another with the actual intent to hinder, delay, or defraud a creditor of the debtor.” Proving the fraudulent intent of the debtor is necessary under one provision of the law.

Factors to Be Considered to Establish "Actual Fraudulent

Intent” Under the NJ Fraudulent Transfer Act

Actual intent can be difficult to prove and "often must be established through inferential reasoning, deduced from the circumstances surrounding the allegedly fraudulent act.” Let’s face it, few people will admit with a straight face that they transferred valuable property for nothing out of the goodness of their heart. If that were the case, they’d claim a charitable contribution under the IRS tax code. Given this reality, New Jersey has evaluated "actual intent” using the following factors. Note that not all factors have to be found to exist before a violation of the statute exists.

(A) The transfer or obligation was to a person or business relationship close to the debtor;

(B) The debtor in some real or indirect way maintained actual possession or control of the property transferred after the transfer;

(C) The transfer was disclosed or concealed from the creditor and others;

(D) Before the transfer the debtor had been sued, threatened with suit or was broke;

(E) The transfer was of substantially all the debtor's assets;

(F) The debtor has secreted themselves or is "suddenly unavailable”;

(G) The debtor relocated to another location or concealed the assets;

(H) The value of the property or asset given back by the debtor was not reasonably equal to the value of the property or asset transferred or the amount of the debt incurred;

(I) The debtor was insolvent or became insolvent after the transfer was made or the debt was incurred;

(J) The transfer occurred before or shortly after a substantial debt was incurred by the debtor; and

(K) The debtor transferred the essential assets of his/her business to a creditor with a secured or unsecured interest who then transferred the assets to an insider of the debtor.
 

In NJ our courts will consider any of the above factors to establish a fraudulent transfer. As previously stated, there need not exist all eleven enumerated factors to exist fraudulent intent to exist.

Who has the burden of proof to establish that a fraudulent transfer

occurred in NJ

If you believe a debtor of yours has perpetrated a fraudulent transfer, you have the burden of proving that the transfer was intentionally fraudulent. This burden of proof requires that an experienced and capable NJ business law attorney evaluate the facts of your case. If you are a debtor being sued or a creditor who has been defrauded, contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com for a consultation to discuss and analyze your individual case.

One Must Know of the Falsity of the Fact(s) for Legal Fraud

to Exist in New Jersey

Legal fraud requires that the person who made the statement actually knew of its falsity and that he or she intended that you rely on it.

For a Commercial and Business Fraud Claim, There Must Be Reasonable Reliance Upon the Fraudulent Information

If someone sues you claiming legal fraud, he or she must show that they relied on the fraudulent representation.  NJ courts have often held that a person who investigates the facts of a statement cannot later argue that he or she relied on the alleged fraud.

In business fraud, NJ courts have rejected claims for fraud when a buyer conducts its own independent investigation.  For example, a claim of fraud was rejected when a buyer conducted an independent investigation of the income generated by the business prior to the sale. Similarly, in a case involving a foreclosure judgment, a fraud claim was rejected because the plaintiff conducted its own independent investigation of the foreclosure prior to purchasing the mortgage from the bank.

Some NJ courts, however, have found fraud when an injured party failed to undertake its own investigation into a matter even though they were free to do so.  However, in these cases, the courts looked at the very unique facts of the case.

What is Equitable Fraud; Understanding the difference between

legal fraud and equitable fraud in NJ

Unlike legal fraud, equitable fraud does not require "actual knowledge” of a false representation. For a claim of equitable fraud to exist, a person needs only to show:

(1) a misrepresentation of an existing or past fact;

(2) relied upon by the other party;

(3) to his or her detriment. 

But here is the crucial difference; a person suing for equitable fraud cannot recover money damages, only equitable relief (ie., rescission of the contract).

Fraudulent Concealment of a Known Fact Can Be Legal

Fraud in New Jersey

If you know about an important fact but fail to disclose it, you can be held liable for fraudulent concealment.  A person may be liable for fraudulent concealment if they fail to disclose material facts that he/she have knowledge of and a duty to disclose. New Jersey courts have held that withholding the truth (keeping a known material fact secret to yourself) when it should have been disclosed is the equivalent of misrepresenting a known fact.

 Do you have a question(s) on a claim or defense of a claim for fraud not addressed here?  If so, contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com to schedule a consultation about your particular matter.  He welcomes your calls and inquiries and you’ll find him very approachable and easy to talk to.

Fraud Law Attorneys serving these New Jersey Counties:

Monmouth County, Ocean County, Essex County, Cape May County, Camden County, Mercer County, Middlesex County, Bergen County, Morris County, Burlington County, Union County, Somerset County, Hudson County, Passaic County