For individuals who have fallen victim to online scams, cryptocurrency fraud, or investment schemes, one burning question remains: How much can you recover if you’ve lost money in a fraud? In this blog post, we explore a crucial aspect of this issue by delving into a recent court case that provides a definition of losses, shedding light on the limitations victims may face in their pursuit of restitution.

The Case: Third Circuit Court’s Definition of Loss

The case in question involves a ruling from the Third Circuit Court, providing a specific definition of a loss concerning fraudulent activities. While we are not legal professionals and this is not legal advice, we frequently encounter situations like these in our asset search investigations.

The court’s definition is significant, and it’s a win for defendants, meaning those engaging in criminal activities. The crux of the matter lies in the fact that the definition of a loss does not include the concept of intended loss.

Unpacking the Definition

To understand the implications, let’s consider an example. Imagine falling victim to an online investment scam where you’re instructed to send $10,000. Subsequently, the scammers claim your account has grown to $18,000, prompting you to send an additional $10,000. If, at some point, you realize it’s a scam and your account purportedly shows $52,000, what is your actual loss?

The court ruling asserts that your loss is only the amount you sent, in this case, $20,000. It does not consider the inflated value presented on fake statements or the potential gains you might have made elsewhere had you not fallen victim to the scam.

Implications for Victims

For victims of fraud, this ruling underscores a critical point: you may only be able to recover your actual losses, not the inflated amounts that scammers falsely present. It’s a sobering reality that individuals seeking restitution need to consider when navigating the aftermath of a scam.

Remember, this ruling is primarily related to sentencing in criminal cases, but it sets a precedent that may influence civil proceedings and the recovery of losses for victims.

Exceptions and Considerations

While the court’s ruling generally emphasizes actual losses, there are exceptions. In one case, the Sixth Circuit mandated a minimum loss of $500 for every gift card stolen by a defendant, irrespective of the actual harm or amount on the card. This exception highlights that there could be nuances to the definition of losses depending on the specific circumstances.

Additionally, on the criminal side, the ruling may impact prosecutors’ ability to leverage conspiracy counts, as the definition of loss now revolves around what was actually taken, not the fictitious profits displayed by scammers.

Victims of online scams should be aware that calculating losses may be confined to the actual money sent to scammers, not the fabricated profits or potential gains. While legal nuances and exceptions may exist, understanding the limitations imposed by court rulings is crucial for victims seeking restitution.

If you find yourself in such a situation, seeking legal advice is paramount. Consulting with legal professionals can provide clarity on your specific case and guide you through the complexities of recovering losses from fraudulent activities.