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What Damages Are Available in Business Fraud Cases?

Fraud is an ever-present risk of doing business, and it can be devastating to your bottom line. Business fraud may include such acts as embezzlement, skimming by employees, nondelivery of merchandise, nonpayment of moneys due, misrepresentation and nondisclosure of material facts in a transaction. In order to obtain legal relief when you are the victim of fraud, you must be able to prove that you suffered financial harm as a result.

Damages for fraud are designed to restore the victim’s losses, to deprive the defrauder of ill-gotten gains and sometimes to serve as punishment and deterrence. They generally fall into three categories:

  • Direct damages — This is compensation for losses that flow directly from the fraudulent act. Direct damages can be measured either by the plaintiff’s out-of-pocket cost (the difference between outlay of funds and value received) or loss of benefit of the bargain (the difference between value as represented and value received). An example of lost benefit of the bargain is when stock or other securities are sold based upon a promised rate of return on investment that is not achieved.
  • Special damages — Also known as incidental, consequential or reliance damages, these result naturally, but not necessarily, from the defendant‘s wrongful acts. However, a plaintiff needs to prove that such damages were foreseeable. Examples are lost profits, interruption of business operations, loss of reputation and injury to customer relations. The costs of actions taken in reasonable reliance on the defrauder’s assurances can also be claimed as special damages.
  • Punitive damages —These damages are awarded to punish a defendant for particularly egregious conduct and to serve as a deterrent to others. The size of a punitive damages award is often determined by a formula based on the amount of money or property wrongfully diverted from its owners and sometimes on the value of the defendant’s business enterprise.

If you believe you may be the victim of business fraud, seek the advice of an experienced business law attorney with a record of success in fraud litigation. We are skilled in making out strong cases of fraud liability and in helping injured parties recoup their losses.

The Law Office of Paul R. Clevenger in Dallas, Texas provides effective representation for businesses and individuals in cases alleging fraud. For help or advice about your legal rights and protections, contact us online or call 469-212-9764.

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