The Expert Podcast

So how much can you get back if you've lost money in a fraud? Let's say if you are a victim of some kind of online scam or a cryptocurrency scam or investment scam, and you sent money to some company or person that you thought was going to make you a profit and turns out to be a scam. How much can you get back? Well, this is an important example of what your limitations are.

This is an article from attorney — their law firm is Shepard Mullen Richter and Hampton. We're not attorneys, not giving legal advice, but we see this all the time when we do asset search investigations. This is the kind of thing that we see in getting back these losses from online scams.

So this Third Circuit Court gave a definition of a loss, and this definition is a win for defendants, meaning for criminals. Here's why: the definition of a loss does not include intended loss. What does that mean? Well, let's look at this example.

Let's suppose that you find some online investment scam on social media and they tell you to send them ten thousand dollars. You send them ten thousand and then they say, "Look, your account went up to eighteen thousand dollars. You made eight thousand profit. Send us another ten thousand and you'll make even more money." So now you send them another ten thousand and it says your account shows fifty-two thousand now, right? And then they ask you for more money and then you get scared and say, "Wait, this is a scam, I want my money back," and then they disappear.

Right, oversimplified, but let's say that happens. How much is your loss? Is it fifty-two thousand or is it twenty thousand? Well, what this court case says is that your loss is only actually what you sent them. It's not the fifty-two thousand that was kind of a fake statement. It's also not what you may have missed out on putting your money somewhere else. You can't say, "Well, if I put that twenty thousand into this other deal I would have had twenty-five thousand, so you owe me that five thousand for the opportunity cost."

What this case says — and this has to do with sentencing of criminals but it's basically the same thing — the loss is only the actual loss. The government may only use evidence of actual loss to establish punishment for fraudulent conduct, right? So this is used for sentencing.

So if the laws in that state say, "Well, if you stole twenty thousand you get five to ten years in prison but if you stole fifty thousand you get ten to twenty years in prison," well what this case says is it goes by the twenty thousand. It doesn't go by the fifty-two thousand. Right? So if you are a victim, remember you're probably only going to be able to look to recover your actual losses — what you actually sent them, no more.

You're not going to be able to get your paper loss from what it showed on the statement. You're not going to be able to get back other costs that you lost out on from other investments. Again, we're not attorneys, we're not giving you legal advice, but this is an example of what the courts say about actual losses versus hypothetical losses.

Now, there are some exceptions to this. In one case, the Sixth Circuit said that a minimum loss of five hundred must apply to every gift card stolen by defendant regardless of the actual harm or amount on the card. So this is one where it can actually be more than the actual loss.

They said that the use of loss was ambiguous; to have five hundred minimum loss was unreasonable because it fell outside any potential zone of ambiguity. What this also does is on the criminal side, it takes away another tool that the prosecutors have.

If loss is only defined by actual loss, then conspiracy counts may not be the heavy hammer that it was. Prosecutors may not be able to do as much conspiracy if the loss only goes by what was actually taken, not the false inflated profit.

So if you're a victim of an online scam, be aware that you calculate it from the actual money you sent them, not from what the statements they sent to you which are probably fake anyways.