Title 18, United States Code, Sections 287 and 286, make it a crime to make false, fictitious, or fraudulent claims upon the United States or conspire to make such claims, and provides as follows:
Section 287, False, fictitious or fraudulent claims
Whoever makes or presents to any person or officer in the civil, military, or naval service of the United States, or to any department or agency thereof, any claim upon or against the United States, or any department or agency thereof, knowing such claim to be false, fictitious, or fraudulent, shall be imprisoned not more than five years and shall be subject to a fine in the amount provided in this title.
Section 286, Conspiracy to defraud the Government with respect to claims
Whoever enters into any agreement, combination, or conspiracy to defraud the United States, or any department or agency thereof, by obtaining or aiding to obtain the payment or allowance of any false, fictitious or fraudulent claim, shall be fined under this title or imprisoned not more than ten years, or both.
In order for the government to prove a case under § 287, three elements must exist:
- An individual made or presented a claim to a department or agency of the United States for money or property,
- The claim was false, fictitious, or fraudulent, and
- An individual knew at the time that the claim was false, fictitious, or fraudulent.
Although not under the Tax Title, i.e., Title 26, § 287 is frequently used in tax cases relating to false refund tactics. One reason the government may choose this statute over 26, U.S.C. §§ 7206(1) or (2) is because this statute allows the government greater opportunity for restitution after conviction.
Claim Against the United States
The first element the government must prove in a § 287 case is that an individual made a claim against the United States for money or property.
Tax-related examples of such claims include, but are not limited to:
- making and presenting a false tax return seeking a refund,
- presenting a false refund check to a financial institution for payment, and
- cashing or depositing a refund check to which the individual was not entitled.
It is not required that the government pay or otherwise fulfill the false claim, only that the claim is presented to the government. Also, the false claim does not have to be made directly to the government, it can be made to an intermediary authorized to accept the claim on behalf of the government, such as a tax return preparer, as long as the individual knows the intermediary will present the false claim to the government.
False, Fictitious, or Fraudulent Claim
The second element the government must prove is that the claim is false, fictitious, or fraudulent. Because this section utilizes the word “or,” a charge under this section can be presented as either a false, fictitious, or fraudulent claim.
False – Deliberately untrue. Unlawful. An action with intent to perpetrate a betrayal of trust or fraud. Done or said to fool or deceive someone. Adjusted or made so as to deceive.
Fictitious – false, feigned, or pretended. Not real or true. Made-up or fabricated.
Fraudulent – Based on or tainted by fraud. Done, made, or effected with a purpose or design to carry out a fraud. Obtained, done by, or involving deception, especially criminal deception.
One can envision the multitude of ways an individual can carry out a false, fictitious, or fraudulent claim to the government. The government’s burden is met when they prove the claim was one of these.
For example: An accountant prepares a tax return for a taxpayer. And instead of placing the taxpayer’s banking information on the return, the accountant places their own banking information on the tax return. The false information causes the government to deposit the taxpayer’s refund into the account of the return preparer.
Materiality
Although not a specific requirement of § 287, it is has been held by some courts that the materiality of a “fraudulent” claim must be proved and determined by a jury, but not so with a “false” or “fictitious” claim. So, the government may chose the wording “false” in their charging document to avoid the issue of materiality as it relates to § 287.
Knowledge
The third element the government must prove is knowledge, or criminal intent, that the claim made to the government was false, fictitious, or fraudulent. The courts vary on their interpretation of the standard the government must meet to prove this element. Generally, the government may meet its burden by showing the individual was aware of the illegality of their actions or acted specifically to break the law.
Elements of § 286
In order for the government to prove a case under § 286, the courts differ on whether there should be three versus five, as follows:
- An individual engaged in a conspiracy to obtain payment from a claim presented to a department or agency of the United States for money or property.
- The claim was false, fictitious, or fraudulent.
- An individual knew at the time it was made that the claim was false, fictitious, or fraudulent.
- Depending on the district, these additional elements may apply:
- An individual was aware of the conspiracy.
- An individual joined the conspiracy of their free will.
Under § 286, the government does not need to prove an overt act in furtherance of the violation.
Venue
The venue, for purposes of §§ 287 and 286, will occur in any district where the offense occurred.
Statute of Limitations
Since §§ 287 and 286 do not specify a statute of limitations, Title 18, Section 3282(a) will apply, which holds:
In General. Except as otherwise expressly provided by law, no person shall be prosecuted, tried, or punished for any offense, not capital, unless the indictment is found or the information is instituted within five years next after such offense shall have been committed.
Although § 6531(1) of Title 26 allows for a six year statute of limitations “for offenses involving the defrauding or attempting to defraud the United States or any agency thereof, whether by conspiracy or not, and in any manner,” no case law exists to support the six year limitations in §§ 287 and 286 cases.