Business Fraud

Fraud claims arise in business when one party relies on another’s statements, or on its silence, and loses money as a result. In Michigan these cases usually involve the sale of a business, financial statements prepared for a lender or buyer, investment solicitations, or dealings between business partners.

The Claims

Common-law fraud requires a material false representation, made knowingly or recklessly, with the intent that the other party rely on it, followed by actual reliance and resulting damage. Silent fraud reaches the suppression of facts a party had a duty to disclose. Innocent misrepresentation can apply between parties to a transaction without proof of intent. Fraud must be pleaded with particularity under MCR 2.112(B), so the facts have to be developed before the complaint is filed.

Business Fraud and Misrepresentation

The firm handles claims of fraud in the inducement, silent fraud, innocent misrepresentation, and related tort theories in the business context, including cases involving distressed acquisitions, misrepresented financial statements, and concealed liabilities. Representation often includes coordinated discovery across multiple parties and jurisdictions.

Remedies and Related Claims

Depending on the facts, remedies can include damages, rescission of the transaction, and equitable relief. Fraud claims are often joined with claims for breach of contract, breach of fiduciary duty, and conversion, and, where assets were moved beyond the reach of creditors, claims under the Michigan Uniform Voidable Transactions Act. When the party accused of fraud files for bankruptcy, the claim may continue as a nondischargeability action in the bankruptcy court.

Defending Fraud Claims

The firm also represents parties accused of fraud. The questions there are often whether the statement was one of fact rather than opinion or a promise about the future, and whether the plaintiff’s reliance was reasonable in light of the contract and the information available.