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How Litigation Helps Uncover Business Fraud

Two parties enter into an agreement to do business with one another, and sign a contract to solidify the deal. The contract lays out the terms, expected performance, how much pay and a completion date. Most of the time a business contract such as this gets executed with little to no hassle. But sometimes, something goes wrong, and there's a sense that one of the parties hasn't done their job properly. In fact, the suspicion of fraud arises, but it's not obvious where and how it happened. That's the point where the injured party seeks out a business litigation lawyer for help.

When a business deal goes sour due to fraud, it's almost impossible to get law enforcement involved. Most law enforcement agencies consider this type of an incident to be a civil matter. The injured party needs to seek justice through a California lawyer who has familiarity with business fraud and knows how to apply state laws to the situation. These types of problems are almost always resolved through litigation. Litigation gives the injured party the opportunity to investigate their claim and uncover if the other party was committing fraud.

Why take this to court when one could hire a private investigator to do the legwork? Because the California courts enforce legal actions such as a litigation hold, an injunction and discovery. The litigation hold is perhaps the most crucial aspect of uncovering business fraud. It's used to prevent the destruction of documents, especially when the defending party leaves a paper trail. If the defendant wants to mount a defense, they have to comply with all of the legal actions brought against them. Destroying documents per the litigation hold is highly frowned upon by the court and is likely to cost them when it comes to the actual trial. The defendant must produce the required information for the purposes of discovery. Otherwise, they demonstrate that they do have something to hide, and won't be viewed as cooperative.

In the event that there's a possibility that the defendant might still engage in the fraudulent behavior, the court can issue an injunction against them. The purpose of the injunction is to make them stop what they're doing and leave everything intact until the trial begins. The defendant must comply with the order or face the consequences in court. Disobeying an injunction is a serious offense as the court wants the activity to cease. It's used to prevent further damage happening to the plaintiff until everything gets sorted out in court.

Once the court actions have been issued, the lawyer goes to work. Forensic examiners are brought in to find information while the lawyer connects the dots to prove that there was a pattern of fraudulent activity. The goal is to prove that the defendant acted in bad faith and deliberately harmed the plaintiff.

Sources:

http://www.consumerreports.org/cro/magazine/2012/10/protect-yourself-from-the-latest-scams/index.htm, https://apps.americanbar.org/buslaw/blt/2009-09-10/chaumette.shtml, http://apps.americanbar.org/abastore/products/books/abstracts/5190497_chap1_abs.pdf

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