Discount fraud is a crime that exploits the special discounts companies sometimes offer when market circumstances justify sacrificing revenue to win a particular piece of business. Most commonly, the customer provides a description of these market circumstances to the company. The customer must also pledge that any specially discounted products it acquires will be used only for the specified purpose, and will not be resold. While it can be highly profitable to obtain these specially discounted products for resale by making fraudulent misrepresentations, people engaging in such conduct may be subject to federal prosecution for mail fraud (18 U.S.C. §1341) and wire fraud (18 U.S.C. §1343).
The U.S. Supreme Court recently denied a petition for a writ of certiorari in the case of United States v. Ali, 10 C.D.O.S. 11104, which leaves standing a Ninth Circuit decision that eases the government’s burden in prosecuting discount fraud cases. Ali is significant because it removes certain defenses that had often provided a barrier to discount fraud prosecutions. It also provides a clear method for determining the amount of a victim’s loss, which is a salient factor in computing the amount of restitution that a defendant owes to the victim.
Background fact
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