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Fraud under German Criminal Law (§ 263 StGB)

Fraud (Betrug) is one of the core economic crimes in Germany. It applies whenever a person suffers a financial loss due to deception and disposes of assets to their own disadvantage.

Key Elements of Fraud

• Deception of another person
• Error (misconception)
• Asset disposal based on this error
• Financial loss
• Intent and unlawful enrichment

The courts use an economic evaluation: what matters is the objective or market value at the time of the transaction.

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Entry Fraud (Eingehungsbetrug)

Entry fraud occurs when a party enters into a contract based on deception, leading to an immediate economic risk equivalent to financial loss.

Typical Examples

• Loan agreements where the borrower lacks creditworthiness (the bank suffers a loss at contract conclusion).
• Subscription traps or false promises of services.
• Ponzi schemes where early investors are paid with new investors’ money — courts usually treat the entire deposit as a loss.
• Insurance fraud, where policies are taken out with the intention of faking claims.

Defence Strategy

• Challenging whether the contract truly created a measurable loss.
• Demonstrating value equivalence (performance vs. obligation).
• Attacking causation between deception and loss.

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Credit Fraud

Credit fraud is a sub-category of fraud where financial institutions are deceived about a borrower’s ability or willingness to repay.

Courts calculate damage based on the increased default risk at the time of the loan agreement, considering:

• Actual financial situation of the borrower,
• Adequacy of securities provided,
• Cashflow or business model projections.

Defence focuses on disputing these calculations and questioning whether there was an actual risk difference compared to normal credit risks.

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Investment Fraud and Capital Market Offences

Capital Investment Fraud (§ 264a StGB)

This offence criminalises misleading a broad group of investors by making false claims or concealing negative facts in prospectuses or public offerings.

• Applies to securities, company shares and investment schemes.
• Classified as an abstract endangerment offence: no actual loss is required; the deception itself is punishable.
• Sanctions: fines or imprisonment of up to three years.

Examples:

• False information in investment prospectuses.
• Concealing risks in financial products.
• Promises of unrealistic returns.

Ponzi Schemes and High-Risk Models

In Ponzi schemes or manipulated betting systems, courts typically regard the entire investment as a loss because the promise of repayment is worthless from the beginning.

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Breach of Trust (§ 266 StGB)

Breach of trust (Untreue) punishes the disloyal handling of assets by someone entrusted with financial powers.

Two Legal Scenarios

• Abuse of authority: when external legal powers are used against internal rules (e.g. exceeding mandate).
• Violation of fiduciary duty: when a person with an obligation to manage assets acts disloyally and causes financial loss.

Typical Cases

• Unauthorised use of company property.
• Granting unsecured loans.
• Misuse of budget funds.

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Document Forgery (§ 267 StGB)

Document forgery protects the integrity and authenticity of documents in legal transactions. It is not about whether the content is true, but whether the document itself is genuine.

Types of Forgery

• Creating a false document (e.g. signing under another’s name).
• Altering a genuine document (changing the content afterwards).
• Using a forged or altered document (submitting it as genuine).

Penalties

• Basic offence: fines or imprisonment up to 5 years.
• Serious cases (e.g. organised or commercial forgery): 6 months to 10 years.

Examples:

• Fake medical certificates.
• Altered contracts or invoices.
• Misuse of official stamps and seals.

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Defence Strategies in White-Collar Crime

• Challenging financial loss calculations (market value, securities, risk assessment).
• Attacking causation between alleged deception and economic disadvantage.
• Questioning intent and unlawful enrichment.
• Clarifying overlaps with tax law or insolvency law, where different legal standards apply.

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Frequently Asked Questions (FAQ)

❓ What is entry fraud (Eingehungsbetrug)?
It is fraud committed at the moment of contract conclusion, when the deceived party already faces a significant economic risk.

❓ How is credit fraud punished?
If convicted, courts look at the increased risk of default at the time of loan approval. Penalties can reach up to five years imprisonment.

❓ What is the difference between fraud and breach of trust?
Fraud requires deception, while breach of trust arises from misusing entrusted powers without necessarily deceiving anyone.

❓ Is investment fraud punishable even without loss?
Yes. Capital investment fraud (§ 264a StGB) is an abstract endangerment offence. Misleading statements or concealing facts is sufficient.

❓ What counts as document forgery?
Any creation, alteration or use of documents that appear genuine but are not, including signatures, contracts or certificates.

❓ How can a defence lawyer help in fraud cases?
By challenging damage calculations, causation and intent — often decisive in avoiding conviction.

Final Call to Action

Looking for an English‑speaking criminal law lawyer in Frankfurt?
Speak to our team today.

Phone: +496971033330
Email: kanzlei@dr-buchert.de

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