Also known as: artifices · deceit · fraudulent device
Written by attorneys · grounded in primary & secondary sources — see below
A stratagem or device employed to deceive or mislead another party. The device operates by creating a false impression that induces reliance and produces pecuniary loss.
Alan Ackerman, general counsel for a law school, copied sections of an earlier grant proposal and applied a colleague's digital signature to certification pages without permission. He submitted the document to the FAA to obtain research funding. The agency discovered the plagiarism and forgery during an audit. The conduct constitutes the use of artifice that triggers professional discipline under the rule against dishonesty or misrepresentation.
Audrey Ashton paid Metro Wholesale $60,000 after viewing photos and authenticity certificates that falsely described the handbags as genuine designer items. The bags delivered were counterfeits worth only $20,000. Ashton relied on the false documents when making the purchase. The supplier's use of artifice caused her pecuniary loss measured by the difference between price paid and actual value received.
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Ariana Azizi and her husband executed a marital settlement agreement after he represented that he had disclosed all assets. He had in fact hidden substantial accounts and income. Azizi later discovered the omissions and sought to set the agreement aside. The husband's artifice in withholding information allowed the court to invalidate the contract even without proof of additional overreaching.
Ava Adebayo purchased solvent-based paints after reading labels that stated the products were fume-free and safe for indoor use without ventilation. She worked for hours in a windowless studio. The manufacturer's false label constituted artifice that caused pecuniary loss through justifiable reliance. Damages include the difference between price paid and actual value received.
Arthur Abrams, a shareholder of J. I. Case Co., received a proxy statement that misrepresented the terms of a proposed merger. He voted his shares in reliance on the false information. The misleading statement operated as artifice that induced the vote and caused financial injury when the true terms became known. The shareholder's claim turned on proof that the misrepresentation was material to the decision.
Abigail Alvarez purchased Tellabs stock after the company issued public statements that downplayed known manufacturing defects. The statements created a false impression of product reliability. When the defects surfaced, the stock price dropped sharply. Alvarez's loss was traceable to the artifice in the disclosures that induced her purchase.
The recipient recovers the difference between the price paid and the actual value of the item received at the time of the transaction. Additional consequential losses may be recovered if they are legally caused by the reliance on the misrepresentation.
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Yes. The rule prohibits conduct involving dishonesty or misrepresentation regardless of whether the lawyer obtained personal financial benefit or acted solely to advance institutional interests. Convictions for forgery or plagiarism arising from professional submissions provide independent grounds for discipline.
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A spouse may invalidate the agreement by proving it resulted from fraud, deceit, or misrepresentation. Even without such proof, the agreement may be set aside if it is unfair and the challenging spouse lacked full financial disclosure or approximate knowledge of the other spouse's assets.
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…to § 10(b) and Rule 10b-5 has been based on doctrines with which we, as judges, are familiar: common-law doctrines of fraud and deceit. See, e. g., Santa Fe Industries, Inc. v. Green, 430 U. S. 462, 471-477 (1977). Even when we have extended civil liability under Rule 10b-5 to a broader reach than the common law had…