Can a lawsuit be filled against a financial company whose employee committed fraud?

UPDATED: Mar 31, 2016

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Can a lawsuit be filled against a financial company whose employee committed fraud?

The company that financed my home employee was found guilty of mortgage

fraud against me and others.

Asked on March 31, 2016 under Real Estate Law, North Carolina


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

If fraud was committed against you that hurt *you* in some way (e.g. stole or took money from you, or increased your costs), then as a general matter, you can sue the person who committed fraud (i.e. any employee) and *possibly* the employer (the mortgage company). The issue is, was the fraud sufficiently part of the employee's employment--that is, was it something he/she was expected to do by his employer, or which benefited the employer and was done in the course of the employment--as to make the employer liable. As a rule of thumb, if the employer directly benefit from the fraud and the fraud was done while the employee was doing the core functions of his/her job, then the employer may be liable, too. But if the fraud only benefited the employee, not the employer, then most often the employer (in this case, the mortgage company) is not responsible for an illegal act outside its control which it did not encourage or benefit from. 
And again: there must be some provable financial, etc. injury to you: the law only provides compensation for actual losses or costs, if you were not hurt by this, there is no lawsuit.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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