DEMAND LETTER - FRAUD AND MISREPRESENTATION

[LAW FIRM NAME]
Attorneys at Law
[FIRM ADDRESS LINE 1]
[FIRM ADDRESS LINE 2]
[CITY, STATE ZIP]
Tel: [TELEPHONE]
Fax: [FAX]
Email: [EMAIL]

SENT VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED
AND FIRST-CLASS MAIL

[DATE]

[RECIPIENT NAME]
[RECIPIENT TITLE]
[COMPANY NAME]
[ADDRESS LINE 1]
[ADDRESS LINE 2]
[CITY, STATE ZIP]

Re: DEMAND FOR DAMAGES ARISING FROM FRAUD AND INTENTIONAL MISREPRESENTATION
Our Client: [CLIENT NAME]
Transaction at Issue: [BRIEF DESCRIPTION OF TRANSACTION]
Transaction Date(s): [DATE(S)]
Demand Amount: $[TOTAL DEMAND AMOUNT] (plus punitive damages)

Dear [RECIPIENT NAME]:

This firm represents [CLIENT NAME] ("our Client") in connection with claims arising from your fraudulent inducement of [DESCRIBE TRANSACTION - e.g., the purchase of commercial real estate, entry into a business acquisition, investment in securities, execution of a licensing agreement]. We write to demand full compensation for damages caused by your intentional misrepresentations.

THIS IS A FORMAL DEMAND. YOUR CONDUCT CONSTITUTES ACTIONABLE FRAUD, AND OUR CLIENT INTENDS TO PURSUE ALL AVAILABLE REMEDIES, INCLUDING PUNITIVE DAMAGES, ABSENT IMMEDIATE RESOLUTION.

I. INTRODUCTION AND SUMMARY

On or about [DATE], our Client entered into [DESCRIBE TRANSACTION] with you, based upon material representations that you knew to be false when made, or that you made with reckless disregard for their truth. As a direct and proximate result of your fraudulent conduct, our Client has suffered damages in excess of $[AMOUNT], for which our Client now demands compensation.

The elements of common law fraud are well-established:

1. A false representation of a material fact;
2. Knowledge of its falsity (scienter) or reckless disregard for the truth;
3. Intent to induce reliance;
4. Justifiable reliance by the victim; and
5. Resulting damages.

See Restatement (Second) of Torts sections 525-552; see also [CITE APPLICABLE STATE AUTHORITY].

Each element is satisfied here, as detailed below.

II. THE PARTIES AND THEIR RELATIONSHIP

Our Client: [CLIENT NAME] is a [DESCRIBE - individual/corporation/LLC] engaged in the business of [DESCRIBE]. At all relevant times, our Client was [DESCRIBE RELEVANT CHARACTERISTICS - e.g., a sophisticated investor, first-time purchaser, consumer, business seeking vendor services].

You/Your Company: [DEFENDANT NAME] is [DESCRIBE - individual/corporation/partnership] engaged in [DESCRIBE BUSINESS]. You [held yourself out as / represented that you were] [DESCRIBE RELEVANT EXPERTISE OR REPRESENTATIONS ABOUT QUALIFICATIONS - e.g., an experienced real estate developer, licensed securities dealer, established manufacturer].

The Relationship: [DESCRIBE HOW PARTIES CAME INTO CONTACT AND THE NATURE OF THEIR DEALINGS]. Our Client relied upon your expertise and representations in entering into the subject transaction.

III. THE FRAUDULENT MISREPRESENTATIONS

You made the following false statements of material fact to induce our Client to enter into the transaction:

A. FIRST MISREPRESENTATION

Statement Made:

"[QUOTE OR DESCRIBE THE SPECIFIC FALSE STATEMENT - be as precise as possible]"

When Made: On or about [DATE]

How Made: [DESCRIBE METHOD - orally during meeting, in writing via email, in contract, in marketing materials, in prospectus]

By Whom: [NAME OF PERSON WHO MADE STATEMENT], [TITLE] of [COMPANY]

To Whom: [NAME OF RECIPIENT], [TITLE] of [OUR CLIENT]

Where Made: [LOCATION - office, telephone, via email from X address]

Falsity: This statement was false because [EXPLAIN WHY THE STATEMENT WAS FALSE AT THE TIME IT WAS MADE - e.g., "in fact, the property had outstanding environmental liens," "the company had already lost its major customer," "the equipment had been previously damaged and repaired"].

Your Knowledge: You knew this statement was false at the time you made it because:
☐ You had direct personal knowledge of the true facts
☐ Documents in your possession contradicted the statement
☐ You had been informed of the true facts by [SOURCE]
☐ The true facts were obvious and you could not have been unaware
☐ You made the statement with reckless disregard for its truth, having no reasonable basis to believe it was true

[ATTACH AS EXHIBIT: Document showing falsity, e.g., inspection report, financial statement, prior correspondence]

B. SECOND MISREPRESENTATION

Statement Made:

"[QUOTE OR DESCRIBE THE SPECIFIC FALSE STATEMENT]"

When Made: [DATE]

How Made: [METHOD]

By Whom: [PERSON], [TITLE]

To Whom: [RECIPIENT]

Where Made: [LOCATION]

Falsity: [EXPLAIN WHY FALSE]

Your Knowledge: [DESCRIBE HOW DEFENDANT KNEW OR SHOULD HAVE KNOWN]

C. THIRD MISREPRESENTATION

[FOLLOW SAME FORMAT AS ABOVE]

D. ADDITIONAL MISREPRESENTATIONS

☐ Fraudulent Concealment: In addition to affirmative misrepresentations, you actively concealed material facts from our Client, including:
- [DESCRIBE FACT CONCEALED #1]
- [DESCRIBE FACT CONCEALED #2]
You had a duty to disclose these facts because [EXPLAIN BASIS FOR DUTY - e.g., fiduciary relationship, partial disclosure creating duty to complete, active concealment, statutory disclosure requirement].

☐ Fraud by Omission: You failed to disclose material facts that you had a duty to disclose:
- [DESCRIBE OMITTED FACT #1]
- [DESCRIBE OMITTED FACT #2]
Your duty to disclose arose from [EXPLAIN SOURCE OF DUTY].

☐ Promissory Fraud/False Promises: You made promises regarding future performance with no intention of performing:
- Promise: "[DESCRIBE PROMISE]"
- Your intent at the time: You had no intention of [performing/delivering/completing] because [EXPLAIN EVIDENCE OF LACK OF INTENT].

IV. MATERIALITY

The misrepresentations described above were material to our Client's decision to enter into the transaction. A misrepresentation is material if:

1. A reasonable person would attach importance to it in deciding how to act; or
2. The maker knows the recipient is likely to regard it as important.

See Restatement (Second) of Torts section 538.

Here, the misrepresentations were material because:

☐ Our Client specifically inquired about [SUBJECT OF MISREPRESENTATION] before entering into the transaction;
☐ The misrepresentations directly related to the [VALUE / QUALITY / SAFETY / LEGALITY / PROFITABILITY] of the subject of the transaction;
☐ Had our Client known the truth, our Client would not have entered into the transaction at all;
☐ Had our Client known the truth, our Client would have demanded substantially different terms;
☐ The misrepresentations related to matters that any reasonable person would consider important.

V. JUSTIFIABLE RELIANCE

Our Client justifiably relied on your misrepresentations in entering into the transaction:

A. Evidence of Reliance

☐ Our Client testified/confirmed that [he/she/it] relied on the statements in making the decision to proceed;
☐ Our Client would not have entered into the transaction absent the misrepresentations;
☐ The misrepresentations were included in due diligence materials provided at our Client's request;
☐ Our Client specifically asked about these matters and relied on your responses;
☐ The terms of the transaction reflect reliance on the representations.

B. Justifiability of Reliance

Our Client's reliance was reasonable and justifiable under the circumstances:

☐ You held yourself out as having expertise in this area;
☐ The matters represented were peculiarly within your knowledge;
☐ You were in a position of trust or had a fiduciary relationship with our Client;
☐ Our Client conducted reasonable due diligence but could not have discovered the fraud;
☐ You actively concealed the truth, making independent verification impossible;
☐ You discouraged further inquiry by [DESCRIBE CONDUCT];
☐ The complexity of the transaction made reliance on your representations reasonable.

[// GUIDANCE: Anticipate and address "caveat emptor" defenses and any due diligence our client conducted]

VI. YOUR SCIENTER AND INTENT

Your conduct demonstrates the required scienter (guilty knowledge) and intent to deceive:

A. Knowledge of Falsity

At the time you made the misrepresentations, you knew they were false because:

1. [DESCRIBE SPECIFIC EVIDENCE - e.g., internal documents, emails, testimony of employees, prior complaints, your own expertise]

2. [DESCRIBE ADDITIONAL EVIDENCE]

3. [DESCRIBE ADDITIONAL EVIDENCE]

B. Reckless Disregard

Alternatively, you made the statements with reckless disregard for their truth or falsity. You had no reasonable basis to believe the statements were true, and you made them anyway, without any investigation into their accuracy.

C. Intent to Induce Reliance

You made the misrepresentations with the intent that our Client would rely upon them in deciding whether to enter into the transaction. This is evidenced by:

☐ The statements were made during negotiations and in response to our Client's inquiries;
☐ You provided the false information in marketing materials designed to induce the transaction;
☐ You emphasized and repeated the false statements;
☐ You knew our Client was relying on the information in making a decision.

VII. DAMAGES

As a direct and proximate result of your fraud, our Client has suffered the following damages:

A. Compensatory Damages

B. Rescission Damages (Alternative)

☐ In the alternative, our Client demands rescission of the transaction and restitution of all amounts paid:
- Principal amount paid: $[AMOUNT]
- Interest from date of payment: $[AMOUNT]
- Incidental costs incurred: $[AMOUNT]
- Total Rescission Damages: $[TOTAL]

C. Punitive/Exemplary Damages

Your conduct was willful, wanton, malicious, and in conscious disregard of our Client's rights. Under applicable law, our Client is entitled to punitive damages to:

1. Punish you for your fraudulent conduct;
2. Deter you and others from similar misconduct in the future.

[STATE] law permits punitive damages where fraud is proven by clear and convincing evidence. See [CITE STATE STATUTE OR CASE LAW].

Our Client will seek punitive damages in an amount to be determined at trial, but in no event less than [MULTIPLIER] times the compensatory damages.

[// GUIDANCE: Research state-specific punitive damage caps. Some states cap punitives at 2x-4x compensatory damages or set dollar limits.]

D. Attorney Fees and Costs

Under [CONTRACT PROVISION / STATUTE / COMMON LAW EXCEPTION], our Client is entitled to recover attorney fees and costs incurred in prosecuting this claim.

VIII. ADDITIONAL CAUSES OF ACTION

Based on your conduct, our Client may assert the following additional claims:

☐ Negligent Misrepresentation: Even if you did not act with intent to deceive, you made material misrepresentations without reasonable grounds to believe them true.

☐ Fraudulent Inducement of Contract: You induced our Client to enter into a contract through fraud, entitling our Client to rescind the contract and recover damages.

☐ Constructive Fraud: You breached a duty of trust and confidence, resulting in gain to yourself and loss to our Client.

☐ Unjust Enrichment: You have been unjustly enriched at our Client's expense through your fraudulent scheme.

☐ Civil Conspiracy: You acted in concert with [CO-CONSPIRATORS] to defraud our Client.

☐ Aiding and Abetting Fraud: [CO-DEFENDANTS] knowingly assisted in your fraudulent scheme.

☐ RICO Violations: Your conduct constitutes a pattern of racketeering activity under [18 U.S.C. section 1961 et seq. / STATE RICO STATUTE].

☐ Securities Fraud: [If applicable - SEC Rule 10b-5, state Blue Sky laws]

☐ Consumer Protection Act Violations: Your conduct violates [STATE CONSUMER PROTECTION STATUTE], which provides for [TREBLE DAMAGES / ATTORNEY FEES / STATUTORY DAMAGES].

IX. DEMAND

Based on the foregoing, our Client demands the following relief:

A. Monetary Compensation

Within [20/30] calendar days of your receipt of this letter, pay to our Client the sum of $[TOTAL COMPENSATORY DEMAND], representing:

• Out-of-pocket/benefit of bargain damages: $[AMOUNT]
• Consequential and incidental damages: $[AMOUNT]
• Prejudgment interest: $[AMOUNT]
• Attorney fees and costs to date: $[AMOUNT]

This demand is for compensatory damages only. Our Client reserves the right to seek punitive damages, which are not subject to pre-litigation settlement, if this matter proceeds to trial.

B. Rescission (Alternative)

☐ In the alternative, our Client demands complete rescission of the [TRANSACTION], including:
- Return of all amounts paid by our Client: $[AMOUNT]
- Return of all property transferred by our Client
- Release from all obligations under the [CONTRACT/AGREEMENT]
- Payment of interest and incidental damages: $[AMOUNT]

C. Additional Relief

☐ Assignment/return of [SPECIFIC PROPERTY OR RIGHTS];
☐ Cancellation of [NOTES/OBLIGATIONS] signed by our Client;
☐ Written acknowledgment that [REPRESENTATIONS MADE] were false;
☐ Agreement not to make similar representations to others.

X. DOCUMENT PRESERVATION DEMAND

LITIGATION HOLD NOTICE

You are hereby placed on notice of our Client's claims and potential litigation. Federal and state law require you to preserve all evidence that may be relevant to this dispute. You must immediately take affirmative steps to preserve:

• All documents relating to the transaction, including drafts and internal notes;
• All communications (emails, texts, letters, voicemails, recordings) relating to the transaction;
• All documents showing what you knew and when you knew it;
• All marketing materials, pitch decks, and sales materials;
• All internal analyses, valuations, and projections;
• All documents relating to similar transactions or complaints;
• All financial records relating to the transaction;
• Metadata associated with electronic documents;
• Backup tapes and archived electronic information.

You must suspend all document destruction policies and automatic deletion programs with respect to relevant materials. Failure to preserve evidence may result in:

• Adverse inference instructions at trial;
• Sanctions including monetary penalties;
• Separate claims for spoliation of evidence;
• Default judgment in extreme cases.

XI. STATUTE OF LIMITATIONS AND TOLLING

[// GUIDANCE: This section may be included to put defendant on notice, but be careful not to reveal strategic information about your limitations period]

Our Client's claims are timely. [STATE] applies a [X]-year statute of limitations to fraud claims, running from the date of discovery or when the fraud should have been discovered with reasonable diligence. See [CITE STATE STATUTE]. Our Client did not discover, and could not have discovered, the fraud until [DATE/EVENT], when [DESCRIBE HOW FRAUD WAS DISCOVERED].

Moreover, the statute of limitations is tolled due to your active concealment of the fraud. The discovery rule applies, and you may not benefit from a limitations defense when you concealed the very facts that would have alerted our Client to your fraud.

XII. RESERVATION OF RIGHTS

Our Client expressly reserves all rights, claims, and remedies available at law or in equity, including but not limited to:

• Claims against additional parties (including officers, directors, employees, agents, and co-conspirators);
• Claims for punitive and exemplary damages;
• Claims under federal and state securities laws;
• Claims under RICO and state anti-racketeering statutes;
• Claims under consumer protection statutes;
• Criminal referral to appropriate authorities;
• Any other claims arising from your conduct.

Nothing in this letter shall be construed as a limitation or waiver of any of our Client's rights.

XIII. RESPONSE REQUIRED

Your written response is required within [20/30] calendar days of your receipt of this letter.

If you fail to respond or fail to make satisfactory arrangements to resolve this matter, our Client will file suit without further notice. In litigation, our Client will seek:

1. Full compensatory damages;
2. Punitive damages in an amount sufficient to punish and deter;
3. Rescission and restitution, if elected;
4. Prejudgment and post-judgment interest at the maximum legal rate;
5. Attorney fees and costs;
6. Injunctive and equitable relief;
7. Any other relief the court deems just and proper.

Additionally, our Client is considering referral of this matter to:

☐ State Attorney General's Office (Consumer Protection Division)
☐ Federal Trade Commission
☐ Securities and Exchange Commission
☐ [STATE] Department of [RELEVANT REGULATORY AGENCY]
☐ Local District Attorney (for criminal fraud investigation)

XIV. CONFIDENTIALITY

This letter constitutes a confidential settlement communication under [FRE 408 / STATE EQUIVALENT]. However, if litigation becomes necessary, our Client reserves the right to use this letter to establish notice, knowledge, and refusal to cure.

We are prepared to meet with you or your counsel to discuss resolution. However, absent a satisfactory response within the time specified, our Client will pursue this matter vigorously through litigation.

Govern yourself accordingly.

Very truly yours,

[LAW FIRM NAME]

By: _______________________________
[ATTORNEY NAME]
[STATE BAR NUMBER]
[EMAIL]
[DIRECT TELEPHONE]

Enclosures:
☐ Exhibit A - [Documents containing false representations]
☐ Exhibit B - [Evidence of falsity]
☐ Exhibit C - [Evidence of reliance]
☐ Exhibit D - [Damage calculations and supporting documentation]
☐ Exhibit E - [Timeline of events]

cc: [CLIENT NAME] (via email)
[CO-COUNSEL, if any]
[INSURANCE CARRIER for potential claim, if applicable]

FRAUD CLAIM PREPARATION CHECKLIST

Before sending this demand letter, verify:

Elements Checklist:

☐ False Representation: Can you specifically identify each false statement with who, what, when, where, and how?
☐ Materiality: Would a reasonable person consider the misrepresentation important?
☐ Scienter: Do you have evidence the defendant knew the statement was false or acted with reckless disregard?
☐ Intent: Can you show defendant intended to induce reliance?
☐ Reliance: Did your client actually rely on the misrepresentation?
☐ Justifiable Reliance: Was the reliance reasonable under the circumstances?
☐ Causation: Did the fraud proximately cause the damages?
☐ Damages: Can you prove specific, quantifiable damages?

Documentary Evidence:

☐ Written statements containing misrepresentations
☐ Marketing materials, prospectuses, offering documents
☐ Contracts and transaction documents
☐ Internal documents showing defendant's knowledge
☐ Expert opinions on value/condition
☐ Damage calculations and supporting documents
☐ Timeline and chronology

Legal Research:

☐ Statute of limitations for fraud in applicable jurisdiction
☐ Discovery rule and tolling provisions
☐ Punitive damages availability and caps
☐ Pleading requirements (Rule 9(b) particularity)
☐ Attorney fee provisions
☐ Economic loss doctrine (may bar fraud claims in some contexts)
☐ Merger/integration clause effect on fraud claims

[// GUIDANCE:

1. PARTICULARITY: Fraud must be pled with particularity under FRCP 9(b) and state equivalents. This letter should lay the foundation for pleading by identifying who, what, when, where, and how.

2. ECONOMIC LOSS DOCTRINE: In some jurisdictions, fraud claims may be barred where the only damages are economic losses arising from a contract. Research applicable state law.

3. INTEGRATION/MERGER CLAUSES: Some courts hold that integration clauses bar fraud claims based on oral representations not included in the written contract. Others allow fraud claims to proceed despite such clauses.

4. PUNITIVE DAMAGES: Most states allow punitive damages for fraud, but there are caps in many states. Research applicable limits.

5. STATUTE OF LIMITATIONS: Fraud typically has a shorter statute of limitations than contract claims, but the discovery rule may extend the period.

6. RELIANCE: Sophisticated parties may have difficulty establishing justifiable reliance, especially if they had access to information or conducted due diligence.

7. CRIMINAL REFERRAL: Consider whether facts warrant referral to criminal authorities, but do not threaten criminal prosecution as a collection tactic.

8. SETTLEMENT AUTHORITY: Confirm client's settlement authority before sending demand.

9. INSURANCE: Fraud may be excluded from defendant's insurance coverage. Consider whether defendant can actually pay a judgment.
   ]