Fraudulently purporting to act on behalf of a non-profit hospital entitled to purchase medical supplies under a federal subsidy program for less than their market value, defendant bought medical supplies for $2,000 and immediately resold them for $34,000. The government sought damages under a federal statute entitling it to a flat penalty of $2,000 plus an additional penalty of twice the amount “of any damage which the United States may have sustained by reason” of defendant’s fraud. Held: The “damage . . . sustained” was the difference between the $2,000 paid by defendant and the $34,000 resale price. The court made no attempt to determine either the trial-date market value of the supplies or their value at the time of their purchase from the government. The government was “damaged” to the extent of whatever profit defendant made on the resale and this apparently, even though for all that appeared defendant may have resold the supplies for more than their market value.
The case is interesting not only for its interpretation of the federal statute involved but for its applicability in any case in which a defrauding buyer makes a profit by reselling and more particularly where the defrauded seller is arguably unable to prove any actual damage. Indeed, the court in deciding the instant case relied heavily on common law principles.
Fraud—Recovery of the Defrauding Buyer’s Profits on Resale,
39 Neb. L. Rev. 430
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