Major Fraud Act Of 1988

Definition of 'Major Fraud Act Of 1988'


A piece of legislation passed during the Reagan administration that modified and strengthened previous fraud legislation. Among the many changes, the Major Fraud Act of 1988 increased the maximum penalties for fraud, added protection for employees who assist the prosecution of fraud cases and introduced mandatory annual reports on fraud investigations by the attorney general.

Investopedia explains 'Major Fraud Act Of 1988'


The timing of the Major Fraud Act makes it seem like a reaction to the securities fraud cases of the late '80s and early '90s. However, much of the legislation targeted government contractors' persistent cost overruns and suspect bidding practices. The increase of penalties to $1 million for a single count and $10 million for multiple counts may not have significantly deterred this type of fraud, but it did increase the amount the government was able to claw back through the courts.



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