Legal Question in Business Law in California

Re: Is this fraud?

It's actually called "conversion." Your "friend" exercised dominion and control over your property. I hope that you have something in writing, or a witness, to prove that the money was yours in the first place. It probably would make sense to file a small claims action if your demand letter doesn't work, and just ask that the $5k be awarded to you.

Re: Is this fraud?

It's probably not fraud; fraud requires a false representation which the victim reasonably relies upon. Here, it doesn't sound as though the "friend" induced you to part with the money by making any false statements.

Rather, this is an example of the crime of embezzlement. It is also the tort of conversion. Since only the People, acting through a D.A., can charge a crime, your civil suit in small claims court should allege that your friend "converted" the money to his own use, and that you are suing for "conversion."

In the past, there has been some legal question as to whether cash or money could be the subject of conversion, as conversion historically had to do with misappropriation of physical property like someone's horse, or his toolbox. The courts have now pretty well resolved this in favor of allowing a suit for conversion of money when a definite and specific sum is misappropriated. You don't need a list of serial numbers of the bills, but you do need to specify something like "the $5,000 check I gave him on March 15th" or something like that. See the cases of Shahood v. Cavin (1957) at 154 Cal.App.2d 745, 747-748 and Haigler v. Donnelly (1941) 18 Cal.2d 674 in case the guy raises the defense that you can't convert money.