Would really need more information on what the "fraud" actually was. 

Like if someone used a stolen credit card to purchase something and the credit card company reversed the charges, a deduction for the item sold would still be allowed, but there would be no deduction for the "profit" that was lost unless it had previously been included in income.

A wire transfer payment for services was intercepted, and the payment to vendor was "stolen" by the fraudster. The company then was charged and required to pay for the service as the original "payment" was never received. 

This was not income for my client, it was an expense.

Business casualty losses for theft are deductible.