Chapter 63 of Title 18 of the United States Code lays out a number of fraud offenses. The two that will be explained below are mail and wire fraud. While there are important distinctions between the two crimes, each statute requires proof of a “scheme or artifice” to defraud, and the courts have interpreted those terms consistently across the various statutes. Before we take a dive into these statutes, it is important to know that prosecution under the mail and wire fraud statutes will often support prosecution under one or more other criminal provisions. Those other crimes include: (1) racketeering or money laundering, (2) defrauding the federal government or federally insured banks, and (3) bribery and kickbacks which tend to deprive honest services.
What is the difference?
Mail and wire fraud statutes are essentially the same except for the medium that is used in the offense. That is why mail is commonly used in mail fraud while wire communication is used in wire fraud.
Statutes:
Under 18 U.S.C. § 1341, the mail fraud statute punishes the use of the mails in furtherance of any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises.
Under 18 U.S.C. § 1343, the wire fraud statute punishes the use of the wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for obtaining money or property by means of false or fraudulent pretenses, representations, or promises.
Breaking Down the Elements:
- Scheme to Defraud
- Many circuit courts have interpreted scheme to defraud to mean any false or fraudulent pretenses or representations intended to deceive others in order to obtain something of value such as money or from an entity to be deceived. Further, a scheme to defraud includes both statements that defendant knows to be false or “kind of false” in which the defendant knows to be misleading and on which he expects another to act to his detriment but to the defendant’s benefit.
- Most important, the crime is done when the scheme has begun, not its success. If there is proof that the defendants contemplated some actual harm or injury to their victims that is enough to satisfy this prong.
- Defrauding or to Obtain Money or Property
- This is the other part of the statute; however, the Supreme Court of the United States has stated that scheme to defraud and obtaining money or property are not to be charged as separate offenses.
- Materiality:
- Neither of the statutes explicitly state this word but it is an element of each offense.
- Going back when the statutes were put into law, the word “defraud” was understood to require a misrepresentation of concealment of a material fact.
- A misrepresentation is material if it is capable of influencing the intended victim to do something that they would normally not do or if they knew the truth (or whole truth) of the situation.
- Material misrepresentation can also mean that you omitted (did not say anything knowing it was false) of a material fact.
- Intent:
- Mail and wire fraud are specific intent offenses. This means that the defendant had to possess the specific intent to deceive or defraud. There must be specific intent to cause some harm from the result of the deceit or cheating.
- Often times, this element is satisfied through the use of circumstantial evidence or inferences because it is very hard to get direct evidence of intent.
- Medium (as explained above)
- Mail:
- All that is required under mail fraud is a showing that the defendant intended to have knowledge that the use of the mails would follow in the ordinary course of their actions or that a reasonable person in their shoes would have foreseen the use of the mails.
- The mail must have the purpose of executing the scheme and linked to the scheme’s success.
- Mail:
- Wire:
- The use of an interstate (across State lines) communications device to transmit material.
- Examples include: Telephone, fax, email ,internet communication, television, or radio.
- The use of an interstate (across State lines) communications device to transmit material.
- Wire:
Common Examples of Schemes:
Many examples involve defrauding businesses such as insurance companies and banks. Defrauding an individual for their money or personal financial information are of the most common wire fraud situations. The common ways of carrying out the fraud include: (1) telemarking fraud, (2) internet scams, and (3) phishing scams to people’s emails.
Common examples of mail fraud include brochures in the mail that offer services for low prices, phony inheritance notifications, and notices asking for payment of either a service that you currently have or free services.
Penalties:
Mail and wire fraud are punishable by imprisonment for not more than 20 years and a fine of not more than $250,000 (not more than $500,000 for organizations), or fine of not more than $1 Million and imprisonment for not more than 30 years if the victim is a financial institution or the offense was committed in related to a natural disaster. Additionally, a mandatory minimum of two year imprisonment if identity theft is used during and in furtherance of the fraud. On top of that, a term of supervised release may occur after you have served your time in prison.