WIRE FRAUD CHARGES AND OTHER FEDERAL FRAUD OFFENSES
Wire fraud charges (18 U.S.C. § 1343) are federal crimes that involve allegations that someone made materially false promises or representations, with intent to defraud, using “wire communications” (phone, text, email, internet, TV/radio). Mail fraud (18 U.S.C. § 1341) is similar but involves the U.S. Mail or a commercial mail carrier like FedEx or UPS.
Both statutes carry up to 20 years in prison—or up to 30 years and a $1,000,000 fine if the offense affects a financial institution or relates to federal disaster/emergency benefits under the Stafford Act.
What usually happens in a federal criminal case? Watch Tom Church explain in this video.
Confused about the Federal Sentencing Guidelines? Watch Tom Church explain in this video.
We have successfully represented clients in federal fraud cases across the United States. Our firm has its main office in Atlanta, GA, and we frequently travel to federal courts in other states to represent people in serious federal criminal cases.
I’ve been representing people in federal criminal cases for well over 20 years now, and many of those cases have involved mail or wire fraud charges. So if you or someone you know is going through a case like that, you may find it helpful to learn a little bit more about the basics. What is a mail or wire fraud prosecution, and what are some possible defenses? So let’s start with the basics.
What does the government have to prove to convict someone of mail or wire fraud? Well, the first element the government has to prove is that the person made false promises or representations. They have to prove that the person lied. Now the lie needs to be an important lie, a material lie. Not some trivial matter, but something that the person who’s saying the lie or saying the false statement intends for the other person to rely on. It has to make a difference.
Let’s use an example of a telemarketer trying to pitch an investment opportunity. If that telemarketer gets on the phone and makes false statements about the company, about the investment opportunity, say, you know, the returns have averaged over a 1,000% every year for the past 10 years. And if that’s a false statement, obviously it’s a material statement. The person is saying that statement to get the other guy to send the money for this particular investment. So it’s material, and it’s false, and it qualifies as a false promise or representation.
And that’s true even if the statement is crazy and almost unbelievable. So let’s say the same telemarketer gets on the phone, calls someone else, and says, “This is such a great investment that if you send me $10 you’re going to have a million dollars by the end of the year.” Now, most people wouldn’t believe that I hope. But that can still be the basis for a mail or wire fraud case because it’s false, and the government can probably prove it’s false.
The next thing the government would have to show is that there’s an intent to defraud someone. Not just are you lying to the person, but you’re lying to them for a reason. And usually, that reason is to get them to send you some money. So the intent to defraud is the basis, it’s really the heart of this type of case. The government is not going to prosecute every lie. They’re only going to focus on lies that are intended to get someone to send them something, usually money.
The next element is that, makes sense, in a wire or a mail fraud prosecution that the case must involve the mail or wire communication. And the mail can include not just dropping letters at the post office, but also FedEx, or any other private, overnight carrier. And wire communication can, of course, be the telephone, radio, television, and these days mostly email, websites, and even chats. And the reason there’s an element like this in this statute is because it gives the federal government jurisdiction.
If it was just one person talking to another person, face-to-face, and the person was committing a fraud, the federal government would have no jurisdiction over that because it was local. It had nothing to do with interstate commerce. So the federal government included this element so that they would have jurisdiction over this type of fraud offense.
Now the scheme doesn’t have to work. I mean, let’s say the telemarketer is making this false statement about the investment opportunity. And the person on the other end of the line decides I’m not going to send any money in. I’m not going to fall for it. They can still be prosecuted for mail or wire fraud because it’s that intent to deceive someone. It’s that intent to cheat someone that’s the focus of this type of case.
Now if someone is convicted for this offense the penalties can be pretty steep, up to 20 years. Unless it involves disaster relief money or financial institution, and then it can be up to 30 years in prison. The exact sentence will usually depend mostly on the amount of money involved in the case. And you would want to start calculating the potential sentence for a case like this under the Federal Sentencing Guidelines. And I do have a separate video on the Federal Sentencing Guidelines that you can probably find on this page. There should be a link to it.
Now, what are some defenses to a mail or wire fraud charge? Well, the most obvious one is there’s no false statement, what the telemarketer said on the phone was true, or was simply an exaggeration. I mean, let’s say the telemarketer’s talking about this investment. They don’t give specific numbers about their profits or returns. But they say, “This is one of the best companies I’ve ever seen in this particular industry. It’s a no-lose type of investment. It’s a once in a lifetime opportunity.” All of those statements may technically be false, but they’re really more exaggerations, more opinion. And for the most part, the government does not prosecute that type of false statement under the mail or wire fraud statute. The statement can also be a mistake. Let’s say the telemarketer’s on the phone. They give them this information about these annual returns. The information is false. It’s not true, but the telemarketer got that information from what he or she believed was a reliable source, either their employer or some other company, and the relied on that information in telling some else about it. They made a mistake. The information’s not true, but they didn’t know that. They weren’t intending to get on the phone and lie to someone. And of course, you can’t have a mail or wire fraud prosecution if there’s no scheme to defraud. If the purpose of the lie is not to try to take money or something of value from someone else.
And of course finally and this is the most successful defense that we’ve used because it’s the most common. The person being charged with the particular crime didn’t know about the scheme. I mean, let’s say the salesperson is on the phone, and they’re given a script by their employer, and they’re reading it and they have no reason to believe that the information they’re providing is false. Now you have to be careful because the courts do say that if, you know, turned a blind eye to it, or you make no investigation at all, that you had a reckless disregard for the truth you can still be prosecuted. But if you had no reason to believe the information was false, even if you gave it to someone else, and even if it wasn’t true, and even if they sent you money in exchange, you’re not guilty of mail or wire fraud.
So I hope this has been helpful. We went over the basics of this type of an offense, the possible defenses. But if you have any additional questions about this type of case, feel free to give us a call. We’ve been down this road many times, and we’ll do our best to help.
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What are Wire Fraud Charges?
Under federal law, wire fraud involves making a false statement or material misrepresentation to obtain money or property from another person or entity through the use of a telephone, text messages, email, website, and/or other forms of “wire communications.” Submitting a fraudulent loan application to a bank through an online portal constitutes wire fraud, for example, as do investment scams (like those involving fake cryptocurrency), real estate fraud, and other common fraud schemes.
In a wire fraud prosecution, the government must prove: (1) a scheme to defraud, (2) material misrepresentations or omissions, (3) intent to defraud, and (4) use of interstate wire communications for the purpose of executing the scheme. The use of wire communications does not have to be a core aspect of the fraudulent scheme—it can be part of a step to further, conceal, or help the scheme. Ultimately, the scheme does not have to be successful—the attempt or intent to fraudulently obtain money from another is enough.
What are Mail Fraud Charges?
Under 18 U.S.C. § 1341, mail fraud charges mirror wire fraud charges but involve the use of the mail, whether through the federal post office or private carriers like FedEx or UPS. The elements of the offense are otherwise exactly the same: material falsehoods/omissions, intent to defraud, and use of the mails to execute or further the scheme—even if the mailing occurs after the money changes hands (for concealment or “lulling”). As society relies more on wire communications than the mail, wire fraud charges have become much more common than mail fraud charges.
Wire Fraud Conspiracy Charges
Many wire and mail fraud cases also include conspiracy counts under 18 U.S.C. § 1349. The government must prove that two or more people agreed to commit mail/wire fraud and that the defendant knowingly joined the agreement. There’s no separate overt-act requirement in § 1349, and the penalty is the same as the underlying fraud.
Related financial‑institution fraud: If the alleged scheme targets a bank or credit union directly, prosecutors sometimes charge 18 U.S.C. § 1344 (Bank Fraud), which carries up to 30 years and a $1,000,000 fine.
What are “Honest Services Fraud” Charges?
In some cases (often public corruption cases or cases involving kickbacks), prosecutors charge “honest services” fraud via 18 U.S.C. § 1346. This statute does not impose enhanced penalties but expands the definition of a “scheme to defraud” under the wire fraud and mail fraud statutes to include losses based on the deprivation of another’s intangible right to “honest services.”
Rather than committing fraud to obtain money, “honest services fraud” involves conduct like accepting bribes, self-dealing, or failing to disclose conflicts of interest—there may not be any actual economic loss, but there is still fraud. The U.S. Supreme Court recently narrowed the scope of “honest services fraud,” making it a little harder for the government to prosecute that kind of fraudulent offense.
Other Federal Fraud Offenses
(Bank Fraud, COVID-19 Relief Fraud, Healthcare Fraud, False Statements, Securities Fraud)
While wire fraud charges are the most common form of federal fraud charges, as they can be brought in almost any kind of fraud case involving electronic communications, they are not the only kind of federal fraud charges. Certain statutes carry different penalties for fraud offenses based on who the victim is or the nature of the scheme to defraud. These fraud offenses include:
- Bank fraud — 18 U.S.C. § 1344: The government must prove a scheme to (1) defraud a financial institution, or (2) obtain its money or property by false or fraudulent pretenses. The penalties for bank fraud are more severe than wire or mail fraud—bank fraud carries up to 30 years in prison.
- False statements to banks/lenders — 18 U.S.C. § 1014: Similar to bank fraud, § 1014 more broadly applies to anyone who knowingly makes a false statement to influence the action of a federally insured bank, credit union, mortgage lender, or related institution. A violation of § 1014 also carries up to 30 years in prison.
- Health care fraud — 18 U.S.C. § 1347: The government must prove a fraudulent scheme to defraud a health-care benefit program, like Medicare, for unnecessary or fraudulent medical expenses. The maximum sentence is 10 years in prison, 20 if serious bodily injury results, and up to life if death results.
- Securities/commodities fraud — 18 U.S.C. § 1348: The government must prove the defendant committed fraud in connection with securities and/or commodities. The maximum sentence is up to 25 years in prison.
- False statements (general) — 18 U.S.C. § 1001: The government must prove that a defendant knowingly and willfully made a materially false statement, concealment, or false writing in a matter within federal jurisdiction. This statute is often used as a “catch-all” charge and carries up to 5 years in prison, unless the matter involves terrorism or certain sex offenses.
- Major Disaster Benefits Fraud — 18 U.S.C. § 1040: The government must prove a fraudulent scheme involving a benefit paid in connection with a “major disaster declaration” or “emergency declaration” under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (see 42 U.S.C. § 5170). The maximum sentence for this kind of fraud is 30 years.
- COVID-19 Relief Fraud: Prosecutors typically charge the general fraud statutes—wire fraud (§ 1343), bank fraud (§ 1344), and false statements to lenders (§ 1014)—for conduct involving PPP and EIDL loans or unemployment benefits tied to the pandemic.
What are the financial penalties for federal fraud offenses?
Aside from substantial prison terms and millions in potential fines, a federal fraud conviction usually also results in several financial penalties, including restitution and forfeiture.
“Restitution” is when the court orders a defendant to pay back the victim for their economic losses. Calculating restitution can be a contested process where the government and victim are claiming a bigger loss than they actually suffered. The court cannot award restitution based on speculation, and restitution cannot put the victim in a better place than they would have been without the losses caused by the fraud. An experienced federal attorney can make a big difference in a contested restitution hearing.
A fraud conviction can also result in forfeiture, where the Government is entitled to seize or keep any money or property that the defendant obtained through their offense. The amount of forfeiture is sometimes the same as the restitution amount but can be broader, as it includes any money derived or connection to criminal activity.
In fraud cases, the government often brings additional charges for money laundering, which is a broad federal offense that is based on how the defendant uses money obtained from fraud. The penalties for money laundering can be severe, but the same defenses for fraud offenses often apply to money laundering charges too.
What are the defenses against Wire Fraud and Mail Fraud Charges?
There are several valid defenses for those charged with mail or wire fraud. Some of the more common defenses include:
- There was no “fraudulent intent.” A person can’t be convicted of mail fraud just because they told a lie in a letter they sent someone. Rather, a person must make a false statement with a specific intent to cheat someone, usually out of their money or property. There is no criminal intent if the false statements in question are exaggerations or sales “puffery.” A car dealer who advertises a car as the fastest in the world, for example, is not necessarily committing fraud.
- The statements made were not “knowingly false.” Even if the government can prove a person said something untrue, that person cannot be convicted of mail fraud unless they knew they were lying. The “good faith” defense exists when a person makes a false representation or promise without knowing it’s untrue. The government has to provide evidence that the person knew the statement was false specifically at the time they made it.
- The false promise or misrepresentation was not material. The government must prove that a person’s false promises and misrepresentations in a fraud offense were “material.” A “material” statement is the kind of statement a person may rely on, as opposed to a statement about something trivial. In fraud offenses, material misrepresentations are false statements that involve false information likely to trick or cheat someone.
- The use of mail or wire communications was not related to the fraudulent scheme. It is a valid defense for a person to argue that, even if they did commit fraud, neither the mail or the wires were used in connection with that fraud. The government doesn’t just have to prove that the mail or the wires were used, it must prove that they were used to further the fraudulent scheme.
- The government evidence was illegally obtained. Evidence in fraud cases often includes communications and financial information derived from government searches and wiretaps. Since the government must first obtain orders authorizing searches and wiretaps before collecting this type of evidence, a person charged with mail fraud can have the evidence “suppressed” if their constitutional right against “unreasonable searches and seizures” is violated.
Of course, we have also been very effective in reducing the sentence our clients face in these cases by focusing on the calculation of the “loss amount” under the Federal Sentencing Guidelines.
Sentencing in a fraud case is primarily determined by these Guidelines, and these Guidelines are complex and frequently being amended by Congress and the Sentencing Commission. We have saved our clients many years of prison time by creatively arguing for a favorable application of the Guidelines, and by presenting judges with positive character evidence that shows our client is more than just what crime he or she may have been charged with in their case.
Contact us if you or a loved one has been targeted or charged by the federal government with alleged fraud offenses.
Mail and wire fraud prosecutions are usually complex and involve a lot of financial information and other documents that require expert review and analysis. If you have been charged with mail or wire fraud, you need an experienced criminal attorney who will defend your legal rights.
I hired Mr Pate to handle my federal 2255 appeal which was for ineffective council of a former attorney. He spent countless hours with my case load filing paperwork, meeting with me, more than one hearing in front of multiple judges etc. my 2255 was won and I had a sentence reduction fo all his hard work. 2255 are very hard to win and the odds are slim so if you need a great lawyer that will work hard for you and argue for you even harder in Court, you need to call Page! He and Mr Church both had my back all the way thru. Thanks to them both but especially Page Pate!