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What federal laws apply to wire fraud prosecutions?

Federal Laws on Wire Fraud Prosecutions

Wire fraud is a serious white collar crime that involves using electronic communications to execute fraudulent schemes. Some key federal laws that apply to wire fraud prosecutions include:

Mail and Wire Fraud Statutes

The primary laws used to prosecute wire fraud are the mail and wire fraud statutes, which are found in Title 18, Chapter 63 of the U.S. Code.

• Mail Fraud Statute (18 U.S.C. § 1341) – This law prohibits schemes to defraud that involve the use of the U.S. Postal Service or private mail carriers. Mail fraud applies when the mail is used at any step in furtherance of the scheme.
• Wire Fraud Statute (18 U.S.C. § 1343) – This law prohibits schemes to defraud using interstate wire communications, which includes phone, radio, television, internet, or electronic communications that cross state lines.

To be convicted under the mail or wire fraud statutes, the prosecution must prove beyond a reasonable doubt that the defendant:

• Knowingly participated in a scheme to defraud or obtain money or property through false pretenses, representations, or promises
• Acted with intent to defraud
• Used the mail or interstate wires to further the fraudulent scheme

Penalties for mail and wire fraud include up to 20 years in prison and significant fines. The law also provides for criminal forfeiture of any proceeds derived from the fraud.

Honest Services Fraud

In 1988, the U.S. Supreme Court limited the mail/wire fraud statutes in McNally v. United States by holding that the statutes only apply to schemes to defraud victims of money or property, not intangible rights like honest services.In response, Congress passed 18 U.S.C. § 1346 in 1988 to define “scheme or artifice to defraud” under the mail/wire fraud laws to also include schemes to “deprive another of the intangible right of honest services.”This means public officials and private employees can be prosecuted under the mail/wire fraud statutes for schemes to defraud their employer or the public of honest services through bribes, kickbacks, or self-dealing.However, the Supreme Court has limited the scope of honest services fraud in cases like Skilling v. United States. The Court held that honest services fraud only covers bribery and kickback schemes, not more ambiguous conduct like failing to disclose a conflict of interest.

Money Laundering

Money laundering laws are often used in connection with wire fraud prosecutions when the fraud generates proceeds that are laundered to conceal their criminal source. Key statutes include:

• 18 U.S.C. § 1956 – Laundering of monetary instruments
• 18 U.S.C. § 1957 – Engaging in monetary transactions in property derived from specified unlawful activity

These laws impose severe penalties for conducting financial transactions involving fraud proceeds to hide their origin, route them through legitimate channels, or otherwise launder the money.

Criminal Forfeiture

18 U.S.C. § 981(a)(1)(C) and 18 U.S.C. § 982(a)(2) allow the government to criminally forfeit any property derived from or traceable to wire fraud offenses. This includes forfeiture of fraud proceeds and any assets purchased with the proceeds.Criminal forfeiture is a powerful tool allowing the government to “follow the money” and strip defendants of their ill-gotten gains from wire fraud schemes.

Federal Sentencing Guidelines

The U.S. Sentencing Guidelines provide recommended sentencing ranges for federal crimes, including wire fraud under §2B1.1. The guidelines increase sentences based on the amount of loss and other aggravating factors.Judges have discretion but often rely heavily on the guidelines in imposing sentences for wire fraud convictions. The guidelines frequently result in stiff sentences, especially in high-loss cases.

RICO

The Racketeer Influenced and Corrupt Organizations Act (RICO) provides enhanced penalties for crimes committed through a pattern of racketeering activity. Wire fraud can serve as a predicate offense to establish a RICO violation.RICO allows for extended prison terms, increased fines, and forfeiture of interests acquired through racketeering. RICO is useful for dismantling large criminal enterprises involved in wire fraud schemes.

Conspiracy

18 U.S.C. § 371 makes it a separate federal crime to conspire to commit wire fraud or other offenses. Co-conspirators involved in planning or facilitating a wire fraud scheme can face up to 5 years in prison even if they did not personally use the wires to execute the fraud.

Aiding and Abetting

Under 18 U.S.C. § 2, a person who aids, abets, or otherwise assists in a wire fraud offense can be punished as a principal. This allows prosecutors to pursue enablers who help facilitate wire fraud schemes.

Attempts

Even failed attempts to commit wire fraud are punishable under 18 U.S.C. § 1349, which carries up to 20 years imprisonment. The government does not have to prove the scheme succeeded, only that there was intent to defraud and use of wires in attempted furtherance.

Wiretapping

Wire fraud investigations often involve wiretaps to intercept incriminating communications. 18 U.S.C. § 2516 authorizes court-approved wiretapping by law enforcement in wire fraud investigations. Evidence obtained through properly authorized wiretaps can be used to prosecute wire fraud offenses.

Obstruction of Justice

Destroying evidence, lying to investigators, or interfering with an investigation can lead to additional charges for obstruction of justice under 18 U.S.C. § 1519 and other laws. These charges are commonly added to wire fraud indictments.

Defenses

Some potential defenses in wire fraud cases include:

• No intent to defraud – The defendant made false statements or committed wrongful acts, but lacked any intent to defraud.
• No material misrepresentations – The defendant made false statements, but they were not important or material to the transaction.
• Reliance on advice of counsel – The defendant acted in good faith based on the advice of a lawyer. This can negate intent.
• Statute of limitations – The statute of limitations is 5 years for wire fraud under 18 U.S.C. § 3282. Old offenses may be time-barred.
• Jurisdictional challenge – The communications did not actually cross state lines or use interstate wires as required.
• Lack of criminal intent – The defendant was unaware their conduct violated the law. This is rarely successful.
• Coercion/duress – The defendant only engaged in the fraud due to threats of harm.
• Entrapment – The fraud was induced by overly coercive law enforcement conduct.
• Constitutional challenge – Asserting the wire fraud statutes are overly vague or violate Constitutional rights. This is an uphill battle given longstanding court precedent upholding the statutes.

Sentencing Considerations

Some factors judges may consider in sentencing wire fraud offenders include:

• Degree of sophistication and duration of the scheme
• Amount of loss caused to victims
• Number of victims impacted
• Whether the defendant held a position of trust
• Obstruction of justice
• Acceptance of responsibility and cooperation
• Defendant’s criminal history
• Age and health of the defendant
• Family ties and responsibilities
• Charitable works and public service
• Remorse and attempts to mitigate harm to victims

Judges have broad discretion to evaluate these factors under 18 U.S.C. § 3553 in determining an appropriate sentence after conviction.

Conclusion

Wire fraud is a serious offense that carries substantial penalties. Key federal laws used to prosecute wire fraud include the mail/wire fraud statutes, money laundering laws, RICO, criminal forfeiture, and federal sentencing guidelines. Defendants face an uphill battle given the broad scope of the mail and wire fraud laws. However, skilled criminal defense counsel can identify potential defenses and mitigating factors to limit sentencing exposure for clients facing wire fraud charges. The full array of federal investigative and prosecutorial powers are brought to bear on wire fraud cases, making experienced legal representation essential.