How do they prove intent in fraud cases?

| by Max Soni

Thanks for visiting Spodek Law Group. We’re a second-generation law firm managed by Todd Spodek – who has many, many years of experience handling federal criminal defense cases. Our team has over 40 years of combined experience, and we’ve represented thousands of clients since 1976. You might know us from the Netflix series about Anna Delvey, or our work on the Ghislaine Maxwell juror misconduct case. When federal prosecutors come after you for fraud, we know how they build their case – because we have former federal prosecutors on our team.

This article explains how prosecutors prove intent in fraud cases, what evidence they use against you, and why this element matters more than anything else in your defense. Federal fraud cases live or die on intent. You need to understand what you’re facing.

Intent is Everything in Federal Fraud Prosecutions

The government doesn’t just need to prove you made false statements or that someone lost money. They need to prove you intended to defraud someone – that you acted with knowledge and willfulness. This is the difference between a mistake and a federal crime.

Here’s what makes fraud different from other federal crimes. The scheme doesn’t need to succeed. Nobody actually has to lose money. According to DOJ prosecution guidelines, prosecutors only need to show that you contemplated causing harm through deception. That’s it. Your business partner could have caught the scheme before any money moved, you’re still facing wire fraud charges if prosecutors can prove intent.

Federal prosecutors prove intent through circumstantial evidence – emails, text messages, financial records, witness testimony about what you said and did. They reconstruct your state of mind from the totality of circumstances. Direct evidence of intent is rare, prosecutors almost never have a confession where you admit “yes, I intended to defraud these people.” They build the case piece by piece.

The Circumstantial Evidence Prosecutors Use

Victim testimony is powerful evidence of intent. When someone takes the stand and explains exactly how your representations misled them, that’s not just proof of deception – it’s proof you intended to deceive. Courts allow this “impression testimony” specifically to show fraudulent intent. The victim describes the conversation, the promises you made, how they relied on your statements. Juries believe victims.

Your own statements come back to haunt you. Prosecutors will use emails where you discussed the business, text messages with co-conspirators, recorded phone calls, presentations to investors. They’re looking for inconsistencies between what you told different people. Did you tell investors the company was profitable while telling your accountant it was losing money? That inconsistency suggests you knew the truth and chose to lie.

Financial records tell the story prosecutors want to tell. They’ll trace where money went – if investor funds went into your personal account instead of the business operations you promised, that’s evidence of intent to defraud. If you created fake invoices or altered financial statements, the documents themselves show fraudulent intent. You don’t accidentally create a fake invoice.

The modus operandi of your scheme can prove intent by itself. When the necessary result of your plan is to injure others, courts let juries infer you intended that result. If your business model only works if early investors get paid with later investors’ money – that’s a Ponzi scheme, and the structure itself proves fraudulent intent. We defended a client in a $12 million Ponzi scheme case on the Gold Coast, secured only a 6-month sentence despite 40+ victims, because we attacked the government’s proof of intent at every stage.

Willful Blindness – When Ignorance Becomes Intent

You can’t avoid fraud charges by deliberately staying ignorant. The willful blindness doctrine says if you suspected something was wrong and deliberately avoided learning the truth, that’s the same as knowing. Federal courts apply this aggressively in fraud cases.

Two requirements must be met. First, you must have subjectively believed there was a high probability something fraudulent was happening. Second, you took deliberate actions to avoid confirming that fact. Maybe you stopped reading financial reports, or you told your CFO “don’t tell me the details, just handle it,” or you ignored obvious red flags that would have revealed the fraud.

This doctrine has expanded far beyond drug trafficking cases where it started. Now prosecutors use willful blindness in wire fraud, mail fraud, money laundering, securities fraud, tax evasion, healthcare fraud – basically every federal fraud statute. A defendant in a recent insurance fraud case argued he relied on state audit reports showing solvency, but the court found he recognized the likelihood of insolvency and deliberately avoided learning the truth. That’s willful blindness, and it proved the knowledge element of fraud.

The defense argument “I didn’t know” fails if prosecutors can show you should have known and chose not to find out. That’s why federal fraud defendants often get convicted even when they claim ignorance – the jury hears about all the warning signs you ignored, all the questions you refused to ask, all the information you avoided reviewing. Willful blindness turns your ignorance into evidence against you.

Reckless Indifference to Truth

You don’t need to know for certain that your statements are false. Reckless indifference to truth or falsity is enough to prove fraudulent intent under federal law. If you made representations without caring whether they were true, that’s fraud.

This standard comes up constantly in securities fraud cases. When executives make projections about company performance, they can’t just throw out numbers they hope are true. They need a reasonable basis. If you told investors “we expect $10 million in revenue next quarter” without any data supporting that projection, just because it sounded good – that’s reckless indifference. Prosecutors don’t need to prove you knew the projection was false, only that you didn’t care whether it was true.

The same principle applies to due diligence failures. If you’re selling an investment opportunity and you make claims about the underlying assets without verifying those claims, you’ve shown reckless indifference. Courts treat this as fraudulent intent even if you personally believed everything would work out fine. Your belief doesn’t matter if it wasn’t grounded in facts you actually checked.

Continued Conduct After Learning the Truth

What you do after discovering a problem is evidence of your intent from the beginning. If you learned that your business model wasn’t working as promised but you kept taking investor money anyway – that continuation proves fraudulent intent. The complaint letters matter, the internal memos matter, the conversations where someone raised concerns matter.

Prosecutors love this evidence because it’s hard to explain away. You can argue you didn’t know about problems initially, but once someone sent you an email describing the issue or a customer complained in writing, your knowledge is documented. If you kept operating the same way after that point, you can’t claim good faith. You knew people were being misled and you let it continue.

Defense attorneys sometimes argue their client was trying to fix the problems, that continued operations were an attempt to make investors whole. That argument works only if you actually took concrete steps to correct the misrepresentations and notify affected parties. If you just hoped things would improve while continuing to make the same false claims – prosecutors will argue that continuation proves your original intent was fraudulent all along.

Why Intent Matters More Than Loss Amount

Federal fraud sentencing is driven by loss amount – the more money involved, the longer the Guidelines range. But you can’t get convicted in the first place without proof of intent. We’ve seen cases with millions in losses fall apart because prosecutors couldn’t prove the defendant intended to defraud anyone. Negligence isn’t fraud. Bad business judgment isn’t fraud. Even making false statements isn’t fraud if you honestly believed they were true.

The intent element is where defense attorneys attack fraud cases. If we can show you relied on advice from accountants or lawyers, that’s evidence you lacked fraudulent intent. If we can show you disclosed risks and uncertainties, that undercuts the government’s theory that you intended to deceive. If we can show the business had a reasonable prospect of success when you made representations, that challenges the claim you knew they were false.

At Spodek Law Group, we focus our defense strategy on the intent element from day one. Before prosecutors even indict the case, we’re building the record of your good faith – finding documents that show you believed in the business, witnesses who can testify about your honest efforts, experts who can explain why your conduct was consistent with legitimate business practices. Intent is provable and disprovable, which means it’s where cases get won.

What This Means for Your Defense

If you’re under investigation for federal fraud, everything you said and did is being analyzed for evidence of intent. Your emails are being reviewed by prosecutors who will interpret every ambiguous statement in the worst possible light. Your financial records are being examined for any sign you personally benefited. Witnesses are being interviewed about conversations where you might have said something inconsistent with your public statements.

Don’t talk to investigators without a lawyer. The moment you try to explain your intent, you’re creating evidence that will be used against you. Federal agents are skilled at getting defendants to make statements that seem exculpatory but actually prove knowledge. “I thought the money would be paid back” sounds like a defense, but it’s actually an admission you knew the money wasn’t being used as promised. “I relied on what my partner told me” sounds like ignorance, but prosecutors will argue it’s willful blindness if you had reason to doubt your partner.

We handle federal fraud cases differently than other law firms. We have former federal prosecutors who know exactly how the government builds intent cases, what evidence they prioritize, what arguments work with judges and juries. We know how to challenge circumstantial evidence, how to present alternative explanations for your conduct, how to show the difference between bad judgment and criminal intent. Many of the cases we’re famous for handling – are cases others said were unwinnable. That’s because we understand intent is everything in fraud prosecutions, and we know how to fight these cases from the investigation stage through trial if necessary.

The government has unlimited resources to investigate and prosecute fraud cases. You need a defense team that matches their sophistication – who can analyze the same evidence and build a different narrative, one where your conduct reflects honest business operations rather than criminal intent. At Spodek Law Group, that’s exactly what we do. We’re available 24/7 to discuss your case, and we only take on clients we believe we can truly help. If you’re facing a fraud investigation or charges, the sooner you get experienced counsel involved, the better your chances of avoiding conviction or achieving a resolution that protects your future.