Wire Fraud vs Bank Fraud Charges in PPP Loan Cases: What’s the Difference?

Thanks for visiting Spodek Law Group. We’re a second-generation law firm managed by Todd Spodek, with over 40 years of combined experience in federal criminal defense. If you’re facing federal charges for PPP loan fraud, prosecutors likely charged you with both wire fraud and bank fraud – and understanding the difference between these charges matters because it affects your defense strategy, plea negotiations, and potential sentencing.

This article explains wire fraud versus bank fraud, why prosecutors charge both offenses in PPP cases, and how we defend against these charges.

Wire Fraud: 18 USC 1343

Wire fraud is the most common federal fraud charge. The statute prohibits using wire, radio, or television communication in interstate or foreign commerce to execute a scheme to defraud.

“Wire communication” includes everything electronic – emails, phone calls, text messages, online applications, electronic bank transfers, internet activity. If you submitted your PPP application online, that’s wire fraud. If you received the loan via electronic transfer to your bank account, that’s wire fraud. If you sent emails discussing the loan application, that’s wire fraud.

Federal prosecutors love wire fraud charges because they’re easy to prove. They don’t have to show that you actually succeeded in defrauding anyone – just that you used electronic communications as part of a fraud scheme. Each email, each electronic transfer, each online submission can be charged as a separate count of wire fraud.

Wire fraud carries up to 20 years in federal prison per count. If the fraud affects a financial institution, the maximum increases to 30 years per count.

Elements Prosecutors Must Prove

To convict you of wire fraud, prosecutors must prove three elements beyond a reasonable doubt. First, you devised or participated in a scheme to defraud. Second, you acted with intent to defraud. Third, you used interstate wire communications in furtherance of the scheme.

The “scheme to defraud” is broadly defined. Submitting a PPP application with inflated employee counts is a scheme to defraud. Claiming your business existed before it actually did is a scheme to defraud. Misrepresenting your payroll costs is a scheme to defraud.

“Intent to defraud” means you knowingly participated in the scheme with the purpose of obtaining money through false pretenses. Honest mistakes aren’t wire fraud – but prosecutors will argue that discrepancies between your application and IRS records show you knew the information was false.

Bank Fraud: 18 USC 1344

Bank fraud is a more specific charge that applies when you knowingly execute a scheme to defraud a financial institution or obtain money from a financial institution by false pretenses.

Your PPP lender – whether it’s a traditional bank, credit union, or online lender – is a financial institution under federal law. Submitting a fraudulent loan application to obtain funds from that lender is bank fraud.

Bank fraud carries up to 30 years in federal prison per count – longer than wire fraud. It also carries fines up to $1,000,000 per count.

Elements Prosecutors Must Prove

Bank fraud requires proof of two elements. First, you knowingly executed or attempted to execute a scheme to defraud a financial institution. Second, you intended to obtain money, funds, credits, assets, securities, or other property owned by or under the custody or control of a financial institution by means of false or fraudulent pretenses, representations, or promises.

The key difference from wire fraud is that bank fraud specifically targets schemes to defraud financial institutions. Wire fraud is broader – it covers any fraud scheme using electronic communications.

Why Prosecutors Charge Both Offenses

In PPP fraud cases, prosecutors routinely charge both wire fraud and bank fraud. The same conduct satisfies the elements of both statutes – you used electronic communications (wire fraud) to submit a fraudulent loan application to a financial institution (bank fraud).

Charging both offenses gives prosecutors leverage. They can threaten you with more counts, higher maximum sentences, and increased sentencing exposure under federal guidelines. This pressure encourages defendants to plead guilty rather than go to trial.

Prosecutors can also hedge their bets. If a jury acquits you on bank fraud charges but convicts on wire fraud, they still get a conviction. If one charge fails on a technicality, the other charge might stick.

Defenses to Wire Fraud and Bank Fraud

Both charges require proof of intent. If you made honest mistakes on your PPP application, if you relied on advice from accountants who told you the application was accurate, if you had a good faith belief that you qualified – those are defenses to both charges.

We challenge the government’s evidence of intent. We present communications showing you consulted professionals, we demonstrate that discrepancies resulted from confusion about PPP eligibility rules, we show honest disclosure even if misunderstood.

We also attack loss calculations. If prosecutors claim you defrauded the SBA of $500,000 but you actually qualified for $300,000 based on legitimate payroll, the actual loss is only $200,000. That difference significantly affects sentencing.

Challenging Materiality

Both statutes require that the false statements were material – meaning they had the potential to influence the lender’s decision. If you overstated your employee count by one person, that might not be material. If you understated your payroll costs and therefore received less money than you qualified for, that’s not material.

We challenge whether discrepancies were actually material to the lending decision. Sometimes lenders approved PPP loans with minimal review, relying on self-certifications without verifying information. If the lender would have approved your loan anyway, the false statement wasn’t material.

Sentencing Differences Between Wire Fraud and Bank Fraud

Wire fraud and bank fraud carry different statutory maximums – 20 years versus 30 years. But actual sentences depend on federal sentencing guidelines that calculate prison time based on loss amount, enhancements, and other factors.

For sentencing purposes, wire fraud and bank fraud are treated similarly. The base offense level is determined by the amount of loss. Enhancements apply for leadership role, sophisticated means, obstruction of justice, or number of victims.

What matters more than which charge you’re convicted on is the total loss amount and how many counts prosecutors can prove. Each separate wire communication can be a separate count. Each interaction with the financial institution can be a separate count.

We negotiate with prosecutors to reduce counts, consolidate charges, and minimize your sentencing exposure. Sometimes we can get prosecutors to dismiss some counts in exchange for guilty pleas on others. Sometimes we can get them to agree to specific sentencing recommendations.

Why You Need Spodek Law Group

We defend clients facing wire fraud and bank fraud charges in PPP loan cases nationwide. Todd Spodek is a second-generation criminal defense attorney who has handled hundreds of federal cases. We represented Anna Delvey in the case that became a Netflix series.

Our team includes former federal prosecutors who know exactly how the DOJ builds fraud cases. They understand what evidence prosecutors need, what legal standards apply, and what defenses are most effective.

If you’re facing wire fraud or bank fraud charges, if you’re under investigation, or if you’ve received a target letter or grand jury subpoena – contact us immediately. We’re available 24/7. The difference between wire fraud and bank fraud might seem technical, but understanding these charges is critical to building your defense and protecting your freedom.