Wire Fraud Laws
Scams online or over the phone have inflicted financial losses on unwary consumers for decades. People who take advantage of others in this way may face “wire fraud” charges. Like many federal crimes, these may result in a long time behind bars. As soon as you find out that you may be suspected of wire fraud, you should seek legal counsel. You should not talk to the police or prosecutors in the meantime. Anything that you divulge in good faith while trying to prove your innocence could come back to haunt you later in the process.
Elements of Wire Fraud
18 U.S. Code Section 1343 is the main wire fraud statute. This federal law defines the offense broadly. A prosecutor bringing this charge must prove that the defendant devised (or intended to devise) a “scheme or artifice” to defraud someone else, or to get money or property through false or fraudulent pretenses, representations, or promises. The prosecutor also must show that the defendant transmitted writings, signs, signals, pictures, or sounds through a wire, radio, or television communication with the purpose of furthering their scheme or artifice. Wire fraud thus may include the use of phones or computers, such as sending emails or text messages or making phone calls.
As with the mail and bank fraud statutes, the prosecution also must meet a “materiality” requirement. The U.S. Supreme Court imposed this rule in Neder v. U.S., noting that fraud offenses traditionally included this element and that Congress did not explicitly omit it from the statute. Materiality essentially means that the false statement or misrepresentation was significant enough to sway the target of the fraud.
Examples of Wire Fraud
Phil sends emails telling consumers that their Netflix subscriptions are about to expire. The emails resemble official Netflix emails. They invite a recipient to click on a link to renew their subscription. The link goes to a website that Phil has designed to look like the Netflix website. “Renewing the subscription” requires entering a credit card or other payment information. Phil collects these financial details in preparation for using them to make purchases.
“Patricia,” allegedly an aspiring model, joins a dating app. She gets the attention of a wealthy businessman and cultivates a relationship with him. Eventually, “Patricia” texts the man that her mother needs an expensive surgical procedure. The man sends money for the procedure to the bank account that “Patricia” provides. It turns out that “Patricia” is actually a man called “Patrick,” who collects the money and then shuts down the fake account.
Offenses Related to Wire Fraud
Some other offenses that might be charged in situations similar to those supporting a wire fraud charge include:
- Forgery: making or using a fake or falsified legal instrument with an intent to defraud
- Larceny: essentially the generic form of theft, which involves taking someone else’s property without authorization and with the intent to deprive them of it
- Bank fraud: trying to defraud a financial institution, or get money or property in its control
- Securities fraud: false statements or misrepresentations involving the offer, purchase, or sale of securities, such as stocks or bonds
- Credit card fraud: could be charged when someone uses another person’s credit card information online without their consent
Since wire fraud is a very broad offense, prosecutors sometimes charge it in addition to more specific offenses. It may serve as a fallback option if they cannot prove other charges.
Defenses to Wire Fraud
One way to defeat a wire fraud charge involves arguing a lack of intent to defraud. Perhaps Phil in the first example above set up the Netflix-like website out of curiosity to see how many people would fall for the trick, without planning to collect and use their financial information. Or a defendant might have sent out information that they genuinely believed to be true. If the recipients of the information made decisions accordingly, and they suffered losses while the defendant benefited, this is still not wire fraud.
A defendant also might attack the purpose element of the charge, claiming that they did not make the communication at issue to further the fraudulent scheme. Perhaps they sent it after they had completed the fraud, or perhaps their plan to defraud had already failed. In other cases, a defendant might question whether a false statement was “material.”
Wire fraud often involves complex circumstances. Investigations may take a long time to uncover wrongdoing. A five-year statute of limitations generally applies to these charges, although a 10-year period applies to wire fraud affecting a financial institution. If the prosecution does not bring a charge within the applicable period, the defendant likely can get the case dismissed, regardless of its merits.
Penalties for Wire Fraud
Like many federal criminal statutes, Section 1343 carries severe penalties. A defendant could face up to 20 years of imprisonment. They also may be ordered to pay a fine as described by Section 3571, which provides in part that a defendant may be fined up to twice the monetary gain that someone received or twice the monetary loss of a victim, whichever is greater. Alternatively, the fine may go up to $250,000 if that is greater than twice the monetary gain or loss. Penalties are tougher in cases involving a financial institution or a disaster or emergency. A defendant could face up to 30 years of imprisonment and a fine of up to $1 million.
Perpetrators of wire fraud often commit multiple violations. Each violation may be treated as a separate count. This could result in an even longer prison term and heavier fine.
