Review of Federal Wire Fraud Laws, Penalties, and Defenses
Wire fraud under 18 U.S.C. § 1343 is generally described as any fraudulent activity involving the use of electronic communications of any kind. This federal fraud offense carries its own penalties and other punishments for the underlying crime.
This law penalizes anyone who devises a scheme to defraud or obtain money or property by false pretenses by transmitting wire communication in interstate commerce.
Since wire fraud is a federal offense, the United States Department of Justice (DOJ) is responsible for seeking an indictment.
The primary elements of the crime for wire fraud are the existence of a fraudulent scheme and the use of interstate electronic communications to execute, or make an attempt to execute, the illegal scheme.
Wire Fraud is related to 18 U.S.C. § 1341 mail fraud, and sometimes both federal statutes are used in the same indictment.
Simply put, wire fraud is a federal crime that occurs when a defendant uses any form of wire communication (e.g., radio, television, phone, email) in an attempt to commit fraud.
Wire fraud is a serious federal offense that can result in significant fines and a lengthy time in federal prison.
Our Los Angeles criminal defense attorneys will take a closer look at the federal laws below to give you a better understanding.
How Is Wire Fraud Defined?
U.S. Code Title 18 § 1343 makes it illegal to "devise any scheme or artifice to defraud, or for obtaining money using false or fraudulent pretenses, representations, or promises" through the use of wire communications.
Internet-related wire fraud could occur when an online seller charges a customer money for a product. For example, work-at-home schemes advertised on different websites are common wire fraud offenses.
Other examples of a wire fraud scheme include Phishing scams designed to gain unauthorized access to accounts, telemarketing fraud, spam-related fraud, and the offer of false investment opportunities over the internet.
Wire communication encompasses virtually any type of electronic communication, including:
- Phone calls,
- Text messages,
- Broadcasting via television or radio,
- Email,
- Various Internet transmissions (e.g., instant messaging).
The federal prosecutor has to prove, beyond a reasonable doubt, the defendant engaged in a scheme to commit fraud by making a material misrepresentation, used some wire mechanism, and possessed the necessary intent to commit the crime.
It should be noted that the defendant does not have to complete the crime to be convicted for wire fraud. In other words, attempted wire fraud is penalized the same. When a crime crosses state lines or international borders, it could become an interstate crime under different federal laws.
Wire Fraud as a Federal Crime versus State Crime
Individual states may have statutes that criminalize wire fraud. For example, in California, Penal Code 502 PC makes it illegal to defraud someone using computers or computer networks.
However, wire fraud is prosecuted as a federal crime in most cases, especially when the communication crosses state lines or international borders.
Wire fraud cases are tried in federal court with federal prosecutors, and if convicted, the defendant will usually serve time in federal prison.
What Are Some Examples?
Wire fraud can occur in many different ways. Here are just a few examples:
- Phishing schemes: Sending out a fraudulent email in an attempt to deceive people into disclosing personal information (e.g., passwords, credit card numbers, social security numbers);
- False prize-winning: Emails are sent out to people claiming the receiver has won a prize, but to claim it, they must send money;
- Telemarketing fraud: Calling individuals under false pretenses (typically posing as a phony company) to convince them to divulge personal information or make a payment via credit card;
- Fraudulent radio/TV ads: Using television or radio to advertise a product that either doesn't exist or has grossly misrepresented results.
How Can A Prosecutor Prove Federal Wire Fraud Charges?
For an action to be considered wire fraud under federal law, it must contain the following three elements:
- There must be a plan or scheme in place. In other words, you engaged in a system using false misrepresentation or omission over something;
- The defendant must utilize wire communication to further the fraudulent scheme; and
- The defendant must have a specific intent to commit fraud. Simply put, you possessed the required “mens rea” or mental state.
For federal prosecutors to obtain a conviction for wire fraud, they must demonstrate to the jury that all three of the above elements were present.
As noted above, another essential point is that you don't have to succeed in defrauding someone to be convicted of wire fraud.
You only have to have attempted to do so. Even if no money changed hands or no fraudulent product was issued, you may be guilty of wire fraud if you intended and tried to complete the transaction.
What Are the Penalties?
Wire fraud is a serious felony offense that can result in many years of prison time. Typically, a single count of wire fraud can result in up to 20 years in prison, a fine, or both.
If the wire fraud involves a financial institution (e.g., a banking scheme) or a natural disaster (e.g., falsely claiming to raise money for victims), the prison sentence could be as high as 30 years.
Note that these prison sentences are per count of wire fraud, and every separate count can result in additional prison time.
Thus, if you sent a phishing email to 10 recipients, you could theoretically face up to 200 years in prison if convicted on all counts.
What Offenses Are Related to Wire Fraud?
Depending on the specifics of the scheme, wire fraud charges may occur about other types of fraud charges. These may include:
- Mail fraud—use of the U.S. postal service to carry out a fraudulent scheme. (Almost always prosecuted as a federal crime since the postal service is a federal agency.)
- Internet fraud—other uses of the Internet to defraud or steal from people. For example, if someone sends a phishing email directing people to a fake website that mines their personal information, they could be charged with wire fraud and Internet fraud.
- Securities fraud—fraudulent acts concerning investments or securities. These are often charged in tandem with wire fraud because they involve fraudulent wire transfers.
What Are the Common Defenses?
If you are charged with federal wire fraud, your defense attorneys may be able to offer several arguments to defend against the charges, including the below.
Lack of intent—since wire fraud requires an intent to commit fraud, attorneys may provide evidence that you were an unwitting participant in a fraudulent scheme and that you had no intention of defrauding anyone.
Specific intent is often difficult for a federal prosecutor to prove in a wire fraud case since it is hard to know precisely what a defendant was thinking at the time. For example, they may not have known they were committing wire fraud in some cases.
Mistaken facts—your attorney may present the argument that you were unaware that statements or assertions you were making were false.
In other words, you were mistaken about the product/service and were passing that misinformation with an intent to deceive. Further, if guilt is not in doubt, we may be able to negotiate a favorable plea bargain with the federal prosecutor.
For example, perhaps we could make an arrangement where the defendant would plead guilty to a lesser offense in return for a recommendation of a lighter sentence before the judge.
We appear daily in the Central District of California courtrooms and the United States District Court in Los Angeles. While we are located in LA County, we represent people charged with federal offenses throughout the United States.
You can contact Eisner Gorin LLP for an initial consultation by calling (877) 781-1570 or filling out our contact form.
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