Charity Fraud

Federal Charity Fraud Defense Lawyer 

Charity fraud is a grave crime that erodes public confidence in charitable organizations and diverts resources away from those who need them.

Charity fraud involves the dishonest solicitation or misuse of charitable funds and can be prosecuted as a federal crime.

Essentially, it includes dishonest practices that deceive donors, steal funds, or falsely portray charitable efforts to benefit individuals or the organization itself.

Although each state has laws penalizing charity fraud, it becomes a federal offense primarily when the activity involves federal programs or crosses state borders.

If you're involved in activities that could be misinterpreted or scrutinized, understanding these risk factors can help you take preventative measures and seek legal advice before issues arise.

Charity scams tend to increase after major disasters, as scammers exploit people's desire to help. They target victims via emails, social media, crowdfunding sites, and unsolicited calls.

Charity scammers often try to secure quick donations and pressure individuals to give immediately. They request payments in cash, gift cards, cryptocurrency, or via wire transfer, but they do not provide details about the charity or how the funds will be used.

Misleading Donors or Government Authorities

There are various types of charity scams aimed at misleading donors or government bodies. These frauds are frequently carried out online, but some also occur through telemarketing, where callers solicit donations for fake charities or false causes.

The federal government considers these offenses serious and uses various laws to prosecute fraud, including charity fraud. Conviction can lead to heavy fines and imprisonment.

Charities play an important role, but understanding the federal crimes involved is crucial for those accused. Consulting a federal criminal defense lawyer can help develop a strategic response and provide reassurance against conviction.

What Exactly is Charity Fraud? 

Many readers may wonder how laws define charity fraud and what behaviors are legally considered fraudulent. Clarifying these misconceptions helps you better understand the legal boundaries and avoid unintentional violations.

Charity fraud involves dishonest solicitation or misuse of donations. Recognizing how offenders pretend to be legitimate charities or divert funds helps the audience feel more informed and confident in identifying risks.

In some cases, they may be part of a real charity but divert the funds for personal benefit or unauthorized uses. Examples of charity fraud include:

• Misrepresentation of Activities: When an organization claims to support causes or communities but does not allocate the collected funds properly.
• Funds for Personal Use: Members of a charity divert donations to personal expenses rather than the charity's declared mission.
• Fake Charities: Falsely creating charities or events to trick people into donating.

For example, someone or a group might establish a charity purportedly dedicated to disaster relief. They run large-scale fundraising drives, gathering substantial funds from the public and businesses.

However, the collected funds are often diverted for personal gain rather than used in disaster-affected regions.

What Federal Laws Address Charity Fraud?

Although there is no specific law directly addressing charity fraud, federal prosecutors can rely on various federal statutes to pursue charges. The choice of statutes largely depends on the type of scam and its execution.

Common laws employed in these cases include, but are not limited to:

• Mail Fraud (18 U.S.C. 1341): This federal law is used when the U.S. Postal Service or any private interstate carrier is involved in carrying out a fraudulent scheme. It usually involves fraudulent donation solicitations sent by mail to potential donors.
• Wire Fraud (18 U.S.C. 1343): Wire fraud occurs when fraudulent actions are conducted via wire, radio, or television communications. Examples include email scams or deceitful online donation sites.
• Tax Evasion (26 U.S.C. 7201): A fake charity issuing tax receipts for nonexistent donations could result in tax evasion charges. Both the charity and the donor might be implicated.
• Bank Fraud (18 U.S.C. 1344): If charity fraud includes deceptive activities impacting financial institutions, like fake bank transfers or fraudulent transactions, the offender could face prosecution under this law.
• Identity Theft (18 U.S.C. 1028): The identity theft statute could apply in cases of charity fraud that involve the misuse of someone else's identity or personal data.
• Money Laundering (18 U.S.C. 1956): If funds gained from charity fraud are processed through multiple transactions to hide their source, the accused could face extra charges of money laundering.
• Impersonating the Red Cross (18 U.S.C. 917): Federal law explicitly makes it a crime to falsely present oneself as a member or agent of the Red Cross in order to solicit or gather donations.

What are the Possible Penalties?

The penalties for charity fraud depend on the applicable statutes, the seriousness of the offense, and any aggravating factors. Typically, federal charges related to charity fraud can lead to fines from thousands to millions of dollars and substantial prison terms.

For example, convictions for mail or wire fraud can result in up to 20 years in prison and substantial fines. If the fraud impacts a financial institution or is linked to a presidentially declared disaster or emergency, the maximum prison sentence can rise to 30 years.

Tax evasion convictions can lead to imprisonment of up to 5 years and fines of up to $250,000 for individuals or $500,000 for companies. Violations of money laundering laws may result in fines up to $500,000 or twice the amount involved, whichever is higher, along with a maximum prison sentence of 20 years.

What Are the Common Defense Strategies?

Countering accusations of charity fraud requires a strategic legal approach. Engaging experienced lawyers can help clients feel supported and confident in their defense strategies, such as:.

• Lack of Intent: A strong defense can prove that the accused did not intend to deceive donors or embezzle funds. This may include demonstrating that any misrepresentations were due to misunderstandings or mistakes rather than intentional deception.
• Good Faith Belief: Arguing that the accused truly believed in the charity's legitimacy and that any problems that arose were due to administrative or operational oversights rather than fraudulent intentions.
• Misunderstanding: Sometimes, people are wrongly accused because they misunderstand or misidentify their role in a charitable organization. Clarifying these misunderstandings is essential for the defense.

For more details, reach out to our federal criminal defense lawyers at Eisner Gorin LLP, located in Los Angeles, California.

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