Federal Wire Fraud Laws – What You Need to Know

Wire fraud is a federal crime that involves any scheme to defraud another person or party by means of electronic communication.

It can take many forms including telemarketing fraud, internet scams, phishing, or fraudulent schemes that use television or radio. Additionally, federal authorities are often able to prosecute other, underlying crimes that might otherwise only be subject to state laws by linking those crimes to wire fraud.

While wire fraud may be commonly thought of as a “white collar crime,” it is a serious federal crime that comes with the possibility of steep penalties for defendants.

Only a knowledgeable and experienced criminal defense attorney can provide you with the kind of expert advice that you will need to secure the best possible outcome for your case. If you’ve been charged with wire fraud or any of its related offenses, it’s a good idea to contact an attorney right away to start discussing your options.

What is Wire Fraud?

Wire fraud is fraud that is carried out through pictures, sounds, writings, signs, or signals that are transmitted through any form of wire, including television, radio, telephone, internet, or fax. 

The Elements of Wire Fraud

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The prosecution must prove certain elements are present in a crime in order to secure a conviction of wire fraud. While the precise list of elements may vary from one federal circuit court to another, they tend to be very similar to each other and can be summarized as the following:

1. A scheme to commit fraud
2. Specific intent to commit fraud
3. Use of wire, radio, or television communication to further that scheme

Below are more in-depth descriptions of each of these elements and the role they play in proving that a defendant is guilty of committing wire fraud.

1. A scheme to commit fraud

In order to make a wire fraud conviction, the prosecution must prove that the you were part of a scheme to defraud another person or party. In other words, the you planned to use a false statement, promise, or misrepresentation in order obtain money or something of value from someone else.

While deception or dishonest means are a crucial element in a wire fraud scheme, to be convicted you do not necessarily need to tell an outright lie. Failing to disclose certain facts in a misleading way can also be considered a form of deception. 

2. Specific intent to commit fraud

If it cannot be proven that you acted knowingly or with the specific intent to defraud someone else, you cannot be convicted of wire fraud. Participation in a wire fraud scheme is not enough to secure a conviction alone, you need to have known about the scheme and participated in it with the goal of deceptively obtaining money valuables from someone else.

However, you can also be guilty of wire fraud for having caused the wire transmission that was used as part of a fraudulent scheme if that transmission was a foreseeable part of the business being conducted.

The element of “specific intent to commit fraud” ensures that you cannot accidentally commit wire fraud. However, it is possible to lack “specific intent” and still be guilty of wire fraud through what is called “reckless indifference.” 

For example, if you wrote in an email to potential investors that your product was the “50% more effective than the competitor” as a means to secure their financial support without having any factual evidence to support that claim, you may be guilty of wire fraud for having shown a “reckless indifference” to the truth regardless of the fact that you did not necessarily lie either.

Additionally, you may be guilty of wire fraud without having successfully defrauded anyone. All that needs to be proven is that you intended to defraud someone through the use of wire transmission.

3. Use of wire, radio, or television communication to further that scheme

What makes wire fraud unique from other related form of fraud, such as mail fraud, is the use of an interstate communications device to transmit material. This can be just about anything that is able to transmit messages across state lines including a telephone, fax machine, email, internet communication, television, or radio. You can also be guilty of wire fraud for causing someone else to use a wire transfer of money as part of a scheme. 

Many fraud-based offenses are carried out via wire fraud including insurance fraud, tax fraud, and bank fraud. The material that is transmitted in these cases may include fraudulent bank statements or warranties, or statements made to customers or investors, such as those involved in an alleged Ponzi scheme.

It is important to note that the communication by wire itself doesn’t need to play a crucial role in the scheme to defraud, it only needs to be made in order to advance the scheme. For example, planning a fraudulent scheme over the telephone constitutes the use of a wire. 

Who investigates wire fraud?

Wire fraud is a federal crime that is investigated by the Federal Bureau of Investigation (FBI). Wire fraud occurs when someone uses wire, radio, or television communications to defraud others. This can include sending false information in order to obtain money or property, or sending threats to harm another person. Wire fraud is punishable by up to 20 years in prison, and can result in a fine of up to $250,000.

Examples of Wire Fraud Schemes

While many wire fraud offenses involve defrauding businesses such as insurance companies or banks, or other institutions such as the IRS, it perhaps just as common if not more common for those committing wire fraud to seek an individual’s money or personal financial information. Many such schemes involve the misuse of a person’s credit cards or bank accounts. Some of the common ways that an individuals’ money or financial information is fraudulently obtained via wire include:

• Telemarketing fraud
• Internet scams
• “Phishing,” or the use of unsolicited emails sent out to a high volume of personal email accounts

Many people will be familiar with the famous example if the “Nigerian prince scam,” in which the perpetrator sends an email identifying themselves as a Nigerian prince who has fallen victim to some terrible circumstances that have made him unable to access the money in his Nigerian bank account.

The sender then requests the bank account information of the email’s recipient in order to have a place to temporarily deposit his money. If the recipient complies, the perpetrator will then use the recipient’s account information to access the money in their account. 

While some scams or schemes to commit fraud may seem obvious to the average person, others are more difficult to spot. It is recommended that individuals be wary of any request for personal information made through email, television, phone call, or text message and to report instances of wire fraud to the Federal Trade Commission. 

Offenses Related to Wire Fraud

Mail Fraud

The wire fraud statute was enacted by congress in 1952 as a means of extending mail fraud laws to cover forms of fraud carried out through means of communication other than mail. While wire fraud and mail fraud share many common characteristics, the main difference is the use of wire vs. mail. Just as with wire fraud, a mail fraud conviction requires proof that the defendant participated in a scheme to commit fraud and did so intentionally.

Because communications in schemes to commit fraud often take place through multiple means including telephone, email, and mail, mail fraud is often charges alongside wire fraud in the same case.

Both mail fraud and wire fraud are federal crimes. The penalties for committing mail froud include up to twenty (20) years in federal prison and/or a fine. The prison sentence may be increased to up to thirty (30) years if the fraud committed involves a presidentially declared disaster or emergency or a federal financial institution.

Securities Fraud

Securities fraud is a broad term that covers a range of fraudulent behavior involving investment securities, including the sale or purchase of securities. This offense may be charged alongside wire fraud in certain situations, such as the use of wire communication in a scheme involving investment securities. 

Because securities fraud is both a federal and state crime, the penalties can be very steep. Those penalties include up to ten million (10,000,000) dollars in fines and a prison sentence of up to five (5) years, with an increased prison sentence of up to twenty (20) years for federal securities fraud.  

Internet Fraud

Fraud that is carried out through email or elsewhere on the internet is often referred to as “cybercrime.” Some common types of cybercrime are hacking and phishing in order to unlawfully obtain computer data or financial information. The use of email in a scheme to commit fraud is often prosecuted as wire fraud, as in the case of work-at-home scams or other popular schemes. Forms of cybercrime not prosecuted as wire fraud can be prosecuted under either federal or state law.

Attempt or Conspiracy to Commit Wire Fraud

If you attempt to use wires to commit fraud but are unsuccessful, you may still be guilty of “attempted wire fraud” or of participating in a “conspiracy to commit wire fraud.” Despite the different designation, federal law does not distinguish between successful and unsuccessful attempts to commit fraud. Attempted wire fraud and conspiracy to commit wire fraud carry the same penalties as a successful wire fraud attempt. Possible penalties (described in more detail below) include steep fines and up to twenty (20) years in federal prison.

California’s Criminal Fraud Laws

California state fraud laws include such offenses as real estate fraud, health care fraud, and a wide range of others. In some cases, a defendant may be charged with both federal wire fraud and another type of California criminal fraud. 

Federal Wire Fraud Penalties 

Acts of wire fraud are counted separately for every instance that wire communication toward fraudulent aims occurs. For example, if a fraudulent scheme involved the sending of 5 emails, then 5 separate acts of wire fraud were committed. 

While many state fraud-related crimes may be charged in conjunction with wire fraud, wire fraud itself is a federal crime, the penalties for which include:

• Up to twenty (20) years in federal prison 
• Up to $250,000 in fines for individuals
• Up to $500,000 in fines for organizations

If the wire fraud scheme involves a presidentially declared disaster or a federal financial institution, penalties may be increased to:

• Up to thirty (30) years in federal prison
• Up to $1,000,000 in fines

What are the Legal Defenses Against Federal Wire Fraud Charges?

If you have been charged with wire fraud, there are a number of legal defenses that your attorney may choose to use during the trial and/or appeals process for your case. While the strategies that your council chooses to use will depend on the specific circumstances of your case, below are some of the more common ones used to defend against charges of wire fraud.

Lack of Intent

In order to be convicted of wire fraud it must be proven that you intended to commit fraud. Intent can be a difficult thing to prove as it is impossible to know for certain what another person is thinking. If there is insufficient evidence to prove your intent, you cannot be convicted.

Mistake of Fact

Often a wire fraud case rests on the communication of false or misleading statements. If, however, you communicated false information that you believed to be true, you cannot be convicted of knowingly and intentionally communicating false information in an attempt to defraud. For example, if you send an email to potential investors citing that the weight loss pill you sell has a 90% success rate which you believe to be true based on the information you have been given, but it turns out the pill only has a 30% success rate, you were not intentionally communicating false information, but instead had mistaken facts. 

Puffery

“Puffery” is the use of exaggeration or opinionated statements used by salespeople in an attempt to make a sale. Examples of puffery might include statements like, “our weight loss pill is the best on the market!” A salesperson who makes such a statement through phone, email, television, or other forms of wire communication is likely not guilty of wire fraud, as consumers will likely understand the statement to be opinionated puffery and are not relying on that information to make an informed purchase.

California Wire Fraud Attorney

Wire fraud is a serious federal offense and, if convicted, you could find yourself facing some serious penalties. If you’ve been charged with committing wire fraud, you need to contact an attorney as soon as possible. As an expert criminal defense attorney with over 30 years of experience representing clients in the Los Angeles area, I have the skills and knowledge it takes to build you the best possible defense based on the details of your case. As your legal representative, I will guide you through the criminal justice process and aggressively defend your rights. Don’t wait, contact my firm today to set up a consultation.