Isabella Carter
The federal wire fraud statute, enacted by Congress in 1952, is based on the constitutional power to regulate interstate commerce and communications. This statute, 18 U.S.C. Section 1343, criminalizes the use of wire, radio, or television communication in furtherance of a scheme to defraud. The broad language of the statute, particularly the term wire, has allowed for its interpretation to include internet communications, making it a powerful tool for prosecuting fraud in the modern era. The statute carries severe penalties, including up to 20 years of imprisonment and substantial fines, and has a five-year statute of limitations.
| Characteristics | Values |
|---|---|
| Basis of constitutional power | Enumerated power to create a post office under Article I, Section 8 of the US Constitution |
| Federal wire fraud statute enacted | 1952 |
| Statute's use of the term "wire" | Allows prosecution based on the use of the internet |
| Elements of wire fraud | 1. Scheme to defraud; 2. Use of an interstate wire communication to further the scheme |
| Four essential elements of wire fraud crime | 1. Defendant voluntarily and intentionally devised or participated in a scheme to defraud another out of money; 2. Defendant did so with the intent to defraud; 3. It was reasonably foreseeable that interstate wire communications would be used; 4. Interstate wire communications were in fact used |
| Materiality requirement | False statement or misrepresentation was significant enough to sway the target of the fraud |
| Statute of limitations | 5 years; 10 years if wire fraud affects a financial institution |
| Penalty | Fined or imprisoned not more than 20 years, or both |
| Penalty if violation occurs in relation to a presidentially declared major disaster or emergency, or affects a financial institution | Fined not more than $1,000,000 or imprisoned not more than 30 years, or both |
| Defenses to prosecution | Lack of intent to defraud; Unconstitutional searches of phones and other devices; Seizing evidence in violation of suspects' constitutional rights; Interrogating suspects in custody without reading their Miranda rights |
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What You'll Learn
Mail fraud
There are two elements to mail fraud: the first is devising or intending to devise a scheme to defraud, or to perform specified fraudulent acts. The second element is the use of the mail for the purpose of executing or attempting to execute the scheme or specified fraudulent acts. Mail fraud applies only to domestic mailings and the use of interstate carriers such as UPS or FedEx, which originate in one state and terminate in another.
There are many types of mail fraud schemes, including employment fraud, financial fraud, fraud against older Americans, sweepstakes and lottery fraud, and telemarketing fraud. Telemarketing fraud often begins with mail that describes an appealing offer and prompts the recipient to call a number, where they are then tricked into handing over personal information. Financial fraud involves deception that uses financial transactions for personal gain, such as requiring an upfront payment for a new credit card or an advance on a loan. Other examples of mail fraud include phony advertising practices, insurance scams, and fraudulent charitable organizations that use the mail to facilitate their illegal activities.
Those found guilty of mail fraud may be punished with a fine and/or a prison sentence of up to 20 years. However, if the fraud occurs during a Presidential-declared major disaster or emergency, or if it involves a financial institution, the prison sentence can be extended to 30 years and the fine can be as high as $1,000,000.
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Jurisdiction and constitutional violations
The federal government of the United States claims jurisdiction in cases of wire fraud if the illegal activity crosses interstate or international borders. The federal wire fraud statute was enacted by Congress in 1952 and remains an extremely powerful tool in the DOJ's law enforcement arsenal. This is due to the statute's broad language, which includes the use of "wire, radio, or television communication". The term "wire" has been interpreted to allow prosecution based on the use of the internet in connection with the commission of a substantive federal fraud crime.
The four essential elements of the crime of wire fraud are:
- That the defendant voluntarily and intentionally devised or participated in a scheme to defraud another out of money;
- That the defendant did so with the intent to defraud;
- That it was reasonably foreseeable that interstate wire communications would be used; and
- That interstate wire communications were in fact used.
The wire fraud statute has been used to prosecute various types of fraud, including employment fraud, financial fraud, fraud against older Americans, sweepstakes and lottery fraud, and telemarketing fraud.
In some cases, constitutional violations during a wire fraud prosecution can provide defenses to prosecution. For example, an overzealous investigation may violate a suspect's constitutional rights, such as Fourth Amendment limits on searches and seizures. A defendant can ask the court to suppress evidence obtained through the violation, which can prevent a prosecutor from proving the charge or weaken their position in plea negotiations. Other examples of constitutional violations include conducting unconstitutional searches of phones and other devices, seizing evidence in violation of suspects' constitutional rights, and interrogating suspects in custody without reading their Miranda rights.
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Scheme to defraud
The federal wire fraud statute was enacted by Congress in 1952. The statute criminalizes the use of wire communications to execute "any scheme or artifice to defraud" or to obtain money or property through false pretenses.
To establish wire fraud, the prosecution must prove the following four elements:
- Scheme to Defraud: The defendant voluntarily and intentionally devised or participated in a scheme to defraud another entity or person out of money or property.
- Intent to Defraud: The defendant acted with the specific intent to deceive or cheat, intending to deprive the victim of something of value.
- Interstate Wire Communication: It was reasonably foreseeable that interstate wire communications would be used to carry out the scheme, and such communications were, in fact, utilized. This includes the use of telephones, email servers, radio, or television.
- Furtherance of the Scheme: The use of interstate wire communications facilitated or furthered the fraudulent scheme.
It is important to note that the wire fraud statute does not require the government to prove that the scheme to defraud was successful or that the victims were actually defrauded. The focus is on the defendant's intent and the use of wire communications to execute the scheme.
An example of a case involving wire fraud is United States v. Takhalov (2016), where female nightclub employees lured potential customers into Takhalov's nightclubs by posing as tourists and expressing romantic interest. While the 11th Circuit ruled that Takhalov deceived customers, it was not considered defrauding under the Wire Fraud Statute as it did not meet all the required elements.
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Use of interstate wire communication
The federal wire fraud statute, enacted by Congress in 1952, includes the use of "wire, radio, or television communication". This language has been interpreted to include internet communications, even though the internet did not exist when the statute was created.
The use of interstate wire communication is a critical component of wire fraud. The statute requires that the defendant voluntarily and intentionally devised or participated in a scheme to defraud another party of money or property, with the intent to defraud. It must also be reasonably foreseeable that interstate wire communications would be used, and that they were, in fact, used.
Interstate wire communications include telephone communications from one state to another, or between the US and a foreign country. It also includes wire transfers of funds between financial institutions.
In United States v. Schaefer (2007), the Tenth Circuit held that a single individual's use of the internet was insufficient to establish that the article "travelled across state lines in interstate commerce". However, in a more recent case, US v Kieffer (2012), the court concluded that users in different states accessing a website hosted in another state constituted the transmission of data across state lines, thus meeting the criteria for wire fraud.
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Conspiracy
To prove conspiracy to commit wire fraud, the government must establish the following essential elements:
- An agreement between two or more persons to commit wire fraud;
- Knowledge of the agreement and its fraudulent purpose; and
- A voluntary decision to join the conspiracy with the intent to further the wire fraud scheme.
The punishment for conspiracy to commit wire fraud can include a maximum penalty of 20 years in prison and a fine of up to $250,000. However, the actual sentence may vary depending on factors such as the amount of financial loss and the defendant's criminal history.
It is important to note that constitutional violations by investigators or prosecutors can significantly impact the outcome of a case. Individuals facing charges of conspiracy to commit wire fraud should consult experienced federal conspiracy lawyers to protect their rights and navigate the complexities of the legal system.
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