Mail and Wire Fraud: A Brief Overview of Federal Criminal Law

Summary

Introduction

The federal mail and wire fraud statutes outlaw schemes to defraud that involve the use of mail or wire communications.¹ Both condemn fraudulent conduct that may also come within the reach of other federal criminal statutes. Both may serve as racketeering and money laundering predicate offenses. Both are punishable by imprisonment for not more than 20 years; for not more than 30 years, if the victim is a financial institution or the offense is committed in the context of major disaster or emergency. Both entitle their victims to restitution. Both may result in the forfeiture of property.

The mail fraud statute was first enacted in the late nineteenth century in order to prevent city slickers from using the mail to cheat guileless country folks.² But for penalty increases and amendments calculated to confirm its breath, the prohibition has come down to us essentially unchanged.³ Speaking in 1987, the Supreme Court noted that "the last substantive amendment to the statute ... was the codification of the holding of Durland ... in 1909 [that is, (Durland v. United States, 161 U.S. 306 (1896)(rejecting the argument that the statute was limited to the common law crime of false pretenses)].⁴ Congress did amend it thereafter to confirm that the statute and the wire fraud statute reached schemes to defraud another of the right to honest services ⁵ and to encompass the use of commercial postal carriers.⁶

The wire fraud statute is of more recent vintage. Enacted as part of the Communications Act Amendments of 1952,⁷ it was always intended to mirror the provisions of the mail fraud statute.⁸ Since its inception, changes in the mail fraud statute have come with corresponding changes in the wire fraud statute in most instances.⁹

The mail and wire fraud statutes are essentially the same, except for the medium associated with the offense—the mail in the case of mail fraud and wire communication in the case of wire fraud. As a consequence, the interpretation of one is ordinarily considered to apply to the other.¹⁰ In construction of the terms within the two, the courts will frequently abbreviate or adjust their statement of the elements of a violation to focus on the questions at issue before them.¹¹ As treatment of the individual elements makes clear, however, there seems little dispute that conviction requires the government to prove:

• 1. the use of either mail or wire communications in the foreseeable furtherance
• 2. of a scheme to defraud
• 3. involving a material deception
• 4. with the intent to deprive another of
• 5. either property or honest services.

The wire fraud statute applies to anyone who "transmits or causes to be transmitted by wire, radio, or television communication in interstate or foreign commerce any writings ... for the purpose executing [a] ... scheme or artifice."¹² The mail fraud statute is similarly worded and applies to anyone who "... for the purpose of executing [a] ... scheme or artifice ... places in any post office ... or causes to be delivered by mail ... any ... matter."¹³

The statutes require that a mailing or wire communication be in furtherance of a scheme to defraud. It need not be an essential element of the scheme, as long as it "is incident to an essential element of the scheme."¹⁴ A qualifying mailing or communication, standing alone, may be routine, innocent or even self-defeating, because "[t]he relevant question at all times is whether the mailing is part of the execution of the scheme as conceived by the perpetrator at the time, regardless of whether the mailing later, through hindsight, may prove to have been counterproductive."¹⁵ The element may be satisfied by mailings or communications "designed to lull the victim into a false sense of security, postpone inquiries or complaints, or make the transaction less suspect."¹⁶ The element may also be satisfied by mailings or wire communications used to obtain the property which is the object of the fraud.¹⁷

A defendant need not personally have mailed or wired a communication; it is enough that he "caused" a mailing or transmission of a wire communication in the sense that the mailing or transmission was the reasonable foreseeable consequence of his intended scheme.¹⁸

The mail and wire fraud statutes "both prohibit, in pertinent part, 'any scheme or artifice to defraud[,]' or to obtain money or property 'by means of false or fraudulent pretenses, representations, or promises,"¹⁹ or deprive another of the right to honest services by such means.²⁰ From the beginning, Congress intended to reach a wide range of schemes to defraud, and has expanded the concept whenever doubts arose. It added the second prong—obtaining money or property by false pretenses, representations, or promises—after defendants had suggested that the term "scheme to defraud" covered false pretenses concerning present conditions but not representations or promises of future conditions.²¹ More recently, it added Section 1346 to make it clear the term "scheme to defraud" encompassed schemes to defraud another of the right to honest services.²² Even before that adornment, the words were understood to "refer 'to wronging one in his property rights by dishonest methods or schemes,' and 'usually signify the deprivation of something of value by trick, deceit, chicane or overreaching.'"²³

The statutes condemn schemes to defraud—both the successful and the unsuccessful.²⁴ Nevertheless, there may be some question whether the statutes reach those schemes designed to deceive the gullible though they could not ensnare the reasonably prudent.²⁵ It is not uncommon for the courts to declare that to demonstrate a scheme to defraud the government needs to show that the defendant's "communications were reasonably calculated to deceive persons of ordinary prudence and comprehension."²⁶ One court considered these statements no more than an identification of a point at which the government has satisfied its burden in a particular case, without addressing whether a lesser quantum of evidence might suffice in other cases.²⁷ In any event, the question may be more clearly present in the context of the defendant's intent and the materiality of deception, matters discussed below.

Neither the mail nor the wire fraud statute includes a reference to materiality. Yet materiality is an element of each offense, because at the time of the statutes' enactment, the word "defraud" was understood to "require[] a misrepresentation or concealment of [a] material fact."²⁸ "[A] statement is material for [mail or] wire fraud purposes only if it has the natural tendency to influence or be capable of influencing the person to whom it was addressed."²⁹ The deception, however, need not be addressed to the person to be defrauded.³⁰

"Intent to defraud requires a wilful act by the defendant with the specific intent to deceive or cheat, usually for the purpose of getting financial gain for one's self or causing financial loss to another."³¹ Under both statutes, intent to defraud requires a willful act by the defendant with the intent to deceive or cheat, usually [, but not necessarily,] for the purpose of getting financial gain for one's self or causing financial loss to another."³² A defendant has a complete defense if he believes the deceptive statements or promises to be true or otherwise acts in good faith.³³ A defendant has no such defense, however, if he blinds himself to the truth.³⁴ Nor is it a defense if he intends to deceive but feels his victim will ultimately profit or be unharmed.³⁵

The mail and wire fraud statutes speak of schemes to defraud or to obtain money or property.³⁶ They clearly protect against deprivations of tangible property. Their protection of intangibles has not always been as clear. They do protect intangible property rights,³⁷ although they do not apply to certain intangible rights in property that have no value in the hands of the victim of a scheme.³⁸

Some time ago, the Supreme Court held in McNally v. United States that the protection does not extend to "the intangible right of the citizenry to good government."³⁹ Soon after McNally, Congress enlarged the mail and wire fraud statute coverage to include the intangible right to honest services, by defining the "term 'scheme or artifice to defraud' [to] include[s] a scheme or artifice to deprive another of the intangible right to honest services."⁴⁰ Lest the expanded definition be found unconstitutionally vague, the Court in Skilling v. United States limited its application to cases of bribery or kickbacks.⁴¹

Attempting or conspiring to commit mail or wire fraud or aiding and abetting the commission of those offenses carries the same penalties as the underlying offense.⁴² "In order to aid and abet another to commit a crime it is necessary that a defendant in some sort associate himself with the venture, that he participate in it as in something that he wishes to bring about, that he seek by his action to make it succeed."⁴³

Where attempt has been made a separate offense, as it has for mail and wire fraud,⁴⁸ conviction ordinarily requires that the defendant commit a substantial step towards the completion of the underlying offense with the intent to commit it.⁴⁹ It does not, however, require the attempt to have been successful.⁵⁰ Unlike conspiracy, a defendant may not be convicted of both the substantive offense and the lesser included crime of attempt to commit it.⁵¹

A mail and wire fraud are punishable by imprisonment for not more than 20 years and a fine of not more than $250,000 (not more than $500,000 for organizations), or fine of not more than $1 million and imprisonment for not more than 30 years if the victim is a financial institution or the offense was committed in relation to a natural disaster.⁵² Conviction may also result in probation, a term of supervised release, a special assessment, a restitution order, and/or a forfeiture order.

Sentencing in federal court begins with the federal Sentencing Guidelines.⁵³ The Guidelines are essentially a score keeping system. A defendant's ultimate sentence under the Guidelines is determined by reference first to a basic guideline, which sets a base "offense level." Offense levels are then added or subtracted to reflect his prior criminal record as well as the aggravating and mitigating circumstances attending his offense.⁵⁴ One of two basic guidelines applies to mail and wire fraud. Section 2C1.1 applies to mail or wire fraud convictions involving corruption of public officials.⁵⁵ Section 2B1.1 applies to other mail or wire fraud convictions. Both sections include enhancements based on the amount of loss associated with the fraud.⁵⁶

After all the calculations, the final offense level determines the Guidelines' recommendation concerning probation, imprisonment, and fines. The Guidelines convert final offense levels into 43 sentencing groups, which are in turn each divided into 6 sentences ranges based on the defendant's criminal history.⁵⁷ Thus, for instance, the recommended sentencing range for a first time offender (i.e., one with a category I criminal history) with a final offense level of 15 is imprisonment for between 18 and 24 months.⁵⁸ A defendant with the same offense level 15 but with a criminal record placing him in criminal history category VI, would face imprisonment from between 41 and 51 months.⁵⁹ The Guidelines also provide offense-level-determined fine ranges for individuals and organizations.⁶⁰

As a general rule, sentencing courts may place a defendant on probation for a term of from 1 to 5 years for any crime punishable by a maximum of term of imprisonment of less than 25 years.⁶¹ The Guidelines, however, recommend "pure" probation, that is probation without any term of incarceration, only with respect to defendants with an offense level of 8 or below, i.e., levels where the sentencing range is between 0 and 6 months.⁶²

Once a court has calculated the Guideline recommendations, it must weigh the other statutory factors found in 18 U.S.C. 3553(a) before imposing sentence.⁶³ Sentences will be upheld on appeal if they are procedural and substantively reasonable. A sentence is reasonable procedurally if it is free of procedural defects, such as a failure to accurately calculate the Guidelines recommendations and to fully explain the reasons for the sentence selected.⁶⁴ A sentence is reasonable substantively if it is reasonable in light of circumstances which a case presents.⁶⁵

Supervised release is form of parole-like supervision imposed after a term of imprisonment has been served.⁶⁶ Although imposition of a term of supervised release is discretionary in mail and wire fraud cases,⁶⁷ the Sentencing Guidelines recommend its imposition in all felony cases.⁶⁸ The maximum supervised release term for wire and mail fraud generally is three years—five years when the defendant is convicted of the mail or wire fraud against a financial institution that carries a 30-years maximum term of imprisonment.⁶⁹ Release will be subject to a number of conditions, violation of which may result in a return to prison for not more than two years (not more than three years if the original crime of conviction carried a 30-year maximum).⁷⁰ There are three mandatory conditions: (1) commit no new crimes; (2) allow a DNA sample to be taken; and (3) submit to periodic drug testing.⁷¹ The court may suspend the drug testing condition,⁷² although it is under no obligation to do so even though the defendant has no history of drug abuse and drug abuse played no role in the offense.⁷³

Most courts will impose a standard series of conditions in addition to the mandatory condition of supervised release.⁷⁴ The Sentencing Guidelines recommend that these include the payment of any fines, restitution, and special assessments that remain unsatisfied.⁷⁵ Defendants convicted of mail or wire fraud must pay a special assessment of $100.⁷⁶

Restitution is ordinarily required of those convicted of mail or wire fraud.⁷⁷ The victims entitled to restitution include those directly and proximately harmed by the defendant's crime of conviction, and "in the case of an offense that involves as an element a scheme, conspiracy, or patterns of criminal activity"—like mail and wire fraud—"any person directly harmed by the defendant's conduct in the course of the scheme, conspiracy, or pattern."⁷⁸

Property that constitutes the proceeds of mail or wire fraud is subject to confiscation by the United States.⁷⁹ It may be confiscated pursuant to either civil forfeiture or criminal forfeiture procedures. Civil forfeiture proceedings are conducted treating the property itself as the defendant.⁸⁰ Criminal forfeiture proceedings are conducted as part of the criminal prosecution of the property owner.⁸¹ The provision authorizing the civil confiscation of property associated with mail or wire fraud is somewhat convoluted:

The following property is subject to forfeiture to the United States ... (C) Any property, real or personal, which constitutes or is derived from proceeds traceable to ... any offense constituting 'specified unlawful activity' (as defined in Section 1956(c)(7) of this title).... " 18 U.S.C. 981(a)(1)(C). "The term 'specified unlawful activity' means – any act or activity constituting an offense listed in Section 1961(1).... " 18 U.S.C. 1956(c)(7)(A). "(1) As used in this chapter – (1) 'racketeering activity' means ... (B) any which is indictable under any of the following provisions of Title 18, United States Code ... Section 1341 (relating to mail fraud), Section 1343 (relating to wire fraud).... 18 U.S.C. 1961(1)(B).⁸²

Any property subject to civil forfeiture may be confiscated instead using criminal forfeiture procedures, unless Congress has specifically provided otherwise.⁸³

A number of defendants, convicted of either mail or wire fraud, have argued to no avail that they should not be held liable for restitution and forfeiture.⁸⁴

The mail and wire fraud statutes essentially outlaw dishonesty. Due to their breadth, misconduct that constitutes mail or wire fraud may constitute a violation of one or more other federal criminal statutes as well. This overlap occurs perhaps most often with respect to (1) crimes for which mail or wire fraud are predicate offenses;⁸⁵ (2) fraud proscribed under jurisdictional circumstances other than mail or wire use;⁸⁶ and (3) honest services fraud in the form of bribery or kick backs.⁸⁷

Some federal crimes have as an element the commission of some other federal offense. The money laundering statute, for example, outlaws laundering the proceeds of various predicate offenses. The racketeering statute outlaws committing predicate offense to operate a racketeering enterprise. Mail and wire fraud are predicate racketeering and money laundering predicate offenses.

The Racketeering Influenced and Corrupt Organization (RICO) provisions outlaw acquiring or conducting the affairs of an enterprise, engaged in or whose activities affect interstate commerce, through loan sharking or the patterned commission of various other predicate offenses.⁸⁸ The elements under the more commonly prosecuted conduct prong are: (1) conducting the affairs; (2) of an enterprise; (3) through a pattern; (4) of racketeering activity.⁸⁹ "Racketeering activity" means, among other things, any act which is indictable under either the mail or wire fraud statutes.⁹⁰ As for pattern, "a person cannot be subjected to the sanctions [of RICO] simply for committing two widely separate and isolated criminal offenses. Instead, the term 'pattern' itself requires the showing of a relationship between the predicates and of the threat of continuing activity. It is this factor of continuity plus relationship which combines to produce a pattern."⁹¹

The pattern of predicate offenses must be used by someone employed by or associated with a qualified enterprise to conduct or participate in its activities. "The 'conduct or participate' element requires a defendant to have some part in directing those" activities.⁹² The element is not satisfied unless "one has participated in the operation or management of the enterprise itself."⁹³ Nevertheless, an "enterprise is operated not just by upper management but also by lower rung participants in the enterprise who are under the direction of upper management."⁹⁴

The enterprise may be either any group of individuals, any legal entity, or any group "associated in fact."⁹⁵ An enterprise "associated in fact" "must have at least three structural elements: a purpose, relationships among those associated with the enterprise, and longevity sufficient to permit these associates to pursue the enterprise's purpose."⁹⁶ Qualified enterprises are only those that "engaged in, or the activities of which affect, interstate or foreign commerce."⁹⁷

RICO violations are punishable by imprisonment for not more than 20 years and a fine of not more than $250,000 (not more than $500,000 for organizations).⁹⁸ The crime is one for which restitution must be ordered when one of the predicate offenses is mail or wire fraud.⁹⁹ RICO has one of the first contemporary forfeiture provisions, covering property and interests acquired through RICO violations.¹⁰⁰ As noted earlier, any RICO predicate offense is by virtue of that fact a money laundering predicate.¹⁰¹ Victims enjoy a cause of action for treble damages when injured in their business or property by reason of a RICO violation.¹⁰²

Mail and wire fraud are both money laundering predicate offenses.¹⁰³ Among other things, the most commonly prosecuted federal money laundering statute, 18 U.S.C. 1956, outlaws knowingly engaging in a financial transaction involving the proceedings of a "specified unlawful activity"(a predicate offense) for the purpose (1) of laundering the such proceeds or (2) of promoting further predicating offenses.¹⁰⁴

To establish the laundering or concealment offense, the government must establish that "(1) [the] defendant conducted, or attempted to conduct a financial transaction which in any way or degree affected interstate commerce or foreign commerce; (2) the financial transaction involved proceeds of illegal activity; (3) [the] defendant knew the property represented proceeds of some form of unlawful activity; and (4) [the] defendant conducted or attempted to conduct the financial transaction knowing the transaction was designed in whole or in part to conceal or disguise the nature, the location, the source, the ownership or the control of the proceeds of specified unlawful activity."¹⁰⁵

To prove the promotional offense, "the government must demonstrate that [the defendant]: (1) conducted a financial transaction that involved the proceeds of unlawful activity; (2) knew the property involved was proceeds of unlawful activity; and (3) intended to promote that unlawful activity."¹⁰⁶

Nothing in the either provision suggests that the defendant must be shown to have committed the predicate offense. Yet, simply establishing that the defendant spent or deposited the proceeds of the predicate offense is not enough without proof of an intent to promote or conceal.¹⁰⁷

Either offense is punishable by imprisonment for not more than 20 years and a fine of not more than $500,000.¹⁰⁸ Property involved in a transaction in violation of Section 1956 is subject to civil and criminal forfeiture.¹⁰⁹

Merely depositing the proceeds of a predicate offense does not alone constitute a violation of Section 1956. It is enough for a violation of Section 1957, if more than $10,000 is involved.¹¹⁰ Section 1957 uses Section 1956's definition of specified unlawful activities.¹¹¹ Thus, mail and wire fraud are predicate offenses for purposes of Section 1957.¹¹² "Section 1957 differs from Section 1956 in two critical respects: It requires that the property have a value greater than $10,000, but it does not require that the defendant know of [the] design to conceal [or promote] aspects of the transaction or that anyone have such a design."¹¹³

Violations are punishable by imprisonment for not more than 10 years and a fine of not more than $250,000 (not more than $500,000) for organizations.¹¹⁴ The property involved in a violation is subject to forfeiture under either civil or criminal procedures.¹¹⁵

This category includes the offenses that were made federal crimes because they involve fraud against the United States, as well as, the other frauds that share chapter 63 with the mail and wire fraud sections. The most prominent are the proscriptions against defrauding the United States by the submission of false claims, conspiracy to defraud the United States, and material false statements in matters within the jurisdiction of the United States.¹¹⁶ Bank fraud, health care fraud, securities and commodities fraud, and fraud in foreign labor contracting are all chapter 63 companions of mail and wire fraud.¹¹⁷

False claims

Section 287 outlaws the knowing submission of a false claim against the United States.¹¹⁸ "[T]o sustain a conviction under Section 287, the government must prove: (1) that the defendant presented a false or fraudulent claim against the United States; (2) that the claim was presented to an agency of the United States; and (3) that the defendant knew that the claim was false or fraudulent."¹¹⁹ The offense carries a sentence of imprisonment for not more than five years and a fine of not more than $250,000 (not more than $500,000 for organizations).¹²⁰ The crime is one for which restitution must be ordered.¹²¹ There is no explicit authority for confiscation of property tainted by the offense,¹²² but either a private individual or the government may bring a civil action for treble damages.¹²³ It is neither a RICO nor a money laundering predicate offense.¹²⁴

Conspiracy to defraud the U.S.

The general conspiracy statute has two parts.¹²⁵ It outlaws conspiracies to violate the laws of the United States.¹²⁶ More relevant here, it also outlaws conspiracies to defraud the United States.¹²⁷ To prove conspiracy to defraud the United States, the government must show (1) an agreement between two or more persons, (2) to defraud the United States, and (3) an overt act on the part of one of them in furtherance of the conspiracy.¹²⁸ The "fraud covered by the statute reaches any conspiracy for the purpose of impairing, obstructing or defeating the lawful functions of any department of the Government" by "deceit, craft or trickery, or at least by means that are dishonest."¹²⁹ Unlike mail and wire fraud, the government need not show that the scheme was designed to deprive another of money, property, or honest services; it is enough that to show that the scheme is designed to obstruct governmental functions.¹³⁰

Conspiracy to defraud the United States is punishable by imprisonment for not more than five years and a fine of not more than $250,000 (not more than $500,000 for organizations).¹³¹ It is neither a RICO nor a money laundering predicate offense.¹³² It is an offense for which restitution must be ordered.¹³³ There is no explicit authority for confiscation of property tainted by the offense.¹³⁴

False statements

Section 1001 outlaws knowingly and willfully making a material false statement on a matter within the jurisdiction of the executive, legislative, or judicial branch of the federal government.¹³⁵ A matter is material for purposes of Section 1001 when "it has a natural tendency to influence, or is capable of influencing, the decision of" the individual or entity to whom it is addressed.¹³⁶ A matter is within the jurisdiction of a federal entity "when it has the power to exercise authority in a particular matter" and "may exist when false statements [are] made to state or local government agencies receiving federal support or subject to federal regulation."¹³⁷

A violation of Section 1001 is punishable by imprisonment for not more than five years and a fine of not more than $250,000 (not more than $500,000 for organizations).¹³⁸ It is neither a RICO nor a money laundering predicate offense.¹³⁹ It is an offense for which restitution must be ordered.¹⁴⁰ There is no explicit authority for confiscation of property tainted by the offense, unless the offense relates to the activities of various federal financial entities.¹⁴¹ However, in a situation where the offense involves the submission of a false claim either a private individual or the government may bring a civil action for treble damages.¹⁴²

Chapter 63 contains four other fraud proscriptions in addition to mail and wire fraud: bank fraud, health care fraud, securities and commodities fraud, and fraud in foreign labor contracting.¹⁴³ Each relies on a jurisdictional base other than use of the mail or wire communications.

Bank Fraud

The bank fraud statute outlaws (1) schemes to defraud a federally insured financial institution, and (2) schemes to falsely obtain property from such an institution.¹⁴⁴ To establish the scheme to defraud offense, "the government must prove ... (1) the defendant knowingly executed or attempted to execute a scheme or artifice to defraud a financial institution; (2) the defendant had the intent to defraud a financial institution; and (3) the bank involved was federally insured."¹⁴⁵

To establish the "falsely obtain" violation, "the government must show that: (1) a scheme existed to obtain money, funds, or credit in the custody or control of a federally insured financial institution; (2) the defendant participated in the scheme by means of a material false pretenses, representations, or promises; and (3) the defendant acted knowingly."¹⁴⁶

Prosecutors have experienced some difficulty establishing the "financial institution" element of these offenses.¹⁴⁷

Violation of either offense is punishable by imprisonment for not more than 30 years and a fine of not more than $1 million.¹⁴⁸ Bank fraud is both a RICO and a money laundering predicate offense.¹⁴⁹ Conviction also requires an order for victim restitution.¹⁵⁰ Property constituting the proceeds of a violation is subject to forfeiture under either civil or criminal procedure.¹⁵¹

Health Care Fraud

The health care fraud proscription in Section 1347 has two prongs as well. It outlaws knowingly and willfully executing or attempting to execute a scheme either (1) to defraud a health care benefit program, or (2) to falsely obtain property from a health care benefit program—in connection with the delivery of, or payment for, health care products or services.¹⁵² Construction of the two prongs mirrors the effort elsewhere, e.g., "To obtain a conviction for health care fraud under 18 U.S.C. Section 1347, the Government is required to prove beyond a reasonable doubt that [the defendant]: (1) knowingly devised a scheme or artifice to defraud a health care benefit program in connection with the delivery of or payment for health care benefits, items, or services; (2) executed or attempted to execute this scheme or artifice to defraud; and (3) acted with intent to defraud."¹⁵³ The intent element, however, is a little different. Conviction requires a knowing and willful intent. "To establish knowledge and willfulness, the Government must prove that the defendant acted with knowledge that his conduct was unlawful,"¹⁵⁴ but it need show that the defendant knew of or intended to violation Section 1347 specifically.¹⁵⁵

Section 1347's penalty structure is also somewhat distinctive. General violations are punishable by imprisonment for not more than 10 years and fines of not more than $250,000.¹⁵⁶ Should serious bodily injury result, however, the maximum penalty is increased to imprisonment for not more than 20 years; should death result the maximum penalty is imprisonment for life or any term of years.¹⁵⁷ Section 1347 offenses are neither money laundering nor RICO predicate offenses.¹⁵⁸ They do entitle the government to restitution,¹⁵⁹ but not to forfeiture of any tainted property.¹⁶⁰

Securities and Commodities Fraud

The securities and commodities fraud prohibition in Section 1348 features the same two pronged approach.¹⁶¹ It outlaws knowingly executing or attempt to execute a scheme (1) to defraud or (2) to falsely obtain money or property—with respect to commodities or securities.¹⁶² "Under Section 1348(1), the Government must provide sufficient evidence to establish that [the defendant] had (1) 'fraudulent intent'; (2) 'a scheme or artifice to defraud'; and (3) 'a nexus with a security.' Alternatively, pursuant to Section 1348(2), the Government can show that [the defendant] executed: (1) a scheme or artifice; (2) 'to obtain, by means of false or fraudulent pretenses, representations, or promises, any money or property;' while possessing (3) fraudulent intent.... " Moreover, "the Government must also show that the false and misleading statements ... were material."¹⁶³

Offenders face imprisonment for not more than 25 years and fines of not more than $250,000 (not more than $500,000 for organizations).¹⁶⁴ The offense is neither a money laundering nor a RICO predicate offense.¹⁶⁵ Victim restitution must be ordered upon conviction,¹⁶⁶ but forfeiture is not authorized.¹⁶⁷

Fraud in Foreign Labor Contracting

The recently enacted fraud in foreign labor contracting statute, 18 U.S.C. 1351, provides that

(a) Work Inside the United States.-Whoever knowingly and with intent to defraud recruits, solicits, or hires a person outside the United States or causes another person to recruit, solicit, or hire a person outside the United States, or attempts to do so, for purposes of employment in the United States by means of materially false or fraudulent pretenses, representations or promises regarding that employment shall be fined under this title or imprisoned for not more than 5 years, or both.

(b) Work Outside the United States.-Whoever knowingly and with intent to defraud recruits, solicits, or hires a person outside the United States or causes another person to recruit, solicit, or hire a person outside the United States, or attempts to do so, for purposes of employment performed on a United States Government contract performed outside the United States, or on a United States military installation or mission outside the United States or other property or premises outside the United States owned or controlled by the United States Government, by means of materially false or fraudulent pretenses, representations, or promises regarding that employment, shall be fined under this title or imprisoned for not more than 5 years, or both.

The offense is a RICO predicate offense and consequently a money laundering predicate offense as well.¹⁶⁸ A restitution order is required at sentencing,¹⁶⁹ but forfeiture is not authorized.¹⁷⁰

After Skilling, honest services mail and wire fraud consists of bribery and kickback schemes furthered by use of the mail or wire communications. Mail and wire fraud aside, the principal bribery and kickback statutes include 18 U.S.C. 201 (bribery of public officials), 666 (bribery relating to federal programs), 1951 (extortion under color of official right); 15 U.S.C 78dd-1 to 78dd-3 (foreign corrupt practices); and 42 U.S.C. 1320a-7b (Medicare/Medicaid anti-kickback).

Bribery of Public Officials

Conviction for violation of Section 201 "requires a showing that something of value was corruptly ... offered or promised to a public official ... or corruptly ... sought ... or agreed to be received by a public official with intent ... to influence any official act ... or in return for 'being influenced in the performance of any official act."¹⁷¹

The hallmark of the offense is a corrupt quid pro quo, "a specific intent to give or receive something of value in exchange for an official act."¹⁷² The public officials covered include federal officers and employees, those of the District of Columbia, and those who perform tasks for or on behalf the United States or any its departments or agencies.¹⁷³ The official acts that constitute the objective of the corrupt bargain include any decision or action relating to any matter coming before an individual in his official capacity.¹⁷⁴

Section 201 punishes bribery with imprisonment for up to 15 years, a fine of up to $250,000 (up to $500,000 for an organization), and disqualification from future federal office or employment.¹⁷⁵ Section 201 is a RICO predicate offense and consequently also a money laundering predicate offense.¹⁷⁶ The proceeds of a bribe in violation of Section 201 are subject to forfeiture under either civil or criminal procedure.¹⁷⁷

Bribery Related to Federal Programs

Section 666 outlaws bribes offered to, or solicited by, agents of any state, local, tribal, or private entity—that receives more than $10,000 in federal benefits—in relation to a transaction of $5,000 or more.¹⁷⁸ Agents are statutorily defined as "person[s] authorized to act on behalf of another person or a government and, in the case of an organization or government, includes a servant or employee, and a partner, director, officer, manager, and representative."¹⁷⁹ "Where the bribe-giver receives an intangible benefit, the bribe amount may be used as a proxy to stand for the value of the business or transaction."¹⁸⁰ The circuits appear divided over whether the government must establish a quid pro quo as in a Section 201 bribery case.¹⁸¹ The government, however, need not establish that the tainted transaction involves federal funds.¹⁸²

Violations of Section 666 are punishable by imprisonment for not more than 10 years and a fine of not more than $250,000 (not more than $500,000 for organizations).¹⁸³ Section 666 offenses are money laundering predicate offenses.¹⁸⁴ Section 666 offenses are not among the RICO federal predicate offenses, although bribery in violation of state felony laws is a RICO predicate offense.¹⁸⁵ The proceeds of a bribe in violation of Section 666 are subject to forfeiture under either civil or criminal procedure.¹⁸⁶

Hobbs Act

The Hobbs Act, 18 U.S.C. 1951, outlaws obtaining the property of another under "color of official right," in a manner that has an effect on interstate commerce.¹⁸⁷ Conviction requires the government to prove that the defendant: "(1) was a government official; (2) who accepted property to which she was not entitled; (3) knowing that she was not entitled to the property; and (4) knowing that the payment was given in return for officials acts: (5) which had at least a de minimis effect on commerce."¹⁸⁸ Conviction does not require that the public official sought or induced payment, "the government need only show that a public official has obtained a payment to which he was not entitled, knowing that the payment was made in return for official acts."¹⁸⁹

Hobbs Act violations are punishable by imprisonment for not more than 20 years and a fine of not more than $250,000 (not more than $500,000 for an organization).¹⁹⁰ Hobbs Act violations are RICO predicate offenses and thus money laundering predicates as well.¹⁹¹ The proceeds of a Hobbs Act violation are subject to forfeiture under either civil or criminal procedure.¹⁹²

Foreign Corrupt Practices

The bribery provisions of the Foreign Corrupt Practices Act are three: 15 U.S.C. 78dd-1(trade practices by issuers), 78dd-2 (trade practices by domestic concerns), 78dd-3 (trade practices by others within the United States).¹⁹³ Other than the class of potential defendants, the elements of the three are comparable. They "make[] it a crime to: (1) willfully; (2) make use of the mail or any means or instrumentality of interstate commerce; (3) corruptly; (4) in furtherance of an offer, payment, promise to pay, or authorization of the payment of any money, or offer, gift, promise to give, or authorization of the giving of anything of value to; (5) any foreign official; (6) for purposes of [either] influencing any act or decision of such foreign official in his official capacity [or] inducing such foreign official to do or omit to do any act in violation of the lawful duty of such official [or] securing any improper advantage; (7) in order to assist such [corporation] in obtaining or retaining business for or with, or directing business to, any person."¹⁹⁴

None of the three proscriptions apply to payments "to expedite or to secure the performance of a routine governmental action,"¹⁹⁵ and each affords defendants an affirmative defense for payments that are lawful under the applicable foreign law or regulation.¹⁹⁶

Violations are punishable by imprisonment for not more than five years and by a fine of not more than $100,000 (not more than $2 million for organizations).¹⁹⁷ Foreign Corrupt Practices Act violations are not RICO predicate offenses,¹⁹⁸ but they are money laundering predicates.¹⁹⁹ The proceeds of a violation are subject to forfeiture under either civil or criminal procedure.²⁰⁰

Medicare Kickbacks

The Medicare/Medicaid kickback prohibition in 42 U.S.C. 1320a-7b(b)²⁰¹ outlaws "knowingly and willfully [offering or paying], soliciting [or] receiving, any remuneration (including any kickback) ... to induce the referral of[, or the purchase with respect to] Medicare [or] Medicaid beneficiaries ... any item or service for which payment may be made in whole or in part under the Medicare [or] Medicaid programs.... 42 U.S.C Section 1320a-7b(b)[(1), ](2)."²⁰²

Violations are punishable by imprisonment for not more than five years and by a fine of not more than $25,000. Section 1320a-7b kickback violations are money laundering, but not RICO, predicate offenses.²⁰³ The proceeds of a violation are subject to forfeiture under either civil or criminal procedure.²⁰⁴

18 U.S.C. 1341. Frauds and swindles (text)

18 U.S.C. 1343. Fraud by wire, radio, or television (text)

Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than 20 years, or both. If the violation occurs in relation to, or involving any benefit authorized, transported, transmitted, transferred, disbursed, or paid in connection with, a presidentially declared major disaster or emergency (as those terms are defined in Section 102 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5122)), or affects a financial institution, such person shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.

Footnotes

18 U.S.C. 1341(mail fraud), 1343(wire fraud).

18 U.S.C. 1346.

Act of July 16, 1952, ch. 879, §18(a), 66 Stat. 722 (1952).

E.g., United States v. Daniel, 749 F.3d 608, 613 (7^th Cir. 2014)("Wire fraud under §1343 requires the government to prove beyond a reasonable doubt that Daniel: (1) participated in a scheme to defraud, (2) intended to defraud, and (3) used interstate wires in furtherance of the fraudulent scheme. The same elements must be proved to establish mail fraud under §1341, except that the United States mail system, rather than interstate wires, must have been used in furtherance of the fraud for the third element of the scheme"); United States v. Porter, 745 F.3d 1035, 1050, 1051 (10^th Cir. 2014)("The elements of federal mail fraud as defined in 18 U.S.C. §1341 are (1) a scheme or artifice to defraud or obtain property by means of false or fraudulent pretenses, representations, or promises, (2) an intent to defraud, and (3) use of the mails to execute the scheme.... To convict a defendant of wire fraud under 18 U.S.C. §1343, the government must show (1) a scheme or artifice to defraud or obtain property by means of false or fraudulent pretenses, representations, or promises, (2) an intent to defraud, and (3) use of interstate wire ... communications to execute the scheme"); United States v. Simpson, 741 F.3d 539, 547-48 (5^th Cir. 2014)("The elements of mail fraud under 18 U.S.C. §1341 are: (1) a scheme to defraud; (2) use of the mails to execute the scheme; and (3) the specific intent to defraud. The elements of wire fraud under 18 U.S.C. §1343 are: (1) a scheme to defraud and (2) use of, or causing the use of, wire communications in furtherance of the scheme").

18 U.S.C. 1343.

18 U.S.C. 1341.

United States v. Vilar, 729 F.3d 62, 95 (2d Cir. 2013)("A scheme to defraud is not complete until the proceeds have been received and use of the mail or wires to obtain the proceeds satisfies the jurisdictional element, which is to say that the jurisdictional element is fulfilled when the defendant uses the mail or wires to convert the money to his own use").

18 U.S.C. 1346.

United States v. Rodriguez, 732 F.3d 1299, 1303 (11^th Cir. 2013)(acknowledging that "'puffing' or 'sellers' talk' is not a crime under federal fraud statutes").

United States v. Jenkins, 633 F.3d 788, 802 n.3 (9^th Cir. 2011)(parenthetical indications omitted); United States v. Sharp, 749 F.3d 1267, 1279 (10^th Cir. 2014); United States v. Seidling, 737 F.3d 1155, 1160 (7^th Cir. 2013); United States v. Wetherald, 636 F.3d 1315, 1324 (11^th Cir. 2011); United States v. Radley, 632 F.3d 177, 185 (5^th Cir. 2011); United States v. Weldon, 606 F.3d 912, 918 (6^th Cir. 2010).

United States v. Seidling, 737 F.3d at 1161("[T]his Court does not interpret the mail fraud statute as requiring convergence between the misrepresentations and the defrauded victims"), citing decisions from the First, Fifth, Eighth and Tenth Circuits in accord.

United States v. White, 737 F.3d 1121, 1130 (7^th Cir. 2013); see also, United States v. Imo, 739 F.3d 226, 236 (5^th Cir. 2014).

18 U.S.C. 1341, 1343.

18 U.S.C. 1346.

Skilling v. United States, 561 U.S. 358, 368 (2010); United States v. McDonough, 727 F.3d 143, 152 (1^st Cir. 2013); United States v. Garrido, 713 F.3d 985, 993-94 (9^th Cir. 2013); United States v. Botti, 711 F.3d 299, 310 (2d Cir. 2013).

18 U.S.C. 2(a)("Whoever commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal"); 18 U.S.C. 1349("Any person who attempts or conspires to commit any offense under this chapter shall be subject to the same penalties as those prescribed rot he offense, the commission of which was the object of the attempt or conspiracy").

Pinkerton v. United States, 328 U.S. 640, 647 (1946); United States v. Rodriguez, 751 F.3d 1244, 1256 (11^th Cir. 2014); United States v. Ortega, 750 F.3d 1020, 1024 (8^th Cir. 2014); United States v. Ocasio, 750 F.3d 399, 408-409 (4^th Cir. 2014).

Smith v. United States, 133 S.Ct. 714, 718 (2013)("Upon joining a criminal conspiracy, a defendant's membership in the ongoing unlawful scheme continues until he withdraws"); see also, United States v. Ortega, 750 F.3d 1020, 1024 (8^th Cir. 2014)("A defendant is liable for the reasonably foreseeable actions taken by coconspirators in furtherance of the conspiracy unless he affirmatively withdraws from the conspiracy. To establish withdrawal from a conspiracy, the defendant has the burden to demonstrate that he took affirmative action by making a clean breast to the authorities or by communicating his withdrawal in a manner reasonably calculated to reach his coconspirators"); United States v. Vallone, 752 F.3d 690, 696-97 (7^th Cir. 2014); United States v. Mandell, 752 F.3d 544, 552 (2d Cir. 2014).

18 U.S.C. 1349.

United States v. Anderson, 747 F.3d 51, 73 (2d Cir. 2014); United States v. Muratovic, 719 F.3d 809, 815 (7^th Cir. 2013); United States v. Gordon, 710 F.3d 1124, 1150 (10^th Cir. 2013).

U.S.S.G. ch.5A, Sentencing Table.

Id.

Id.

U.S.S.G. §§5E1.2, 8C12.4.

18 U.S.C. 3561, 3581(b).

Gall v. United States, 552 U.S. 38, 51 (2007); United States v. Smith, 749 F.3d 465, 484 (6^th Cir. 2014)("Procedural reasonableness turns on whether the district court: (1) properly calculated the applicable advisory Guidelines range; (2) considered the other §3553(a) factors as well as the parties' arguments for a sentence outside the Guidelines range; and (3) adequately articulated its reasoning for imposing the particular sentence chosen"); United States v. Schlueter, 634 F.3d 965, 967 (7^th Cir. 2013); United States v. Christensen, 732 F.3d 1094, 1100 (9^th Cir. 2013); United States v. Corsey, 723 F.3d 366, 374 (2d Cir. 2013).

Gall v. United States, 552 U.S. at 51; United States v. Smith, 749 F.3d at 486 ("For a sentence to be substantively reasonable, it must be proportionate to the seriousness of the circumstances of the offense and offender, and sufficient but not greater than necessary, to comply with the purposes of §3553(a).... A sentence will be found substantively unreasonable when the district court selects a sentence arbitrarily, bases the sentence on impermissible factors, fails to consider relevant sentencing factors, or gives an unreasonable amount of weight to any pertinent factor"); United States v. Huston, 744 F.3d 589, 593 (8^th Cir. 2014)("A within-range sentence is presumptively [substantively] reasonable"); United States v. White, 737 F.3d 1121, 1145 (7^th Cir. 2013).

18 U.S.C. 3583(d).

18 U.S.C. 3583(d), 3563(a)(5).

U.S.S.G. §5D1.3(a), (c).

U.S.S.G. §5D1.3(a)(5), (6); see e.g., United States v. Moschella,727 F.3d 888, 893-94 (9^th Cir. 2013)(upholding payment of restitution as a condition of supervised release).

18 U.S.C. 3013(a)(2), 3559, 1341, 1343.

United States v. Smith, 749 F.3d 465, 488 (6^th Cir. 2014)("Criminal forfeiture judgments are mandatory for mail fraud convictions. See 18 U.S.C. 982(A)(2)"); United States v. Simpson, 741 F.3d 539, 560 (5^th Cir. 2014)("The amount of forfeiture is statutorily defined as any property traceable to gross proceeds of the wire or mail fraud offenses. See 18 U.S.C. 981(a)(1)(D). By statute, the court 'shall order' the forfeiture of the property as part of the sentence if the defendant is found guilty of the offense"); see generally, CRS Report 97-139, Crime and Forfeiture, by [author name scrubbed].

E.g., 18 U.S.C. 983.

E.g., 18 U.S.C. 982.

United States v. Taylor, 582 F.3d 558, 565 (5^th Cir. 2009)(rejecting the contention that civil forfeiture under 981(a)(1)(C), 1956(c)(7)(A), and 1961(1) is limited to cases in which a RICO (18 U.S.C. 1962) violation is shown).

28 U.S.C. 2461(c).

In re Classicstar Mare Leasing Litigation, 727 F.3d 473, 483 (6^th Cir. 2013), citing, Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496 (1985); United States v. Nieto, 721 F.3d 357, 365-66 (5^th Cir.2013); Cruz v. FXDirectDealer, LLC, 720 F.3d 115, 120 (2d Cir. 2013). A RICO civil cause action also requires a plaintiff to show that the RICO violation resulted in an injury to his business or property, 18 U.S.C. 1964(c); Cruz v. FXDirectDealer, LLC, 720 F.3d at 120.

18 U.S.C. 1961(1)(B); e.g., United States v. Harris, 695 F.3d 1125, 129-130 (10^th Cir. 2012); United States v. Teel, 691 F.3d 578, 581 (5^th Cir. 2012).

Reves v. Ernst & Young, 507 U.S. at 183-85.

18 U.S.C. 1961(4).

18 U.S.C. 1962(c).

18 U.S.C. 1963(a), 3571.

18 U.S.C. 1963(a), (b).

18 U.S.C. 1956(c)(7)(A).

18 U.S.C. 1964(c).

18 U.S.C. 1956(c)(7)(A), 1961(1)(B).

18 U.S.C. 1956(a)(1).

18 U.S.C. 981(a)(1)(A); 982(a)(1).

18 U.S.C. 1957(f)(3).

18 U.S.C. 1957(b), 3571.

18 U.S.C. 981(a)(1)(A), 982(a)(1).

18 U.S.C. 287, 351, and 1001, respectively.

18 U.S.C. 1344, 1347, 1348, and 1351, respectively.

18 U.S.C. 287.

18 U.S.C. 287, 3571.

18 U.S.C. 3663A(c)(1)(A)(ii).

Cf., 18 U.S.C. 981, 982.

United States v. Coplan, 703 F.3d 46, 60-61 (2d Cir. 2012); United States v. Meredith, 685 F.3d 814, 822 (9^th Cir. 2012); United States v. Whiteford, 676 F.3d 348, 356 (3d Cir. 2012).

18 U.S.C. 371.

Cf., 18 U.S.C. 981, 982.

31 U.S.C. 3729-3733.

See generally, Twenty-Eighth Annual Survey of White Collar Crime; Financial Institution Fraud, 50 American Criminal Law Review 1023 (2013).

See e.g., United States v. Davis, 735 F.3d 194, 199, 201-202 (5^th Cir. 2013)("In addressing Davis's challenge to the sufficiency of the evidence on the financial-institution element, we set foot on well-trodden terrain. This court has admonished the government to exercise care in satisfying its burden of proving the financial-institution element in prosecuting bank fraud and other bank-related offenses, lest it suffer a reversed conviction on a seeming technicality.... We conclude that the government's evidence was not sufficient to prove a depository institution holding company theory of the financial-institution element.... We do not reach this conclusion lightly, particularly given the government's strong proof as to Davis's conduct relating to other of the elements of the bank-fraud offenses. We can only note, as we have previously, that greater attention to this issue at trial would advance the efficient and fair administration of criminal justice); United States v. Colon-Rodriguez, 696 F.3d at 106 ("No rational jury could have concluded that the government proved the [financial institution] element[] beyond a reasonable doubt. As the government has conceded, it offered no evidence that the FSA qualified as a 'financial institution' at the time of the offense conduct in this case.... Accordingly, Colon's conviction ... must be reversed").

18 U.S.C. 1344.

18 U.S.C. 1961(1), 1956(c)(7)(A).

18 U.S.C. 3663A(c)(1)(A)(ii).

18 U.S.C. 981(a)(1)(C), 982(a)(2)(A).

18 U.S.C. 1347(a); United States v. Willett, 751 F.3d 335, 339 (5^th Cir. 2014).

United States v. Rufai, 732 F.3d 1175, 1190 (10^th Cir. 2013).

18 U.S.C. 1347(b); United States v. Imo, 739 F.3d 226, 236 (5^th Cir. 2014).

18 U.S.C. 1347(a).

18 U.S.C. 1348.

18 U.S.C. 1348.

Cf., 18 U.S.C. 1961(1), 1956(c)(7).

18 U.S.C. 3663A(c)(1)(A)(ii).

Cf., 18 U.S.C. 1348, 981, 982.

18 U.S.C. 1961(1)(B), 1956(c)(7)(A).

18 U.S.C. 3663A(c)(1)(A)(ii).

Cf., 18 U.S.C. 1351, 981, 982.

18 U.S.C. 201(b), 3571.

18 U.S.C. 666(d)(1).

18 U.S.C. 666(a), 3571.

18 U.S.C. 1956(c)(7)(D).

18 U.S.C. 1961(1).

18 U.S.C. 981(a)(1)(C), 1956(c)(7)(A); 28 U.S.C. 2461(c).

18 U.S.C. 1951("(a) Whoever in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by ... extortion or attempts or conspires so to do ... shall be fined under this title or imprisoned not more than twenty years, or both. (b) As used in this section ... (2) The term 'extortion' means the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right ...").

18 U.S.C. 1951, 3571.

18 U.S.C. 1961(1)(B), 1956(c)(7)(A).

Cf., 18 U.S.C. 1961(1).

18 U.S.C. 1956(c)(7)(D).

18 U.S.C. 981(a)(1)(C), 1956(c)(7)(E); 28 U.S.C. 2461(c).