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The mail and wire fraud statutes are exceptionally broad. Their scope has occasionally given the courts pause. Nevertheless, prosecutions in their name have brought to an end schemes that have bilked victims out of millions, and sometimes billions, of dollars. The statutes proscribe (1) causing the use of the mail or wire communications, including email; (2) in conjunction with a scheme to intentionally defraud another of money or property; (3) by means of a material deception. The offenses, along with attempts or conspiracies to commit them, carry a term of imprisonment of up to 30 years in some cases, followed by a term of supervised release. Offenders also face the prospect of fines, orders to make restitution, and forfeiture of their property.
The mail and wire fraud statutes overlap with a surprising number of other federal criminal statutes. Conduct that supports a prosecution under the mail or wire fraud statutes will often support prosecution under one or more other criminal provision(s). These companion offenses include (1) those that use mail or wire fraud as an element of a separate offense, like racketeering or money laundering; (2) those that condemn fraud on some jurisdictional basis other than use of the mail or wire communications, like those that outlaw defrauding the federal government or federally insured banks; and (3) those that proscribe other deprivations of honest services (i.e., bribery and kickbacks), like the statutes that ban bribery of federal officials or in connection with federal programs.
Among the crimes for which mail or wire fraud may serve as an element, RICO (Racketeer Influenced and Corrupt Organizations Act) outlaws employing the patterned commission of predicate offenses to conduct the affairs of an enterprise that impacts commerce. Money laundering consists of transactions involving the proceeds of a predicate offense in order to launder them or to promote further predicate offenses.
The statutes that prohibit fraud in some form or another are the most diverse of the mail and wire fraud companions. Congress modeled some after the mail and wire fraud statutes, incorporating elements of a scheme to defraud or obtain property by false pretenses into statutes that outlaw bank fraud, health care fraud, securities fraud, and foreign labor contracting fraud. Congress designed others to protect the public fisc by proscribing false claims against the United States, conspiracies to defraud the United States by obstructing its functions, and false statements in matters within the jurisdiction of the United States and its departments and agencies.
Federal bribery and kickback statutes populate the third class of wire and mail fraud companions. One provision bans offering or accepting a thing of value in exchange for the performance or forbearance of a federal official act. Another condemns bribery of faithless agents in connection with federally funded programs and activities. A third, the Hobbs Act, outlaws bribery as a form of extortion under the color of official right.
The fines, prison sentences, and other consequences that follow conviction for wire and mail fraud companions vary considerably, with fines from not more than $25,000 to not more than $2 million and prison terms from not more than five years to life.
Some time ago, a federal prosecutor referred to the mail and wire fraud statutes as "our Stradivarius, our Colt 45, our Louisville Slugger … and our true love." Not everyone shares the prosecutor's delight. Commentators have argued that the statutes "have long provided prosecutors with a means by which to salvage a modest, but dubious, victory from investigations that essentially proved unfruitful." Federal judges have also expressed concern from time to time, observing that the "mail and wire fraud statutes have 'been invoked to impose criminal penalties upon a staggeringly broad swath of behavior,' creating uncertainty in business negotiations and challenges to due process and federalism." Nevertheless, mail and wire fraud prosecutions have brought to an end schemes that bilked victims of millions, and sometimes billions, of dollars.
It is a federal crime to devise a scheme to defraud another of property, when either mail or wire communications are used in furtherance of the scheme, 18 U.S.C. 1341, 1343. Mail or wire fraud includes schemes to defraud another of honest services, when the scheme involves bribery or a kick back, 18 U.S.C. 1346; Skilling v. United States, 130 S.Ct. 2896 (2010). In order to convict, the government must prove beyond a reasonable doubt that the defendant (1) used 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.
Offenders face the prospect of imprisonment for not more than 20 years, a fine of not more than $250,000 (not more than $500,000 for organizations), an order to pay victim restitution, and the confiscation of any property realized from the offense.
Misconduct that constitutes mail or wire fraud may also constitute a violation of one or more other federal crimes. Principal among these are predicate offense crimes, frauds based on jurisdictional factors other than use of mail or wire communications, and other honest services frauds in the form of bribery or kickbacks. The other federal bribery and kickback offenses include bribery of public officials, federal program bribery, extortion under color of official right, and Medicare/Medicaid kickbacks. Mail and wire fraud are money laundering and racketeering predicate offenses. Numbered among the fraud offenses based on other jurisdiction grounds are the false claims and false statement offenses, bank fraud, health care fraud, securities fraud, and foreign labor contracting fraud.
This is an abridged version of CRS Report R41930, Mail and Wire Fraud: A Brief Overview of Federal Criminal Law, by [author name scrubbed], without the footnotes, appendix, quotation marks, or citations to authority found in the longer version. Related CRS reports include CRS Report R40852, Deprivation of Honest Services as a Basis for Federal Mail and Wire Fraud Convictions, by [author name scrubbed].
The federal mail and wire fraud statutes outlaw schemes to defraud that involve the use of mail or wire communications. 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 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. 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. As treatment of the individual elements makes clear, however, there seems little dispute that conviction requires the government to prove:
Use, (3) involving a material deception.
Use of Mail or Wire Communications:
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[a] ... scheme or artifice." The mail fraud statute is similarly worded and applies to anyone who "... for the purpose of executing a scheme or artifice causes use of the mails.[a] ... scheme or artifice ... places in any post office ... or causes to be delivered by mail ... any ... matter."
The statutes require that a mailing or wire communication be in furtherance of a scheme to defraud. ItThe mailing or communication need not be an essential element of the scheme, as long as it "is incident to an essential element of the scheme." A qualifying mailing or communication, standing alone, may be routine, innocent, or even self-defeating, because the"[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." The element may also 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." The element may also be satisfied by mailings or wire communications used to obtain the property whichthat is the object of the fraud.
A defendant need not personally have mailed or wired a communication; it is enough that he caused"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.
Scheme to Defraud:
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," or to deprive another of the right to honest services by such means. 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. More recently, it added Section18 U.S.C. § 1346 to make it clear the term "scheme to defraud" encompassed schemes to defraud another of the right to honest services. 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.'"
As a general rule, the crime is done when the scheme is hatched and an attendant mailing or interstate phone call or email has occurred. Thus, the statutes are said to condemn a scheme to defraud regardless of its success
The statutes condemn schemes to defraud—both the successful and the unsuccessful. 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. 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. 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. In any event, the question may be more clearly present" Even a casual reading, however, might suggest that the statutes also cover a scheme specifically designed to deceive a naïve victim. Nevertheless, the courts have long acknowledged the possibility of a "puffing" defense, and there may be some question whether the statutes reach those schemes designed to deceive the gullible though they could not ensnare the reasonably prudent. In any event, the question may be more clearly presented in the context of the defendant's intent and the materiality of the deception, matters discussed below.
Defrauding or to Obtain Money or Property. The mail and wire fraud statutes speak of schemes to defraud or to obtain money or property by means of false or fraudulent pretenses. The Supreme Court has said that the phrase "to defraud" and the phrase "to obtain money or property" do not represent separate crimes, but instead the phrase "obtain money or property" describes what constitutes a scheme to defraud. In later look-alike offenses, Congress specifically numerated the two phrases. The bank fraud statute, for example, applies to "whoever knowingly executes … a scheme or artifice – (1) to defraud a financial institution; or (2) to obtain any of the money, funds, credits, assets, securities, or other property owned by … a financial institution, by means of false or fraudulent pretenses …" It left the mail and wire fraud statutes, however, unchanged. The mail and wire fraud statutes clearly protect against deprivations of tangible property. They also protect certain intangible property rights, but only those that have value in the hands of the victim of a scheme. "To determine whether a particular interest is property for purposes of the fraud statutes, [courts] look to whether the law traditionally has recognized and enforced it as a property right." Materiality: Neither the mail nor the wire fraud statute include aa focus on the scheme's creator rather than its victim.
require"require[] a misrepresentation or concealment of a material fact. 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.
Again, other than in the case of honest services, "'intent to defraud' requires an intent to (1) deceive, and (2) cause some harm to result from the deceit. A defendant acts with the intent to deceive when he acts knowingly with the specific intent to deceive for the purpose of causing pecuniary loss to another or bringing about some financial gain to himself." Intent: 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. [a] material fact." Thus, other than in an honest services context, a "scheme to defraud" for mail or wire fraud purposes must involve a material misrepresentation of some kind. "A misrepresentation is material if it is capable of influencing the intended victim."
Intent
in good faith. A defendant has no such defense, however,under circumstances that belie an intent to defraud. Yet, a defendant has no defense if he blinds himself to the truth. Nor is it a defense if he intends to deceive but feels his victim will ultimately profit or be unharmed.
Money, Property, or Honest Services: The mail and wire fraud statutes speak of schemes to defraud or to obtain money or property. They clearly protect against deprivations of tangible property. Their protection of intangibles has not always been as clear. They do protect intangible property rights, although they do not apply to certain intangible rights in property that have no value in the hands of the victim of a scheme.
Some time ago, the Supreme Court held in McNally v. United States that the protection doesHonest Services
Some time ago, the Supreme Court held in McNally v. United States that the protection of the mail fraud statute, and by implication the protection of the wire fraud statute, did not extend to "the intangible right of the citizenry to good government." Soon after McNally, Congress enlarged the mail and wire fraud statute coverageprotection to include the intangible right to honest services, by defining the "term "'scheme or artifice to defraud" to' [to] include[s] a scheme or artifice to deprive another of the intangible right to honest services." Lest the expanded definition be found unconstitutionally vague, the Court in Skilling v. United States limited its application to cases of bribery or kickbacks.
The definition of the word "kickback" quoted by the Court in Skilling has since been reassigned, and the courts have cited the dictionary definition on occasion.
Except for the elements of a scheme to defraud in the form of a bribe and a kickback, honest services fraud, as an adjunct of the mail and wire fraud statutes, draws its elements and the sanctions that attend the offense from the mail and wire fraud statutes.
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. "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."
"Conspiracy to commit wire fraud under 18 U.S.C. § 1349 requires a jury to find that (1) two or more persons agreed to commit wire fraud and (2) the defendant willfully joined the conspiracy with the intent to further its unlawful purpose."
To prove conspiracy to commit either wire or mail fraud, the government must establish that (1) two or more persons, directly or indirectly, reached an agreement to devise and execute a scheme to defraud; (2) the defendant knew the unlawful purpose of the agreement; and (3) the defendant joined in the agreement willfully, that is, with the intent to further the unlawful purpose. Most appellate courts do not list an overt act requirement among the elements of the offense, although the Sixth Circuit identifies it as a necessary element. The offense is complete upon agreement without the necessity of an overt act committed in its furtherance. As a general rule, a conspirator is liable for any other offenses that a co-conspirator commits in the foreseeable furtherance of the conspiracy. Such liability, however, extends only until the objectives of the conspiracy have been accomplished or the defendant has withdrawn from the conspiracy.
Where attempt has been made a separate offense, as it has for mail and wire fraud, conviction ordinarily requires that the defendant commit a substantial step towardstoward the completion of the underlying offense with the intent to commit it. It does not, however, require the attempt to have been successful. Unlike conspiracy, a defendant may not be convicted of both the substantive offense and the lesser included crime of attempt to commit it.
A mailMail and wire fraud are each 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. Conviction may also result in probation, a term of supervised release, a special assessment, a restitution order, and/or a forfeiture order.
Supervised Release and Special Assessments. Supervised release is a form of parole-like supervision imposed after a term of imprisonment has been served. Although imposition of a term of supervised release is discretionary in mail and wire fraud cases, the Sentencing Guidelines recommend its imposition in all felony cases. 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-year maximum term of imprisonment. 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). 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. The court may suspend the drug testing condition, 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. Most courts will impose a standard series of conditions in addition to the mandatory condition of supervised release. The Sentencing Guidelines recommend that these include the payment of any fines, restitution, and special assessments that remain unsatisfied. Defendants convicted of mail or wire fraud must pay a special assessment of $100. Restitution:It is also subject to a mandatory minimum two-year term of imprisonment if identify theft is used during and in furtherance of the fraud. Conviction may also result in (1) probation, (2) a term of supervised release, (3) a special assessment, (4) a restitution order, and/or (5) a forfeiture order.
patternspattern 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."
Forfeiture:. Property that constitutes the proceeds of mail or wire fraud is subject to confiscation by the United States. It may be confiscated pursuant to either civil forfeiture or criminal forfeiture procedures. Civil forfeiture proceedings are conducted treating the property itself that treat the forfeitable property as the defendant. Criminal forfeiture proceedings are conducted as part of the criminal prosecution of the property owner. 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.
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 offenseselements ("predicate offenses") of another offense; (2) fraud proscribed under jurisdictional circumstances other than mail or wire use; and (3) honest services fraud in the form of bribery or kick backskickbacks.
Predicate Offense Crimes:
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 offensethe commission of a pattern of predicate offenses to operate a racketeering enterprise. Mail and wire fraud are predicate racketeering and money laundering predicate offenses.
RICO: The Racketeering. The Racketeer Influenced and Corrupt OrganizationOrganizations (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. The elements under the more commonly prosecuted conduct prongracketeering-conduct and conspiracy-to-engage-in-racketeering-conduct appear to be the RICO offenses most often built on wire or mail fraud violations. The elements of the RICO conduct offense are (1) conducting the affairs; (2) of an enterprise; (3) engaged in activities in or that impact interstate or foreign commerce; (4) through a pattern; (45) of racketeering activity. "Racketeering activity" means, among other things, any act whichthat is indictable under either the mail or wire fraud statutes. As for pattern, a RICO pattern "requires at least two acts of racketeering activity. The racketeering predicates may establish a pattern if they [were] related and … amounted to, or threatened the likelihood of, continued criminal activity.'" 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. "Congress did not intend to extend RICO liability … beyond those who participated in the operation and management of an enterprise through a pattern of racketeering activity." Nevertheless, "liability under § 1962(c) is not limited to upper management … An enterprise is operated not just by upper management but also by lower rung participants." is indictable under either the mail or wire fraud statutes. 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.
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. The element is not satisfied unless one has participated in the operation or management of the enterprise itself. 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.
The enterprise may be either any group of individuals, any legal entity, or any group "associated in fact." An enterprise "associated in fact""Nevertheless, 'an association-in-fact enterprise must have at least three structural elementsfeatures: a purpose, relationships among those associated with the enterprise, and longevity sufficient to permit thesethose associates to pursue the enterprise's purpose. Qualified'" Moreover, qualified enterprises are only those that "engaged in, or the activities of which affect, interstate or foreign commerce.
RICO violations are punishable by imprisonment" Penalties: Imprisonment for not more than 20 years and a fine of not more than $250,000 (not more than $500,000 for organizations). The crime is one for which restitution must be ordered when one of the predicate offenses is mail or wire fraud. RICO has one of the first contemporary forfeiture provisions covering property and interests acquired through RICO violations. As noted earlier, any RICO predicate offense is by virtue of that fact a money laundering predicate. Victims enjoy a cause of action for treble damages when injured in their business or property by reason of a RICO violation.
Money Laundering:
Money Laundering. Mail and wire fraud are both money laundering predicate offenses, as well. Among other things, the by virtue of their status as RICO predicates. The most commonly prosecuted federal money laundering statute, 18 U.S.C. §1956, outlaws, among other things, knowingly engaging in a financial transaction involving the proceedings ofproceeds generated by a "specified unlawful activity" (a predicate offense) for the purpose (1) of laundering the such proceedsproceeds (i.e., concealing their source or ownership), or (2) of promoting further predicating offenses.
To establish the laundering or concealment offense, the government must establish that "(1) the[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[the] defendant knew the property represented proceeds of some form of unlawful activity, [such as mail or wire fraud]; and (4) [the]; 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.
To prove the promotional offense, "the Government must showthe government must demonstrate that the defendant: (1) conducted or attempted to conduct a financial transaction; (2) which the defendant then knew involved the (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(3) with the intent to promote thator further unlawful activity.
" Nothing in either provision suggests that the defendant must be shown to have committed the predicate offense. YetMoreover, 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.
Either offense is punishable by imprisonmentPenalties: Imprisonment for not more than 20 years and a fine of not more than $500,000. Property involved in a transaction in violation of Section 1956 is subject to civil and criminal forfeiture.
Merely depositing the proceeds of a money laundering predicate offense does not alone constitute a violation of Section 1956. It is enough for a violation of Section 1957, 18 U.S.C. § 1957, however, if more than $10,000 is involved. Section 1957 uses Section 1956's definition of specified unlawful activities. Thus, mail and wire fraud are predicate offenses for purposes of Section 1957. violations may serve as the basis for the prosecution under Section 1957. "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.
Violations are punishable by imprisonment" Penalties: Imprisonment for not more than 10 years and a fine of not more than $250,000 (not more than $500,000) for organizations. The property involved in a violation is subject to forfeiture under either civil or criminal procedures.
Fraud Under Other Jurisdictional Circumstances:
This category includes the offenses that were made federal crimes because they involve fraud against the United States, as well as the or because they are other frauds that share chapter 63elements with the mail and wire fraud sections. The most prominent are the proscriptions against defrauding the United States by submittingthe submission of false claims, conspiracy to defraud the United States, and material false statements in matters within the jurisdiction of the United States. Bank fraud, health care fraud, securities and commodities fraud, and fraud in foreign labor contracting are all chapterChapter 63 companions of mail and wire fraud.
Defrauding the United States—False claims:
Claims. Section 287 outlaws the knowing submission of a false claim against the United States, 18 U.S.C. 287. To sustain a conviction under §287. "To prove a false claim, the government must prove that (1) [the defendant] 'made and presented' to the government a claim, (2) 'the claim was false, fictitious, or fraudulent,' (3) [the defendant] knew the claim was false, fictitious, or fraudulent, and (4) 'the claim was material' to the government." Penalties: Imprisonment(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. 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). The crime is one for which restitution must be ordered. There is no explicit authority for confiscation of property tainted by the offense, but either a private individual or the government may bring a civil action for treble damages. It is neither a RICO nor a money laundering predicate offense.
Conspiracy to defraud
Conspiracy to Defraud the United States. the U.S.: The general conspiracy statute, 18 U.S.C. 371, has two parts. It outlaws conspiracies to violate the laws of the United States. More relevant here, it also outlaws conspiracies to defraud the United States. "To convict on a charge under the 'defraud' clause, the government must show that the defendant (1) entered into an agreement (2) to obstruct a lawful government function (3) by deceitful or dishonest means and (4) committed at least one overt act in furtherance of the conspiracy." Thus, theTo 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. 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." 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.
Conspiracy to defraud the United States is punishable by imprisonment Penalties: Imprisonment for not more than five years and a fine of not more than $250,000 (not more than $500,000 for organizations). It is neither a RICO nor a money laundering predicate offense. It is an offense for which restitution must be ordered. There is no explicit authority for confiscation of property tainted by the offense.
False statements:
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, 18 U.S.C. 1001. 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. A matter is within the jurisdiction of a federal entity "when it has the power to exercise authority in a particular matter" and federal jurisdiction " and may exist when false statements [are] made to state or local government agencies receiving federal support or subject to federal regulation." Penalties: Imprisonment
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). It is neither a RICO nor a money laundering predicate offense. It is an offense for which restitution must be ordered. 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. 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.
Fraud Elsewhere in Chapter 63:
Fraud Elsewhere in Chapter 63. Chapter 63 contains four other fraud proscriptions in addition to mail and wire fraud: bank fraud (18 U.S.C. 1344), health care fraud (18 U.S.C. 1347), securities and commodities fraud (18 U.S.C. 1348), and fraud in foreign labor contracting (18 U.S.C. 1351), health care fraud, securities and commodities fraud, and fraud in foreign labor contracting. Each relies on a jurisdictional base other than use of the mail or wire communications.
Bank Fraud:. The bank fraud statute outlaws schemes to (1)(1) schemes to defraud a federally insured financial institution, or (2) and (2) schemes to falsely obtain property from such an institution. To establish the bank-property scheme to defraud offense, "the Governmentthe government must prove: (1) the defendant knowingly executed or attempted to execute a scheme or artifice to defraud a financial institution; (2) the defendant haddid so with the intent to defraud a financial institution; and (3) the bank involvedfinancial institution was federally insured.
To establish the "falsely obtain" violation, the government must show that (1) prove (1) that a scheme existed to obtain moneymoneys, funds, or credit in the custody or control of a federally insured financial institution; (2) -insured bank by fraud; (2) that the defendant participated in the scheme by means of a material false pretenses, representations, or promises; and (3) that the defendant acted knowingly.
Health Care Fraud. The health care fraud provision follows the pattern of other Chapter 63 offenses. It condemns schemes to defraud. The schemes it proscribes include honest services fraud in the form of bribery and kickbacks. Attempts and conspiracies to violate its prohibitions carry the same penalties as the complete offense it describes. It is often prosecuted along with other related offenses. Parsed to its elements, the section declares, "[a] Whoever [b] knowingly and willfully [c] executes or attempts to execute [d] a scheme or artifice (1) to defraud any health care benefit program, or (2) to obtain, by means of false or fraudulent pretenses, representations, or promises, any money or property owned by, or under the custody or control of, any health care benefit program [e] in connection with the delivery of or payment for health care benefits, items, or services shall be …" Penalties: A fine of not more than $250,000 (not more than $500,000 for organizations) and (1) if death results, imprisonment for life or any term of years; (2) if serious bodily injury results, imprisonment for 20 years; (3) otherwise, imprisonment for not more than 10 years. Securities and Commodities Fraud. Section 1348, the securities and commodities fraud prohibition, continues the progression of separating its defrauding feature from its obtaining-property feature. The elements of defrauding offense "are (1) fraudulent intent, (2) a scheme or artifice to defraud, and (3) a nexus with a security." To prove a violation of Section 1348(2), the government must establish that the defendant (1) executed, or attempted to execute, a scheme or artifice; (2) with fraudulent intent; (3) in order to obtain money or property; (4) by material false or fraudulent pretenses, representations, or promises. Penalties: Imprisonment for not more than 25 years and fines of not more than $250,000 (not more than $500,000 for organizations). Fraud in Foreign Labor Contracting. "The substantive offense of fraud in foreign labor contracting [under 18 U.S.C. § 1351] occurs when someone: (1) recruits, solicits, or hires a person outside the United States, or causes another person to do so, or attempts to do so; (2) does so by means of materially false or fraudulent pretenses, representations or promises regarding that employment; and (3) acts knowingly and with intent to defraud." The offense occurs outside the United States when related to a federal contract or U.S. presence abroad. Penalties: Imprisonment for not more than five years and a fine of not more than $250,000 (not more than $500,000 for an organization). After the Supreme Court's 2010 decision in Skilling v. United States, 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(b)(1) (bribery of federal 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 Federal Officials. Conviction for violation of Section 201(b)(1) "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." Violation of either offense is punishable by imprisonment" Penalties: Imprisonment for not more than 30 years and a fine of not more than $1 million.
Bank fraud is both a RICO and a money laundering predicate offense. Conviction also requires an order for victim restitution. Property constituting the proceeds of a violation is subject to forfeiture under either civil or criminal procedure.
Health Care Fraud: The health care fraud proscription in Section 1347 has two prongs as well. It outlaws knowingly and willfully executing 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. Construction of the two prongs mirrors the effort elsewhere, e.g., To obtain a conviction for health care fraud under 18 U.S.C. §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. 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, but it need show that the defendant knew of or intended to violation Section 1347 specifically.
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. If serious bodily injury results, however, the maximum penalty is increased to imprisonment for not more than 20 years, and to imprisonment for life or any term of years should death result. Section 1347 offenses are neither money laundering nor RICO predicate offenses. They do entitle the government to restitution, but not to forfeiture of any tainted property.
Securities and Commodities Fraud: The securities and commodities fraud prohibition in Section 1348 features the same two pronged approach. 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. 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.
Offenders face imprisonment for not more than 25 years and fines of not more than $250,000 (not more than $500,000 for organizations). The offense is neither a money laundering nor a RICO predicate offense. Victim restitution must be ordered upon conviction, but forfeiture is not authorized.
Fraud in Foreign Labor Contracting: The recently enacted fraud in foreign labor contracting section, 18 U.S.C. 1351, establishes a 5-year felony for various fraudulent overseas recruiting and hiring practices for work to be performed within the United States or under federal contracts abroad. The offense is a RICO predicate offense and consequently a money laundering predicate offense as well. A restitution order is required at sentencing, but forfeiture is not authorized.
Honest Services Fraud Elsewhere: 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.
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. 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. 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.
Section 201 punishes bribery with imprisonmentits departments or agencies. 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. Penalties: 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. Section 201 is a RICO predicate offense and consequently also a money laundering predicate offense. The proceeds of a bribe in violation of Section 201 are subject to forfeiture under either civil or criminal procedure.
Bribery .
Bribery and Fraud Related to Federal Programs:. Section 666 outlaws bribes offered to, or solicited by, agents of any both (1) fraud and (2) bribery by the faithless agents of state, local, tribal, or private entity—that receivesentities—that receive more than $10,000 in federal benefits—in relation to a transaction of $5,000 or more. Agents are statutorily defined as persons 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. 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. The circuits appear divided over whether the government must establish a quid pro quo as in a Section 201 bribery case. The government, however, need not establish that the tainted transaction involves federal funds.
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). Section 666 offenses are money laundering predicate offenses. Section 666 offenses are not among the RICO federal predicate offenses, although bribery in violation of state felony laws is a RICO predicate offense. The proceeds of a bribe in violation of Section 666 are subject to forfeiture under either civil or criminal procedure.
"A person is guilty under § 666[(a)(1)(B)] if he, being an agent of an organization, government, or governmental agency that receives federal-program funds, corruptly solicits or demands for the benefit of any person, or accepts or agrees to accept, anything of value from any person, intending to be influenced or rewarded in connection with any business, transaction, or series of transactions of such organization, government, or agency involving anything of value of $5,000 or more." Penalties: Imprisonment for not more than 10 years and a fine of not more than $250,000 (not more than $500,000 for organizations). Hobbs Act: The Hobbs Act, 18 U.S.C. "A violation of Section 666(a)(1)(A) requires proof of five elements. The government must prove that: (1) a defendant was an agent of an organization, government, or agency; (2) in a one-year period that organization, government, or agency received federal benefits in excess of $10,000; (3) a defendant … obtained by fraud … ; (4) … property owned by, or in the care, custody, or control of, the organization, government, or entity; and (5) the value of that property was at least $5,000."
, : "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. Hobbs Act violations are punishable by imprisonment" Penalties: Imprisonment for not more than 20 years and a fine of not more than $250,000 (not more than $500,000 for an organization). Hobbs Act violations are RICO predicate offenses and thus money laundering predicates as well. The proceeds of a Hobbs Act violation are subject to forfeiture under either civil or criminal procedure.
Foreign Corrupt Practices:
Foreign Corrupt Practices. The bribery provisions of the Foreign Corrupt Practices Act (FCPA) are three: 15 U.S.C. §§ 78dd-1(trade practices by issuers), 78dd-2 (trade practices by domestic concerns), and 78dd-3 (trade practices by others within the United States). Other than the class of potential defendants, the elements of the three are comparable. They make"make[] it a crime to: (1) willfully; (2) make use of the mailsmail 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[either] influencing any act or decision of such foreign official in his official capacity or[or] inducing such foreign official to do or omit to do any act in violation of the lawful duty of such official or[or] securing any improper advantage; (7) in order to assist such corporation[corporation] in obtaining or retaining business for or with, or directing business to, any person.
" None of the three proscriptions apply to payments "to expedite or to secure the performance of a routine governmental action," and each affords defendants an affirmative defense for payments that are lawful under the applicable foreign law or regulation. Violations are punishable by imprisonmentPenalties: Imprisonment for not more than five years and by a fine of not more than $100,000 (not more than $2 million for organizations). Foreign Corrupt Practices Act violations are not RICO predicate offenses, but they are money laundering predicates. The proceeds of a violation are subject to forfeiture under either civil or criminal procedure.
Medicare Kickbacks:
Medicare Kickbacks. The Medicare/Medicaid kickback prohibition in 42 U.S.C. 1320a-7b(b) outlaws "knowingly and willfully [offering or paying], soliciting, or [or] receiving, any remuneration (including any kickback) ... (A) to induce the referral of [, or (B) the purchase with respect to,] Medicare or[or] Medicaid beneficiaries ... any item or service for which payment may be made in whole or in part under the Medicare or[or] Medicaid programs. Violations are punishable by imprisonment..." Penalties: 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. The proceeds of a violation are subject to forfeiture under either civil or criminal procedure.
Author Contact Information
This is an abbreviated version of a longer report, CRS Report R41930, Mail and Wire Fraud: A Brief Overview of Federal Criminal Law, without the footnotes, citations to authority, or attribution for quotations, found in the longer version.