Wire fraud is a type of white-collar crime that involves the use of telecommunications technology to deceive victims or financial institutions. The purpose of wire fraud is to obtain money or property illegally. This type of crime can be committed in a number of ways, including by email, telephone, or the internet. In order to commit wire fraud, the perpetrator must first gain access to the victim’s financial information.
We will run through the definition of wire fraud in this article. We will also discuss how wire fraud is similar to mail fraud and look at examples of wire fraud accordingly.
Table of Contents
What Is Wire Fraud?
Wire fraud is a federal crime that involves the use of telecommunications technology to defraud individuals, businesses, or other organizations. It’s similar to mail fraud, and the same federal law covers both. However, the means of communication is what differentiates the two. Wire fraud is covered under 18 U.S. Code § 1343. It is a serious offense that can be charged with other fraud offenses to increase the degree of punishment in federal prison.
Several thousand people fall victim to wire fraud every year. To complete a wire fraud scam, scammers use various means of electronic communication, such as the telephone, radio, television, and the internet. They often target businesses and organizations, but also individuals. The scam might be a simple one where the fraudster promises something that is not true to steal money or assets from the victim. It could also be more complicated, such as a Ponzi scheme.
The most common type of wire fraud is email fraud, also known as “phishing.” This is when the scammer sends an email that looks like it’s from a legitimate source, such as a bank or government agency. The email might ask the recipient to click on a link that takes them to a fake website where they are asked to enter personal or financial information. The scammer can then use this information to commit identity theft or fraud.
Key Elements Of Wire Fraud
The U.S. Department of Justice wire fraud statute cites these as the key elements of wire fraud:
- The defendant created or participated in a scheme to defraud a person or company out of money or property
- The defendant committed the offense with the intent to defraud
- It was reasonably foreseeable that the defendant would use wire communications
- The defendant did, in fact, use interstate wire communications
Essentially, a prosecutor must prove the following:
— Intent To Defraud
When it comes to wire fraud, prosecutors must prove that the defendant had the intent to defraud. This means that the defendant deliberately set out to deceive someone in order to gain an unfair advantage. Intent to defraud can be difficult to prove, so prosecutors often rely on circumstantial evidence.
One example of intent to defraud is the case of former pharmaceutical executive Martin Shkreli, who was convicted of securities fraud and wire fraud in August 2017. Shkreli became infamous in 2015 when his company, Turing Pharmaceuticals, raised the price of a lifesaving drug by more than 5,000 percent. Shkreli was also accused of defrauding investors in his hedge funds. He was convicted of three counts of securities fraud and one count of wire fraud. Prosecutors argued that Shkreli had lied to his investors about the performance of his hedge funds and that he had used money from new investors to pay off earlier investors. While Shkreli’s case is extreme, it highlights the importance of intent when it comes to the crime of wire fraud.
— Use Of Interstate Wire Communications
When it comes to wire fraud, the use of interstate wire communications is key. This means that any communication made across state lines can be used as evidence in a wire fraud case. This can include phone calls, emails, or text messages.
One of the most famous examples of wire fraud using interstate wire communications is the case of Enron. In 2001, Enron filed for bankruptcy after it was revealed that the company had been engaged in massive accounting fraud. One of the ways that Enron was able to hide its financial troubles was by using shell companies to conduct its business. These shell companies would send emails and faxes between themselves to make it look like they were doing legitimate work. However, because the companies were located in different states, the emails and faxes constituted interstate wire communications.
— Lie Or Omission
When it comes to wire fraud, prosecutors must also prove that the defendant lied or omitted key information. This means that the defendant deliberately tried to mislead someone in order to gain an advantage.
One example of lying or omission in a federal wire fraud case is the case of Tom Petters. Petters was convicted of wire fraud, mail fraud, and money laundering in 2009. Petters had been running a Ponzi scheme for years, in which he promised investors high returns on their investments. However, Petters was using the money from new investors to pay off earlier investors, which is a classic sign of a Ponzi scheme. Petters was convicted largely because prosecutors were able to show that he had lied to his investors about where their money was going.
— Loss Of Money, Property, Or Services
One of the most important elements of wire fraud is the loss of money, property, or services. This means that the defendant must have caused some sort of damage to the victim in order to be convicted of wire fraud.
This element can be tricky for prosecutors to prove, especially if the victim does not know about the fraud until after it has occurred. In some cases, prosecutors may need to rely on forensic accounting or other financial experts to prove that the defendant caused harm to the victim.
Examples Of Wire Fraud
The main characteristic of wire fraud is the use of an interstate communication device. So, any device that can send and receive information across state lines qualifies for this purpose. This includes radio, television, fax, internet, mail, or cellphones.
There are different types of wire fraud, such as Ponzi schemes, bank fraud, or voice phishing. Again, the device doesn’t need to play a major role in the scheme. For example, when a person tries to dispose of an estate that’s not theirs but has part of the conversation with the victim via the internet (e.g., Facebook), the person can be charged with wire fraud.
Here are a few popular examples:
— Phishing
One of the most common types of wire fraud is phishing. This occurs when someone sends you a message, usually an email, that looks like it’s from a legitimate company (like your bank). The email will ask you to click on a link or provide your personal information, like your login credentials, social security number, or bank account number. But the link or form is actually a fake, and by providing your information, you’re giving the scammer access to your bank account.
It’s important to know how to protect yourself from phishing scams. Here are a few tips:
— Don’t click on links in emails. Instead, type the official website’s address into your browser’s address bar.
— Never provide your personal information in an email or over the phone. Legitimate companies will never ask for this information via email or phone call.
— Use strong passwords, change them regularly, and never use the same password more than once. A strong password is one that is at least 8 characters long and includes a mix of letters, numbers, and symbols.
— Install antivirus software and keep it up-to-date. This will help protect your computer from malware that can be used to steal your personal information.
— “The Nigerian Prince” Scam
The Nigerian Prince Scam is a type of email scam that involves someone claiming to be a Nigerian prince. The scammer will ask the victim to help them transfer money out of Nigeria, and in return, the victim will receive a large sum of money via wire transfer.
Of course, this is not a legitimate offer, and the victim will never receive any money. Instead, they will lose their money to the scammer.
This scam has been around for many years, and it’s still one of the most common types of wire fraud. There are a few things you can do to protect yourself from this scam:
— Never send money to someone you don’t know.
— Don’t believe offers that seem too good to be true.
— Don’t respond to emails or messages that ask for personal information.
— Use strong passwords and change them regularly.
— Telemarketing Fraud
Telemarketing fraud is a type of wire fraud that occurs when someone tries to sell you a product or service over the phone. The scammer will usually make some sort of false claim about the product or service, like saying it’s a great deal or that you need it to protect your computer. They may also try to get you to provide your personal information, like your credit card number.
If you’re ever contacted by someone who is trying to sell you a suspicious product or service over the phone, be sure to do the following:
— Don’t give them any personal information. This includes your name, address, phone number, or credit card number.
— Hang up the phone.
— Report the scam to the Federal Trade Commission (FTC).
It’s important to remember that not everyone who calls you is trying to scam you. There are many legitimate companies that use telemarketing as a way to sell their products or services. But if something seems too good to be true, or if the caller asks for personal information, it’s probably best to just hang up the phone.
Penalties For Wire Fraud
Wire fraud is a serious crime, and the penalties can be severe. If you’re convicted of wire fraud, you could face a number of penalties, including:
— Prison time
— Fines
— Restitution (paying back what you stole)
— Forfeiture (losing your assets to the government)
It’s important to remember that if you’re convicted of wire fraud, you will likely spend time in prison. The sentence will vary depending on the severity of the misdemeanor or felony charge and the amount of money involved. But in general, you can expect to serve at least several months or even years in jail.
In addition to a lengthy prison sentence and fines, you may also be required to pay restitution to your victims. This means that you will have to reimburse them for any money they lost as a result of your scam. And if you have assets that can be seized by the government, they may be forfeited (or given) to the victims as part of your sentence.
Possible Defenses Against Wire Fraud Charges
There are a number of possible defenses that can be used against charges of wire fraud. Some common defenses include lack of intent to commit a crime, lack of knowledge about the illegal nature of the scheme, and duress or coercion. In addition, an accused person may be able to argue that he or she was acting under orders from a supervisor or other higher-up in the organization involved in the fraudulent scheme. Here are some popular defenses for wire fraud:
— Good Faith
When it comes to wire fraud, defendants often argue that they were acting in good faith. In other words, they maintain that they had no intention of committing a crime and were simply trying to do what was best for their company or organization. This defense can be successful in some cases, but it’s important to understand what it entails and what evidence can be used to support it.
One key factor in determining whether or not a defendant acted in good faith is the level of trust that was placed in them. For example, if someone is given full authority to make financial decisions on behalf of their company, then they may be more likely to be found guilty of wire fraud if they misuse that power. On the other hand, if someone is only given limited authority, then their actions may be more easily justified.
In addition, prosecutors will look at the defendant’s motives for committing the crime. If they can establish that the defendant was trying to benefit themself, financially or otherwise, then this will work against them. However, if the defendant can show that they had no personal gain in mind and were instead motivated by a desire to help their company or organization, this may help their case.
Finally, prosecutors will also examine the defendant’s conduct leading up to and after the crime was committed. If they can demonstrate that the defendant took steps to try and conceal their actions or lied about what happened, this will make it more difficult for them to argue that they were acting in good faith.
— Mistake Of Fact
Wire fraud is a crime that is committed when someone uses a wire communication system to defraud another person or organization. This type of fraud can be carried out in a number of ways, including by using false information or by stealing money or other property.
One of the defenses that can be used against charges of wire fraud is a mistake of fact. This defense applies when the defendant can show that they believed in good faith that their actions were not fraudulent. For example, if the defendant can show that they believed that the information they provided was true or that they had a legal right to take the money they stole, they may be able to use the mistake of fact defense.
It is important to note that this defense is not available in all cases of wire fraud. In order to be successful, the defendant must show that they took all reasonable steps to ensure that their actions were not fraudulent.
— Puffery
When it comes to wire fraud, sometimes what you don’t say can be just as important as what you do. In some cases, if a defendant can prove that their statements were nothing more than puffery — or, simply, exaggerated claims that couldn’t possibly be taken seriously — they may be able to avoid wire fraud charges.
Wire Fraud VS. Mail Fraud
Wire fraud and mail fraud are similar crimes, but what sets them apart is how the fraud is committed. Wire fraud refers to any communication that crosses state lines (telephone, fax, phone calls, social media, emails, etc.), while mail fraud involves sending fraudulent information through the mail.
Both wire fraud and mail fraud are federal offenses, and they both involve making false statements with the intent to defraud someone. The penalties for these crimes are also very similar.
If a person commits wire fraud using multiple methods of communication, they can be charged with both wire fraud and mail fraud. The important thing to remember is that the intention behind the crime is what matters most in a wire fraud conviction.
The Bottom Line
Wire fraud is a serious crime that can result in significant penalties. However, there are a number of defenses that can be used to fight these charges. In order to be successful, the defendant must prove to a grand jury they took all reasonable steps to ensure their actions were not fraudulent. Additionally, what you say (and don’t say) can play a role in whether or not you’re convicted of wire fraud. If you’re facing charges related to wire fraud, it’s important to speak with an experienced criminal defense attorney who can help you build your case.
Frequently Asked Questions
How can you protect yourself from wire fraud?
There are a number of things you can do to protect yourself from wire fraud, including being aware of the warning signs and knowing what to look for. You should also keep your personal information confidential and be careful about what you share online. Additionally, it’s important to make sure that your computer is protected with antivirus software and a firewall. If you think you may have been a victim of wire fraud, contact the police and your financial institution immediately.
What is the maximum sentence for wire fraud?
The maximum sentence for wire fraud is 20 years in prison. However, the sentence can be increased if the crime results in significant financial damage. Additionally, the defendant may also be fined up to $250,000.
What is the punishment for attempted wire fraud?
The punishment for attempted wire fraud can vary depending on the specific circumstances of the case. However, in most cases, the punishment will be less than the punishment for completed wire fraud. Additionally, the defendant may also face additional charges related to attempted fraud. If you are facing charges related to attempted wire fraud, it’s important to speak with an experienced criminal defense lawyer who can help you build your case.
What should you do if you’re a victim of wire fraud?
If you’re a victim of a wire fraud scheme, there are several things you can do. First, report the crime to the police and your bank. Second, change your passwords and contact information. Third, keep a record of all conversations and correspondence with the scammers. Finally, warn your friends and family about the scam.
Who investigates wire fraud?
The FBI investigates most financial crimes, such as wire fraud, although state and local law enforcement may also be involved. If the wire fraud involves crossing state lines, the federal government has jurisdiction. Additionally, if the wire fraud is part of a larger scheme, such as an identity theft or money laundering operation, the federal government may also be involved.
