Wire Fraud Laws – Part I

A person can be prosecuted for wire fraud when there is reliable evidence of a scheme to defraud another by using electronic communications such as wire, radio or television. The defendant must be part of a fraudulent scheme and have a specific intent to commit the fraud. In some cases, it could be enough if the defendant fails to disclose material facts to mislead the plaintiff – i.e., the culprit deceives his or her victim. The defendant may be guilty for wire fraud if he or she shows a reckless indifference through his actions.

For example, the defendant may use wire, radio, or television communication to commit the fraudulent scheme be emailing false or misleading bank statements to clients or investors. Historically, these types of violations include telemarketing fraud or internet scams (e.g., phishing). There have been cases where the culprits hack into the plaintiff’s computer and install keyloggers to track their electronic transactions. Then, they extract personal information that would allow them to log into their bank accounts. Or, they can hack into the escrow company’s network to intercept financial information (e.g., bank account number) that allows them to send false wire instructions. So, thereafter, the hackers provide the false wire instructions to the victim who believes he or she is sending the funds to the correct financial institution.

There have been other instances where the defendant’s action constitutes mail or security fraud. Mail fraud is committed when the defendant uses the mail to commit the fraudulent scheme. Security fraud is committed when the defendant engages in a fraudulent scheme for the sale or purchase of securities which is a violation of state and federal laws. Internet fraud is also referred to as “cybercrime” and may include actions that fall under the definition of hacking or phishing schemes to extract private or confidential information. So, in a nutshell, the culprit uses the internet to lure the victim into believing a false fact. Then, once the victim relinquishes access or discloses the private or confidential information, the culprit uses that information to commit a crime such as identity theft. Also, in other cases, the defendant may be prosecuted for real estate fraud when he or she gains unlawful access to the escrow or title company’s network infrastructure. These types of real estate fraudulent schemes are relatively sophisticated and require the rights tools and resources. The stolen funds are usually sent to another bank account that could be located in another state or country. Obviously, the victims will feel helpless when they face these situations and will reach out to government agencies for assistance. In most cases, the victims should also seek assistance from a private law firm that specializes in these matters.

What are the penalties?

The penalties for wire fraud can include up to twenty years in federal prison, a fine, or both. The fine can be up to $250,000 for individuals and $500,000 for organizations. There could be additional penalties of thirty years and a $1,000,000 fine if the wire fraud violation is related to a presidentially-declared major disaster or a financial institution. It’s important to note that the penalties are per count – i.e., each and every electronic transmission can be considered a separate count and prosecuted as a distinct violation.

What are the defenses?

There are specific defenses to mail and wire fraud charges such as withdrawal from the scheme. A defendant may be able to assert an affirmative defense by proving that he or she withdrew from the scheme by acting in contrary to its objective and communicating the withdrawal to the co-defendants. The defendant can claim and must prove a lack of intent, mistake of fact, or puffery to overcome his or burden of proof. A so-called lack of intent means that the culprit did not intend to commit the violation. A mistake of fact can be proven when the defendant proves he or she believed the misleading information was accurate and did not intentionally communicate the false information. Puffery means the defendant somehow exaggerated the statements to sell the product wherein most customers understand to be opinionated contentions.

Our law firm can manage a legal action that’s related to mail and wire fraud in state and federal courts. We are ready to assist our clients in matters related to internet, cybersecurity, and wire fraud laws. Please contact our law firm to speak with an internet attorney at your earliest convenience.