Federal Wire Fraud Explained
Federal Wire Fraud under 18 USC § 1343
The U.S. Government did not always have generalized prosecution powers. Actually, most criminal prosecution was originally intended to be handled under the police powers of the individual states. However, as is the case with most government initiatives, the federal Government’s authority in this area grew to an astounding level. This holds true for prosecutions under the wire fraud statute as well.
Under federal law, an activity that affects interstate commerce may be criminalized under the Constitution based upon their interference with such commerce. While the language may seem stilted and innocuous, it is very powerful. Imagine how much activity affects interstate commerce. Every store that ships or receives property across state lines is subject to federal jurisdiction. Further, all activity through the mail and phone lines is also subject to that jurisdiction.
Understanding Federal Wire Fraud
Federal wire fraud is defined under 18 U.S.C. § 1343. Let’s break down this law in simple terms.
Elements of Wire Fraud
To prove wire fraud, prosecutors must show:
- The defendant created or participated in a scheme to defraud
- The defendant acted with intent to defraud
- The defendant used interstate wire communications to carry out the scheme
Sentencing and Punishment
Under 18 U.S.C. § 1343, wire fraud carries:
- Maximum of 20 years in prison per count
- Maximum fine of $250,000 for individuals
- Maximum fine of $500,000 for organizations
18 U.S.C. § 3571, which contains the general rules for federal fines. Under § 3571(b) and (c):
- The maximum fine for an individual convicted of a felony is $250,000.
- The maximum fine for an organization convicted of a felony is $500,000.
Thus, the standard maximum fines for wire fraud (when no financial institution is involved) are $250,000 for individuals and $500,000 for organizations.
Higher Penalties Under Certain Circumstances
If the wire fraud involves a financial institution or certain other aggravating factors, § 1343 increases the stakes:
- Imprisonment of up to 30 years, and
- A fine of up to $1 million (instead of the lower limits mentioned above).
If the fraud involves federal disaster relief or affects a financial institution, the maximum sentence increases to 30 years and the fine can go up to $1,000,000.
Wire Fraud vs. Mail Fraud Comparison
| Feature | Wire Fraud (18 U.S.C. § 1343) | Mail Fraud (18 U.S.C. § 1341) |
|---|---|---|
| Method Used | Interstate wire communications (phone, email, internet, etc.) | U.S. Mail or private interstate carriers |
| Basic Elements | Scheme to defraud + use of wire communications | Scheme to defraud + use of mail system |
| Intent Required | Specific intent to defraud | Specific intent to defraud |
| Basic Maximum Sentence | 20 years per count | 20 years per count |
| Enhanced Maximum Sentence | 30 years (if affecting financial institution) | 30 years (if affecting financial institution) |
| Basic Maximum Fine | $250,000 individual / $500,000 organization | $250,000 individual / $500,000 organization |
| Jurisdiction | Federal courts only | Federal courts only |
Additional Considerations
Both wire and mail fraud:
- Can be charged per individual transmission or mailing
- Often carry restitution requirements
- May be accompanied by forfeiture of assets
- Can trigger money laundering charges if profits are concealed
What Qualifies as “Wire Communication” in Federal Fraud Cases?
Under federal law, “wire communication” includes any transmission by wire, radio, or television that crosses state lines or international borders. This includes:
- Electronic Methods:
- Email messages
- Text messages
- Internet transactions
- Electronic fund transfers
- Credit card transactions
- Telecommunications:
- Phone calls
- Fax transmissions
- VoIP communications
- Video calls
- Banking Activities:
- Wire transfers
- ATM transactions
- Online banking activities
Key Requirements for Wire Fraud
Interstate Element: The communication must cross state lines or international borders. However, courts have held that:
- Internet usage typically satisfies this requirement because most internet traffic crosses state lines
- Even if the sender and receiver are in the same state, the communication may still qualify if it passed through servers in another state
- Each individual wire communication can be charged as a separate count of wire fraud
Important Note: The wire communication doesn’t need to be the primary means of fraud – it just needs to be part of executing the scheme. Even a single qualifying wire communication in furtherance of a broader scheme can trigger federal wire fraud charges.
Common Examples in Wire Fraud Cases
- Sending emails with false business proposals
- Making interstate phone calls to solicit investments in a Ponzi scheme
- Processing credit card payments for non-existent services
- Conducting fraudulent wire transfers
- Using online banking to transfer fraudulently obtained funds
It is this expansive jurisdictional rubric that has created one of the broadest categories of white collar prosecutions: Wire Fraud.
Example of Wire Fraud:
For example, if a person posts a picture of a Lamborghini on eBay and solicits a payment of $35,000 via eBay, such a transaction would be legal. However, if that person never had a Lamborghini to sell and takes off with the money, that person has committed wire fraud in two separate ways. One by posting a misleading photo and, two, by receiving payment. Both of these acts occurred online and would be prosecutable under 18 USCÂ 1343.
Learn more: White Collar Criminal Defense
Successful Defenses to Federal Wire Fraud Charges
While wire fraud charges are serious, several successful defense strategies have been used in federal courts. Here are the most effective defenses:
1. Lack of Intent to Defraud
The strongest defense is often proving a lack of intent to defraud because wire fraud is a specific intent crime. Common arguments include:
- Good Faith: The defendant genuinely believed their statements or actions were truthful
- Business Judgment: Actions were legitimate business decisions, even if they turned out poorly
- Full Disclosure: Relevant risks or information were disclosed to alleged victims
2. No Scheme to Defraud
Challenging the existence of a fraudulent scheme by showing:
- The business plan or venture was legitimate
- Any misrepresentations were not material to the transaction
- The alleged scheme lacked the sophistication typically associated with fraud
3. Interstate Wire Communications Issues
Technical defenses related to the wire element:
- Communications didn’t cross state lines
- Wire communications were not essential to the scheme
- The defendant didn’t personally send or cause the wire communications
4. Statute of Limitations
Wire fraud prosecutions must begin within 5 years of the offense. Defenses include:
- Proving the alleged wire communications occurred outside the statute of limitations
- Challenging the government’s timeline of events
- Demonstrating when the scheme actually ended
5. Constitutional and Procedural Defenses
- Fourth Amendment Violations: Challenging illegally obtained evidence
- Fifth Amendment Issues: Protecting against self-incrimination
- Prosecutorial Misconduct: Identifying improper government conduct
6. Insufficient Evidence
Common challenges to evidence include:
- Questioning witness credibility
- Highlighting gaps in documentary evidence
- Demonstrating alternative explanations for transactions
- Challenging expert testimony
7. Reliance on Professionals
Defendants may argue they relied on:
- Legal advice from attorneys
- Guidance from accountants
- Professional consultants’ recommendations
Important Note: The success of any defense strategy depends on:
- Specific facts of the case
- Evidence available
- Jurisdiction where charges are filed
- Quality of legal representation
Case Examples of Successful Defenses
- Good Faith Defense: Courts have acquitted defendants who could prove they genuinely believed in their business model, even if it failed
- Technical Defense: Cases have been dismissed when prosecutors couldn’t prove interstate wire communications
- Professional Advice: Defendants have successfully argued they relied on counsel’s advice about transaction legality
Sentencing in Wire Fraud Cases
How Wire Fraud Sentencing Works
Wire fraud sentencing works like building blocks – each factor adds or subtracts from your total. Here’s a simple breakdown:
1. Starting Point (Base Level)
- Basic Fraud: Level 7
- Public Official Cases: Level 14
2. Money Amount Additions
| Amount Stolen | Levels Added | New Total |
| $30,000 | +4 | 11 |
| $100,000 | +8 | 15 |
| $1,000,000 | +14 | 21 |
3. Additional Factors
- Sophisticated Scheme: +2 levels
- Multiple Victims: +2 levels
- Leader/Organizer Role: +4 levels
- Identity Theft: +2 levels
4. Possible Reductions
- Early Guilty Plea: -2 levels
- Minor Role: -2 levels
- Helping Authorities: -2 or more levels
5. Criminal History Impact
Your criminal record category (I-VI) combines with your final offense level to determine your sentencing range.
Example Case: $100,000 Wire Fraud
- Starting Level: 7
- Amount Addition: +8
- Sophisticated Means: +2
- Guilty Plea: -2
- Final Level: 15
- Category I Range: 18-24 months
Contact Us
Federal wire fraud charges are complex cases that demand experienced counsel. At Varghese Summersett, our criminal defense team includes former federal prosecutors who know exactly how these cases are built – and more importantly, how to spot their weaknesses. We regularly practice in the Northern District of Texas federal courts, understanding the specific approaches of local prosecutors, agents, and judges. We have successfully defended numerous wire fraud cases, developing targeted strategies that challenge the government’s evidence at every stage. If you’re under investigation or have been charged with wire fraud, our team has the federal court experience and prosecutorial background to effectively analyze and defend your case.
