Mail fraud and wire fraud are terms used in the United States to describe the use of a physical or electronic mail system to
defraud
In law, fraud is intentional deception to secure unfair or unlawful gain, or to deprive a victim of a legal right. Fraud can violate civil law (e.g., a fraud victim may sue the fraud perpetrator to avoid the fraud or recover monetary compens ...
another, and are
federal crimes there. Jurisdiction is claimed by the federal government if the illegal activity crosses interstate or international borders.
Mail fraud
Mail fraud was first defined in the United States in 1872.
provides:
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, or to sell, dispose of, loan, exchange, alter, give away, distribute, supply, or furnish or procure for unlawful use any counterfeit
To counterfeit means to imitate something authentic, with the intent to steal, destroy, or replace the original, for use in illegal transactions, or otherwise to deceive individuals into believing that the fake is of equal or greater value tha ...
or spurious coin, obligation, security, or other article, or anything represented to be or intimated or held out to be such counterfeit or spurious article, for the purpose of executing such scheme or artifice or attempting so to do, places in any post office or authorized depository for mail matter, any matter or thing to be sent or delivered by the Postal Service
The mail or post is a system for physically transporting postcards, letters, and parcels. A postal service can be private or public, though many governments place restrictions on private systems. Since the mid-19th century, national postal syst ...
, or deposits or causes to be deposited any matter or thing to be sent or delivered by any private or commercial interstate carrier, or takes or receives therefrom, any such matter or thing, or knowingly causes to be delivered by mail or such carrier according to the direction thereon, or at the place at which it is directed to be delivered by the person to whom it is addressed, any such matter or thing, 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 Presidential 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.
In layman's terms, anyone trying to scam another individual or group through items of value, e.g., money, through the US mail system or a private mail delivery service and those knowingly participating in that scam will be punished with a prison sentence that cannot be longer than 20 years.
However, for such acts during a Presidential declared major disaster or emergency, the prison sentence can be as long as 30 years and the fine as great as $1,000,000.
In mail fraud, US
federal jurisdiction
Federal jurisdiction is the jurisdiction of the federal government in any country that uses federalism. Such a country is known as a Federation.
Federal jurisdiction by country
All federations, by definition, must have some form of federal juri ...
is based on the
enumerated power to create a post office under Article I, Section 8 of the US Constitution.
International reply coupon
An international reply coupon (IRC) is a coupon that can be exchanged for one or more postage stamps representing the minimum postage for an unregistered priority airmail letter of up to twenty grams sent to another Universal Postal Union (UPU) m ...
s mailed by participants of
Charles Ponzi's
scheme A scheme is a systematic plan for the implementation of a certain idea.
Scheme or schemer may refer to:
Arts and entertainment
* ''The Scheme'' (TV series), a BBC Scotland documentary series
* The Scheme (band), an English pop band
* ''The Schem ...
is a 20th-century example of mail fraud. Ponzi was charged with the U.S. federal crime of mail fraud.
Wire fraud
Wire fraud was first defined in the United States in 1952.
provides:
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
Radio is the technology of signaling and communicating using radio waves. Radio waves are electromagnetic waves of frequency between 30 hertz (Hz) and 300 gigahertz (GHz). They are generated by an electronic device called a transmit ...
, 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 affects a financial institution, such person shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.[.]
In layman's terms, anyone trying to scam other people or groups through any form of communication (paradoxically, even wireless) e.g., phones, instant messaging,
email
Electronic mail (email or e-mail) is a method of exchanging messages ("mail") between people using electronic devices. Email was thus conceived as the electronic ( digital) version of, or counterpart to, mail, at a time when "mail" meant ...
, or through writing, signs, pictures or sounds can be punished with a maximum prison sentence of 20 years.
If the scam involves a financial institution, the maximum fine is raised to 1 million US dollars and prison sentence not more than 30 years, or both.
Honest services
provides:
For the purposes of this chapter, the term "scheme or artifice to defraud" includes a scheme or artifice to deprive another of the intangible right of honest services.
Elements
There are three elements to mail and wire fraud:
# A mail or wire communication
# a scheme and
intent
Intentions are mental states in which the agent commits themselves to a course of action. Having the plan to visit the zoo tomorrow is an example of an intention. The action plan is the ''content'' of the intention while the commitment is the ''a ...
to defraud someone
# a
material
Material is a substance or mixture of substances that constitutes an object. Materials can be pure or impure, living or non-living matter. Materials can be classified on the basis of their physical and chemical properties, or on their geologi ...
deception
Mail fraud applies only to United States domestic mailings and use of interstate carriers (
UPS
UPS or ups may refer to:
Companies and organizations
* United Parcel Service, an American shipping company
** The UPS Store, UPS subsidiary
** UPS Airlines, UPS subsidiary
* Underground Press Syndicate, later ''Alternative Press Syndicate'' or ...
,
FedEx
FedEx Corporation, formerly Federal Express Corporation and later FDX Corporation, is an American multinational conglomerate holding company focused on transportation, e-commerce and business services based in Memphis, Tennessee. The name "Fe ...
) which must originate in one state, and successfully terminate pursuant to the address label inside another state, a transportation that is termed "interstate" (over which
Congress
A congress is a formal meeting of the representatives of different countries, constituent states, organizations, trade unions, political parties, or other groups. The term originated in Late Middle English to denote an encounter (meeting of a ...
has power to regulate) and does require that the mailing cross at least one state line into another state;
wire
fraud has been expanded by Congress to include foreign wire communication or interstate connections via (e.g.) an e-mail server or telephone switch or radio communication.
Case law
In ''
McNally v. United States'' (1987), the Supreme Court held that 18 U.S.C. §§ 1341 and 1343 did not reach honest services fraud. Congress responded by passing 18 U.S.C. § 1346. In ''
Skilling v. United States'' (2010), the Court construed § 1346 to apply only to bribes and kickbacks.
''
United States v. Regent Office Supply Co.'' (1970) involves Regent which was a company that sold orders over a telephone. Regent representatives would exaggerate their office products over the phone. The United States government charged the company with wire fraud. The company's salesmen were accused of making "false pretenses" over the phone. The
United States Court of Appeals for the Second Circuit
The United States Court of Appeals for the Second Circuit (in case citations, 2d Cir.) is one of the thirteen United States Courts of Appeals. Its territory comprises the states of Connecticut, New York and Vermont. The court has appellate juri ...
ruled that the "repugnant" conduct of the company didn't amount to criminality.
''Lustiger v. United States'', 386 F.2d 132 (
9th Cir., 1967), involved a real estate advertisement mail fraud. The defendant stated that as a salesman he had engaged in
puffery
In everyday language, puffery refers to exaggerated or false praise. Puffery serves to "puff up" what is being described. In law, puffery is usually invoked as a defense argument: it identifies futile speech, typically of a seller, which does n ...
.
In ''United States v. Takhalov'' (2016), female nightclub employees would pose as tourists, engage with potential customers, and lure them into nightclubs owned by Takhalov. The employees would express romantic interest in the customers and not reveal that they were club employees. The
11th Circuit ruled that Takhalov deceived their customers, but this deception didn't amount to defrauding the customers under the Wire Fraud statute.
Mail fraud schemes
There are many types of mail fraud schemes, including
employment fraud Employment fraud is the attempt to defraud people seeking employment by giving them false hope of better employment, offering better working hours, more respectable tasks, future opportunities, or higher wages. They often advertise at the same locat ...
, financial fraud,
fraud against older Americans, sweepstakes and lottery fraud, and telemarketing fraud. Additional information about these various types of mail fraud schemes can be found on the
United States Postal Inspection Service
The United States Postal Inspection Service (USPIS), or the Postal Inspectors, is the law enforcement arm of the United States Postal Service. It supports and protects the U.S. Postal Service, its employees, infrastructure, and customers by enfor ...
website.
In the 1960s and 1970s, Chief
Postal Inspector Postal inspector may refer to:
* The United States Postal Inspection Service
The United States Postal Inspection Service (USPIS), or the Postal Inspectors, is the law enforcement arm of the United States Postal Service. It supports and protect ...
Martin McGee, also known as "The Top Sleuth" or "Mr. Mail Fraud", led his department in exposing and prosecuting numerous mail fraud swindles such as land sales, phony advertising practices, insurance rip-offs, and fraudulent charitable organizations that used the mail to facilitate their illegal activities.
Scope
The scope of 18 U.S.C. §1341 and 18 U.S.C. §1343 is broad. These statutes have been held by the
Supreme Court
A supreme court is the highest court within the hierarchy of courts in most legal jurisdictions. Other descriptions for such courts include court of last resort, apex court, and high (or final) court of appeal. Broadly speaking, the decisions of ...
to encompass "everything designed to defraud by representations as to the past or present, or suggestions and promises as to the future." Lower courts have progressively expanded this ruling, finding that the law "puts its imprimatur on the accepted moral standards and condemns conduct which fails to match the 'reflection of moral uprightness, of fundamental honesty, fair play and right dealing in the general and business life of members of society.
As interpreted, these requirements are not difficult to meet; the Justice Department claims to defer federal prosecution for petty local fraud.
In 1987, the Supreme Court of the United States ruled in ''
McNally v. United States'' to narrow the scope of the mail and wire fraud statutes, ruling that the statute pertained only to schemes to defraud victims of tangible property, including money. In 1988, Congress enacted a new law that specifically criminalized schemes to defraud victims of "the intangible right of honest services" (honest services fraud).
See also
*
China Medical Technologies
China Medical Technologies, Inc. (CMED) was a Cayman Islands corporation based in China, currently in liquidation following fraud allegations. It purported to develop, manufacture, and market advanced in vitro diagnostic ("IVD") products using en ...
*
Email authentication Email authentication, or validation, is a collection of techniques aimed at providing verifiable information about the origin of email messages by validating the domain ownership of any message transfer agents (MTA) who participated in transferrin ...
*
List of confidence tricks
Confidence tricks and scams are difficult to classify, because they change often and often contain elements of more than one type. Throughout this list, the perpetrator of the confidence trick is called the "con artist" or simply "artist", and t ...
*
Making false statements
Making false statements () is the common name for the United States federal process crime laid out in Section 1001 of Title 18 of the United States Code, which generally prohibits knowingly and willfully making false or fraudulent statements, or ...
*
USA PATRIOT Act
The USA PATRIOT Act (commonly known as the Patriot Act) was a landmark Act of Congress, Act of the United States Congress, signed into law by President of the United States, President George W. Bush. The formal name of the statute is the Uniti ...
*
Ponzi scheme
A Ponzi scheme (, ) is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. Named after Italian businessman Charles Ponzi, the scheme leads victims to believe that profits are comin ...
*
Sholam Weiss
Sholam Weiss (born 1954) is a convicted fraudster.
In 2000, Weiss was sentenced to 845 years in prison for racketeering, wire fraud, money laundering, and other charges in connection to the collapse of the National Heritage Life Insurance C ...
*
Taylor, Bean & Whitaker
Taylor, Bean & Whitaker was a top-10 wholesale mortgage lending firm in the United States, the fifth-largest issuer of Government National Mortgage Association (GNMA or Ginnie Mae) securities. Their slogan was "Perfecting the Art of Mortgage Le ...
, top-10 U.S. wholesale mortgage lending firm that ceased business following multibillion-dollar fraud revelations
*
Travel Act
The Travel Act or International Travel Act of 1961, , is a Federal criminal statute which forbids the use of the U.S. mail, or interstate or foreign travel, for the purpose of engaging in certain specified criminal acts.
The Senate legislation w ...
Notes
References
*
Jed S. Rakoff
Jed Saul Rakoff (born August 1, 1943) is a Senior United States district judge of the United States District Court for the Southern District of New York.
Education
Rakoff was born in Philadelphia, Pennsylvania on August 1, 1943. He grew up in ...
, The Federal Mail Fraud Statute (Part I), 18 771 (1980).
External links
*
{{US federal public corruption law
United States federal public corruption crime
Organized crime activity