Wire Fraud

Wire fraud refers to fraud that is committed through the use of wires, or electronic means. Wire fraud may be committed using interstate wires, television or radio communications, or the Internet. Wire fraud is an intentional act to defraud another individual or entity of his money or property, and is a federal crime punishable by up to 30 years in prison. To explore this concept, consider the following wire fraud definition.

Definition of Wire Fraud

Noun

1. The crime of using an interstate wire, television or radio communications, or the Internet, in order to defraud someone.

Origin

1872     U.S. legal system

What is Wire Fraud

Wire fraud shares many characteristics with regular fraud, though it is committed through the use of phone lines or other wires, utilizing electronic communications. Wire fraud is committed in order to defraud another person out of money or something else of value, to the financial gain of the perpetrator. Wire fraud is a federal crime. To successfully charge an individual with wire fraud, the crime must meet four specific elements:

1. The defendant voluntarily concocted, or participated in, a scheme to defraud a person or entity out of money, or something else of value
2. The defendant perpetrated the scheme with the intent to defraud the victim
3. The defendant used interstate wire communications to perpetrate the fraud
4. The defendant should have known that interstate wire communications would be used to complete the fraud

Mail and Wire Fraud

Modern technology in communications has seen the evolution of more sophisticated fraud schemes. Mail and wire fraud fit into old laws that have been modified to accommodate these techniques. Both mail and wire fraud are felony crimes, involving fraudulent acts committed for the purpose of depriving another person or entity of money, property, or other assets.

Mail fraud, which has been a federal crime since 1872, entails fraud committed through the use of the U.S. Mail system. Wire fraud, a much newer issue, entails fraud committed through the use of any electronic communications, including email, text message, telephone call, the Internet, television communication, and radio communication.

Example 1

Larry prints up postcards imitating a non-profit organization seeking donations to save the local animal shelter. Larry then mails those postcards through the U.S. Post Office to residents of a neighborhood in which mostly affluent older people live, figuring they are most likely to write out checks for his phony cause. The moment Larry put those cards into the mail he has committed mail fraud.

Example 2:

Larry instead decides to create a webpage imitating his fictional non-profit organization, asking people to donate to his cause through PayPal. He sends out spam emails, and makes a bunch of social media posts soliciting donations. Larry’s crime now uses electronic means to commit his fraud scheme, which constitutes wire fraud.

Wire Transfer Fraud

Wire transfers are used to move funds from one account to another. These electronic wire transfers can be used to move money between banks, pay bills, or send money to another person or business. Scammers use many tools, including phishing sites and malware, to steal bank and other account login information. Once this information is obtained, the scammers commit wire transfer fraud to move the victim’s money into their own accounts.

Experts advise individuals and entities to protect their assets from wire transfer fraud by installing a firewall, anti-virus, and anti-malware software on their computers and other electronic devices. They also advise maintaining secure passwords, and using caution when entering passwords and any personal information on a website, or into a POS terminal.

Wire Fraud Scams

Scammers use a wide variety of wire fraud scams to defraud people out of their hard-earned money. Typically, wire fraud scams involve attempts to steal people’s financial information, which can be used to access credit cards or bank accounts, to make purchases, and even to open new credit accounts. One common wire fraud scam is known as “phishing.”

Phishing wire fraud scams begin when the scammer sends out emails to a large number of people, detailing a tragic story, and outlining why the scammer needs financial help. The email wraps up by asking the recipient for money or other financial assistance. Once the victim takes that bait, replying to the email (or social media message), the scammer begins weaving a complex story, and ultimately requests the victim’s personal information with the intent of using it to gain financially.

For example:

A scammer sends out a mass email claiming to be a Nigerian prince who has been exiled. He states in the email that he has money in a Nigerian bank account that needs to be transferred to the United States. He tells the recipient that, if she will allow him to temporarily deposit $100,000 into her bank account, he will pay her $2,000 once he transfers the money to a safer bank. Once the victim gives the scammer her bank account information, he has access to her money.

Wire Fraud Penalties

Wire fraud penalties can be severe, as this federal crime is classified as a felony. Each act of wire fraud is charged as a separate offence, punishable by large fines, and 20 years or more in prison. This means that, if the perpetrator makes 20 phone calls attempting to defraud people, he can be charged with 20 separate counts of wire fraud. In such a case, wire fraud penalties stack up, and can result in a lifetime behind bars. Wire fraud penalties in cases involving a financial institution are much more severe.

St. Louis Man Guilty of Four Counts of Wire Fraud

On May 8, 2015, 54-year old Dana Jefferson stood in court, as U.S. District Judge Audrey Fleissig handed down his sentence for a string of felony wire fraud counts. Jefferson had convinced certain people that he had received an inheritance from his father, the amount of which varied between $5 million and $200 million. There was no inheritance, and Jefferson approached potential victims using several different names. He told these prospective fraud victims that the money was tied up in a trust, or sometimes that it was in a Florida bank, making up various convincing reasons he could not access it at the time.

By making promises to enrich his intended victims, by paying double the amount of the loan he was seeking, buying them homes or expensive cars, or paying for plastic surgery, Jefferson duped nine people out of a total of $740,000. The means Jefferson used to contact his victims, by mail, email, and phone, makes this a crime of mail and wire fraud. In a plea deal, Jefferson pled guilty to four counts of felony wire fraud, and was sentenced to 42 months in federal prison.

Related Legal Terms and Issues

• Defendant – A party against whom a lawsuit has been filed in civil court, or who has been accused of, or charged with, a crime or offense.
• Felony – A criminal offense punishable by a year or more in jail.
• Fraud – A false representation of fact, whether by words, conduct, or concealment, intended to deceive another.
• Fraudulent Intent – A false statement or deceptive act made with the intent to deceive the victim.
• Perpetrator – A person who commits an illegal or criminal act.