Common Schemes

The mail and wire fraud statutes are applicable in a wide variety of contexts, hence their attractiveness to federal prosecutors. Examples range from bad checks, insurance fraud, and fraudulent stock promotions to attorney violations of ethics rules, slush accounts, and industrial espionage. The statutes have also applied to attempts to defraud a foreign government of tax revenue, private litigation under the RICO statutes, and even criminal libel. In perhaps the most tenuous example, a prosecutor successfully convicted a man of using the mails in furtherance of his scheme to seduce women with false modeling advertisements! It is hard to anticipate when a mail or wire fraud charge will be brought, and can likewise be difficult to defend against such charges.

There is no specific statutory requirement that the scheme be in violation of federal or state law, just that it be a “scheme to defraud.” This means the statutes are facially applicable to a range of schemes, some of which may not even prohibited by federal or state law. However, the Supreme Court explicitly noted that “conduct that only amounts to a violation of workplace rules” is not within the scope of the statutes. Herein are some examples of the most common contexts in which the mail and wire fraud statutes have been applied.

Sometimes these scams can leave the victim subject to potential liability. Consider a bogus charity scam, which collects donations for a non-existent fund to support underprivileged children. Often the victim won’t ever find out the charity didn’t exist, since they expect no return or profit. However, they will likely record their contribution as a tax deduction when they file with the IRS. If they are audited and the false charity is discovered, they are liable for the amount of tax that was deducted. Another example of how a victim may be exposed to liability is a check cashing scam. A scammer recently created an online website that purported to be a marketing and consulting firm hiring mystery shoppers. The unsuspecting consumers who signed up were told that they were to evaluate the service at Western Union counters in Wal-Mart stores. They were mailed a bogus check to cash and given instructions to wire the money to a predetermined location. By the time the check bounces, the money is gone via the anonymous untraceable wire transfer, and the consumer is on the hook for the amount of the bounced check (and of course, they are never paid for their mystery shopping services). In such situations, the fraudster can be punished more severely due to these consequences to the victim, and would likely be ordered to pay restitution to make the victim whole.

Common Wire and Mail Fraud Schemes: