Specific Intent to Defraud

Turning to the specific intent to defraud aspect of the crime, it is necessary that the prosecution show that the defendant had intent to injure another to his own advantage by withholding or misrepresenting material facts. Mere participation in the scheme is not enough; the defendant must be shown to have knowledge of falsity of representations or reckless disregard for their truth. In layman’s terms, this means simply that the defendant must be aware of a high probability that the statement is untrue. Again, the injury need not ever actually occur. Intent to impose substantial risk upon the other may be enough even if the risk never materializes. The exact formulation of what specific intent must be shown varies with jurisdiction. Some courts require a showing of fraudulent intent, while others require an intent to achieve personal gain. Some courts will require intent to achieve actual economic harm, while others infer the requisite intent from the fact of reasonably foreseeable harm. Still others require that the defendant intended to inherently harm the parties’ relationship. As we mentioned earlier, circumstantial evidence is admissible to prove this specific intent.

What type of evidence can be used to prove specific intent in a mail fraud or wire fraud criminal prosecution?

  • Excessive profits
  • Receipt of kickbacks
  • Use of aliases
  • Fabricated excuses
  • Success or failure of scheme
  • Ongoing personal and professional relationships between schemers
  • Knowledge about the operation of the venture
  • Repetitive actions by the participants

The crimes are inchoate by nature; that is, no loss or injury need actually occur. Indeed, a plan or attempt to rig contract bidding or receive a kickback payment is every bit as damning in the mail/wire fraud context as a successfully completed scheme of similar nature. When such a scheme has been thwarted or rendered otherwise unsuccessful, the showing of specific intent to work an injury becomes all-important. Both indirect and circumstantial evidence are admissible to support the inference of specific intent to work an injury, since it would be all but impossible to directly prove what was going on inside the accused’s head at the time.

If an injury in fact has been shown, the specific intent element becomes less important, since it can be inferred if the injury was a foreseeable result of the scheme. The “injury” is most commonly defined as a deprivation of a pecuniary or property interest, although its meaning is less clear in light of the intangible rights theory that the honest services provision is grounded upon.

There are two most commonly used tests among federal jurisdictions in determining whether the requisite specific intent to defraud another exists. The first is called the “reasonably foreseeable economic harm test.” Based more upon the defendant’s personal knowledge than any formed intent, this test is applied merely by asking whether a defendant actually foresaw or reasonably should have foreseen that his conduct would result in economic harm to the persons he is alleged to have schemed to defraud.

The second test for specific intent is materiality. This materiality test analyzes whether the misrepresentation or failure to disclose had the natural tendency to influence or is capable of influencing a victim. Put more simply, the test is whether the lie was about something that mattered.

A difficult issue with regard to specific intent that courts deal with is whether evidence of participation in similar schemes in the past is admissible to show intent. It is a rudimentary concept of evidence law that past specific acts are not admissible to prove that a defendant acted in accordance with his character on a particular occasion. This means the prosecution can’t show that a defendant was involved in a money laundering scheme five years ago, in order to prove his character for defrauding to show that he acted in accordance with that character on the dates at issue in the present case. Such evidence of prior schemes is admissible, however, to show proof of motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident. This means that if the schemes are connected (e.g. a past money-laundering scheme provides the motive for the current accounting fraud), the evidence is admissible. Normally with evidence of this nature, judges must engage in a balancing process and determine whether the probative value of such evidence on the latter point is substantially outweighed by the danger of misleading the jury (i.e. that they make the forbidden character inference discussed above). Such evidence is usually admitted when the prior acts are substantially similar, when the evidence is severely needed absent other evidence of intent, and when the prior act is not too remote in time.