So exactly what are the mail and wire fraud statutes? With applicability in nearly every type of crime, they can seem as amorphous as a dense fog, blanketing many areas of law from money laundering to vote buying to insider trading. Any time the mails or interstate wires (phone, cable, internet, etc.) are used in connection with a “scheme to defraud,” mail fraud or wire fraud is a potential option for prosecutors. This “scheme to defraud” language of the statute (18 U.S.C. § 1341, 1343) gives the courts a large amount of discretion in determining when it can apply, and has been a tool of prosecutorial crime-making. Indeed, the mail and wire fraud statutes have in effect conferred federal jurisdiction over a large number of “schemes” that otherwise would have to be prosecuted in state court, and has extended to some activities that were not historically prosecuted at all in criminal courts.
Criticized as standardless by some and outright unconstitutionally vague by others, the “federalization of fraud” nevertheless appears to be here to stay. Therefore, it is wise to look at all of the elements of the mail and wire fraud statutes to gain perspective on where and how the charges can apply. The mail fraud statute, 18 U.S.C. § 1341, lays out four elements which the prosecution must prove beyond a reasonable doubt in order to convict a defendant of criminal mail fraud. The first is that the defendant devised or participated in a scheme to defraud. This entails a showing of specific intent to defraud on the part of the accused, which will be examined more closely as we go along.
Prosecutors can pursue criminal charges under either the traditional mail and wire fraud statutes or the more modern “honest services” fraud statute. As you will see, they are very similar in operation, and their application turns on the interpretation of “scheme to defraud.” The second is that the falsehoods perpetrated by the defendant were material, which is just to say that the facts that were lied about or covered up were important and relevant to some decision made by the victim. The third element the prosecution must prove is that the mails were used in connection with the scheme. This doesn’t mean that the actual mailings need to contain fraudulent statements, but only that the mails were used in some manner that is incidental to an essential part of the scheme. Further, the defendant need not physically mail any parcel; instead, the only requirement is that the defendant caused the mails to be used. Finally, the prosecution must show that the use of the mails was in furtherance of, or for the purpose of executing, the scheme. This adds a timing element to the charge; once the scheme has reached fruition, subsequent mailings cannot be used to support a charge of mail fraud with regard to the completed scheme.
The wire fraud statute, 18 U.S.C. § 1343, has very similar elements. First, the prosecution must show a scheme to defraud, including specific intent, just like in mail fraud. Second, the defendant’s misrepresentation must be shown to be material. Third, they must show that the scheme involved the use of wires in interstate or foreign commerce. This at first blush would seem to exempt any in-state calls or wire transmissions. However, a showing that the network of wires used extends beyond state borders can be argued to be sufficient to satisfy this element. The term “wires” encompasses all forms of telephonic communication, including telephone, radio, television, and even microwave transmissions, whether subject to FCC regulation or not.Finally, the prosecution must show that the wires were used for the purpose of executing the scheme, again raising the timing element previously discussed herein.