MAIL AND WIRE FRAUD

MAIL AND WIRE FRAUD

I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1201

II. ELEMENTS OF THE OFFENSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1202

A. Scheme to Defraud by Means of a Material Deception . . . . . . 1204

B. Intent to Defraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1205

C. Use of the Mails, Wires, or Both in Furtherance of a Scheme to

Defraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1208

D. Loss of Money, Property, or Deprivation of Honest Services . . 1212

1. Loss of Money or Tangible Property . . . . . . . . . . . . . . . . 1212

2. Loss of Intangible Property . . . . . . . . . . . . . . . . . . . . . . . 1213

3. Deprivation of Honest Services . . . . . . . . . . . . . . . . . . . . 1214

III. DEFENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1218

A. Good Faith. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1218

B. Statute of Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1220

IV. SENTENCING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1220

I. INTRODUCTION

To federal prosecutors of white collar crime, the mail fraud statute is our

Stradivarius, our Colt 45, our Louisville Slugger, our Cuisinart—and our true

love. We may f‌lirt with RICO, show off with 10b-5, and call the conspiracy

law “darling,” but we always come home to the virtues of 18 U.S.C. § 1341,

with its simplicity, adaptability, and comfortable familiarity. It understands us

and, like many a foolish spouse, we like to think we understand it.

1

The federal mail

2

and wire

3

fraud statutes are powerful tools for prosecutors that

apply to a wide range of conduct.

4

The statutes have often been used as a stopgap

to enable prosecution of new forms of fraud until Congress enacts more particular-

ized legislation.

5

1. Jed Rakoff, The Federal Mail Fraud Statute (Part I), 18 DUQ. L. REV. 771, 771 (1980).

2. 18 U.S.C. § 1341.

3. Id. § 1343.

4. See Geraldine Szott Moohr, The Balance Among Corporate Criminal Liability, Private Civil Suits, and

Regulatory Enforcement, 46 AM. CRIM. L. REV. 1459, 1467–68 (2009) (arguing that mail fraud is one of

prosecutors’ powerful tools due to “the diminished import of the mens rea element”); Ralph K. Winter, Paying

Lawyers, Empowering Prosecutors and Protecting Managers: Raising the Cost of Capital in America, 42 DUKE

L.J. 945, 954 (1993) (noting that the federal mail and wire fraud statutes “criminalize a wide range of conduct

involving conf‌licts of interest, alleged misrepresentations, or the failure of agents to inform alleged principals of

certain facts”).

5. See United States v. Maze, 414 U.S. 395, 405–06 (1974) (Burger, C.J., dissenting) (“[18 U.S.C. § 1341] has

traditionally been used against fraudulent activity as a f‌irst line of defense. When a ‘new’ fraud develops—as

constantly happens—the mail fraud statute becomes a stopgap device to deal on a temporary basis with the new

phenomenon, until particularized legislation . . . [is] passed to deal directly with the evil.”), superseded by

statute, 18 U.S.C. § 1344; United States v. Sawyer, 85 F.3d 713, 723 n.5 (1st Cir. 1996) (noting that the mail and

1201

Although Congress originally enacted the mail fraud statute to secure the integ-

rity of the United States Postal Service (“USPS”),

6

the mail and wire fraud statutes

are now applied to several modes of communication.

7

The statutes also provide

federal courts with jurisdiction over a broad array of frauds.

8

Mail and wire fraud

are predicate felonies under the Racketeer Inf‌luenced and Corrupt Organizations

Act (“RICO”) and are specif‌ied as unlawful activity for purposes of the federal

money laundering statutes.

9

This Article provides an overview of the prosecution of offenses under the fed-

eral mail and wire fraud statutes. Section II of this Article lists and analyzes the

elements of a mail or wire fraud offense. Section III examines the available

defenses. Finally, Section IV addresses sentencing issues that relate to convictions

under the mail and wire fraud statutes.

II. ELEMENTS OF THE OFFENSE

For a mail or wire fraud offense, the government must show beyond a reasona-

ble doubt that the defendant perpetrated a scheme (A) to defraud by means of a ma-

terial deception; (B) with the intent to defraud; (C) while using the mails, private

commercial carriers, and/or wires in furtherance of that scheme; (D) that did result

or would have resulted in the loss of money or property or the deprivation of honest

wire fraud statues “are increasingly used effectively to convict and punish for the substantive fraud, and that the

use of mails or wires is merely a ‘jurisdictional hook’”).

6. See, e.g., Parr v. United States, 363 U.S. 370, 389 (1960) (stating the mail fraud statute’s “purpose was ‘to

prevent the post off‌ice from being used to carry [fraudulent schemes] into effect’” (quoting Durland v. United

States, 161 U.S. 306, 314 (1896))).

7. See infra Section II.C. (discussing application of the wire fraud statute to new modes of communication).

8. See Sawyer, 85 F.3d at 723 n.5 (referring to mailing element as “hook” to secure federal jurisdiction);

Geraldine Szott Moohr, Mail Fraud Meets Criminal Theory, 67 U. CIN. L. REV. 1, 7 nn.25–29 (1998) (discussing

jurisdictional effect of mailing element); see also United States v. Riley, 621 F.3d 312, 328 (3d Cir. 2010)

(aff‌irming mail fraud convictions in relation to former mayor’s scheme to convey city-owned land); United

States v. Sharapka, 526 F.3d 58, 62 (1st Cir. 2008) (upholding sentence where defendant was convicted of

counterfeiting and mail fraud in stolen credit card scheme), vacated on other grounds, No. 05-10004-PBS, 2011

WL 2471289 (D. Mass. June 17, 2011); United States v. Zichettello, 208 F.3d 72, 99–100 (2d Cir. 2000)

(aff‌irming multi-defendant convictions on counts including: (i) mail fraud in connection with bribery and

(ii) wire fraud in connection with campaign f‌inance scheme); Tony Perry, Ex-Cal State San Marcos Student Gets

Prison For Trying to Rig Election, L.A. TIMES (July 15, 2013, 12:00 AM), http://www.latimes.com/local/lanow/

la-me-ln-exstudent-prison-200130715,0,3461968.story#axzz2kYzaM9ap (reporting on college student convicted

of wire fraud after using a computer program to steal other students’ credentials to win campus election).

9. 18 U.S.C. §§ 1956(c)(7)(A), 1957(f)(3), 1961(1); see also United States v. Jenkins, 633 F.3d 788, 804 (9th

Cir. 2011) (aff‌irming defendant’s conviction for wire fraud based on money laundering scheme); United States v.

Bradley, 644 F.3d 1213, 1242–44 (11th Cir. 2011) (aff‌irming RICO conviction based on mail and wire fraud);

United States v. Goldin Indus., Inc., 219 F.3d 1271, 1274 (11th Cir. 2000) (def‌ining racketeering activity as the

commission of certain federal crimes, including mail fraud, pursuant to 18 U.S.C. § 1341); Zichettello, 208 F.3d

at 79 (aff‌irming multi-defendant convictions on counts including: (i) mail fraud in connection with monthly

bribes related to conspiracy to violate RICO and (ii) wire fraud in connection with campaign f‌inance scheme).

For a discussion of liability under the RICO or money laundering statutes, see the Racketeer Inf‌luenced and

Corrupt Organizations and Money Laundering Articles in this Issue.

1202 AMERICAN CRIMINAL LAW REVIEW [Vol. 58:1201