Wire Fraud
| Statute: | 18 U.S.C. § 1343 |
| U.S. Code: | Title 18, Chapter 63 |
| Max Prison: | 20 years (30 if affecting financial institution) |
| Max Fine: | $250,000 ($500,000 for organizations) |
| Guidelines: | USSG §2B1.1 |
| Base Level: | 7 |
| Agencies: | FBI, DOJ Fraud Section, U.S. Attorneys |
| Related: | Mail Fraud, Bank Fraud, Securities Fraud |
Wire fraud is a federal crime under 18 U.S.C. § 1343 that prohibits the use of interstate wire communications to execute a scheme to defraud. It is one of the most commonly charged federal offenses, serving as a foundational charge in cases ranging from investment fraud and business email compromise to public corruption and healthcare fraud.[1]
Wire fraud carries a maximum sentence of 20 years imprisonment, which increases to 30 years if the offense affects a financial institution or is connected to a presidentially declared major disaster or emergency. The offense is frequently charged alongside related statutes such as mail fraud, bank fraud, and conspiracy.[2]
Elements of the Offense
To secure a wire fraud conviction, federal prosecutors must prove four elements beyond a reasonable doubt:
- Scheme to Defraud: The defendant devised or participated in a scheme to defraud another of money, property, or honest services.
- Materiality: The scheme involved material misrepresentations, false pretenses, or promises, or the concealment of material facts.
- Intent: The defendant acted with the specific intent to defraud.
- Use of Wire Communications: The defendant used, or caused to be used, interstate wire communications (including telephone, email, internet, or other electronic transmissions) in furtherance of the scheme.[1]
The wire communication need not itself contain the fraudulent statement—it is sufficient that the transmission was incident to an essential part of the scheme.[3]
Scheme to Defraud
A "scheme to defraud" encompasses any plan or course of action intended to deprive another of money, property, or the intangible right of honest services through false or fraudulent pretenses, representations, or promises. Courts have interpreted this element broadly to cover a wide range of fraudulent conduct.[4]
Wire Communications
The statute covers any transmission by wire, radio, or television in interstate or foreign commerce. Modern prosecutions commonly involve:
- Email communications
- Text messages
- Phone calls
- Internet transactions
- Electronic fund transfers
- Fax transmissions
- Website communications[2]
Each separate use of wire communications can constitute a separate count of wire fraud, allowing prosecutors to charge multiple counts arising from a single scheme.
Statutory Penalties
The statutory penalties for wire fraud are set forth in 18 U.S.C. § 1343:
| Category | Maximum Imprisonment | Maximum Fine |
|---|---|---|
| Standard wire fraud | 20 years | $250,000 (individual) / $500,000 (organization) |
| Affecting a financial institution | 30 years | $1,000,000 |
| Related to federal disaster/emergency | 30 years | $1,000,000 |
In addition to imprisonment and fines, defendants may be ordered to pay restitution to victims and may be subject to asset forfeiture of property obtained through the fraud.[2]
Federal Sentencing Guidelines
Wire fraud is sentenced under USSG §2B1.1, which governs fraud and theft offenses. The sentencing calculation begins with a base offense level and applies various enhancements based on the specific characteristics of the offense.
Base Offense Level
The base offense level for wire fraud under §2B1.1(a) is:
- 7 if the offense involved fraud or deceit
- 6 if the offense did not involve fraud or deceit[5]
Loss Amount Enhancements
The most significant enhancement typically comes from the amount of loss caused by the fraud. Under §2B1.1(b)(1), offense levels increase based on loss:
| Loss Amount | Level Increase |
|---|---|
| More than $6,500 | +2 |
| More than $15,000 | +4 |
| More than $40,000 | +6 |
| More than $95,000 | +8 |
| More than $150,000 | +10 |
| More than $250,000 | +12 |
| More than $550,000 | +14 |
| More than $1,500,000 | +16 |
| More than $3,500,000 | +18 |
| More than $9,500,000 | +20 |
| More than $25,000,000 | +22 |
| More than $65,000,000 | +24 |
| More than $150,000,000 | +26 |
| More than $250,000,000 | +28 |
| More than $550,000,000 | +30 |
Other Common Enhancements
Additional enhancements under §2B1.1 may apply based on:
- Number of victims: +2 to +6 levels depending on number (10+, 50+, 250+)
- Vulnerable victims: +2 levels if targeting elderly, disabled, or otherwise vulnerable persons
- Sophisticated means: +2 levels for especially complex or intricate schemes
- Mass marketing: +2 levels for schemes using mass marketing techniques
- Financial institution officer: +2 levels if defendant was an officer or employee of a financial institution
- Organized scheme: +4 levels if the offense involved organized, ongoing criminal activity with multiple participants
- Endangering solvency of financial institution: +4 levels[5]
Role Adjustments
The defendant's role in the offense may result in additional adjustments under USSG §3B1.1 and §3B1.2:
- Organizer/leader: +2 to +4 levels based on scope of criminal activity
- Manager/supervisor: +2 to +3 levels
- Minimal participant: -4 levels
- Minor participant: -2 levels
Acceptance of Responsibility
Defendants who plead guilty and accept responsibility typically receive a 2-3 level reduction under §3E1.1.[6]
Prosecutorial Considerations
Why Prosecutors Favor Wire Fraud Charges
Wire fraud has become one of the most frequently charged federal offenses for several reasons:
- Broad Applicability: The statute covers virtually any fraudulent scheme that involves electronic communication.
- Jurisdictional Flexibility: Any use of interstate wire communications provides federal jurisdiction, even for schemes that would otherwise be state crimes.
- Long Statute of Limitations: The general statute of limitations is 5 years, but extends to 10 years for offenses affecting financial institutions.
- Significant Penalties: The 20-30 year maximum provides substantial leverage in plea negotiations.
- Multiple Counts: Each wire transmission can be charged as a separate count, potentially multiplying sentences.
Common Charging Patterns
Wire fraud is frequently charged in combination with:
- Conspiracy (18 U.S.C. § 1349): Agreement to commit wire fraud
- Money Laundering (18 U.S.C. § 1956, 1957): Moving or concealing fraud proceeds
- Bank Fraud (18 U.S.C. § 1344): When the scheme targets financial institutions
- Securities Fraud (15 U.S.C. § 78j(b)): For investment-related schemes
- Tax Fraud (26 U.S.C. § 7201): When proceeds are not properly reported
Types of Wire Fraud Schemes
Business Email Compromise (BEC)
Business email compromise schemes involve hackers or fraudsters impersonating executives, vendors, or business partners via email to trick employees into transferring funds. The FBI's Internet Crime Complaint Center reports that BEC schemes account for billions of dollars in losses annually.[7]
Investment Fraud
Investment fraud encompasses Ponzi schemes, pyramid schemes, and other securities frauds where victims are induced to invest based on false representations about returns, safety, or the nature of the investment.
Advance Fee Fraud
These schemes require victims to pay upfront fees to receive promised loans, inheritances, lottery winnings, or other benefits that never materialize.
Healthcare Fraud
When healthcare fraud schemes use electronic billing systems, claims submissions, or other wire communications, wire fraud charges may be added to healthcare-specific charges.
Government Program Fraud
Fraud targeting government programs, including COVID-19 relief programs like the Paycheck Protection Program (PPP), frequently involves wire communications and results in wire fraud charges.
Notable Cases
Sam Bankman-Fried (2023-2024)
Sam Bankman-Fried, founder of the FTX cryptocurrency exchange, was convicted in November 2023 of wire fraud and other charges related to the collapse of FTX. The scheme involved billions of dollars in customer funds that were misappropriated. Bankman-Fried was sentenced to 25 years in federal prison in March 2024.[8]
Elizabeth Holmes (2022)
Elizabeth Holmes, founder of the blood-testing company Theranos, was convicted of wire fraud in January 2022 for defrauding investors about the capabilities of the company's technology. She was sentenced to over 11 years in federal prison.[9]
Billy McFarland (2018)
Billy McFarland, organizer of the fraudulent Fyre Festival, pleaded guilty to wire fraud charges in 2018. He had sold tickets and investment stakes in the festival while making material misrepresentations about the event. He was sentenced to six years in federal prison.[10]
Ippei Mizuhara (2024)
Ippei Mizuhara, the former interpreter for Los Angeles Dodgers star Shohei Ohtani, pleaded guilty in 2024 to bank and tax fraud charges after stealing approximately $17 million from Ohtani to cover gambling debts. Though charged under bank fraud statutes, the scheme involved wire communications to transfer funds.[11]
Statistics
According to the United States Sentencing Commission, wire fraud is consistently among the most frequently sentenced federal offenses:
- In fiscal year 2023, federal courts sentenced approximately 2,400 defendants for wire fraud offenses
- The median sentence for wire fraud was 18 months imprisonment
- Approximately 85% of wire fraud defendants received some term of imprisonment
- The average loss amount in wire fraud cases exceeded $1 million[12]
Defenses
Common defenses to wire fraud charges include:
Lack of Intent to Defraud
Wire fraud requires proof of specific intent to defraud. Defendants may argue that misrepresentations were made negligently or mistakenly rather than with fraudulent intent.
Good Faith
A defendant who genuinely believed in the truth of their representations or the legitimacy of their business may assert a good faith defense.
No Materiality
Following the Supreme Court's decision in Neder v. United States, materiality is an element of wire fraud. If misrepresentations were not material to the victim's decision-making, no wire fraud occurred.[4]
No Use of Wires
Without proof that the defendant used or caused to be used interstate wire communications in furtherance of the scheme, federal jurisdiction is lacking.
Statute of Limitations
The general statute of limitations for wire fraud is 5 years from the last use of wire communications in furtherance of the scheme. For offenses affecting financial institutions, the limitations period is 10 years.
Relationship to Other Offenses
Mail Fraud (18 U.S.C. § 1341)
Mail fraud is the historical predecessor to wire fraud and covers the use of the postal service or private carriers to execute fraud schemes. The elements are nearly identical, with the primary difference being the medium of communication. Many fraud prosecutions include both wire and mail fraud counts.
Bank Fraud (18 U.S.C. § 1344)
Bank fraud specifically targets schemes to defraud federally insured financial institutions. When a wire fraud scheme also involves bank fraud elements, both charges may apply.
Securities Fraud
Securities fraud under 15 U.S.C. § 78j(b) and SEC Rule 10b-5 covers fraud in connection with securities transactions. Investment fraud schemes typically give rise to both wire fraud and securities fraud charges.
See also
- Mail Fraud
- Bank Fraud
- Money Laundering
- Securities Fraud
- Federal Sentencing Guidelines and Offense Enhancements
- Sam Bankman-Fried
- Elizabeth Holmes
- Billy McFarland
Frequently Asked Questions
Q: What is wire fraud?
Wire fraud is a federal crime under 18 U.S.C. § 1343 that prohibits using interstate wire communications (such as phone calls, emails, or internet transactions) to carry out a scheme to defraud someone of money, property, or honest services. It is one of the most commonly charged federal offenses.
Q: What is the maximum sentence for wire fraud?
The maximum sentence for wire fraud is 20 years in federal prison. However, if the fraud affects a financial institution or is connected to a presidentially declared disaster or emergency, the maximum increases to 30 years.
Q: What must prosecutors prove to convict someone of wire fraud?
Prosecutors must prove four elements beyond a reasonable doubt: (1) a scheme to defraud, (2) material misrepresentations or concealment, (3) intent to defraud, and (4) use of interstate wire communications in furtherance of the scheme.
Q: What is the base offense level for wire fraud under the sentencing guidelines?
Under USSG §2B1.1, wire fraud has a base offense level of 7 when the offense involves fraud or deceit. This level increases significantly based on the amount of loss, number of victims, and other factors such as sophisticated means or targeting vulnerable victims.
Q: What types of communication qualify as "wire" communications?
Wire communications include any transmission by wire, radio, or television in interstate or foreign commerce. This covers telephone calls, emails, text messages, fax transmissions, internet transactions, electronic fund transfers, and website communications.
Q: How is wire fraud different from mail fraud?
Wire fraud and mail fraud have nearly identical elements—the primary difference is the medium of communication. Mail fraud covers use of the postal service or private carriers, while wire fraud covers electronic communications. Many fraud prosecutions include both charges.
References
- ↑ 1.0 1.1 U.S. Department of Justice, Criminal Resource Manual § 941, "18 U.S.C. § 1343—Elements of Wire Fraud."
- ↑ 2.0 2.1 2.2 18 U.S.C. § 1343.
- ↑ Schmuck v. United States, 489 U.S. 705 (1989).
- ↑ 4.0 4.1 Neder v. United States, 527 U.S. 1 (1999).
- ↑ 5.0 5.1 United States Sentencing Commission, USSG §2B1.1 (2024).
- ↑ United States Sentencing Commission, USSG §3E1.1 (2024).
- ↑ FBI Internet Crime Complaint Center, 2023 Internet Crime Report.
- ↑ U.S. Department of Justice, "Samuel Bankman-Fried Sentenced To 25 Years For His Orchestration Of Multiple Fraudulent Schemes," March 28, 2024.
- ↑ U.S. Department of Justice, "Theranos Founder Elizabeth Holmes Found Guilty," January 3, 2022.
- ↑ U.S. Department of Justice, "Fyre Festival Founder Sentenced to 6 Years in Prison," October 11, 2018.
- ↑ U.S. Department of Justice, "Interpreter for Los Angeles Dodgers Star Shohei Ohtani Charged in Multimillion Dollar Theft," April 11, 2024.
- ↑ United States Sentencing Commission, 2023 Annual Report and Sourcebook of Federal Sentencing Statistics.
White Collar Crimes: Wire Fraud · Mail Fraud · Tax Evasion · Money Laundering · Bank Fraud · Healthcare Fraud · Securities Fraud · Aggravated Identity Theft · Embezzlement · Bribery · Insurance Fraud · Mortgage Fraud
Other Federal Offenses: Drug Trafficking · Illegal Reentry · Felon in Possession · RICO · Conspiracy · False Statements · Obstruction of Justice · Child Exploitation