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Laws on Federal Fraud and What You Should Know

Posted by Seth Chazin | Oct 13, 2019 | 0 Comments

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Federal law defines fraud as any intentional deception or misrepresentation used to benefit yourself or someone else. Under 18 USC Sec. 1001, fraud is defined as knowingly and intentionally doing any of the following:

  • Falsifying, concealing, or covering up by any trick, scheme, or device a material fact
  • Making any materially false, fictitious, or fraudulent statement or representation
  • Making or using any false writing or document knowing the same to contain materially false, fictitious, or fraudulent statement or entry

Fraud crimes make up the third largest portion of federal crimes in the US.

Types of Fraud

Mail and Wire Fraud (18 USC 1343): It is a crime to use the mail or any wire communication technology such as the internet as part of a scheme to defraud. Because of these laws, mail fraud and wire fraud are usually charged in a wide range of cases. For instance, people who pay a bribe to government officials typically use the phone or mail a letter at some point in the process. Because of these communications the prosecutors can charge the person with wire or mail fraud in addition to other charges that may apply.

Identity Theft Fraud (18 USC 1028, 1028A): If you knowingly and without lawful authority produce, transfer or possess with intent to unlawfully use an identification document authentication feature, or false identification document, you can be prosecuted under federal identity theft law. Examples include drivers licenses, birth certificates, Social Security Cards and passports.

If you are convicted of identity theft, you face up to 15 years in a federal prison and a fine up to $250,000 ($500,000 for an organization)

Securities Fraud (18 USC 1348): This type of fraud typically occurs when a brokerage firm, investment bank, or stockbroker deceives clients or investors by providing false or misrepresented information. Some examples of securities fraud are Ponzi or pyramid schemes investment schemes, broker embezzlement, and currency fraud. It also occurs when people trade stock by using information not available to the public, known as insider trading.

Medicare or Medicaid Fraud (18 USC 1347): This type of fraud typically occurs when a healthcare company or individual provider attempts to collect illegitimate reimbursement from the government, such as by over-billing for services or by billing unnecessary or non-existent treatment.

Tax Fraud (26 USC 7201, et seq.): Also known as tax evasion, occurs when a taxpayer attempts to avoid paying federal income tax. Tax fraud can be anything from overestimating business expenses to underreporting income to not filing a tax return. Tax fraud is very common, resulting in $2 trillion in unreported taxes per year, according to the IRS.

Embezzlement ( 18 USC  Ch.31): Embezzlement is a crime of trust in which any individual who has lawfully obtained access to any type of property or asset uses that access as a means of stealing, misappropriating, or transferring ownership. It typically becomes a federal crime when it involves the agencies of the U.S. government. However, that is not the only way embezzlement can fall under federal jurisdiction. For instance, businesses who have gained access to U.S. government property or who have been paid from taxpayer money, may fall prey to or be the alleged culprit in federal embezzlement.

Mortgage Fraud (U.S. Codes 18 USC § 1341): Mortgage Fraud is generally characterized as a type of misstatement, misrepresentation, or omission in relation to a mortgage loan. In most cases, an individual commits mortgage fraud when he/ she knowingly makes a false statement that affects the bank's decision to, for instance, approve a loan, reduce payoff amount, or agree to repayment terms. If federal agents would prosecute accidental omissions or accidents, nearly 10% of mortgage applications would be fraudulent. What makes mortgage fraud a federal crime is the intent of the applicant.

Credit Card Fraud (U.S. Codes 18 USC § 1029):  Credit card fraud is defined as knowingly, or with fraudulent intent, producing or distributing fraudulent credit cards. Likewise, anyone who engages in the use of fraudulent credit cards and obtains items of value above a certain value may be prosecuted.

Penalties

Federal fraud crimes are typically charged as felony offenses, though misdemeanor convictions may be possible in certain situations. The difference between a misdemeanor and a felony is that a felony has a potential sentence of a year or more in prison, while misdemeanor crimes can result in a prison sentence of up to a year. The penalties for any federal fraud conviction usually involve fines, prison, or probation.

Prison: Someone convicted of federal fraud crime faces time in prison. The prison sentence can range from 0 to 6 months up to 20 to 30 years per violation. The amount of time served is dependent upon someone's criminal history and the particular law violated.

Probation: For some fraud crimes, it's possible to never have to serve any prison time A federal judge can impose a federal probation sentence individually or in combination with a fine or term of imprisonment in some situations. Those sentenced to probation must report to a court or probation officer on a regular basis. They must also follow probation conditions and submit regular reports to the probation officer.

Fines: The fines for federal convictions can be very high. For instance, a conviction of mail or wire fraud can result in a fine of $250,000 per violation and even larger if the fraud is committed by a company or organization.

Restitution: When convicted of a federal fraud crime, an order to pay restitution is usually a part of the sentence. It is paid by perpetrators to the victims in order to compensate them for their losses. Restitution must be paid in addition to any fines, and payment of fines and restitution is usually a condition of probation.

Contact the Law Offices of Seth P. Chazin

If you or someone you know is under investigation or is charged with a federal crime, contact The Law Offices of Seth P. Chazin immediately. Federal crimes are a serious matter, one that requires the expertise of an experienced attorney. Seth Chazin has over 30 years of experience successfully defending those charged with federal crimes and will make every effort to ensure that all of your constitutional rights are protected. Contact us today at 1-800-499-9902.

About the Author

Seth Chazin

Seth P. Chazin has aggressively defended clients in thousands of felony and misdemeanor cases for over 25 years. He has extensive experience representing criminal defendants in federal and state court, while handling both state and federal appeals as well.

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