UNDERSTANDING MAIL FRAUD AND WIRE FRAUD: A Nonattorney's Guide

By Dennis Boyle

Mail fraud and wire fraud are among the most common white-collar cases prosecuted by the US government. Barely a day goes by without a mail fraud or wire fraud case appearing in the newspaper or on television news. The headlines are sensational: "Businessman Defrauds Clients of Millions of Dollars" or "Local Church Members Defrauded of Millions," but what exactly are mail fraud and wire fraud?This book examines these two related statutes to help laymen understand what these statutes are and, just as importantly, what they are not. It goes behind the headlines to examine the arcane language of the laws and uses hypothetical real-world examples to make the statutes understandable to everyone. It explains concepts like "a scheme or artifice to defraud" or "an intent to defraud" so that the reader can truly understand what the media is reporting.These two statutes also present traps for the unwary. Not every business deal that fails to work out is a fraud. Not every inaccurate statement made in a business setting is a "fraud." There are innocent mistakes. Understanding the difference between a crime and a bad idea is important to understand when the statutes should be applied and when they should not. Chapter after chapter, this book shines a light on these important distinctions.The information provided in this book does not, and is not intended to, constitute legal advice; instead, all information, content, and materials are provided for general informational purposes only. Readers of this publication should contact their attorney to obtain advice with respect to any particular legal matter and should refrain from acting on the basis of information contained in this publication without first seeking legal advice from counsel in the relevant jurisdiction. Only an attorney can determine whether the information contained herein is applicable to any particular individual's situation.

• Language: English
• Publisher: Page Publishing, Inc.
• Release date: Nov 21, 2022
• ISBN: 9781662486234

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UNDERSTANDING MAIL FRAUD AND WIRE FRAUD

A Nonattorney's Guide

Dennis Boyle

Copyright © 2022 Dennis Boyle

All rights reserved

First Edition

PAGE PUBLISHING

Conneaut Lake, PA

First originally published by Page Publishing 2022

ISBN 978-1-6624-8621-0 (pbk)

ISBN 978-1-6624-8623-4 (digital)

Printed in the United States of America

Table of Contents

Disclaimer

Introduction

Chapter 1

Chapter 2

Chapter 3

Chapter 4

Chapter 5

Chapter 6

Chapter 7

Chapter 8

Chapter 9

Chapter 10

Chapter 11

Chapter 12

Chapter 13

About the Author

Disclaimer

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Readers of this publication should contact their attorney to obtain advice with respect to any particular legal matter. No reader of this publication should act or refrain from acting on the basis of information in this publication without first seeking legal advice from counsel in the relevant jurisdiction. Only your individual attorney can provide assurances that the information contained herein—and your interpretation of it—is applicable or appropriate to your particular situation. Use of and access to this publication or any source material contained within the publication do not create an attorney-client relationship between the reader and the author.

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Introduction

I am a white-collar criminal defense lawyer. I defend people who are suspected of and charged with crimes in federal courts throughout the United States. The crimes with which most of my clients are charged are nonviolent felony violations of the United States Code—in the vast majority of white-collar cases, the defendants whom the government decides to charge our first-time offenders. Quite often, they are respected businesspeople, professionals such as doctors or lawyers, and community leaders. They are often active in their churches, synagogues, or mosques. They almost always have a family. In short, the people I represent are not the types of people one thinks of as criminals.

And just as the white-collar defendant is different from the typical defendant, so too is the white-collar case different from the typical criminal case. In a typical criminal case, let's take murder as an example, there is rarely a question as to whether a crime occurred. The body is lying on the ground, there is a series of bullet holes in the victim's chest, and the assailant has fled the scene. Just from the small amount of evidence that exists, one can surmise that the crime of murder has been committed. The elements of murder are straightforward. They involve the intentional killing of another human being without excuse or justification. When one finds a body with bullet holes in the chest and blood on the ground, then checks to see if the victim is breathing or has a heartbeat, and finds that the victim does not, one can safely assume that murder has occurred. The job of the police or the detectives, at that point, is simply to establish who did it. This is not to suggest that determining the identity of the perpetrator is always easy or that the police are infallible in making an arrest. It is exceedingly rare, however, for the police to misinterpret a natural death as a homicide.

In the white-collar case, however, the opposite is true. In the typical white-collar case, someone has lost a lot of money. It is usually fairly easy to determine the identity of the individual responsible for the loss. What is difficult, however, is determining whether the loss was the result of a crime. An individual who places his life savings in the care of an investment professional expects that that investment professional will invest his life savings in a manner that will make him money. Unfortunately, the stock market goes up, and it goes down. A one-million-dollar investment can turn into $3 million. However, if the investment advisor makes a bad investment, that one-million-dollar investment can quickly turn into zero. Unlike the murder case, wherein the identity of the perpetrator is a central issue, in the white-collar scenario, the identity of the perpetrator is obvious—but the crime may not be. The issue in the typical white-collar case is whether fraud has occurred, and if it did, whether the perpetrator had an intent to defraud.

The arena wherein white-collar cases are typically litigated is also different from the state trial courts where most criminal cases are prosecuted. State court prosecutions tend to be investigated by police officers who may or may not have relevant training for the crime they are investigating. Many cases are lost because of incompetent police work. State-level crimes are prosecuted by assistant district attorneys or assistant state attorneys, who are always overworked and underpaid. Because of the publicity associated with violent crime and the public's particular concern about violent crime, the prosecution of murders, robberies, rapes, burglaries, and similar crimes takes priority over nonviolent crime.

Federal criminal investigations are conducted by any one of several investigative agencies, but in white-collar prosecutions, the Federal Bureau of Investigation (FBI) is the agency most likely to be the lead agency. Special agents of the FBI are hardworking and intelligent. Frequently, they have law degrees or accounting degrees. They also rarely work alone. Usually, they are part of a team and have the ability to draw upon fellow agents and forensic experts within the agency to assist them. Federal criminal cases are assigned to Assistant United States Attorneys (AUSA). AUSAs are among the best prosecutors in the United States. Typically, they have distinguished academic backgrounds and extensive experience in the prosecution of cases at the state level before they join the US Department of Justice (DOJ). Just as FBI agents can rely upon very substantial support from the FBI, so too can AUSAs draw upon the nearly unlimited resources of the DOJ. Prosecutors and agents in a white-collar case frequently take years to put the case together. When state prosecutors are dealing with a murder, there is substantial, often sensationalized, coverage of the murder in the local media. Public safety is at risk or at least perceived to be at risk, and police must solve the case quickly. In most white-collar crimes, the victim's money has been lost before criminal investigators begin their work. Federal regulators, like the Securities and Exchange Commission (SEC), can take civil action to protect the public. FBI agents and criminal investigators from other agencies can take their time to complete a more thorough investigation.

For the defense lawyer, the differences between state and federal courts are striking. The odds of winning in federal court are tilted heavily toward the prosecutor. The federal defense attorney has very little access to information from the government. If the attorney is to be prepared, in many instances, the attorney will have to do his or her own thorough investigation and find his or her own witnesses. Relying upon the prosecutor for evidence to support the defense is a recipe for disaster. Plea bargaining in federal court is more difficult than it would be in state court. Directives to AUSAs from the DOJ require the assistant United States attorney to pursue the most serious readily provable offense. Even where a plea has been agreed to, it is normally not binding on the court, and a judge may impose a sentence far longer than was anticipated by the parties at the time the plea was entered.

So why write a book on mail fraud and wire fraud prosecutions? The reasons are many. The first reason is to help people who are suspected of mail fraud or wire fraud understand the meaning of these complex and archaic laws that ensnare so many people. The second reason is to prevent innocent people from pleading guilty to conduct that may not even constitute a crime. The third reason is that the mail fraud and wire fraud statutes are the oldest and most frequently prosecuted white-collar cases. If one is to consider himself or herself a white-collar criminal defense attorney, then one must be familiar with these two statutes. Over the century and a half, since the enactment of the first mail fraud statute, Congress has criminalized many other types of business transactions, but the mail fraud and wire fraud statutes are the oldest. Many of the concepts that have been developed in these statutes are applicable to other white-collar offenses. Mail fraud and wire fraud are the father and mother of all other fraud statutes. Understanding them helps to understand all other fraud statutes.

Finally, I would like to emphasize the disclaimer that appears on the inside cover of this book. This book is meant neither to provide legal advice nor is it intended to form an attorney-client relationship. It seems a bit strange even to be required to make the statement. If one is suspected of mail fraud or wire fraud, or if one has been charged with mail fraud or wire fraud, that individual needs to retain the best white-collar criminal defense attorney available. That attorney is not the college fraternity brother who does DUIs. It is not the business attorney who litigates breach of contract actions. It is not even the criminal defense attorney who represents rapists and drug dealers routinely. It is an attorney who actively represents individuals charged in federal court with white-collar offenses.

For one to read this book or any similar book and then believe that he or she understands mail fraud or wire fraud would be akin to a teenager reading a tenth-grade biology textbook and believing he or she could perform heart surgery. Do not do it.

Chapter 1

What Are Mail Fraud and Wire Fraud?

In the movie The Firm, a young associate, played by Tom Cruise, who recently graduated at the top of his class from Yale, is hired by a law firm in Memphis, Tennessee. As the story develops, the audience learns that the firm is actually a mob law firm that assists clients in laundering their ill-gotten gains (money laundering) and, presumably, in other illegal activities. Because Tom Cruise is apparently more intelligent than anyone else who works at the firm, he quickly learns of the firm's relationship with organized crime. For most of the movie, there seems to be little that Cruise can do to extricate himself from the firm or its ongoing criminal activity.

Finally, in one memorable scene (at least for white-collar criminal defense lawyers), Tom Cruise is confronted by a firm client who complains about his bill. Having clients complaining about bills is something that all law firms face; however, this particular client tells Cruise that when you put a postage stamp on an inflated bill, you have engaged in mail fraud. It is unclear from the movie whether Cruise does any of his own independent research, but what he does do is check his own time records to discover that the bill sent to the client had indeed been inflated by the firm. This revelation seems to come as a shock. I mean, laundering money for the mob is one thing, but who would ever expect a law firm to inflate a bill?

The discovery of this mail fraud somehow enables Cruise to go to the government and cooperate in the mail fraud prosecution of the firm while simultaneously not disclosing any information related to the firm's money-laundering operation for the mob. As the movie ends, Cruise explains to the mobsters that their criminal activity at the firm is protected by the attorney-client privilege; therefore, they have nothing to fear from the FBI's raid on the firm's offices. For some reason, the mobsters seem completely satisfied with this. At the same time, Cruise explains to the FBI that they have a killer mail fraud case against the firm and its senior partners, including Gene Hackman, whom I believe to be an underrated actor. Tom Cruise sails off into the sunset with his wife. The movie ends happily except, of course, for the senior leadership of the firm. Thank God that no one at the firm (or the FBI for that matter) was aware of the crime-fraud exception to the attorney-client privilege.

As the film's closing credits scrolled by, there is a question on everyone's mind (or at least on my mind). Was the firm's client accurate when he said the placement of a postage staff on an inflated invoice for legal services actually mail fraud? If a law firm, or any other professional firm for that matter, inflates an invoice and then mails that invoice to a client, has it committed mail fraud? In reality, the FBI does not investigate law firms for excessive billing, but the movie does make an interesting point. In fact, the mail fraud statute is incredibly broad and might encompass the intentional and systematic overbilling of clients by law firms. However, to my knowledge, no law firm has ever been prosecuted under the mail fraud statute for an excessive invoice. Attorneys have, however, been prosecuted for assisting clients in the development and implementation of a variety of fraud schemes.

So what exactly is mail fraud? The 18 USC Section 1341 defines mail fraud as follows:

Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, or to sell, dispose of, loan, exchange, alter, give away, distribute, supply, or furnish or procure for unlawful use any counterfeit or spurious coin, obligation, security, or