Fraud

What Acts of Fraud are Federal Crimes?

Fraud is the use of wrongful or criminal deception intended to result in financial or personal gain. Like other offenses, acts of fraud are federal crimes when they are involved in interstate or foreign commerce or other activities subject to federal jurisdiction. These are often considered “white collar crimes.” For example: 

• Identity Theft Fraud: producing, transferring, or possessing with intent to unlawfully use an identification document, authentication feature, or a false identification document (such as birth certificates, driver licenses, U.S. Social Security cards, and U.S. passports).
• Bankruptcy Fraud: scheming or concealing a scheme to defraud a creditor with bankruptcy proceedings, such as a fraudulent filing or representation under Chapter 11.
• Money Laundering: concealing the source of illegally obtained income.
  Citizenship Fraud: falsely and willfully representing oneself as a U.S. citizen.
• Computer Fraud: intentionally accessing a computer without authorization or in excess of authorized use to obtain information in a financial record of a financial institution, information of a card issuer or contained in a file of a consumer reporting agency on a consumer, information from any U.S. department or agency, information from any protected computer, or using a computer to knowingly, with intent to defraud, obtain anything of value worth more than $5,000 in a one-year period.
• Mail and Wire Fraud: Using the USPS, a private mail carrier, telephone, fax, internet, radio, television or any interstate or international wire communication as a part of a scheme to commit fraud.
• Bank Fraud: using a scheme to defraud a financial institution or to obtain money, credit, securities, or other property from a financial institution.
• Healthcare Fraud: knowingly and willfully executing, or attempting to execute, a scheme to fraudulently obtain money or property from any health care benefit program.
  Securities Fraud: Ponzi or pyramid schemes, investment schemes, broker embezzlement, foreign currency fraud, and insider trading.
• Tax Fraud: Tax evasion (willful attempt to evade or defeat any imposed tax) and tax avoidance (willful failure to pay tax, file a return, keep required records, or supply required information).

What is the punishment for federal fraud crimes?

Serious federal fraud crimes are felonies punishable with extremely high fines and lengthy prison sentences. Minor violations are misdemeanors punishable by fines and imprisonment up to one year. For example: 

• 18 U.S. Code § 1025 – False pretenses on high seas, obtaining anything by fraud or selling something that is worthless while traveling on the ocean or in flight above it is punishable by up to one year imprisonment if the value is $1,000 or less. Punishment increases up to 5 years imprisonment if the value exceeds $1,000.
• 18 U.S.C. §§ 1028, 1028A7 – Identity theft fraud is punishable by fine of up to $250,000 for an individual ($500,000 for an organization), and up to 15 years imprisonment. Punishment increases up to 20 years imprisonment if committed while facilitating a drug crime, in connection with a violent crime, or subsequent conviction for identity fraud. Punishment increases up to 40 years imprisonment if committed to facilitate an act of domestic or international terrorism.
• 18 U.S. Code § 1573 – Bankruptcy fraud is punishable by fine up to $250,000 ($500,000 for an organization), and up to 5 years imprisonment.
• 18 U.S. Code § 1956 – Laundering of monetary instruments is punishable by fine up to $500,000 or twice the value of property involved, whichever is greater, and imprisonment up to 20 years.
• 18 U.S. Code § 9114 – Citizenship fraud is punishable by fine up to $250,000 and imprisonment up to 3 years.
• 18 U.S. Code § 10305 – Computer Fraud is punishable by fine up to up to $250,000 for an individual ($500,000 for an organization) and up to 10 years imprisonment. A second or subsequent conviction increases punishment up to 20 years imprisonment.
• 18 U.S. Code § 13438 – Mail and Wire Fraud is punishable by fine up to $1,000,000 and up to 20 years imprisonment.
• 18 U.S. Code § 13442 – Bank fraud is punishable by fine up to $1,000,000 and up to 40 years imprisonment.
• 18 U.S. Code § 13476 – Health Care Fraud is punishable by fine up to $250,000 for an individual ($500,000 for an organization) and up to 10 years imprisonment. If the violation results in serious bodily injury, punishment increases up to 20 years imprisonment. If it results in death, punishment increases to life in prison.
• 18 U.S.C. § 13489 – Securities Fraud is punishable by fine of up to $250,000 for an individual ($500,000 for an organization), and up to 25 years imprisonment.
• 26 U.S.C. § 7201 – Tax Evasion is punishable by fine up to $100,000 for an individual ($500,000 for a corporation) plus the cost of prosecution and up to 5 years imprisonment.
• 26 U.S.C. § 7203 – Tax Avoidance is punishable by fine up to $25,000 for an individual ($100,000 for a corporation), plus cost of prosecution and up to one year imprisonment (misdemeanor). It becomes a felony punishable up to 5 years imprisonment if there is willful failure to file a return for receipt of more than $10,000 in 1 business transaction (or 2 or more related transactions).