Mail Fraud Law.
Mail fraud is a federal crime. Specifically, 18 U.S.C. § 1341 makes it a felony to con or scam other people out of money or property using the mail. Equally important, each time you use the mail to push the scam forward is a separate crime.
In addition, this crime has four key elements:
- A scheme to defraud;
- Making false material representations;
- Using the mail to carry out the scheme; and
- Acting with the specific intent to defraud.
If the government can show all four of these things at trial, then a jury will find the person guilty of mail fraud.
But how does this crime work in the real world? Are there defenses to this crime? And what are the penalties for mail fraud? This post will answer these questions and give you a road map of what to expect in a mail fraud case.
What is a scheme to defraud?
A scheme to defraud means any plan, pattern, or course of action that is intended to cheat another person out of his property or money. In short, a scheme to defraud means either a con or a scam.
And it covers all cons or scams that depend in some way on the information or documents that passed through the mail.
What is a material misrepresentation?
A representation is material if it has a natural tendency to influence, or is capable of influencing, the decision of the person that it is addressed to. To add to that, a material fact is a fact that would be important to a reasonable person in deciding if he or she wants to opt in or opt out of the deal.
Consequently, the government must show the defendant lied about something material in the case. If they cannot, then they cannot prove a key element of their case. But critically, this definition will provide a possible defense to a mail fraud charge. We will discuss this below
How is the “scheme to defraud” connected to the use of the mail?
The mail fraud law does not cover all frauds. It only covers frauds that “use the mails” as a “part of the execution of the fraud.” More to the point, the use of the mail must be closely related to the scheme because the person either mailed something or caused it to be mailed in an attempt to carry out the scheme.
As the Supreme Court explained:
Where one does an act with knowledge that the use of the mails will follow in the ordinary course of business, or where such use can reasonably be foreseen, even though not actually intended, then he ’causes’ the mails to be used.Pereira v. United States, 347 U.S. 1, 8-9 (1953).
Courts read this broadly and give prosecutors lots of leeway in mail fraud cases.
Nonetheless, not all mailings will lead to a mail fraud conviction. The key issue is whether the mailing is “incident to an essential part of the scheme.” Further, if the mail was not related in anyway to the scheme, then there is no crime for mail fraud.
What does specific intent to defraud mean?
Specific intent to defraud means a conscious, knowing intent to deceive or cheat someone. This means two things. First, the person must make a material misrepresentation or omission. Second, the person must make the material misrepresentation or omission intending the victim to give up his property or do something the victim would not do absent the fraud.
What is the good faith defense to mail fraud?
Intent to defraud is a jury question. This means a defendant can put on proof that he acted in good faith. That is to say, that he acted with no intent to defraud.
Further, he can raise this defense even if the statements he made were not true. But the major point is that he must have believed they were true when he made them.
On top of that, the good faith defense is critical in many mail fraud cases because it is often the only defense available. As the Fifth Circuit explained:
In the typical case, the [defendant] is not in a position to refute that the representations were false. The [defendant] can then only defend on the ground that the representations were made in good faith and without intent to defraud. Courts have come to recognize that in our high pressure economy, puffing of merchandise and services to the legal limit is commonplace. Consequently, a [defendant] accused of fraudulent representations to prospective customers must not be unduly restricted in asserting what may be his sole defense, good faith.United States v. Diamond, 430 F.2d 688, 692 (5th Cir. 1970).
Stated another way, good faith protects people who puff their goods or services. It also protects the hard sale. As long as the person does not cross the line, then good faith can be a defense to a mail fraud charge. And where the line is drawn is often a matter of degree.
What are examples of Mail Fraud?
18 U.S.C. § 1341 is a flexible law for a couple of reasons. First, it gives prosecutors an important tool to fight fraud. For example, prosecutors can use this law to go after people who use the mail to:
- commit insurance fraud;
- commit bank fraud;
- bribe politicians;
- launder money
- commit check kiting;
- rig bids
- tamper with odometers; and
- commit land fraud.
Second, this law also applies to private and commercial carriers. To illustrate, 18 U.S.C. § 1341 bans someone from using FedEx, DHL, or UPS to defraud others.
In effect, this law targets the scam or the con. And the scam becomes a federal offense if the person used any type of mail carrier to commit the crime.
What are the penalties for mail fraud?
|Mail Fraud Type.||Jail Time.||Fine Amount.||Asset Forfeiture.||Statute of Limitations.|
|No Bank.||0-20 years.||$0.00 to $250,000.00.||Yes.||5 years.|
|Involves a Bank.||0-30 years.||$0.00 to $1,000.000.00||Yes.||10 years.|
If the victim of the crime is not a bank or financial institution, then the penalty range is 0-20 years in prison.
However, if the victim is a bank or financial institution, then the possible jail time is 0-30 years in prison.
Finally, prosecutors must file these charges within the time frames listed above. If they do not, then the defendant can raise a statute of limitations defense.
In other words, the defense can argue that the government waited too long to file the charges. As a result, the charges should be dismissed.
White Collar Defense.
Mail fraud is almost identical to wire fraud. They both cover the same types of frauds and swindles. But not all frauds or swindles are federal crimes. A scam or con only becomes a federal crime if the use of the mail is connected to a vital part of the scheme. If it is not, then there is no federal crime.
Finally, in a mail fraud case, you should always ask the following questions:
- What was the scheme to defraud?
- What statements did the person make to the victim?
- Who is the victim?
- How did the victim rely on the statements?
- How was the use of the mail connected to the scheme to defraud?
- Do the facts and circumstances of the case show that the person was acting in good faith?
The answers to these questions will provide the outline for your defense. They will also help you answer the most important question in your case: Should I fight my case or work something out?
Attorney Genaro R. Cortez.