Wire Fraud

THE FEDERAL WIRE fraud statute, originally enacted in 1952, is codified under 18 U.S.C. §1343, and has two essential elements: 1) using, or trying to use, signal transmission that occurs in interstate or foreign commerce; 2) transmission that is in furtherance of defrauding someone.

The law has been utilized against virtually every new electronic method of fraud as well as less sophisticated schemes. Federal jurisdiction over wire fraud originates in the Constitution under Article 1, Section 8, and is based on Congress's right to make laws affecting interstate and foreign commerce. It is titled Fraud By Wire, Radio, or Television:

Many of the legal theories associated with the application of the mail fraud statute (18 U.S.C. 1341) are also applicable to wire fraud. One major difference between wire and mail fraud is that the federal government can criminalize any use or intended use of the mails both interstate and intrastate, according to its right to regulate the post office, which it owns and operates. In contrast, the federal government does not own the wires over which fraud is conducted and therefore is not allowed to criminalize intrastate wire use. It is restricted by the Commerce Clause to criminalize only wire transmissions that affect interstate and foreign commerce.

Four years after its passage, Congress changed the statute to explicitly reflect the federal jurisdictional criterion and to eliminate any challenges to the law based on constitutionality. The change involved substituting “transmitted by means of wire, radio, or television communication in interstate or foreign commerce” for the original statutory wording of “transmitted by means of interstate wire, radio, or television communication.” The other major revision of the statute occurred in 1989 when the clause related to effects on a financial institution was added, and for which the maximum punishment was increased by 10 years in 1990.

The underlying legal crime of wire fraud is not that associated with the fraud, but rather the crime in using wires or signals in interstate or foreign commerce, or trying to use them, as an instrument of crime. This allows extremely distinctive enforcement interpretations. First, the statute does not[Page 863] consider the harm inflicted by the fraud. Rather, it cares only about how many times signals were used, or were tried, in interstate or foreign commerce to in any way further the fraud.

Second, the statute allows merely a “scheme” to be prosecuted, regardless of whether the fraud actually took place. The interpretation is in this sense similar to a conspiracy to commit a crime, but a conspiracy necessitates at least two participants; there need be only one participant in the scheme to be prosecuted under wire fraud. Further, whereas conspiracy can be charged only once, wire fraud law punishes each act of signal transmission as a separate count.

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