Anyone who uses the U.S. mail or any interstate delivery service in an attempt to engage in fraud runs the risk of being prosecuted under the federal mail fraud law. One of the most frequently prosecuted federal crimes, mail fraud is often charged by federal prosecutors because it can apply in so many situations.
This article will review the federal crime of mail fraud, including elements of the offense, penalties, and examples.
Mail fraud is a federal crime. The two main elements of mail fraud are: the defendant (1) had a scheme or plan to defraud someone and (2) used the "mail system" (or planned to) as a way to carry out the scheme. The mail system includes the U.S. postal service, as well as commercial interstate delivery services like UPS and FedEx.
The federal mail fraud statute is a powerful tool for federal prosecutors due to its simplicity and breadth. Federal prosecutors have successfully obtained mail fraud convictions for crimes committed by Charles Ponzi (Ponzi schemes), Bernie Madoff (investment fraud scheme), and Felicity Huffman (college admissions scandal), to name a few.
The prosecutor's job in a mail fraud case is relatively straightforward, requiring only that the prosecutor prove that the defendant had a plan to defraud and used the mails (or other interstate means) to carry it out.
First, the prosecutor must convince the jury that the defendant had a scheme or plan to defraud someone of money, property, or "honest services." The courts have defined fraud as conduct that breaks a legal or moral duty to another person, causing damages. For example, substituting a lesser grade of merchandise than that ordered by a customer constitutes fraud. But because the forms of fraud are almost limitless, and the concept so obvious, courts haven't given us more precise definitions. One has said, bluntly, "to defraud is, in less nice language, to cheat." (United States v. Foshee, 578 F2d 629, 632 (1978).)
Honest services. A fraudulent scheme's reach can extend beyond the manipulation of money, property, or goods. Depriving a victim of the value of its honest services will suffice. For example, an employee who steered contracts to his best friend, rather than awarding them to the best bidder, has deprived his employer of his duty to deliver "honest services" to those with whom he does business.
Victims. In a mail fraud prosecution, the government need not prove that the scheme actually injured victims, or was even carried out completely. It's not even necessary that the victim of the scheme had knowledge of its existence. The scheme and intent to defraud are enough.
The ease with which prosecutors satisfy this element of the offense is perhaps one reason that the crime of federal mail fraud is known as "the prosecutor's best friend." Using any method of interstate delivery, including the U.S. mail, will suffice. It's not necessary that mailing be an essential part of the scheme (it can be an incidental piece of it). The government needn't prove that the defendant actually deposited anything in the mail or with the delivery service; it's enough to prove that mailing or depositing the item at a collection point was an eventual part of the plan. The prosecutor can even prove "mailing" by pointing to an office's regular mailing procedures.
Common fraud schemes charged under mail fraud include:
Someone charged with mail fraud runs the risk not only of a felony conviction for that offense, with a significant fine and prison time, but a charge of racketeering as well. If the defendant acted in concert with anyone else, the prosecution can also charge under the Racketeer Influenced and Corrupt Organizations Act (known as "RICO"). A RICO conviction exposes the defendant to significantly more punishment in fines and incarceration.
While mail fraud is a widely applicable crime, it doesn't apply in all fraud cases. For example, if you use a phone or email to fraudulently convince someone to pay you money and the crime never involves use of the mail, you haven't committed mail fraud. However, there are numerous other federal fraud laws that can apply to other fraud schemes which do not use the mail, such as wire fraud or computer fraud. (Wire fraud is sometimes referred to as mail fraud's little brother.)
Two common defenses to mail fraud are the statute of limitations and good faith defense.
Statute of limitations. Statutes of limitations impose time limits on prosecutors to file criminal charges. Most mail fraud charges must be brought within five years of the offense. If the offense affects a financial institution, federal prosecutors have 10 years to bring the case.
Good faith defense. A defendant might also argue that he or she believed in good faith that the allegedly false representations were true when made. This defense challenges the element of fraudulent intent.
Mail fraud is a federal felony and carries the potential for stiff penalties. While the specific penalty a court imposes will differ significantly based on the circumstances of the case, any mail fraud conviction can result in steep fines, long prison sentences, and other penalties.
The potential prison penalty for a federal mail fraud crime is very high. Each offense can result in a felony sentence of up to 20 years in federal prison. However, the penalty can be harsher if the crime involves specific victims or elements. When, for example, a fraud scheme involves federal disaster relief or where the victim is a financial institution, sentences of 30 years per offense are possible.
Mail fraud convictions can also result in a probation term. Anyone sentenced to probation has to spend a specific amount of time, typically one to three years or more, abiding by specific court conditions in lieu of serving prison time. These conditions limit the person's liberties, such as by requiring the probationer to regularly report to a probation monitor, submitting to random home searches or random drug tests, not associating with known criminals, and not committing other crimes. Violating probation conditions can result in the defendant serving the federal prison sentence.
Mail fraud fines are also very high. A conviction for a single count of mail fraud can result in a fine of up to $250,000. For fraud involving financial institutions or federal disaster relief, fines of up to $1 million per offense are possible.
When a mail fraud scheme succeeds in defrauding someone of property or causes harm to a victim, courts make restitution a part of the sentence. Restitution payments are made to the victims so they can recover what they lost as a result of the fraud. Restitution payments must be made in addition to fines, and when probation is given, are made a condition of the sentence.
The federal government can also confiscate any proceeds of the crime through the forfeiture process in civil or criminal court.
If you're facing a mail fraud charge, you need the advice of an experienced criminal defense attorney. As soon as you learn that you are being investigated for, or charged with, any federal crime, you need to seek out a local criminal defense attorney immediately. You can unknowingly and detrimentally affect your case by speaking to investigators without competent legal representation. Talking to a criminal defense lawyer who is familiar with mail fraud laws and who has experience with the local federal prosecutors and courts is the only way to ensure that your rights are protected at every stage of the criminal justice process.
(18 U.S.C. §§ 1341, 3282, 3293 (2022).)
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