10 Possible Defenses for Wire Fraud

Wire fraud is a serious federal crime under 18 U.S.C. § 1343 , which criminalizes schemes to defraud that involve interstate or foreign wire communications (e.g., phone calls, emails, text messages, online transactions).

To convict a defendant of wire fraud, federal prosecutors must prove beyond a reasonable doubt that the defendant:

1. Devised or participated in a scheme to defraud
2. Had intent to defraud
3. Used wire communications (interstate or foreign) to further the fraudulent scheme

A conviction can result in up to 20 years in prison (or 30 years if a financial institution is involved) and significant fines. However, a strong defense strategy can challenge the prosecution's case. Below are 10 potential defenses against wire fraud charges:

1. Lack of Intent to Defraud

A key element of wire fraud is intent. If the defendant acted in good faith, made an honest mistake, or lacked fraudulent intent, the case may not hold up in court.

Example:

A startup founder misrepresents projected revenue, believing it is accurate based on optimistic but reasonable assumptions. If there was no intent to deceive, the fraud charge may not stand.

Legal Precedent:

United States v. Starr, 816 F.2d 94 (2d Cir. 1987) – The court held that a misstatement or misunderstanding does not necessarily indicate fraud; intent to deceive must be proven.

2. Insufficient Evidence

The government bears the burden of proof. The case may be dismissed if the prosecution fails to establish every element of wire fraud.

Example:

An accountant unknowingly files financial statements with errors but has no fraudulent intent. If prosecutors cannot present direct evidence of deception, they cannot meet the burden of proof.

Legal Precedent:

United States v. D'Amato, 39 F.3d 1249 (2d Cir. 1994) – A fraud conviction cannot be based on speculation or weak evidence.

3. No Scheme to Defraud

Not every failed business deal or lousy investment is fraud. If the defendant’s actions were legal but unsuccessful, the fraud charge may not apply.

Example:

An investor puts money into a legitimate real estate venture that collapses due to a market downturn. Since there was no intent to deceive, there is no fraud.

Legal Precedent:

United States v. Regent Office Supply Co., 421 F.2d 1174 (2d Cir. 1970) – Aggressive sales tactics or exaggerated claims do not automatically qualify as fraud.

4. No Use of Wire Communications

Since wire fraud requires electronic communications, the prosecution must prove that emails, phone calls, or internet transactions were used.

Example:

A person conducts all transactions personally and never sends electronic communications about the alleged fraud. If no wire communications were used, the charge may not apply.

Legal Precedent:

United States v. Pereira, 347 U.S. 1 (1954) – Using interstate wires must be proven for a wire fraud conviction.

5. Duress or Coercion

If the defendant was forced or threatened into committing wire fraud, they may invoke a duress defense.

Example:

A banker transfers funds under threats from a criminal organization. They may not be criminally liable if they were under imminent threat of harm.

Legal Precedent:

United States v. Bailey, 444 U.S. 394 (1980) – Duress is a valid defense when the defendant had no reasonable alternative to committing the act.

6. Entrapment

Entrapment occurs when law enforcement induces someone to commit a crime they otherwise would not have committed.

Example:

An FBI informant pressures a business owner into submitting false financial documents while promising financial rewards. Entrapment may be a valid defense if the crime originated with the government.

Legal Precedent:

United States v. Jacobson, 503 U.S. 540 (1992) – A defendant must not be predisposed to commit the crime for entrapment to apply.

7. Statute of Limitations Expired

Under 18 U.S.C. § 3282, the statute of limitations for wire fraud is five years (or ten years if it involves a financial institution).

Example:

A business transaction allegedly involved fraud but occurred over six years ago and does not involve a bank. If prosecutors file charges beyond five years, the case may be dismissed.

8. Mistaken Identity or False Accusation

A defendant may be wrongfully accused due to mistaken identity, misinterpretation of evidence, or a setup by another party.

Example:

A business partner commits fraud using company funds, but another executive is falsely accused due to misattributed financial records.

Legal Precedent:

United States v. X-Citement Video, Inc., 513 U.S. 64 (1994) – The government must prove knowledge and deliberate participation in a criminal act.

9. Procedural Violations

Evidence may be suppressed if law enforcement violates constitutional rights (e.g., illegal search and seizure, lack of Miranda warnings, or improper warrants).

Example:

The FBI seizes emails and financial records without a valid search warrant. A defense attorney challenges the search as unconstitutional, leading to the exclusion of key evidence.

Legal Precedent:

Mapp v. Ohio, 367 U.S. 643 (1961) – Illegally obtained evidence must be excluded from trial under the exclusionary rule.

10. Good Faith Defense

If the defendant reasonably believed their actions were lawful, they can argue good faith as a defense.

Example:

A CEO provides complete financial disclosures to investors, but the business fails due to unforeseen economic downturns. If the defendant acted transparently, they lacked fraudulent intent.

Legal Precedent:

United States v. Cheek, 498 U.S. 192 (1991) – A good faith misunderstanding of the law can serve as a defense in fraud cases.

The Importance of Legal Representation

Facing wire fraud charges can be overwhelming, but understanding possible defenses is critical. Each case is unique, and an experienced criminal defense attorney can evaluate the specific facts and develop the best legal strategy.

Next Steps

If you or a loved one is facing wire fraud charges, consult an experienced federal criminal defense attorney immediately. Gasner Criminal Law stands ready to defend your rights and fight for the best outcome in your case.

Call 415-782-6000 to schedule a consultation today.

Disclaimer: This article is for informational purposes only and does not constitute legal advice.