Wire Fraud
Rule
18 U.S.C. § 1343 prohibits using wire, radio, or television communications in interstate or foreign commerce in furtherance of a scheme or artifice to defraud, or to obtain money or property by means of false or fraudulent pretenses, representations, or promises.
Elements / Requirements
- Scheme or artifice to defraud — a plan to deprive someone of money, property, or (in limited cases) honest services
- Materiality — the false statement or omission would be important to a reasonable person making the relevant decision (Neder v. United States)
- Use of wire communications — interstate or foreign wire (phone, email, internet) used in furtherance of the scheme; does not require the wire to be the core of the fraud, only in furtherance of it
- Intent to defraud — specific intent to deceive and cause harm; good faith is a complete defense
Honest Services Fraud (§ 1346)
18 U.S.C. § 1346 extends the wire fraud statute to schemes to deprive another of the “intangible right of honest services.” After Skilling v. United States (2010), § 1346 is limited to:
- Bribery — payments to a public official or private employee to influence their official duties
- Kickbacks — secret payments from a third party for steering business
Mere self-dealing, undisclosed conflicts of interest, or “gratuities” that do not involve quid pro quo corruption are NOT covered. This limitation was necessary to save the statute from unconstitutional vagueness.
Victim Must Be Deprived of Something of Value
A critical limitation: the victim must actually be deprived of money, property, or honest services. If the victim receives everything they bargained for, there is no fraud even if the defendant was deceptive. (United States v. Takhalov — bar owners who sent “decoys” to lure customers into buying overpriced drinks; customers got the drinks they paid for; no deprivation of property.)
Limitations and Key Distinctions
- No deprivation = no fraud (Takhalov): deception alone is insufficient; there must be harm to a cognizable property or honest services interest
- Materiality: misrepresentation must be capable of influencing the victim’s decision (Neder)
- “In furtherance”: the wire need only be incident to an essential part of the scheme — the wire does not need to transmit the fraudulent statement itself
- Puffery: mere sales talk or obvious exaggeration is not fraudulent
Policy
The wire fraud statute is the “workhorse” of federal white-collar prosecution — broadly worded, easy to charge, and carrying a 20-year maximum (30 years for financial institution fraud). Prosecutors use it to reach a wide variety of deceptive schemes. Critics argue it is overbroad and gives prosecutors excessive discretion to criminalize ordinary business misconduct.
Key Cases
- United States v. Binday — insurance fraud; misrepresentations on life insurance applications about intent to sell policies were material; brokers convicted of wire fraud
- United States v. Walters — sports agent scheme; court wrestled with whether university’s property interest was infringed; “in furtherance” element
- United States v. Takhalov — hostess bar case; no wire fraud where customers received the service they paid for; deception must cause actual deprivation
- Skilling v. United States — narrows § 1346 honest services to bribery/kickbacks only