Federal Fraud Crimes

You have likely heard the term embezzlement before.  It is normally characterized by people improperly using their position of trust, and access to information, in their job to enrich themselves at the expense of their employer. 

The elements of the crime of embezzlement exist when a person:

1. Has the specific intent,
2. To knowingly steal,
3. An employer’s property.

As you can see from the elements, a federal prosecutor must prove beyond a reasonable doubt that you had the specific intent to knowingly steal property that was entrusted to them by virtue of your job.

At first blush, you may think that “specific intent” and “knowingly” are saying the same thing.  They are not.  “Knowingly” stealing something refers to the notion that a person knew, i.e., was aware of, the fact that he or she was taking something.  The notion of “specific intent,” however, refers to the need to prove that the accused had the “subjective desire” to commit an illegal act. 

In other words, the federal prosecutor needs to prove that you were aware that you were taking something that was not yours, and that you knew it was illegal to do so to prove embezzlement. 

Please note that there is no distinction between a public or private employer for purposes of embezzlement.  Regardless of whether a person takes money from a government employer or a private company employer, it is still considered embezzlement.

The defenses that you can raise in response to an embezzlement charge are as follows:

1. Entrapment.  It is possible to argue that until a government actor – such as a confidential informant used in a criminal investigation – “entrapped” you into committing embezzlement.  That means that you did not intend to steal anything until the government actor put the idea into your head.   
2. Lack of Knowledge.  As noted above, “knowingly” is one of the elements that the government must prove in an embezzlement case.  Thus, if you can show that you did not know the nature or source of the funds relevant to your case, then that will undermine the entire “knowingly” element.
3. Insanity.  Also as noted, the government must prove “specific intent.”  If your mental state is such that you could not have formed the requisite intent to know that you were committing a crime, then the government would be unable to prove embezzlement against you

Messing around with U.S. mail is a federal crime because the U.S. Postal Service has the responsibility to deliver, and protect, items sent through the mail.  Thus, the crime of mail theft actually encompasses hiding or destroying mail, in addition to stealing it.

The elements of the crime of mail theft exist when:

1. A person steals, takes, or by fraud or deception obtains a piece of mail;
2. The mail, when stolen, was under the U.S. Postal Service’s control; and
3. The person acting knowingly with the intent to take the piece of mail.

The defenses to mail theft are as follows:

1. Mis-labelled Mail.  If mail is sent to the wrong place, and then subsequently stolen, it is possible to argue that the piece of mail was no longer in the U.S. Postal Service’s control, thereby removing the second element listed above.
2. Mistake.  Similarly, a mail theft defendant may claim that he or she did not have the requisite “knowledge” or “intent” to steal anything because the mail was taken due to carelessness or mistake.

As you can expect, insurance fraud involves fraud or deception with regard to insurance information or proceeds.  The classic case is a doctor claiming that he or she performed a particular medical procedure to obtain the patient’s insurance proceeds for that procedure, when he or she never actually performed the procedure.

There are, actually, a number of different statutes covering various types of insurance fraud.  Typically, insurance fraud cases involve some form of electronic/wire fraud as well. 

Accordingly, the elements of insurance fraud generally exist when a person:

1. Uses either the mail or wire communications to further,
2. A scheme to defraud,
3. Involving material deception,
4. With the intent to deprive another of,
5. Either property or honest services.

The defenses of insurance fraud include the following:

1. Good Faith.  One defense to insurance fraud is to argue that your insurance claim was genuine, with no intent to defraud.
2. Statute of Limitations.  The federal government generally has 5 years within which to bring an insurance fraud charge.  If the federal government waited too long to charge you, then that is a complete defense to an insurance fraud crime.
3. Abandonment.  Many insurance fraud matters are charged as a conspiracy, in which you might be accused of working with others in connection with an insurance fraud scheme.  However, if you clearly withdrew yourself from the conspiracy, then that may be a defense to any charges against you associated with the actions attributed to the conspiracy.

Mortgage fraud involves crimes typically associated with real estate documents.  Some of the criminal charges you will see with mortgage fraud include bank fraud, loan fraud, mail and wire fraud, false statements, and money laundering charges.  Recently, we have seen a prevalence of two examples of mortgage fraud-related crimes:

1. Housing Fraud.  Lying on a mortgage application about your income in order to obtain a mortgage loan.
2. Fraud for Profit.  Any number of mortgage assistance schemes – like foreclosure rescue claims, and reverse mortgage schemes – can be considered fraud for profit. 

The common defenses to mortgage fraud crimes include:

1. Lack of Intent.  Most mortgage fraud requires proof of “willful” conduct.  Thus, you can claim that the documents demonstrate genuine business conduct, and thus any mistake was not done willfully or intentionally.
2. Internal Procedures Followed.  A strong defense to a mortgage fraud charge is that a company’s common internal investigation processes and procedures were followed.  Thus, you can rely on the fraud-prevention processes in place to again show that your conduct was not criminal, but at best an unintentional mistake.