Regulations Affecting You

909 False Statement
For a violation of 18 U.S.C. § 1001, a false statement may be written or oral, sworn or unsworn, voluntarily made in regard to information sought as or required by law, signed or unsigned. See generally United States v. Beacon Brass Co., 344 U.S. 43, 46 (1952); United States v. Poindexter, 951 F.2d 369, 387-88 (D.C. Cir. 1991) cert. denied, 506 U.S. 1021 (1992), cert. denied, 406 U.S. 1021 (1992); United States v. Massey, 550 F.2d 300, 305 (5th Cir. 1977); on remand, 437 F. Supp. 843 (1977); United States v. Isaacs, 493 F.2d 1124, 1156-57 (7th Cir. 1974), cert. denied, 417 U.S. 976 (1974).

914 Concealment--Failure to Disclose
Although 18 U.S.C. § 1001 is often referred to as a false statement statute, its scope extends beyond statements. The statute proscribes the acts of making false statements, falsifying, concealing or covering up. The statute also covers half-truths if there is a duty to speak the truth. See generally United States v. Lutwak, 195 F.2d 748 (7th Cir. 1948), aff'd, 344 U.S. 604 (1953).

Concealment and cover-up are essentially identical concepts and often result from falsification. These acts need not have any relation to a statement or representation. A concealment may involve a failure to disclose or partial disclosures of information required on an application form; however, when using such a theory, the government must prove that the defendant had a duty to disclose the facts in question at the time of the alleged concealment of them. United States v. Irwin, 654 F.2d 671, 678-79 (10th Cir. 1981), cert. denied, 455 U.S. 1016 (1982). Concealment may also involve a merely physical act of concealment such as transferring inspection stamps, changing numbers on bottles to conceal rejection, conceal use of certain drugs, or using false stamps to conceal ownership of tobacco. Some courts have required that the government be prepared to prove that the "concealment by trick" consisted of affirmative acts. United States v. London, 550 F.2d 206 (5th Cir. 1977).

921 False Claims
Title 18, United States Code, section 287--the false claims statute--provides in part:

Whoever makes or presents to any person or officer in the civil, military or naval service of the United States, or to any department or agency thereof, any claim upon or against the United States, or any department or agency thereof, knowing such claim to be false, fictitious, or fraudulent, shall be imprisoned not more than five years . . . .

See Project, Tenth Annual Survey of White Collar Crime, 32 Am. Crim. L. Rev. 137, 309-32 (1995) (discussing § 287). There is also a companion conspiracy statute, 18 U.S.C. § 286.

In 1863 Congress enacted a false claims and statements statute "in the wake of a spate of frauds upon the government." United States v. Bramblett, 348 U.S. 503, 504 (1955). As originally enacted the statute penalized presentment "for payment or approval" of false claims upon or against the Government. . ." (Bramblett, 348 U.S. at 504) as well as false statements made "for the purpose of obtaining, or aiding in obtaining, the approval or payment of such claim." On June 25, 1948, the statute was divided into 18 U.S.C. § 287 and 18 U.S.C. § 1001, respectively. 62 Stat. 749.

The Section 287 statute is designed to "protect the government against those who would cheat or mislead it in the administration of its programs" (United States v. White, 27 F.3d 1531, 1535 (11th Cir. 1994)), and it has been employed to combat fraudulent claims filed under numerous Federal programs, including Medicare and Medicaid. White (Medicare claims by a chiropractor); United States v. Hooshmand, 931 F.2d 725, 733 (11th Cir. 1991)(Medicare claims for tests); see also United States v. Abud-Sanchez, 973 F.2d 835, 836 (10th Cir. 1992)(Medicare and Medicaid claims); United States v. Siddiqi, 959 F.2d 1167, 1171-72 (2d Cir. 1992)(physician submitted Medicare claims for a period when he was out of the country); United States v. Nazon, 940 F.2d 255, 258, 261 (7th Cir. 1991)(Medicaid claims for lab work not done); United States v. Beasley, 550 F.2d 261, 263-64 (5th Cir.), cert. denied, 434 U.S. 863 (1977)(claims for costs of clinics never built).

941 18 U.S.C. 1343 -- Elements of Wire Fraud
The elements of wire fraud under Section 1343 directly parallel those of the mail fraud statute, but require the use of an interstate telephone call or electronic communication made in furtherance of the scheme. United States v. Briscoe, 65 F.3d 576, 583 (7th Cir. 1995) (citing United States v. Ames Sintering Co., 927 F.2d 232, 234 (6th Cir. 1990) (per curiam)); United States v. Frey, 42 F.3d 795, 797 (3d Cir. 1994) (wire fraud is identical to mail fraud statute except that it speaks of communications transmitted by wire); see also, e.g., United States v. Profit, 49 F.3d 404, 406 n. 1 (8th Cir.) (the four essential elements of the crime of wire fraud are:
(1) that the defendant voluntarily and intentionally devised or participated in a scheme to defraud another out of money; (2) that the defendant did so with the intent to defraud; (3) that it was reasonably foreseeable that interstate wire communications would be used; and (4) that interstate wire communications were in fact used) (citing Manual of Model Criminal Jury Instructions for the District Courts of the Eighth Circuit 6.18.1341 (West 1994)), cert. denied, 115 S.Ct. 2289 (1995); United States v. Hanson, 41 F.3d 580, 583 (10th Cir. 1994) (two elements comprise the crime of wire fraud: (1) a scheme or artifice to defraud; and (2) use of interstate wire communication to facilitate that scheme); United States v. Faulkner, 17 F.3d 745, 771 (5th Cir. 1994) (essential elements of wire fraud are: (1) a scheme to defraud and (2) the use of, or causing the use of, interstate wire communications to execute the scheme), cert. denied, 115 S.Ct. 193 (1995); United States v. Cassiere, 4 F.3d 1006 (1st Cir. 1993) (to prove wire fraud government must show (1) scheme to defraud by means of false pretenses, (2) defendant's knowing and willful participation in scheme with intent to defraud, and (3) use of interstate wire communications in furtherance of scheme); United States v. Maxwell, 920 F.2d 1028, 1035 (D.C. Cir.1990) ("Wire fraud requires proof of (1) a scheme to defraud; and (2) the use of an interstate wire communication to further the scheme."). 950 Use of Mailings and Wires in Furtherance of the Execution of the Scheme.

"The federal mail fraud statute does not purport to reach all frauds, but only those limited instances in which the use of the mails is a part of the execution of the fraud, leaving all other cases to be dealt with by appropriate state law." United States v. Schmuck, 489 U.S. 705, 710 (1989) (quoting Kann v. United States, 323 U.S 88, 95 (1944)); accord United States v. Coachman, 727 F.2d 1293, 1302 n. 43 (D.C. Cir. 1984) ("The offense of mail fraud demands proof of a scheme to defraud which, at some point, is intentionally furthered by use of the mails.").

"It is not necessary that the scheme contemplate the use of the mails as an essential element." Pereira v. United States, 347 U.S. 1, 8 (1954); Durland v. United States, 161 U.S. 306, 313 (1896) (proof of specific intent to use the mails on the part of defendants need not be proven). "It is sufficient for the mailing to be 'incident to an essential part of the scheme,' . . . or 'a step in [the] plot' . . . . " Schmuck, 489 U.S. at 710-11 (citations omitted); cf. United States v. Diggs, 613 F.2d 988, 998 (D.C. Cir.) ("[A]lthough the schemer need not 'contemplate the use of the mails as an essential element,' the mailings must be sufficiently closely related to [the] scheme to bring his conduct within the statute.") (footnote omitted), cert. denied, 446 U.S. 982 (1980); United States v. Alston, 609 F.2d 531, 538 (D.C. Cir. 1979) ("For conviction under the mail fraud statute, the mails must be used 'for the purpose of executing' the fraudulent scheme, and not merely 'as a result of' such scheme.") (quoting Kann, 323 U.S. 88), cert. denied, 445 U.S. 918 (1980).

951 Proof of Mailings and Transmissions
The mailing or wire communication may be proven by circumstantial evidence. See, e.g., United States v. Griffith, 17 F.3d 865, 874 (6th Cir.), cert. denied, 115 S.Ct. 149 (1994); United States v. Bowman, 783 F.2d 1192, 1197 (5th Cir. 1986) (mailings performed in the course of the bank's customary practices) (citing United States v. Ledesma, 632 F.2d 670, 675 (7th Cir.), cert. denied, 449 U.S. 998 (1980)); United States v. Brooks, 748 F.2d 1199, 1202-03 (7th Cir. 1984) (introduction of envelope). But see United States v. Hannigan, 27 F.3d 890, 895 (3d Cir. 1994) (defendant's statement that he received check was insufficient to prove check was sent through the mails).

"To constitute a violation of [§ 1341] . . ., it is not necessary to show that [defendants] actually mailed . . . anything themselves; it is sufficient if they caused it to be done. Pereira v. United States, 347 U.S. 1, 8 (1954) (citing 18 U.S.C. (Supp. V) § 2(b)); United States v. Kenofskey, 243 U.S. 440, 443 (1917) ("Cause" is used "in its well-known sense of bringing about . . . ."); accord United States v. Diggs, 613 F.2d 988, 998 (D.C. Cir.) ("One must 'cause' the mails to be used" to satisfy the element of "use of the United States mails 'for the purpose of executing the scheme.'") (quoting United States v. Maze, 414 U.S. 395, 400 (1974) (quoting Kann v. United States, 323 U.S. 88, 94 (1944), cert. denied, 446 U.S. 982 (1980). The government need show only that the defendant "caused" the mailing by acting "with knowledge that the use of the mails follow in the ordinary course of business, or where such use can reasonably be foreseen, even though not actually intended." Pereira, 347 U.S. at 8-9.

"'[I]nnocent' mailings - ones that contain no false information - may supply the mailing element." United States v. Schmuck, 489 U.S. 705, 715 (1989) (citing Parr v. United States, 363 U.S. 370, 390 (1960)). Moreover, the elements of mail fraud may be satisfied where the mailings have been routine. Mailings that may lead to the uncovering of the fraudulent scheme may also supply the mailing element of the mail fraud offense. Id. ("The relevant question at all times is whether the mailing is part of the execution of the scheme as conceived by the perpetrator at the time, regardless of whether the mailing later, through hindsight, may prove to have been counterproductive and return to haunt the perpetrator of the fraud."). 953 Use of a Wire Communication in Interstate or Foreign Commerce.

The statute requires a transmission in interstate or foreign commerce. See United States v. Mann, 884 F.2d 532, 536 (10th Cir. 1989); see also United States v. Van Cawenberghe, 827 F.2d 424, 430 (9th Cir. 1987) (telex transmission was in interstate commerce because its path included the interstate transmission from New York to Los Angeles), cert. denied, 484 U.S. 1024 (1988). Accordingly, an intrastate transmission does not constitute an offense. See Boruff v. United States, 310 F.2d 918 (5th Cir. 1962).

QUERY: What is the definition of Foreign Commerce?

In 1956 the wire fraud statute was amended to include transmissions in "foreign commerce." Pub.L. No. 84-688, 70 Stat. 523 (1956). Generally, the term "foreign commerce" is defined as including "commerce with a foreign country." 18 U.S.C. § 10; see generally, United States v. Goldberg, 830 F.2d 459, 461-65 (3d Cir. 1987) (wire fraud arising from the transfer of funds by wire from Montreal, Canada to Nassau, Bahamas caused by telephone calls that originated from the United States), and 830 F.2d at 468 n. 1 (J. Sloviter, dissenting in part and concurring in part) ("[T]he examples in the legislative history of 'foreign commerce' to which the amended provision was to apply all included transmissions between a foreign country and the United States.") (citing S.Rep. No. 1873, 84th Cong., 2d Sess. 2-3 (1956); H.R.Rep. No. 2385, 84th Cong., 2d Sess. 1-2 (1956)). 958 Fraud Affecting a Financial Institution.

To combat financial institution fraud, Congress enacted the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), Pub.L. No. 101-73, which amended a number of criminal statutes, including the mail and wire fraud statutes, if the offense affects a financial institution. The term "financial institution" is defined at 18 U.S.C. § 20.

QUERY: What is the meaning of the phrase "affects a financial institution?"

See United States v. Pelullo, 964 F.2d 193, 215-16 (3d Cir. 1992) (defendant's fraud against the financial institution's wholly owned subsidiary affected the parent financial institution for purposes of applying the ten-year statute of limitations to the wire fraud scheme).

960 More Severe Sanctions, Including Forfeiture
The maximum fine and maximum term of imprisonment for violating the mail or wire fraud statutes were increased to $1,000,000 and 20 years for violations affecting financial institutions. Pub.L. No. 101-73, Title IX, § 961(i) and (j), 103 Stat. 500. In addition, FIRREA directed the United States Sentencing Commission to provide guidelines ensuring that a violation of, or a conspiracy to violate, the mail or wire fraud statutes that substantially jeopardizes the safety and soundness of a federally insured financial institution will be subject to "a substantial period of incarceration." Pub.L. No. 101-73, Title IX, § 961(m), 103 Stat. 501; see also U.S.S.G. §2F1.1(6) (minimum offense level of 24). 18 U.S.C. §§ 981(a)(1) and 982 were also amended to provide for civil and criminal forfeiture, respectively, for mail and wire frauds affecting financial institutions. Pub.L. No. 101-73, Title IX, § 963, 103 Stat. 504-05.

966 Venue in Mail Fraud
Generally, 18 U.S.C. § 3237(a) provides that in cases where the offense was begun in one district and completed in another, venue may be laid in any district through which the offense was continued. Section 1341, however, has its own "built-in" venue provisions. The locus of the offense under section 1341 has been carefully specified; and only the acts of "placing", "taking" and "causing to be delivered" at a specified place have been penalized. Venue should therefore be placed according to the specific prohibitions of section 1341, irrespective of section 3237(a). See Travis v. United States, 364 U.S. 631, 636-37 (1961) ("[V]enue should not be made to depend upon the chance use of the mails, when Congress has so carefully indicated the locus of the crimes."). The locus for mail fraud prosecutions is specifically set forth in section 1341; since Congress has "otherwise expressly provided," section 3237 is inapplicable to mail fraud.

Accordingly, venue must be charged in either (1) the district in which the letter was placed in the mail by the defendant; (2) the district in which the defendant took or received the letter from the mails; or (3) the district in which the defendant knowingly caused a letter to be delivered according to the direction thereon. Hagner v. United States, 285 U.S. 427 (1932)); see also United States v. Turley, 891 F.2d 57, 60 (3d Cir. 1989) (government conceded that section 3237 is not applicable to mail fraud).

Several decisions, citing as authority the provisions of section 3237(a), have held that venue for mail fraud prosecutions also lies in any district through which the count letter passed. Section 3237(a) must, however, be read in light of the constitutional requirements and the explicit provisions of section 1341. See USAM 9-43.300 (Statement of Policy concerning Venue in Mail Fraud Prosecutions).

967 Venue in Wire Fraud
Unlike the mail fraud statute, the fraud by wire statute makes no reference to the venue of the offense. Accordingly, the provisions of § 3237(a) apply, and prosecutions may be instituted in any district in which an interstate or foreign transmission was issued or terminated. See United States v. Goldberg, 830 F.2d 459, 465 (3d Cir. 1987)(Section 1343 is a continuing offense under 18 U.S.C. § 3237 "so that venue is proper in any district in which the offenses were begun, continued, or completed."). Department of Justice > USAM > Title 9 > Criminal Resource Manual.

968 Defenses -- Statute of Limitations
The statute of limitations for mail fraud and wire fraud prosecutions is five years (18 U.S.C. § 3282), except for mail and wire fraud schemes that affect a financial institution, in which case the statute is ten years (18 U.S.C. § 3293).

COMMENT: Consider that a scheme may extend back beyond the limitations period; the gist of the offense is the use of the mails, and if the prohibited use of the mails was within the period, the prosecution is timely. See O. Obermaier and R. Morvillo, White Collar Crime: Business and Regulatory Offenses, § 9.04[5], at 9-67 (Rel. 2, 1991) (citing cases); cf. United States v. Garfinkel, 29 F.3d 1253, 1259 (8th Cir. 1994) (mail fraud scheme may continue after mailing). That a scheme may extend back beyond the limitation period does not preclude prosecution of an offense committed in furtherance of the scheme within the period.

1024 Fraudulent Production, Use or Trafficking in Counterfeit or Unauthorized Access Devices -- 18 U.S.C. § 1029(a)(1-4)

The access device fraud provisions enacted under the Credit Card Fraud Act of 1984, part of the Comprehensive Crime Control Act of 1984, Pub.L. No. 98-473, 98 Stat. 2183-4 (1984), and codified at 18 U.S.C. § 1029 expand upon the older, limited provisions at 15 U.S.C. § 1644 (fraudulent use of credit cards) and 15 U.S.C. §1693n (fraudulent use of debit instruments). Most significantly, the provisions at 18 U.S.C. § 1029, in comparison with those of Title 15, broaden the definitions of credit card and debit instrument to any "access device," including an account number; increase the maximum penalties of incarceration and fines; and provide a substantial repeat-offender penalty.

Congress passed this legislation to give Federal prosecutors a broad jurisdictional base to prosecute effectively a variety of credit card fraud schemes. However, Congress established certain jurisdictional threshold requirements to ensure that Federal involvement is concentrated on the activities of major offenders. Aggregation is allowed to reach the jurisdictional threshold amount. See United States v. Picquet, 963 F.2d 54 (5th Cir. 1992), cert. denied, 506 U.S. 902 (1992) (sales taxes were includable when determining aggregate value of goods and services illegally obtained); United States v. Ryan, 894 F.2d 355, 357 (10th Cir. 1990) (allowed aggregation among districts). As such aggregation is also allowed under Title 15, caselaw regarding § 1029 aggregation has relied on caselaw regarding Title 15 aggregation. See United States v. Iredia, 866 F.2d 114, 120 (5th Cir.), cert. denied, 492 U.S. 921, reh'g denied, 493 U.S. 884 (1989); United States v. Abod, 770 F.2d 1293, 1296-97 (5th Cir. 1985); United States v. Mikelberg, 517 F.2d 246, 251-52 (5th Cir. 1975), cert. denied, 424 U.S. 909 (1976); but see United States v. Russell, 908 F.2d 405 (8th Cir. 1990) (aggregation of possessions is not allowed). Nevertheless, it is intended that the bulk of the prosecutions for credit card fraud will continue to be handled by state and local law enforcement authorities. NOTE: All 18 U.S.C. § 1029(a)(1)-(7) offenses must "affect interstate or foreign commerce." See United States v. Scartz, 838 F.2d 876, 879 (6th Cir.), cert. denied, 488 U.S. 923 (1988) (because banking channels were used for gaining authorization approval of the charges on the cards, interstate commerce was affected); United States v. Lee, 818 F.2d 302, 305 (4th Cir. 1987) (interstate telephone call by bank manager to credit card authorization center concerning defendant's attempt to secure cash advance on credit card was sufficient to prove effect on interstate commerce).

Legislative History
Pertinent legislative history may be found in a report which accompanied H.R. 5616, proposed legislation that preceded the enactment of, but was identical to, this statute. It provides a detailed explanation of the definitions in the statute and emphasizes the intended broad coverage of its provisions. House Committee on the Judiciary Report on Counterfeit Access Device and Computer Fraud and Abuse Act of 1984, H.R. Rep. No. 894, 98th Cong., 2d Sess. (1984).

The legislative history defines the terms "knowing state of mind" and "with the intent" as used in 18 U.S.C. § 1029(a). See United States v. Bailey, 444 U.S. 394, 404 (1976). The report discusses the concept of "willful blindness" and the proof required for such a defense to succeed. See United States v. Jewell, 532 F.2d 697, 700 n. 7 (9th Cir.), cert. denied, 426 U.S. 951 (1976).

Congress intended that Federal prosecutions for the use of "unauthorized access devices" be directed particularly to activity involving a criminal or an organized crime ring that traffics in fraudulent access devices. Situations in which a valid card owner knowingly uses an expired or revoked card should remain under the jurisdiction of state and local authorities or be handled through the civil actions available to the credit card companies.