Generally, fraud occurs when someone misrepresents or conceals material information that another individual relies upon to make a decision. The person engaging in the fraudulent conduct knows that they have delivered misleading information. They do so to obtain something of value for themselves or others, which results in a loss or injury to the person against whom the act was committed.
Various types of fraud offenses exist, and with the proliferation of technology and the internet, these schemes have become more sophisticated. They have also become more widespread, often crossing state lines and country borders. Many of them fall under federal jurisdiction, meaning federal agents will investigate, and a federal attorney will prosecute.
Below are common types of frauds and scams that can be charged as federal crimes:
- Advance fee fraud: This type of scam gets its name from the way it is carried out. Typically, an individual will ask someone to pay money upfront. The advance payment can be referred to by various names, such as a deposit, finder’s fee, or processing fee. In exchange for this upfront payment, the individual promises that the payor will receive something greater in value in return, be it money, stocks, or proceeds. Unfortunately, the product or plan on which the promise is based is false, and the payor never sees the return they were guaranteed. One type of advanced fee scheme is where a person offers someone an investment opportunity with high returns within a short period and with little or no risk.
- Business Email Compromise: Referred to as BECs, these schemes exploit the fact that many individuals use email communication in their personal and professional lives. BECs are carried out by an individual or group sending an email appearing to be from a reputable source and making a legitimate request. For instance, a person posing as the president of an organization might ask the treasurer to transfer funds to a venue. Believing the request to be valid, the treasurer does so. However, the money is actually transmitted to an account belonging to the individual who sent the email.
BECs are often charged as wire fraud crimes, which carry a prison term of up to 20 years.
- Charity fraud: In these types of offenses, an individual or group will claim to be a charity, and they are seeking donations to help their cause. Individuals involved in the crime use various platforms, such as email, social media, or crowdsourcing to solicit donations. Wanting to be helpful in times of crisis, targeted persons will transfer funds to the organization, but the money does not go to charity. Instead, it is funneled to an account held by the individual or group who sent the message. Depending on the method used to ask for donations, the offense can be charged as mail and/or wire fraud, and alleged offenders can face up to 20 years of imprisonment.
- Credit card fraud: Credit card fraud occurs when someone unlawfully obtains another person’s credit card or credit card number. There are various ways this can be done, such as grabbing the information from unsecured websites or carrying out an identity theft scheme. The individual uses the information to withdraw cash or make purchases.
Credit card fraud is prosecuted under 18 U.S.C. § 1029 and is punishable by up to 15 years of imprisonment.
- Sextortion: Sextortion offenses involve a person trying to obtain sexually explicit images or something of value from another individual. Typically, they do this by claiming to already have revealing photos or videos and threatening to share them with others if the individual does not comply.
Sextortion can be prosecuted under the federal extortion law and cyberstalking law, each carrying a prison term of up to 20 years. However, in many cases, the alleged offender is an adult seeking explicit photos of a minor. Because of this, the person can face charges such as sexual exploitation of a minor (publishable by up to 30 years of imprisonment) and production or dissemination of child pornography (punishable by 5 to 20 years of imprisonment).
- Identity theft: A person commits identity theft when they steal someone else’s personal information and use it to commit a crime. There are various ways someone can get another’s identifying information, such as through phishing scams, malware, and mail theft. The federal statute for identity theft is 18 U.S.C. § 1028(a)(7). The offense is punishable by up to 15 years of imprisonment.
As mentioned earlier, perpetrators of frauds and scams are increasingly using sophisticated means to carry out their offenses. Because of this, someone might unknowingly become involved in a crime and be subject to a federal investigation and criminal charge.