Federal Wire Fraud vs. State Fraud Charges: Why It Matters Where Your Case Is Filed

Wire fraud is a federal crime under 18 U.S.C. § 1343, and the court where your fraud case is filed changes nearly everything about how it will be handled.

Federal wire fraud carries up to 20 years in prison per count, and federal courts convict at a rate that far exceeds state courts.

State fraud charges under Texas Penal Code Chapter 32 cover similar dishonest conduct, but the penalties, procedural rules, and odds of conviction are different.

Understanding whether your case will be prosecuted as a federal wire fraud or a state fraud offense is one of the most important things a defendant can know early on, because the forum determines the fight.

Why Is Wire Fraud Almost Always a Federal Crime?

Wire fraud is almost always prosecuted at the federal level because the statute itself requires the use of interstate wire communications, which is the jurisdictional hook that brings the case into federal court.

The federal wire fraud statute, 18 U.S.C. § 1343, makes it a crime to use wire, radio, or television communication “in interstate or foreign commerce” as part of a scheme to defraud someone out of money or property.

That interstate element is what separates wire fraud from ordinary state fraud, and it is why federal prosecutors have jurisdiction over these cases.

In practice, virtually any fraud scheme that touches the internet, uses email, or involves a phone call will meet this requirement.

A single email sent through Gmail, a text message routed through a nationally based carrier, or a wire transfer processed through a bank with branches in multiple states all satisfy the interstate commerce element.

This means that even a purely local fraud scheme between two people in Dallas can become a federal wire fraud case if any electronic communication was used during the scheme.

Federal prosecutors do not need to show that the wire communication itself was fraudulent, only that it was used “in furtherance of” the scheme.

What Are the Elements Prosecutors Must Prove Under 18 U.S.C. § 1343?

Federal prosecutors must prove four elements to secure a wire fraud conviction:

• The defendant voluntarily participated in a scheme to defraud another out of money or property.
• The defendant acted with the intent to defraud.
• It was reasonably foreseeable that interstate wire communications would be used.
• Interstate wire communications were in fact used in furtherance of the scheme.

These elements come directly from the DOJ Justice Manual and have been confirmed by federal courts of appeals across the country, including the Fifth Circuit.

The Supreme Court held in Neder v. United States (1999) that the government must also prove the misrepresentation was “material,” meaning it was the kind of falsehood that could influence a reasonable person’s decision.

One critical point for defendants: the government does not need to prove that anyone actually lost money.

An unsuccessful scheme still qualifies as wire fraud if the other elements are met.

And each individual wire communication, whether it is an email, a phone call, or a text message, can be charged as a separate count, each carrying its own maximum penalty.

How Does Federal Court Differ From State Court for Fraud Defendants?

Federal court is a fundamentally different environment than state court, and in nearly every measurable way, it is harder on defendants.

The resources available to federal prosecutors, the procedural rules governing federal cases, and the sentencing framework all combine to create a system where fraud defendants face longer odds and steeper consequences than they would in state court.

What Are the Conviction Rates in Federal Court?

Federal conviction rates are among the highest in the world.

According to Pew Research Center’s analysis of federal judiciary data, only 290 out of 71,954 federal criminal defendants in fiscal year 2022 went to trial and were acquitted, which is roughly 0.4%.

Another 1,379 defendants went to trial and were found guilty, representing about 1.9% of all cases.

The overwhelming majority of federal defendants, approximately 89.5%, pleaded guilty.

About 8.2% had their cases dismissed.

These numbers reflect a system where federal prosecutors are highly selective about which cases they bring.

Unlike state district attorneys who may feel political pressure to file charges quickly, federal prosecutors at the U.S. Attorney’s office often spend months or years investigating a case before filing an indictment.

By the time charges are filed, the government has already reviewed financial records, obtained witness statements, and gathered documentary evidence.

The result is that federal trials are high-risk for defendants.

State courts, by comparison, see plea rates of roughly 95%, which is still high, but the acquittal rate is meaningfully higher than in federal court.

How Do Federal Sentencing Guidelines Affect Wire Fraud Penalties?

The statutory maximum for wire fraud under 18 U.S.C. § 1343 is up to 20 years in federal prison and a fine of up to $250,000 per count for individuals.

If the fraud involves a financial institution or a presidentially declared major disaster, the maximum jumps to 30 years in prison and a fine of up to $1,000,000.

In practice, sentences are driven by the United States Sentencing Guidelines, which use a point-based system.

The key driver of the sentence in a fraud case is the “loss amount,” which is the total financial harm caused or intended by the scheme.

The higher the loss, the more sentencing points are added, and the longer the recommended sentence becomes.

According to U.S. Sentencing Commission data, the average sentence for federal fraud, theft, and embezzlement offenses has been approximately 20 to 24 months.

But that average is heavily influenced by low-loss cases.

Fraud schemes involving losses above $1.5 million regularly produce guideline ranges well above five years, and schemes involving tens of millions can result in recommended sentences exceeding 15 or even 20 years.

On top of the loss amount, the guidelines apply specific offense characteristics that can increase the sentence.

These include enhancements for schemes that:

• Targeted vulnerable victims, such as elderly individuals
• Involved a large number of victims
• Used sophisticated means to carry out the fraud
• Were committed by someone in a position of trust

Each enhancement adds more sentencing points, driving the guideline range higher.

Federal wire fraud convictions also carry mandatory restitution under the Mandatory Victims Restitution Act (18 U.S.C. § 3663A).

According to the U.S. Sentencing Commission’s 2024 Annual Report, restitution was ordered in 79% of federal fraud, theft, and embezzlement cases, with a combined total of $13.5 billion ordered that fiscal year.

Unlike a fine, a federal restitution order is not dischargeable in bankruptcy.

It follows the defendant for life, and the government can garnish wages, intercept tax refunds, and seize assets to collect on it.

For many fraud defendants, the restitution order is the consequence that outlasts the prison sentence by decades.

Texas state courts can order restitution as part of a sentence, but it is not imposed as systematically and the collection mechanisms are less aggressive than those available to the federal government.

Texas state courts do not use this kind of point-based sentencing system.

State fraud penalties are based on the value of the property or money involved, with the offense classification increasing at certain dollar thresholds (for example, $2,500 to $30,000 is a state jail felony; $300,000 or more is a first-degree felony under Texas Penal Code § 31.03).

But state judges have broad discretion over sentencing, and probation is available for many fraud offenses that would result in prison time in federal court.

How Does Federal Pretrial Detention Work Differently Than State Bail?

Federal pretrial detention operates under the Bail Reform Act of 1984, 18 U.S.C. § 3142, which is structurally different from the bond system used in Texas state courts.

In state court, a defendant arrested for fraud will typically see a magistrate within 24 to 48 hours and can post a bond, which is an amount of money that secures the defendant’s release and appearance at future court dates.

For most fraud charges in Texas state court, bond is readily available and reasonably affordable.

In federal court, the process is more complex and more restrictive.

The Bail Reform Act creates a presumption that defendants should be released before trial, but it also allows the government to request a detention hearing where it argues that no conditions of release will reasonably assure both the defendant’s appearance and the safety of the community.

If the court agrees, the defendant is held in custody pending trial, which can take months or longer.

Federal pretrial detention is not based on a dollar amount like a state bail bond.

Instead, a federal magistrate judge weighs factors including the nature of the offense, the defendant’s criminal history, financial resources, community ties, and risk of flight.

In wire fraud cases involving large dollar amounts or allegations of ongoing schemes, the government frequently argues that the defendant is a flight risk due to access to funds, foreign contacts, or the severity of the potential sentence.

This means a defendant charged with wire fraud in federal court may spend more time in custody before trial than a defendant facing similar fraud charges in state court.

When Might State Fraud Charges Apply Instead of Federal Wire Fraud?

State fraud charges apply when the fraudulent conduct does not involve interstate wire communications, when the dollar amount or scope of the scheme does not attract federal attention, or when the conduct falls squarely under a specific Texas state statute.

Texas Penal Code Chapter 32 covers a wide range of fraud offenses, including:

• Forgery
• Credit card abuse
• Identity theft
• Insurance fraud
• Securing execution of a document by deception
• Medicaid fraud

These statutes do not require any interstate element.

What State Fraud Statutes Overlap With Wire Fraud in Texas?

Several Texas fraud statutes cover conduct that could also support federal wire fraud charges when electronic communications are involved.

Theft by deception under Texas Penal Code § 31.01 and § 31.03 is the broadest.

Any scheme to obtain money or property through intentional deception can be prosecuted as theft, with the penalty level determined by the dollar amount involved.

Fraudulent use or possession of identifying information under Texas Penal Code § 32.51 covers identity theft, which is often prosecuted federally as wire fraud when the stolen information is transmitted electronically.

Insurance fraud under Texas Penal Code § 35.02, Medicaid fraud, and forgery of financial instruments are other state offenses that frequently overlap with conduct that could be charged as federal wire fraud.

The critical question in these overlap situations is not whether federal prosecutors can bring wire fraud charges, but whether they will.

Federal prosecutors generally focus on fraud schemes that involve large dollar amounts, cross state lines, target federal programs or federally insured institutions, or affect a large number of victims.

Smaller-scale fraud schemes, even those involving electronic communications, are more likely to be left to state prosecutors.

“In my experience, the biggest dividing line between federal and state fraud is the dollar amount,” says Michael Lowe, Board Certified Criminal Defense Attorney at the Law Offices of Michael Lowe in Dallas, Texas.

“The multimillion dollar schemes tend to go federal. Private party fraud usually has to involve very large numbers before the US Attorney’s office gets interested.”

“There is also a policy dimension. The recent Galeotti Memo from May of 2025, the Justice Department’s white collar enforcement plan, directs prosecutors to prioritize fraud against government programs, health care fraud, and federal procurement fraud, and it acknowledges that overbroad white collar enforcement burdens legitimate businesses. So the government will still prosecute private investment schemes, but it wants to see big dollars, while it will pursue fraud against the government or the taxpayer even at much smaller amounts.”

“The other key difference is sentencing. State judges have a much wider range of punishment and use far greater discretion. That can be a blessing or a curse, but for a defendant with a good lawyer who prepares properly, a state sentence is typically going to come in lower than a federal one. In federal court, judges are not required to follow the sentencing guidelines, but the guidelines are heavily influential, and most federal sentences land inside or very close to the guideline range. So where your case is filed can change not just the exposure, but how much room there is to fight for a better outcome.”

The table above shows why the forum where fraud charges are filed has a direct impact on the defendant’s exposure, options, and likely outcome.

Federal sentencing guidelines tie punishment directly to the loss amount in a way that Texas state courts do not, and federal conviction rates leave very little margin for acquittal.

What Happens When Both Federal and State Prosecutors Have Jurisdiction?

Both federal and state prosecutors can have jurisdiction over the same fraudulent conduct, and the Constitution does not prevent both from filing charges.

The Supreme Court confirmed this in Gamble v. United States (2019), upholding the dual sovereignty doctrine.

Under this doctrine, the federal government and a state government are separate sovereigns with their own laws, and a prosecution by one does not bar a prosecution by the other for the same underlying conduct.

This means that a defendant who is acquitted of state fraud charges in Texas could still face federal wire fraud charges based on the same scheme, and vice versa.

Does the DOJ Petite Policy Limit Dual Prosecutions?

In practice, dual prosecutions are rare because of an internal Department of Justice guideline known as the Petite Policy (Justice Manual § 9-2.031).

The Petite Policy generally bars federal prosecutors from bringing charges based on substantially the same acts or transactions that were the subject of a prior state prosecution, unless three conditions are met:

• The matter involves a substantial federal interest.
• The prior prosecution left that interest demonstrably unaddressed.
• The admissible evidence is sufficient to obtain and sustain a conviction.

The Petite Policy is an internal DOJ rule, not a constitutional right.

Defendants cannot invoke it to block a prosecution, and the Department of Justice can override it in cases where it determines that federal interests require separate prosecution.

In fraud cases, this typically comes into play when a state prosecution results in a sentence the federal government considers inadequate given the scope of the scheme, or when the state case fails to address victims or conduct that falls under federal jurisdiction.

Are State Fraud Charges Ever Preferable for the Defendant?

State fraud charges are generally more favorable for defendants than federal wire fraud charges across nearly every dimension of the case.

State courts offer lower conviction rates, broader access to pretrial release through the bond system, more judicial discretion at sentencing, and greater availability of probation and deferred adjudication.

In Texas, deferred adjudication allows a defendant to plead guilty or no contest, complete probation, and then have the case dismissed without a final conviction on their record.

Federal courts do not offer deferred adjudication in the same way, although federal deferred prosecution agreements and pretrial diversion programs exist in limited circumstances.

State fraud penalties, while still serious, are also less mechanically tied to the dollar amount of the alleged loss.

A Texas state judge has discretion to impose a sentence anywhere within the statutory range, regardless of the dollar amount, while a federal judge must start with the guideline range calculated under the Sentencing Guidelines.

For defendants facing a choice between cooperating with state prosecutors to resolve a case at the state level versus the possibility of federal charges, the calculus strongly favors early resolution in state court when that option is available.

However, defendants do not get to choose their forum.

The decision to charge federally or at the state level rests entirely with the prosecutors.

Need a Federal Wire Fraud Defense Lawyer in Dallas?

Where your fraud case is filed determines the rules of the game, the resources of the prosecution, and the penalties you face if convicted.

Federal wire fraud charges bring the full weight of federal law enforcement and the federal sentencing guidelines to bear on your case.

If you or someone you know is under investigation or facing charges for wire fraud or any fraud offense in Texas, getting an experienced defense lawyer involved early can make a critical difference in how the case unfolds.

Michael Lowe is a wire fraud defense lawyer in Dallas, a former prosecutor, and board certified in criminal law by the Texas Board of Legal Specialization who defends clients facing federal and state fraud charges throughout North Texas.

Contact Michael Lowe today by calling 214-526-1900.

Frequently Asked Questions

Is wire fraud always a federal crime?

Wire fraud is a federal crime under 18 U.S.C. § 1343 whenever interstate wire communications are used in furtherance of a scheme to defraud. Because virtually all electronic communications, including emails, phone calls, and text messages, cross state lines through nationally based service providers, most fraud schemes involving electronic communication will qualify as federal wire fraud. There is no separate state wire fraud statute in Texas.

Can you be charged with both federal wire fraud and state fraud for the same conduct?

Yes. Under the dual sovereignty doctrine confirmed by the Supreme Court in Gamble v. United States (2019), both the federal government and a state government can prosecute a defendant for the same underlying conduct without violating the Double Jeopardy Clause. In practice, the Department of Justice Petite Policy limits dual prosecutions, but it is an internal guideline that defendants cannot enforce.

What is the maximum sentence for federal wire fraud?

The maximum sentence for federal wire fraud is 20 years in prison and a fine of up to $250,000 per count. If the fraud involves a financial institution or a presidentially declared disaster, the maximum increases to 30 years in prison and a fine of up to $1,000,000. Each wire communication used during the scheme can be charged as a separate count.

How does federal sentencing for fraud differ from Texas state sentencing?

Federal fraud sentences are driven by the United States Sentencing Guidelines, which use a point-based system tied primarily to the dollar amount of loss caused by the scheme. Texas state courts do not use a comparable point system. State judges have broader discretion to impose sentences within the statutory range, and probation or deferred adjudication is available for many fraud offenses that would result in prison time in federal court.

What determines whether fraud is charged in federal or state court?

The key factor is whether interstate wire communications were used during the scheme. Beyond that jurisdictional trigger, federal prosecutors consider the dollar amount involved, whether the scheme crossed state lines, whether federal programs or federally insured institutions were targeted, and the number of victims. Smaller-scale fraud schemes are more often left to state prosecutors, while large or complex schemes attract federal attention.