Things to Know about Wire Fraud Today: It’s a Big Deal

Read news stories about arrests or prosecutions here in Texas, and you’ll find Wire Fraud usually gets added into the mix alongside Mail Fraud and the more well-known felonies like Racketeering, or Money Laundering, or Drug Trafficking.

Wire fraud is like the apple that gets tossed into the lunchbox – it’s got substance and it fills out the menu, but it’s not the focus of the meal.

What is Wire Fraud?

We’ve discussed wire fraud and mail fraud before, what they are and the elements that must be proven in these prosecutions.  For those details check out:

• What is Wire Fraud?
• What is Mail Fraud?
• 10 Things to Know About Mail Fraud Prosecutions

Thing is, from a criminal defense perspective it is becoming more and more obvious wire fraud is getting its own spotlight; it’s becoming more important to prosecutors as technology progresses. 

Wire Fraud and IT Advances

Information technology (IT) advances are being announced almost daily.  And with them come new investigations, and arrests, and charges of federal wire fraud felonies.

Why?  It’s because wire fraud involves the accused using some kind of electronic device or electronic communication to commit an illegal act.  Crimes like bank fraud, identity theft, credit card theft, mortgage fraud, securities fraud, embezzlement or other kinds of white collar crime.

Usually, police or federal agents are snooping around into bigger felonies, where money or property has gone missing.  The investigation finds that in the course of things, the accused’s activities involved things like cell phones; smart phones; tablets; computers; etc. used to send e-mails, texts, comments, or other messages.  So “wire fraud” is added to the list of crimes being named in the indictment.

Now, more and more often, wire fraud is the crux of the case.  See, “Why You Need To Worry About Wire Fraud,” written by Rob Ragan and published in Forbes Magazine on June 30, 2017.

In fact, an ABA White Paper quotes research studies showing 76% of all fraud attempts in this country involve a wire transfer (and therefore are open to a charge of Wire Fraud).

The Big Opportunities for Wire Fraud

Wire fraud not only offers more opportunities for fraudsters because of advances in technology, but in the variety of options open to compromise in the process.  There can be vulnerabilities allowing access to the victim’s funds via: (1) online access; (2) mobile access; (3) contact with customers; (4) contact with employees; and (5) via call centers.

Additionally, there are all sorts of tools that can be used to gain access.  Things like (1) malware; (2) social media manipulation; (3) phishing email messages; and (4) compromised email.

There are all sorts of ways to get from the starting point to the movement of money through the banking system’s wire transfers to the end-game, the outlaw’s bank account.  And clever folk are continually discovering new and novel means of doing so.

Consider these two recent Wire Fraud scams that were hugely successful monetarily:

1.  Business E-Mail Compromise

Here’s an example of how this works.  Back in May the Federal Bureau of Investigation (FBI) issued an alert about wire fraud at the world-wide level.  As described in its Internet Crime Complaint Center report, American businesses were warned of a global scam they named the “Business E-mail Compromise (BEC).”

Here, companies and individuals that sent wire transfer payments as a part of their business as well as those that did business with foreign suppliers were targeted by unknown parties who were taking their cash.

This was being done via compromised (spoofed) email accounts that were then used to transfer money by the hackers or get income tax information (presumably to grab tax refunds in the future).

From the ICCC warning:

The fraudsters will use the method most commonly associated with their victim’s normal business practices. The scam has evolved to include the compromising of legitimate business e-mail accounts and requesting Personally Identifiable Information (PII) or Wage and Tax Statement (W-2) forms for employees, and may not always be associated with a request for transfer of funds.

For more details on this wire fraud investigation, check out an article by Reuters published by Fortune Magazine on May 5, 2017, entitled “Beware of the Surge in Wire Transfer Fraud via Spoofed Emails.”

2. CEO Fraud

Another big scheme discovered by federal wire fraud investigators is the “CEO Fraud” tactic.  A recent huge CEO Fraud scheme was revealed this summer, out of Berlin.

It was the standard CEO Fraud Scam.  The hackers created lots of phony email messages that looked to have been sent by the Chief Executive Officers (CEOs) of some big (and well-heeled) companies.  The CEO messages contained instructions for the accounting department to transfer money to various accounts.  Sometimes, the messages had nice details to make them seem more authentic – stuff that had been gleaned from social media, online job sites, and the like.

Of course, those in accounting complied – who’s going to call the CEO and ask “are you sure?”

And millions were sent via wire transfer to the unknown outlaws.

For more on this story, read U.S.News and World Reports coverage in “German Firms Lost Millions of Euros in ‘CEO Fraud’ Scam” written by Andrea Shalal and published on July 10, 2017.

Defending Against Wire Fraud Charges

Now, all this activity means that law enforcement is focused on tracking down and prosecuting people on Wire Fraud charges, among many other felonies.

If you use a phone, a tablet, or a computer to send information across a state line in the course of committing an illegal act, then you are subject to being charged with Wire Fraud.

And it’s a serious felony in its own right.  This means you need to be ready to defend against it aggressively if charged.

Generally speaking, your defense can include slaps at the prosecution’s work:  they failed to follow the proper rules of evidence or criminal procedure, for instance.  Or the charges have been incorrectly filed of record, things like that.

Motions to Suppress or Motions to Dismiss can be filed based solely upon the weaknesses found in the prosecution’s file.

There are other defenses, as well, that are specific to a charge of Wire Fraud.  They include things like good faith.  If you did not intend to defraud someone of a valuable item (money, property, stocks, whatever), then you lacked the intent to enter into a scheme to defraud and this is a valid defense to the charge of wire fraud.

There are no “cookie cutter” defense templates for these kinds of felony charges.  Each case must be individually analyzed from a criminal defense standpoint.

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For more information, check out our web resources, read Michael Lowe’s Case Results, and read his in-depth article,” Pre-Arrest Criminal Investigations.”