Federal wire fraud is a white collar crime, and may be reportable under federal whistleblower laws. Typically, the Department of Justice and the Federal Bureau of Investigation are involved in the prosecution once a whistleblower has come forward with information revealing the scheme.
Rewards may be available for those who blow the whistle on wire fraud. Federal wire fraud laws may involve financial fines as well as possible imprisonment for perpetrators. On the other hand, opportunities like the SEC Whistleblower Program can offer rewards in exchange for honesty concerning federal wire fraud.
What is Federal Wire Fraud?
Wire fraud is a federal financial crime covered by U.S. Code, Title 18. This federal mail and wire fraud statute criminalizes the attempt to “obtain money or property by means of false or fraudulent pretenses, representations, or promises,” or to deprive someone of the “intangible right of honest services.”
History of Federal Wire Fraud
US federal wire fraud statutes are in place to help govern the internet and digital age. Mail fraud laws have been in place since 1872, making it illegal to misuse the postal service in order to send materials that perpetrate “any scheme or artifice to defraud.” As communication methods evolved in the United States, so too did scam artists’ techniques, as well as federal statutes to keep them in check.
At the time of its initial passage in 1952, the Federal Wire Fraud statute was mostly meant to cover interstate communications made by wire, meaning through telephone, radio, and some television transmissions. Today, it has expanded to cover internet, text, and cellular communications, too.
Federal Wire Fraud Laws
Wire fraud scam artists can be brought to justice via a number of routes. One of the options is by filing a whistleblower complaint. When a whistleblower steps forward, they are known as a relator in a qui tam case. Their attorney files a qui tam complaint on behalf of the federal government, who may choose to investigate the claim further. If a relator’s information leads to a recovery of funds, they are entitled to up to 30% of the total amount recovered in the case.
Federal mail and wire fraud statutes are similar, but differ in what kind of communication is used to perpetrate the scheme.
941. 18 U.S.C. 1343
Under Section 1343, the four elements of wire fraud are:
- That the defendant voluntarily and intentionally devised or participated in a scheme to defraud another out of money.
- That the defendant did so with the intent to defraud.
- That it was reasonably foreseeable that interstate wire communications would be used in the scheme.
- That interstate wire communications were actually used in the scheme.
Examples of interstate wire communications under this federal wire fraud law are telephone calls made from one state to another, or internet communications.
Section 1343 offenses are reportable by whistleblowers under the US Securities and Exchange Commission Whistleblower Program. Securities do not have to be Wall Street trades or high level corporate assets. A security may also be considered as simply an investment tool where one party puts in a stake of money expecting a return. Under the SEC Whistleblower Program, fraudulent investment opportunities, financial scams, and the sale or trade of unregistered securities may all be reported for the chance to claim a reward in the case.
If you were presented with fraudulent and deceitful information to invest in a security, property, or commodity via the internet or phone call, this may be an example of wire fraud reportable under the SEC Whistleblower Program. If you have insider information about the scam, you may be able to claim a reward with the help of a whistleblower attorney.
940. 18 U.S.C. SECTION 1341
Section 1341 outlines the scope of mail fraud, which is directly parallel to wire fraud. The two qualifications for this kind of communications fraud are:
- Intent to defraud.
- Use of the mail to execute the scheme.
Financial Institutions Reform, Recovery, and Enforcement Act of 1989
Under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), civil monetary penalties can be levied against individuals and companies that commit wire fraud, mail fraud, and offer other kinds of fraudulent investment opportunities. There is a ten-year statute of limitations on FIRREA claims, meaning that the fraud must have been committed within the last ten years to qualify for a reward.
FIRREA claims have a unique disclosure process best navigated by a qualified whistleblower law firm. Coming forward can lead to significant awards as well as penalties for predatory mortgage lenders, banks, and more.
Protections for Federal Wire Fraud Whistleblowers
One of the most powerful protections for federal wire fraud whistleblowers is the Sarbanes-Oxley Act. Passed in 2002 in the wake of the Enron meltdown, the Sarbanes-Oxley Act creates pathways for internal disclosure, as well as offering protections for whistleblowers who come forward outside of internal audits.
Employees of publicly-traded companies who report bank fraud, wire fraud, securities fraud, and other kinds of financial schemes are protected against retaliation even if they have only reasonable suspicions and not actionable proof to support their disclosure.
Prohibited kinds of retaliation include:
- Termination
- Suspension
- Demotion
- Harassment
- Blacklisting
- Threatening to retaliate against a protected whistleblower
If you have been retaliated against while blowing the whistle on wire fraud, you may be able to sue your employer for back pay including lost wages, lost potential promotions and benefits, special damages including impairment to reputation and personal anguish, reasonable legal fees as well as possible reinstatement.
Examples of Federal Wire Fraud
Examples of federal wire fraud include telemarketing scams, phishing attempts, text and social media fraud, or other kinds of communications fraud involving internet, tv, and radio. You may have heard of the classic “Nigerian Prince” scam, where someone receives a phishing email from an unknown party claiming to be distant royalty needing a wire transfer in order to access their bank accounts. This relatively transparent scheme is a classic example of wire fraud.
Because wire fraud is defined by the communication method and not necessarily the content, federal wire fraud may encompass bank fraud, securities fraud, Ponzi schemes, tax evasion, and more.
Who is Most Likely to Report Federal Wire Fraud?
When wire fraud originates from a financial institution, such as predatory mortgage companies, whistleblowers are likely to be employees of the company committing fraud. Whistleblowers may also be competitors seeking to gain a leg up in the field, or those who have been taken advantage of by a scam.
How to Report Federal Wire Fraud
If you suspect you have been a victim of wire fraud, contact your bank first and foremost to place a freeze on your account. From there, you may be able to report the incident to the FBI’s Internet Crime Complaint Center. You can also report scams involving bank fraud, mortgage or loan fraud, retirement plan fraud, tax crimes, money laundering, and more to the Department of Justice online.
If you have insider information about how to bring a wire fraud scam to an end, contact a whistleblower lawyer who can help you p
repare your complaint and qualify you for a possible reward.
What is the Federal Statute of Limitations for Wire Fraud
The federal statute of limitations wire fraud is typically five years from the initial date of fraud. In cases of wire fraud, this may be considered the initial date of the transmission. However, certain case law holds that longer reporting times are permissible, and that reporting periods span instead from the first payment of the false claim.
In 2019, Supreme Court action further extended whistleblower reporting potential to encapsulate up to three years after an “official of the United States knew or should have known” about the fraud, but no longer than 10 years after the violation first occurred. This decision may offer more opportunities for whistleblowers to follow up on cases where the Department of Justice declined to intervene in their initial disclosure.
Statute of Limitations for Federal Wire Fraud Whistleblower Retaliation Cases
The statute of limitations under Sarbanes-Oxley is 180 days after the first retaliation. A Sarbanes-Oxley retaliation complaint is considered filed based on the date of its postmark if sent by mail, or by the time the Department of Labor receives it if filed electronically.
Because of this time constraint, it is imperative to contact a lawyer at once with information regarding fraud or retaliation as a whistleblower. Contact the attorneys at Tycko & Zavareei LLP today to ensure that you do not miss your chance to file your claim.
Federal Wire Fraud Investigations
Typically, once a complaint of wire fraud has been lodged, the FBI will investigate. When a whistleblower is involved, the Department of Justice or SEC Whistleblower Program administrators may be involved in the process as well.
If you have filed a claim with a federal wire fraud lawyer, these government agencies will communicate with your legal team in order to build up their case. Your qui tam attorney will be able to stress the importance of your disclosure and will be by your side as you cooperate with any further steps taken during the investigation. They can advise you in your testimony as well as in what kinds of evidence to gather and share with federal investigators.
Federal Wire Fraud Penalties
Federal wire fraud sentencing guidelines include up to 20 years in prison and fines of up to $250,000. Federal civil claims for wire fraud, on the other hand, carry the potential for whistleblower rewards.
The SEC is authorized to offer a reward of anywhere from 10 to 30% of the overall amount recovered to the whistleblower in a wire fraud case. The enforcement action must involve over $1,000,000 in sanctions. Because of this requirement, it is common for wire fraud whistleblowers to receive hundreds of thousands, if not millions, as their share of the settlement in a finished securities fraud case.
Federal Wire Fraud Cases
Scam attempts proliferate in our interconnected world, and wire fraud cases are prosecuted regularly. The identities of whistleblowers are kept confidential by the SEC, as another way to protect those who blow the whistle from possible retaliation.
The following are examples of some recent federal wire fraud cases:
- Whistleblower receives more than $37 million after launching internal investigation: The whistleblower received credit for the investigation’s initiation because they also reported the tip to the SEC within 120 days of reporting internally. This led to a successful enforcement action.
- Wells Fargo bank manager awarded $5.4 million for whistleblower retaliation lawsuit: After a Wells Fargo employee reported fraud to both his superiors and via a bank ethics hotline, he was terminated despite previous positive performance reviews, and was unable to find other work in the banking industry. Misconduct by Wells Fargo that was reported on involved up to 2 million false credit card and checking accounts opened under customers’ names without their knowledge or permission. For these violations, the bank was ordered to pay $185 million as a settlement in 2016. As a result of the bank’s retaliation against their employee, OSHA ordered Wells Fargo to pay the former manager back pay, compensatory damages, and attorneys’ fees. He was also ordered to be re-hired. The amount totaled up to $5.4 million, currently the largest OSHA award for an individual whistleblower to date.
- Whistleblower awarded approximately $14 million for exposing fraud: The SEC awarded a whistleblower who also posted information online about fraudulent business practices approximately $14 million as part of the final settlement. Coming forward to the Commission and being of persistent help to SEC staff helped the whistleblower earn their portion of the overall recovery.
Let Our Lawyers Help You Blow the Whistle on Federal Wire Fraud
Reporting federal wire fraud can involve different kinds of disclosures to government agencies, depending on if your claim also involves securities fraud, banking fraud, internet scams or more. Working with a qui tam attorney can ensure that you fulfill your obligations as a whistleblower while also protecting your best interests.
A federal wire fraud attorney is an expert in how to report financial scams, which federal agencies to speak with, how to build your case, what kinds of evidence are necessary, how to insulate yourself against liability, and how you can expect your claim to progress once it has been filed. Our firm can also represent you if you experience retaliation as a whistleblower, and ensure that your reporting follows all necessary timelines and restrictions to qualify you for protection.
If you need help concerning a federal wire fraud case, contact the experts at Tycko & Zavareei LLP, one of the top whistleblower law firms in the United States. Our federal whistleblower lawyers are ready to help in whatever way you need to bring your claim to a successful conclusion. An initial consultation is confidential and complimentary.