Federal Fraud Conspiracy

If you or someone you love has been charged with conspiracy to commit fraud, or has been told they are part of a fraud investigation involving other people, here is what the charge means, what the government has to prove, and what penalties are possible.

Conspiracy is one of the charges federal prosecutors bring most often. In fraud cases it is called conspiracy to commit fraud, and it is often added to other charges in the same case. Prosecutors have a strong reason to add it: a conspiracy charge lets them bring in many more facts as evidence against you, including things other people said and did.

If you are under investigation, have a lawyer review the case against you before you decide on a next step.

What is federal fraud conspiracy?

Courts generally describe fraud as lying on purpose to cheat someone out of money or property. A conspiracy is an agreement between two or more people to commit a crime.

Fraud conspiracy is a separate crime from fraud itself. If you commit fraud on your own, you can be charged with the fraud. If you agree with at least one other person to commit fraud, that agreement is a fraud conspiracy. You can be charged with and convicted of conspiracy even if the fraud was never carried out.

There are two main federal conspiracy laws in fraud cases:

• 18 U.S.C. § 371: conspiracy to commit any federal crime, or to defraud the United States. The maximum is 5 years in prison.
• 18 U.S.C. § 1349: attempt or conspiracy to commit mail fraud, wire fraud, bank fraud, health care fraud, securities fraud, and the other crimes in Chapter 63. The penalty is the same as for the fraud itself.

Which of these two laws is charged makes a big difference, as the penalties section below shows. If you think you may be caught up in a federal fraud investigation, speak with a lawyer as soon as you can.

What does the government have to prove in a fraud conspiracy case?

At its core, the government must prove that you meant to join an agreement to commit the crime, and that at least one other person was part of that agreement. Specifically:

• Two or more people agreed to commit a crime.
• You knew about the agreement and meant to be part of it.
• For § 371 only: at least one member of the group did some act to carry out the plan, called an "overt act." It does not have to be you. Section 1349 does not mention an overt act.

So under § 371, the person charged does not have to be the one who took a step to carry out the crime. Whether an overt act happened, and when, depends on the facts — and as explained below, the timing can matter a great deal.

You also do not have to agree to commit every part of the crime yourself. The Supreme Court has said each conspirator must intend that some member of the group would commit each part of the crime (Ocasio v. United States, 578 U.S. 282 (2016)).

How much prison time does fraud conspiracy carry?

Under 18 U.S.C. § 371, a fraud conspiracy carries up to five years in federal prison, plus fines. If the crime the group planned is only a misdemeanor, the conspiracy can't be punished more than that misdemeanor, which means no more than one year in jail.

Many fraud conspiracies are charged under 18 U.S.C. § 1349 instead, and that changes the math. Conspiracy to commit wire fraud under § 1349 carries up to 20 years, the same as wire fraud (18 U.S.C. § 1343).

What defenses can work against a fraud conspiracy charge?

Knowing about a plan is not the same as joining it

The prosecutor must prove that you meant to be a member of the conspiracy. If the evidence shows only that you knew a plan was going on, and not that you agreed to join it, that can be a complete defense. Being around the people involved is not enough either. Nor is doing something the government thinks fits a larger scheme, without a real link to the agreement.

Were the statements made to help the conspiracy?

Sometimes the government points to a statement that is only loosely tied to the conspiracy. A co-conspirator's statement can be used against you only if it was made during the conspiracy and to help it along (Federal Rule of Evidence 801(d)(2)(E)). If the government's case rests only on casual comments that loosely relate to the scheme, that should not be enough to convict.

Was there one conspiracy or several?

This defense is complicated, but it sometimes applies. Several separate conspiracies may have been going on at the same time, and the government may lump them together. If you were not part of the conspiracy the government is actually charging, you should not be swept into that prosecution. If you were only part of a smaller, separate deal, that matters.

Was the case brought in time?

Most federal crimes that are not capital crimes must be charged within five years (18 U.S.C. § 3282). If the government waits too long, the charge can be dismissed. Some fraud crimes have a longer limit. Bank fraud, and wire or mail fraud that affects a financial institution, have 10 years (18 U.S.C. § 3293).

Timing is harder to sort out in conspiracy cases. For a § 371 conspiracy, the government must show the conspiracy was still going on, and that an overt act happened, within the limitations period (Grunewald v. United States, 353 U.S. 391 (1957)). That can be hard to pin down, because many statements in a conspiracy are spoken, not written, and are hard to tie to a specific date. Building a clear timeline of the facts shows whether a statute of limitations defense may be available.

Read about federal wire fraud

Why start working on your defense early?

If you are charged with fraud conspiracy, the earlier your defense starts, the more time there is to test the government's evidence. There may be real defenses to the charge, and a lawyer can explain how the federal criminal process works and what your options are.

What should you do next?

Book a consultation to talk it through with Brandon Sample.

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