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What Constitutes Fraud in State and Federal Courts?

Federal Fraud AttorneyFraud cases can be prosecuted in either state or federal courts with the differentiation usually being made by the type of fraud and if the activity had impacts across state or international boundaries. State level fraud charges in North Carolina are usually prosecuted at the felony level, ranging from Class I up to Class C, depending on the type of fraud and the amounts involved.

State Fraud

Common state level fraud charges include:

Criminal Charge Class of Crime
Embezzlement Class C, F or H Felony
Obtaining property by false pretenses Class C or H Felony
Residential mortgage fraud Class E or H Felony
Obtaining signatures by false pretenses Class H Felony
Issuance of false receipt Class I Felony
Fraudulent misrepresentation Class I Felony

As a comparison, the most serious fraud related charges that are Class C felonies are in the same category as rape, incest, and drug trafficking. Other less serious charges include public assistance fraud, worthless checks, forgery, and identity theft.

Federal Fraud

Once a case is determined to be a federal case, the issue becomes much more serious. Federal penalties are far harsher than state, both from a financial penalty perspective as well as the length of prison sentences.

Common federal fraud charges include:

Criminal Charge
Wire and mail fraud
Bank fraud
Securities fraud
Corporate fraud
Health care fraud
Tax fraud

Wire fraud is one of the more common types of federal fraud because many people don’t understand that this is defined as any fraudulent scheme to intentionally deprive another of property or honest services via mail or wire communication.

18 U.S.C. § 1343 provides:

Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than 20 years, or both. If the violation affects a financial institution, such person shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.

There are three elements to mail and wire fraud:

  1. Intent;
  2. A “scheme or artifice to defraud” or the obtaining of property by fraud; and,
  3. A mail or wire communication.

To be fraudulent, a misrepresentation must be material.

Being investigated or charged with a white collar crime such as fraud is a serious and life changing matter. The Chetson Firm is a Raleigh criminal defense law firm with significant experience representing clients for fraud related crimes.

 

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