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Wire fraud is any fraudulent activity that takes place over any interstate wires. Wire fraud is almost always prosecuted as a federal crime.
Anyone who uses interstate wires to scheme to defraud or obtain money or property under false or fraudulent pretenses can be charged with wire fraud. Those wires include any television, radio, telephone, or computer modem.
The information transmitted can be any writes, signs, signals, pictures or sounds used in the scheme to defraud. In order for wire fraud to take place, the person must voluntarily and knowingly make misrepresentations of facts with the intent to defraud someone of money or property.
Under federal law, anyone convicted of wire fraud can be sentenced to up to 20 years in prison. If the victim of the wire fraud is a financial institution, the person can be fined up to $1 million and sentenced to 30 years in prison.
Wire Transfer Fraud Against U.S. Businesses
Businesses have become particularly vulnerable to wire fraud due to the increase of their online financial activity and mobile banking.
According to the Financial Services Information Sharing and Analysis Center (FS-ISAC) "2012 Business Banking Trust Study," businesses that conducted all of their business online more than doubled from 2010 to 2012 and continues to grow yearly.
The number of online transaction and money transferred tripled during this same time period. As a result of this massive increase in activity, many of the controls that were placed to prevent fraud were breached. In 2012, two out of three businesses suffered fraudulent transactions, and of those, a similar proportion lost money as a result.
For example, in the online channel, 73 percent of businesses had money missing (there was a fraudulent transaction before the attack was detected), and after recovery efforts, 61 percent still ended up losing money.
Methods Used for Online Wire Fraud
Fraudsters use various methods to get personal credentials and passwords including:
- Malware: Malware short for "malicious software" is designed to gain access, damage or disrupt a computer without the knowledge of the owner.
- Phishing: Phishing is a scam typically carried out through unsolicited email and/or websites that pose as legitimate sites and lure unsuspecting victims to provide personal and financial information.
- Vishing and Smishing: Thieves contact bank or credit union customers via live or automated phone calls (known as vishing attacks) or via text messages sent to cell phones (smishing attacks) that may warn of a security breach as a way to obtain account information, PIN numbers and other account information they need to gain access to the account.
- Accessing Email Accounts: Hackers gain illicit access to an email account or email correspondence through spam, computer virus, and phishing.
Also, access to passwords is made easier due to the tendency for people to use simple passwords and the same passwords at multiple sites.
For example, it was determined after a security breach at Yahoo and Sony, that 60% of the users had the same password at both sites.
Once a fraudster gets the necessary information to conduct an illegal wire transfer, the request can be made in various ways including using online methods, through mobile banking, call centers, fax requests and person-to-person.
Other Examples of Wire Fraud
Wire fraud includes almost any crime that is fraud-based including but not limited to mortgage fraud, insurance fraud, tax fraud, identity theft, sweepstakes and lottery fraud and telemarketing fraud.
Federal Sentencing Guidelines
Wire fraud is a federal crime. Since November 1, 1987, federal judges have used the Federal Sentencing Guidelines (The Guidelines) to determine the sentence of a guilty defendant.
To determine the sentence a judge will look at the "base offense level" and then adjust the sentence (usually increase it) based on the specific characteristics of the crime.
With all fraud offenses, the base offense level is six. Other factors that will then influence that number include the dollar amount stolen, how much planning went into the crime and the victims that were targeted.
For example, a wire fraud scheme that involved the theft of $300,000 through an intricate scheme to take advantage of the elderly will score higher than a wire fraud scheme that an individual planned in order to cheat the company that they work for out of $1,000.
Other factors that will influence the final score include the defendant's criminal history, whether or not they tried to impede the investigation, and if they willingly help investigators catch other people involved in the crime.
Once all of the different elements of the defendant and the crime are counted for, the judge will refer to the Sentencing Table which he must use to determine the sentence.