Mail Fraud

Benjamin owns a ranch in Oklahoma that he wants to subdivide and sell. He sends letters to hundreds of people offering them the opportunity to buy a piece of his ranch. The letters state that an investor from Houston, Texas, is interested in drilling for oil on the property and will pay buyers a large sum for drilling rights. In reality, however, there are no investors interested in drilling on the land. This is a material misrepresentation and could constitute fraud.

Suppose it is true that an investor expressed interest in drilling for oil on the ranch. But the investor is not from Houston, Texas — he is from Dallas. This would likely not be a material misrepresentation that would lead to Benjamin being charged with fraud.

The misrepresentation must also be designed to deceive someone of “ordinary prudence,” meaning someone with a reasonable amount of common sense. Therefore, if the lie was so outrageous that a reasonably prudent person would never believe it, a prosecutor may not be able to prove wire fraud.

As a joke, Benjamin sends letters to hundreds of people offering them the opportunity to buy plots of land in a new colony on Mars if they send him checks. He may not be convicted under federal wire fraud laws because his scheme would not deceive a person of ordinary prudence.

Wire fraud can occur not only when someone says something untrue, but also when someone fails to disclose something that is true in a way that amounts to deception.

Thomas is a government official whose job involves deciding which construction companies receive lucrative contracts to build new schools. Harry owns a construction company. They reach an agreement in which Thomas directs contracts to Harry’s company, and Harry gives Thomas 25% of the profits from those contracts. This is a kickback scheme. If Thomas and Harry use email to discuss or carry out their arrangement, they could be charged with mail fraud or wire fraud.

Pedro travels across the country trying to sell cotton candy machines. He takes money from people who want to buy the machines but never delivers them. He meets Esteban at a marketing presentation and discusses the machine face-to-face. Esteban then gives Pedro a check. Later, Pedro sends Esteban several letters confirming the order and falsely claiming that bad weather delayed delivery.

The fraud was essentially completed when Esteban gave Pedro the check. However, Pedro’s later letters helped support the lie that a cotton candy machine was on its way. Therefore, Pedro has committed mail fraud.

Pedro, from the previous example, has a wife named Carmen. Carmen only has a ninth-grade education and worked as a waitress before marrying Pedro. Now she works as a secretary in his business. She answers the phone and types and sends letters to Pedro’s “customers.” However, she has no idea that Pedro’s business is fraudulent and that customers will never receive their cotton candy machines. Carmen likely has not committed mail fraud, because there is no evidence that she had the specific intent to defraud anyone.