Mail fraud is one of the most common federal criminal charges. The use of the U.S. Postal Service (USPS) or private interstate carrier to commit a crime of deceit gives feds an easy opportunity to claim jurisdiction. The following article provides an overview of what constitutes mail fraud and profiles one of the most famous mail fraud convictions in history.
Mail fraud is broadly defined by 18 U.S. Code, Section 1341, listing a wide range of activities that all meet the crime's definition. The term fraud includes any scheme:
- To obtain money or property under false pretenses; or
- To sell, distribute, exchange, supply, or use counterfeits;
To constitute mail fraud this scheme must involve the mailing of something associated with the fraud. Mailing contracts, receipts, and communications regarding a fraudulent deal could all meet the law's requirements. The communications are not limited to the USPS and include mail sent through private and commercial interstate carriers.
The use of interstate mails is important because the federal government's jurisdiction is limited to matters that impact multiple states. Crimes that take place entirely within a single state fall under that state's laws, but the Commerce Clause of the Constitution grants the federal government jurisdiction over interstate matters.
Mail fraud is punishable by a fine and imprisonment of up to 20 years. Mail fraud that involves benefits connected to a presidentially declared major disaster or emergency, or that affects a financial institution, results in enhanced penalties that include fines of up to $1 million and imprisonment for up to 30 years.
Ponzi and Madoff
Mail fraud prosecutions have been fairly common, but there are a few that have been particularly memorable. Charles Ponzi and Bernard Madoff were the targets of lengthy investigations, and ultimately highly publicized prosecutions, for their fraudulent schemes.
Charles Ponzi is almost certainly one of the most famous swindlers of all time. His notoriety resulted in the coinage of the term "Ponzi scheme" for financial scams where money from each successive round of participants is used to pay the previous one. This kind of scam is a variation of the "pyramid scheme." During the brief rise and fall of Ponzi's scam it became a nationwide affair that involved extensive use of the postal system.
Ponzi went into business for himself in 1919, was making a million dollars a day on a scheme involving postal reply coupons by the summer of 1920, and was indicted for 86 counts of mail fraud by fall. In November of 1920, he pleaded guilty to a single count of mail fraud and was sentenced to five years in prison.
The scale of Charles Ponzi's scheme may make the punishment he received seem slight, and compared to contemporary mail fraud prosecutions it is. Ponzi's latter-day corollary didn't get off so easily (though Ponzi himself never recovered from his conviction and ended his life a blind, half-paralyzed pauper.)
Bernard (Bernie) Madoff was responsible for the largest Ponzi fraud scheme of all time. Madoff pretended to trade in securities, but actually simply collected investment funds and used them to pay off victims who wanted to withdraw funds from the investment pool. Like Ponzi, Madoff's scheme produced returns that were a mathematical impossibility. When the scam fell apart, Madoff was prosecuted for defrauding his clients for a whopping $65 billion. Madoff, in stark contrast to Ponzi, was sentenced to 150 years in federal prison for 11 federal charges, including mail fraud.
Members of Madoff's family were sent to prison and one of his sons committed suicide. The courts have continued to pursue his assets in an attempt to compensate his victims and has resulted in lawsuits against many of the financial institutions involved in his business.
Get a Free Initial Case Assessment
The public outrage regarding financial crimes is at an all-time high. Mail fraud is taken very seriously and can result in some spectacularly harsh penalties. If you have been accused of mail fraud you can contact a local attorney for a free initial case assessment to learn how they can help prepare a defense against this and other federal criminal charges.