Published Jul 21, 2023
According to the latest data on federal prosecutions, the total number of prosecutions with wire fraud as the lead charge (specifically 18 U.S.C. § 1343) is projected to reach 1,304 by the end of fiscal year 2023 in September—the highest on record since TRAC began tracking these data points in the 1980s. In recent years, federal prosecutors have included wire fraud charges against high-profile defendants, such as Theranos founder Elizabeth Holmes and FTX CEO Sam Bankman-Fried, as well as other less public figures. For the third year in a row, consistent with the start of the Biden administration, wire fraud charges will exceed 1,000 prosecutions filed. See Figure 1.
These results are based on an analysis of detailed case-by-case government records obtained by the Transactional Records Access Clearinghouse (TRAC) under court order after successful litigation against the U.S. Department of Justice under the Freedom of Information Act.
The DOJ describes wire fraud as a type of fraud that involves the “use of an interstate telephone call or electronic communication made in furtherance of the scheme.” A federal wire fraud charge can be brought when fraud was perpetrated using electronic communication across state lines.
The cases of Elizabeth Holmes and FTX CEO Sam Bankman-Fried (SBF) provide illustrative examples of wire fraud. For example, Holmes was convicted of three counts of wire fraud (18 U.S.C. § 1343) and one count of conspiracy to commit wire fraud (18 U.S.C. § 1349).
According to the Department of Justice, Holmes “[made] false claims concerning Theranos” and “[omitted] information” where she knew Theranos was not capable of what she represented. Holmes was found to have used “interstate electronic wires” to purchase advertisements furthering the fraud scheme.
Bankman-Fried has been indicted on two counts of wire fraud and two counts of conspiracy to commit wire fraud. Similarly, the Department of Justice alleged that Bankman-Fried intentionally defrauded FTX customers “through the misappropriation of the customer deposits to pay expenses and debts of a different company” and to also “make other investments”.
Holmes and Bankman-Fried may be the most public figures prosecuted for wire fraud, but they are hardly alone. For example, in June 2023, DOJ prosecutors filed charges against California resident Amadou Diallo for 19 counts of wire fraud. Diallo is accused of making false representations about his companies to at least 11 investors by soliciting their $1.8 million to fund his luxury lifestyle. If convicted, Diallo faces a maximum penalty of 20 years in prison on each of the wire fraud counts.
The additional charge of conspiracy to commit wire fraud ( 18 U.S.C. § 1349), which appears in many of these cases, was added to the law in 2002 and saw its first prosecutions where it was recorded as the lead charge in 2003. The number of these prosecutions peaked in 2011, and although these charges still make up a significant number of wire fraud charges, its use as the lead charge has been declining overall for the past decade. Its continuing use as an additional charge, as noted in the examples above, is not reflected in these numbers. See Figure 2.
The number of convictions for wire fraud has also risen in parallel. Records show that 88 percent of all prosecutions under this lead charge result in a conviction on one or more counts. If current trends continue, FY 2023 will see the highest number of these convictions ever, with a projected total of 1,101—the first time convictions for wire fraud will cross 1,000 in a single year. See Figure 3.
One example of a wire fraud conviction took place recently. On June 28th, 2023, a Gatlinburg woman was sentenced to 27 months in federal prison for one count of wire fraud for defrauding the Covid-19 Economic Relief Program (“CARES” Act).
For context, the increase in wire fraud prosecutions juxtaposes with the trend of a long term decline in the prosecution of white-collar crime overall which includes all types of fraud, as TRAC reported recently, with 2023 projected to be the least number of prosecutions filed since the beginning of the record in 1986. See Figure 4.