Mail fraud is one of the most common federal criminal charges. The use of the U.S. Postal Service (USPS) or a private interstate carrier to commit a crime of deceit gives feds an easy opportunity to claim jurisdiction. The following article provides a definition of this crime and a discussion of two of the most famous mail fraud convictions in history.
Definition of Mail Fraud
The term fraud includes any scheme:
- To obtain money or property under false pretenses; or
- To sell, distribute, exchange, supply, or use counterfeits.
A person commits mail fraud when the scheme involves 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. If the crime involves benefits connected to a presidentially declared major disaster or emergency, or affects a financial institution, there are enhanced penalties that include fines of up to $1 million and imprisonment for up to 30 years.
Famous Mail Fraud Conviction: Charles Ponzi
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 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 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.)
Famous Mail Fraud Conviction: Bernie Madoff
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, which has resulted in lawsuits against many of the financial institutions involved in his business.
Charged with Mail Fraud? Get Legal Help
The public outrage regarding financial crimes is at an all-time high, which is why such crimes can result in some spectacularly harsh penalties. If you've been accused of mail fraud or any other crime, you should contact a local criminal defense attorney to learn how you can prepare a strong defense and protect your rights.
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