Many crimes constitute wire fraud, including scams that involve interstate wires. Federal wire fraud is a federal offense and the Federal Bureau of Investigation (FBI) is typically responsible for investigating it. However, state laws and penalties may also apply to any given case. Let’s dive into the penalty of wire fraud.
The lawbook definition of “wire fraud” is quite broad. It can include any sign, signal, sound, writing, or picture transmitted by wire, over radio or through television both domestically and internationally. Wire fraud charges are often brought into cases where a person would otherwise only be charged at the state level. Since wire fraud entails federal punishment, it’s a major crime.
Wire fraud is much like regular fraud, except it involves phone lines or another form of electronic communications (i.e., “wire”). Four elements are used to determine whether or not a case of fraud constitutes wire fraud:
- Whether or not the defendant was involved in a scheme to defraud money or property;
- Whether or not the defendant took part with intent to defraud;
- Whether or not it was likely that the defendant would use wire communications; and
- Whether or not the defendant used wire communications.
Charges of wire fraud vary and become more severe when elements like “interstate” wire fraud come into play. Interstate wire fraud is any type of fraud case where telephone calls, faxes, television transmission, or even communication via the internet were involved, which is why it’s important to talk about the penalty of wire fraud.
Wire fraud is a major offense and one that the FBI tends to prosecute to their fullest abilities. If found guilty of wire fraud, federal law entails these penalties:
- Up to $250,000 in fines for individuals.
- Up to $500,000 in fines for organizations.
- Up to 20 years in prison.
Additional periods of 30 years of imprisonment may come into a case, along with fines of up to one million dollars, under special circumstances. For instance, if a case of wire fraud took advantage of a major disaster or involved a financial institution, far more serious charges will be brought about.
It’s also important to note that these are “per count” penalties, so every email, phone call, or other form of electronic communication can be tried as separate counties. So, if an individual makes just one phone call, they’re only subject to up to $250,000 in fines and 20 years in prison. However, if they make three different phone calls, they could be tried for up to three counts of wire fraud, potentially facing a total penalty of $750,000 and 60 years imprisonment.
Despite having such severe penalties, wire fraud schemes are perpetrated each and every day. Those who commit these schemes typically seek out direct money transfers or credit card information. Telemarketing fraud is a common example, and in the real estate industry, examples are rampant.
- Posing during closing. Scammers may pose as your real estate agent or title company, forging signatures and having you direct your closing costs or other transfers to them.
- Offers to refinance. When a fraudster offers to help negotiate a refinance, they’ll collect large fees up front and then never help you refinance with your bank.
- Foreclosure consulting. If a homeowner falls behind on their mortgage, they may be approached by a “foreclosure consulting” business, where they promise to work out terms with the bank — but only after the homeowner signs papers authorizing them to do so and, unknowingly signs their deed over to the scammer.
Unfortunately, these are just a few examples of real estate wire fraud on a mountain of other schemes that exist. According to the FBI, real estate wire fraud cost Americans over $150 million in 2018. It’s a very real threat, and it’s only becoming more rampant as technology progresses and we grow more comfortable with the devices and electronic communications platforms we depend on.
Wire fraud is a very real, and very scary, threat. As a homeowner, future home buyer, investor, or real estate agent, it’s important that everyone you work with throughout a real estate transaction understands the threat of fraud and does everything in their power to protect themselves against it.
Preventing wire fraud is truly as easy as remaining aware of the situation and double- and triple-checking all of the numbers. For instance, before ever transferring money to a title company, call them directly to confirm any and all information, such as account and routing numbers. Also, be aware of industry practices.
Most title companies will send clear written instructions for the transfer through a secure portal. You should also be able to call them at any point to confirm the information. Scammers, on the other hand, often change details last minute and may rush you to send the details. If you feel time pressure is being put on you or the details just don’t seem right, don’t hesitate to confirm with the title company and other parties.
An owner’s title insurance policy can help protect them against real estate wire fraud, but only to the policy limits. It’s still important to be careful whether or not you carry owner’s title insurance, as a specific wire fraud scheme may or may not be covered by your policy.
Wire fraud is a very real threat that takes millions away from home buyers, owners, and sellers each and every year. Agents, title companies, and other professional players also stand to lose money when wire fraud happens. As such, it’s important that everyone takes the time to educate themselves about wire fraud and its potential for wreaking havoc and causing financial burden on every party of a real estate transaction.
Education is the best way to fight wire fraud, which is why you should stay on top of the latest scams and schemes being reported by the FBI and other leading institutions. Of course, it’s also important that you secure your transactions by using the right tools for the job. With the power of technology, we can make real estate transactions safer and more secure, all while improving user experience.
At paymints.io, we believe the world of real estate should be simpler and, let’s face it: less scary. That’s why we have created secure, easy-to-use platforms to make managing life’s biggest purchase that much simpler for everyone involved. With paymints.io by your side, your next real estate transaction can move smoothly and close with confidence.
You can learn more about paymints.io and our services by scheduling a 30-minute consultation. Book now!