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Federal Fraud Charges: Mail, Wire, Bank, Mortgage, and Medicare


There are several types of fraud cases which are prosecuted in the federal courts rather than the state court. The federal government has the authority to prosecute whenever a federally funded or charted institution, such as a Bank or Medicare, is involved. In some cases, in order for a charge to be prosecuted in the federal court, it is given a somewhat generic title which gives the federal government the authority to prosecute it.

Wire or Mail Fraud:

In general, federal courts are not allowed to become involved in state matters. In cases where someone perpetrated a fraud, or was accused of a theft, embezzlement, or anything of that nature, they would be prosecuted in the state courts. If, however, somebody had set up a scheme where they were defrauding people in multiple states, then that would be beyond the state’s jurisdiction to handle the case properly. Hence, the federal courts were allowed to step in and do something about it, which is not unlike kidnapping across state lines. A constitutional provision also allows the federal courts to be involved in things that affect interstate commerce.

Wire fraud or Mail fraud, then, are just the vehicles which allows the federal government to prosecute somebody for fraud. The reality of it is that it’s just a jurisdictional issue in federal court, which uses specific terminology to allow the federal government to have jurisdiction to prosecute something that was not an area that the federal government would historically be involved in.

Bank or Mortgage Fraud:

Banks are federally charted and thus fall under federal jurisdiction for prosecution. If someone is accused of misusing the bank system, or perpetrating a fraud on the bank, where the bank loses money or someone else loses money through the banking system, the person can be indicted and charged with bank fraud. Most fraud cases in federal court are handled the same way – you have the same loss schedule for the sentencing guidelines and the same type of elements of proof – but bank fraud is simply a term that’s used if somebody has committed fraud in the money system which effects or involves the use of a federally charted bank.

Mortgage fraud is a specific type of bank fraud in which somebody is accused of lying on a loan application. It’s really just a situation of someone being accused of misstating material facts in order to get a loan from a bank, and then someone later comes back and says the loan should not have been made and the bank saying it’s the borrower’s fault. In reality, mortgage fraud only becomes a problem when there’s an economic downturn where people are losing money. As we’ve seen in the not-so-distant past, it’s only when banks lose a lot of money that this becomes important, and then at that point they start looking for scapegoats and charging people. Of course, in some instances there were great frauds committed, but in other instances it’s less clear.

Medicare or Medicaid Fraud:

Both Medicare and Medicaid are federal subsidies and so they, like banks, are under federal jurisdiction for prosecution. Medicare or Medicaid fraud would simply be where a medical provider, such as someone doing diagnostic tests (CAT scans, MRIs, or something of that nature) or doctors are performing procedures for patients which are then examined, possibly through a grand jury investigation, and it is determined that none of these procedures were medically necessary. The claim might be that the doctors were having tests done that were not required in the course of normal medical practice and that the government, via the healthcare system, was being billed needlessly. It is a case where someone is accused of having money being paid out which should not have been paid out because the doctors or medical providers were committing dishonest billing acts and that those acts were done intentionally.

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