Wire Fraud: How 18 U.S.C. § 1343 Became the Prosecutor's Universal Statute — and How to Defend It

If the federal criminal code has a universal solvent, it is 18 U.S.C. § 1343 — wire fraud. The statute reaches any scheme to defraud that uses an interstate wire communication. In the internet age, that means virtually every fraud case. And in an era when the Supreme Court has narrowed honest-services fraud, prosecutors have returned to traditional wire fraud as their default white-collar charge. This Journal entry surveys the current state of wire fraud prosecution and the defenses that work.

The elements — deceptively simple. To prove wire fraud, the government must establish (1) a scheme to defraud, (2) the use of an interstate wire communication, and (3) specific intent to defraud. United States v. Autuori, 212 F.3d 105 (2d Cir. 2000). There is no loss requirement. The scheme need not succeed. A single interstate email sent in furtherance of a fraudulent scheme completes the offense. Each wire transmission is a separate count, and each count carries a maximum of 20 years (30 years if the fraud affects a financial institution or relates to a presidentially declared major disaster or emergency). 18 U.S.C. § 1343.

The honest-services detour and return. In Skilling v. United States, 561 U.S. 358 (2010), the Supreme Court limited honest-services fraud under § 1346 to schemes involving bribes or kickbacks — rejecting the broader "conflict of interest" theory that had been used to prosecute corporate executives for undisclosed self-dealing. The decision was widely expected to constrain white-collar prosecutions. Instead, prosecutors adapted. Rather than charging honest-services fraud, they charged traditional money-or-property wire fraud. The key: identify the specific property interest obtained through the scheme. In a corporate self-dealing case, that property interest is the salary, bonus, or stock proceeds the executive received while concealing the conflict.

The "right to control" theory. Several circuits recognize a "right to control" theory of wire fraud, under which the scheme deprives the victim of potentially valuable economic information necessary to make discretionary decisions. United States v. Binday, 804 F.3d 558 (2d Cir. 2015). Under this theory, a defendant who lies on a mortgage application commits wire fraud even if the lender suffers no financial loss — because the lender was deprived of information material to its underwriting decision. The theory is controversial. The Supreme Court has granted certiorari on the question at least twice in recent terms before the cases resolved short of decision. Defense counsel in circuits that recognize the right-to-control theory should preserve the objection for potential Supreme Court review.

Materiality after Kelly. The government must prove that the misrepresentation was material — that it had a natural tendency to influence, or was capable of influencing, the decision of the victim. Neder v. United States, 527 U.S. 1 (1999). Materiality is a question for the jury, not the court. In practice, the government satisfies materiality through the testimony of the alleged victim: "Had I known the truth, I would not have approved the transaction." Cross-examination of the victim on their own due diligence failures, their awareness of red flags, and their independent reasons for the transaction is the most effective way to challenge materiality.

Loss calculation at sentencing. The Guidelines loss table at § 2B1.1 drives wire fraud sentences. Loss exceeding $550 million adds 30 offense levels; loss under $6,500 adds none. The government's loss calculation is frequently inflated — it includes intended loss alongside actual loss, treats gross revenue as loss without deducting the value of goods or services provided, and aggregates conduct from dismissed and uncharged counts as relevant conduct under § 1B1.3. A forensic accountant retained by the defense is no longer optional in any wire fraud case with a seven-figure loss allegation.