Defending Against Federal Wire Fraud Charges in Orange County and Los Angeles When You Lack the Intent to Defraud
Fraud in general is a very intent-focused crime. Investors lose billions each year when they choose the wrong companies to invest in. Simply losing money on a poorly functioning business is a bad finance decision - not fraud. What separates fraud from struggling business operations is intent. If you
intend to wrongly deprive investors of their money, you are participating in a fraudulent scheme.
Fraud is a fairly confusing concept. The very nature of doing business involves taking money, services, or other property from customers in order to benefit and grow. For instance, in order to grow your Silicon Beach tech start-up, you need capital. You can obtain that capital from investors – other businesses, banks, and even individuals who have faith in your product. These investors believe your product will be so successful that their investment in your business will be handsomely rewarded. If your start-up turns into a flop, these investors can't start claiming fraud and calling the authorities because they lost their money. The start-up was simply a losing business venture despite all of your hard work and efforts to help it succeed.
But, what if the tech start-up is a shell company? If you create a flashy website, come up with a name for a catchy product you have no intention of ever creating and selling, and then market your company to investors, you have created a shell company. By using this shell company to attract money from investors, money that you do not intend to use for its intended purpose, you have designed a scheme to defraud the investors. You can be now be held criminally liable for wire fraud.
The difference between these two business designs is intent. If you intend to defraud, you have committed wire fraud. If you don't, you're safe from prosecution.
However, the U.S. Attorney's Office for the Central District of California is not privy to what you are thinking. Federal prosecutors can only guess at your intent by looking at circumstantial evidence. Oftentimes, evidence of intent is scarce or even non-existent. The Assistant United States Attorney (AUSA) must prove intent to defraud beyond a reasonable doubt. Beyond a reasonable doubt is a strict standard with a high threshold. If the jury has just one doubt based on reason, regardless of how small, the jury cannot convict you. The AUSA will often try to creatively paint a picture of deviance and deception using evidence unrelated to your tech start-up, such as a recent purchase of a nice car. If the federal prosecutor is unable to prove beyond a reasonable doubt that you possessed the requisite intent, you do not even need to put on a defense.
However, it is advantageous to counteract accusations by proffering reasonable explanations for items submitted into evidence by the AUSA. For instance, if the AUSA argues that your recent purchase of an expensive convertible shows your intent to defraud investors and spend their money on personal expenses instead of operating costs, you can present evidence that the purchase was funded by non-investor money such as an inheritance.
Even if you were caught up in a fraudulent scheme, the U.S. Attorney's Office's burden is not lessened in a Los Angeles federal wire fraud trial. The prosecutor will still be tasked with proving every element of wire fraud beyond a reasonable doubt before your defense attorney even has a chance to put forth any evidence or testimony. The three elements of wire fraud are:
- Intent to defraud;
- Designing or participating in a fraudulent scheme that uses lies, false promises, exaggerations, or false pretenses to permanently deprive others of money or other property; and
- Using wire communications (i.e., television or radio) to conduct the scheme.
Federal wire fraud is a serious charge. Los Angeles and Orange County prosecutors vigorously pursue any and all allegations of fraud. If you are in the middle of a federal wire fraud investigation, consult with Scott D. Hughes, Attorney at Law, California federal white collar criminal defense attorney. To schedule a free case review, call our Los Angeles criminal defense law firm at (714) 423-6928.