Mail Fraud

views updated

MAIL FRAUD

A crime in which the perpetrator develops a scheme using the mails to defraud another of money or property. This crime specifically requiresthe intent to defraud, and is a federal offense governed by section 1341 of title 18 of the U.S. Code. The mail fraud statute was first enacted in 1872 to prohibit illicit mailings with the Postal Service (formerly the Post Office) for the purpose of executing a fraudulent scheme.

Initially, courts strictly followed the mail fraud statute's language and interpreted it narrowly. The early decisions required a connection between the fraudulent scheme and the misuse of the mails for a violation of the mail fraud statute. Since its enactment, application of the statute has evolved to include dishonest and fraudulent activities with only a tangential relationship to the mails.

Punishment for a conviction under the mail fraud statute is a fine or imprisonment for not more than five years, or both. If, however, the violation affects a financial institution, the punishment is more severe: the statute provides that "the person shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both."

Both the Supreme Court and Congress have consistently broadened the mail fraud statute since its enactment. Prior to a 1909 amendment, a violation of the mail fraud statute required proof, among other requirements, of either opening or intending to open correspondence or communication with another person. In 1909 Congress eliminated this requirement and replaced it with the language that the mails be used "for the purpose of executing such scheme or artifice or attempting so to do." This amendment followed the Supreme Court's decision in Durland v. United States, 161 U.S. 306, 16 S. Ct. 508, 40 L. Ed. 709 (1896), which held that the mailing only needed to "assist" in the completion of the fraud. Although this amendment was the last significant change until 1988, the Supreme Court has struggled with the relationship between the mailing element and the execution of the fraud.

The Court's struggle with this relationship is illustrated by two of its decisions: United States v. Maze, 414 U.S. 395, 94 S. Ct. 645, 38 L. Ed. 2d 603 (1974), and Schmuck v. United States, 489 U.S. 705, 109 S. Ct. 1443, 103 L. Ed. 2d 734 (1989). In Maze, the defendant stole his room-mate's credit card and car and signed his room-mate's name to the charge vouchers to obtain food and lodging. The merchants mailed the invoices to a bank in Louisville, Kentucky. The Supreme Court held that this did not fall within the scope of the mail fraud statute because the mailings did not perpetuate the fraud. The Court held that the scheme did not depend on the mailings and that the fraud was completed once the defendant signed the vouchers. The Court refused to interpret the statute as merely a jurisdictional requirement and stated that "Congress could have drafted the mail fraud statute so as to require only that the mails be in fact used as a result of the fraudulent scheme."

However, in Schmuck, the Court did expand the mail fraud statute. In Schmuck, the defendant sold used cars to auto dealers in which he had rolled back the odometers to inflate the vehicles' value. The dealers sent title application forms to the state department of transportation to register the cars after the dealers sold them to individual purchasers. The Court held that the sale of the vehicles depended on the transfer of title and that, although the mailing of the registration may not have contributed directly to the scheme, it was necessary for the passage of title and perpetuation of the scheme.

In recent years Congress has amended the mail fraud statute twice. In 1988 Congress added section 1346, which states that the term "scheme to defraud" includes a scheme to deprive another of the intangible right of honest services. In 1994 Congress expanded the use of the mails to include any parcel that is "sent or delivered by a private or commercial interstate carrier." As a result of these amendments, the mail fraud statute has become a broad act for prosecution of dishonest and fraudulent activities, as long as those crimes involve the mails or an interstate carrier.