3 “Hidden” Risks in Federal Criminal Investigations

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When facing a federal investigation, one of the keys to asserting a successful defense is making sure you know what charges are on the table. There are numerous federal crimes, and each individual case requires its own targeted defense strategy.

In most cases, federal investigations focus on one or more substantive crimes. From healthcare fraud to securities fraud, and from tax evasion to bribery, identifying the substantive allegations at issue in a federal investigation is usually a relatively straightforward process. You might already have an idea of why you are being targeted, federal agents might tip their hand, or your attorney may be able to gain insight into the investigation by contacting the agents involved. However, in addition to identifying the substantive allegations at hand, it is important to be aware of three “hidden” risks of federal criminal investigations as well.

“Hidden” Risks that Can Lead to Prosecution in Federal Criminal Cases

What do we mean by “hidden” risks? There are several federal crimes that are non-specific to the substantive issues involved in a federal investigation. In many cases, federal prosecutors can pursue charges for these crimes even if they cannot prove the substantive allegations that initially triggered the investigation. As a result, when defending against a federal investigation, it is crucial not solely to focus on your obvious defense priorities, but to ensure that your defense strategy is sufficiently comprehensive to address these hidden risks as well.

Here are three common examples of hidden risks in federal criminal investigations:

1. Wire Fraud

The federal wire fraud statute is one of the most-potent tools in federal prosecutors’ toolkits. It allows for prosecution in an extremely broad range of scenarios, and the penalties under the statute are substantial. Under Section 1343 of Title 18 of the United States Code:

Whoever, having devised or intending to devise any scheme or artifice to defraud . . . transmits or causes to be transmitted by means of wire . . . in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than 20 years, or both. If the violation occurs in relation to . . . a presidentially declared major disaster or emergency . . . or affects a financial institution, such person shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.”

Although “wire” may seem like an outdated term, this statute remains hugely relevant in present-day federal criminal investigations. This is because the courts have interpreted “wire” communications to include use of the Internet and cell phones. As a result, anyone who sends an email, sends a text, or makes a call “having devised or intending to devise any scheme or artifice to defraud” can potentially face decades of federal imprisonment and a seven-figure fine.

Consider these implications of the federal wire fraud statute:

  • Since the statute applies to anyone who has devised or who is intending to devise a crime, it is not necessary to actually commit a substantive crime in order to face prosecution for wire fraud.
  • Since the statute is non-specific to the individuals involved in committing a substantive crime (if any), prosecutors can use it to target anyone who is even tangentially involved in contemplating or planning a proposed criminal act.
  • Since the federal wire fraud statute can ensnare people who are only tangentially involved in criminal activity and expose them to the statute’s severe penalties, prosecutors will often use it as a tool to secure cooperation from individuals who have information about contemplated and actual crimes.

2. Money Laundering

Prosecutors can often use the federal money laundering statute to similar effect. Under Section 1856 of Title 18 of the United States Code, multiple individuals can face prosecution for playing various roles in transactions involving illegal-source funds:

“Whoever, knowing that the property involved in a financial transaction represents the proceeds of . . . unlawful activity, conducts or attempts to conduct such a financial transaction which in fact involves the proceeds of specified unlawful activity . . . with the intent to promote the carrying on of specified unlawful activity[;] with intent to engage in [tax fraud]; or . . . knowing that the transaction is designed in whole or in part . . . to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity [or] avoid a transaction reporting requirement under State or Federal law, shall be sentenced to a fine of not more than $500,000 or twice the value of the property involved in the transaction, whichever is greater, or imprisonment for not more than twenty years, or both.”

While money laundering can involve illicit conduct such as that portrayed in shows like Ozark and Breaking Bad, it can also involve far less in terms of structure and organization. As you can see from the statutory language, even being “involved” in a single transaction involving illegal-source funds is enough to trigger criminal culpability. Financial institutions, business partners, friends, and even family members can all potentially get pulled into federal money laundering investigations; and, here too, prosecution for money laundering does not necessarily require prosecution of the same individual for the underlying criminal activity.

3. Conspiracy

The third major hidden risk in federal criminal investigations is the risk of being charged with conspiracy. Similar to wire fraud, prosecutors do not need to be able to prove that any substantive crime was committed in order to pursue conspiracy charges. Section 371 of Title 18 of the United States Code provides:

“If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do[es] any act to effect the object of the conspiracy, each shall be fined under this title or imprisoned not more than five years, or both.”

What it means for two or more persons to “conspire” is not clearly defined, and this allows federal prosecutors to pursue conspiracy charges under an extremely broad range of scenarios. Generally speaking, any efforts to communicate regarding the possible commission of a federal crime will be enough to implicate Section 371. If any person involved in the conspiracy subsequently takes a step toward committing the crime in question, then this is enough to establish criminal culpability for all individuals involved.

As you can see, conspiracy and wire fraud charges will often go hand-in-hand. When faced with these types of charges, targets must be extremely careful not to assert “defenses” that end up doing more harm than good. For example, while saying “I didn’t go through with committing the crime” might be enough to avoid prosecution for the underlying substantive offense, this type of admission could be all federal prosecutors need to move forward with pursuing an indictment for conspiracy, wire fraud, or both.

Defending Against These “Hidden” Risks During Federal Criminal Investigations

Despite the challenges involved with fending off federal charges for wire fraud, money laundering, and conspiracy, there are defenses available. For example, depending on the circumstances involved, it may be possible to avoid an indictment (or avoid a conviction at trial, if necessary), by asserting defenses such as:

  • Lack of Criminal Intent – In order to establish criminal culpability, prosecutors are generally required to prove criminal intent. If you can argue that you did not intend to commit a crime, then this could save you from a conviction. However, this should not be confused with being unaware that the conduct in question was illegal. “Mistake of law” is not a defense to federal charges in most cases.
  • Lack of Knowledge – Under the federal money laundering statute, prosecutors need proof that a defendant knew that the funds involved in a particular transaction were obtained from an illegal source. If you didn’t know that you were dealing with illegal-source funds, this could potentially serve as a complete defense. However, prosecutors may also try to argue that you had “constructive knowledge” based on the fact that you should have known that the funds involved were derived from criminal activity.
  • Mistake of Fact – The “mistake of fact” defense is available to individuals who were unaware that they were involved in the commission of a crime. This may be based on lack of knowledge (as in the case of money laundering), or it may be based on a legitimate misunderstanding of the circumstances at hand. But, here too, prosecutors will often view targets’ claims of ignorance with skepticism, and asserting this defense successfully will often require affirmative evidence of the mistake of fact.
  • Constitutional Defenses – In some cases, it will be possible to assert constitutional defenses in response to allegations of wire fraud, money laundering, and conspiracy. For example, if federal agents conducted a wiretap or search without a warrant, then any evidence obtained from the wiretap or search may be inadmissible under the Fourth Amendment’s protection against unreasonable searches and seizures. There are several other possible constitutional defenses as well; and, again, determining what defenses a target can assert in any particular case will require a comprehensive assessment of the particular circumstances involved.

Speak with a Federal Criminal Defense Lawyer at The Criminal Defense Firm

Are you facing a federal criminal investigation? If so, it is imperative that you speak with a lawyer as soon as possible. To discuss your situation with a senior federal criminal defense lawyer at The Criminal Defense Firm in confidence, call 214-251-4238 or request a complimentary consultation online now.

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