federal fraud

Federal fraud is not a single provision in US federal law but an umbrella term for federal fraud charges — most often brought under the wire fraud provision in 18 U.S.C. § 1343. The term covers situations in which a person has devised or taken part in a fraudulent scheme intended to defraud others or to obtain money or property by means of false representations, and where that scheme has been carried out through interstate or international electronic communication — including telephone, email or bank transactions.

In connection with the NCAA basketball scandal involving Adidas, bribery and corruption, federal fraud charges were used against actors who coordinated illegal payments to sports recruits and their families through precisely such communication channels. It was not the payments in themselves, but the combined use of fraudulent planning and interstate communication, that formed the federal basis for the charges.

A central element of the provision is the "scheme or artifice to defraud" — that is, the existence of a deliberate and organised fraudulent plan. A single dishonest act is not sufficient; the prosecution must prove a systematic intent to defraud. This makes the provision particularly useful in complex corruption and bribery cases involving multiple parties.

The provision is federal, meaning that US federal authorities — typically the FBI and the federal prosecution service — investigate and bring charges, and that the cases are heard before federal courts. The penalty under 18 U.S.C. § 1343 is up to 20 years' imprisonment per count, and in cases involving financial institutions the maximum may be higher still.

The term must not be confused with the fraud provision of Danish law and has no direct equivalent in Danish legislation. In a Danish context, the expression appears solely as a description of US federal legal matters.