Can Usage of the Internet be used for a Charge of Wire Fraud?

Because the Internet is principally a new form of media transmission there are still many gray areas open to interpretation by the courts.

A 2012 decision of a case (US v Kieffer) decided in the Tenth Circuit, which covers the districts of Colorado, Utah Kansas, Wyoming, New Mexico, as well as Eastern, Western and Northern Oklahoma became a critical declaration in the legal question probing the use of the Internet as a means of transmitting deceitful data which meets the defined criteria and establishes an interstate wire for the purpose of a fraud.

In previous cases the findings did not conclude an overwhelming association. This topic has progressed over the past few years as demonstrated in the case of the United States v. Phillips, 376 F. Supp. 2d 6 (D. Mass. 2005), also referenced on page 25, US v Acevedo Vila, et al. In these cases, the court did not accept the argument of the government that “in order to satisfy the elements of the wire fraud offense, it was not necessary to present evidence that the pertinent wire communications themselves actually crossed state lines, as long as the communications (whether interstate or intrastate) traveled via an ‘instrument of an integrated system of interstate commerce,’ such as the interstate phone system.”

In a more recent decision, in United States v. Schaefer, 501 F.3d 1197 (10th Cir. 2007) , the Tenth Circuit held that a single individual’s use of the internet, “standing alone” was inadequate substantiation that the article “traveled across state lines in interstate commerce and requires proof of an intentional scheme to defraud and the use of interstate wire communications to further that scheme.” The Court laid out three reasons why the Act did not significantly have an impact regarding interstate commerce and reasoned why the counts of wire fraud were flawed and were requisite to be terminated.

In regard to the Kieffer case, several other prior cases referenced the Court’s decisions on Phillips and Schaefer.

Based on the earlier decisions and the apparent direction of previous cases, it was somewhat unanticipated that the Tenth Circuit reversed its previous judgments. In this latest case looking for a clarification of wire fraud’s significance by way of the Internet, the court allude to the fact that in advance of the website reaching Network Solutions, the local host server, the files comprising it were uploaded by Kieffer to the Company based in Virginia. By way of the Website being viewed in Colorado and Tennessee it is deemed to be transmitted to the end users. Taking those facts into consideration, the court came to the conclusion that the existence of all end users living in different states, accessing the site hosted in another state, in this case Virginia, combined with the “very character of the internet” endorsed the jury’s interpretation of all data included within the Website being transmitted across state line boundaries and rendering a positive result for the Website to be considered an instrument of the fraud.

With this decision, an accusation that a Website was used to carry out a fraud will most like now bring an escalation for federal wire fraud prosecutions in fundamentally any case brought forward. The terminology stated by the Court “the very character of the internet,” would show that it is implausible that a perpetrator of such a fraud would reside in the identical state as the host of the web site disseminating the fraudulent or misleading information as well as any of those affected by it.

Click here to read the page (The United States of America v Howard O. Kieffer) that lends credence to the Courts decision.