Is Fraud a Felony or Misdemeanor? Thresholds and Penalties

Whether fraud is a felony or a misdemeanor depends almost entirely on how much money was involved. Every state sets a dollar threshold, generally somewhere between $500 and $2,500, and a loss above that line turns the same conduct from a misdemeanor into a felony. Federal fraud is a different story: charges brought under federal statutes are nearly always felonies, with maximum sentences running from 10 years for healthcare fraud up to 30 years for schemes that hit a federally insured bank.

The Dollar Threshold Is the Main Dividing Line

State felony thresholds for fraud and theft-by-deception sit in a range from roughly $500 to $2,500. Take $400 through a fraudulent scheme in a state with a $500 threshold and you are looking at a misdemeanor. Take $600 and the same scheme becomes a felony, with prison time measured in years rather than months.

The threshold is a bright line in theory, but prosecutors have real discretion in borderline cases. A one-time bad check for $600 is treated very differently from a months-long scheme that netted $600 through calculated deception, even though both cross the same dollar line.

What Else Can Push Fraud Into Felony Territory

Dollar amount isn’t the only trigger. Several factors can turn a small-dollar fraud into a felony on their own:

  • Defrauding an elderly person, a disabled adult, or another vulnerable individual. Many states have standalone statutes that treat financial exploitation of a vulnerable adult as a felony regardless of the amount taken.
  • Using stolen identities, forged documents, or digital tools. Sophisticated methods signal the kind of deliberate planning that prosecutors and judges treat more seriously.
  • A large number of victims. A scheme targeting dozens or hundreds of people will almost certainly be charged as a felony, even if the individual losses are small, because the aggregate harm is substantial.
  • Prior convictions. Some states classify even small-dollar fraud as a felony on a second or third offense.

Certain fraud types are also carved out as felonies regardless of the dollar amount in many states, including fraud involving public benefits, government documents, or healthcare programs.

Misdemeanor Fraud: What the Penalties Look Like

Fraud that stays under a state’s felony threshold is typically a misdemeanor carrying up to one year in jail. The actual sentence depends on the state’s classification system, the amount involved, and the defendant’s criminal history. Common pieces of a misdemeanor sentence include:

  • Jail time ranging from none for a minor first offense up to the full year.
  • Fines, usually capped at a few thousand dollars.
  • Probation, often one to three years, with conditions like regular check-ins, employment requirements, and prohibitions on certain financial activities.
  • Restitution covering the victim’s losses. Courts routinely order full repayment even for misdemeanor convictions.
  • Community service, commonly imposed alongside or in place of jail time for first offenders.

Misdemeanor does not mean minor. A fraud conviction at any level creates a criminal record that shows up on background checks, and many of the collateral consequences that attach to felony convictions reach misdemeanor fraud as well.

Felony Fraud at the State Level

Once a fraud charge crosses the felony threshold, the exposure jumps from months in jail to years in prison, and the specific range is set by the state’s grading of the felony. States break their felonies into degrees or classes, with higher dollar amounts, more victims, and aggravating factors pushing the charge up the ladder. Restitution remains mandatory in practice, and probation becomes less likely as the offense level rises.

Federal Fraud Is Almost Always a Felony

Federal prosecutors reach a fraud scheme when it uses interstate communications (phone, email, internet), targets a federal agency or program, involves a federally insured bank, or crosses state lines. Nearly every federal fraud statute is a felony, and the maximum penalties are steep:

Wire fraud and mail fraud function as catch-all statutes. Almost any fraudulent scheme that involves an email, a phone call across state lines, or a mailed document can be prosecuted under one of them, which covers an enormous range of conduct — from internet scams to real estate fraud to fake invoicing schemes.6United States Department of Justice Archives. 941. 18 U.S.C. 1343 – Elements of Wire Fraud

Conspiring to commit any of these offenses carries the same maximum as the underlying crime. You don’t have to succeed in defrauding anyone; agreeing to carry out the scheme and taking a step toward it is enough.7Office of the Law Revision Counsel. 18 U.S. Code 1349 – Attempt and Conspiracy

Federal sentences also tend to be longer in practice because federal parole was abolished decades ago, and defendants serve at least 85% of the sentence imposed.

How Federal Fraud Sentences Are Actually Calculated

Maximum penalties set the ceiling; actual sentences are driven by the federal sentencing guidelines. For fraud, the most important variable is the loss amount. The U.S. Sentencing Commission’s loss table adds offense levels based on how much money the scheme involved:

  • $6,500 or less: no increase to the base offense level
  • More than $6,500: add 2 levels
  • More than $40,000: add 6 levels
  • More than $150,000: add 10 levels
  • More than $1,500,000: add 16 levels
  • More than $9,500,000: add 20 levels
  • More than $65,000,000: add 24 levels
  • More than $550,000,000: add 30 levels
8United States Sentencing Commission. Loss Table from 2B1.1(b)(1) – Theft, Property Destruction, and Fraud

The base offense level for most fraud is 7, and the loss-table additions stack on top of that. More levels can be added for the number of victims, sophisticated planning, or abuse of a position of trust. The final offense level, combined with the defendant’s criminal history category, maps to a range in months. A first-time offender at offense level 15 faces a recommended range of 18 to 24 months; at level 25, the range jumps to 57 to 71 months.9United States Sentencing Commission. Sentencing Table – 2025 Guidelines Manual

“Loss” means the greater of actual loss or intended loss. A scheme that fails can still generate a high offense level based on what the defendant was trying to steal.

Enhancements That Make Charges Worse

Aggravated Identity Theft

When someone uses another person’s identifying information during a fraud scheme, federal law adds a mandatory two-year prison term on top of whatever sentence the underlying fraud carries. This enhancement under 18 U.S.C. § 1028A runs consecutively, meaning the judge has no discretion to let it overlap with the fraud sentence. Probation is not an option.10Office of the Law Revision Counsel. 18 U.S.C. 1028A – Aggravated Identity Theft

Vulnerable Victims

Schemes that prey on elderly or disabled adults face enhanced penalties at both the state and federal level. Federal guidelines add offense levels when a vulnerable victim is targeted, and many states layer standalone elder-fraud felonies on top.

Large-Scale Schemes

Ponzi schemes, large-scale investment fraud, and multi-state operations draw some of the longest sentences in white-collar criminal law. High dollar losses, numerous victims, and sophisticated planning combine inside the guidelines to push recommended ranges into decades. The median loss in federal fraud cases sentenced under the theft and fraud guidelines is over $210,000, and roughly 20% of cases involve losses above $1.5 million.11United States Sentencing Commission. Theft, Property Destruction and Fraud Quick Facts

Consequences That Follow a Fraud Conviction

The sentence is only part of what a fraud conviction does to someone’s life.

Mandatory Restitution

Federal law makes restitution mandatory for fraud. Under the Mandatory Victims Restitution Act, courts must order defendants convicted of offenses committed by fraud or deceit to repay their victims for the full amount of pecuniary loss, and the judge cannot waive the order based on inability to pay.12Office of the Law Revision Counsel. 18 U.S. Code 3663A – Mandatory Restitution to Victims of Certain Crimes Enforcement tools include liens, wage garnishment, forced asset sales, and injunctions against hiding money. Failing to pay can trigger probation revocation, contempt, or resentencing.13U.S. Sentencing Commission. Imposition and Enforcement of Restitution

Professional Licenses

A fraud conviction can end a career in a regulated industry. FINRA treats all felony convictions and certain misdemeanor convictions as “statutory disqualifications” that bar someone from working at any FINRA member firm for ten years from the conviction date, with the bar applying to any role at the firm. Getting back in requires a formal eligibility proceeding.14FINRA. General Information on Statutory Disqualification and FINRA Eligibility Proceedings Law, medicine, accounting, and real estate carry their own licensing consequences that vary by state.

Immigration

For non-citizens, a fraud conviction can be devastating. The State Department classifies fraud as a crime involving moral turpitude, which makes a convicted non-citizen potentially ineligible for a visa under the Immigration and Nationality Act. Waivers exist but are difficult to obtain.15U.S. Department of State. Foreign Affairs Manual – Ineligibility Based on Criminal Activity

Firearms

A felony fraud conviction triggers a federal ban on possessing firearms or ammunition. Violating that ban is a separate crime carrying up to 10 years in prison.16Department of Justice. Quick Reference to Federal Firearms Laws

Expungement

Clearing a fraud conviction is possible in some states but far from guaranteed. Most states require a waiting period, commonly one to eight years after completing the sentence. Felony fraud convictions are significantly harder to expunge than misdemeanors, and some states exclude fraud-related felonies entirely.

How Long Prosecutors Have to Charge You

Federal prosecutors generally have five years from the date of the offense to bring fraud charges.17Office of the Law Revision Counsel. 18 U.S. Code 3282 – Offenses Not Capital Two important exceptions stretch that window:

State statutes of limitations for fraud vary widely, with most falling in the three-to-six-year range. Some states apply a “discovery rule” that starts the clock when the fraud is discovered rather than when it was committed, which matters for schemes designed to stay hidden.