Fraud is a deliberate act of deception used to obtain money, property, or some other benefit that the victim would not have given up willingly. It can be prosecuted as a crime, sued over in civil court, or both at the same time. Federal criminal penalties run as high as 30 years in prison and a $1,000,000 fine for offenses like bank fraud, and civil judgments can require the wrongdoer to repay the victim’s losses or, in some cases, triple that amount.
What Must Be Proved
Whether the case is civil or criminal, the same core elements apply. If any one of them fails, the claim fails with it.
- A false statement about a material fact. The claim has to be untrue, and it has to be important enough that a reasonable person would consider it when deciding whether to act.
- Knowledge the statement is false. The speaker knew the truth and said otherwise. An honest mistake isn’t fraud.
- Intent to deceive. The lie was told so the victim would rely on it—hand over money, sign a contract, give up a right.
- Reasonable reliance. The victim believed the statement, and that belief was reasonable in context. A claim so wild that no sensible person would trust it generally won’t support a fraud case.
- Actual harm. The victim lost something real, usually money, because of the lie. No loss, no fraud claim.
The level of proof is where civil and criminal cases split. A civil plaintiff must show fraud was more likely than not—a “preponderance of the evidence.” A criminal prosecutor must prove each element beyond a reasonable doubt. That difference is why the same conduct can lose a criminal trial and still win a civil one.
Common Types of Fraud
Federal law defines fraud offenses by the method used or the kind of victim involved. These are the categories prosecutors charge most often.
Wire Fraud and Mail Fraud
Wire fraud covers schemes carried out through electronic communications—phone, email, text, internet transactions—that cross state lines or use national infrastructure. The maximum sentence is 20 years, rising to 30 years and a $1,000,000 fine when the scheme affects a financial institution or exploits a presidentially declared disaster.1Office of the Law Revision Counsel. 18 U.S.C. 1343 – Fraud by Wire, Radio, or Television
Mail fraud is the postal and private-carrier version, with identical penalties: up to 20 years, or up to 30 years and $1,000,000 if a financial institution is affected.2Office of the Law Revision Counsel. 18 U.S.C. 1341 – Frauds and Swindles Because nearly every modern scheme involves an electronic communication or a mailed document, these two statutes are the federal government’s catch-all fraud charges.
Bank Fraud
Bank fraud targets a financial institution directly—a falsified loan application, checks written against an empty account, and the like. A conviction can bring up to 30 years in prison and a fine of up to $1,000,000.3Office of the Law Revision Counsel. 18 U.S.C. 1344 – Bank Fraud
Healthcare Fraud
Healthcare fraud is the knowing submission of false claims to Medicare, Medicaid, a private insurer, or any other health care benefit program. Billing for services never rendered, upcoding procedures, and prescribing unnecessary treatment to generate revenue are typical examples. The base penalty is up to 10 years. If the fraud causes serious bodily injury to a patient, the maximum climbs to 20 years. If a patient dies, the defendant faces up to life in prison.4Office of the Law Revision Counsel. 18 U.S.C. 1347 – Health Care Fraud
Securities and Investment Fraud
Federal securities law prohibits false statements and material omissions in the buying or selling of securities. Ponzi schemes, insider trading, market manipulation, and misleading disclosures about a company’s finances all fall under this heading. The Securities and Exchange Commission enforces the rules and accepts tips through its online complaint portal.5U.S. Securities and Exchange Commission. Submit a Tip or Complaint
Tax Fraud
Tax fraud comes in two main forms. Tax evasion—willfully trying to avoid paying taxes you owe—is a felony with a maximum of five years in prison and a fine of up to $100,000, or $500,000 for a corporation.6Office of the Law Revision Counsel. 26 U.S.C. 7201 – Attempt to Evade or Defeat Tax Filing a false return, or helping someone else file one, carries up to three years and the same fine amounts.7Office of the Law Revision Counsel. 26 U.S.C. 7206 – Fraud and False Statements Fake deductions, hidden income, and inflated charitable contributions are common fact patterns.
Identity Theft
Identity theft is the unauthorized use of someone else’s personal information—Social Security number, bank account, credit card—to open accounts, make purchases, or file tax returns in that person’s name. When it occurs during another felony such as wire, mail, or bank fraud, it becomes aggravated identity theft, which adds a mandatory two-year sentence that must run consecutively to the sentence for the underlying crime. Courts cannot shorten the underlying sentence to absorb this additional time.8Office of the Law Revision Counsel. 18 U.S.C. 1028A – Aggravated Identity Theft
Criminal Penalties at a Glance
Maximum federal penalties for the most commonly charged fraud offenses:
- Wire fraud or mail fraud: up to 20 years, or up to 30 years and a $1,000,000 fine if a financial institution is affected.
- Bank fraud: up to 30 years and a $1,000,000 fine.
- Healthcare fraud: up to 10 years; up to 20 if the fraud causes serious bodily injury; up to life if it causes a death.
- Tax evasion: up to 5 years and a $100,000 fine, or $500,000 for a corporation.
- Filing a false tax return: up to 3 years and a $100,000 fine, or $500,000 for a corporation.
- Aggravated identity theft: a mandatory additional 2 years, served on top of the underlying sentence.
On top of fines and prison time, a federal judge is required to order restitution when a fraud case has an identifiable victim with a quantifiable loss. The defendant has to repay the full amount. A judge can set restitution aside only when the number of victims is so large that calculating each loss would be impractical, or when the complexity would unreasonably delay sentencing.9Office of the Law Revision Counsel. 18 U.S.C. 3663A – Mandatory Restitution to Victims of Certain Crimes
Civil Consequences
A fraud victim can sue independently of any criminal case. Civil remedies are about compensation, not punishment. A court can order the defendant to repay the full loss, cover interest, and pay the victim’s attorney fees.
Damages can run higher in certain cases. Under the federal Racketeer Influenced and Corrupt Organizations Act (RICO), a person harmed by a pattern of fraud tied to an ongoing criminal enterprise can recover three times the actual damages, plus costs and a reasonable attorney fee.10Office of the Law Revision Counsel. 18 U.S.C. 1964 – Civil Remedies One important boundary: RICO’s treble-damages remedy generally does not reach securities fraud unless the defendant has already been criminally convicted for the same conduct.
Deadlines to Bring a Case
Every fraud case has a filing deadline. Miss it and the case is gone regardless of how strong the proof is.
For most federal fraud offenses, prosecutors have five years from the date of the offense to file charges.11Office of the Law Revision Counsel. 18 U.S.C. 3282 – Offenses Not Capital Fraud against a financial institution—bank fraud, and wire or mail fraud that affects a bank—gets an extended window of ten years.12Office of the Law Revision Counsel. 18 U.S.C. 3293 – Financial Institution Offenses
Civil deadlines vary by claim. A private securities-fraud lawsuit must be filed within two years of discovering the fraud or five years after the violation, whichever is earlier.13Office of the Law Revision Counsel. 28 U.S.C. 1658 – Time Limitations on Civil Actions Arising Under Acts of Congress State common-law fraud claims follow state deadlines, typically two to six years, and many states use a discovery rule that starts the clock when the victim learns of the fraud rather than when it happened.
If Your Account Was Hit
Federal law caps your personal liability when fraud involves your credit or debit accounts, but the rules differ sharply by account type and depend on how fast you report.
For credit cards, the Truth in Lending Act caps your liability for unauthorized charges at $50, no matter how much was spent. You owe nothing for charges made after you notify the issuer of the unauthorized use, and the card issuer carries the burden of proving a charge was authorized.14Office of the Law Revision Counsel. 15 U.S.C. 1643 – Liability of Holder of Credit Card Most major issuers go further and offer zero-liability policies as a matter of policy.
Debit cards and electronic transfers fall under the Electronic Fund Transfer Act, where liability turns on speed:15eCFR. 12 CFR 205.6 – Liability of Consumer for Unauthorized Transfers
- Report within 2 business days of learning about the fraud: maximum loss is $50.
- Report after 2 business days but within 60 days of your statement: maximum loss is $500.
- Report after the 60-day window: no cap on losses from unauthorized transfers that occur after that window closes.
If circumstances beyond your control—hospitalization, extended travel—kept you from reporting on time, the bank must extend these windows to a reasonable period.
Reporting Fraud
Where to report depends on the type of fraud. General scams and consumer fraud go to the Federal Trade Commission at ReportFraud.ftc.gov, which shares reports with law enforcement.16Federal Trade Commission. ReportFraud.ftc.gov Identity theft is reported at IdentityTheft.gov, which generates a recovery plan and an official FTC Identity Theft Report you can use when disputing fraudulent accounts with creditors and credit bureaus.17Federal Trade Commission. IdentityTheft.gov – Identity Theft Resources Investment and securities fraud go to the SEC through its tip portal.5U.S. Securities and Exchange Commission. Submit a Tip or Complaint Suspected tax evasion or false filings are reported to the IRS on Form 3949-A; you can submit it anonymously, though contact information helps with follow-up.18Internal Revenue Service. Form 3949-A Information Referral File a report with local police as well. The police report creates the official record that insurers, creditors, and courts typically require before processing fraud-related claims.