Conspiracy to Defraud the United States: 18 U.S.C § 371
This article discusses the following:
Conspiracy to defraud the United States, as outlined in 18 U.S.C § 371, is a serious federal offense that carries significant penalties.
This statute specifically prohibits two or more persons from conspiring to cheat the government out of money or to commit any offense against the United States. Those found guilty of this offense can face up to five years in prison.
If you find yourself facing charges related to conspiracy to defraud the United States, seek legal representation from a skilled attorney who is well-versed in federal law. The experienced team at Kolsrud Law Offices specializes in defending clients against a wide range of federal charges, including those related to fraud and conspiracy.
What is Conspiracy to Defraud the United States
Conspiracy to defraud the United States is a federal offense codified under 18 U.S.C § 371.
This law targets two main types of conspiracies: those aiming to commit any offense against the United States, and those intending to defraud the United States, or any agency thereof, in any manner or for any purpose.
The essence of this statute is not merely the act of defrauding, but also the agreement between two or more individuals to engage in activities that are deceitful or obstruct government functions through dishonest means.
The crime of conspiracy to defraud the United States encompasses a wide range of activities, including but not limited to, financial fraud, procurement fraud, and employment fraud, particularly when these actions impair the operations of federal agencies.
This statute is deliberately broad, covering any act that interferes with governmental functions by deceit, craft, or trickery, regardless of whether the outcome of such deceit is financially motivated or not.
To establish a case under 18 U.S.C § 371, prosecutors must prove the following elements:
- An agreement between two or more persons to defraud the U.S. government or any of its agencies.
- An overt act committed by one of the conspirators in furtherance of the conspiracy.
- The intent to defraud the U.S. government by interfering with its lawful functions.
This law is a powerful tool for federal prosecutors, as it allows for the charging of all members of a conspiracy, regardless of whether the intended fraud was completed or successful.
How Does the Law Define Conspiracy
Conspiracy is legally defined as an agreement between two or more persons to engage in unlawful conduct or to achieve a lawful end by unlawful means.
The defining characteristics of conspiracy include:
- Agreement: There must be a mutual understanding or agreement, either explicit or implied, among the parties to partake in the conspiracy. It is important to note that this agreement itself is the primary crime under conspiracy law, not necessarily the completion of the illegal act.
- Intent: The parties involved must have the intent to achieve the objective of the conspiracy. This means that each participant was aware of the unlawful nature of the plan and willfully joined in it.
- Overt Act: In most cases, at least one overt act must be taken by one of the conspirators in furtherance of the conspiracy. This act does not need to be an illegal act itself but must indicate that the underlying agreement is being put into action.
The law does not require that all parties involved know each other, nor does every conspirator need to be involved in every detail of the planned illegal activity.
Furthermore, a person can be charged with conspiracy even if they join the conspiracy after it has already begun, as long as they adopt the initial plan and agree to further its objectives.
The expansive scope of the conspiracy statute enables federal prosecutors to target a wide range of criminal enterprises, making it an effective legal tool against schemes that involve multiple participants across various jurisdictions.
It also allows for the prosecution of individuals for conspiracy even if the intended crime was not completed, provided there was a clear agreement and intent to commit the crime.
How Can You Defraud the US?
Defrauding the United States involves engaging in deceptive or dishonest practices intended to impair, obstruct, or defeat the lawful functions of government departments or agencies.
The scope of such fraudulent activities is broad and can manifest in various forms, impacting different facets of federal operations. Here are some typical methods through which individuals or entities might defraud the U.S. government:
- Tax Evasion: This involves deliberately misrepresenting or omitting information on tax returns to reduce tax liability. Examples include underreporting income, inflating deductions, or hiding money in offshore accounts.
- Healthcare Fraud: Committing fraud against government healthcare programs like Medicare or Medicaid. This can include billing for services not rendered, upcoding services to receive higher reimbursements, or performing unnecessary procedures to increase billing.
- Procurement Fraud: Occurs when individuals or companies manipulate the procurement process to gain contract awards unjustly. Methods include bid-rigging, kickbacks, or falsifying qualifications to win government contracts.
- Social Security Fraud: Involves obtaining Social Security benefits through false claims of disability, hiding employment activities while receiving benefits, or using another person’s identity to claim benefits.
- Employment Fraud: Misrepresenting employment eligibility or using fraudulent means to secure jobs, as seen in the case involving the placement of IT workers who used stolen identities to appear as lawful U.S. residents.
- Grant Fraud: Misusing or misappropriating funds received from government grants. This includes falsifying grant applications to receive funds or using grant money for unauthorized purposes.
What are the Possible Penalties
Here’s a detailed look at the specific penalties that can be imposed under 18 U.S.C § 371.
- Imprisonment: The statute stipulates a maximum imprisonment term of five years for conspiracy to defraud the United States. However, if the conspiracy involves other offenses which themselves carry heavier penalties, the imprisonment could extend beyond the five-year maximum under this statute, depending on the nature of those offenses.
- Fines: Individuals convicted under 18 U.S.C § 371 can also face significant fines. The maximum fine for this offense can be up to $250,000 for individuals and $500,000 for organizations, or twice the pecuniary gain derived from the crime or twice the pecuniary loss suffered by the victims, whichever is greater.
- Restitution: The court often mandates restitution, requiring the defendant to compensate the government for the full amount of the loss caused by the fraudulent activity. This is aimed at making the government whole for the damages suffered.
- Probation: Defendants may also be sentenced to probation, particularly in cases where their involvement was minimal or it's their first offense. Conditions of probation could include regular reporting to a probation officer, restrictions on certain activities or associations, and other requirements deemed appropriate by the court.
- Forfeiture of Assets: The law allows for the forfeiture of any assets obtained as a result of the conspiracy. This is particularly impactful in financial crimes, where it can include the seizure of money, real estate, or other valuable assets linked to the fraudulent activities.
- Prohibition from Future Contracts: Convicted individuals or companies may be prohibited from bidding on or receiving public contracts. This debarment ensures that only entities that adhere to lawful and ethical standards are allowed to do business with the government.
- Enhanced Penalties for Aggravated Cases: In cases where the fraud has significantly undermined the functions of the government or involved particularly egregious conduct, enhanced penalties may be applicable.
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Frequently Asked Questions
What does "commit a federal crime" entail under conspiracy laws?
- To "commit a federal crime" under conspiracy laws, individuals must agree with one or more others to engage in criminal conduct that violates federal statutes. This can include any action aimed at defrauding government agencies or obstructing federal operations.
How do federal conspiracy charges differ from state charges?
- Federal conspiracy charges typically involve crimes that violate U.S. federal laws and are prosecuted at the federal level, often carrying more severe penalties than state charges. State conspiracy charges, meanwhile, involve violations of state laws and are handled by state courts.
What role does the “overt act” play in proving federal conspiracy charges?
- An "overt act" is a key element in federal conspiracy cases, serving as concrete evidence that the conspirators have begun to execute their plan. It must be an action that, although not necessarily illegal itself, furthers the objectives of the conspiracy.
Can discussing a plan to commit a federal offense qualify as conspiracy under 18 U.S.C § 371?
- Yes, simply discussing a plan can qualify as conspiracy if it includes a clear and deliberate agreement to commit a federal offense, followed by at least one overt act that attempts to further the conspiracy, even if the crime itself is never completed.
What does "federal election fraud" involve in terms of conspiracy?
- Federal election fraud in a conspiracy context involves agreements to illegally interfere with the conduct of elections, such as altering vote counts, submitting fraudulent ballots, or other acts that impair the administration of federal elections.
How does conspiracy to violate the Federal Housing Administration laws manifest?
- This involves conspiracies aimed at deceiving the FHA through fraudulent mortgage applications, false information, or other means designed to secure housing loans under false pretenses, thereby defrauding the government.
What evidence must federal prosecutors provide to convict in a conspiracy case?
- Federal prosecutors must demonstrate beyond a reasonable doubt that there was an agreement to commit a crime, participation of two or more persons, and at least one overt act taken to further the conspiracy. This requires substantial evidence linking the accused to the conspiracy.
What are the consequences for conspiring to obstruct or impair government operations?
- Conspiring to obstruct or impair government operations can lead to severe penalties, including imprisonment, heavy fines, and loss of future contracting opportunities with the government, reflecting the serious nature of disrupting governmental functions.
How do federal criminal defense lawyers challenge conspiracy charges?
- Federal criminal defense lawyers may challenge conspiracy charges by attacking the evidence of an agreement, the sufficiency of the overt act, the intent of the accused, and by proving that their client withdrew from the conspiracy before any criminal act occurred.
What complexities arise in criminal conspiracy cases prosecuted at the federal level?
- These cases often involve multiple defendants, extensive electronic evidence, complex legal arguments about the nature of the agreement, and jurisdictional issues, making them some of the most complicated cases in the federal criminal justice system.
Recent Arizona Case Involving Federal Conspiracy to Defraud
Following a detailed investigation by the Justice Department, Christina Marie Chapman, an Arizona resident, has been implicated in a large-scale conspiracy to defraud the United States.
The charges against Chapman highlight her alleged role in orchestrating a network that facilitated the employment of overseas IT workers—many linked to North Korea—within American companies by using stolen or borrowed identities of U.S. citizens. These workers, posing as U.S. residents, were covertly inserted into over 300 U.S. companies across various industries, including major names in technology, finance, and media.
This infiltration was not just a breach of corporate integrity but potentially endangered national security by enabling unauthorized access to sensitive corporate and government networks.
Chapman's specific charges include conspiracy to defraud the United States, wire fraud, bank fraud, aggravated identity theft, identity fraud, money laundering, operating an unlicensed money transmitting business, and unlawful employment of aliens.
This extensive list of charges reflects the gravity of the alleged activities, with potential penalties totaling up to 97.5 years in prison.
How a Federal Criminal Defense Attorney Can Help
Josh Kolsrud, founder of Kolsrud Law Offices, brings a unique and rich background to his practice as a federal criminal defense attorney. Starting his career at the Maricopa County Attorney’s Office, Josh handled thousands of felony cases, earning multiple "Attorney of the Month" recognitions for his exceptional trial work.
His role then evolved at the Major Crimes and Repetitive Offender Bureau, where he deepened his expertise in prosecuting serious offenses. With a total of over 3,500 cases and more than 100 jury trials under his belt, Josh's prosecutorial experience is extensive.
After transitioning from a prosecutor to an Assistant United States Attorney, he collaborated closely with federal agencies on complex criminal cases spanning drug trafficking, illegal reentry, human trafficking, and white-collar crimes. This experience grants him an insider's perspective on federal prosecution tactics, greatly enriching his defense strategies in federal criminal cases.
For personalized legal assistance from a seasoned federal crimes prosecutor turned defense attorney, reach out to Josh Kolsrud at Kolsrud Law Offices. To discuss your case or schedule a free initial consultation, call (602) 638-3790 or email Josh directly at Josh@KolsrudLawOffices.com.
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