mortgage companies.19 In Hitchens, the real estate agent argued that she could not be convicted of mail or wire fraud because the evidence at trial did not show that she personally used the mails or wires. The Third Circuit rejected her arguments, because judicial precedent interpreting the mail and wire fraud statutes has established that law enforcement need not show that the person committing the fraud herself placed documents in the mail. Rather, law enforcement need only show that a person commits an act with knowledge that use of the mails or wires would follow in the ordinary course of business.20 Furthermore, evidence of business custom is sufficient to establish knowledge that the use of the mails or wires would follow.21 The Third Circuit concluded that because the evidence showed (1) the routine practice of mortgage companies using mail or carrier services for various documents associated with the mortgage loan, and (2) the prevalence of wire transfers from mortgage lenders to transmit loan proceeds and wire transfers in mortgage transactions, the evidence supported the real estate agent’s conviction.
Since law enforcement agencies can show that mortgage companies routinely use mail and carrier services for documents associated with mortgage loans and that wire transfers are prevalent in mortgage transactions, the mail and wire fraud statutes would be applicable in the case of mortgage fraud as in any case of mail or wire fraud.
Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transports or causes to be transported, or induces any person or persons to travel in, or to be transported in interstate or foreign commerce in the execution or concealment of a scheme or artifice to defraud that person or those persons of money or property having a value of $5,000 or more; …
Shall be fined under this title or imprisoned not more than 10 years, or both.22
Judicial interpretations of this statute have given it a broad application. The Supreme Court has explained that the term “interstate commerce” is intended to be as broad as the Court has used that phrase in Commerce Clause decisions (which is very broad), and can reach activities that do not themselves cross a state’s border.23 Additionally, the federal courts have held that a wire transfer satisfies the “transport” requirement of the statute.24 Since (1) wire transfers are prevalent in mortgage transactions, (2) wire transfers make use of an interstate system for transmitting money, and (3) wire transfers, in many cases, involve the transfer of funds between entities in different states, it is difficult to envision many cases of mortgage fraud, if any, that would not be subject to § 2314.25
Federal law regarding the transportation of stolen goods applies to man , if not all, instances of mortgage fraud.
Other federal statutes make illegal fraud on federally chartered or federally insured financial institutions.
22 23 24 25
18 U.S.C. § 2314 McElroy v. United States, 455 U.S. 642, 653-54 (1982). See, e.g., United States v. Wright, 791 F.2d 133 (10th Cir. 1986).
See, e.g., United States v. Bond, 231 F.3d 1075 (7th Cir. 1990) (upholding conviction under § 2314 for mortgage fraud).
18 U.S.C. § 20 denes “nancial institution” as: “(1) an insured depository institution (as dened in section 3(c)(2) of the Federal
The federal statute prohibiting the transfer of stolen goods applies to many, if not all, instances of mortgage fraud. It provides in relevant part:
In addition to the statutes discussed above, other federal statutes specifically make illegal defrauding the United States, any agency, and any so-called Section 20 financial institutions (defined generally as federally chartered or federally insured institutions but not state-licensed, non-depository lenders).26 In particular,
Whoever transports, transmits, or transfers in interstate or foreign commerce any goods, wares, merchandise, securities or money, of the value of $5,000 or more, knowing the same to have been stolen, converted or taken by fraud; or
United States v. Hitchens, 2002 WL 31898234 (3d Cir. Nov. 19, 2002).
See, e.g., U.S. v. Bentz, 21 F.3d 37, 40 (3d Cir. 1994). See, e.g., U.S. v. Hannigan, 27 F.3d 890, 894 (3d Cir. 1994).
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