Fraud and other financial crimes are a type of theft that occurs when the defendant takes the money or property of another party, or uses them in an unauthorized manner, with the intent of gaining a benefit from it. Fraud differs from other types of theft in that the defendant typically commits the crime by deceiving the victim or abusing a position of trust and/or power.
Fraud and financial crimes can take many forms, and both Illinois state law and federal law have laws that cover fraud, meaning that most forms of fraud can be prosecuted at either the state or federal level. Generally, federal prosecution is much more severe, so the determination of whether the case will be handled federally or not is of significant importance.
Although the handling of each individual case is left to the discretion of the courts, there are certain factors that make federal fraud charges more likely. Below we’re going to go over the factors that make federal prosecution for fraud more likely.
How State or Federal Prosecution for Fraud Is Decided
Most fraud crimes violate both state and federal law, so technically they fall under both jurisdictions. In this situation, the case could be handled either at the state level or federally – the defendant will not be prosecuted for the same charge in both courts.
When a case falls under both state and federal jurisdiction, the court system determines whether it will be handled at the state or federal level. There are a few factors that increase the chances of an offense being charged at the federal level:
- Defrauding federal agencies: If the alleged offense involved defrauding a federal agency – for example, attempting to collect fraudulent social security benefits. On the other hand, if the case involves a state agency, it will most likely be handled in Illinois state courts.
- Significant value: If the value of benefits the defendant allegedly attempted to gain is significant (generally over five figures), the case is more likely to be prosecuted federally.
- Numerous victims: If the alleged fraud involved a large number of supposed victims (for example, more than 20 or 30), it is more likely to be handled in federal court.
- Bank fraud: If the defendant used the banking system – whether a debit card or bank account – to commit the alleged offense, the case is more likely to be handled federally.
- Wire fraud or mail fraud: Offenses allegedly committed using a federal system, such as wire fraud or mail fraud, are often prosecuted federally.
How Federal Prosecution for Fraud Is Handled Differently
State and federal cases are handled similarly in terms of how the prosecution builds its case. However, there are some important differences in how the investigation is conducted.
Most federal fraud cases involve the FBI or other federal agencies such as the IRS or Secret Service. On the other hand, Illinois state cases usually involve the Chicago Police Department or other state agencies. Federal agencies generally have greater resources to investigate, so any evidence against the defendant is likely to be more solid, and more difficult to defend against.
Additionally, federal cases are much more labor intensive than state cases, and the time frame for federal prosecution is likely to be more stringent in terms of when discovery must be complete, and when the trial will be set.
Finally, defendants can expect much harsher sentencing in federal courts, and they are also much less likely to offer plea bargains to settle the case before it goes to trial.
If a defendant is under investigation for fraud but charges have not yet been filed, the defense team can take certain steps to make state-level prosecution more likely. This is one of the reasons we recommend consulting with an attorney immediately if you are under investigation for any kind of fraud crime.
Understanding Federal Fraud Penalties
Federal fraud sentencing guidelines are complex, but typically the sentence is reflective of the amount of loss that resulted from the offense. The average sentence length for federal fraud offenders is 23 months, but this can vary widely from case to case.
Most often the mandatory minimum for a fraud case is in the range of two years, with up to 20 or even 30 years for serious cases that involve a significant amount of loss.
If you are under investigation for fraud or facing fraud charges, it’s definitely not good. That being said, a conviction is not inevitable. We recommend being proactive in order to fight back and beat the charges against you.
About the Author
Sami Azhari has been working as a lawyer since 2007, after receiving his Juris Doctor from the Michigan State University College of Law. He has handled numerous state and federal cases, and is known throughout the Chicago and Rolling Meadows area for providing his clients with high-quality, skilled representation. He has been recognized by SuperLawyers, the National Trial Lawyers Association, and other notable organizations, and has spoken at a number of legal conferences.