Federal Fraud Laws 2025: Sentencing, Punishment, and Other Consequences

If you have been arrested for fraud, it is important that you first understand whether you are being charged at the state or federal level. The justice system processes and penalties will be different depending on how you are being charged. If you are being federally charged with fraud, it is recommended that you reach out to a knowledgeable federal fraud attorney who can explain current federal fraud laws and how the charges can impact your life moving forward.

Federal Fraud Laws

There are several crimes that fall under the umbrella of federal fraud, but they each have distinct characteristics and legal implications. Some types of federal fraud include:

• Mail fraud. Any situation that involves using private mail carriers like UPS and FedEx or the U.S. Postal Service to defraud someone can be charged as mail fraud. Examples include deceptive contracts, fake invoices, or stealing from a neighbor’s mailbox.
• Wire fraud. Wire fraud is similar to mail fraud, but instead involves interstate wire communications such as emails, electronic transfers, or phone calls to defraud victims. Examples include phishing scams, online financial fraud, or identity theft.
• Tax fraud. Tax fraud occurs when an individual intentionally underreports or evades paying federal taxes. Examples include claiming improper deductions, underreporting income, or filing false tax returns.
• Healthcare fraud. Any instance of fraud that occurs within the healthcare system is classified as healthcare fraud. Examples include falsifying patient diagnoses or billing for services not provided.
• Securities fraud. Securities fraud occurs when an individual or company deceives investors in order to manipulate financial markets. Examples include Ponzi schemes and insider trading.

Sentencing for Federal Crimes

The U.S. Government Accountability Office estimates that the federal government could lose between $233 billion and $521 billion each year to fraud. The Federal Trade Commission found that consumers reported losing $12.5 billion to fraud in 2024. As a result, these crimes are pursued aggressively and punished severely by government agencies.

Federal fraud cases are tried in federal court and typically impose harsher penalties than state cases. There are sentencing guidelines in place for federal crimes, and while the judge is required to consider the guidelines, they are not mandated to follow them.

Federal sentencing guidelines number convictions based on offense level, ranking them from one to 43. The offenses are divided into four zones: A, B, C, and D. Then, the defendant’s criminal history is taken into account. These categories, I through VI, correspond to the number of criminal points they have earned from prior convictions. These two combinations of factors determine the potential recommended range for incarceration time.

Other Consequences

Though the criminal penalties of a federal conviction can be life-altering, the impact on your life will not stop there. There are several other consequences that can negatively influence your life. Examples of these impacts include:

• Loss of civil rights. Depending on the nature and severity of the crime, you may lose certain civil rights. A federal felony conviction can result in the loss of the right to vote, but fortunately, in New Jersey, you regain the right to vote once you have fully completed your sentence. You also lose the right to own a firearm unless you are pardoned.
• Employment difficulties. A federal crime conviction will show up on your criminal record. Employers may hesitate to hire someone with a criminal record, citing concerns about trustworthiness, liability, or impact on their business’s reputation. This can make finding gainful employment difficult. Additionally, some professions become off-limits following a conviction.
• Housing challenges. Often, landlords will conduct background checks on potential tenants before approving them for housing. A criminal record can be grounds to deny a rental application. If approved, there will be large financial requirements, such as first/last month’s rent and a security deposit, that can also hinder your ability to move in, as higher-salaried jobs may be more difficult to find.
• Travel restrictions. A passport is required to travel internationally, but the U.S. Department of State can deny a passport to Americans with certain types of criminal convictions. Even if you are authorized to receive a passport, some countries will prohibit you from entering based on your criminal record.
• Social stigma. Federal arrests and trials are not quiet affairs, and criminal records are publicly available. It is possible that you will experience discrimination, harassment, and marginalization from others in your community. Even your friends and family may distance themselves from you.

The potential impact on your life following a federal conviction can be overwhelming. Reaching out to a skilled defense attorney can help you reach the most favorable outcome in your case.

FAQs

Q: What Are the Three Basic Elements of Fraud?

A: The three basic elements of fraud are perceived opportunity, incentive, and rationalization. These three elements combine to form the Fraud Triangle, or a theory that a person is more likely to commit fraud if all three of these elements are present. Research has suggested that acts of fraud are highly influenced by conditional environmental factors.

Q: How Long Will You Go to Prison for Federal Fraud?

A: The total amount of time you could be sentenced to prison for a federal fraud conviction depends on several factors, such as your prior criminal history, the type of crime committed, and the total value of the fraud. A prison term for federal fraud can range from a few years to decades.

Q: Is Fraud Always a Federal Crime?

A: Fraud is not always a federal crime. There are state-level fraud charges in New Jersey. Fraud becomes a federal crime when it violates U.S. federal statutes instead of just New Jersey law. It is also a federal crime when it crosses state lines, involves a federal agency, or involves mail/interstate communication.

Q: Can I Be Prosecuted in Both State and Federal Court for Fraud?

A: It is possible to be prosecuted in both state and federal court for fraud if both state and federal laws were broken. This is not a violation of double jeopardy because of dual sovereignty- each U.S. state is considered its own sovereign, as is the federal government. Federal fraud cases in New Jersey are heard in the United States District Court for the District of New Jersey.

Experienced Federal Criminal Defense

LGR Law, LLC, understands how much a fraud conviction can disrupt your life. When building your defense, we prioritize transparency and communication to help you feel heard and informed. If you or a loved one has been accused of federal fraud, reach out to our office to see how we can help you reach a favorable outcome for your case.