What is a “Scheme to Defraud”?

With multi-level marketing companies and investment firms in the news lately for fraudulent business practices, the term “scheme to defraud” has become a hot topic. This term is often used incorrectly and interchangeably with the term “fraud” or “theft” but there is a difference that is important to understand, especially if you’re facing charges for a scheme to defraud.

In this brief article, a criminal defense attorney in St. Petersburg with our team at Russo, Pelletier & Sullivan has broken down the definition of “scheme to defraud” and the penalties one can face if charged.

What is the Legal Definition of a Scheme to Defraud?

Florida Statutes Chapter 817 defines “Scheme to Defraud” as:

“…a systematic, ongoing course of conduct with intent to defraud one or more persons, or with intent to obtain property from one or more persons by false or fraudulent pretenses, representations, or promises or willful misrepresentations of a future act.”

This is broken down into two categories:

  • Organized fraud: This is charged where there is a scheme to defraud that is committed when a person actually obtains property as the direct result of a scheme to defraud. Organized fraud does not require wire, mail, telephonic, or electronic communications to have occurred as part of the scheme to defraud.
  • Communications fraud: This type of fraud occurs when a person engages in a scheme to defraud and, in furtherance of that scheme, communicates with another by mail, telephone, or electronic means with the intent to obtain property fraudulently.

Let’s think about this in a practical sense. A scheme to defraud could be someone lying about the expected return on investment in a new business, or perhaps even lying about previous returns in order to make the business look better than it actually is to get new investors. This can also occur as a part of a pyramid scheme. On a more granular level, a scheme to defraud can be as simple as someone soliciting money to get a person to send checks or payments for services that don’t exist or won’t be delivered upon.

What are the Penalties for Schemes to Defraud?

The penalties for schemes to defraud depend on whether it was organized fraud, communications fraud, or a combination of both. The possible maximum sentence or punishment presented under the Florida Organized Scheme to Defraud Statute is influenced by the extent of the loss. For example:

  • A scheme to defraud that is less than $20,000 is a 3rd-degree felony punishable by 5 years in Florida State Prison;
  • A scheme to defraud that is more than $20,000 but less than $50,000 is a 2nd-degree felony punishable by 15 years in Florida State Prison; and
  • A scheme to defraud that is more than $50,000 is a 1st-degree felony punishable by 30 years in Florida State Prison.

Even if nothing of value actually traded hands, you can still face very serious penalties. If no assets, currency or valuables were actually collected throughout the scheme to defraud, the charge will carry a punishment contingent on the amount the offender intended to take:

  • A scheme to defraud crime involving $300 or more is a 3rd-degree felony punishable by 5 years in Florida State Prison;
  • A scheme to defraud crime involving less than $300 is a misdemeanor in the 1st degree, punishable by up to 12 months in the county jail and a $1,000 fine.

If you’re facing a charge of scheme to defraud, you’ll need the expertise of Marc N. Pelletier in St. Petersburg. The burden of proof lies on the state and your attorney will help you understand the best defense possible for your case. Contact Russo Pelletier & Sullivan today.

For a free consultation with a criminal defense attorney in St. Petersburg, please contact Russo, Pelletier & Sullivan today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.