Internet Fraud, Access Device Fraud, Threatening Communications, and Interstate Stalking

1
Internet Fraud, Access Device Fraud,
Threatening Communications, and Interstate
Stalking

• Sean B. Hoar
• sean.hoar_at_usdoj.gov
• 541-465-6792 (voice)
• 541-465-6840 (fax)

2
18 U.S.C. 1343Internet (Wire) Fraud

• Text of statute
• 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, transmits or causes to be transmitted
  by means of wire, radio, or television
  communication in interstate or foreign commerce,
  any writings, signs, signals, pictures, or sounds
  for the purpose of executing such scheme or
  artifice, shall be fined under this title or
  imprisoned not more than 20 years, or both. If
  the violation affects a financial institution,
  such person shall be fined not more than
  1,000,000 or imprisoned not more than 30 years,
  or both.

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Elements of 18 U.S.C. 1343Internet (Wire) Fraud

• First, the defendant devised a scheme or plan to
  obtain money by making false promises or
  statements
• Second, the defendant knew that the promises or
  statements were false
• Third, the promises or statements were material,
  in that they would reasonably influence a person
  to part with money
• Fourth, the defendant acted with the intent to
  defraud and
• Fifth, the defendant transmitted or caused to be
  transmitted in interstate commerce a wire
  communication, to wit an electronic
  communication via the Internet, to carry out or
  attempt to carry out an essential part of the
  scheme.

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18 U.S.C. 1343Internet (Wire) Fraud

• Types of Internet fraud
• Auction fraud
• shill bidding
• Non-delivery of merchandise
• Investment fraud
• Stock pump dump fraud
• Ponzi/pyramid schemes
• Phisher scams
• Nigerian scams
• Business opportunities Get Rich Quick schemes
• Many others . . . any fraud facilitated by the
  Internet

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United States Sentencing Guidelines

• Offense Level
• Base Offense Level
• Specific Offense Characteristics
• Cross References
• Aggravating/Mitigating Factors
• Acceptance of Responsibility
• Departures
• Total Offense Level
• Criminal History Category
• Applicable Advisory Sentencing Guideline Range

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Sentencing Guidelines for Internet Fraud

• U.S.S.G. 2B1.1. Larceny, Embezzlement, and
  Other Forms of Theft Offenses Involving Stolen
  Property Property Damage or Destruction Fraud
  and Deceit Forgery Offenses Involving Altered
  or Counterfeit Instruments Other than Counterfeit
  Bearer Obligations of the United States
• (a) Base Offense Level
• 7, if the offense of conviction has a statutory
  maximum penalty of 20 years or more.
• 6, otherwise.

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Sentencing Guidelines -- Actual penalties under
the sentencing guidelines --

• Actual guideline ranges are based primarily on
  the amount of loss (U.S.S.G. 2B1.1) prior to
  adjustments, the lowest guideline ranges based on
  ranges of loss are as follows
• If more 5,000 or less 0-6 months
• If more than 5,000 but less than 10,000 4-10
  months
• If more than 10,000 but less than 30,000 8-14
  months
• If more than 30,000.00 but less than 70,000.00
  12-18 months
• If more than 70,000.00 but less than
  120,000.00 18-24 months
• If more than 120,000.00 but less than
  200,000.00 24-30 months
• If more than 200,000.00 but less than
  400,000.00 30-37 months
• If more than 400,000.00 but less than
  1,000,000.00 37-46 months
• If more than 1,000,000.00 but less than
  2,500,000.00 46-57 months
• If more than 2,500,000.00 but less than
  7,000,000.00 57-71 months
• If more than 7,000,000.00 but less than
  20,000,000.00 70-87 months
• If more than 20,000,000.00 but less than
  50,000,000.00 87-108 months
• If more than 50,000,000.00 but less than
  100,000,000.00 108-135 mos
• If more than 100,000,000.00 but less than
  200,000,000.00 135-168 mos
• If more than 200,000,000.00 but less than
  400,000,000.00 168-210 mos
• If more than 400,000,000.00 210-262 months
• Even if there is no loss, however, the "floor" or
  minimum applicable guideline range, prior to
  other adjustments, will be 10-16 months in prison
  if certain circumstances exist. U.S.S.G.
  2B1.1(b)(10).

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Sentencing Guidelines -- multiple victim
enhancement --

• U.S.S.G. 2B1.1(b) Specific Offense
  Characteristics -- multiple victim enhancement
• (2) (Apply the greater) If the offense
• (A)(i) involved more than 10, but less than 50
  victims, or (ii) was committed through
  mass-marketing, increase by 2 levels or
• (B) involved 50 or more, but less than 250
  victims, increase by 4 levels
• (C) involved 250 or more victims, increase by 6
  levels.

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Sentencing Guidelines -- multiple victim
enhancement --

• Victim means any person who sustained any part
  of the actual loss. Person includes
  individuals, corporations, companies, etc.
  U.S.S.G. 2B1.1, comment. (n. 1).
• Actual loss means the reasonably foreseeable
  pecuniary harm that resulted from the offense.
  Reasonably foreseeable pecuniary harm means
  pecuniary harm that the defendant knew or
  reasonably should have known was a potential
  result of the offense. U.S.S.G. 2B1.1,
  comment. (n. 3(A)).

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Sentencing Guidelines -- breeder document
enhancement--

• Even if there is no loss, however, pursuant to
  U.S.S.G. 2B1.1(b)(10), the "floor" or minimum
  applicable guideline range, prior to other
  adjustments, will be offense level 12 (10-16
  months in prison) if the offense involves
• The possession or use of any device- making
  equipment
• The production or trafficking of any unauthorized
  access or counterfeit access device
• The unauthorized transfer or use of any means of
  identification unlawfully to produce or obtain
  any other means of identification
• The possession of five (5) or more means of
  identification that unlawfully were produced
  from, or obtained by the use of, another means of
  identification
• If the guideline range is already at least 10-16
  months, then a two level increase is appropriate.
  U.S.S.G. 2B1.1(b)(10).

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Sentencing Guidelines misrepresentation
enhancement --

• If the resulting offense level is less than 10,
  increase to 10, or otherwise increase by 2 levels
  if the misrepresentation is
• that defendant was acting on behalf of a
  charitable, educational, religious, or political
  organization, or government agency
• during the course of a bankruptcy proceeding
• a violation of judicial or administrative order
• to a consumer in connection with obtaining,
  providing, or furnishing financial assistance for
  an institution of higher education
• U.S.S.G. 2B1.1(b)(8).

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Sentencing Guidelines relocation or
sophisticated means enhancement --

• If the resulting offense level is less than 12,
  increase to 12, or otherwise increase by 2 levels
  if
• the defendant relocated fraudulent scheme to
  another jurisdiction to evade law enforcement or
  regulatory officials
• A substantial part of scheme occurred outside
  United States
• The offense otherwise involved sophisticated
  means
• U.S.S.G. 2B1.1(b)(9)

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Sentencing Guidelines-- financial impact
enhancement --

• (13) (Apply the greater) If
• (A) the defendant derived more than 1,000,000 in
  gross receipts from one or more financial
  institutions as a result of the offense, increase
  by 2 levels or
• (B) the offense (i) substantially jeopardized the
  safety and soundness of a financial institution
  (ii) substantially endangered the solvency or
  financial security of an organization that, at
  any time during the offense, (I) was a publicly
  traded company or (II) had 1,000 or more
  employees or (iii) substantially endangered the
  solvency or financial security of 100 or more
  victims, increase by 4 levels.
• (C) The cumulative adjustments from application
  of both subsections (b)(2) and (b)(12)(B) shall
  not exceed 8 levels, except as provided in
  subdivision (D).
• (D) If the resulting offense level determined
  under subdivision (A) or (B) is less than level
  24, increase to level 24.

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Sentencing Guidelines -- Role adjustments
aggravating role --

• 3B1.1. Aggravating Role -- Based on the
  defendants role in the offense, increase the
  offense level as follows
• (a) If the defendant was an organizer or leader
  of a criminal activity that involved five or more
  participants or was otherwise extensive, increase
  by 4 levels.
• (b) If the defendant was a manager or supervisor
  (but not an organizer or leader) and the criminal
  activity involved five or more participants or
  was otherwise extensive, increase by 3 levels.
• (c) If the defendant was an organizer, leader,
  manager, or supervisor in any criminal activity
  other than described in (a) or (b), increase by 2
  levels.

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Sentencing Guidelines -- Role adjustments
mitigating role --

• 3B1.2. Mitigating Role -- Based on the
  defendants role in the offense, decrease the
  offense level as follows
• (a) If the defendant was a minimal participant in
  any criminal activity, decrease by 4 levels.
• (b) If the defendant was a minor participant in
  any criminal activity, decrease by 2 levels.
• In cases falling between (a) and (b), decrease by
  3 levels.

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Sentencing Guidelines -- Abuse of trust/special
skill --

• 3B1.3. Abuse of Position of Trust or Use of
  Special Skill
• If the defendant abused a position of public or
  private trust, or used a special skill, in a
  manner that significantly facilitated the
  commission or concealment of the offense,
  increase by 2 levels. This adjustment may not be
  employed if an abuse of trust or skill is
  included in the base offense level or specific
  offense characteristic. If this adjustment is
  based upon an abuse of a position of trust, it
  may be employed in addition to an adjustment
  under 3B1.1 (Aggravating Role) if this
  adjustment is based solely on the use of a
  special skill, it may not be employed in addition
  to an adjustment under 3B1.1 (Aggravating Role).

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Indictments

• Allege all statutory subsections in heading
• Track statutory elements
• Include penalty subsections
• Include forfeiture count when applicable

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Credit Card Fraud

• Credit card fraud, encompassed in the broader
  definition of access device fraud, is
  prohibited by 18 U.S.C. 1029.

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Text of 18 U.S.C. 1029(a)(1)Production, use, or
trafficking in counterfeit access devices

• (a) Whoever--
• (1) knowingly and with intent to defraud
  produces, uses, or traffics in one or more
  counterfeit access devices
• shall, if the offense affects interstate or
  foreign commerce, be punished as provided in
  subsection (c) of this section.

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Definition of access device

• The term "access device" means any card, plate,
  code, account number, electronic serial number,
  mobile identification number, personal
  identification number, or other
  telecommunications service, equipment, or
  instrument identifier, or other means of account
  access that can be used, alone or in conjunction
  with another access device, to obtain money,
  goods, services, or any other thing of value, or
  that can be used to initiate a transfer of funds
  (other than a transfer originated solely by paper
  instrument). 18 U.S.C. 1029(e)(1).

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Definitions of counterfeit access device and
unauthorized access device

• The term "counterfeit access device" means any
  access device that is counterfeit, fictitious,
  altered, or forged, or an identifiable component
  of an access device or a counterfeit access
  device. 18 U.S.C. 1029(e)(2).
• The term "unauthorized access device" means any
  access device that is lost, stolen, expired,
  revoked, canceled, or obtained with intent to
  defraud. 18 U.S.C. 1029(e)(3).

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Elements of 18 U.S.C. 1029(a)(1) Production,
use, or trafficking in counterfeit access devices

• First, the defendant knowingly used, produced, or
  trafficked in a counterfeit access device
• Second, the defendant acted with intent to
  defraud
• Third, the defendants conduct in some way
  affected commerce between one state and another
  state, or between a state or the United States
  and a foreign country.

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Text of 18 U.S.C. 1029(a)(2)Using or
trafficking in unauthorized access devices

• (a) Whoever--
• (2) knowingly and with intent to defraud traffics
  in or uses one or more unauthorized access
  devices during any one-year period, and by such
  conduct obtains anything of value aggregating
  1,000 or more during that period
• shall, if the offense affects interstate or
  foreign commerce, be punished as provided in
  subsection (c) of this section.

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Elements of 18 U.S.C. 1029(a)(2) Using or
trafficking in unauthorized access devices

• First, the defendant knowingly used or trafficked
  in one or more unauthorized access devices at any
  time during a one-year period
• Second, by using or trafficking in the
  unauthorized access devices during that period,
  the defendant obtained anything of value
  aggregating 1,000 or more during that period
• Third, the defendant acted with intent to
  defraud
• Fourth, the defendants conduct in some way
  affected commerce between one state and another
  state, or between a state or the United States
  and a foreign country.

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Section 1029 also proscribes a variety of other
access device fraud

• knowingly and with intent to defraud possesses
  fifteen or more devices which are counterfeit or
  unauthorized access devices 1029(a)(3)
• knowingly, and with intent to defraud, produces,
  traffics in, has control or custody of, or
  possesses device-making equipment -- 1029(a)(4)

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Section 1029 also proscribes a variety of other
access device fraud

• knowingly and with intent to defraud effects
  transactions, with one (1) or more access devices
  issued to another person or persons, to receive
  payment or any other thing of value during any
  1-year period the aggregate value of which is
  equal to or greater than 1,000 -- 1029(a)(5)
• without the authorization of the issuer of the
  access device, knowingly and with intent to
  defraud solicits a person for the purpose of (A)
  offering an access device or (B) selling
  information regarding or an application to obtain
  an access device -- 1029(a)(6)

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Section 1029 also proscribes a variety of other
access device fraud

• knowingly and with intent to defraud uses,
  produces, traffics in, has control or custody of,
  or possesses a telecommunications instrument that
  has been modified or altered to obtain
  unauthorized use of telecommunications services
  -- 1029(a)(7)
• knowingly and with intent to defraud uses,
  produces, traffics in, has control or custody of,
  or possesses a scanning receiver -- 1029(a)(8)

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Section 1029 also proscribes a variety of other
access device fraud

• knowingly uses, produces, traffics in, has
  control or custody of, or possesses hardware or
  software, knowing it has been configured to
  insert or modify telecommunication identifying
  information associated with or contained in a
  telecommunications instrument so that such
  instrument may be used to obtain
  telecommunications service without authorization
  -- 1029(a)(9)

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Section 1029 also proscribes a variety of other
access device fraud

• without the authorization of the credit card
  system member or its agent, knowingly and with
  intent to defraud causes or arranges for another
  person to present to the member or its agent, for
  payment, one or more evidences or records of
  transactions made by an access device --
  1029(a)(10)

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Attempt/conspiracy provisions for 18 U.S.C.
1029

• Whoever attempts to commit an offense under
  subsection (a) of this section shall be subject
  to the same penalties as those prescribed for the
  offense attempted -- 1029(b)(1)
• Whoever is a party to a conspiracy of two or more
  persons to commit an offense under subsection (a)
  of this section, if any of the parties engages in
  any conduct in furtherance of such offense, shall
  be fined an amount not greater than the amount
  provided as the maximum fine for such offense
  under subsection (c) of this section or
  imprisoned not longer than one-half the period
  provided as the maximum imprisonment for such
  offense under subsection (c) of this section, or
  both -- 1029(b)(2)

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Penalties for 18 U.S.C. 1029

• (c)(1) Penalties generally --
• (A) in the case of an offense that does not occur
  after a conviction for another offense under this
  section--
• (i) if the offense is under paragraph (1), (2),
  (3), (6), (7), or (10) of subsection (a), a fine
  under this title or imprisonment for not more
  than 10 years, or both and
• (ii) if the offense is under paragraph (4), (5),
  (8), or (9), FN1 of subsection (a), a fine
  under this title or imprisonment for not more
  than 15 years, or both
• (B) in the case of an offense that occurs after a
  conviction for another offense under this
  section, a fine under this title or imprisonment
  for not more than 20 years, or both and
• (C) in either case, forfeiture to the United
  States of any personal property used or intended
  to be used to commit the offense.

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Sentencing guidelines for 18 U.S.C. 1029

• Same sentencing guidelines section as used for
  identity theft and other fraud-related cases
  U.S.S.G. 2B1.1
• Special rule for determining loss for stolen or
  counterfeit credit cards
• Loss includes any unauthorized charges and shall
  not be less than 500 per access device. U.S.S.G.
  2B1.1,comment.(n.3(F)(i)).

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Sentencing guidelines for 18 U.S.C. 1029
-- enhancement for production or trafficking in
access devices --

• U.S.S.G. 2B1.1(b) Specific Offense
  Characteristics (continued) enhancement for
  production or trafficking in access devices
• (9) If the offense involved (A) the possession or
  use of any device-making equipment (B) the
  production or trafficking of any unauthorized
  access device or counterfeit access device or
  (C)(i) the unauthorized transfer or use of any
  means of identification unlawfully to produce or
  obtain any other means of identification or (ii)
  the possession of 5 or more means of
  identification that unlawfully were produced
  from, or obtained by the use of, another means of
  identification, increase by 2 levels. If the
  resulting offense level is less than level 12,
  increase to level 12.

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18 U.S.C. 875(c)Threatening Communications

• Text of statute
• Whoever transmits in interstate or foreign
  commerce any communication containing any threat
  to kidnap any person or any threat to injure the
  person of another, shall be fined under this
  title or imprisoned not more than five years, or
  both.

35
Elements of 18 U.S.C. 875(c) Threatening
Communications

• First, the defendant must cause a transmission in
  interstate or foreign commerce
• Second, the communication must contain a threat
  which a reasonable person would take as a serious
  expression of an intention to inflict bodily harm
  and would perceive as being communicated to
  effect some change or achieve some goal through
  intimidation
• Third, the threat must be a threat to injure or
  kidnap the person of another. United States v.
  Alkhabaz, 104 F.3d 1492, 1494 (1997). See also
  United States v. LeVison, 418 F.2d 624, 626 (9th
  Cir.1969) ("a general intent to threaten is an
  essential element of the crime").

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Sentencing Guidelines for 18 U.S.C. 875(c)

• The sentencing guidelines recognize that the
  seriousness of the conduct depends upon the
  defendants intent and the likelihood of the
  threat being carried out.
• The specific offense characteristics are intended
  to distinguish such cases.

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Sentencing Guidelines for 18 U.S.C. 875(c)
Threatening or Harassing Communications

• U.S.S.G. 2A6.1 (a) Base Offense Level
• 12 or
• 6, if the defendant is convicted of an offense
  under 47 U.S.C. 223(a)(1)(C), (D), or (E) that
  did not involve a threat to injure a person or
  property

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Sentencing Guidelines for 18 U.S.C. 875(c)

• U.S.S.G. 2A6.1 (continued)
• (b) Specific Offense Characteristics
• (1) If the offense involved any conduct
  evidencing an intent to carry out such threat,
  increase by 6 levels.
• (2) If the offense involved more than two
  threats, increase by 2 levels.
• (3) If the offense involved the violation of a
  court protection order, increase by 2 levels.

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Sentencing Guidelines for 18 U.S.C. 875(c)

• U.S.S.G. 2A6.1 (continued)
• (b) Specific Offense Characteristics
• (4) If the offense resulted in (A) substantial
  disruption of public, governmental, or business
  functions or services or (B) a substantial
  expenditure of funds to clean up, decontaminate,
  or otherwise respond to the offense, increase by
  4 levels.
• (5) If (A) subsection (a)(2) and subdivisions
  (1), (2), (3), and (4) do not apply, and (B) the
  offense involved a single instance evidencing
  little or no deliberation, decrease by 4 levels.

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Text of 18 U.S.C. 2261AInterstate Stalking

• Whoever
• (2) with the intent--
• (A) to kill or injure a person in another State
  or tribal jurisdiction or within the special
  maritime and territorial jurisdiction of the
  United States or
• (B) to place a person in another State or tribal
  jurisdiction, or within the special maritime and
  territorial jurisdiction of the United States, in
  reasonable fear of the death of, or serious
  bodily injury to--
• (i) that person
• (ii) a member of the immediate family of that
  person or
• (iii) a spouse or intimate partner of that
  person,
• uses the mail or any facility of interstate or
  foreign commerce to engage in a course of conduct
  that places that person in reasonable fear of the
  death of, or serious bodily injury to, any of the
  persons described in clauses (i) through (iii),
  shall be punished as provided in section 2261(b).

41
Maximum statutory penalties for 18 U.S.C.
2261AInterstate Stalking

• Life imprisonment if death to the victim results
• 20 years imprisonment if permanent disfigurement
  or life threatening bodily injury to the victim
  results
• 10 years imprisonment if serious bodily injury to
  the victim results or if the offender uses a
  dangerous weapon during the offense
• The applicable penalty under sections 2241-2246
  (proscribing sexual abuse) if the offense would
  constitute an offense under those sections and
• Five (5) years imprisonment in any other case
• And/or a 250,000 fine

42
Definitions for 18 U.S.C. 2261AInterstate
Stalking

• The term "bodily injury" means any act, except
  one done in self-defense, that results in
  physical injury or sexual abuse.

43
Definitions for 18 U.S.C. 2261AInterstate
Stalking

• The term "serious bodily injury means bodily
  injury that involves
• A substantial risk of death
• Extreme physical pain
• Protracted and obvious disfigurement or
• Protracted loss or impairment of the functions of
  a bodily member, organ, or mental faculty

44
Definitions for 18 U.S.C. 2261AInterstate
Stalking

• The term "course of conduct" means a pattern of
  conduct composed of two (2) or more acts,
  evidencing a continuity of purpose.

45
Definitions for 18 U.S.C. 2261AInterstate
Stalking

• The term "spouse or intimate partner" includes--
• (A) for purposes of
• (ii) section 2261A, a spouse or former spouse of
  the target of the stalking, a person who shares a
  child in common with the target of the stalking,
  and a person who cohabits or has cohabited as a
  spouse with the target of the stalking and
• (B) any other person similarly situated to a
  spouse who is protected by the domestic or family
  violence laws of the State or tribal jurisdiction
  in which the injury occurred or where the victim
  resides.

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Elements for 18 U.S.C. 2261AInterstate Stalking

• First, the defendant acts with the intent to kill
  or injure a person or to place a person in
  reasonable fear of the death of, or serious
  bodily injury to--
• (i) that person
• (ii) a member of the immediate family of that
  person or
• (iii) a spouse or intimate partner of that person
• Second, the defendant uses the mail or any
  facility of interstate or foreign commerce (the
  Internet) to engage in a course of conduct that
  places a person in reasonable fear of the death
  of, or serious bodily injury to and of the
  persons listed above.

47
Sentencing Guidelines for 18 U.S.C. 2261A

• Base Offense Level 18
• Specific Offense Characteristic
• (1) If the offense involved one of the following
  aggravating factors (A) the violation of a court
  protection order (B) bodily injury (C)
  possession, or threatened use, of a dangerous
  weapon or (D) a pattern of activity involving
  stalking, threatening, harassing, or assaulting
  the same victim, increase by 2 levels. If the
  offense involved more than one of these
  aggravating factors, increase by 4 levels.
• Cross Reference
• (1) If the offense involved the commission of
  another criminal offense, apply the offense
  guideline from Chapter Two, Part A (Offenses
  Against the Person) most applicable to that other
  criminal offense, if the resulting offense level
  is greater than that determined above.

48
Questions?
49
Internet Fraud, Access Device Fraud,
Threatening Communications, and Interstate
Stalking

• Sean B. Hoar
• sean.hoar_at_usdoj.gov
• 541-465-6792 (voice)
• 541-465-6840 (fax)