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Federal Fraud, Embezzlement, and Theft Defense

Federal fraud, embezzlement, and theft charges can expose a person to substantial prison sentences, restitution, forfeiture, financial penalties, and lasting professional consequences.

Federal fraud defense attorney Michael J. Petro represents individuals who are under investigation or have been charged with federal fraud, embezzlement, theft, and other financial crimes.

With more than 35 years of criminal defense experience, Attorney Petro represents clients in complex federal cases involving financial records, electronic communications, business transactions, government investigations, and allegations of fraudulent intent.

Federal financial crime cases can involve thousands of pages of records and years of transactions. The government’s characterization of those records is not necessarily the only reasonable interpretation of what occurred.

Every case requires an individualized examination of the evidence, applicable federal statutes, the government’s theory of criminal intent, and potential defenses.

Federal Fraud Investigations

Federal fraud investigations frequently begin long before an indictment is returned.

Investigations may involve the FBI, the IRS Criminal Investigation Division, the United States Postal Inspection Service, the Department of Health and Human Services Office of Inspector General, the Small Business Administration Office of Inspector General, the Department of Homeland Security, or other federal agencies.

Investigators may obtain evidence through:

  • Grand jury subpoenas
  • Search warrants
  • Bank records
  • Business records
  • Email accounts
  • Text messages
  • Financial records
  • Tax records
  • Computer and phone searches
  • Interviews with employees
  • Cooperating witnesses
  • Confidential sources
  • Forensic accounting
  • Electronic surveillance
  • Other investigative techniques

Learning that you are under federal investigation does not mean that criminal charges are inevitable.

However, decisions made during the investigative stage can significantly affect what happens later.

Federal Fraud Charges

Federal fraud is not a single criminal offense.

Federal prosecutors use numerous statutes to prosecute conduct they characterize as fraudulent.

Depending on the allegations, charges may include:

  • Wire fraud
  • Mail fraud
  • Bank fraud
  • Healthcare fraud
  • Securities fraud
  • Tax fraud
  • Government program fraud
  • PPP loan fraud
  • EIDL loan fraud
  • Disaster assistance fraud
  • False statements
  • Money laundering
  • Conspiracy
  • Theft of government property
  • Embezzlement
  • Other financial offenses

Each offense contains elements that the government must prove.

The existence of a financial loss or failed business transaction does not automatically establish criminal fraud.

Intent Is Critical in Federal Fraud Cases

Fraud generally requires proof of criminal intent.

This can become one of the most important issues in a federal fraud prosecution.

Business disputes, accounting errors, contract disagreements, inaccurate records, failed investments, and poor business decisions are not necessarily federal crimes.

The government may attempt to establish fraudulent intent through circumstantial evidence, including emails, text messages, financial transactions, statements, accounting records, or the testimony of cooperating witnesses.

The defense should examine whether that evidence actually establishes a deliberate scheme to defraud or whether there is another reasonable explanation for the conduct.

Potential issues may involve:

  • Lack of fraudulent intent
  • Good faith
  • Reliance on professionals
  • Mistake
  • Inaccurate accounting
  • Ambiguous communications
  • Legitimate business purposes
  • Disputed ownership of funds
  • Lack of knowledge
  • Actions of employees or business partners
  • Other explanations inconsistent with criminal intent

The appropriate defense depends on the facts and the specific offense charged.

Federal Embezzlement Charges

Embezzlement generally involves allegations that a person lawfully obtained access to money or property and later wrongfully converted it.

Federal embezzlement cases can arise in many different settings.

Allegations may involve:

  • Employees
  • Corporate officers
  • Accountants
  • Bookkeepers
  • Financial professionals
  • Government employees
  • Healthcare employees
  • Bank employees
  • Benefit programs
  • Federally funded organizations
  • Other individuals entrusted with money or property

These cases often depend heavily on financial records and evidence concerning authorization, ownership, intent, and the defendant’s use of the funds.

The fact that a person had access to money does not, by it self, establish embezzlement.

The government must prove the elements of the particular federal offense charged.

Federal Theft Charges

Federal theft offenses can involve money, property, government benefits, government property, or other assets within federal jurisdiction.

One important federal statute is 18 U.S.C. § 641, which addresses theft, embezzlement, conversion, and unauthorized disposition of property of the United States.

Cases under § 641 can present important questions concerning whether the property actually belonged to the federal government.

When government property has been transferred to a private business or organization, questions may arise concerning whether the government retained sufficient ownership, supervision, or control for the property to remain property of the United States.

Attorney Petro has litigated this issue through trial, the United States Court of Appeals for the Seventh Circuit, and a petition for writ of certiorari to the United States Supreme Court. See MJ Petro Asks Supreme Court to Stop Wrongful COVID-19 Prosecution

Wire Fraud

Wire fraud is one of the federal government’s most frequently used fraud statutes.

A wire fraud prosecution generally involves an alleged scheme to defraud and the use of interstate wire communications in furtherance of that scheme.

Modern communications and financial transactions can readily involve interstate wires.

Potential evidence may include:

  • Emails
  • Text messages
  • Telephone communications
  • Electronic bank transfers
  • Credit card transactions
  • Online applications
  • Internet communications
  • Electronic payment systems
  • Other electronic transmissions

The fact that wire communication occurred does not, by itself, establish fraud.

The government must establish the required connection between the communication, the alleged scheme, and the defendant’s criminal intent.

Mail Fraud

Mail fraud cases involve allegations that the United States mail or certain private or commercial interstate carriers were used to further a fraudulent scheme.

Mail fraud charges can arise from many types of alleged conduct, including business transactions, insurance claims, healthcare matters, investment activity, and government programs.

As with wire fraud, the government must prove the required elements of the offense rather than simply establish that something was mailed.

Bank Fraud

Federal bank fraud charges can involve allegations of schemes directed at federally insured financial institutions.

These cases may involve:

  • Loan applications
  • Mortgage transactions
  • Check transactions
  • Business loans
  • Credit arrangements
  • False financial information
  • Identity information
  • Electronic banking
  • Other financial transactions

Bank fraud cases frequently involve complex financial records and questions about intent, materiality, representations made to the financial institution, and the true nature of the transaction.

Healthcare Fraud

Federal healthcare fraud investigations may involve allegations concerning Medicare, Medicaid, TRICARE, private insurers, medical billing, prescriptions, medical necessity, kickbacks, or other healthcare transactions.

These cases can be particularly document-intensive.

The defense may need to evaluate billing records, medical records, coding practices, reimbursement rules, communications, expert opinions, and the defendant’s actual role in the alleged conduct.

Not every billing error or reimbursement dispute constitutes criminal healthcare fraud.

PPP and EIDL Loan Fraud

Federal prosecutors continue to pursue cases involving Paycheck Protection Program loans and Economic Injury Disaster Loans.

Potential allegations may involve:

  • False information on applications
  • Number of employees
  • Payroll expenses
  • Business revenue
  • Use of loan proceeds
  • Multiple applications
  • Identity information
  • Supporting documents
  • Loan forgiveness submissions
  • Certifications made to the government

PPP and EIDL cases require careful examination of the original application, supporting records, use-of-proceeds documentation, forgiveness documents, communications, and the specific statements the government claims were false.

Individuals being investigated or charged for EIDL or SBA Loan Fraud should review Attorney Petro’s Federal SBA Loan Fraud & PPP Fraud Criminal Defense Attorney page.

Conspiracy Charges

Federal fraud indictments frequently include conspiracy charges.

A conspiracy allegation can significantly expand the scope of a federal prosecution because the government may attempt to attribute conduct involving multiple people to an alleged common criminal agreement.

Merely knowing or associating with someone who committed a crime does not automatically establish participation in a criminal conspiracy.

The government must prove the elements of the conspiracy charge, including the defendant’s knowing participation in the unlawful agreement.

Financial Records and Forensic Accounting

Financial records are often central to federal fraud, embezzlement, and theft cases.

The government may use agents, analysts, accountants, or expert witnesses to trace money and characterize financial transactions.

The defense should independently examine those records.

Relevant evidence may include:

  • Bank statements
  • General ledgers
  • Tax returns
  • Payroll records
  • Loan documents
  • Invoices
  • Contracts
  • Corporate records
  • Accounting records
  • Electronic payments
  • Credit card records
  • Business expenses
  • Financial transfers
  • Communications concerning transactions

In appropriate cases, Attorney Petro may work with forensic accountants or other financial experts to evaluate the government’s analysis.

Search Warrants and Subpoenas

Federal financial investigations frequently involve grand jury subpoenas and search warrants.

A subpoena may seek years of financial and business records.

Search warrants may authorize agents to seize computers, mobile phones, financial records, and other evidence.

Potential defense issues can include whether a search warrant was supported by probable cause, whether it was sufficiently particular, whether investigators exceeded the authorized scope of the search, and whether evidence was obtained in violation of the Fourth Amendment.

Individuals and businesses receiving federal grand jury subpoenas should also evaluate their legal obligations, potential criminal exposure, privilege issues, and preservation requirements before producing records.

Individuals being investigated by the Feds or who have received a Grand Jury Subpoena should review Attorney Petro’s Investigations and Grand Jury page.

Statements to Federal Investigators

Federal agents may ask to interview a person during a fraud investigation.

A person should not assume that voluntarily speaking with investigators will prevent criminal charges.

Statements made during an interview can become evidence.

False statements to federal investigators can also create separate criminal exposure under federal law.

Anyone who learns that federal agents are investigating possible financial crimes should consider obtaining legal advice before participating in a substantive interview.

Loss Amount and Federal Sentencing

Loss can become an important issue in sentencing for federal economic offenses.

The amount attributed to the defendant can significantly affect the advisory Sentencing Guideline calculation in applicable cases.

Loss calculations can involve disputes concerning:

  • Amount actually lost
  • Amount attributable to the defendant
  • Credits against loss
  • Returned property
  • Money recovered
  • Collateral
  • Relevant conduct
  • Jointly undertaken criminal activity
  • Number of victims
  • Other financial issues

The government’s proposed loss calculation should not be accepted automatically.

The financial evidence and the applicable Sentencing Guidelines should be analyzed independently.

Restitution and Forfeiture

Federal financial crime cases can involve substantial financial consequences in addition to imprisonment.

Depending on the conviction and circumstances, the government may seek:

  • Restitution
  • Criminal forfeiture
  • Money judgments
  • Forfeiture of specific property
  • Seizure of financial accounts
  • Other financial penalties

Restitution and forfeiture are distinct legal concepts and can involve different rules.

These issues should be considered throughout the case rather than only after a conviction.

Plea Negotiations in Federal Fraud Cases

Federal fraud cases are often resolved through plea negotiations.

A proposed plea agreement should be carefully evaluated for its effect on the charges, sentencing exposure, loss amount, restitution, forfeiture, Sentencing Guideline provisions, factual stipulations, and appellate rights.

The decision whether to plead guilty belongs to the defendant after consultation with counsel.

Individuals considering a federal plea agreement should review Attorney Petro’s Federal Plea Negotiations Attorney page.

Federal Sentencing in Fraud and Embezzlement Cases

Federal sentencing in a financial crime case can involve complicated Sentencing Guideline calculations.

Depending on the offense, potential issues may include the loss, the number of victims, the sophistication of the means, the role in the offense, obstruction, acceptance of responsibility, criminal history, and other Guideline provisions.

The sentencing court also considers the statutory factors under 18 U.S.C. § 3553(a).

Effective sentencing advocacy may involve challenging the Guideline calculation and presenting individualized mitigation regarding the defendant’s history, characteristics, conduct, family, employment, restitution efforts, and other sentencing-relevant circumstances.

Individuals facing federal sentencing should review Attorney Petro’s Federal Sentencing Attorney and Sentence Reductions page.

How a Federal Fraud Defense Attorney Can Help

Federal fraud, embezzlement, and theft cases can involve complicated financial, factual, constitutional, and sentencing issues.

Attorney Petro’s representation may include:

  • Communicating with federal investigators and prosecutors
  • Responding to federal grand jury subpoenas
  • Reviewing search warrants
  • Evaluating financial records
  • Analyzing the government’s theory of fraudulent intent
  • Working with forensic accountants when appropriate
  • Evaluating wire fraud and mail fraud allegations
  • Defending bank fraud allegations
  • Defending healthcare fraud allegations
  • Defending PPP and EIDL fraud allegations
  • Defending federal embezzlement and theft charges
  • Evaluating conspiracy allegations
  • Filing appropriate pretrial motions
  • Negotiating with federal prosecutors
  • Preparing for trial
  • Challenging Sentencing Guideline calculations
  • Developing sentencing mitigation
  • Addressing restitution and forfeiture
  • Evaluating potential appellate issues

Every federal financial crime case requires an individualized defense based on the evidence, applicable statutes, potential sentencing exposure, and circumstances of the accused.

Experienced Federal Fraud Defense Attorney

Federal fraud investigations can involve years of financial transactions and thousands of pages of records. The government’s characterization of those records should be carefully examined before conclusions are drawn about criminal intent.

Michael J. Petro has more than 35 years of criminal defense experience representing individuals facing serious federal criminal charges.

If federal agents have contacted you, you have received a grand jury subpoena, your business is under investigation, or you have been charged with federal fraud, embezzlement, or theft, consulting an experienced federal fraud defense attorney can help you understand the allegations, potential penalties, and available defenses.

Contact Michael J. Petro to discuss your federal criminal case.