Although there is no specific federal statute prohibiting insurance fraud because there is a nexus with interstate commerce, federal prosecution for fraudulent conduct may be sought under a variety of different statutes. Some of the types of statutes that the defendant may be charged under include:
- Mail fraud.
- Racketeer Influenced and Corrupt Organizations Act (RICO).
- Travel Act.
Because filing insurance claims often times involve the mail system; federal prosecutors may seek to prosecute under the mail fraud statute. Prosecution for fraudulent insurance crimes based upon violating a mail fraud statute is a common way to prosecute insurance fraud. Almost every insurance fraud scheme involves a violation of the mail fraud statute.
The mail fraud statute requires that the defendant knowingly cause the mails to be used in furtherance of the scheme to defraud. The prosecutor is not required to prove that the defendant himself used the mails or that he intended the mails to be used, as long as, such use was incidental to an essential part of the scheme. Proof of mailing may be shown by either direct or circumstantial evidence. Generally, any paper flow that passed through the mail, and which was in furtherance of the defendant’s scheme to defraud the insurer is sufficient to support a conviction for mail fraud.
Often times insurance fraud schemes are prosecuted under RICO. The majority of insurance fraud schemes prosecuted under RICO tend to involve arson insurance fraud. RICO prohibits any individual employed by or associated with any enterprise from conducting such enterprise’s affairs through a pattern of racketeering activity. RICO prosecutions involving insurance fraud have defined the enterprise as the association in fact of the members of the arson ring, and have named the role of each defendant in the scheme.
The Travel Act was enacted to assist state and local authorities with limited resources in their efforts to combat organized crime. The Act provides that any individual who travels in interstate or foreign commerce or uses the mail or any facility in interstate or foreign commerce with the intent to distribute the proceeds of any unlawful activity or to commit a violent crime to further criminal activity, or to promote, manage, establish, carry on, or facilitate the promotion, management, establishment, or carrying on of any criminal activity may be charged for violating the Travel Act. Insurance fraud may be prosecuted under the Travel Act because it uses the mail system as does mail fraud.