What is a Business Email Compromise Scheme?
Business Email Compromise (BEC) schemes vary in their details and mechanics, but the gist of the scheme is that it is conducted by sending email targeting individuals or employees of companies, usually with the goal of fraudulently inducing the target to make a transfer of funds to an account or accounts controlled by the schemers. In most cases, this involves spoofed emails that are designed to appear as if they are being sent from a legitimate source that the target would trust.
While these schemes can have countless forms, we provide an example here: An employee working at ABC Milk Company, who has access to ABC’s bank accounts and has authority to make payments and transfers through these accounts is targeted. This person has contact with the company’s president, Mike Little, whose email account is email@example.com. The employee receives an email from Mike.Little@abcmiIk.com (the lowercase “L” is replaced with an uppercase “i”). The scammer, posing as Mike, instructs the employee to urgently pay a vendor, and attaches an invoice with wiring instructions. The employee, believing this to be a legitimate transaction, then makes the wire transfer to a foreign bank where it is collected or transferred by members of the scheme.
This is a very simple example, and BEC schemes are often far more involved and have a number of participants and moving parts. For example, perpetrators of the scheme will sometimes speak to the target by phone, send multiple fraudulent documents to make the scheme more believable to the target, and engage in other conduct designed to “groom” or reassure the target of the legitimacy of the transaction.
Other types of BEC schemes involve the use of malware that is able to compromise the target’s computer and gain access to email and other information. Some BEC schemes may not seek money transfers, but are instead designed to obtain other information, such as a person’s identifying information, which can then be used in furtherance of other fraud schemes or sold on the darkweb.
How are BEC Schemes Prosecuted?
BEC schemes are prosecuted under a variety of criminal statutes, including: conspiracy, wire fraud, and money laundering.
Because BEC schemes overwhelmingly involve more than one person, they can be prosecuted under the conspiracy laws. As we describe, prosecutors favor conspiracy charges for a number of reasons. Given the nature of BEC schemes, it is common for multiple people to work together to commit these crimes, each being responsible for different aspects of the crime. For example, one person might research individuals or companies to target, another person may create and send fraudulent emails, and yet another person may be responsible for setting up bank accounts and collecting the fraud proceeds.
Federal prosecutors will also likely rely on the wire fraud statute, which is at the heart of any BEC offense. As detailed here, that law criminalizes schemes to defraud by using interstate wires, which includes emails.
In addition to conspiracy and wire fraud, prosecutors may also pursue money laundering charges. These charges make it a crime to engage in transactions with the proceeds of unlawful activity. Thus, for participants in a BEC scheme whose role is limited to receiving or otherwise transacting in funds that are the proceeds of fraud, there are nevertheless significant consequences, as we discuss below.
What are the Penalties for BEC Schemes?
The penalties for BEC schemes can be severe. Fraud conspiracy, wire fraud, and money laundering offenses all carry up to 20 years in prison. The actual sentence in each case will depend on a variety of factors, including the background and history of the defendant and the United States Sentencing Guidelines calculation.
While the sentencing guidelines are not mandatory, most judges pay careful attention to the guidelines calculation in determining the ultimate sentence. As we discuss in detail elsewhere, the sentencing guidelines are largely driven by the amount of loss cause by the offense. In addition, the guidelines are often bumped up in BEC schemes for a number of reasons, including the use of sophisticated means, and the commission of the crime or part of the crime from outside of the United States.
Are There Defenses to BEC Charges?
Yes. Because of the complexity and the fact-specific nature of BEC charges, the defenses to such charges will also be highly fact-specific. One of the key aspects to conspiracy and fraud charges, however, is the knowledge and intent of the person charged. So, for example, if a person engaged in bank transactions but had no knowledge that they were dealing with the proceeds of a fraud scheme, this would be a defense to conspiracy and money laundering charges. An experienced white collar defense attorney would need to carefully review the evidence in each case to determine what defenses are available.
In addition to a complete legal defense on BEC charges, it is also important to know that these charges and punishments can often be mitigated, which means that a less serious punishment would apply. Like the process for defending against these charges, mitigation requires the careful review of evidence in the case to determine what exactly the accused individual knew and did. Even in a conspiracy case, alleged participants are not automatically responsible for all of the conduct and all of the resulting harm of the conspiracy. Instead, they are only responsible for a subset of conduct, known as “relevant conduct.” Properly delimiting the scope of an individual’s conduct can have a profound impact on the ultimate advisory sentencing range and the resulting sentence imposed by the court.
Talk to an Experienced Fraud Attorney
If you believe you may be facing charges related to an alleged BEC fraud scheme, contact an experienced federal white collar crime attorney. If you would like to discuss your case with us confidentially, please use the contact form to set up your free consultation.