Internet Fraud—Hurricane Katrina

The Federal government has filed criminal charges against Gary S. Kraser in the first internet fraud case related to Hurricane Katrina relief efforts.^[1] Mr. Kraser was indicted on four counts of wire fraud related to his collection of almost $40,000 in donations over the internet by falsely claiming he was flying supplies to victims of Hurricane Katrina.^[2] According to federal prosecutors, Mr. Kraser launched a web site called Air Katrina, allegedly claiming that he and others needed donations to help defray the cost of fuel for relief flights.^[3] It seems, however, that there were no flights, and that he doesn’t have a pilot’s license.^[4]

If the allegations are true, he had established a very complex scheme. He wrote entries on his site describing what he saw during his “flights,” claiming that he saw people waving for help, dogs being electrocuted as they swam into power lines, and bodies floating in the water. He also claimed to have rescued a 7-month-old child from the area, and to have “tipped wings” as he flew over Air Force One.^[5] Furthermore, a woman who called Mr. Kraser to apparently determine whether he was legitimate was told by him that he was “in the cockpit of an airplane about to take off for Louisiana. … After being interrupted by what appeared to be sounds from air traffic control, [Mr.] Kraser told the woman this would be his last flight unless more money was donated.”^[6] Mr. Kraser later told investigators that the airplane sounds came from his computer.^[7]

U.S. Attorney R. Alexander Acosta says that most of the money has been returned to those who donated it.^[8]

Wire fraud is a crime under 18 U.S.C. § 1343, which makes it a crime for a person to devise a scheme or artifice to defraud and use wire, television, or radio communication technologies to carry out the scheme.

Violating section 1343 can be punished by a fine, imprisonment for up to 20 years, or both. If a financial institution is harmed in the commission of the fraud, the fine can be as high as $1,000,000 and the prison sentence can be up to 30 years.

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[1] Michelle Spitzer, Feds: First Arrest Made for Katrina Internet Fraud, New Orleans Times-Picayune, Oct. 3, 2005, available here.
[2] Id.
[3] Id.
[4] Id.
[5] Id.
[6] Id.
[7] Id.
[8] Id.