Wire Fraud—Luis R. Cañas

A Miami man has been arrested in Miami on allegations that he committed wire fraud.^[1] Luis R. Cañas allegedly tried to defraud E*Trade by opening multiple E*Trade accounts in his own and his mother’s and father’s names.^[2] Each time an account is opened, funds must be deposited in order to buy and sell securities.^[3] It is alleged that Mr. Cañas funded those accounts by “caus[ing] checks payable to E*Trade to be drawn on a local Miami bank account for which he was the only signatory, knowing that there were insufficient funds in the bank account to cover the checks.”^[4]

Wire fraud is committed when a person devises a scheme or artifice to defraud, or to obtain money or property by means of false or fraudulent pretenses, and then uses telecommunications to carry out that scheme.^[5] Clearly, in this case, the government alleges that Mr. Cañas’s “scheme or artifice” was drawing checks on accounts that he knew had insufficient funds.

In 1986, the Third Circuit Court of Appeals decided a case that was somewhat similar.^[6] The defendant in that case was convicted of 25 counts of wire fraud “in connection with a check kiting scheme.”^[7] He challenged his conviction by arguing that “a scheme to defraud based on passing checks backed by insufficient funds cannot, as a matter of law, form the basis of a wire fraud conviction.”^[8] He based this argument on a Supreme Court case which held that “if merely passing a single bad check could form the basis of a federal prosecution, then a surprisingly broad range of unremarkable conduct [would be] a violation of federal law.”^[9] This holding has been superseded with the passage of the bank fraud statute, but the rest of the Third Circuit’s analysis is valid. There is a difference between passing one bad check and a “scheme to pass a number of bad checks.”^[10] In other words, the scheme requires “a deliberate plan to deceive through submitting checks backed by insufficient funds.”^[11]

This is something that will have to be proven if Mr. Cañas’s case goes to trial.

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[1] US Attorneys Office, Miami Man Arrested for E*Trade Fraud, Feb. 27, 2006.
[2] Id.
[3] Id.
[4] Id.
[5] 18 U.S.C. § 1343.
[6] See United States v. Rafsky, 803 F.2d 105 (3d Cir. 1986).
[7] Id. at 106.
[8] Id.
[9] Id. at 107 (citing Williams v. United States, 458 U.S. 279 (1982).
[10] Id. at 107.
[11] Id.