Whether it’s a complex white collar crime or a drug conspiracy charge, one of the first things I think of when meeting with a client is if they will be prosecuted in federal or state court? To answer that question, it’s necessary to understand why some criminal cases are handled in federal court as opposed to state court.
There is a correct perception that more serious criminal cases are handled in federal court. Simple drug possession cases are almost never prosecuted in federal court. Federal prosecutors typically focus upon large drug conspiracy cases involving marijuana, cocaine, and methamphetamine that are interstate in nature. The quantities of drugs involved also have a strong bearing on whether you will be prosecuted in federal or state court for a drug offense.
Merely because federal law enforcement, namely the DEA, is involved in an investigation does not mean a case will be prosecuted in federal court. DEA agents routinely collaborate with local and state police on drug investigations. But when trafficking or transportation of marijuana for sale involves distribution through the United States Postal Service, it is not uncommon for the case to be prosecuted federally. This is because the mail falls under the authority of the federal government. The same would hold true for the distribution of cocaine or other illegal drugs through airplanes as this falls under the jurisdiction of the Federal Aviation Administration (FAA).
Just like the United States Attorney’s Office is not interested in each and every drug conspiracy case, the same holds true for many fraud cases and other white collar crimes. Fraud is rampant, but only those cases that reach a certain minimum threshold (typically $1,000,000 or more) will catch the attention of federal prosecutors. Even then, there must be some nexus to interstate commerce. In other words, typically there must be some showing that the fraud crossed state lines.
In the age of modern technology, this is relatively easy to demonstrate given the amount of data and documents that are transferred via the internet and via fax. Sending an email, an attachment, or a fax which contains any type of false statement, or a material omission, can be treated as wire fraud. And if the documents are sent via the United States Postal Service, the same false statement or omission can be treated as mail fraud. Each of these offenses carries serious penalties upon conviction.
The question of will you be prosecuted in state or federal court also depends on the depth of the investigation and the agencies involved. In complex white collar and drug conspiracy cases which cross state lines, it is typical to see multiple federal law enforcement agencies involved and coordinating their efforts. Even in a case which has nothing to do with taxes, it is common for criminal investigators from the Internal Revenue Service to get involved and “follow the money” to show how the crimes are being committed. Often times, investigators have difficulty proving that crimes are being committed until the inevitable financial portion of the case is documented. With specialized investigative knowledge and abilities, let alone access to materials and information that is not readily available to local law enforcement, federal agents are able to dig deeply into criminal activity and show that some form of money laundering has occurred. This can be one of the most determinative factors to see if you will be prosecuted in state or federal court.
Lastly, just like a drug conspiracy being committed within the federal jurisdiction of the mail or aviation, certain white collar crimes also fall within the exclusive jurisdiction of the federal government. Individuals who falsify their federal tax returns could expect to be charged with tax evasion in federal court. Individuals who make false statements in a bankruptcy proceeding could expect to be prosecuted for bankruptcy fraud in federal court. Individuals who engaged in fraudulent schemes and cause a loss to federally insured banks could expect to be charged with bank fraud in federal court. And of course, making false statements under oath for federal benefits could result in being charged with perjury in federal court.