18 U.S.C. § 1031 – Major Fraud Against the United States
Major fraud against the United States is a serious federal white-collar offense prosecuted by the United States Department of Justice (DOJ).
Codified at 18 U.S.C. § 1031, this statute targets large-scale fraud schemes involving federal contracts, grants, loans, or assistance valued at more than $1 million.
Unlike general fraud statutes, Section 1031 imposes enhanced penalties when substantial federal funds are at stake.
If you are under investigation for federal contract fraud, procurement fraud, PPP fraud, healthcare fraud, or disaster relief fraud, early intervention by experienced federal defense counsel is critical.
Your best hope for a favorable outcome is with an experienced criminal defense attorney at the Hedding Law Firm in Los Angeles. To schedule a consultation, call (866) 986-2092 or use the contact form here.
What Is Major Fraud Against the United States?
18 U.S.C. § 1031 makes it a federal crime to:
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Knowingly execute or attempt to execute a scheme to defraud the United States, or
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Obtain money or property from the United States by false or fraudulent pretenses
The statute applies when the value of the federal contract, grant, subsidy, loan, guarantee, or assistance program exceeds $1,000,000.
The law was enacted as part of the Major Fraud Act of 1988 and later expanded by the Fraud Enforcement and Recovery Act of 2009 to cover economic stimulus programs and emergency relief funding.
What Must Federal Prosecutors Prove?
To convict someone of violating 18 U.S.C. § 1031, prosecutors must prove beyond a reasonable doubt:
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The defendant knowingly and willfully participated in a scheme to defraud the United States.
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The scheme involved materially false statements or representations.
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The purpose of the scheme was to obtain money or property from the federal government.
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The value of the contract or assistance involved exceeded $1 million.
Importantly, attempted fraud is also criminalized. The government does not need to prove the scheme succeeded.
What Types of Cases Trigger Section 1031 Charges?
Section 1031 is frequently charged alongside mail fraud, wire fraud, and false statement offenses. Common examples include:
Government Procurement Fraud
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Inflated billing
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False certifications
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Kickback schemes
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Bid rigging on federal contracts
Healthcare Fraud
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False claims submitted to Medicare or Medicaid
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Upcoding or billing for services not rendered
Disaster Relief Fraud
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Fraudulent FEMA claims
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False representations to obtain federal emergency funds
Pandemic & Stimulus Program Fraud
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Fraud involving PPP loans
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CARES Act funding fraud
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TARP-related transactions
Statute of Limitations
Under Section 1031(f), prosecution may be commenced within seven years of the offense, plus any additional time otherwise allowed by law. This extended statute of limitations reflects the complexity of federal fraud investigations.
Penalties for 18 U.S.C. § 1031
A conviction for major fraud against the United States carries severe consequences:
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Up to 10 years in federal prison per count
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Fines up to $1 million per offense
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Enhanced fines up to $5 million per count and $10 million total in certain cases
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Restitution to the federal government
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Potential forfeiture of assets
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Debarment from future federal contracting
Sentencing is determined under the Federal Sentencing Guidelines and depends heavily on:
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Loss amount
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Number of victims
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Role in the offense
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Obstruction of justice
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Prior criminal history
How Is Section 1031 Different From Mail or Wire Fraud?
While mail fraud (18 U.S.C. § 1341) and wire fraud (18 U.S.C. § 1343) apply broadly to fraudulent schemes, Section 1031 specifically targets fraud involving high-value federal programs.
The key distinguishing feature is the $1 million contract or assistance threshold.
Prosecutors often stack these charges to increase sentencing exposure.
Related Federal Fraud Statutes
Major fraud cases frequently involve additional charges under Chapter 47 of Title 18, including:
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18 U.S.C. § 1028A – Aggravated identity theft
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18 U.S.C. § 1040 – Disaster relief fraud
A single investigation can result in multi-count indictments with substantial sentencing exposure.
Defenses to Major Fraud Charges
Federal fraud cases are document-intensive and complex. Common defense strategies may include:
Lack of Intent
The government must prove specific intent to defraud. Mistakes, accounting errors, or misunderstandings do not automatically constitute criminal fraud.
Good Faith
If the defendant reasonably believed representations were accurate, criminal intent may be negated.
Insufficient Evidence
The government must prove materiality, intent, and loss amount beyond a reasonable doubt.
Contractual Dispute vs. Criminal Fraud
Many federal investigations begin as contract disputes that are later criminalized. Demonstrating the matter is civil — not criminal — can be pivotal.
Pre-Indictment Advocacy
In some cases, counsel may intervene before indictment to:
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Present exculpatory evidence
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Clarify misunderstandings
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Negotiate civil resolution
Why Early Federal Defense Matters
Federal investigations are often conducted by agencies such as:
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FBI
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Inspector General offices
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Department of Defense investigators
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Health and Human Services OIG
By the time charges are filed, the government typically has conducted a lengthy investigation. Early representation may affect:
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Charging decisions
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Loss calculations
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Sentencing exposure
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Asset forfeiture proceedings
Frequently Asked Questions
What is the dollar threshold for major fraud under 18 U.S.C. § 1031?
The federal contract, grant, or assistance must be valued at more than $1 million.
Can a business be charged under Section 1031?
Yes. Both individuals and corporate entities can face prosecution.
Is attempted fraud punishable?
Yes. The statute criminalizes attempts to execute a fraudulent scheme.
How long does the government have to file charges?
Generally seven years from the date of the offense.
Can I go to prison for federal contract fraud?
Yes. A conviction can result in up to 10 years in federal prison per count.
Speak With a Federal Criminal Defense Attorney
Major fraud investigations are high-stakes and aggressively prosecuted. If you or your company is under investigation for violating 18 U.S.C. § 1031 or related federal fraud statutes, early legal intervention can significantly impact the outcome.
The Hedding Law Firm is based in Los Angeles, California, and represents clients facing complex federal white-collar investigations and prosecutions.
Schedule your consultation today. Our law firm is based in Los Angeles, CA
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