Conspiracy to Defraud the U.S. Defense Lawyer

Section 371 of Title 18 contains two separate conspiracy offences, and the second is the one that surprises people. The first clause covers conspiring to commit any offence against the United States. The second covers conspiring to defraud the United States, and it does not require that anyone lose money.

That second clause, known in practice as the Klein conspiracy, reaches agreements to impair, obstruct, or defeat the lawful functions of a government agency by deceit, craft, or trickery. It is used heavily in the Eastern District of Virginia in procurement and tax matters, precisely because it does not depend on proving a loss. Law Offices Of SRIS, P.C. has been practicing since 1997, and Mr. Sris brings a background in accounting and information systems from George Mason University, applied to complex financial and technology-related cases. To discuss a § 371 charge, request a consultation at (888) 437-7747.

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The Defraud Clause Does Not Require Fraud in the Ordinary Sense

Under the offence clause, the government must identify a substantive federal crime that the conspirators agreed to commit. Under the defraud clause it does not. It need only establish an agreement to interfere with a lawful government function through dishonest means.

The consequence is that conduct which caused no financial loss to anyone, and which involved no substantive offence the government can identify, can still support a conspiracy count. Concealing information an agency was entitled to receive, structuring dealings to keep a regulator from seeing what was happening, or agreeing to submit records that obscured a true position have all been charged this way.

In tax matters the pattern is familiar: an agreement to impede the ability of the Internal Revenue Service to assess and collect, without necessarily proving an evasion offence against any particular return. In procurement it is an agreement to obstruct the ability of a contracting authority to evaluate bids or verify performance honestly.

The breadth is why the clause attracts criticism and why it is worth taking seriously. The defence has to engage with what the alleged government function was and how the agreement is said to have impaired it, rather than looking for a missing loss.

The Overt Act Requirement

Section 371 differs from the fraud conspiracy provision at 18 U.S.C. § 1349 in one important respect: it requires an overt act. At least one conspirator must have committed an act in furtherance of the agreement, and the indictment must allege it.

This gives the defence a concrete target that § 1349 does not. The act must be identified, proved, and genuinely connected to the agreement. An act that occurred before the agreement was formed, that was unrelated to it, or that a defendant can show never happened, does not satisfy the element.

The overt act need not itself be unlawful, and that surprises people. A telephone call, a meeting, or the filing of an ordinary document can suffice if it advanced the conspiracy. But it must have been in furtherance, and the timing and purpose are open to challenge.

Where the Charge Is Used

Procurement and contracting cases are the largest category in this district. The theory is typically that participants agreed to conceal a relationship, a subcontract arrangement, an eligibility fact, or a performance failure from the contracting authority, impairing its ability to administer the award honestly.

Tax matters are the second. The Klein conspiracy is a standard charge where several people are alleged to have agreed to obstruct assessment or collection through structured transactions, false records, or concealment, particularly where proving a substantive evasion count against any individual would be difficult.

Beyond those, the clause appears in cases involving false statements to agencies, immigration and benefit programmes, export controls, grant administration, and any situation where the alleged harm is to the integrity of a government process rather than to a bank balance.

It is also charged defensively by prosecutors, as a fallback where the substantive theory is uncertain. That is worth noticing, because a § 371 defraud count standing alongside weak substantive counts sometimes signals that the government knows its primary theory has problems.

The evidence in these matters reflects that institutional character. Agency correspondence, submission portals and their audit trails, certifications and representations made at award or filing, internal approval chains, and the records the agency itself generated in response are the documentary spine. Very little of it belongs to the defendant, and much of it sits with the agency or with an employer that may be responding to the government separately.

Obtaining the agency file matters for a reason specific to this clause. Because the theory is impairment of a government function, what the agency actually knew, required, and did with the information is directly in issue. Where the agency held the material said to have been concealed, or did not require it, or proceeded unaffected, the impairment theory weakens on the government’s own records.

What the Defence Engages With

The agreement is the first question, as in any conspiracy. A meeting of minds on the objective is required, and commercial relationships, parallel conduct, and repeated dealings are not agreements. Where the evidence consists of transactions rather than communications about a shared plan, the element is contested.

The dishonest means requirement is the second, and it is more useful here than it appears. The clause reaches interference by deceit, craft, trickery, or dishonest means. Conduct that was merely aggressive, uncooperative, or legally wrong without being deceptive does not satisfy it. Taking an aggressive tax position, structuring a transaction in a way a regulator dislikes, or disputing an agency’s interpretation is not by itself dishonesty.

The government function is the third. The indictment must identify what lawful function was impaired and how. Where the agency had the information, where the function was not actually obstructed, or where the alleged concealment concerned something the agency did not require, the theory weakens.

Knowing participation and scope operate as in any conspiracy. A defendant must have known the essential nature of the plan and joined it deliberately, and is accountable only within the scope of what they agreed to and could reasonably foresee.

Exposure and Why the Pairing Matters

The statutory maximum for § 371 is set by the current text of the statute and should be confirmed against it with counsel for the specific charge. It is lower than that of the substantive fraud provisions, which is one reason the count sometimes appears attractive in a negotiation.

That apparent attraction needs care. Where a § 371 count is charged alongside substantive counts, resolving to the conspiracy alone can be genuinely favourable. But the advisory Guidelines range is calculated from the underlying conduct rather than from the count of conviction, so the label on the count does not by itself determine the sentence. Loss, or in tax cases the tax loss, still drives the range.

Collateral consequences run independently. For contractors, suspension and debarment proceedings can move faster than the criminal case. For professionals, licensing review can open on a charge. For noncitizens, immigration consequences turn on the offence of conviction.

Frequently Asked Questions

What is a Klein conspiracy?

The practitioner name for a charge under the defraud clause of 18 U.S.C. § 371: an agreement to impair, obstruct, or defeat the lawful functions of a government agency by deceit, craft, trickery, or dishonest means. It does not require proof that anyone lost money or that any substantive offence was committed, which is why prosecutors use it where a loss theory would be difficult.

How is § 371 different from § 1349?

Two ways. Section 371 requires an overt act in furtherance of the agreement, which § 1349 does not, giving the defence a concrete target. And § 371 carries its own statutory maximum rather than importing the penalty of a predicate offence, whereas § 1349 carries whatever the underlying fraud offence carries.

Can I be convicted if nobody lost money?

Under the defraud clause, yes. The harm alleged is to the integrity of a government function rather than to anyone’s finances, so the absence of loss does not defeat the count. Loss still matters at sentencing, because the advisory Guidelines range is calculated from the underlying conduct, and in tax cases the tax loss drives the range.

What counts as an overt act?

Any act in furtherance of the agreement, committed by at least one conspirator. It need not be unlawful in itself: a telephone call, a meeting, or the filing of an ordinary document can suffice. It must genuinely have furthered the conspiracy, so acts predating the agreement or unrelated to it are open to challenge, and the indictment must allege the act.

Is taking an aggressive position dishonest?

Not by itself. The clause requires interference by deceit, craft, trickery, or dishonest means. Adopting an aggressive tax position, structuring a transaction in a way a regulator dislikes, or disputing an agency’s interpretation is not dishonesty. That distinction is one of the more productive defences available under the defraud clause.

Why is this charged in procurement cases?

Because the alleged harm is usually to the contracting authority’s ability to evaluate and administer an award honestly rather than to a measurable loss. Concealing a relationship, a subcontract arrangement, or an eligibility fact fits the defraud clause even where the government received what it paid for, which makes the charge available when a fraud theory would not be.

Is a § 371 count good news in a negotiation?

Sometimes, because its statutory ceiling is lower than the substantive fraud provisions. But the advisory Guidelines range is calculated from the underlying conduct rather than from the count of conviction, so pleading to a conspiracy count does not by itself reduce the sentence. The exposure analysis has to be run on the conduct, not the label.

Working With Law Offices Of SRIS, P.C.

The defraud clause is defended on ground that does not exist in an ordinary fraud case: what lawful government function is alleged to have been impaired, whether the means used were genuinely deceptive rather than merely aggressive, and whether the overt act pleaded actually furthered any agreement.

Mr. Sris, Owner and Founder of Law Offices Of SRIS, P.C., is a former prosecutor and is admitted in Virginia, Maryland, the District of Columbia, New Jersey, and New York. The firm has been practicing since 1997. Mr. Sris and the firm’s Of Counsel attorneys handle criminal defense matters across those jurisdictions, which matters in federal practice because a single investigation frequently reaches conduct, witnesses, and records in more than one state. Mr. Sris brings a background in accounting and information systems from George Mason University, applied to complex financial and technology-related cases.

The firm serves Northern Virginia from 1655 Fort Myer Dr, Suite 700, Room 719, Arlington, VA 22209 and central Virginia from 7400 Beaufont Springs Drive, Suite 300, Room 395, Richmond, VA 23225. By appointment. Call (888) 437-7747 to schedule. Request a consultation. Reach our location at (888) 437-7747.

This page provides general information about conspiracy to defraud the United States under 18 U.S.C. § 371 and does not create an attorney-client relationship. Case results depend on a variety of factors unique to each case. Results may vary.

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A conspiracy to defraud the US case is one part of fraud & financial crimes work, and our page on bank fraud defence covers the wider process.