Bank Fraud

Bank Fraud is generally defined as the criminal offense of knowingly executing, or attempting to execute, a scheme or artifice to defraud a financial institution, or to obtain property owned by or under the control of a financial institution, by means of false or fraudulent pretenses, representations, or promises. In contrast to the broad and wide-ranging natures of the wire and mail fraud statutes, the bank fraud statute, 18 U.S.C. § 1344, was specifically enacted to provide an effective and comprehensive prosecution vehicle to address the defrauding of federally created, controlled, or insured financial institutions. As such, section 1344 is both succinct straight forward.

Under this section, it is a crime for a person to "knowingly" execute, or attempt to execute, a scheme or artifice to defraud a financial institution; or to obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises.

The punishment for a violation of section 1344 is a fine of not more than $1,000,000, imprisonment for not more than 30 years, or both.

While conceptually very limited in nature and scope section 1344, does protect all federally insured financial institutions. In reality, virtually all financial institutions are federally insured. Accordingly, virtually all fraud allegations involving banks, credit unions, or savings and loans will or can be federally prosecuted. In an apparent attempt to ease bank fraud prosecutions, some courts do not even require a showing that the defrauded bank suffered a financial loss. Essentially, the bank does not actually need to be harmed as long as the defendant acted with the requisite intent to harm. In that same vein, while one of the elements of a violation of section 1344 is intent, intent to harm the financial institution is not required. All that is required is intent to deceive the bank in order to obtain money or other property.

However, in a limited attempt to constrain overzealous prosecutions several courts have determined that a "scheme to defraud" is measured by determining whether the scheme demonstrated a departure from fundamental honesty, moral uprightness, and/or fair play and candid dealings in the general life of the community. Additionally, the execution of the entire scheme to defraud is the appropriate "unit" of prosecution for an offense under section 1344, not each particular act done in furtherance of the scheme. This helps to limit the number of charges or counts in a federal indictment and ultimately the amount of punishment. Accordingly, the decision of whether a particular transaction is an execution of a scheme or merely a component of a scheme is very important and depends on several factors. These factors include the ultimate goal of the scheme, the nature of the scheme, the benefits intended under the scheme, the interdependence of acts committed under the scheme, and the number of parties involved.

Bank fraud is sometimes allegedly perpetrated from the inside by a bank employee or manager. This constitutes embezzlement, in which a person entrusted with funds or bank property appropriates it for his or her own use or benefit. A bank employee may borrow funds during a personal emergency and then attempt to replace the missing funds undetected, a move that seldom goes undetected. Bank fraud may also be perpetrated from outside the bank for example, when it is alleged that investment bankers, entrepreneurs, accountants, attorneys or other professionals are perceived to have defrauded a bank and/or its clients from its funds.

Bank fraud charges are quite serious due to the combination of the severe sentencing guidelines based on the amount of proven financial damages and the dependence on complex financial records for one's defense. Often, the defendant has much less access to the required financial records than the prosecution.

There are many defenses that can be used when facing bank fraud charges. The outcome of your defense depends in large part on the amount of pre-trial research, the defense strategies employed and the motivations of the prosecution. While banks are typically highly motivated to press charges in these cases, they are generally more interested in recovering missing funds. In many cases, it may be possible to reach a financial settlement that can minimize or avoid entirely prison time. Early intervention is critical to obtaining the best results.
If you or a loved one are potentially facing or actually facing federal bank fraud charges, it is critical that you seek an aggressive legal defense team with specific experience and expertise dealing with these types of white collar charges. Contact us immediately for a free, confidential initial consultation.