Defending Federal Bank Fraud Charges
Bank fraud offenses under 18 U.S.C. § 1344 range from relatively non-complex theft or embezzlement of money by a bank employee to complex schemes designed to defraud, such as the over valuation of property, or false loan applications and improper use of loaned money.
In other words, 18 U.S.C. § 1344 makes it a federal crime to defraud a bank or participate in a scheme to defraud regarding the accounts of a financial institution.
Bank fraud can be a crime of significant temptation, especially given the large number of seemingly faceless financial transactions in which we all engage in a modern economy.
With the sheer size of national banks, bank fraud can also seem like a victimless crime.
When the world doesn't always seem especially fair, a little exaggeration may seem as if it's only playing by a rough world's rules.
Bank fraud, like fraud of any kind, involves cheating, cutting corners, or finding a way around the honest practices on which secure and stable financial transactions depend.
Banks and their auditors look closely for fraud, and when they find evidence of it, they only too gladly refer it to prosecutors.
Our Los Angeles criminal defense lawyers are providing more detailed information below.
What Is Federal Bank Fraud?
The general federal bank fraud statute 18 U.S.C. § 1344 defines federal bank fraud as:
- “knowingly executing or attempting a scheme or artifice to defraud a financial institution, or to obtain financial institution money, funds, credit, assets, securities, or other property by false or fraudulent pretenses, representations, or promises.”
The same statute states the severe penalty of up to a $1 million fine and thirty years of imprisonment if you are convicted.
To define bank fraud as a scheme to defraud is circular unless one knows what the law means by fraud.
Generally, fraud, a crime of transaction, is a knowingly false statement made with the intent to induce another's reliance to their loss.
Federal jury instructions used in California emphasize that fraud is indeed generally a crime of intent. A scheme or artifice isn't something one does by mistake.
To commit fraud, one must not only know of the false statements that cause the other to lose in the transaction.
One must also have the purpose that they lose through one's deception or cheating.
Federal anti-fraud statutes
The Department of Justice notes that the general bank fraud statute 18 U.S.C. § 1344 is a backstop to several more-specific anti-fraud statutes protecting U.S. banks. Those more-specific statutes include, among others:
- 18 U.S.C. § 215 - bribery,
- 18 U.S.C. § 656 - embezzlement,
- 18 U.S.C. § 1014 - false statements,
- 18 U.S.C. § 1005 - false bank entries.
Those whom authorities accuse of bank fraud should not be surprised to face multiple charges under different statutes with the general bank fraud statute as a catch-all or backstop.
Bank Fraud Examples
Fraud, like a scheme or artifice to cheat another out of money or other property, can take many forms. Bank fraud is similarly broad in scope.
While authorities might charge some of these examples under more specific statutes than the general federal bank fraud statute 18 USC Section 1344, all would likely fall within that catch-all provision:
- check-kiting using the delay in posting to draw on non-existent funds;
- deliberately leaving other debts off of a loan application;
- deliberately over-stating one's income on a loan application;
- deliberately leaving off a prior bankruptcy or default on a loan application;
- using a fictitious personal or business name to conceal credit history;
- identity theft for financial advantages;
- deliberately presenting false financial statements to support a loan;
- withdrawing funds using a forged signature or altered payee or date;
- deliberate purported deposits knowingly using empty envelopes;
- stealing credit card numbers for fraudulent charges.
The Federal Statute's Wide Reach
Don't make the mistake of assuming that the federal bank fraud statute applies only to federally chartered banks.
The statute has a much broader state and local reach. You need not be banking with a national bank to be subject to federal bank fraud prosecution.
The Department of Justice explains that the federal bank fraud statute protects the financial institutions, including any federally chartered or insured bank.
A few thousand banks and savings associations, those with the word National or letters N.A. in their name, have federal charters.
Those federal financial institutions have the federal bank fraud statute's protection. Many other banks look instead to a state for their charter and regulation.
The Conference of State Bank Supervisors reports that state-chartered banks have been growing in assets and national reach, while federally chartered institutions have been dwindling.
Current data shows about 4,500 federally insured banks.
State-chartered banks and credit unions whose deposits the Federal Deposit Insurance Corporation or National Credit Union Administration insure have the same anti-fraud protection as federally chartered banks.
Chances are very good that your bank has the federal bank-fraud statute's protections.
How Can Someone Defend Against Bank Fraud Charges?
First, a word of warning for anyone facing federal bank fraud charges:
- do not communicate with investigating federal agents whose role is to gather evidence against you.;
- do not assume that a federal bank fraud charge automatically means that a conviction is coming.
Instead, rely on your Fifth Amendment privilege against self-incrimination and Sixth Amendment right to counsel.
Prosecutors must prove each element of a bank fraud charge beyond a reasonable doubt. Fraud can be a tough charge to prove because it depends on showing the defendant's guilty state of mind.
People make mistakes when dealing with their bank. Those mistakes can include misstating information in a way that ends up making the person's financial condition look better than it is.
However, a mistake or other misstatement is not the same as evidence of deception, scheme, and artifice.
Lack of intent
People also innocently leave information off of financial documents, innocently alter documents prepared by others, and innocently complete documents left incomplete by others.
None of those actions are necessarily evidence of deception and fraud, even when they end up helping the one who takes those actions.
Innocent explanations can well exist for conduct that could under other circumstances be deliberately deceptive.
These elements are precisely the ones on which an experienced federal criminal defense lawyer may cast reasonable doubt with an aggressive investigation, cross-examination, and firm presentation.
Federal Criminal Lawyer for Bank Fraud Cases
Federal bank fraud is a very serious crime. If not met with an aggressive defense, it can quickly end a career while resulting in a lengthy prison term and a huge fine.
Our top-rated lawyers defend clients nationwide against serious federal charges, including federal bank fraud.
Don't enter a criminal proceeding without the best available legal representation.
The penalties for bank fraud, and the collateral consequences of federal charges, are far too serious for anything but the best defense.
We know how to protect you, enforce your constitutional rights, and beat frivolous or overreaching charges.
Eisner Gorin LLP is a nationally recognized criminal defense law firm serving people in Southern California and throughout the United States.
Our office address is 1999 Avenue of the Stars, 11th Fl., Los Angeles, CA 90067.
Call (310) 328-3776 for a free immediate response to your call, or contact the firm online.