What is commonly known as Bank Fraud under Federal Law can fall under three Federal criminal statutes that govern offenses by or against financial institutions under the Bank Fraud Statute (“BFS”), 18 U.S.C. § 1344. concerns fraud against financial institutions.
- When is Best Time to Act?:
Investigations by the authorities uncovering acts of bank fraud can take years to conclude depending on the complexity of the scheme involved and the behavior of those involved. Due to the lengthy nature of the investigations that can lead to an indictment it is important to seek experienced counsel as soon as you become aware that you could potentially be subject of the investigation and/or are under threat of indictment.
- Types of Charges:
Bank fraud may encompass a number of charges such as loan fraud, money laundering, falsifying loan documents or financial documents, forging checks or any number of fraud based financial crimes involving a federally insured bank.
- Criminal Schemes:
Criminal Bank Fraud schemes range from acts by committed by individuals in the course of making false statements in banking transactions or in the process of obtaining credit such as providing false information on a mortgage application. More involved schemes involve high-level fraudulent activity aimed at fabricating financial performance concerning investments or actively covering up misconduct in the course of financial activities.
- Related Crimes:
Bank Fraud often travels in lockstep with other federal crimes such as mail fraud; wire fraud and can often form the basis of a Federal RICO charge.
The Federal Bank Fraud Statute, 18 U.S.C. § 1344, provides as follows: Whoever knowingly executes, or attempts to execute, a scheme or artifice- (1) to defraud a financial institution; or (2) 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; shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.
- Penalties & Punishment:
A bank fraud conviction may result in a 30 year prison sentence with fines up $1,000,000.
- Successful Defenses:
One of the common defenses to a charge arising under 18 U.S.C. § 1344 is to challenge the government’s contention of that the defendant knowingly acted to defraud a financial institution. The requirement that the defendant intended to defraud a bank with the intent of obtaining something if value. Further a defense to this charge could potentially rest in the fact that the financial institution did not incur a tangible loss as a consequence of the defendant’s conduct.
- Differences between State & Federal Charges:
Under New York law defendants engaging in conduct which can meet the requirements of the Federal Bank Fraud Statute may also be charged under state law. Generally, fraud against financial institutions falls can be charged under the the Grand Larceny statute, the General Business Law or under a state law prohibiting mortgage fraud.
- High Profile Cases:
High profile cases of bank fraud such as that which involved Enron or Bernie Madoff make a small percentage of the bank fraud cases filed in federal court. Most of the cases filed in Federal Courts involve individuals engaging in fraudulent schemes which rarely approach the 100s of millions of dollars seen in high profile cases.