Bank Fraud Conspiracy
The U.S. Bank Fraud Statute, Title 18 U.S. Code section 1344, prohibits defrauding federal financial institutions of any money, securities or property. Attempting to commit fraud or conspiring to commit fraud against a federal financial institution carries the same penalty as bank fraud.
Bank fraud and bank fraud conspiracy can be alleged against individuals working within a financial institution or against non-employees. Among the institutions protected by the statute are those chartered under the laws of the United States or insured by the Federal Deposit Insurance Corporation (FDIC), or the National Credit Union Administration. Federally backed mortgage loan companies are included.
Bank fraud is a very serious federal offense. Prosecutors spend months, or years, investigating fraud committed against financial institutions. As soon as you believe you are under investigation, you should contact an attorney. As former prosecutors, attorneys at The Blanch Law Firm have the knowledge and resources to conduct our own investigation. By intervening early in a case, we can sometimes convince prosecutors to pursue lesser offenses. At the very least, early work on a case permits us to hit the ground running when charges are filed. This provides clients who face years in prison and extremely large fines the advantage of a well-crafted defense strategy that produces results.
Under the Federal Bank Fraud Statute, it is a crime to knowingly execute or attempt to execute a scheme or artifice:
(1) to defraud a financial institution
(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
Individuals devise numerous schemes involving numerous variations. Some popular bank fraud schemes involve:
• Submitting loan or other financial documents containing misrepresentations or false information that results in the bank participating in a financial transaction that is not repaid.
o Using straw buyers to obtain mortgages, then using the funds for personal use and allowing the purchased property to go into foreclosure.
o Individuals or mortgage brokers submitting loan applications with false information for unqualified buyers.
o Obtaining financing for bogus construction projects.
• Check kiting – writing checks between two accounts with insufficient funds in order to receive money that appears to be in the account but does not exist. It takes advantage of the delay in banks clearing checks.
• Depositing stolen checks, forging checks
• Insiders manipulating funds at their institution to mask loan losses or other business practices that would be a red flag to regulators.
• Insiders using their position to gain personally.
Bank fraud is rarely the only charge filed. Other white collar crimes that typically accompany it include wire fraud, money laundering, embezzlement, tax fraud, identity theft, conspiracy and Racketeer Influenced and Corrupt Organizations Act violations (RICO)
If convicted of bank fraud, attempted bank fraud or bank fraud conspiracy, you face up to $1 million in fines and/or up to 30 years in prison.
Defending a bank fraud or conspiracy charge requires finding holes in the prosecution’s case. Bank fraud cases are extremely complex. Successful defense depends on the knowledge and experience of the defense attorney. Some strategies include proving that you did not:
• Knowingly execute the scheme
• Defraud the institution
• Make a material misrepresentation or concealment
In some cases, our attorneys also can argue that the institution was not insured or chartered by the federal government so does not fall under the statute.
The government does not have to prove that an actual loss occurred, only that you intended to expose the financial institution to such a loss.
New York does not have a bank fraud statute. Crimes like those under the federal law would be charged under state mortgage fraud, business law or grand larceny provisions.
In April 2014, Poppi Metaxas, the former Chief Executive Officer of Gateway bank was indicted in New York for bank fraud and bank fraud conspiracy. The indictment alleges Metaxas engaged in a scheme to defraud Gateway in connection with Gateway’s sale of non-performing mortgage loans to three entities in exchange for $15 million. Metaxas allegedly entered into a sham agreement to loan money to the bank’s largest mortgage-lending client. The mortgage lender, Lend America, then provided that money to the three purchasers of the non-performing mortgage loans. Through a series of wire transfers, Metaxas and others used the proceeds of the sham loan to satisfy the 25% down payment that the three entities owed to Gateway. This scheme was designed to convince regulators into believing that Gateway had successfully removed the toxic assets from its books. The indictment alleges provided false testimony to the Office of Thrift Supervision to conceal the scheme.