We Help People Fight Charges of Bank Fraud

Our lawyers specialize in federal white collar crimes like bank fraud, conspiracy, electronic fund transfer fraud, mail and wire fraud, and various forms of government investigations. Our measure of success is our casework and the freedom of our clients.

If you would like to speak to a federal financial crimes attorney who is experienced in defending against allegations and investigations of bank fraud or any of the related crimes described below, contact the Blanch Law Firm at (212) 736-3900 for a free legal review of your case.

What is “Bank Fraud?” – 18 U.S.C. § 1344

The Bank Fraud Statute, codified under 18 U.S.C. § 1344, defined bank fraud and federally criminalized various forms of fraud involving financial institutions. Generally, “fraud” involves “a crime against the property rights of another by dishonest means or schemes.”

“Bank fraud” is:
– knowingly executing; or
– attempting to execute;
– a “scheme or artifice” to defraud a financial institution.

This can include obtaining money or property from a financial institution by means of false pretenses, false representations, or false promises.

A “scheme” or “artifice” to defraud involves a plan that will ultimately deprive another person of their right to tangible property—like money—or even intangible rights of honest services.”

“Tangible Property, Like Money” v. “Intangible Rights of Honest Services”

Originally, federal bank fraud and mail and wire fraud statutes were applied strictly to schemes to defraud victims of “tangible property, including money.”

Then, in 1988, this narrow interpretation was expanded to include the criminalization of schemes to defraud people of their “intangible right of honest services.”

What is “Honest Services Fraud?” – 18 U.S.C. § 1346

Honest services fraud refers to schemes to defraud people of their “intangible right of honest services.” § 1346 has been applied to cases of both: (1) public corruption by state officials; and (2) private individuals.

Public sector honest services fraud generally consists of a state or federal employee who has engaged in acts of bribery or received kickbacks which resulted in personal gain.

On the other hand, private sector honest services fraud is generally applied to individuals who “breach their fiduciary duty” to someone—like a client or employer.

An employee who breaches a fiduciary duty to their employer may be liable for federal fraud charges because, in effect, they “stole the salary they were paid, thus recasting a theft of honest services as a theft of property.”

What is “Electronic Funds Transfer Fraud?”- 15 U.S.C. § 1693

The Electronic Fund Transfer Act (“EFTA”) governs the rights and obligations of banks and cardholders in the event of debit or credit card fraud.

For consumers, the EFTA requires you to immediately notify your bank of any unauthorized charges you discover.

For banks, the EFTA developed requirements to promptly investigate each suspected case of fraud and entitled a cardholder to request the results of this investigation. The Act also limits the bank’s obligation to repay or reimburse a customer for funds lost due to fraud.

What is an “electronic funds transfer?”

Every time you swipe your credit or debit card at an ATM or a “point of sale terminal” at a business, there is an electronic funds transfer (“EFT”).

Any transaction initiated through an electronic terminal, computer, or telephone call is an EFT. Venmo, Paypal, Zelle, and other remote and online banking programs are also considered EFTS.

Basically, EFTs include any transaction which authorizes a financial institution to debit or credit a consumer’s account.

What is not and “electronic funds transfer?”

The Federal Reserve Board’s Regulation, codified 12 CFR § 205.3(c) describes transfers that are not EFTs and are therefore not covered by the EFTA:

• A transfer of funds initiated by a “paper instrument”–like a check;
• A transfer of funds for the purchase or sale of securities or commodities;
• An authorization that does not directly result in a debit or credit to a consumer’s account;
• Transfers between accounts from the same customer within the same institution;
• Transfers between accounts from family members;
• Preauthorized transfers.

Federal Financial Crimes Related to Bank Fraud

Bank fraud is rarely the only charged filed against a defendant. The charges listed below are often filed in addition to bank fraud charges.

If you would like to learn more about any of the “charges related to bank fraud” listed below, visit our Practice Areas page or call the Blanch Law Firm at (212) 736-3900 to speak with an experienced federal financial crimes attorney.

Attempt and Conspiracy to Commit Fraud – 18 U.S.C. § 1349

Any person, firm, partnership, corporation, or association who “attempts or conspires” to commit bank fraud is subject to the same penalties as those who are charged with committing bank fraud directly. This could mean fines of up to $1,000,000, imprisonment for up to 30 years, or both.

Laundering of Monetary Instruments – 18 U.S.C. § 1956

Whoever knowingly conducts or attempts to conduct;
– a financial transaction;
– which involves the proceeds of unlawful activity;
– with the intent to promote such unlawful activity;

Knowing that the transaction is designed to “conceal or disguise:”
– the nature, location, source, ownership or control of the proceeds; or
– to avoid a reporting requirement.

Penalties include a fine of $500,000 or twice the value of the property or funds involved in the transaction, whichever is greater, or imprisonment for up to 20 years, or both. You may also face civil penalties of $10,000, or the value of the property involved in the transaction.

Engaging in Monetary Transactions with Property Derived from Unlawful Activity – 18 U.S.C. § 1957

Whoever engages or attempts to engage in a transaction with property or funds obtained from unlawful activity can face fines of up to $1,000,000, imprisonment for up to 10 years, or both. Under this section, prosecutors are not required to prove that you knew the money was derived from an unlawful activity.

Transportation of Stolen Goods or Money Used in Counterfeiting – 18 U.S.C. § 2314

“Transporting, transmitting or transferring” any funds, fraudulent check, or other fraudulent documents–that you know is the product of unlawful activity–can lead to fines of up to $1,000,000 or imprisonment for up to 10 years, or both.

Obstructing Examination of Financial Institution- 18 U.S.C. § 1517

Any person, partnership, corporation, or association who obstructs or attempts to obstruct the examination of a financial institution by a U.S. federal agency can face fines of up to $1,000,000, imprisonment for up to 5 years, or both.

Liability for Financial Institution Employees

Disclosing Bank Entries, Reports, and Transactions – 18 U.S.C. § 1005

Any office , director, agent, of employee of a bank who discloses information from bank reports, or makes a false entry into a bank report with the intent to defraud can face fines of up to $1,000,000, imprisonment for up to 30 years, or both.

Disclosure of Confidential Information – 18 U.S.C. § 1905

Any government employee who “publishes, divulges, or discloses” any confidential information obtained in the course of their employment or in the course of any fraud investigation, can face fines of up to $1,000,000, imprisonment for up to 1 year, or both. Public officers and employees of the government may also be removed from their office.

Disclosure of Information in Bank Examination Report – 18 U.S.C. § 1906

Any person, firm, partnership, corporation, or association–public or private–who discloses information obtained from a bank examination report, can face fines of up to $1,000,000, imprisonment for up to 1 year, or both.

Investigating and Enforcing Bank Fraud

Investigating allegations of bank fraud in the U.S. are regulated by a variety of federal agencies. Bank employees also assist in conducting fraud investigations.

The Electronic Fund Transfer Act (“EFTA”) developed requirements for banks to promptly investigate each suspected case of fraud and notify a cardholder of the results of this investigation.

According to the EFTA, financial institutions who are notified of an “error” must:

• Promptly initiate its investigation and resolve it within 45 days. Financial institutions must begin investigating potential fraud as soon as they are notified of the fraud by the consumer. Generally, financial institutions have 45 days to resolve any disputed transactions. If the institution determines that it was an “error,” and no unauthorized activity took place, the institution must refund the customer within 1 business day of that determination.
• Temporarily credit the account if the investigation takes more than 10 business days. If the bank determines that a fraud has occurred, and the case does not simply involve a disputed payment, the institution may be required to temporarily credit the consumers account and give the consumer full use of the funds during the investigation. This depends on the amount in question and when the customer notified the financial institution. For new accounts, the financial institution may take up to 20 business days to credit your account for the amount in dispute.
• Disclose it’s investigative report to the consumer within 3 days if it is determined to be fraud. After completing it’s investigation, a financial institution typically has 3 business days to report its results. The EFTA entitles cardholders and consumers to receive disclosure of this investigative report and any documents the bank gathered or produced during its investigation if the documents were related to the banks ultimate conclusion. If the bank imposes no liability, the financial institution does not need to provide disclosure.

Reporting Bank Fraud to Federal Agencies

Banks have an obligation to notify the appropriate agencies of any alleged fraud which they have uncovered. If the fraud involves a federally insured bank, you can be sure federal agencies will be involved.

The federal agencies responsible for enforcing federal bank fraud crimes include:

– Federal Bureau of Investigation (FBI)
– Department of Justice (Attorney General’s Office)
– Financial Crimes Enforcement Network (FinCEN)
– Internal Revenue Service Criminal Investigations (IRS-CI)
– Board of Governors of the Federal Reserve System
– Department of Homeland Security (DHS)
– Department of Treasury (DoT)
– Department of Defense (DoD)
– Government Accountability Office (GAO)
– National Credit Union Administration (NCUA)
– Office of Foreign Asset Control (OFAC)

The FBI has a particular interest in cases of bank fraud because cases of bank fraud are usually associated with identity theft. To the FBI, any unauthorized charge is considered “identity theft.”

In addition to banks and federal agencies, the three national credit bureaus–Equifax, Experian and TransUnion–are also notified and commonly receive reports of fraudulent activity to assist in monitoring accounts. These three reporting agencies will then initiate the monitoring of any account for 90 days.

Penalties

Penalties for violating 18 U.S.C. § 1344 for knowingly executing, or attempting to execute, a fraudulent scheme on a financial institution include a fine of up to $1,000,000, imprisonment for up to 30 years, or both.

Additional Consequences

In addition to facing million dollar fines and a quarter-century in prison, federal crimes like bank fraud could mean civil forfeiture of your property and assets.

● Injunctions and Restraining Orders – 18 U.S.C. § 1345

To prevent a “continuing and substantial injury” to the victims of fraud, §1345 allows the Attorney General (“AG”) of the United States to commence a civil action in any federal court—known as an injunction—to prevent you from carrying out this alleged fraud.

The AG may also commence a civil action in federal court to request a temporary restraining order (“TRO”) against you in order to prevent you from “withdrawing, transferring, removing, dissipating or disposing” of any money or property obtained as a result of a banking law violation.

Basically, this means that if you are suspected of committing bank fraud, or the government thinks that you are about to commit bank fraud, they have the authority to freeze your bank accounts and seize any assets you can use to continue the alleged fraud.

After the AG has filed for a restraining order, the federal court will hold a hearing to determine whether or not to issue the restraining order against you. After the hearing, the court can issue the restraining order or “take any action warranted to prevent a continuing and substantial injury.”

Ultimately, the court–not the Attorney General–has the authority to make this determination and issue the restraining order.

This is significant because it subjects your liability to jury interpretation and may allow your attorney an opportunity to disprove the elements of your charges and prove that your actions do not amount to violations of fraud.

Facing Both Civil and Criminal Charges

In addition to facing criminal charges for bank fraud, defendants may also face civil charges in the form of injunctions, restraining orders, and additional monetary penalties.

Basically, whomever you allegedly perpetrated the fraud against is going to want their money or property back. In order to get reimbursed, or compensated for their loss, they may file charges against you in civil court for restitution.

If you find yourself to be a defendant in both civil and criminal proceedings, you must respond separately to each jurisdiction.

An experienced federal bank fraud attorney at the Blanch Law Firm can help you defend against both criminal and civil charges. Our attorneys are sophisticated bank fraud attorneys who have experience working in federal court defending our clients against the Attorney General’s Office, the Federal Bureau of Investigations, and other federal agencies.

The Best Defenses to Bank Fraud

There was no fraudulent knowledge or intent. (“Good-Faith” Defense)

If you lacked the knowledge or intent to deprive someone of their money, property, or their intangible right of their honest services, you may be able to establish the “good faith” defense to bank fraud.

If you are in possession of funds obtained through bank fraud, the prosecution must prove that you knew the money was originally obtained illegally and that you intended to promote the fraud, conceal the fraud, avoid reporting the money, or intended to prevent the money from being traced to its origin.

If you did not have knowledge of the scheme to defraud, an experienced defense attorney would seek to highlight your lack of criminal intent. Without the element of knowledge or intent to commit the underlying fraud, you should not be convicted of bank fraud.

However, keep in mind, if you use any funds obtained through a financial fraud crime to make purchases, prosecutors may not be required to prove that you knew the money was derived from an unlawful activity.

Bottom line, if you use the proceeds of the crime, there is a presumption that your knowledge and intent is criminal. Your attorney would need to rebut this presumption by showing your lack of knowledge or criminal intent.

The statements you made were not knowingly false.

A common defense to charges of bank fraud related to false statements and fraudulent misrepresentations is that you did know that the statements you made were false. If this can be proven it would negate the knowledge and intent requirements and provide a viable defense.

3. Even if you did know the statements were false, they were not material.

In order to invoke criminal liability, a fraudulent misrepresentation must be material.

This means that, even if you did know that the statements you made were false, you may be able to establish a viable defense by showing that the statements were not material.

A “material statement” is a statement that you reasonably believe would change the way the financial institution did business with you. If the false or fraudulent information you provided would not otherwise matter, your attorney could argue that the misrepresentation was not material, and should not invoke federal criminal liability.

4. 10 Year Statute of Limitations for Financial Institution Offenses – 18 U.S.C. § 3293

While the statute of limitations for mail or wire fraud prosecution is generally five years, prosecution for mail or wire fraud that affects a financial institution is 10 years.

Unless an indictment is filed within 10 years after the commission of your alleged bank fraud, you cannot be prosecuted, tried, or punished for violating § 1344.

This means that if you have been charged with a bank fraud that allegedly happened over 10 years ago, you and your attorney should explore the statute of limitations defense provided by § 3293.

Keep in mind, prosecutors are not precluded from bringing charges against you for any act made “in furtherance of” the alleged scheme to defraud.

For example, if you wrote fraudulent checks from 2007-2008. Your attorney would argue that the statute of limitations provided in § 3293 will prevent prosecuting you in 2020 because it would be outside the 10 year statute of limitations.

However, if you took the proceeds from those fraudulent checks and transferred those funds to a third-party in 2012, prosecutors will argue that the alleged “scheme” extended until 2012 and that they should not be prevented from prosecuting you in 2020 because it would be within to 10 year statute of limitations.

5. Alleged fraud is actually an “error.”

Any unauthorized EFT is an “error” and can be considered identity theft and fraud. However, many of the recognized “errors” are not bank fraud at all and are actually incorrect and unintentional bank administrative errors.

According to the EFTA, an “error” can also include:
– An incorrect EFT to or from a consumer’s account;
– An omission from a periodic statement that should have been included;
– A computational or bookkeeping error made by the financial institution;
– Consumer’s receipt of an incorrect amount of money from on electronic terminal.

While the bank may conduct internal investigations into the cause of the disputed transaction, it is important that you and your attorney work together to conduct your own investigation into your financial history. If you can prove that the alleged fraud was in fact an “error” on the part of the financial institution, you would lack the intent necessary to be found guilty.

Recent Bank Fraud Cases in the News

1. Bank Looks to Drop Charges on Diamond Dealer Sylla Moussa

Sylla Moussa, a diamond dealer in New Jersey, was accused of defrauding Absa Bank of more than $40,000,000 by allegedly using a “check-kiting” technique which involves writing checks to his empty bank account to take advantage of non-existing funds.

Moussa has consistently stated that the charges related to his alleged fraud were the result of a brief lack of capital and the inability to pay the compounding fees.

In September of 2018, after ten years of maintaining his case, it was determined that the investigators and complainants who worked at the bank at the time of the alleged fraud were no longer available or employed be the institution.

This negatively impacts the prosecution’s case and now, after a 10 year battle, the charges against Sylla Moussa may be dropped.

2. 76-counts of Conspiracy in Texas for Just Sixteen Individuals

After items began to go missing from cars in Texas, local law enforcement and FBI stumbled upon an alleged conspiracy to commit bank fraud. These individuals have been accused of stealing wallets and using the bank cards and driver’s licenses they found inside of them to make withdrawals.

In addition to bank fraud, these individuals were charged with aggravated identity theft for allegedly wearing disguises in order to trick bank employees into authorizing the transactions.

In total, the indictment consisted of 76-counts of conspiracy to commit bank fraud and related charges for just sixteen individuals.

With 30-year federal prison sentences for bank fraud and a mandatory 2 additional years for each charge of identity theft, depending on how many counts you may be facing, that could mean spending half of your life in prison.

Having an experienced bank fraud attorney can help defend you from trumped up charges and overzealous prosecutors. Our lawyers at the Blanch Law Firm have experience working with federal bank fraud conspiracy cases. If you would like a free legal review of your case, call the Blanch Law firm at (212) 736-3900.

To see the FBI press release, click here.

3. $4 Million Conspiracy

In 2016, a man in Boston was charged with bank fraud conspiracy for recruiting “runners” to go to banks and make withdrawals with unlawfully obtained bank account information.

The man allegedly obtained fake drivers licenses with the “runners” pictures and the account holders personal identification information. This allowed the individuals to open additional bank accounts in the card holder’s name.

If convicted, the Boston native could face up to 30 years in prison, million dollar fines, and additional restitution payments to the alleged victims.

To see the FBI press release, click this here.

4. Airline Industry Executives Take Money From Passenger Escrow

In 2018, two New Jersey airline executives were convicted of conspiracy to commit wire fraud affecting financial institutions and bank fraud. According to the Attorney General’s office, the two women “stole passengers’ money to try and prop up their failing company.”

The “scheme” described by prosecutors involved taking passengers future travel expenses from an escrow account by claiming artificially inflated customer claims to their bank.

To see the FBI press release, click here.

5. Bank Fraud in Puerto Rico

In 2016, defendants were charged with engaging in deceptive conduct designed to fraudulently obtain money from financial institutions by requesting loans using false identification and forged documentation.

Using illegally obtained credit cards, the defendants then obtained cash advances, and used the credit cards to purchase cars and make other retail purchases.

The indictment for the defendant included the forfeiture of any property or proceeds derived–directly or indirectly–from the alleged fraudulent activity.

To see the FBI press release, click here.

6. Man Admits to Writing Checks From Firefighters Account Without Consent

In 2018, a Rhode Island man admitted to cashing checks from a firefighters retirement account without the firefighters consent. The 28 year-old man was charged with bank fraud conspiracy and aggravated identity theft.

To see the FBI press release, click here.

7. Over $1 Million in Citibank is “Gone in 60 Seconds”

In 2012, federal prosecutors uncovered a fraud scheme in which $1,000,000 was stolen from Citibank using cash advance kiosks at casinos in Southern California and Nevada.

The defendants also allegedly “structured” their withdrawals by keeping each withdrawal below $10,000–which is the threshold at which a casino must report the transaction to the federal authorities.

“Structuring” financial transactions like this to avoid reporting requirements can be charged as a separate federal crime.

To learn more about how “structuring” your payments, transfers, and withdrawals may subject you to federal criminal liability visit our practice area page on “Money Laundering.”

To see the FBI press release, click here, or copy the URL below:

Frequently Asked Questions

Can I be compelled to testify in a bank fraud case if I do not want to?

If you are a government witness to bank fraud, and you refuse to testify in front of a grand jury or other federal agency, a court may issue an order to compel your testimony. This means that you cannot refuse to comply with the order to testify without facing prosecution.

Wait, what about my first amendment right against self-incrimination?

While compelling you to testify may seem like an unconstitutional breach of your right against self-incrimination, no testimony or information compelled under the court order (or any information directly or indirectly derived from such testimony) may be used against you in any criminal case unless you commit perjury, give a false statement, or otherwise fail to comply.

Since the information derived from your testimony is not sought to be used against you, but is in fact meant to be used against someone else, there is no violation of your right against self-incrimination.

Call a Federal Financial Crimes Attorney You Can Trust

With over 50 years of combined experience in all federal judicial practices and procedures, our comprehensive attorney-team approach ensures an aggressive criminal defense and the best outcome for each of our clients.

We have defended public companies and private individuals and will strive to protect you, your family, and your rights from charges and accusations of fraud.

If you have been charged with
conspiracy to commit bank fraud or a related financial crime,
call a bank fraud attorney at the Blanch Law Firm at (212) 736-3900 now.

^[1] See Skilling v. United States, 130 S.Ct. 2896 (2010); see also 18 U.S.C. § 1346.

^[2] McNally v. U.S., 483 U.S. 350 (1987).

^[3] 18 U.S.C. § 1346.

^[4] McNally, 483 U.S. 350 (1987)(dissent).

^[5] https://www.fdic.gov/regulations/laws/rules/8000-1250.html

^[6] 18 U.S.C. § 1957(c).

^[7] 18 U.S.C. § 1345; See also 18 U.S.C. § 1956(3).

^[8] 18 U.S.C. § 1957(c).