Bank Fraud Charges

Bank fraud is a federal crime that carries steep penalties. But what does it mean to be charged with “bank fraud” under federal law? According to the federal statute on bank fraud, 18 U.S.C. § 1344, a person is guilty of bank fraud when they:

Knowingly executes, or attempts to execute, a scheme or artifice –
  1. To defraud a financial institution; or
  2. To obtain any of the money, 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.

As you likely determined, this statute is exceedingly broad in its scope, with many activities that could lead to potential charges, including conspiracy or attempt. This also means that you could be charged under this statute in tandem with many other fraud-related offenses, including fraud involving computers, property, credit cards, and more.  

With the penalties for bank fraud on a single conviction including a fine up to $1 million or up to 30 years prison sentence, or both, you cannot risk trusting your case to inexperienced counsel. If you are under investigation or facing charged for federal bank fraud, contact the skilled federal defense attorneys at Tarlton Polk today.

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What is Bank Fraud?

While the bank fraud statute itself is quite vague, there are additional legal guidelines, resources and precedents that tell us what violations could lead to a bank fraud investigation. As to which institutions the statute covers, as stated in the Department of Justice’s (DOJ) Criminal Resource Manual, the bank fraud statute,

“The institutions protected by the statute are those chartered under the laws of the United States or insured by the Federal Deposit Insurance Corporation, the Federal Savings and Loan Insurance Corporation (now defunct), or the National Credit Union Administration.”

This essentially means that all banks and other financial institutions operating in the United States are protected by the statute.

As for what kinds of activities could lead to charges, the statute is intentionally vague to allow prosecution to convict the defendant so long as they can show the defendant knowingly engaged in any fraudulent activity or conduct. This includes attempt or conspiracy to commit bank fraud, which as per statute 18 U.S.C. § 1349, carries the same penalties as committing the offense. Many of the activities that could lead to a bank fraud investigation or charge are crimes under other federal and state statutes, so the best way to understand how you could face these charges is look at some examples.

Crimes that Constitute Bank Fraud

As per the DOJ’s Criminal Resource Manual:

The general bank fraud statute should be viewed as a supplement to, rather than a substitute for, other criminal provisions relating to fraud perpetrated on insured financial institutions. The choice of offenses charged should be based on the facts of the individual case.

This means that if you are facing bank fraud charges, you are likely to be facing other charges in tandem of which the bank fraud charges are an additional offense. As bank fraud is a federal crime, this would typically involve other federal crimes. However, you absolutely can face related state crimes in North Carolina which may have been the source that triggered a federal investigation, or vice-versa.

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Related Federal Crimes

The types of federal crimes that could constitute bank fraud include, but are not limited to:

  • Extortion and Theft: Taking bank funds by force or through intimidation is a federal crime under 18 U.S.C. § 2113. As this directly involves a bank, bank fraud charges are possible.
  • Computer Fraud and Hacking: “Hacking”, or using a computer to obtain unauthorized access to a network, computer system, computer device or digital information is a federal crime under 18 U.S.C. § 1030. If you are accused or hacking a financial institution’s network and breaching data security, or hacking and individual’s or businesses’ bank account, you can also be guilty of bank fraud.
  • Identity Theft: Using stolen or falsely produced identity documents, or otherwise misrepresenting your identity to defraud a United States institution, is a federal crime under 18 U.S.C. § 1028. If identity theft was used to defraud a financial institution, you could face additional bank fraud charges.
  • Email Fraud: Using electronic mail messages (emails) with the tent to deceive or mislead recipients is a crime itself under 18 U.S.C. § 1037, and could lead to bank fraud charges if the email recipient was a financial institutions
  • Wire Fraud: Committing fraud by “interstate wire” (e.g. telephone calls, faxes, internet communications) is a federal crime under S.C. § 1343. As this statute covers the majority of ways people communicate with banks and may defraud them, it is highly likely to face wire fraud charges along with bank fraud charges.
  • Mortgage Fraud: Making a false statement in a letter, paper, or proposal to the sale of a mortgage to any Federal land bank is a federal crime under 18 U.S.C. § 1011. As this directly involves a financial institution, it could very easily incur bank fraud charges.

Related North Carolina State Crimes

Some North Carolina state crimes that are related to and could trigger or be triggered by a federal bank fraud investigation include, but are not limited to:

  • Financial Transaction Card Fraud: Unauthorized use of another person’s financial cards (credit or debit) debit or making false statements in relation to credit cards to your bank is a crime in North Carolina under C.G.S § 14-113.13. Conviction is punished by a class 2 misdemeanor if value of stolen goods is less than $500 in any six-month period, and a class I felony otherwise.
  • Computer Crimes: Like in federal law, hacking crimes with the purpose to defraud or extort money is a felony crime in North Carolina under C.G.S § 14-453. If the hacking involved a financial institution, it would likely lead to a federal bank fraud investigation

Bank Fraud Investigations

While we often hear of these charges being filed in extensive criminal enterprise schemes, they absolutely can happen unsuspecting individuals who had no intention to defraud a bank. The source of investigation may not necessarily have been triggered by your bank itself. If other crimes are involved, it may be triggered by individual informants, or anybody who has something to gain for reporting allegations, whether they are true or false. Investigation can even be triggered by review of tax filings and other records that involve your persona finances.

The investigation itself is a serious matter that should urge you to immediately seek legal representation. Most federal bank fraud cases are investigation by the Federal Bureau of Investigation (FBI) along with the Internal Revenue Service Criminal Investigations (IRS-CI) or another federal law enforcement agency, all of which have a great deal of resources and take these allegations very seriously.  

Defending Bank Fraud Charges

Defending bank fraud charges requires a thorough review of the case and all related charges you may be facing, which is why it is imperative that you hire an experienced white-collar federal defense attorney. There are several defenses that can be used in a bank fraud case to either completely avoid liability, or significantly reduce charges. These defenses target the aspects that federal prosecution must prove to convict you of bank fraud, which are that you:

  1. Defrauded, conspired to defraud, or attempted to defraud a financial institution,
  2. To obtain money, funds, credit, assets, securities, or other property owned by or in the custody of a financial institution, and
  3. Did so knowingly.

Some defenses to bank fraud are:

You did not Defraud Knowingly

Like most fraud crimes, it is not enough for prosecution to show that you presented false information or omitted important information. They must show that you did so knowingly. While this may seem like an easy area of defense, you will need more than to simply testify that you did not mean to defraud a bank, as prosecution will find and present any evidence that suggests you were aware of your actions. An experienced attorney will review the details of the case and identify evidence you can present that shows a lack of knowingly defrauding a bank. For example, showing that you acted in good faith and presented largely true information, but the falsehoods were the result of misunderstanding or oversight.

Fraudulent Misrepresentations were Inconsequential

If you are facing bank fraud for misrepresenting information, you can avoid liability by asserting that the information misrepresented did not result in meaningful consequence to the bank. Inconsequential information, in this context, would be any information that does not have real potential to influence decisions made by the bank. For example, an inconsequential misrepresentation could be slightly incorrect address information for a loan. Information that would likely be considered consequential to the bank can include income information or identity misrepresentation.

You Committed Fraud Under Duress

This defense is tricky because it entails admitting to committing fraud, but under unlawful pressure from another person or entity. If you firmly believe this was the reason you committed bank fraud, you will need an experienced attorney who knows how to frame this kind of defense. Duress does not entail minor cases of pressure, such as a partner, family or friend telling you to misrepresent your income to receive more credit. Cases where duress can be used as a defense typically involve violent threats and extreme coercion, such as a third party threatening the safety or life of you or family members unless you commit bank fraud on their behalf. If your lawyer determines that this defense is viable in your case, it does serve as an absolute defense that can clear you from any liability.

Request a Consultation with Tarlton | Polk Bank Fraud Attorneys

Our lawyers have successfully represented clients in fraud cases at state and federal levels and know how to carefully structure a defense based on the facts of the case. Most importantly, we are exceptionally skilled at taking these cases to trial, as we know the tactics used white collar criminal prosecution that often push the defendant into a plea-bargaining position before a trial begins. If you would like to learn more about how we an help, or request a consultation with us, then leave us a message or call us today.