Facing Federal Bank Fraud Charges?

Seeking Immediate Counsel from a Federal Defense Attorney is Imperative

The earlier you receive expert counsel, the more likely your matter will end favorably. If you’re facing prosecution, contact us immediately.

Federal Bank Fraud Charges

Federal bank fraud laws in the United States are primarily governed by Title 18 of the United States Code, Section 1344. This statute criminalizes schemes to defraud a bank or to obtain money or property from a financial institution by deceitful means. A conviction under this law can result in severe penalties, including fines and imprisonment.

Bank fraud charges encompass a wide array of federal crimes, ranging from embezzlement to money laundering. The charges that the government ultimately indicts you on will go a long way in determining which tailored, strategic defense your attorney will undertake. But that is only half the battle. Your federal defense attorney must also conduct a counter-investigation by interviewing witnesses, issuing subpoenas, and gathering exculpatory materials.

Bank fraud can come in various forms, including but not limited to:

• Money laundering
• Embezzlement
• Racketeering
• Forgery
• Lending fraud
• Wire fraud
• Identity theft

Federal Bank Fraud Law (18 U.S.C. § 1344)

The law covers two primary types of fraud related to banking:

1. Defrauding a financial institution: This involves any fraudulent scheme to mislead or deceive a bank in order to obtain money or property. For example, a person who falsifies information on a loan application with the intent to get money they are not entitled to is committing bank fraud.
2. Obtaining funds by false representation: This refers to the act of using misrepresentations or false information to take money or property from a bank. An example would be forging checks or falsifying the value of collateral to secure a loan.

The penalties for bank fraud can be severe:

• A conviction can lead to a fine of up to $1 million and up to 30 years in prison, depending on the circumstances and severity of the fraud.

Recently, the Department of Justice has expanded its prosecution efforts as it pertains to bank fraud, especially with the rise of cryptocurrency based investment funds on the rise. In general, the bank fraud statute covers two related types of offenses:

1. 18 U.S.C. 1344(1) punishes individuals who knowingly execute a scheme to defraud a financial institution.
2. Similarly,18 USC 1344(2) punishes those who execute a scheme to obtain money, credit, or some other institutional asset by false pretenses.

Identity Fraud

As mentioned, bank fraud comes in many forms. As it pertains to federal identity theft and fraud, identity theft laws under 18 U.S.C. § 1028 makes it a crime to misuse someone's identifying information, whether personal or financial. Personal identification information can include social security numbers, driver's license number, credit card or bank account information, and PIN numbers obtained through the internet. 

Moreover, aggravated identity theft under 18 U.S.C § 1028A is defined as follows: Whoever knowingly transfers, possesses, or uses, without authority, a means of identification of someone shall, in addition to the penalties for such general felony, will be sentenced to imprisonment of 2 years, or 5 years for terrorism.

This last piece is crucial. While sentencing guidelines have become advisory for federal judges, an identity theft charge on a federal level can carry a mandatory two year prison term – an enhancement that is frequently tacked on during bank fraud prosecutions.

Elements

Pursuant to 18 U.S.C. §1344(1), a prosecutor must prove that the defendant knowingly executed or attempted to execute a scheme to defraud a financial institution insured or chartered by the federal government. To prove this crime, it must also be shown that a defendant used some material misrepresentation or act of concealment.

Pursuant to 18 U.S.C. § 1344(2), the prosecutor must prove that the defendant knowingly executed or attempted to execute a plan to defraud a federal financial institution by using materially false representations or fraudulent pretenses to obtain money or property controlled by the government.

Sentencing & Penalties

Some of the steepest federal sentencing guidelines are associated with bank fraud charges. The amount alleged or proven to be fraudulently conveyed, or the loss amount, can drive up your guidelines drastically. Therefore, finding creative and meritorious ways to fight back within this realm will go a long way towards limiting your exposure should a guilty plea or verdict result.

Generally, penalties for federal bank fraud (18 U.S.C. § 1344) includes

1. Maximum Prison Sentence:
   • A conviction for federal bank fraud can result in up to 30 years in prison.
   • The maximum sentence is typically imposed for particularly serious cases of fraud, such as those involving large sums of money, multiple victims, or a pattern of repeated fraudulent activity.
2. Fines:
   • A convicted individual can face a fine of up to $1 million.
   • The fine may vary depending on the amount of money defrauded, the defendant's financial status, and other aggravating factors.
3. Restitution:
   • In addition to prison time and fines, the court may order the defendant to pay restitution to the victims. Restitution involves the defendant reimbursing the victims for their financial losses caused by the fraudulent activity.
   • Restitution is particularly common in cases involving significant financial losses to the bank or individual victims.
4. Forfeiture of Assets:
   • In some cases, the government may seek to seize any property or assets that were acquired using the proceeds of the bank fraud scheme.
   • This can include real estate, vehicles, financial accounts, or any other property purchased with the stolen funds.

More specifically, on a federal level, if convicted of federal identity theft involving producing or transferring identification, or counterfeit, or the defendant possessed equipment to produce documents, or fraudulently obtains currency or goods up to $1,000, the penalties include up to 15 years in a federal prison, and large fines.

If convicted of federal identity theft for the purpose of drug trafficking, or connected to a violent crime, or a prior identity theft conviction, the penalties will include up to 20 years in a federal prison.

If convicted of identity theft that is connected to a means of aiding or committing domestic or international terrorism, the penalties will include up to 30 years in prison.

How We Fight Federal Bank Fraud Charges in New York

With your bank fraud charges comes vast discovery productions from the federal government. This is an important step where your defense attorney will efficiently organize, analyze, and interpret these materials.

Also, a crucial step during this process is to launch a counter-investigation. Finding and interviewing witnesses and tracking down useful, exculpatory evidence can lead to your charges being dismissed or an acquittal at trial.

Notably, many bank fraud prosecutions will turn on the government’s ability to prove your fraudulent intent, making this element a crucial factor. For example, if a person is accidentally caught up in a money laundering operation but genuinely believed that the money was being moved through lawful means, then they did not knowingly participate in the criminal activity. This is only one potential avenue to successfully defend you against such charges – many others exist and can be brought to light with the proper strategy in place.

Notable Cases

There have been several notable cases under the federal bank fraud statute (18 U.S.C. § 1344) that illustrate the variety of ways individuals have been charged and convicted for defrauding financial institutions. These cases highlight the breadth of the statute, from false loan applications to sophisticated schemes involving forged documents and embezzlement. 

1. United States v. O'Hagan 521 U.S. 642 (1997)

• Case Summary: This case involved a former partner at the law firm of Dorsey & Whitney, James O'Hagan, who used inside information from a client to commit securities fraud, including bank fraud. He obtained confidential information about a client’s potential acquisition and used that information to purchase stock in the target company and profit from the transactions.
• Legal Outcome: O'Hagan was convicted of securities fraud, wire fraud, and money laundering. While this case wasn't purely about bank fraud, it is notable for involving a fraudulent scheme targeting financial institutions, leading to a conviction under federal statutes, including the bank fraud statute.
• Significance: This case is often referenced for its expansion of the scope of fraudulent schemes to include insider trading and the use of deceptive means to obtain funds or property.

2. United States v. Bradley 917 F.3d 493 (6th Cir. 2019)

• Case Summary: Bradley, a former bank employee, was involved in a scheme to embezzle money from the bank by using his position to manipulate loan documents. He would forge signatures and create false loan applications to divert bank funds to himself and his co-conspirators.
• Legal Outcome: Bradley was convicted of multiple counts of bank fraud and sentenced to over ten years in prison. His actions were a direct violation of the trust placed in him by the bank, and the court considered the significant financial loss caused by his fraudulent activities.
• Significance: This case highlights the risks of internal fraud within financial institutions and demonstrates how those in positions of trust can face severe penalties for misusing that trust for personal gain.

3. United States v. Gupta (2018)

• Case Summary: This case involved a defendant named Gupta, who was part of a conspiracy to defraud multiple financial institutions by obtaining loans under false pretenses. Gupta and his co-conspirators presented fake business plans, fraudulent tax returns, and doctored bank statements to obtain large loans from several banks.
• Legal Outcome: Gupta was convicted of multiple counts of bank fraud, wire fraud, and conspiracy. The court sentenced him to a lengthy prison term due to the scale and sophistication of the fraud.
• Significance: The case is notable for its illustration of how complex fraudulent schemes can involve multiple financial institutions and affect large sums of money. It also highlights the role of conspiracies in committing bank fraud.

4. United States v. Michael E. Sklut (2019)

• Case Summary: Sklut, a real estate developer, engaged in a scheme to defraud banks by submitting fraudulent applications for construction loans. He inflated the value of his properties and used false appraisals to secure loans.
• Legal Outcome: Sklut was convicted on charges of bank fraud after an extensive investigation revealed that he had knowingly misled banks to secure millions of dollars in loans. He was sentenced to several years in federal prison.
• Significance: This case is significant for showing how fraudulent loan applications—especially in the real estate sector—can lead to serious federal charges and long-term legal consequences. It also reinforces the importance of accurate appraisals in the loan process.

Your Defense Begins Now

If you are being prosecuted for any of the various types of bank fraud, hire a former prosecutor and seasoned federal defense attorney who will find creative solutions to counter these complex charges.

A federal defense attorney who is well-versed with the complex bank fraud statute is necessary in order to fight back against these charges. Similarly, as with all federal matters, a defense attorney who is experienced with the federal sentencing guidelines is crucial in order to negotiate a favorable plea or put forth persuasive mitigation arguments should a conviction occur.

The sooner you put your case in the hands of an experienced bank fraud attorney, the more likely your matter will end favorably. Contact us today.