Bank Fraud

To convict a defendant under the federal bank fraud statute, the government has to prove beyond a reasonable doubt that the defendant engaged in a “scheme or artifice to defraud” a financial institution or to obtain property from such an institution “by false or fraudulent pretenses.” The government must prove that the institution was either the intended or actual victim of the fraud. Bank fraud is punishable by up to thirty years in prison or by a fine of up to $1,000,000, or both. Thus, the penalty for bank fraud is the same as the penalty for wire or mail fraud against a financial institution. Bank fraud charges are also often brought against those who are accused of engaging in mortgage fraud.

The bank fraud statute is among federal prosecutors’ favorites because the statute, initially passed as a “stopgap” to a Supreme Court case involving check kiting, is broad in reach and flexible in application. In the check kiting Supreme Court case, the Court determined that check kiting could not be prosecuted under the statute prohibiting false statements to financial institutions, reasoning that presenting a check to a bank is not a representation of sufficient funds. In response to that case, the legislature, in 1984, passed the bank fraud statute to target check kiting and to address more complex and creative frauds. Over the years, amendments to the statute have increased the penalty and have attempted to clarify the definition of “financial institution.”

There are two ways to violate the bank fraud statute. The first involves a “scheme to defraud,” which requires proof that there was a pattern of conduct to deceive a financial institution. The second involves a scheme to obtain money, assets, or credit through false or fraudulent pretenses or representations. Therefore, the difference between the two bank fraud subsections is that the second subsection requires proof of an affirmative misrepresentation. In general, because courts have been reluctant to define the “scheme to defraud” element, bank fraud cases and defenses tend to be highly fact specific. It should be noted that the government only needs to prove one act of deception to satisfy the “scheme to defraud” element at trial. The government does not need to prove that the institution suffered an actual loss. Rather, it is enough that the financial institution was put at risk. In the context of the bank fraud statute, an “intent to defraud” means acting knowingly and with the “specific intent to deceive or cheat, usually for the purpose of getting financial gain for one’s self or causing financial loss to another.”

Bank fraud charges may involve check forgery, counterfeit documents, false statements, identity theft, fraudulent loans, embezzlement, rogue trading, mail or wire fraud, check kiting, mortgage fraud, and more. Sometimes federal prosecutors invoke bank fraud as a means of investigating larger criminal schemes involving serious drug crimes or money laundering. Sentencing in bank fraud cases is generally related to the amount of money at issue in the scheme. Bank fraud defendants come from all walks of life. Many bank “insiders,” including employees, officers, and managers, may find themselves accused of appropriating bank funds or property for their own use. Others on the “outside” of the bank, including attorneys, entrepreneurs, an investment bankers, may be accused of this offense based on allegations of fraud upon a bank or its clients. If you have been accused of bank fraud, it is extremely important to contact an experienced defense attorney.

If you or someone you know has been charged with bank fraud, contact the Law Offices of Stephen Neyman, P.C. by calling 617-263-6800 or by sending an e-mail through this website. Stephen Neyman has been practicing criminal defense in federal and state courts for multiple decades. He is an aggressive advocate who builds smart defense strategies in all types of criminal matters, including those involving white collar offenses. As soon as you speak with Attorney Neyman, he will schedule a confidential and free consultation to discuss the facts of your case and possible defenses. He prides himself on professionalism and regular client contact. Speak with Attorney Neyman today about bank fraud or any other federal or state criminal matter.