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Understanding Bank Fraud

October 14, 2024

From a legal standpoint, “bank fraud” is an all-encompassing charge that targets individuals, or sometimes corporations, who defraud a federally insured bank. In other words, the alleged perpetrator lied or made a material misrepresentation to obtain property from the bank in the way of money, a loan, or a line of credit.

Bank fraud can involve criminal acts like forgery, misrepresentation of assets, lying on a loan application, or impersonating a bank officer. In recent years, for example, many individuals have been charged with bank fraud for fraudulently obtaining PPP loans available to businesses during the COVID-19 pandemic.

Elements of Bank Fraud

As codified in 18 U.S.C. § 1344, three elements must be present to prove a charge of bank fraud:

These three elements indicate that illegal or deceptive practices have been used to take money, assets, or other property held by a bank.

What if I’m Accused of Bank Fraud?

If you are accused of bank fraud, it’s critical to hire a lawyer you trust right away.

It does not matter if the government is still investigating allegations of bank fraud or if you have already been charged; you need to get a lawyer. There have been numerous cases where individuals not directly involved in bank fraud faced charges because they didn’t believe they needed a lawyer and said something to agents they shouldn’t have.

When hiring a lawyer, be sure they have experience representing individuals in white-collar crimes such as bank fraud. That experience will prove critical in helping you navigate the investigation or defending against charges.

Penalties for Bank Fraud

Each count of bank fraud carries up to 30 years in prison and up to a $1,000,000 fine.

The sentences for bank fraud, like other white-collar crimes, are covered by the federal sentencing guidelines and ultimately driven by the loss amount. The more money stolen, the longer the potential sentence will be.

A number of other factors may also result in a greater sentence. The use of sophisticated means, the abuse of a position of trust, identity theft, a large number of victims, or vulnerable victims are among the factors a court may consider under the federal sentencing guidelines.

Defending Against Bank Fraud Accusations

When defending a client accused of bank fraud, an attorney could initially argue that they never lied to the bank, which is an absolute defense to the charge. However, the most common defenses focus on the individual’s intent, whether they actually sought to defraud the bank or acted in good faith. This type of defense often relies on the person’s knowledge of certain facts at the time the misrepresentation was made or evidence of intentions other than defrauding the bank.

Alternatively, the defense attorney could argue the misrepresentation was not material to the bank’s decision to provide the accused with the property they sought. However, this argument is usually difficult to prove, and judges rarely allow the defense to argue that a misrepresentation may not have been material to the banking institution.

While the law provides several other defenses, these are generally the most common and effective available to people charged with bank fraud.