What is Bank Fraud?
Legal Definition & Potential Punishment
Generally speaking, whoever knowingly executes, or attempts to execute, a scheme or artifice-
1) to defraud a financial institution; or
2) to obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or under the custody of or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises; shall be fined not more than $1,000,000 or imprisoned for more than 30 years, or both.
In other terms, bank fraud refers to the use of deliberate misrepresentation in order to fraudulently obtain money or other assets that are held by a bank or similar institution.
How Can False Statements Result in Bank Fraud Charges?
The violation of making a false statement to a financial institution is a commonly used criminal law used to prosecute people for making misrepresentations of fact to a bank. Under Title 18, United States Code, Section 1014, it is a federal crime to make a false statement to a financial institution. Generally, 18 U.S. C. §1014 reads as follows:
False Statements to a Financial Institution –
1) Makes a false statement, or overvalues any property
2) For the purpose of influencing an anyway
3) The action of a financial institution
shall be fined not more than $1,000,000 or imprisoned for more than 30 years, or both.
How Can Checks Give Rise to Bank Fraud Charges?
Writing a bad check to a store merchant is not bank fraud. However, if a person knowingly writes a bad check and cashes it at the bank. Forging checks or signatures on them, as well as altering checks that have already been written are two ways in which check fraud is committed. In the case of the latter, it may be as simple as adding a few strokes of a pen to turn a check for $100 into one for $1,000. Another common type of fraud is check kiting. This is any kind of fraud that takes advantage of the fact that funds can be drawn on a deposited check before the money is actually removed from the check writer’s account. Another version of check kiting is opening a bank account with non-existent funds, and withdrawing money from the new account.
Bank Fraud Charges Arising From Identity Theft
Another type of bank fraud is known as identity theft, where one person uses another person’s private identifying information to obtain money, usually in the form of loans or credit. Somewhat related to identity theft is identity fraud, where credit is obtained by the use of an entirely fictitious identity. While identity theft and similar crimes receive a great deal of publicity, they are certainly not the only crimes involving bank fraud.
Charges Against Bank Employees
Bank fraud charges can be brought bank employees. In many cases, these acts are only discovered by careful auditing of the bank’s accounting records, months down the road, by which time it is too late to recover lost funds.