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    David M. Garvin, P.A.
200 South Biscayne Blvd.
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Miami, Florida 33131
Tel.: (305) 371-8101
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Bank Fraud Representation

Bank Fraud

Bank Fraud Criminal Lawyer

Criminal Lawyer

The Federal Bank Fraud Statute, 18 U.S.C. § 1344, provides as follows:

          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 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 not more than 30 years, or both.


          While the two subsections proscribe slightly different conduct, a person may commit bank fraud by violating either subsection. United States v. Brandon, 298 F.3d 307, 311 (4th Cir. 2002), citing United States v. Colton, 231 F.3d 890, 897 (4th Cir. 2000). The two subsections are in the disjunctive, so that an individual may commit bank fraud under provision (1) by defrauding a financial institution without making the false or fraudulent representations required by provision (2). United States v. Brandon, 150 F.Supp.2d 883 (E.D.Va. 2001).

          The criminal law elements of a violation of 18 U.S.C. § 1344 (1) bank fraud which must be contained in an indictment and must be proved by the government beyond a reasonable doubt are as follows:

 
The defendant knowingly executed or attempted to execute a scheme or artifice to defraud.

 
The defendant did defraud or attempt to defraud the financial institution.

 
The defendant used a material misrepresentation or concealment of a material fact as part of  the scheme or attempted scheme.

 
The financial institution was insured or chartered by the federal government.

          United States v. Neder, 527 U.S. 1 (1999); United States v. Akers, 215 F.3d 1089, 1100 (10th Cir. 2000), cert. denied, 531 U.S. 1023 (2000); United States v. Omer, 395 F.3d 1087 (9th Cir. 2005) (conviction reversed for failure of the indictment to allege the element of a material misrepresentation of fact).

          The criminal law elements of a violation of 18 U.S.C. § 1344 (2) bank fraud which must be contained in an indictment and must be proved by the government beyond a reasonable doubt are as follows:

 
The defendant knowingly executed or attempted to execute a scheme or artifice to obtain the money (or other property) owned by, or under the custody or control of, a financial institution.

 
The defendant used materially false or fraudulent pretenses, representations, or promises in the execution or attempted execution of the scheme.

 
The financial institution was insured or chartered by the federal government.

          United States v. Miller , 70 F.3d 1353, (D.C. Cir. 1995); United States v. Neder, 527 U.S. 1 (1999).

          In Neder, the Supreme Court defined a matter as material if a reasonable man would attach importance to its existence or nonexistence in determining his choice of action in the transaction in question. Neder, 527 U.S. at 22, n. 5. The Second Circuit Court of Appeals has defined a material misrepresentation as one capable of influencing a bank's actions. United States v. Rodriguez, 140 F.3d 163 (2nd Cir.1998).

          The issue of materiality is a question for the jury, not the judge. United States v. Neder, 527 U.S. 1 (1999); United States v. Gaudin, 515 U.S. 506 (1995) (materiality in a false statement case is a jury question).

          18 U.S.C. § 20 defines a financial institution as used in Title 18 of the US Code as follows:

 
An insured depository institution (as defined in section 3(c)(2) of the Federal Deposit Insurance  Act).

 
A credit union with accounts insured by the National Credit Union Share Insurance Fund.

 
A Federal home loan bank or a member, as defined in section 2 of the Federal Home Loan 
     Bank Act ( 12 U.S.C. 1422), of the Federal home loan bank system.

 
A System institution of the Farm Credit System, as defined in section 5.35(3) of the Farm Credit       Act of 1971.

 
A small business investment company, as defined in section 103 of the Small Business Investment Act of 1958 ( 15 U.S.C. 662).

 
A depository institution holding company (as defined in section 3(w)(1) of the Federal Deposit Insurance Act.

 
A Federal Reserve bank or a member bank of the Federal Reserve System.

 
An organization operating under section 25 or section 25(a) of the Federal Reserve Act.

 
A branch or agency of a foreign bank (as such terms are defined in paragraphs (1) and (3) of section 1(b) of the International Banking Act of 1978).

The government is not required to prove an actual loss to the financial institution so long as there is evidence that the defendant intended to expose the institution to such a loss[.] United States v. Laljie, 184 F.3d 180, 189 (2nd Cir.1999); United States v. Colton, 231 F.3d 890, 908 (4th Cir. 2000) (sufficient if bank was exposed to an actual or potential risk of loss).

18 U.S.C. § 1346 which defines a scheme or artifice to defraud, provides as follows:

For the purposes of this chapter, the term "scheme or artifice to defraud" includes a scheme or artifice to deprive another of the intangible right of honest services.

The phrase scheme to defraud of 18 U.S.C. § 1344 has been broadly construed by the courts. The scheme to defraud clause of Section 1344(1) is to be interpreted broadly, and requires that the defendant act with the specific intent to deceive or cheat, for the purpose of getting financial gain for oneself or causing financial loss to another United States v. Moede, 48 F.3d 238, 241 (7th Cir.1995), citing United States v. Colton, 231 F.3d 890, 897-98 (4th Cir. 2000); United States v. Brandon, 298 F.3d 307 (4th Cir. 2002); United States v. Goldblatt, 813 F.2d 619, 624 (3d Cir.1987) (The term scheme to defraud, however, is not capable of precise definition. Fraud instead is measured in a particular case by determining whether the scheme demonstrated a departure from fundamental honesty, moral uprightness, or fair play and candid dealings in the general life of the community).

Depending on how a bank fraud is charged in an indictment, a scheme involving checks may or may not constitute a bank fraud. United States v. Brandon, 298 F.3d 307 (4th Cir. 2002) (stolen and forged checks constituted bank fraud); United States v. Celesia, 945 F.2d 756 (4th Cir. 1991) (check kiting scheme constituted bank fraud); United States v. Orr, 932 F.2d 330 (4th. Cir. 1991) (check cashed on insufficient funds account did not constitute bank fraud).

An attempt or conspiracy to commit bank fraud is subject to the same criminal penalties as the substantive bank fraud. 18 U.S.C. § 1349 provides as follows:

Any person who attempts or conspires to commit any offense under this chapter shall be subject to the same penalties as those prescribed for the offense, the commission of which was the object of the attempt or conspiracy.

The statute of limitations for a federal bank fraud case is 10 years. 18 U.S.C. § 3293 provides as follows:

No person shall be prosecuted, tried, or punished for a violation of, or a conspiracy to violate--

    (1) section 215, 656, 657, 1005, 1006, 1007, 1014, 1033, or 1344;

    (2) section 1341 or 1343, if the offense affects a financial institution; or

    (3) section 1963, to the extent that the racketeering activity involves a violation of section 1344; unless the indictment is returned or the information is filed within 10 years after the commission of the offense.

       There are a number of other federal statutes prohibiting fraud against banks or other similar financial institutions, including, but not necessarily limited to, the following:

 
18 U.S.C. § 1004. Certification of checks.

 
18 U.S.C. § 1005. Bank entries, reports and transactions.

 
18 U.S.C. § 1006. Federal credit institution entries, reports and transactions.

 
18 U.S.C. § 1007. Federal Deposit Insurance Corporation transactions.

 
18 U.S.C. § 1013. Farm loan bonds and credit bank debentures.

 
18 U.S.C. § 1014. Loan and credit applications generally; renewals and discounts; crop insurance.

 
18 U.S.C. § 1029. Fraud and related activity in connection with access devices.

 
18 U.S.C. § 1032. Concealment of assets from conservator, receiver, or liquidating agent of financial institution.

       Sentencing regarding federal bank fraud violations is generally governed by the Section 2B1.1 of the United States Sentencing Guidelines, which are advisory pursuant to United States v. Booker, 125 S.Ct. 738 (2005), and the factors set forth in 18 U.S.C. § 3553(a). United States v. Staples, 435 F.3d 860 (8th Cir. 2006); United States v. Reid, 2006 WL 41194 (C.A.4 (Va.)).

 
18 U.S.C. § 3553 provides as follows:

          (a) Factors to be considered in imposing a sentence. --The court shall impose a sentence sufficient, but not greater than necessary, to comply with the purposes set forth in paragraph (2) of this subsection. The court, in determining the particular sentence to be imposed, shall consider--

    (1) the nature and circumstances of the offense and the history and characteristics of the defendant;

      (2) the need for the sentence imposed--

(A) to reflect the seriousness of the offense, to promote respect for the law, and to provide  just punishment for the offense;

(B) to afford adequate deterrence to criminal conduct;

(C) to protect the public from further crimes of the defendant; and

(D) to provide the defendant with needed educational or vocational training, medical care, or other correctional treatment in the most effective manner;

    (3) the kinds of sentences available;

    (4) the kinds of sentence and the sentencing range established for--

(A) the applicable category of offense committed by the applicable category of defendant as set forth in the guidelines--

            (i) issued by the Sentencing Commission pursuant to section 994(a)(1) of title 28, United States Code, subject to any amendments made to such    guidelines by act of Congress (regardless of whether such amendments have yet to be incorporated by the Sentencing Commission into amendments issued under section 994(p) of title 28); and (ii) that, except as provided in section 3742(g), are in effect on the date the defendant is sentenced; or

        (B) in the case of a violation of probation or supervised release, the applicable guidelines or policy statements issued by the Sentencing Commission pursuant to section 994(a)(3) of title 28, United States Code, taking into account any amendments made to such guidelines or policy statements by act of Congress (regardless of whether such amendments have yet to be incorporated by the Sentencing Commission into amendments issued under section 994(p) of title 28);

    (5) any pertinent policy statement--

(A) issued by the Sentencing Commission pursuant to section 994(a)(2) of title 28, United States Code, subject to any amendments made to such policy statement by act of Congress (regardless of whether such amendments have yet to be incorporated by the Sentencing Commission into amendments issued under section 994(p) of title 28); and

(B) that, except as provided in section 3742(g), is in effect on the date the defendant is sentenced.

(6) the need to avoid unwarranted sentence disparities among defendants with similar records who have been found guilty of similar conduct; and

(7) the need to provide restitution to any victims of the offense.

                                                                                                         
Copyright © 1999-2015
Tax Attorney David M. Garvin, P.A.

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Robert "Bobby" Rugilo
Florida Bar Board Certified Tax Lawyer
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David M. Garvin, P.A.
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