Bank Fraud Prosecutions Under Federal Law
Bank Fraud Prosecutions Under Federal Law: Overview
What is Bank Fraud?
Bank fraud under U.S. federal law generally refers to any scheme to defraud a financial institution or to obtain money, funds, credit, 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.
Statutory Authority
18 U.S.C. § 1344 — The primary federal statute criminalizing bank fraud.
“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... shall be fined or imprisoned…”
Elements of Bank Fraud
A scheme or artifice to defraud a financial institution or obtain its property by fraud.
The defendant knowingly participated in the scheme.
Intent to defraud.
Use of false pretenses, representations, or promises.
Involvement of a federally insured financial institution.
Key Federal Cases Involving Bank Fraud
1. United States v. Wells (2017)
Court: 5th Circuit Court of Appeals
Facts:
Wells was charged with bank fraud for submitting false loan applications that inflated his income to obtain loans.
Legal Issue:
Whether the false information on loan applications constituted a scheme to defraud the bank.
Holding:
The court upheld the conviction, emphasizing that falsifying loan documents with intent to deceive the bank qualifies as bank fraud under 18 U.S.C. § 1344.
Significance:
Confirms that misrepresentation on loan documents to secure credit triggers bank fraud liability.
2. United States v. Savoy (2018)
Court: 3rd Circuit Court of Appeals
Facts:
Savoy orchestrated a check-kiting scheme involving multiple bank accounts to artificially inflate balances and obtain unauthorized loans.
Legal Issue:
Whether check kiting constitutes bank fraud.
Holding:
The court affirmed the conviction, holding that check kiting is a form of bank fraud because it involves intentionally deceiving a bank about available funds.
Significance:
Clarifies that schemes manipulating bank processes to fraudulently obtain funds fall within the bank fraud statute.
3. United States v. Brown (2015)
Court: 9th Circuit Court of Appeals
Facts:
Brown used false documentation to secure mortgage loans and then defaulted on payments.
Legal Issue:
Does obtaining mortgage loans under false pretenses constitute bank fraud?
Holding:
The court affirmed Brown’s conviction, reasoning that the bank was defrauded because it was induced to lend based on false information.
Significance:
Mortgage fraud cases often prosecuted under bank fraud statutes.
4. United States v. Orozco (2019)
Court: District Court, Southern District of New York
Facts:
Orozco submitted fraudulent loan applications, providing fabricated tax returns and pay stubs to obtain loans.
Legal Issue:
Whether the submission of false supporting documents with the intent to deceive the bank supports bank fraud conviction.
Holding:
The court ruled that knowingly submitting false documentation to a bank to obtain funds satisfies the elements of bank fraud.
Significance:
Illustrates the importance of documentary evidence in proving bank fraud.
5. United States v. Osborne (2020)
Court: 7th Circuit Court of Appeals
Facts:
Osborne operated a Ponzi scheme where investors’ funds were deposited in banks, and false financial statements were presented to obtain new loans.
Legal Issue:
Whether using false financial statements to secure loans and cover losses constitutes bank fraud.
Holding:
The court held that using false statements to deceive banks for loans is bank fraud even if the bank was not the ultimate victim of loss.
Significance:
Expands the understanding of “scheme to defraud” to include indirect losses or deceptions.
6. United States v. Singh (2021)
Court: District Court, Eastern District of Virginia
Facts:
Singh used stolen identities to open bank accounts and obtain fraudulent loans.
Legal Issue:
Does identity theft combined with fraudulent loan applications fall under bank fraud?
Holding:
Court found Singh guilty, emphasizing that using stolen identities to deceive banks into granting loans is bank fraud.
Significance:
Demonstrates the overlap between identity theft and bank fraud.
Summary Table of Bank Fraud Cases
| Case | Year | Type of Fraud | Key Holding | Court |
|---|---|---|---|---|
| United States v. Wells | 2017 | False loan applications | Falsifying loan info = bank fraud | 5th Circuit |
| United States v. Savoy | 2018 | Check kiting | Check kiting = bank fraud | 3rd Circuit |
| United States v. Brown | 2015 | Mortgage fraud | False mortgage docs = bank fraud | 9th Circuit |
| United States v. Orozco | 2019 | False supporting docs | False docs + intent to deceive = bank fraud | SDNY |
| United States v. Osborne | 2020 | Ponzi scheme + false financials | False financials to secure loans = bank fraud | 7th Circuit |
| United States v. Singh | 2021 | Identity theft + loan fraud | Stolen identities to obtain loans = bank fraud | EDVA |
Conclusion
Federal bank fraud prosecutions are centered around the intentional deception of financial institutions to secure money or assets through false information or schemes. The courts have consistently upheld convictions where defendants:
Falsify loan applications or documents
Engage in check kiting or other deceptive banking schemes
Use stolen identities to deceive banks
Use false financial information to secure loans
These cases highlight the broad reach of 18 U.S.C. § 1344 in prosecuting various fraudulent schemes involving banks.
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