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Bank Fraud – 18 U.S.C. 1344

Bank Fraud

Bank Fraud, codified in 18 U.S.C. 1344, is one of many types of fraud criminalized by the federal government.  Bank fraud specifically targets any scheme or artifice to defraud a financial institution, including banks and credit unions.  The government often uses bank fraud to charge individuals for passing fake checks (check-kiting), mortgage fraud, fraudulent loans, and many other types of conduct that involve lies or deceit to obtain money or property.  Bank fraud is often charged in conjunction with wire and/or mail fraud.

The Henry Law Firm PLLC has effectively represented clients facing bank frauds of all kinds.  We have defended individuals in cases involving false loan applications, mortgage frauds, passing fake checks, and other types of bank fraud.  In some instances we have obtained deferred prosecutions or probation.  We are well equipped to review your case, investigate the government’s claims and mount a defense to all kinds of bank fraud schemes.

18 U.S.C. 1344

The bank fraud statute is very short.  Despite its’ brevity, it is a very broad statute that encompasses a multitude of criminal acts.  18 U.S.C. 1344 states simply that:

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.

The concise language and lack of limitations allows the government to apply it to many types of activity that are not specifically defined.  It is important to remember that the “financial institution” must be a federal chartered or insured institution.  However, banks that are not themselves federally chartered or insured, but are the subsidiary of the issuing institution or substantially involved in the transaction, may also qualify as a financial institution under this statute.

The most hotly contested issue in many fraud cases is the definition of a “scheme to defraud.”  Courts around the country have issued hundreds of opinions on the definition of scheme to defraud, but the Second Circuit summed it up saying:

“Scheme to defraud” within bank fraud statute is not capable of precise definition but is measured in particular case by determining whether scheme demonstrated departure from fundamental honesty, moral uprightness, or fair play and candid dealings in the general life of the community.

U.S. v. Ragosta, C.A.2 (Vt.) 1992, 970 F.2d 1085.

Because no precise definition exists, the government oversteps their bounds in some instances and charge conduct that does not qualify.  Additionally, the information used during the scheme must be material to the transaction.  Immaterial representations, even if false, do not meet the standard for conviction.

Check-kiting is a specific type of bank fraud that involves the use of checks to withdraw money when insufficient funds exist to back the checks.  The Second Circuit has described a check-kiting scheme as “embellished” where:

Defendant committed “embellished” check-kiting, so as to be subject to prosecution under section of bank fraud statute prohibiting schemes or artifices to obtain money of financial institution by false or fraudulent pretenses or representations, where he concealed control over account in one bank from another bank by using checks signed by another person and by having his employees make deposits into account, he carefully coordinated deposits to conceal number and amount of daily deposit, he discussed state of his accounts with branch managers of banks and assured them that overdrafts were inadvertent and any problems would be corrected, and he falsely alleged that he would obtain loan to remedy overdrafts.

U.S. v. Burnett, C.A.2 (N.Y.) 1993, 10 F.3d 74.

But, the Fifth Circuit has said that check-kiting is not an automatic when there are insufficient funds to back a check deposit:

Defendant who had engaged in check kiting scheme by depositing a series of checks, which were not backed by sufficient funds, in various federally insured banks did not violate criminal statute prohibiting obtaining of money from federally insured financial institution by means of false or fraudulent pretenses or representations;  mere depositing of check was not of itself representation that bank account on which it was drawn had a sufficient balance to cover check.

U.S. v. Medeles, C.A.5 (Tex.) 1990, 916 F.2d 195.

The point is that bank fraud is almost never a given.  There is room to litigate whether a person’s conduct constitutes bank fraud.  That is why it is so important to seek out an experienced federal criminal defense attorney to assist you in fighting the charges against you.

Potential Penalties

A violation of the Bank Fraud statute carries a maximum penalty of 30 years in prison, a fine of up to one million dollars, a period of supervised release, and a one hundred dollar special assessment.  A person convicted of Bank Fraud must also pay restitution and is subject to forfeiture.

How We Can Help

The federal criminal defense lawyers at The Henry Law Firm PLLC can help you fight bank fraud charges.  Our firm has handled many kinds of bank fraud cases, understand how to review the documents involved, and we have access to forensic accountant experts and former FBI agents who can assist us in breaking down a case.  We will discuss the conduct the government alleges against you, develop an aggressive, strategic plan to fight back, and put together a team of talented attorneys and experts to defend you. Call us anytime at 646-820-0224 to learn how we can help you.


Can I Go to Jail For Using Bitcoin?

Bitcoin and similar “crytpocurrencies” have been around for years, but Bitcoin is getting a lot more attention than usual in 2017, primarily based on the fact that such currencies have risen in value six times over since the start of the year, and $6.6 billion in digital currencies are now traded daily. This growth in digital currencies is having some effect on mitigating the cloud of controversy that has hung over Bitcoin and similar currencies, which is partly due to the mysterious origins of Bitcoin (for years its inventor remained anonymous) and the frequent use of Bitcoin in criminal transactions. But, as digital currency grows in popularity, more individuals and businesses are justifiably interested in learning more while understandably cautious about the legality.

Digital Currency Usage Is Not Inherently Illegal

Individuals and businesses are permitted to use Bitcoin and other similar currencies, although some states such as New York do impose licensing requirements on certain parties. Under New York State’s recently promulgated BitLicense rules, parties engaged in the following activities are required to obtain a BitLicense from the state if they are conducting business in New York or with people who reside in New York:

  • Virtual currency transmission
  • Storing, holding, or maintaining custody or control of virtual currency on behalf of others
  • Buying and selling virtual currency as a customer business
  • Performing exchange services as a customer business
  • Controlling, administering, or issuing a virtual currency

Customers and merchants who merely conduct transactions involving digital currency are not required to obtain a license in New York.

Criminal Liability With Bitcoin

The most common situations in the news involving criminal liability for use of Bitcoin and similar currencies is when the currency is used for illegal purposes. Several high-profile individuals have been convicted of crimes in connection with an online marketplace called Silk Road where illegal transactions involving criminal acts for hire, illegal pornography, and drug trafficking were facilitated by use of Bitcoin.

In one case, an entrepreneur who ran a service facilitating Bitcoin transactions pled guilty and served time in federal prison for facilitating the purchase of illegal drugs on Silk Road using Bitcoin. In another case, the founder of Silk Road was sentenced to life in prison for his role in facilitating illegal transactions using Bitcoin, and his trial included evidence of five potential murder-for-hires that he sought out “to protect his burgeoning creation from informants.”

Bitcoin and similar currencies have also been factors in criminal investigations and prosecutions involving fraudulent securities dealings as well as money laundering. Ultimately, many of the same finance-related crimes that can be committed with traditional currency can also be committed with digital currency, although, perhaps ironically given the attraction many of had to the supposed privacy of digital currency, crimes involving digital currency have become easier for law enforcement to investigate in some cases.

When faced with any questions over potential criminal liability for a proposed transaction or one that has already occurred, parties are highly encouraged to speak with an experienced criminal defense attorney regarding their situation.

Contact a New York White Collar Defense Attorney Today

The Henry Law Firm PLLC provides criminal defense to individuals and businesses throughout New York in all state and federal investigations and prosecutions, and aggressively pursues appeals on their behalf. To take immediate action to defend your rights in a white collar investigation or prosecution, do not hesitate to contact us today to schedule a confidential consultation regarding your matter.

When Do I Have a Right to an Attorney?

As residents of the United States – whether citizens or not – we enjoy the greatest legacy of constitutional rights against government overreach into our personal lives that the world has known, and this legacy is most famously embedded in our constitution’s approach to the rights of people against police and prosecutors. But, in many cases, unless a person is actually aware of what those rights are and how to utilize them, those rights can be wasted. This is especially true with regard to our constitutional right to an attorney. Below we briefly discuss what that means and how you can assert those rights.

Don’t Speak: The Fifth Amendment Right to an Attorney

We often speak of the “right to an attorney” as if it were a single right provided by the constitution, but really there are two distinct but related sources of this right in the constitution. The first is the Fifth Amendment, which states that a person has the right against self-incrimination. What that means is that you cannot be forced to give the government damaging information about yourself that could lead to a conviction.

The federal courts have more fully illustrated what that means by also ruling that a person does not need to provide any information to a government agent questioning him. In addition, the courts have ruled that, when a person tells the police that he wants to speak to an attorney before speaking to police, the police must stop all questioning.

Note that this right does not depend on the police arresting you or “reading you your rights,” and instead a person can invoke this right anytime the police are questioning him. If the police keep questioning, then they are in violation of the law and any statements provided will be inadmissible at trial.

“The Assistance of Counsel”: The Sixth Amendment Right to an Attorney

In addition to the right to a lawyer that attaches to every person’s right against self-incrimination, the Sixth Amendment of the Constitution also guarantees every person “the Assistance of Counsel for his defense” at trial. As with the Fifth Amendment, the federal courts have ruled that this constitutional guarantee means that a defendant not only has a right to an attorney at a criminal trial but also has a right to an attorney during pre-trial proceedings, starting from the time that formal proceedings are brought against the defendant, such as through an indictment.

What this means is that any statement obtained from a defendant by government agents without his attorney present is inadmissible. But, putting this together with the Fifth Amendment rights, what every person should understand is that they always have a right to an attorney when approached by government agents – regardless of whether they have been read their rights, arrested, or formally charged – and speaking to police or other agents without an attorney can result in self-incrimination.

Contact a New York Defense Attorney Today

The Henry Law Firm PLLC provides criminal defense to individuals and businesses throughout New York in all state and federal investigations and prosecutions. If you believe you may be under investigation for any state or federal crime, do not hesitate to contact us today to schedule a confidential consultation regarding your matter.  

In What Circumstances Can a Drug Conviction Be Appealed?

Whether you have been convicted in state or federal court for a drug crime, you already know that serious consequences to your liberty and future can follow, including a long prison sentence, steep fines, and lasting damage to your personal and professional reputation. Which makes appealing your drug conviction a hugely important step to consider. Not all convictions involve circumstances providing grounds for appeal, but below are a few common grounds for appealing a drug crime conviction. Consult with an experienced drug crime appeals attorney to learn more about grounds for appeal in your situation, and do not delay as appeals are often extremely time-sensitive.

Improper Police Action in Detaining or Arresting You

The police must have reasonable suspicion that you have violated the law to stop and detain you, whether on the street or in your car. If they did not, and evidence leading to your conviction was collected as a result, you may have grounds to appeal. In addition, police must have probable cause that you committed a crime before arresting you, and failure to do so can be grounds for appeal.

Failure to Provide You With an Attorney

If the police obtained statements from you leading to your conviction while in custodial interrogation (e.g. where you were detained) prior to reading you your Miranda rights, such statements may be thrown out on appeal. In addition, if you asked for a lawyer but did not receive one, or if the police questioned you without a lawyer after you were indicted, you may have grounds to appeal.

Improper Admission or Denial of Evidence

Convictions in drug crimes are often based on the nature of the evidence admitted against you, either in witness statements or physical or documentary evidence. If a judge improperly allowed the admission of evidence against you in violation of procedural rules or your constitutional rights (such as where the police violate your Fourth Amendment rights with an illegal search), this can be grounds for appeal. Likewise, an improper  failure to allow the admission of evidence that would have helped exculpate you may also be grounds for appeal.

Issues with Your Criminal Jury

A number of grounds for appeal can arise with regard to the jury that handed down your conviction. If prosecutors used improper jury selection techniques – such as selecting jurors based on race – this can be grounds for appeal. Also, if jurors engaged in misconduct by failing to follow the judge’s orders, this can also be grounds for appeal.

A Lack of Sufficient Evidence Against You

While a jury makes the determination of guilt against you, the question of your guilt should not even go to the jury if the prosecutors had not presented evidence such that it would be reasonable for a jury to find that you were guilty beyond a reasonable doubt. An appeals attorney can examine your trial record to determine whether this is the case.

Improper Judge Instructions

If the judge improperly instructed the jurors with regard to how they should analyze the facts presented at your trial in the light of the legal structures, this can be grounds for appeal.

Failure of Your Counsel at Trial

Unfortunately, many attorneys are incompetent or at least fail to provide adequate counsel at trial. If this was the case, you may have grounds for appeal.

Improper Sentence

When a judge hands down a sentence after a conviction that is not supported by the facts or the law, you can appeal the sentence.

Contact a New York Federal Drug Crime Appeals Attorney Today

The Henry Law Firm PLLC provides criminal defense to individuals and businesses throughout New York in all state and federal investigations and prosecutions and aggressively pursues appeals on their behalf. To take immediate action to appeal your drug crime conviction, do not hesitate to contact us today to schedule a confidential consultation regarding your matter.

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The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship. Prior results do not guarantee future outcomes.