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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 Plead the Fifth in a Company Internal Investigation?

You probably already understand that only a state, local, or federal prosecutor can bring criminal charges against you, and that your employer’s attorneys or outside law firm may have the power to discipline you in the form of suspension or termination, but they cannot put you in jail. But what your employer’s lawyers can do is to report information about you – including statements you have made and your work emails and other records – to the government, which can then use that information in any way it pleases, including in preparing civil actions and/or criminal charges against you. Which raises the question of whether it is appropriate for an employee, manager, director, officer, or other individual to raise the protections of the Fifth Amendment in an internal investigation conducted by a business entity.

Why Companies Report Misconduct to the Government

It may seem counterintuitive that your employer would self-report incriminating information relating to its employees’ work on their behalf – as companies are often but not always liable for the acts of employees within the scope of employment – but such is the nature of white collar civil and criminal investigations in recent decades.

More and more, state and federal investigators incentivize companies to self-report wrongdoing by employees. Common ways in which this occurs is that prosecutors and companies will reach a deferred prosecution agreement (DPA) or non-prosecution agreement (NPA), by which the company will avoid prosecution itself by agreeing to undertake other actions, such as paying fines, instituting new procedures, and/or taking actions against individuals in the company perceived to be problematic. This is generally only done when the company makes efforts to self-report, e.g. handing over the findings of an internal investigation.

This of course can be a relatively good outcome for the company, but not for the individuals who are on the receiving end of the company’s internal actions. Furthermore, the government may bring civil and/or criminal proceedings against the individuals based on information provided by the company.

You Are Not Obligated to Incriminate Yourself

The Fifth Amendment protection against self-incrimination applies only to the government and its agents, meaning that it would only make sense for an individual to invoke his or her Fifth Amendment rights when being questioned by an agent of a state, local, or federal government.

That said, you are never obligated to respond to questions from private parties, including your supervisor, HR department, in-house counsel, or an outside law firm conducting an internal investigation. Of course, your employer is, in many cases, not obligated to continue employing if you refuse to participate in an internal investigation related to your conduct at work.

Thus, rather than invoking your Fifth Amendment right in an internal investigation where you have reason to believe negative consequences might flow from what you say, a more appropriate action is to work with an experienced white collar defense attorney who can assess your situation and help you strategize what your best options are in light of your circumstances. Those options might range from simply providing your employer with all information requested to being represented by an attorney during all questioning, and so on, but only a white collar attorney that represents you can provide you with that guidance.

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.

What Does it Mean to Have “Constructive Possession” of a Firearm in New York?

Although we often hear about a lack of gun control in the U.S., federal agents arrest around 7,000 individuals for firearms violations every year, and many more arrests are made at the state level. While the Second Amendment and current federal regulations do allow for legal ownership of a wide variety of firearms, you can face stiff criminal penalties if arrested for possession of an illegal weapon. Furthermore, felony convicts and others who have had their gun ownership rights revoked also face arrest, which are among the most common type of federal firearms. States and localities such as New York do go further than federal law in regulating firearms, requiring permits for pistol ownership and outlawing assault rifles. But what does it mean to have possession of a firearm in New York? Under the concept of “constructive possession,” defendants in firearms crime cases face legal challenges in asserting their criminal defense in New York.

Possession and Constructive Possession Defined

First off, it should be understood that possession is not the same as ownership. If you are holding a firearm, you are possessing it, regardless of whether someone loaned it to you even for a brief moment, you are transferring it to someone else, or you simply found it.

Constructive possession takes the concept of possession a step further. It says that a person can be considered to have possessed a firearm – and thus run afoul of any relevant firearm laws – even if the firearm was not literally in their possession. Specifically, New York courts have held that: a defendant has property in his or her constructive possession when that defendant:

  • exercises a level of control over the area in which the property is found, OR
  • exercises control over the person from whom the property is seized, AND
  • this control was sufficient to give the defendant the ability to use or dispose of the property

New York legal authorities have also said that two people can both have constructive possession over contraband when: “they each exercise dominion or control over the property by a sufficient level of control over the area in which the property is found.”

Defending Against Constructive Possession Charges

Taking the above definition, this means that prosecutors can bring charges for illegal possession of a firearm when the defendant is not literally possessing the firearm on his body or in his personal belongings, but where a gun is simply found on a person over whom he has control (e.g. a spouse, a child, a subordinate, etc.) or in property he possesses, such as a shared home, vehicle, or business.

That said, it is important to remember that prosecutors must prove every element of a firearms charge beyond a reasonable doubt, and an experienced criminal defense attorney can cast doubt and present contrary arguments against the prosecutor’s allegations.

Such defenses can take any number of specific forms, but might include questioning whether a defendant did in fact have control over the person or the property on which the firearm was found or whether the defendant was even aware of the presence of the firearm. Talk to an experienced criminal defense attorney about the best defense in your particular circumstance.

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.

Are There Legal Defenses to Extortion/Blackmail?

Extortion and blackmail crimes both involve threats made against another person to do violence to that person or their property – which can include publicizing facts about that person to damage his or her reputation – for the purpose of extracting money or other property from the person. Under both state and federal law, an extortion conviction is a felony that can mean many years in prison, fines, as well as a ruined personal and professional reputation. But sometimes people are investigated and/or charged with extortion based on exaggerations or statements taken out of context. If you are under investigation for extortion, it is important to obtain experienced legal counsel to present your best defenses to the potential charges.

Lack of Evidence to Support an Extortion Charge

Extortion statutes may vary across states and at the federal level, but in general they require that the defendant have knowingly made a threat to damage the person, property, or reputation of a victim with the purpose of obtaining money or other property from the victim.

When a disagreement between parties gets out of control, an extortion or blackmail allegation may arise based on what has actually just heated negotiations and discussions which should not be taken literally or which were not based on an actual intent to threaten another person. Your defense attorney can assess all of the available evidence for relevance and strength and cast doubt on the prosecutor’s allegations in this regard, as the prosecutor is required to prove your intent beyond a reasonable doubt.

Lack of Admissible Evidence

Even where evidence may support elements of an extortion or blackmail charge, that evidence can only be used against you where it is admissible based on being legally obtained by police and other government agents.

If evidence was obtained through illegal means – including custodial interrogations that did not include Miranda warnings, detainments not supported by reasonable suspicion, questionings that did not honor your right to counsel, searches not conducted via a warrant or a warrant exception – your attorney can successfully argue that such evidence should not presented to a jury and that charges should be dismissed.

Attempted Extortion or Conspiracy to Commit Extortion

When no money or property was actually obtained in response to an alleged extortion threat, prosecutors may still try to bring charges based on an attempt to extort or even a conspiracy (agreement) to commit conspiracy. In such cases, your attorney can argue that you did not have the requisite intent for either an attempt or conspiracy and/or that no significant steps were actually taken in furtherance of committing extortion.

Other Defenses to Extortion

Other defenses that your attorney may raise to an extortion charge could include:

  • You performed illegal acts under duress
  • You were voluntarily or involuntarily intoxicated at the time, negating the mental intent
  • You otherwise lacked the mental capacity to commit extortion

Speak to an experienced defense attorney at the first sign of an extortion investigation to begin mounting your best defense to all potential charges.

Contact a New York Extortion 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.  

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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.