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Bank Fraud and Financial Institutions

Congress enacted a bank fraud statute as part of the Comprehensive Crime Control Act of 1984. The purpose of the bank fraud statute was to fill the gaps that existed with respect to fraud against federally chartered or insured institutions. Thereafter, other federal acts were passed to expand the scope and coverage of the bank fraud statute. Some of the other acts included the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, the Crime Control Act of 1990, and the Racketeer Influenced and Corrupt Organizations Act.

In order for the prosecution to be successful in its action against a defendant for bank fraud, the prosecution must show the following:


  • The defendant knowingly executed or attempted to execute a scheme to defraud the financial institution.

  • The defendant used false or fraudulent promises or representations to obtain money, funds, or securities.

  • A financial institution was the intended party to be defrauded.

Elements Elaborated

Fraud requires a misrepresentation or concealment of a material fact. The prosecution must show that a material fact was misrepresented or concealed by the defendant in the defendant’s attempt to defraud the financial institution.

The essence of bank fraud stems from the commission of the fraudulent act. The fraudulent act may include a false promise, representation, or verbal or written statement.

The property that is the subject of the fraud must include property that was owned or under the control and custody of the financial institution involved.

Types of conduct that may be construed as fraudulent conduct included under the bank fraud statute include:


  • automobile title fraud

  • conversion of stolen checks

  • fraud involving the use of automated teller machines.

Penalties

If the defendant is convicted of fraud with respect to financial institutions, he may be fined up to $1,000,000, sentenced to up to 30 years imprisonment, or both.

Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.

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