What is Bank Fraud? Understanding Your Charges and What Steps to Take Next

Is bank fraud a felony?

Are you wondering, “What is bank fraud?  Is bank fraud a felony?”  Don’t worry.  We are here to answer your questions and more.

If you or someone you know has been charged with bank fraud, it’s important to know that it is a serious crime.  Sometimes such charges are combined with other felony and misdemeanor charges.  For example, a person committing bank fraud may often find him or herself also faced with the following:

Bank fraud charges carry significant penalties. It’s something the financial industry devotes an enormous of time fighting. In fact, banks in the United States stopped nearly $17 billion in fraudulent transactions in 2016.

What is bank fraud, and what should you do if you’re charged with it? Read on for information you need to know, now.

bank fraud

What Is Bank Fraud?

Bank fraud is defined as “deliberately engaging in a secret scheme or deception intended to defraud a bank or financial institution, to obtain money or property owned by the bank or financial institution.” In Louisiana, bank fraud is specifically defined in the statute this way:

“Whoever knowingly executes, or attempts to execute, a scheme or artifice to do any of the following shall be imprisoned, with or without hard labor, for not more than ten years, or may be fined not more than one hundred thousand dollars, or both:

  1. To defraud a financial institution.
  2. To obtain any of the monies, 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, practices, transactions, representations, or promises.”

Bank fraud is considered to be a white-collar crime in the United States.  It is generally included in one of two categories.

  • External: When the person engaged in the fraudulent activity has no connection to the financial institution. Common schemes might include stolen or counterfeit checks, account holder impersonation and the unauthorized use of debit or credit cards.
  • Internal: When bank employees use their access to accounts and banking systems, along with their knowledge of bank policies to commit fraud.

In Louisiana, theft is defined as “taking something of value from someone or someplace without their consent or through fraudulent means. It must also include the intention of permanently keeping it from the rightful owner.”

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Common Types of Bank Fraud

There are dozens of different ways that someone could defraud a financial institution and be charged with bank fraud. Some of the most common are:

Impersonating a bank. Someone might pretend to represent a bank or credit union by creating fake websites to convince people to deposit money or give up their personal information.

Check Fraud. Someone might steal checks out of their neighbor’s mailbox or post office box. They may alter a check to change the amount, adding a zero at the end of $50 to increase the amount of the deposit, for example. They might forge someone’s signature on a check. $789 million is lost to check fraud in the U.S every year.

Credit and Debit Card Fraud. This can include stealing credit or debit cards or just the information. It also includes applying for a debit card with someone else’s information to gain access to their bank account.

Internet Fraud. This can happen when someone hacks into a bank’s computer system to gain access to customer accounts. Someone could also access a specific customer’s account by impersonating them online, like in a live chat for example.

Fraudulent loans. This can happen if someone provides phony documents to get a loan from the bank. It may also happen if someone takes out a loan, knowing he will immediately file for bankruptcy.

Identity theft. Most common types of bank fraud involve identity theft to some degree. A person can be charged with identity theft if he forges someone’s signature on a loan application, uses someone else’s checks without permission, or uses a fake ID to open an account.

What Is the Punishment for Bank Fraud?

Bank fraud is almost always a federal crime. This is because the Federal Deposit Insurance Corporation (FDIC) insures most banks. The FDIC is a federal program that protects consumers’ deposits in banks and other financial institutions.

The law says in order to prove someone committed bank fraud, prosecutors must show three things:

  1. That someone knowingly executed or attempted to execute a scheme to defraud. Basically, this means that someone deliberately broke the law. If you accidentally use your friend’s debit card instead of your own, you won’t likely be charged with bank fraud.
  2. That the scheme to defraud was material.
  3. The FDIC insured the financial institution.

The punishment for bank fraud can include fines up to $1,000,000 or a maximum of 30 years in prison or both. If convicted, the person may also have to make restitution to the victim. That means the person who committed the crime could have to pay back the money he took.

Bank fraud is almost always a felony, rather than a misdemeanor. Louisiana doesn’t set a dollar amount that separates misdemeanors from felonies the way some other states do. (Some states classify a misdemeanor as theft under $500, for example).

is bank fraud a felony?
Is bank fraud a felony? Yes. In most cases, it is.

Louisiana law says a criminal offense is a felony if it carries a sentence of hard labor. A misdemeanor is any other crime that doesn’t qualify as a felony. So, all theft and fraud charges can qualify as felonies, even crimes with very small dollar amounts. Even if you charge $10 with someone else’s debit card, it could legally be considered a felony.

But again, bank fraud is almost always a felony.

If you were charged with theft in Louisiana, rather than bank fraud, then the amount of money would factor into your punishment. For example,

  • For theft of property valued at less than $1000, you could receive a sentence of six months in jail and a maximum fine $1,000, or both.
  • For theft of property valued at $1000 but less than $5,000, you could receive a sentence of five years in prison and a maximum fine of $3,000, or both.
  • For theft of property valued at $5,000 or more, but less thank $25,000, you could receive a sentence of ten years in prison or a maximum fine of $10,000, or both.
  • For theft of property valued at $25,000 or more, you could be facing a sentence of imprisonment at hard labor for up to 20 years.

Final Thoughts

Clearly, bank fraud is a serious charge that carries significant penalties. It’s not something you should try to handle on your own. Hopefully, we’ve been able to provide answers to your question, “What is bank fraud?”.

If you or someone you know has been charged with bank fraud, please contact our office for a consultation. Carl Barkemeyer, Criminal Defense Attorney is here to help guide you through the legal system.  We are conveniently located at 7732 Goodwood Blvd suite a, Baton Rouge, LA 70806.  We look forward to helping you with your case.

You should now better understand the answer to your question is bank fraud a felony and wish you the best.