Facing Federal Bank Fraud Conspiracy Charges?

Under 18 U.S.C. § 1349, it's a federal crime to conspire to commit bank fraud, even if the actual fraud was never completed. Prosecutors don’t need to prove the fraud was successful but rather only that there was an agreement to commit it and that the defendant knowingly joined the scheme.

This statute is often used in investigations involving:

• Forged or altered checks
• Fictitious bank accounts
• Loan application fraud
• COVID-19 relief fraud (PPP/EIDL)
• Insider schemes or “bank insiders”

Additionally, 18 U.S.C. § 371 may be charged in smaller cases, which carries lesser penalties but still involves a federal conspiracy conviction.

How Federal Bank Fraud Conspiracy Differs From State Charges

To convict under § 1349, federal prosecutors must establish:

• An agreement between two or more people to commit bank fraud.
• Knowing and willful participation in the scheme by the defendant.

Unlike New York State conspiracy laws, the federal statute does not require an overt act. This makes it easier for federal prosecutors to charge and convict.

How We Fight Federal Bank Fraud Conspiracy Charges

Federal bank fraud conspiracy charges under 18 U.S.C. § 1349 present multiple viable defense strategies that can be categorized into substantive defenses challenging the elements of the offense, procedural defenses based on constitutional violations, and affirmative defenses.

The key distinction from 18 U.S.C. § 371 general conspiracy is that § 1349 does not require proof of an overt act, making it easier for prosecutors to charge but also creating specific defense opportunities.

Challenging the Essential Elements

• Lack of Intent Defense: The "Good Faith" Defense is the most common and effective defense in bank fraud conspiracy cases. Federal prosecutors must prove the defendant acted "knowingly" with specific intent to defraud. Intent to defraud is another fundamental element that must be proven in a bank fraud case. The accused must act or attempt to act "knowingly".
• No Conspiracy Agreement: The prosecution must prove an actual agreement existed between two or more people to commit bank fraud. An experienced attorney will argue that no agreement ever existed—or that the evidence is too vague to prove one. Association with someone involved in criminal activity is not enough to prove a conspiracy.
• Mere Association Defense: Proving that defendant's contact with co-conspirators was innocent business or social interaction. The mere presence, even with knowledge that a crime is being committed there, is not sufficient to establish that the defendant was a member of the conspiracy. Single acts, without more, are also insufficient to link a defendant to a conspiracy
• Circumstantial Evidence Challenge: Attacking the sufficiency of circumstantial evidence used to infer agreement. Conspiracy often hinges on circumstantial evidence like phone calls, meetings, or documents that show or suggest involvement. You may be able to challenge the sufficiency or reliability of this evidence. If the prosecution's case is based on weak or circumstantial evidence, they may struggle to prove their claims beyond a reasonable doubt.

Constitutional and Procedural Defenses (Fourth Amendment Violations)

• Suppression of Evidence: Challenging illegally obtained evidence through unconstitutional searches and seizures. [Seeking to keep the government's evidence out of court based on constitutional violations (i.e., an unconstitutional search or seizure, or the improper withholding of evidence that is unfavorable to the government's case), federal-lawyer.com] [The Fourth Amendment to the United States Constitution protects you from unlawful searches or seizures by the government. If the police seize your property or search your home without a warrant, your attorney could move to exclude any evidence they discover from your trial. This doctrine is known as "fruit from the poisonous tree".
• Prosecutorial Misconduct: Challenging the government's failure to disclose exculpatory evidence favorable to the defense. The improper withholding of evidence that is unfavorable to the government's case.
• Witness Credibility Challenges / Co-conspirator Testimony: Attacking the credibility and motivations of cooperating witnesses. [Witness testimony can be a double-edged sword in conspiracy cases. While it can provide direct evidence of an agreement or overt act, its reliability can be called into question. Witnesses may have biases, faulty memories, or ulterior motives, all of which can undermine their credibility.

Possible Sentencing & Penalties in New York

Under 18 U.S.C. § 1349, penalties mirror the underlying offense, (bank fraud under 18 U.S.C. § 1344):

• Up to 30 years in federal prison
• Up to $1 million in fines
• Mandatory restitution to financial institutions
• Asset forfeiture of any proceeds linked to the crime

Cases prosecuted under § 371 typically carry up to 5 years in prison and $250,000 in fines, unless the conspiracy involves a more serious underlying offense.

Sentences can vary widely depending on factors like criminal history, dollar amount of intended loss, and cooperation with authorities.

Examples and Related Cases

Federal bank fraud encompasses a wide-array of federal criminal violations. This may include wire fraud and securities fraud, amongst others. In many bank fraud matters, a person may also be accused of impersonating another or using a banking system to defraud and deceive others in an attempt to illegally obtain a customer’s funds.

Recently, our firm represented an individual charged with bank fraud, identity theft, and other related charges in connection to a PPP loan scheme. Our client, a non-citizen with minimal ties to the country, was first granted bail over the government’s objections. Once out on pretrial release, we were then able to successfully convince federal prosecutors to dismiss the identity fraud charge, which carried a mandatory minimum of 24-months imprisonment, resulting in a favorable disposition for our client who was able to swiftly return back to his family overseas. 

Major Bank Fraud Conspiracy Cases

Included herein are several other landmark bank-fraud matters:

Shaw v. United States: The "Intent to Defraud" Standard (Shaw v. United States, 580 U.S. ___ (2016))

In Shaw v. United States, the Supreme Court clarified the mental state required for a conviction under the federal bank fraud statute. The key legal standard addressed was whether a defendant must intend to harm the bank itself, or if an intent to deceive the bank to obtain a customer's funds is sufficient.

• The Ruling: The Court held that a scheme to defraud a bank's customer is inherently a scheme to defraud the bank. The reasoning is that the bank has a property interest in the customer's deposits. Therefore, by trying to take the customer's money, the defendant is also targeting the bank's property.
• Key Takeaway: The government does not need to prove that the defendant intended for the bank to be the ultimate financial victim. It is enough to show that the defendant intended to deceive the bank to get to the customer's money. The Court also noted that the statute does not require the government to show that the bank suffered an actual financial loss.
• Legal Standard Applied: The Court interpreted 18 U.S.C. § 1344(1), which criminalizes a "scheme...to defraud a financial institution." The Court's decision broadened the application of this section by clarifying that the "intent to defraud" element is satisfied even when the primary target is a bank customer.

United States v. Yates: The "Something of Value" Standard (United States v. Yates, 16 F.4th 256 (9th Cir. 2021))

The Ninth Circuit's decision in United States v. Yates focused on what constitutes "something of value" under the bank fraud statute. This case is particularly relevant in the context of fraud committed by bank insiders.

• The Ruling: The court in Yates rejected the government's theories that depriving a bank of "accurate information" or the continued payment of salaries and bonuses constituted a deprivation of "something of value." The court reasoned that an "ethereal right to accurate information" is not a cognizable property interest for the purposes of the bank fraud statute.
• Key Takeaway: The Yates decision narrows the definition of "something of value" in bank fraud cases. It establishes that the government must prove that the object of the fraud was to deprive the bank of a tangible property interest, not just to deceive it. The court did, however, leave open the possibility that exposing the bank to a reasonably foreseeable risk of financial harm could satisfy the "something of value" element.
• Legal Standard Applied: The court's analysis centered on the requirement that a scheme to defraud must target "money or property." The decision emphasizes that there must be a clear link between the fraudulent conduct and the deprivation of a cognizable property interest of the bank.

United States v. Brandon: The Co-Conspirator Liability Standard (United States v. Brandon, 17 F.3d 409 (1st Cir. 1994))

United States v. Brandon is a significant case from the First Circuit that deals with the scope of liability for individuals involved in a bank fraud conspiracy.

• The Ruling: The court in Brandon held that co-conspirators in a bank fraud scheme can be held liable for the entire loss caused by the conspiracy, as long as that loss was a reasonably foreseeable consequence of the scheme. The defendants in this case were involved in a widespread conspiracy to obtain fraudulent real estate loans, and the court found that each participant was responsible for the overall harm.
• Key Takeaway: This case illustrates the broad reach of conspiracy law in the context of bank fraud. Even defendants with minor roles can be held accountable for the full extent of the financial damage if they were part of a single, overarching conspiracy.

• Legal Standard Applied: The court applied the principles of co-conspirator liability under 18 U.S.C. § 371. This statute makes it a crime for two or more persons to conspire to commit any offense against the United States. The Brandon decision demonstrates how this general conspiracy statute is applied in the specific context of bank fraud to hold all members of a fraudulent scheme responsible for the collective actions of the group.

Your Defense Begins Now

If you or a loved one has been charged with conspiracy to commit bank fraud, an experienced criminal defense attorney can help you navigate the legal complexities of your case. If you’ve been contacted by federal agents, even informally, it’s even more crucial to speak with a criminal defense lawyer immediately. Don’t face the federal system alone. Contact The Law Offices of Jason Goldman today.