Criminal Defense Lawyers

Federal Bank Fraud Defense: Financial Institution Fraud

That Loan Application Could Mean 30 Years in Federal Prison

That loan application you signed three years ago? That mortgage paperwork with the income figures? That PPP loan your accountant helped you submit? Any of it could be the basis for federal bank fraud charges under 18 USC 1344. And were not talking about some minor offense here. Bank fraud carrys a maximum penalty of 30 years in federal prison. Per count. Thats 50% more then wire fraud or mail fraud.

Look, if your reading this, something has probably already happend. FBI agents showed up asking about your loan applications. Your bank account got frozen. A business partner got arrested and there asking about you. Whatever brought you here, you need to understand what bank fraud actualy is, why its treated more seriously then other federal fraud charges, and most importantly—how to fight back.

Because heres the thing: bank fraud charges can be defended. But only if you understand what your facing and act fast.

What Is Bank Fraud Under 18 USC 1344?

Bank fraud is exactly what it sounds like—defrauding a bank or other financial institution. But the federal statute is broader then most people realize. According to the DOJ Criminal Resource Manual, there are actualy two seperate ways to commit bank fraud:

First prong (1344(1)): Executing a scheme to defraud a financial institution. The BANK is the victim. Think loan application fraud, check kiting, account manipulation—schemes where the bank itself gets cheated.

Second prong (1344(2)): Using a financial institution to obtain money through false pretenses. Here, the bank might not be the direct victim—but someone used the bank as the vehicle to commit fraud against others.

This distinction matters for defense strategy. If your charged under the first prong, prosecutors have to prove the bank was deceived. Under the second prong, they need to show you used the bank’s services to deceive someone else.

Common Bank Fraud Schemes

Federal prosecutors bring bank fraud charges for all sorts of conduct:

Loan application fraud – Lying about income, assets, employment, or other material facts on loan applications. This is probly the most common form of bank fraud. You overstated your income on that mortgage application? Thats bank fraud.

Check kiting – Writing checks between accounts to artificially inflate balances, taking advantage of the “float” time before checks clear. Classic scheme thats been around forever.

Account takeover – Gaining unauthorized access to someone else’s bank account. Often overlaps with identity theft charges.

Mortgage fraud – False appraisals, straw buyers, undisclosed kickbacks, inflated property values. The 2008 financial crisis led to massive mortgage fraud prosecutions.

SBA loan fraud – Including PPP and EIDL fraud. Those pandemic relief loans went through banks, which means the bank fraud statute applies. Alot of people dont realize their “PPP fraud” case is actualy a 30-year bank fraud exposure.

The 30-Year Maximum: Why Bank Fraud Is Treated More Seriously

Heres something that catches people off gaurd. Bank fraud carrys a 30-year maximum sentence—50% more then wire fraud or mail fraud, which cap at 20 years. Why the difference?

Congress specificly enhanced bank fraud penalties to protect the integrity of the financial system. Banks are considered “too important to defraud.” When you mess with federally insured financial institutions, your messing with the entire economy. Atleast thats how the goverment sees it.

What this means practically: bank fraud charges give prosecutors enormous leverage. Even if your conduct could be charged as wire fraud (20 years) or mail fraud (20 years), if a federally insured bank was involved, they can charge 1344 instead and get that extra 10 years of exposure.

The 10-Year Statute of Limitations

Another difference: bank fraud has a 10-year statute of limitations. Most federal crimes have 5 years. But Congress doubled it for bank fraud.

Think about what that means. That loan application you submitted in 2015? Still within the limitations period in 2025. That mortgage fraud from 2016? Still prosecutable. The goverment has a long memory when it comes to bank fraud, and they can reach back a full decade.

What Counts as a “Financial Institution”?

This is actualy a critical question for defense, and most lawyer websites dont explain it well. Bank fraud under 1344 only applies to federally insured financial institutions. If the bank or credit union isn’t federally insured, the statute dosnt apply.

Federally insured institutions include:

Banks insured by FDIC (Federal Deposit Insurance Corporation). Credit unions insured by NCUA (National Credit Union Administration). Federal Reserve member banks. Federal home loan banks. Various other institutions defined in the statute.

Defense attorneys always verify federal insurance status as a threshold matter. If the institution lacks federal insurance, 1344 charges may be inappropriate—though prosecutors might still bring wire fraud or mail fraud instead.

PPP and EIDL Loans: The Bank Fraud Connection

Heres something alot of people dont understand. Those PPP loans that went through banks during the pandemic? They trigger bank fraud liability under 18 USC 1344.

See, PPP loans were SBA-backed, but they were actualy processed and funded through banks—federally insured banks. So when prosecutors go after PPP fraud, they’re not just using the CARES Act provisions. They’re stacking bank fraud charges on top, with that 30-year maximum.

If your facing PPP fraud allegations, you need to understand your not just dealing with some pandemic relief violation. Your looking at full-blown federal bank fraud exposure.

Penalties and Sentencing: What Your Actually Facing

Alright, lets get into the numbers. And honestly, this section is why people loose sleep at night.

The basic bank fraud statute provides:

• Maximum imprisonment: 30 years per count
• Maximum fine: $1,000,000 per count
• Supervised release: Up to 5 years
• Restitution: Full amount of loss, typically mandatory

No Loss Required for Conviction

Heres something that suprises people. The goverment dosnt have to prove the bank actually lost money. Attempted bank fraud with zero actual loss still carrys the full 30-year maximum.

So if your scheme was caught before any money changed hands—before the loan funded, before the check cleared—you can still be convicted. The scheme itself is the crime, not the result.

Sentencing Guidelines and Loss Enhancements

In reality, actual sentances are determined by the Federal Sentencing Guidelines. And loss amounts drive everything.

The loss table adds offense levels based on how much money was involved: $6,500 adds 2 levels. $15,000 adds 4 levels. $40,000 adds 6 levels. $100,000 adds 8 levels. $400,000 adds 10 levels. $1 million adds 12 levels. And it keeps going up from their.

Then you got enhancements for sophisticated means, leadership role, number of victims, and other factors. By the time its calculated, someone with no criminal history in a major bank fraud case could easily be looking at 5-15 years.

Asset Forfeiture: The Parallel Financial Attack

And were not done. Bank fraud triggers civil asset forfeiture. The goverment can seize property they believe was involved in or derived from the fraud—even before your convicted.

Worse, civil forfeiture has a lower burden of proof. Even if your acquitted criminally, the goverment can still pursue civil forfeiture with “preponderance of evidence” instead of “beyond reasonable doubt.” Your bank accounts, your property, your investments—all vulnerable.

Debarment: The Career-Ending Consequence

One more thing finance professionals need to know: bank fraud conviction means permanent debarment from federally insured financial institutions. You cant work for a bank. You cant serve on a bank board. You cant even open certain types of accounts.

For people in finance, banking, or related fields, this collateral consequence is career-ending. Even with cooperation, even with a light sentence, the debarment remains.

Defense Strategies That Work

Despite the scary numbers, bank fraud cases can be defended. There are real strategies that work.

Good Faith Defense

Bank fraud requires intent to defraud. If you genuinley believed your statements were accurate—even if they turned out to be wrong—you cant be guilty. Maybe you relied on your accountant’s numbers. Maybe you misunderstood what the form was asking. Good faith negates intent.

Materiality Challenge

The false statements have to be “material”—capable of influencing the bank’s decision. Not every lie on a loan application is bank fraud. If the misstatement wouldnt have changed the bank’s lending decision, it may not be material.

For example: you listed the wrong employer name but your income was accurate. Did that error actualy influence the bank’s decision to lend? Probly not. Materiality can be contested.

Institution Not Federally Insured

As discussed, 1344 only applies to federally insured institutions. Defense counsel should verify the institution’s status. Private lenders, some finance companies, foreign banks operating in the US—they may not be covered.

Check Kiting Timing Defense

In check kiting cases, timing is everything. If funds were deposited within the normal “float” period—the time banks allow for checks to clear—intent to defraud may be negated. “I wasnt kiting checks, I was using the normal banking system.” Technical banking procedures create defense opportunities.

Statute of Limitations

Even with the 10-year SOL, timing still matters. When exactly did the alleged fraud occur? Has there been any tolling? Defense attorneys always analyze whether the goverment is within the limitations period.

Current Enforcement 2024-2025

Federal prosecutors are focusing bank fraud resources on several areas:

PPP and EIDL fraud remains the biggest priority. Thousands of cases are still being prosecuted from the pandemic loan programs. This will continue for years.

Mortgage fraud is seeing renewed attention as the housing market has heated up. Appraisal fraud, income misrepresentation, straw buyer schemes.

Check fraud schemes have exploded with the rise of mobile deposit. Altered checks, stolen checks, fake check scams—all being prosecuted as bank fraud.

Business loan fraud involving false financial statements to obtain commercial credit.

You Need to Act Now

Bank fraud is serious. Were talking 30-year maximums, million-dollar fines, asset forfeiture, career-ending debarment. The goverment can reach back 10 years into your past.

But you have options. Good faith defenses. Materiality challenges. Verification that the institution is actualy federally insured. Pre-indictment intervention. Cooperation strategies when appropriate.

None of it works if you wait to long. That loan application from 2016 is still within the statute of limitations. Prosecutors are building cases right now. Witnesses are being interviewed. Documents are being subpoenaed.

Call a federal criminal defense attorney today. Not after you “see what happens.” Not after your accounts get seized. Today. Because bank fraud cases move fast, and every day you wait is leverage you loose.

Your facing the full weight of federal prosecution designed to protect the banking system. You need a defense team thats ready to fight back.