“White-collar” crime was given its nickname because of the type of individual who tended to commit these illegal acts: suit and tie wearing professionals who find loopholes in the financial world, and exploit them for monetary gain. One of the crimes that falls into the category of this sort of criminal activity is bank fraud.

Federal law labels bank fraud as an underhanded scheme intended to “defraud a financial institution,” which is a fairly substantial over-simplification. Below we discuss how this crime is committed, how those who engage in any of these acts might get caught, and what you could be facing if you’re convicted.

How is bank fraud committed?

The days of white collar crime being reserved only for the “suit crowd” is long gone. Bank fraud can be committed by anyone, including individuals or financial institutions. Some criminal acts that fall under the category of bank fraud include:

• Identity theft
• Check kiting (writing bad checks)
• Forgery
• Bank theft, which includes mail theft of checks
• Uninsured deposits
• Opening bank accounts without permission
• Manipulating the foreign exchange

You hear stories on a daily basis of individuals and bankers alike committing bank fraud crimes. For example, a Memphis man used the stolen identities of the deceased to take over their credit card, savings and stock accounts to steal hundreds of thousands of dollars of what should have been estate assets. The man was convicted and sentenced to 17 years in prison in October 2020.

One of the most notable stories revolves around the investigation into fraudulent accounts opened by Wells Fargo employees who alleged they were required to meet account quotas to keep their jobs. Failure to do so was met with a hostile work environment and threats of unemployment. As a result, millions of accounts were opened over more than a decade.

Accounts were opened by:

• Improperly obtaining customer authorizations
• Misleading customers about the accounts they were opening
• Bankers temporarily personally funding accounts
• Tellers making unauthorized transfers between customer accounts to fund fraudulent accounts

All of these actions constituted bank fraud. Early in 2020, the bank agreed to the payment of a $3 billion fine to settle criminal charges and a civil suit.

What happens in a bank fraud investigation?

Whether or not a police report is filed by the defrauded individual, banks have the authority to initiate investigations and pursue criminal charges. Because widespread fraud costs money, banks have built-in fraud teams dedicated to handling the investigations into these complaints. Further, the Federal Deposit Insurance Corporation (FDIC) may also get involved in a regulatory investigation.

In addition to the customer complaint, they’ll pull and review:

• Account statements
• Signature cards
• Video footage from inside banks or ATMs
• Account agreements
• Phone call recordings
• Correspondence with the customer

If a complaint is made about a bank or its employees, federal regulatory agencies become involved in the investigation and may weed through the bank’s records with a fine tooth comb over months or even years. Often these investigations lead to finding other potential fraudulent acts that spin off into new investigations.

How is bank fraud punished?

The punishments for bank fraud activities vary widely based upon whether it’s a misdemeanor or felony. Lower level offenses committed by individuals may only see a fine and possibly probation while more serious crimes can end your career and your freedom.

• Community service. Typically, first offenses for misdemeanor bank fraud charges may come with a fine coupled with community service for a period of time.
• Fines. For individuals, financial penalties for the crime committed can range from several hundred to tens of thousand dollars based upon the level of bank fraud you engaged in.
• Prison. If you’re sentenced to incarceration, you could spend your time in a state or federal prison depending upon the charges upon which you were convicted.

If you have been questioned or arrested in connection with a bank fraud investigation, you want the experience of tested criminal defense attorneys standing behind you. While law enforcement conducts their investigation, we’ll get busy investigating the facts and evidence that will lead to the best outcome possible for you.

Schedule your free case consultation with the dedicated bank fraud criminal defense attorneys at Delius & McKenzie, PLLC by calling 865-297-4425, or we invite you to reach out to a member of our legal team through our contact page. Proudly serving clients in Sevierville, Pigeon Forge, Seymour, Gatlinburg, Greeneville, the Tri-Cities and the surrounding areas in Tennessee.