18 U.S.C. § 1344

Bank & Mortgage Fraud

Bank fraud have traditionally included a wide variety of crimes, such as check kiting, check forgery, empty ATM deposits, phishing, internet fraud, and money laundering. Check kiting is a fraudulent practice that exploits the clearance time needed for checks. It involves two checks, the first of which represents an account with insufficient funds. This check is deposited into a second account. Another check is then written from the latter account and the check deposited into the first account, to cover the first check. Phishing schemes mine sensitive information for unauthorized users. Money laundering is illegally-sourced money (usually from criminal practices) that is made to appear legally earned.

However, anti-structuring laws have broadened the range of existing crimes. Consider this case based on true facts: a man incurred a debt of well over $100,000 at a Reno casino. In order to pay the casino back on time, the man returned with $100,000 in cash. However, having been informed that all cash exceeding $10,000 had to be reported to the state and federal authorities, and that the casino would accept cashier’s checks in that same amount, he finally obtained several cashier’s checks, each of which amounted to less than $10,000 (below the state and federal authorities’ trigger threshold). The man was later charged with and convicted for “structuring transactions” to circumvent the bank’s reporting duty to government agencies. He was able to successfully appeal the 9th Circuit’s decision to the US Supreme Court. The Supreme Court reversed the decision on which his conviction rested, and he was declared innocent. Ratzlaf v. United States510 U.S. 135 (1994). The Court elucidated the difference in criminal and innocent “structuring”: The defendant who undertakes innocent, inadvertent structuring does not know that the act of structuring money (in Ratzlaf’s case, ordering cashier’s checks of less than $10,000) is unlawful. Hence the reversal of Ratzlaf’s conviction by the Supreme Court. This is a landmark decision and criminal intent distinction by the Supreme Court since, notably, structuring is a practice that potentially lends itself to such innocent persons as husbands who structure their finances only as a means to ensure that an ex-wife remains unaware of the extent of accumulated wealth. There is no criminality in such acts under U.S.C.§ 5322, and consequently, Ratzlaf’s absurd result could not be replicated.

Elements of bank fraud:

  • Executing with knowledge (“knowingly”) or
  • Attempting to execute
  • A scheme or artifice to defraud a financial institution or
  • A scheme or artifice to obtain any money, funds, credits, assets, securities or other property which is owned, in custody of, or controlled by falsehood or fraudulent practices.

Punishment of the crime:

  • A fine not in excess of $1,000,000
  • A prison sentence not exceeding 30 years

Defenses

  • Insufficient mens rea (criminal intent), for instance, innocent structuring (not criminal structuring)
  • Insufficient evidence to convict on one or all counts

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