The bank fraud statute (18 U.S.C. § 1349) is worded virtually identical to the wire fraud statute. It makes any scheme to knowingly defraud a financial institution a crime punishable by up to 30 years in prison and a fine of $1,000,000.
Although the ways in which one might defraud a bank are virtually limitless, most of the cases being brought involve businesses, often through the use of fraudulent loan brokers, submitting false financial information to banks to secure large loans. These schemes are uncovered when the loans go into default, oftentimes very shortly after the loan is funded. The bank then investigates the details of the loan to determine why it went into default, often uncovering improprieties in the financial information submitted.
Another type of bank fraud case being encountered with surprising frequency involves the indictment of loan officers for allegedly knowingly facilitating fraudulent loans. The government will allege the loan officer coached the borrower regarding the income required to support the large loan they were seeking. The borrower would then present false income tax returns showing income that matched the number provided. In most of these cases, the loan officers were not paid and had little or nothing to gain. Then why does the government contend they knowingly engaged in this fraud? Because banks put so much pressure on loan officers to produce, they often go out on a limb to save their job. The defense in all of these cases is that the loan officer did not knowingly engage in a fraud; rather, the loan officer was duped by the borrower.
Mortgage fraud cases are very similar to the bank fraud cases. They usually involve false representations made to a lender to obtain a mortgage. However, there is usually an additional layer or layers of fraud. One of the more common schemes is for an individual to approach people with good credit (“straw buyers”) and pay them $5,000 or $10,000 to become an “investor” in a property. The straw buyer is led to believe that he is purchasing a property, but has no risk, because the individual will secure a tenant, and the rent will cover the mortgage payments. Usually, no tenant is obtained, or if obtained, the rent is insufficient to cover the mortgage. The property then goes into default within a few months. Oftentimes it is alleged that an appraiser artificially inflated the value of the property, so that a mortgage is obtained for more than the property is worth. These schemes are usually quickly uncovered because when the loan immediately goes into default, the lender reviews the loan to discover what went wrong. It doesn’t take long before the FBI is involved
Mr. Kuniansky has handled virtually every type of bank fraud and mortgage fraud case imaginable. Most have involved millions of dollars of alleged losses, and some have involved tens of millions of alleged losses.