New Jersey Federal Bank Fraud Lawyer

Bank fraud carries one of the highest maximum penalties in the federal fraud statutes: up to 30 years in prison and a $1 million fine per count. Yet bank fraud charges are filed against a wide range of people, from bank employees and mortgage brokers to small business owners who overstated revenue on a loan application and young people recruited to deposit a few checks through their accounts. If you are under investigation or charged in New Jersey, a New Jersey federal bank fraud lawyer can evaluate whether the government can truly prove the intent and materiality that the statute requires.

Keith Oliver Criminal Law represents clients throughout the state in the U.S. District Court for the District of New Jersey in Newark, Trenton and Camden. This guide explains how bank fraud is defined, what the penalties are and how these cases are defended.

What Is Bank Fraud Under 18 U.S.C. § 1344?

The bank fraud statute punishes anyone who knowingly executes, or attempts to execute, a scheme or artifice:

1. To defraud a financial institution; or
2. To obtain any of the moneys, funds, credits, assets, securities or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations or promises.

“Financial institution” is defined in 18 U.S.C. § 20 and includes FDIC-insured depository institutions, NCUA-insured credit unions, Federal Reserve banks, Federal Home Loan Banks, and “mortgage lending businesses” whose activities affect interstate commerce. That last category, added in 2009, brought many non-bank mortgage lenders within the statute.

The two clauses of § 1344 are separate ways of committing the crime. In Loughrin v. United States (2014), the Supreme Court held that the second clause does not require proof that the defendant intended to defraud the bank itself; it is enough that the false statement was the means by which the defendant obtained bank property, such as passing an altered check at a retailer that was then presented to the bank. In Shaw v. United States (2016), the Court held that a scheme to take money from a customer’s account can be bank fraud even when the bank ultimately bears no loss.

Common Types of Bank Fraud in New Jersey

• Check fraud and check kiting. Depositing counterfeit, altered, forged or stolen checks, or floating funds between accounts to create artificial balances.
• Mortgage and loan fraud. Misstating income, assets, occupancy or employment on a mortgage, home equity, commercial or SBA loan application. These are often charged under both § 1344 and § 1014 (false statements to influence a lender).
• Account takeover and identity-based fraud. Using another person’s identifying information to open accounts, obtain credit cards or withdraw funds.
• “Money mule” recruitment. Social media schemes that recruit people to let others use their accounts or debit cards in exchange for a cut of deposited funds. Many young defendants in New Jersey have been charged this way.
• Insider fraud and embezzlement. Tellers, loan officers and branch managers accused of misapplying funds or approving fraudulent loans, often charged under 18 U.S.C. § 656.
• Business loan fraud. Inflated receivables, double-pledged collateral or false financial statements submitted to obtain lines of credit.
• Pandemic-era loan fraud. PPP loans were made by banks, so many PPP cases are charged as bank fraud. See our separate page on PPP and government benefits fraud.

Penalties for Federal Bank Fraud

Each count of bank fraud is punishable by up to 30 years in federal prison and a fine of up to $1,000,000. Several related statutes carry the same maximum. Prosecutors often charge each check, each loan or each transaction as a separate count, and they may add aggravated identity theft under § 1028A, which requires a mandatory two-year prison term served consecutively to the fraud sentence.

In addition to prison, a conviction typically results in mandatory restitution to the bank or account holders, forfeiture of proceeds and property derived from the offense, up to five years of supervised release, and a felony record that can bar future employment in banking. The FDIC can prohibit anyone convicted of a crime involving dishonesty or breach of trust from working at an insured institution without its consent, and for non-citizens bank fraud involving more than $10,000 in loss is generally treated as an aggravated felony with severe immigration consequences.

How Bank Fraud Sentences Are Determined

Bank fraud is sentenced under U.S.S.G. § 2B1.1. The base offense level is 7, and the loss amount controls most of the remaining calculation. For loan fraud, courts generally measure loss as the unpaid principal minus the value of any collateral recovered or reasonably expected to be recovered. That credit can be significant in mortgage cases, where the property may have been sold or foreclosed. There is also a specific enhancement if the defendant derived more than $1,000,000 in gross receipts from one or more financial institutions, which adds two levels and sets a minimum offense level of 24.

Other adjustments include sophisticated means, use of “authentication features” or device-making equipment, number of victims, abuse of a position of trust for bank insiders and role in the offense. Reductions are available for acceptance of responsibility, minor role and zero-point offenders. Because the guideline calculation largely determines the starting point for the judge, careful analysis of each claimed loss item is essential.

Bank Fraud Investigations

Banks are required to file Suspicious Activity Reports (SARs) with the Treasury Department’s Financial Crimes Enforcement Network when they detect possible fraud. Those reports, along with internal fraud department investigations, often launch federal cases. Investigating agencies include the FBI, the U.S. Secret Service, the Postal Inspection Service, IRS Criminal Investigation, the FDIC Office of Inspector General, the Federal Housing Finance Agency OIG for mortgage matters and the SBA OIG for small business loans.

Agents may contact you for a “voluntary” interview, request documents, or execute a search warrant at your home or business. Federal prosecutors also use grand jury subpoenas to obtain bank records, loan files, emails and phone records. Speaking with agents without counsel is one of the most common and damaging mistakes people make. You have the right to decline the interview and to have a lawyer communicate with the government on your behalf.

Defenses to Bank Fraud Charges

• No intent to defraud. Errors on a loan application, a misunderstanding about how a deposit would clear, or reliance on a broker who filled out paperwork are not fraud. The government must prove you knew the statements were false and intended to deceive.
• Lack of materiality. A misstatement that would not have influenced the lender’s decision is not material. Evidence of the bank’s actual underwriting practices can be powerful here.
• Unwitting participation. Money mules and account holders frequently believed they were helping a friend, working a legitimate job or receiving a legitimate payment. Proving that lack of knowledge can defeat the charge.
• Insufficient connection to a financial institution. Some lenders do not qualify under 18 U.S.C. § 20, and some schemes target customers rather than bank property in ways that fall outside § 1344.
• Challenging § 1028A counts. After Dubin v. United States (2023), using someone’s name or account number in passing is not aggravated identity theft unless the misuse of identity is at the heart of the crime.
• Loss and restitution disputes. Collateral credits, repayments and offsets can sharply reduce the guideline range and the restitution order.

Bank Fraud vs. New Jersey State Charges

Some bank-related conduct can also be prosecuted in New Jersey Superior Court under state statutes such as theft by deception, forgery, credit card fraud and misconduct by a corporate official. Federal prosecution typically follows when losses are large, multiple banks or states are involved, the scheme is organized or federal agencies discovered it. Federal cases generally carry longer sentences, no parole and less flexibility than state cases, so early intervention aimed at keeping a case in the state system, or out of the system altogether, can be worthwhile.

For related charges, see our pages on mail fraud, wire fraud, identity theft and federal money laundering. You can also read about our broader white-collar crime defense practice.

What Happens After an Indictment

After charges are filed, you will appear before a U.S. Magistrate Judge for an initial appearance and arraignment. Most defendants in white-collar cases are released on conditions such as travel restrictions and surrender of passports. The government then produces discovery, which in bank fraud cases often includes thousands of pages of bank statements, loan files and surveillance images. Your attorney will analyze that evidence, file motions, consult experts and negotiate with the Assistant U.S. Attorney. If a plea makes sense, the details of the agreement, especially the loss stipulation and the counts of conviction, will shape the sentence. If not, the case proceeds to trial before a federal jury.

Restitution, Forfeiture and Your Financial Future

In a bank fraud case, the financial consequences often last far longer than any prison term. Under the Mandatory Victims Restitution Act, the court must order full restitution to the bank or account holders for their actual losses, and that obligation can be enforced for 20 years after release from prison. Restitution is different from the guideline “loss” figure: it is limited to actual losses caused by the offense, and it should be reduced by amounts the lender recovered through foreclosure, collateral sales, insurance or repayment. Defense counsel should scrutinize every line of the government’s restitution calculation, because errors are common, particularly in mortgage cases involving multiple loan transfers or short sales.

Forfeiture is a separate penalty. The government can seek a money judgment for the proceeds of the offense and can forfeit specific property traceable to those proceeds, such as a home purchased with a fraudulently obtained loan, a vehicle or funds in a bank account. In some cases prosecutors seek pretrial restraint of assets, which can affect your ability to pay living expenses. Early negotiation about forfeiture and restitution, and about whether funds already returned to a lender will be credited, can protect your family’s finances and support an argument for a lower sentence. Making voluntary restitution before sentencing is also one of the most persuasive forms of mitigation in a federal fraud case.

Related Federal Defense Guides

• Federal credit card and access device fraud
• Federal embezzlement and theft of government funds
• Federal identity theft and aggravated identity theft
• Federal wire fraud

Frequently Asked Questions

What makes bank fraud a federal crime?

Bank fraud under 18 U.S.C. § 1344 applies to schemes targeting “financial institutions,” which includes FDIC-insured banks, credit unions insured by the NCUA, and certain mortgage lending businesses. Because nearly every bank in New Jersey is federally insured, almost any scheme against a bank can be charged federally.

Is bank fraud the same as check fraud?

Check fraud is one common form of bank fraud. Depositing counterfeit, altered or stolen checks, or kiting checks between accounts, is frequently charged under § 1344.

How long does the government have to charge bank fraud?

Ten years, under 18 U.S.C. § 3293, which is twice the usual five-year federal statute of limitations.

Do I have to have intended to hurt the bank?

No. In Shaw v. United States (2016), the Supreme Court held that a scheme to obtain a customer’s deposits from a bank can be bank fraud even if the defendant did not intend to cause the bank itself a financial loss.

Can a bank fraud case be resolved without prison?

Sometimes. Outcomes depend on the loss amount, criminal history, restitution, cooperation and the strength of the evidence. Lower-loss first offenses may qualify for probationary sentences or pretrial diversion in appropriate cases.

Talk to a New Jersey Federal Defense Lawyer Today

Federal cases are won or lost early, often before an indictment is ever filed. If an agent has contacted you, a search warrant has been executed, or you have received a target letter or grand jury subpoena, call Keith Oliver Criminal Law at (732) 858-6959 or contact us online for a confidential consultation. We defend clients throughout New Jersey in the U.S. District Court in Newark, Trenton and Camden, with offices in Monmouth, Mercer and Somerset Counties and Jersey City. Learn more about our federal criminal defense practice and attorney Keith G. Oliver.