Bank Fraud Charges: When Business Decisions Become Criminal Allegations

Business owners, executives, investors, and professionals make financial decisions every day. Most of those decisions involve risk, from borrowing money to planning major capital expansions. Sometimes, those risks don’t pay off.

Unfortunately, federal investigators sometimes view certain financial decisions differently. What one person sees as a failed business strategy, the government may characterize as fraud. When that happens, what you believed to be a routine bank transaction can quickly lead to a criminal investigation. If you aren’t prepared, you could find yourself charged with a crime that never occurred. Below, we explain how business decisions can be misconstrued as criminal activity, and what you can do about it.

What Is Bank Fraud?

The crime of bank fraud involves schemes intended to defraud a financial institution or to obtain money or other items of value. Of course, there must be some sort of false or fraudulent representation made to the financial institution for this to be a crime.

Bank fraud comes in a variety of forms. In many cases, prosecutors claim that a borrower provided inaccurate information to obtain a loan, while in other cases, there might be allegations that an individual concealed important facts from a lender or submitted documents containing false information. What matters most is understanding that you have the right to defend yourself against any of these charges.

It’s important to remember that proving bank fraud requires more than just showing that a loan eventually defaulted or that a business experienced financial difficulties. Federal prosecutors must prove that you knowingly participated in a fraudulent scheme, and that’s a high burden for the government to meet.

Why Business Decisions Sometimes Attract Criminal Scrutiny

When lenders lose money, investigators often review the circumstances surrounding the transaction. They may examine loan applications, financial statements, emails, internal business records, and communications with the bank.

During that review, federal investigators could identify discrepancies between the information provided by the lender and the bank’s official records. These discrepancies might be little more than accounting errors, but in some cases they could be signs of fraud.

What many of these cases boil down to is the fact that businesses frequently make projections that later prove inaccurate. Markets change, and customer bases dry up, but that doesn’t mean anyone was defrauded. The sad reality is that thousands of businesses fail every year, and it rarely has anything to do with fraud or misrepresentation.

The Difference Between Poor Judgment and Criminal Fraud

One of the most important issues in any bank fraud case involves intent. Fraud is a crime of intent, meaning it isn’t possible to accidentally defraud a financial institution.

Businesses routinely make projections about future performance, but those projections aren’t always accurate. A failed prediction does not necessarily amount to fraud, but that doesn’t mean federal investigators won’t get the wrong idea.

Similarly, business owners frequently rely on accountants and financial advisors, often taking their advice without understanding the consequences if they are wrong. Some of these carefully scrutinized financial transactions are frequently at the behest of other parties advising the business owner. While taking advice blindly isn’t a good idea, it also isn’t a crime.

How Federal Investigators Build Bank Fraud Cases

Bank fraud investigations often begin long before an arrest occurs. Federal agencies may spend months or years collecting evidence before presenting a case to a grand jury.

Subpoenas often play a major role in these investigations. Banks, accounting firms, vendors, and business partners may receive requests for documents long before the target of the investigation becomes aware of the government’s interest.

Because these investigations often involve large volumes of financial records, prosecutors often seek to build a narrative showing that certain documents were intentionally misleading. It’s up to the defense attorney to paint a clear picture of what actually happened during every phase of that transaction.

Defenses to Bank Fraud Charges

You have the right to fight back against allegations of bank fraud. Some of the most common defense strategies available include the following:

Lack of Intent

The government must prove that the defendant knowingly engaged in fraudulent conduct. If the evidence shows mistakes, misunderstandings, negligence, or poor judgment rather than intentional deception, prosecutors may have difficulty proving their case.

Good Faith Reliance on Others

When a defendant reasonably relied on information prepared by others, that reliance may undermine allegations of intentional fraud.

Insufficient Evidence

Federal prosecutors bear the burden of proving every element of the offense beyond a reasonable doubt. If key witnesses lack credibility, documents are open to interpretation, or important facts remain unclear, the defense may challenge the government’s ability to meet that burden.

Reach Out to The Harville Law Firm Today

Bank fraud allegations often arise from business transactions that prosecutors believe involved deception. However, federal criminal liability requires more than a failed loan, an unsuccessful business venture, or an inaccurate financial projection. If you’ve been accused of bank fraud, it’s vital that you seek out experienced legal counsel as soon as possible. Contact us today for a free consultation.