We Help People Fight Charges of Check Fraud
Our lawyers specialize in federal white collar crimes like check fraud, bank fraud, mail and wire fraud, conspiracy and various forms of government investigations. Our measure of success is the freedom of our clients.
Check fraud involves writing a bad check with a fraudulent purpose, signing another person’s name on the check, altering the check in some way, or completely fabricating a fake check.
In order to be convicted of check fraud or forgery, prosecutors must prove that you intended to defraud another person or your financial institution.
A defendant can be charged with check fraud regardless of whether they actually harmed that person or institution. Proving intent to defraud will be enough to charge you.
If you would like to speak to a federal financial crimes attorney who is experienced in defending against allegations and investigations of check fraud or any of the related crimes described below, contact us for a legal review of your case.
What is “check fraud?”
According to the Federal Reserve, some of the common forms of check fraud include:
- forged signatures;
- forged endorsements;
- counterfeit checks;
- altered checks;
- check kiting;
- demand drafts;
- third-party bill paying services;
- making fraudulent deposits through ATM’s
- ordering checks by using fraudulent names, addresses or routing numbers;
- Counterfeiting money orders which are cashed by check-cashing businesses.
In order to keep up with competition, banks are making funds from checks available as soon as possible. As you can imagine, the faster they make the funds available, the less time they have to investigate the possibility that the check they are cashing is fraudulent. This has opened the door to even more opportunities for potential fraud.
“Check Fraud” is “Bank Fraud” – 18 U.S.C. § 1344
“Check fraud” is categorized as “bank fraud” and involves obtaining money or property from a financial institution by means of false pretenses, false representations, or false promises.
The Bank Fraud Statute, codified under 18 U.S.C. § 1344, defined bank fraud and federally criminalized various forms of fraud involving financial institutions.
“Bank fraud” is:
- knowingly executing; or
- attempting to execute;
- a “scheme or artifice” to defraud a financial institution.
“Check fraud” can also involve forgery. “Forgery” is also a federal offense charges of forging. The United States Criminal Code has 45 different statutes related to frauds like forgery and counterfeiting, so it is crucial that you contact an experience financial crimes attorney as soon as you learn about charges and accusations of check fraud or forgery.
“Check Fraud” is not “electronic funds transfer fraud.”
Check fraud is not electronic funds transfer fraud.
What is an “electronic funds transfer?”
The Electronic Fund Transfer Act (“EFTA”) governs the rights and obligations of banks and cardholders in the event of debit or credit card fraud.
- For consumers, the EFTA requires you to immediately notify your bank of any unauthorized charges you discover.
- For banks, the EFTA developed requirements to promptly investigate each suspected case of fraud and entitled a cardholder to request the results of this investigation. The Act also limits the bank’s obligation to repay or reimburse a customer for funds lost due to fraud.
Every time you swipe your credit or debit card at an ATM or a “point of sale terminal” at a business, there is an electronic funds transfer (“EFT”).
Any transaction initiated through an electronic terminal, computer, or telephone call is also an EFT. Basically, EFTs include any transaction which authorizes a financial institution to debit or credit a consumer’s account, unless it is initiated through a paper instrument–like a check.
What is not an “electronic funds transfer”?
The Federal Reserve Board’s Regulation codified 12 CFR § 205.3(c) describes transfers that are not EFTs and are therefore not covered by the EFTA:
- A transfer of funds initiated by a “paper instrument”–like a check;
- A transfer of funds for the purchase or sale of securities or commodities;
- An authorization that does not result in a debit or credit to a consumer’s account;
- Transfers between accounts from the same customer within the same institution;
- Transfers between accounts from family members;
- Preauthorized transfers.
Financial Crimes Related to Check Fraud
Check fraud is rarely the only charged filed against a defendant. The charges listed below are often filed in addition to charges of check fraud.
If you would like to learn more about any of the “charges related to check fraud” listed below, visit our “Practice Areas” page or call us today to speak with an experienced federal financial crimes attorney.
Attempt and Conspiracy to Commit Fraud – 18 U.S.C. § 1349
Any person, firm, partnership, corporation, or association who “attempts or conspires” to commit bank fraud is subject to the same penalties as those who are charged with committing bank fraud directly. This could mean fines of up to $1,000,000, imprisonment for up to 30 years, or both.
Laundering of Monetary Instruments – 18 U.S.C. § 1956
Whoever knowingly conducts or attempts to conduct;
- a financial transaction;
- which involves the proceeds of unlawful activity;
- with the intent to promote such unlawful activity;
Knowing that the transaction is designed to “conceal or disguise:”
- the nature, location, source, ownership or control of the proceeds; or
- to avoid a reporting requirement.
Penalties include a fine of $500,000 or twice the value of the property or funds involved in the transaction, whichever is greater, or imprisonment for up to 20 years, or both. You may also face civil penalties of $10,000, or the value of the property involved in the transaction.
Engaging in Monetary Transactions with Property Derived from Unlawful Activity – 18 U.S.C. § 1957
Whoever engages or attempts to engage in a transaction with property or funds obtained from unlawful activity can face fines of up to $1,000,000, imprisonment for up to 10 years, or both. Under this section, prosecutors are not required to prove that you knew the money was derived from an unlawful activity.
Transportation of Stolen Goods or Money Used in Counterfeiting – 18 U.S.C. § 2314
“Transporting, transmitting or transferring” any funds, fraudulent check, or other fraudulent documents–that you know is the product of unlawful activity–can lead to fines of up to $1,000,000 or imprisonment for up to 10 years, or both.
Obstructing Examination of Financial Institution- 18 U.S.C. § 1517
Any person, partnership, corporation, or association who obstructs or attempts to obstruct the examination of a financial institution by a U.S. federal agency can face fines of up to $1,000,000, imprisonment for up to 5 years, or both.
Investigating and Reporting Check Fraud to Federal Agencies
Banks have an obligation to notify the appropriate agencies of any alleged fraud which they have uncovered. If the fraud involves a federally insured bank, you can be sure federal agencies will be involved.
Generally, in cases involving check fraud, the bank will press charges against the fraudulent party.
The federal agencies responsible for enforcing federal check fraud crimes include:
- Federal Bureau of Investigation (FBI)
- Department of Justice (Attorney General’s Office)
- Financial Crimes Enforcement Network (FinCEN)
- Internal Revenue Service Criminal Investigations (IRS-CI)
- Board of Governors of the Federal Reserve System
- Department of Homeland Security (DHS)
- Department of Treasury (DoT)
- Department of Defense (DoD)
- Government Accountability Office (GAO)
- National Credit Union Administration (NCUA)
- Office of Foreign Asset Control (OFAC)
The FBI has a particular interest in cases of check fraud because cases of check fraud are usually associated with identity theft. To the FBI, any unauthorized charge is considered “identity theft.”
In addition to banks and federal agencies, the three national credit bureaus–Equifax, Experian and TransUnion–are also notified and commonly receive reports of fraudulent activity to assist in monitoring accounts. These three reporting agencies will then initiate the monitoring of any account for 90 days.
Penalties for violating 18 U.S.C. § 1344 for knowingly executing, or attempting to execute, a fraudulent scheme on a financial institution include a fine of up to $1,000,000, imprisonment for up to 30 years, or both.
In addition to facing million dollar fines and a quarter-century in prison, federal crimes like check fraud could mean civil forfeiture of your property and assets.
Injunctions and Restraining Orders – 18 U.S.C. § 1345
To prevent a “continuing and substantial injury” to the victims of fraud, §1345 allows the Attorney General (“AG”) of the United States to commence a civil action in any federal court—known as an injunction—to prevent you from carrying out this alleged fraud.
The AG may also commence a civil action in federal court to request a temporary restraining order (“TRO”) against you in order to prevent you from “withdrawing, transferring, removing, dissipating or disposing” of any money or property obtained as a result of a banking law violation.
Basically, this means that if you are suspected of committing check fraud, or the government thinks that you are about to commit check fraud, they have the authority to freeze your bank accounts and seize any assets you can use to continue the alleged fraud.
After the AG has filed for a restraining order, the federal court will hold a hearing to determine whether or not to issue the restraining order against you. After the hearing, the court can issue the restraining order or “take any action warranted to prevent a continuing and substantial injury.”
Ultimately, the court–not the Attorney General–has the authority to make this determination and issue the restraining order.
This is significant because it subjects your liability to jury interpretation and may allow your attorney an opportunity to disprove the elements of your charges and prove that your actions do not amount to violations of fraud.
Facing Both Civil and Criminal Charges
In addition to facing criminal charges for check fraud, defendants may also face civil charges in the form of injunctions, restraining orders, and additional monetary penalties.
Basically, whoever you allegedly perpetrated the fraud against is going to want their money or property back. In order to get reimbursed, or compensated for their loss, they may file charges against you in civil court for restitution.
If you find yourself to be a defendant in both civil and criminal proceedings, you must respond separately to each jurisdiction.
An experienced federal check fraud attorney can help you defend against both criminal and civil charges. Our attorneys are sophisticated check fraud attorneys who have experience working in federal court defending our clients against the Attorney General’s Office, the Federal Bureau of Investigations, and other federal agencies.
The Best Defenses to Check Fraud
There was no fraudulent knowledge or intent (“Good-Faith” Defense).
Writing a few bad checks around town will likely only qualify as a misdemeanor. The deciding factor in these cases is your knowledge of the fact that the checks were bad, or your intent to defraud a person or entity.
If you lacked the knowledge or intent to deprive someone of their money, property, or their intangible right of their honest services, you may be able to establish the “good faith” defense to check fraud.
In cases of check fraud, the prosecution must prove that you knew you had insufficient funds in your account or that you intended to promote or conceal the fraud.
If you did not have knowledge of the scheme to defraud, an experienced defense attorney would seek to highlight your lack of criminal intent.
Without the element of knowledge or intent to commit the underlying fraud, you should not be convicted of check fraud.
The check was post-dated.
Post-dating a check does not necessarily qualify as check fraud. Personal checks written to pay for goods (i.e. movable objects) are governed by the Uniform Commercial Code (“UCC”).
Under the UCC, a check is an order by a “payor” (you) to pay a fixed amount of money to the “bearer” (the person you want to pay).
According to the UCC, a check can be made payable “on demand” or “at a definite time.”
Therefore, if you post-date a check, it is considered an order to pay the bearer “at a definite time” in the future. This is legal and is not considered check fraud.
You stopped payment or provided the bank with an “insufficient money notice.”
Although post-dating a check is legal, the bank may charge a “payor’s” account even before the date of the check and even if doing so created an overdraft.
However, the bank must not charge an overdraft to the person’s account if the payor:
- notifies their bank that she has post-dated a check;
- identifies the check with “reasonable certainty”; and
- provides the bank with a “reasonable opportunity to take action.”
Therefore, stopping payment on a bad check could be used as a defense, as long as you stop the payment prior to receiving an insufficient funds notice.
If a defendant provides the bank with an insufficient funds notice and promises to pay the debt, no fraud has occurred.
In this case, the individual has essentially created a temporary credit extension.
A person can identify a check with “reasonable certainty” by providing the bank with the check number or the amount the check was written for.
If the bank does, in fact, charge you, even after receiving your notice of stopped payment, the bank may be liable for damages to the payor.
You were mentally incapacitated at the time you wrote the check.
10 Year Statute of Limitations for Financial Institution Offenses
While the statute of limitations for mail or wire fraud prosecution is generally five years, prosecution for mail or wire fraud that affects a financial institution is 10 years.
Unless an indictment is filed within 10 years after the commission of your alleged check fraud, you cannot be prosecuted, tried, or punished for violating § 1344.
This means that if you have been charged with a check fraud that allegedly happened over 10 years ago, you and your attorney should explore the statute of limitations defense provided by § 3293.
Keep in mind, prosecutors are not precluded from bringing charges against you for any act made “in furtherance of” the alleged scheme to defraud. For example, if you wrote fraudulent checks from 2007-2008.
Your attorney would argue that the statute of limitations provided in § 3293 will prevent prosecuting you in 2020 because it would be outside the 10 year statute of limitations.
However, if you took the proceeds from those fraudulent checks and transferred those funds to a third-party in 2012, prosecutors will argue that the alleged “scheme” extended until 2012 and that they should not be prevented from prosecuting you in 2020 because it would be within to 10 year statute of limitations.
Recent Check Fraud Cases in the News
- Connecticut Man Charged with Check Fraud (2018)
- In January of 2018, Bernard Harris, was sentenced to 30 months of imprisonment and 3 years of supervised release for his role in a check fraud scheme in Connecticut. According to the complaint, Harris began the fraud by stealing blocks of blank postal money orders from the U.S. Post Office in Greenwich, Connecticut. Harris then printed fraudulent denominations on each of the money orders to make them appear authentic. He then recruited individuals to deposit the money orders in various ATM’s and teller windows. The total amount alleged to have been taken was $313,570. While on bond, Harris later attempted to cash fraudulent checks which were allegedly issued by the Connecticut Department of Children and Families. Harris ultimately plead guilty to wire fraud as a result of his fraudulent check scheme.
- North Carolina Man Sentenced in Connection with Check Fraud (2017)
- In April of 2016, Obinna Izuchi Onwuzurike, was sentenced to 65 months of imprisonment and ordered to pay over $150,000 in restitution. According to the complaint, Onwuzurike deposited a $60,000 counterfeit check into the bank account of a shell company. The check itself was actually drawn from another victims home equity line of credit. In addition to his check fraud scheme, Onwuzurike was convicted of “access device fraud” for stealing credit card information and using the information to make unauthorized charges on victims accounts.
- Florida Man Sentenced for Check-Kiting Bank Fraud Scheme (2016)
- In February of 2016, Eugene Hagood was sentenced to 4 years in federal prison for his role in a check-kiting bank fraud scheme. According to the complaint, Hagood’s check-kiting scheme involved him writing thirteen checks totaling over $1.5 million on his business checking account. Hagood’s business was a used car dealership which received financing to purchase vehicles through a third-party lender.In order to receive the loan, Hagood would send the third-party lender the vehicle title to hold until he sold the vehicle and could use the proceeds from the sale to pay off the debt. The issue was that the $1.5 million Hagood was writing were taken from a business checking account Hagood knew lacked sufficient funds. As a result, the third-party lender wrote new loan checks to Hagood and his used car dealership totaling over $1 million. Then, in an attempt to cover his tracks, Hagood disposed of 20 boxes of records and documents pertaining to the sales at his used car dealership. Hagood was caught on camera disposing of the boxes and the boxes were ultimately retrieved by the local sheriff’s office and turned over to the FBI.
Call a Federal Financial Crimes Attorney You Can Trust
With over 50 years of combined experience in all federal judicial practices and procedures, our comprehensive attorney-team approach ensures an aggressive criminal defense and the best outcome for each of our clients.
We have defended public companies and private individuals and will strive to protect you, your family, and your rights from charges and accusations of fraud.
If you have been charged with conspiracy to commit check fraud or a related financial crime, call a bank fraud attorney today.