FEDERAL CRIMINAL LAWYERS

What is Bank Fraud

You submitted a business loan application with inflated revenue figures. Or deposited checks you knew wouldn’t clear. Or overstated income on a mortgage application. Now you’re charged with federal bank fraud under 18 USC § 1344. The indictment lists fifteen counts. News articles say you’re “facing 450 years.” You lied to a bank—how is that a federal crime carrying decades in prison?

Understanding what bank fraud is—not the statute’s language, but what it means for YOUR situation—requires defending these cases across federal districts. Todd Spodek, a second-generation criminal defense attorney with hundreds of federal trials and experience defending high-profile fraud cases (Anna Delvey on Netflix’s “Inventing Anna”), has seen how prosecutors use bank fraud charges to pressure pleas. Each transaction with false information becomes a separate federal count. If you’re facing bank fraud charges, call 212-300-5196.

What Counts as Bank Fraud

Bank fraud under 18 USC § 1344 covers two types: (1) scheme to defraud a financial institution, OR (2) obtaining money from a financial institution through false pretenses. Remarkably broad. You’re a business owner who submitted SBA loan application with falsified tax returns showing $2 million revenue (actual: $900,000), fabricated client contracts. Bank approved $500,000 based on false documents. That’s bank fraud—obtaining money through false pretenses. Doesn’t matter if your business was legitimate or you intended to repay. You knowingly submitted false information to obtain money from a bank.

Check kiting? You write $75,000 check from Bank A (insufficient funds), deposit at Bank B, withdraw cash before it clears, write check from Bank B back to Bank A to cover original check. Repeat over four months creating $300,000 “float.” That’s bank fraud—scheme to defraud through artificial balances. PPP fraud dominates federal dockets since 2020. You overstated employee count and payroll, requested $400,000 when actual entitlement was $180,000. SBA approved full amount. You used some for payroll, some personally. SBA investigates in 2024. Bank fraud? Absolutely—false application to obtain funds from federally insured lender.

“Financial institution” is very broad—banks, credit unions, mortgage lenders, federal credit agencies. Very broad. Each transaction becomes separate count. Loan application with five false statements? Five counts. Ten kited checks? Ten counts. Prosecutors charge fifteen to twenty counts knowing they’ll negotiate to two or three for plea. Multi-count indictment creates enormous pressure.

Intent is crucial. Bank fraud requires you “knowingly” executed the scheme. Good faith belief in accuracy of statements—even if wrong—negates intent. If you believed revenue figures were accurate based on accountant’s calculations, if you relied on business partner representations, if you had reasonable basis—that challenges intent, building defense requires contemporaneous documents showing good faith inquiries, reliance on professional advice. Spodek Law Group defends clients across all bank fraud types—false loan applications, check kiting, PPP fraud, mortgage fraud. The statute’s breadth means almost any dishonest interaction with financial institution can become federal case.

The 30-Year Maximum vs. Reality

Bank fraud carries up to thirty years and $1 million fine per count. Prosecutors charge fifteen counts. News reports: “facing 450 years.” Nonsense. Actual sentencing starts at base offense level seven. Level seven with zero criminal history equals zero to six months. But loss amount destroys that. Guidelines add levels based on bank loss: $100K-$250K adds ten levels. Jump to $1.5M-$3.5M—add sixteen. Hit $10M-$25M territory, add twenty-two. Bank fraud with $2M loss: base level seven, add sixteen for loss, total level twenty-three. Guideline range: 46 to 57 months—four to five years federal prison.

More than ten victims adds two levels. Sophisticated means (shell companies, false documents) adds two. Leadership role adds four. These stack. That level twenty-three becomes level twenty-seven—70 to 87 months (six to seven years). Acceptance of responsibility (pleading guilty early) reduces by three levels. Substantial assistance (cooperating against others via 5K1.1 agreement) can reduce by thirty to fifty percent. That level twenty-three offense (four to five years) with acceptance becomes level twenty (33 to 41 months). With cooperation, potentially 18 to 24 months.

Concrete examples: False PPP loan ($220K overstatement): likely 12-18 months. Check kiting ($500K float, $150K bank loss): 18-24 months. False business loan ($2.5M, bank loses $1.8M): 42-51 months even with acceptance. Number of counts you plead to matters differently than most think. Pleading to three versus fifteen counts typically doesn’t change guideline range—loss amount already accounts for full scope. Federal prosecutors charge fifteen to twenty counts knowing they’ll negotiate to two or three. Multi-count indictment is pressure tactic. Spodek has negotiated these cases for years—first offers are never final offers, prosecutors use count multiplication as leverage.

Investigation begins when bank files Suspicious Activity Report. FBI investigates, subpoenas records, interviews witnesses. Can last months or years. First critical decision: if agents contact you, talk without lawyer or invoke counsel. Most people catastrophically talk, thinking they’ll “clear this up.” Wrong. Agents are building prosecution. Get counsel immediately. Target letter arrives late in investigation—AUSA informs you’re target, may be indicted. Typically thirty to sixty days. Your narrow window to potentially prevent indictment charges. Attorney contacts AUSA, possibly presents information avoiding charges. Once indicted, negotiating position weakens. Indictment means grand jury returned charges—you’re arrested or surrender, arraigned within days. For white-collar fraud, release is typical with conditions: surrender passport, GPS monitoring, account restrictions. Pretrial lasts six to eighteen months. You receive discovery—bank records, applications, emails, witness statements. Attorney reviews evidence, files motions, negotiates charges. Government’s first offer on the charges: plead to eight counts, $3M loss, seven-eight years. Almost never final. As trial approaches, offers improve: plead to two counts, $800K loss, three-four years. Second critical decision on cooperation: cooperate or don’t. Cooperation means substantial assistance prosecuting others on related charges. Sign 5K1.1 agreement, debrief with agents, testify if needed, receive downward departure on charges. Can reduce sentence thirty to fifty percent. Only valuable if you have information on OTHERS involved in the charges. Complete truthfulness required when discussing the charges.

What Defense Does

Challenging intent: Bank fraud requires “knowingly” executed scheme. Good faith belief negates intent. You genuinely believed revenue projections, relied on CPA, based valuations on professional appraisals. Building defense: contemporaneous emails to accountant, communications with appraisers, expert witnesses supporting reasonableness.

Loss amount fights are most important. Government inflates by including “intended loss” versus “actual loss.” You applied for $500K using false statements. Government claims $500K intended loss. Challenge: bank approved $300K, you paid $180K, bank recovered $80K from collateral. Actual loss: $40K. Reducing from $500K to $40K drops guideline twelve levels—difference between four years and six months. Loss fights happen at plea (negotiating stipulated amount) and sentencing (challenging PSR). Government wants $3M stipulation. Challenge: which banks lost money? What was recovered? What losses from your conduct versus co-defendants? What’s foreseeable versus intended? Reducing from $3M to $900K drops guideline six levels—eighteen to twenty-four months less. Todd Spodek handles cases across U.S. Attorneys’ Offices nationwide—understanding how different districts calculate loss matters. In one recent case, we reduced government’s $2M calculation to $400K, changing five-year range to two years.

Multi-count negotiation: Prosecutors charge fifteen expecting to plead to two or three. First offer never final. If government demands eight counts, seven-year recommendation, that drops as trial approaches. Negotiating from strength requires preparing for trial—filing motions, identifying witness problems, conducting expert analysis.

If you’re charged with bank fraud—or received target letter—your window is short. Target letters give thirty to sixty days before indictment. Once indicted, position weakens. Call now.