Bank Fraud Elements of the Offense

Section 1344 states two offences, and the elements differ between them. Under the first prong the government must prove that the defendant knowingly executed or attempted to execute a scheme to defraud a financial institution, and did so with intent to defraud. Under the second prong it must prove a scheme to obtain money, 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 pretences, representations, or promises, executed or attempted knowingly and with intent to defraud.

Both prongs require that the institution qualify as a financial institution under the statutory definition. Law Offices Of SRIS, P.C. has been practicing since 1997. To discuss a bank fraud charge, request a consultation at (888) 437-7747.

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The Financial Institution Element

This is the element that distinguishes § 1344 from the general fraud statutes and the source of federal jurisdiction. The statutory definition reaches federally insured banks and credit unions and extends to certain other entities, including mortgage lending businesses and institutions with federally insured deposits.

The government must establish it rather than assume it, generally by certificate or testimony about insured status. Where the entity involved was a private lender, a broker rather than the funding source, a servicer, or a platform, the element is genuinely worth examining, and where it fails the count fails.

Scheme, and Which Prong

The first prong requires a scheme to defraud the institution itself. The second requires a scheme to obtain property owned by or in the custody or control of an institution, which does not require the institution to be the intended victim. Loss falling on a customer, a title company, or an investor can satisfy the second prong where the property passed through the institution’s hands.

That difference matters analytically. Prosecutors frequently charge both in the alternative, and reading which prong the evidence actually supports is the first step, because what the government must prove about the target of the deception is not the same under each.

Under either prong, the false pretences must be material, meaning capable of influencing the decision of a reasonable lender. And the government need not prove the scheme succeeded, since attempts are covered.

Knowing Execution and Intent to Defraud

The defendant must have knowingly executed or attempted to execute the scheme, and must have acted with intent to defraud, meaning an intent to deceive for the purpose of causing financial or property loss.

Each execution can constitute a separate offence, which is why a single lending relationship can generate many counts from individual draws, payments, or transactions.

Good faith negates the intent element entirely. Because lending transactions routinely involve forms prepared by intermediaries and documents signed without close reading, this element is where the substantive contest usually sits.

Frequently Asked Questions

How many elements does bank fraud have?

It depends on the prong charged. Both require a knowing execution or attempted execution of a scheme, an intent to defraud, and the involvement of an entity qualifying as a financial institution. The first prong requires a scheme to defraud the institution itself; the second requires a scheme to obtain property owned by or under the custody or control of an institution by false pretences.

What is the difference between the two prongs?

Whether the institution must be the intended victim. Under the first prong it must. Under the second the property need only be owned by or in the custody or control of the institution, so a scheme whose loss fell on a customer, a title company, or an investor can still be charged. Prosecutors commonly plead both in the alternative.

Does the bank have to lose money?

No. Attempts are covered, so the scheme need not have succeeded, and under the second prong the loss can fall on someone other than the institution. Loss becomes decisive at sentencing rather than at conviction, because the advisory Guidelines range in a fraud case is driven principally by the loss amount.

Is insured status really an element?

Yes. The entity must qualify as a financial institution under the statutory definition, and that is what supplies federal jurisdiction. The government establishes it, usually by certificate or testimony. The definition is broad but not unlimited, so where the lender was a private investor, broker, servicer, or platform the element deserves examination.

Why is each transaction a separate count?

Because each execution of the scheme can constitute a separate offence under the statute. In a lending relationship that can mean individual draws, payments, or transactions each supporting a count, which is why indictments in this area frequently look much larger than the underlying conduct.

Does materiality apply here?

Yes. The false pretences must be capable of influencing the decision of a reasonable lender. That argument has unusual force in lending cases because underwriting is documented: where the institution approved on independent grounds, did not require verification of the disputed item, or would have approved on accurate figures, materiality is genuinely contestable.

Working With Law Offices Of SRIS, P.C.

The first analytical step in a § 1344 case is establishing which prong the indictment actually pleads and whether the entity involved qualifies as a financial institution. Those two questions frame everything that follows, including what the government must prove about who was deceived.

Mr. Sris, Owner and Founder of Law Offices Of SRIS, P.C., is a former prosecutor and is admitted in Virginia, Maryland, the District of Columbia, New Jersey, and New York. The firm has been practicing since 1997. Mr. Sris and the firm’s Of Counsel attorneys handle criminal defense matters across those jurisdictions, which matters in federal practice because a single investigation frequently reaches conduct, witnesses, and records in more than one state. Mr. Sris brings a background in accounting and information systems from George Mason University, applied to complex financial and technology-related cases.

The firm serves Northern Virginia from 1655 Fort Myer Dr, Suite 700, Room 719, Arlington, VA 22209 and central Virginia from 7400 Beaufont Springs Drive, Suite 300, Room 395, Richmond, VA 23225. By appointment. Call (888) 437-7747 to schedule. Request a consultation. Reach our location at (888) 437-7747.

This page provides general information about the elements of federal bank fraud and does not create an attorney-client relationship. Case results depend on a variety of factors unique to each case. Results may vary.

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These are the elements the government must prove. Our page on bank fraud charges covers the offence as a whole.