Bank and mortgage fraud may involve several underlying offenses which can lead to convictions on multiple charges, imprisonment, and significant fines. These offenses may be perpetrated by individuals acting alone or be part of organized criminal activity involving multiple actors. Regardless of how many individuals are involved, any allegations of bank or mortgage fraud carry the potential of prison time, a criminal record, and adverse impact to future employment opportunities.
If you have been accused of bank or mortgage fraud, or you have been questioned in connection with an investigation that might give rise to these charges, it is important to be informed of your rights, potential defenses, the consequences of a conviction, and to seek the advice of an experienced and knowledgeable bank and mortgage fraud lawyer who can carefully examine the facts involved in your case and prepare an effective legal strategy for your defense.
At Delahunty & Edelman LLP, our team of attorneys are skilled and experienced in handling complex bank fraud and mortgage fraud defense cases in California and nationwide from our San Francisco office. If you have been accused of mortgage or banking fraud, contact us today at (415) 891-6210 for a complimentary evaluation of your matter.
Bank fraud is a federal offense that occurs when an individual uses deception, whether through identity theft, forgery, falsification of documents, fraudulent loans, stolen checks, or any other misrepresentation, to steal money or other property from a financial institution or its depositors. At its core, it usually involves an alleged misrepresentation to a bank that results in an improper transfer of funds.
Small business owners are frequently investigated for it. For example, fraud relating to PPP loans, COVID relief funds, and SBA loans commonly under scrutiny by federal law enforcement investigators. Sometimes, or even simultaneously, the government may allege that this such conduct is also mail fraud or wire fraud.
Typically, these charges are brought in federal court, but the underlying offenses involved in bank fraud may also be prosecuted under the California Penal Code in state court.
Bank fraud, whether it is charged as such or described under a theory of mail or wire fraud, carries maximum penalties under federal law of up to 30 years of imprisonment and fines of up to one million dollars.
If proven, bank fraud also commonly results in collateral consequences. For example, bank fraud is classified as a “crime involving moral turpitude,” which means that a conviction may also impact an individual’s future access to financial institutions and carry immigration consequences for non-citizens.
Mortgage fraud is not criminalized by a separate federal statute. Instead, federal authorities typically charge it under a theory of bank, mail, or wire fraud. That aside, mortgage fraud generally occurs when an individual or group of individuals use intentional misrepresentations or omissions to induce the funding, purchase, or insurance of a mortgage loan or the terms relating to it.
It comes in several forms that the government commonly investigates. For example, mortgage fraud is sometimes committed by individuals seeking to obtain a loan or more advantageous loan terms for themselves through some type of intentional misrepresentation to obtain a mortgage. This is sometimes referred to as “origination” mortgage fraud. Examples of it include falsely identifying a property as a primary residence or falsely identifying the borrowers assets on a loan application.
However, mortgage fraud is also commonly committed in a greater, more organized way. Such schemes might involve fictitious or “straw” buyers (i.e., real individuals or entities that usually never obtain true control of the property). For example, the government may allege that some individuals have bought and sold a variety of properties in a “short sale” scheme that involved fictitious buyers and sellers. Additionally, some alleged mortgage fraud schemes may victimize homeowners and seniors, in addition to financial institutions. Such schemes include equity skimming, loan modification schemes, foreclosure rescue schemes, and home equity conversion mortgage (HECM) schemes.
To prosecute mortgage fraud, the federal government must show that a financial institution was involved. Federal law defines this term. It includes a broad list of applicable businesses and entities. Essentially, however, if the alleged scheme involved the transfer of funds to or from an FDIC-insured entity, or an entity whose primary purpose relates to issuing loans secured by a property (e.g., so-called “hard money” lenders), it may be charged under federal statutes.
The potential penalties that may be imposed for a conviction related to mortgage fraud vary depending on the specific underlying charges. Because mortgage fraud commonly involves allegations of misrepresentations directed toward financial institutions, the penalty may include a maximum sentence of 30 years and a $1,000,000 fine. In general, these federal offenses are classified as felonies and carry the potential of significant fines and jail time.
If prosecuted under California state law, a defendant who is convicted of misdemeanor mortgage fraud may face up to $1,000 in fines and be sentenced to serve up to one year in prison. If convicted of felony mortgage fraud, defendants may be sentenced to up to three years in prison and be ordered to pay fines of up to $10,000. Convictions for mortgage fraud also result in deportation of green card holders and other non-citizens.
Allegations of bank fraud or mortgage fraud can lead to both state and federal criminal charges, significant fines, and imprisonment. They are serious crimes. To prove them, the government typically assembles a case after a lengthy investigation. The investigation’s conclusion usually results in substantial documentation and a large of number of detailed financial transactions. Accordingly, the government’s proffered proof of the alleged scheme may initially appear overwhelming.
Defendants benefit from an attorney that can do two things in response to these charges. First, presenting an effective defense against these charges involves an in-depth analysis and understanding of the relevant facts. It is not enough to just assume that there is too much information to fully understand. Second, it is important to figure out what matters and what doesn’t. Put another way, it is critical to zero-in on the handful of facts that usually form the lynch pin of the government’s case. Doing both will substantially improve your ability to present a vigorous defense to such charges.
At Delahunty & Edelman LLP, our team of attorneys are skilled and experienced in handling complex bank fraud and mortgage fraud defense cases in California and nationwide. If you have been accused of mortgage fraud, contact us today at (415) 891-6210 for a complimentary evaluation of your case.