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Examples of financial institution fraud

| Jun 3, 2019 | Bank Fraud |

There are numerous ways one can commit financial institution fraud in Tennessee. Victims can be retail banks, credit unions, savings and loans associations, investment banks, insurance companies, brokerage firms and mortgage companies.

According to the Federal Deposit Insurance Corporation, bank fraud occurs when someone knowingly carries out a scheme to fraudulently obtain property or assets that belong to a financial institution or defraud them in any way. Convicted offenders can face serious penalties, such as up to 30 years in prison, up to $1 million in fines or both. This fraudulent activity can look like a variety of things. 

The Internal Revenue Service discusses some examples of what bank fraud can look like. These include:

  • Mortgage fraud – a common occurrence, people provide false information, such as inflated income, a different name or residential status, to obtain a mortgage
  • Money laundering – opening bank accounts in which to hold money received from criminal activities
  • Counterfeit money – using counterfeit checks to inflate the balance of accounts for withdrawal
  • Identity theft – using someone else’s identity to take out money or receive a loan
  • Rental fraud scheme – using Ponzi scheme to defraud investors of rental units and making fraudulent mortgage transactions
  • Embezzlement – an employee takes money or other assets from a financial institution and manipulates the books to hide the activity

Fraud schemes result in financial loss for the financial institutions as well as investors, and they can ruin one’s credit when offenders steal identity and use it falsely. If convicted, the judge can demand that offenders pay the victims back in addition to the associated fines and/or prison time.