Federal Bank Fraud and Related Texas Financial Crimes

Bank-fraud proof map

1. Charged count and statutory clause
2. Institution and property
3. Alleged representation and knowledge
4. Execution, date and records
5. Witnesses and trial issues

Illustrative review framework drawn from this guide. Apply the charged provision and case-specific evidence; this is not a conclusion about any actual case.

Reading the charge

The first page of the indictment might speak of years of financial difficulty. If you carry on to the specific charges, there should be an allegation concerning a particular execution or an attempt to execute a scheme, and the government has to prove that allegation beyond a reasonable doubt. A missed payment alone does not achieve that, nor does a poor business year.

The offense set out in 18 U.S.C. § 1344 may be prosecuted in one of two ways. The first clause relates to defrauding a financial institution, while the second relates to obtaining money or other property which a financial institution owns, holds or controls by means of false pretenses, representations or promises. In both cases the conduct in question must be done knowingly. Even if the application fails it is still possible to bring an attempt charge, so the fact that ‘the bank never funded it’ does not necessarily close the case.

One of the leading decisions began with purchases at Target. Kevin Loughrin stole checks, changed them, used them to buy merchandise and returned the purchases for cash. He argued that he hadn’t intended to defraud a bank. The Supreme Court held that clause (2) didn’t require that specific intent. His altered checks supplied the means of obtaining bank funds. But Loughrin v. United States, 573 U.S. 351 (2014), also rejected an unlimited reading that would capture every fraud in which a bank happened to play some incidental role.

Keep that distinction in mind when reading the charge. The government has to connect the alleged falsehood to the property under the applicable clause. Finding an inaccurate statement somewhere in a loan file isn’t a substitute for doing so.

What the bank owned or controlled

The name listed on an account does not determine who has a property interest in the deposit. In Shaw v. United States, 580 U.S. 63 (2016), a man had used the customer’s account details to get money and claimed that his intention had been to cheat the customer not the bank. The Supreme Court stated that the bank also had a property interest in the funds. This undermined the idea that taking a customer’s deposits could not be considered fraudulent under clause (1).

When a loan is arranged using an app, you should look at the agreements associated with that app. The lender, the servicer, and the institution that holds the money could all be different companies. Sections 20 and 27 can be used to find out if the institution meets the federal definitions. Although an FDIC certificate might be relevant, the absence of deposit insurance does not necessarily mean anything if some other statutory category applies. The inquiry is about the real entity and its status at the time the conduct took place.

The fact that there are five withdrawals does not mean that there are five separate executions of bank fraud. Place the charged counts alongside the relevant transaction records and consider why the prosecutor has grouped them as such. Were there indeed separate acts, or did multiple entries come about as a result of a single execution that had already been charged? To be able to answer that question, the counsel will need to know the details of the transfers and also refer to the pertinent decisions by the Fifth Circuit.

A mistake, a false statement, or a scheme?

Let’s assume that an application reports revenue of $1 million while the ledger shows $800,000. Before anyone calls the discrepancy a lie, it’s necessary to check the dates. Does one figure cover twelve months while the other covers ten? If the dates agree, then the calculations should be examined. An error in the formula, a contested accounting method, and the fabrication of sales are all ways in which the total could be inflated. Each of these scenarios gives rise to different explanations as to how the figure was arrived at.

It is possible that there are two files named final.xlsx. In a hypothetical review of the files, one might have been signed at 10 a.m. and the other attached to an email at 2 p.m. The version sent later could include a correction, an unauthorized addition or possibly no meaningful change whatsoever. The files should be compared before deciding on an explanation and the attachments from both emails should be kept, even if one of them contains an entry which the client would prefer not to discuss.

You should retain any disclosure that went with the forecast. For instance, the borrower might have informed the bank that the projected revenue was based on an unsigned contract. This shows that the bank was made aware of the uncertainty involved. A forged signature page would be a different matter: it would then have to be established whether the borrower had knowingly represented the unsigned contract as if it were signed. Just expecting eventually to earn enough to repay does not mean that the signature is genuine.

A statement which has a natural tendency or capacity to affect the decision is a material statement; the question of actual reliance must be considered separately. The fact that the bank did not verify an invented amount of $200,000 in revenue does not justify the invention. In the case where the matter in question involves something that has been omitted, the entire communication should be examined. The legal adviser has to determine whether there was a duty to disclose or whether the half-truth stated made the matter misleading.

Working through the loan file

Suppose there are two invoices contained in a borrowing-base certificate. Invoice A is a genuine invoice but is beyond the limit with regard to age, while Invoice B is one which is sent to a customer who does not exist. In both cases the amount eligible is increased. However, Invoice A requires a review of the eligibility term, the exceptions and the preparer’s understanding; Invoice B calls for evidence as to who created the customer and who was aware of it. These questions should not be bundled up under a single category like ‘bad receivables.’

The usefulness of that comparison lies in the fact that “inflated receivables” may mask a number of different claims. For each invoice you should obtain the related order, the delivery record and the payment history. Compare the information shown by these documents on the certificate date with that which was later discovered. A review carried out after default cannot prove, on the basis of that alone, that the person who signed knew all the facts that the auditor eventually identified.

Perhaps the credit committee were made aware of the old invoices. Get the memorandum that contains the warning together with its schedules and then check what the minutes say. Which invoices were mentioned? What exception did the committee agree to? If they had approved the invoice even though it was old this could provide an explanation for including a real receivable; it would say nothing about a fictitious customer about whom the committee had never been informed.

Other transactions and lending programs

A house being rented out today doesn’t establish what its buyer intended when signing an owner-occupancy statement months earlier. Check the dates of the lease, a job change or a decision to move. Broker correspondence may show that the plan changed, or it may undermine that explanation. The same care belongs in an appraisal dispute: obtain the valuation date, comparables and work file before deciding what the number proves about the borrower’s knowledge.

The application instructions which were in force at the time need to be used in PPP and other SBA-related cases; it is not acceptable to assess an earlier submission on the basis of a later version of the instructions without first checking for any changes. Different representations may be required for loan applications and for forgiveness applications. In cases where a broker prepared the documentation, it is necessary to determine what the borrower provided and what they actually approved. The fact that funds have been received does not indicate who entered the disputed payroll figure.

When dealing with a disputed check, it is useful to start by looking at the image and comparing the alleged alteration with both the item that was deposited and the bank’s records of how it was processed. In the case of an ACH dispute, you should refer to the authorization and return records. Did the entry settle, reverse or get rejected? In the event of an account takeover, the account and device logs might assist in identifying the user. Just be aware that with an office IP address, multiple people could have used the network.

A report from a processor could indicate card sales of $50,000 before refunds, chargebacks and a reserve have been taken away, but you should not refer to that as $50,000 in settled payments unless you have checked and reconciled the report. In the field of trade finance, an analogous ambiguity can occur when a shipment is noted as overdue: the goods might still be in a warehouse or the shipment might have never actually taken place. The records of orders and shipping can help to clarify this ambiguity. Company transfers also require the relevant authorization documents. A real resolution which grants an employee authority is different in nature from a forged resolution, even if both transactions broke an internal company rule. Any instance of employee misapplication or a fiduciary property charge must be assessed in accordance with the relevant statute.

Who made the entry?

The most useful aspects of a spreadsheet can be lost when it is printed. It is important to keep the original file, including the formulas and the version history, as well as to save a readable copy. The old entries should not be corrected in place. If it is necessary to provide an explanation, counsel can determine the best way to document it without damaging the original.

Next to each timestamp record the time zone. In some cases, if the server logs the time in UTC and the email system shows the local time, an apparent time gap of a number of hours may vanish when the times are converted. Use the offset that was in effect on that date and continue to retain the entries that have not been converted. Access logs require the same level of attention: since they may involve shared credentials, they do not always allow conclusions to be drawn about identity, and the receipt of an attachment does not prove that the message has been read.

Find the time at which the bank witness became involved. In the case where the answer is ‘after the default’, find out how the witness obtained knowledge of what is said to have taken place at the origination stage—was it from a conversation, the credit file or a report drawn up for the investigation? The approving officer and the custodian might be able to answer entirely different questions. Legal counsel should not allow a job title to substitute for the basis needed for the testimony.

Rule 17(c) restricts the use of subpoenas to obtain records from third parties; lawyers have to show the reason for the request. It is also necessary to distinguish between account records and suspicious-activity reports, the latter being subject to special confidentiality restrictions. However, the confidentiality restrictions remain even if the relevant underlying transaction records are obtained through lawful means.

Related federal and Texas charges

An indictment involving bank fraud can include a wire fraud charge relating to an email or an electronic transfer. Locate the transmission referred to in § 1343 and then determine how it contributed to the scheme alleged to have been aimed at obtaining money or property. It is also necessary to provide evidence of the transmission’s interstate or foreign character. Just because an email is in the file does not mean that it proves the other elements.

Two decisions are particularly relevant to a related wire-fraud count:

In Ciminelli v. United States, 598 U.S. 306 (2023), the Supreme Court dismissed the right-to-control doctrine as applied in a bid-rigging case in New York. Information that might have been useful for making economic decisions was not in itself the kind of traditional property interest that was required.

In Kousisis v. United States (2025) it was found that false statements made concerning a disadvantaged-business supplier resulted in painting contracts being awarded in Pennsylvania. The Court ruled that fraudulent inducement can be sufficient to establish property fraud even in the absence of a net economic loss. The fact that valuable work was carried out does not, on its own, eliminate the alleged material deception.

If you are dealing with a later transfer that is charged as laundering, you must determine when the alleged proceeds came into existence. Section 1956(a)(1) specifies that there must be proceeds from specified unlawful activity, together with the relevant knowledge and the purpose or design required by the statutory provision charged. Section 1957 has different elements and provides that for a qualifying monetary transaction there must be criminally derived property amounting to more than $10,000. Any money that goes in to or comes out of a mixed account must be traced. A chart using arrows is only as useful as the records on which those arrows are based.

To bring a charge under § 1349 it is necessary to have evidence that the person accused knowingly took part in the criminal agreement. The fact that an accountant attended a meeting and then issued an invoice does not show what had been agreed. The messages sent around the meeting might be useful in checking a witness’s version of the meeting. Any cooperation agreement should also be looked at for any terms which are relevant to the witness’s credibility.

Texas charging provisions to check against the alleged conduct:

§ 31.03 — theft.

§ 32.21 — forgery.

§ 32.31 — abuse of a credit card or a debit card.

§ 32.32 — making a false statement with the intention of obtaining property or credit.

§ 32.45 — misapplication of fiduciary property.

§ 32.51 — the fraudulent use or possession of identifying information.

Each offense has its own elements and grading. There is no single offense under the Texas Penal Code that corresponds to federal § 1344.

Preserving records and dealing with investigators

Retain all the subpoena papers, including the schedule which lists the records that are being requested, and calendar the response deadline. Inform your lawyer about any automatic deletion settings. Do not make any changes to the existing files, do not coordinate your accounts with colleagues, and do not use the systems of a previous employer after access has been cancelled.

Prior to a company interview, it is necessary to find out who the lawyer is representing. It is possible for the company to be the only client and in that case it might have control over the privilege. An employee cannot assume the company will keep the interview or its contents from investigators. Different advice may be required if the interests in question are different. It is important to talk about an advice-of-counsel defense before raising it, as doing so could bring other privileged communications into question.

It is advisable to obtain advice before an interview or proffer. Under Section 1001 there can be separate liability for false statements, and the protection afforded by a proffer depends on the terms of that proffer. In the case of a search, lawyers will need the warrant, the return and any available affidavit in order to determine whether a motion for suppression has both a factual and a legal basis.

Preparing for trial

For every count, gather the supporting documents, the probable witnesses, and the disputed facts, and also include the adverse records. This enables the lawyer to evaluate the proposed plea or other resolution based on the evidence which would actually come before the jury.

There is also a calendar and a document file associated with trial preparation. Motions relating to the venue and joinder, for example, might become due before the complete records have arrived. Although Section 3293 provides extended limitation periods for certain financial offenses, it is still necessary to identify both the offense charged and the date of execution. When an accountant is to reconcile the receivables, you should give the accountant the disputed invoices together with the agreement, not an undefined assignment to ‘review everything’. The expert’s method and disclosure must comply with Rule 702 and the judge’s orders.

The omission of a $20,000 repayment from the loss schedule provides the counsel with a specific question for the analyst. They should be given the statement and then asked to indicate where the credit appears. If the credit has been omitted, it should be checked whether the same method was used in relation to the other entries. The fact that one correction is made does not mean that the whole schedule is invalid. When dealing with a loan officer, it is necessary to find out which version of the application the witness actually received before inquiring about its contents.

The accused will decide whether or not to give testimony after talking to their lawyer; the government retains the burden of proof whether or not the accused testifies. The proposed instructions should be checked in light of the relevant § 1344 provision. Request supported good-faith or limiting instructions, preserve objections under Rule 30, and make necessary offers of proof. Once the verdict has been reached, Rule 29, Rule 33 and the rules regarding appeals and deadlines should each be checked separately.

Loss, restitution and forfeiture

The bank could provide a figure showing the amount that has been charged off. You should request the calculation that goes with it. Find out what advances were included in the figure, what had been repaid and what became of the collateral. After those entries have been matched up, the lawyer will then be able to determine how the appropriate sentencing or financial rule applies to them. A recording of an accounting transaction does not serve as a ready-made solution for all such purposes.

The financial issues need separate calculations:

For guideline loss, use the appropriate edition of § 2B1.1, including any intended loss and credits where they apply.

When looking into restitution, you must identify the victims as well as the losses that qualify as being caused by the offense under sections 3663A to 3664.

To obtain a forfeiture, it is necessary to establish the property connection required by § 982 or by the other statute cited.

Payment toward restitution does not automatically discharge forfeiture.

The person who ends up suffering a loss can be altered by a loan sale or a guarantee payment. You must trace the various events and the credit recoveries as the rule mandates. A reliable answer cannot be reached either by listing every advance or by relying on the final balance alone; the first method risks counting the same money twice and the second might fail to take into account a loss that was intended.

Sentencing and unresolved proceedings

The highest penalties provided in § 1344 are thirty years’ imprisonment and a fine of $1 million; however, they do not indicate the kind of sentence a client can expect. In order to have this conversation, the lawyer has to have the presentence report, the applicable edition of the guidelines, the defendant’s criminal history and the findings that the government is asking for. The court must also take into account the factors listed in § 3553(a).

A plea may leave the amount of loss contested; the agreement must specify what the client admits and what is still in dispute. Before signing, the matter of waiving an appeal should be discussed, as well as any possible immigration, professional-license or banking consequences.

A settlement letter from a bank might settle the civil debt without mentioning any criminal investigation; do not assume that the bank’s signature includes a promise from the prosecutor. Similarly, when looking at a federal agreement check to see if it leaves any state case, forfeiture dispute or professional proceeding open. The written commitments should make clear who is bound and what issues remain unresolved.

Getting records admitted

The bank statement and the chart prepared for the trial are not the same type of exhibit. With regard to the statement, Rule 803(6) provides for the business-record exception to the hearsay rule. It is necessary for counsel to look into how and when the record was made, whether the information came from someone with knowledge, and the bank’s usual practices. A qualifying certification under Rule 902(11) can establish the foundation without the need for live testimony, provided that the notice and inspection requirements of the rule are met. Nevertheless, it does not overcome all objections to the contents.

For instance, the bank might keep the borrower’s letter in its regular file; this does not mean that all the statements in the letter are true. You have to determine the purpose for which the letter is being used and also consider any relevant hearsay problems. In the same way, a transaction description that has been imported will need an explanation as to its source. Furthermore, a custodian who is familiar with the record-keeping system is not therefore qualified to interpret what the customer meant.

If you want a summary under Rule 1006, request to see the admissible underlying records and ask that the calculation be reproduced. The rule permits a summary of a large amount of material which is not conveniently examinable in court; the original documents or copies thereof must be made available for examination or copying at a reasonable time and place. Before checking whether an item has been added, check the inclusion criteria. A total which is mathematically correct may still contain duplicate entries, omit reversals or combine the principal with another figure. The admissibility of a chart which is used merely to help explain testimony is a different issue from that of a summary offered to prove the contents of the records.

It is worthwhile to compare the redactions with the original undeleted document; the court’s methods should be used to protect other customers and privileged material, at the same time as ensuring that the necessary context regarding the transaction is retained. The exhibit book should enable counsel to locate the source of any figure shown without requiring the jury to accept the chart on trust.

Other transactions and unfair prejudice

It is possible that an earlier default will be included in the government’s proposed exhibits even if the indictment is about a later application. One should investigate the reason for this. Although Rule 404(b) prevents the use of another act solely to show a person’s character or conduct in line with it, it does allow for certain other purposes, for example to show intent or the absence of a mistake. The prosecution’s notice must clearly state the permitted purpose and the reasons for it. The lawyer also needs to decide whether the government is instead asserting that the act is an integral part of the scheme in question and should look into how that claim is treated by the relevant authority.

Rule 403 still has to take into account the risks of unfair prejudice, confusion and the other particular dangers mentioned. A dispute concerning a loan that has nothing to do with the case might use up the whole trial without really helping to establish the statement which the jury has to decide; yet the records of that dispute could contain a disclosure or an approved exception which is of use to the defense. Before deciding to exclude everything connected with it, read the context. If admission is appropriate for a limited purpose, ask for an instruction which informs the jury of that purpose.

In the trial which involves bank fraud, wire fraud and laundering, the lawyers ought to evaluate joinder and severance in accordance with the relevant standards. An inflammatory description of an affiliate transfer cannot take the place of evidence showing knowledge regarding an earlier certificate. Exhibits and instructions that are specific to each count might help in keeping those issues separate even if severance is not possible. When moving in limine the party should state the evidence and the relief that is being asked for; nevertheless, the lawyers have to adhere to the judge’s instructions concerning the preservation of an objection when the issue comes up at trial.

Experts and reproducible calculations

When you are selecting an expert, you should first clarify the problem that the testimony is meant to address. For example, an accountant can be asked to reconcile a receivables schedule, a banking witness can be asked to explain an underwriting exception, and a digital examiner can be asked to examine the history of a disputed file. Different qualifications and records are required for these various tasks.

To establish the admissibility of the evidence Rule 702 requires the person putting it forward to do so by a preponderance of the evidence. This involves having sufficient facts or data, reliable principles and methods, and a reliable application which is shown in the opinion. Obtain the inputs and the formulas used in the other side’s report. In the case of an accountant who has deleted invoices because they were duplicates, there should be a means of identifying which ones they were and of reproducing the outcome. If a digital opinion assigns an action to a device, then you should find out what supports the further conclusion that this defendant used it.

Rule 704(b) bars an expert from stating an opinion about whether the defendant had a mental state or condition constituting an element of the crime charged or a defense. It would be wrong to present an accounting opinion as an unsubstantiated statement that the client intended to commit fraud or that they had acted innocently. Furthermore, Rule 16 and the scheduling order also deal with the duty to disclose. A helpful opinion given at too late a date or beyond the scope that had been disclosed can still cause difficulties no matter how convincing the figures may be.

Jury selection and opening statement

Under Federal Rule of Criminal Procedure 24, a court has the option of examining prospective jurors or permitting the attorneys to conduct the examination. Before proceeding with a lengthy attorney-led voir dire, it is important to check the judge’s procedure. Suggested questions could look at people’s assumptions regarding banks, executives, and financial loss without requiring the jurors to promise a verdict.

For example, would a single large bank loss cause a potential juror to think that someone had lied? Would the title of ‘chief executive’ cause the juror to suppose that he or she knew about every entry in each spreadsheet? Attention should also be paid to the opposite assumptions. A juror who thinks that all banks are careless might find it difficult to assess the evidence in a fair way. The follow-up should make the difference between ordinary experience and an inability to apply the court’s instructions. It is necessary to keep a contemporaneous record of strikes and to comply with both the constitutional limits and Rule 24.

In opening, choose a document the jury will actually see and explain its role. A borrowing-base certificate is easier to understand with a real entry from the admitted or expected evidence than with a string of unexplained accounting terms. Distinguish when the entry was made, when the bank advanced funds and when default occurred. Don’t promise that the accused will testify before that decision has been made. The defense can identify gaps it expects in the government’s proof without taking on a burden to prove an alternative story.

A count-by-count trial file

For each count, counsel should be able to locate the alleged execution, date, § 1344 clause, institution and property, disputed representation, evidence of knowledge, and the records and witnesses supporting or contradicting those propositions. Add the proposed instruction and any unresolved admissibility issue. Where several alleged representations appear in one count, research unanimity and alternative-means questions against the actual pleading and current Fifth Circuit law.

Separate a witness’s own observations from facts learned during an investigation. A decision maker can explain what reached the committee. A custodian can explain posting and reversal entries. An investigator should identify which conclusions come from documents, interviews or inference. For a cooperator, compare earlier accounts and contemporaneous messages and examine any benefit for cooperation. A benefit may bear on credibility without making every statement false.

At closing, return to the count and the evidence the jury received. If a number was wrong, acknowledge the error and explain the disputed inference about knowledge rather than insist that the record was perfect. A defense display should identify sources and avoid suggesting that the accused carries the burden of proof. Objections to a new prosecution theory or misleading argument still need to be made under the court’s procedures.

Individual roles and sentencing findings

A bank employee may face a misapplication allegation under § 656 in addition to bank fraud. A borrower, outside accountant and guarantor may also have different information and duties. Compare the signed documents with what each person supplied, reviewed and authorized. An accountant compiling figures is not necessarily certifying facts outside the engagement; a guarantor’s signature does not establish authorship of every attachment. The prosecution’s evidence and the applicable elements must establish the individual’s responsibility.

At sentencing, check more than the loss total. The presentence report may propose findings on relevant conduct, the number of victims, role, sophisticated means, obstruction or acceptance of responsibility. Each disputed finding needs a factual response. A complicated business structure doesn’t by itself resolve a sophisticated-means question, and responsibility for another participant’s conduct cannot simply be assumed from shared employment. Review the guideline edition and any ex post facto issue from an unfavorable amendment.

If the parties negotiate a plea, record any reservation of a loss, restitution or forfeiture issue in the agreement rather than leave it to an oral understanding. After trial, preserve challenges to the financial findings as well as the conviction. The notice of appeal has its own requirements, and an appeal waiver in a plea needs separate analysis.

Legal references: 18 U.S.C. §§ 1344, 1343, 1349, 1956 and 1957; the Texas Penal Code sections identified above; Loughrin, Shaw, Ciminelli and Kousisis; the Federal Rules of Criminal Procedure and Evidence; and applicable sentencing law. Counsel must check current Fifth Circuit decisions and the particular court’s rules and orders for the case being handled.

Practice area · Bank fraud

Dallas Bank Fraud Defense Lawyer

Heath Hyde’s practice page for these investigations and charges: the stages he handles, what to bring to a consultation, and how to reach the office.

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Related resources

• Texas and Federal Financial Crimes Defense
• Federal Bank Fraud Defense in Texas: Charges, Evidence, Wire Fraud, Money Laundering, and Trial
• Dallas Bank Fraud Defense Lawyer
• Wire Fraud Defense Lawyer in Texas
• Money Laundering Defense Lawyer in Texas

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• What Does Federal Bank Fraud Require Under 18 U.S.C. § 1344?
• How Do the Two Clauses of the Bank Fraud Statute Differ?
• Must the Bank Actually Lose Money?
• How Are Borrowing Base Certificates Investigated?

To discuss representation, contact Heath Hyde or call 903-439-0000. Representation begins only after the firm agrees to take the matter.