Financial Institutions Fraud

Article excerpt

I.   INTRODUCTION

II.  BANK FRAUD STATUTE
     A. Purpose and Scope
     B. Elements of an Offense
        1. Knowledge
        2. Executes or Attempts to Execute
        3. Scheme or Artifice
        4. To Defraud or Obtain Monies By False or Fraudulent
           Pretenses
           a. Defrauding a Financial Institution
           b. False or Fraudulent Pretenses
        5. Financial Institution
     C. Defenses
        1. Custody or Control
        2. Good Faith
        3. Multiplicity of the Indictment
     D. Penalties

III. THE FINANCIAL INSTITUTIONS REFORM, RECOVERY, AND
     ENFORCEMENT ACT
     A. Purpose and Scope
     B. Civil Sanctions for Insider Fraud
        1. Applicable Law in Civil Cases under FIRREA:
           Atherton v. FDIC
        2. Federal Common Law Post-Atherton: "No-Duty"
           Rule
        3. Federal Common Law Post-Atherton: Circuit Split on
           the D'Oench Doctrine
     C. Criminal Penalties Under 12 U.S.C. [section] 1818(j)
        1. Scope
        2. Elements
        3. Penalties
     D. Double Jeopardy
        1. The Dual Functions of the FDIC
        2. Hudson v. United States

IV.  THE BANK SECRECY ACT
     A. Purpose
     B. Title I: Record-Keeping Requirements
        1. Additional Records to Be Retained by Banks
        2. Additional Records to Be Retained by Brokers and
           Dealers in Securities
        3. Additional Records to be Retained by Casinos
        4. Additional Records to be Retained by Currency
           Dealers and Exchangers
        5. Enforcement and Penalties
     C. Title II: Reporting Requirements
        1. Money Services Businesses
        2. Currency Transaction Reports
           a. Domestic Currency Transactions
           b. Foreign Currency Transactions
           c. Transactions with Foreign Financial Agencies
        3. International Transportation of Currency and
           Monetary Instruments Reports
           a. Elements of the Offense
                i. Legal Duty to File
               ii. Knowledge
              iii. Willful Violation of the Reporting
                   Requirement
           b. Enforcement and Penalties
           c. Defenses
               i. Excessive Fines
              ii. Double Jeopardy
        4. Structuring Transactions to Avoid Reporting
           Requirements
           a. Elements
           b. Enforcement and Penalties
           c. Defenses

I. INTRODUCTION

This article reviews the development and application of three federal criminal statutes that govern offenses by or against financial institutions. Section II analyzes the Bank Fraud Statute ("BFS"), (1) which concerns fraud against financial institutions. Section HI reviews the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"), (2) which regulates the conduct of officers, directors, and third-party fiduciaries who fraudulently managed financial institutions. Section IV examines the Bank Secrecy Act ("BSA"), (3) which prohibits deceptive financial transactions designed to evade certain reporting requirements.

II. BANK FRAUD STATUTE

This Section examines the Bank Fraud Statute ("BFS"), 18 U.S.C. [section] 1344. Specifically, this Section addresses the purpose and broad scope of [section] 1344; delineates its five statutory elements; discusses several defenses to a charge of bank fraud; and presents the sanctions for violating the statute.

A. Purpose and Scope

The purpose of the BFS is to protect the interests of the federal government as an insurer of financial institutions. (4) The driving force behind the legislation was the Supreme Court's decision in Williams v. United States, (5) where the Court held that the crime of making false statements to financial institutions did not encompass check-kiting schemes. (6) Congress passed [section] 1344 in reaction to this ruling primarily to give the government the ability to prosecute check-kiting. …