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Texas Fraud Laws: All About Bank Fraud

Criminal Law Blog by The Law Office of Greg Tsioros

Texas Fraud Laws: All About Bank Fraud

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When you work for a financial institution like a bank or credit union, you are expected to follow strict security measures. These measures are designed to prevent theft of funds and protect the security of customers who have accounts with the business.

When you find yourself accused of defrauding the financial institution that you work for, you need to defend yourself fully against the charges. You also need to understand the potential penalties that come with being convicted of bank fraud in Texas.

What is Bank Fraud?

Texas state law defines bank fraud as the purposeful deception of a financial institution for personal gain or profit. Financial institutions include:

  • Banks
  • Credit unions
  • Mortgage companies
  • Brokerage firms
  • Tax and accounting firms
  • Payday loan companies
  • Credit card companies
  • Any business that allows customers to deposit and withdraw money or secure financing or credit

Depending on the type of bank fraud that you are accused of committing in Texas, you can be charged with either a misdemeanor or felony. The penalties for this crime can include steep civil fines, probation and jail time. As a general rule, felony bank fraud convictions often result in harsher penalties than misdemeanor bank fraud convictions.

However, prosecutors and law enforcement must abide by the statute of limitations allowed under Texas state law when charging someone with bank fraud. Most types of bank fraud have a five-year statute of limitation. If the crime that you are accused of committing took place longer than five years ago, you cannot legally be charged and prosecuted.

Still, there are exceptions to this five-year limit. For example, forgery has a 10-year statute of limitation. Money laundering and credit card fraud have seven-year statutes of limitation.

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Types of Bank Fraud

A variety of monetary offenses are chargeable as bank fraud in Texas. One of the most common and oldest forms of bank fraud is embezzlement.

Embezzlement is a type of bank fraud that is committed most often by an employee of a financial institution who has access to the institution’s money. This employee fraudulently steals and uses the institution’s money for their own personal gain.

Another type of bank fraud is called abstraction. Abstraction is similar to bank fraud in that it involves an employee withdrawing money without the institution’s knowledge or consent. They then uses the stolen funds for his or her benefit or for the benefit of another person outside of the financial institution.

An employee of a bank, credit union or other financial business can also commit a type of bank fraud known as willful misapplication of funds. This crime involves the purposeful abuse of bank funds, money or credit by distributing it to a false record with the sole intent of deceiving the financial institution.

Check kiting is another type of bank fraud in Texas that robs a bank, credit union or other financial business of money. This crime involves an employee approving the payment of a check when there are no funds in the account. The check is deposited from one bank where some or all of the funds are available to the account holder. The funds are then drawn by a second bank and account that lacks the funds to cover the check. By the time the first bank finds out about the lack of funds to cover the deposit, the money has already been withdrawn on the kited check.

Similarly, bank employees can commit fraud by approving unworthy customers for bank loans. These customers may lack the credit score to qualify for a bank loan legitimately.

The loan officer may also know that the collateral that the customer is using has little to no value to back up the funds in the loan. The bank employee typically has a financial incentive to approve the unworthy customer for the loan.

These crimes are among the most common types of bank fraud that Texas prosecutors take to court. However, other examples can include:

  • Securities fraud
  • Tax evasion
  • Bankruptcy fraud
  • Forgery
  • Mail or wire fraud
  • Healthcare fraud

All of them can carry with them severe punishments that range from time in state or federal prison to expensive civil penalties and fines.

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Possible Penalties in Texas for Bank Fraud

The penalties for bank fraud in Texas largely depend on whether or not the offense is charged as a misdemeanor or felony. They also are designed to reflect the damage that the victim sustained in the crime.

  • Misdemeanor conviction – fines of up to $4000, may also spend up to one year in jail
  • State felony conviction – fine of up to $10,000, may also spend anywhere from 18 months to two years in jail
  • Third degree felony conviction – fine of up to $10,000, mY also spend two to 10 years in state prison

However, some types of bank fraud in Texas result in harsher penalties. For instance, money laundering carries with it the possibility of a fine of up to $500,000, as well as a federal prison sentence. Tax evasion could result in fines totaling up to $100,000. The prison sentence can also be as long as five years. Mail and wire fraud can result in up to 20 years in federal prison. You also might have to pay a fine of up to $100,000. Securities fraud likewise can result in a 25-year federal prison stay. A conviction of this type of bank fraud can also in upwards of $100,000 in civil fines.

Why Hire a Bank Fraud Defense Attorney?

Given the variety of harsh penalties that you could face if convicted of bank fraud in Texas, you need an experienced defense attorney to represent you. An assertive and knowledgeable bank fraud defense lawyer may help you escape the worst punishments if you are convicted. They can also provide a solid defense for why you may be innocent of the charges against you.

Your Texas bank fraud defense lawyer can find and use evidence in your case to show that you may not have known that you were involved in activities that could be defined as bank fraud. Likewise, They may also be able to show that you might have been coerced or threatened into committing the offense.

If you have an otherwise clean criminal record, you could have your bank fraud defense attorney use this to your advantage in court. Your lawyer may be able to convince the judge or jury to sentence you to the lightest punishment possible for bank fraud or exonerate you altogether.

Bank fraud is a serious crime in Texas that can lead to severe penalties and long jail or prison sentences. However, you have the right to defend yourself if you are charged with one of these crimes. You can start by hiring an experienced bank fraud defense lawyer in Texas to represent you in court.


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