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Banking Fraud

Did You Know?

Bank Fraud has been added to the list of crimes that comprise prohibited activities under the Racketeer Influenced and Corrupt Organizations Act

Stock Fraud practices have existed among several Wall Street firms while investment banks were continuing to profit off of investors being cheated from stock fraud. With new laws being put into place, individuals that have suffered monetary losses due to bank fraud can recover some of their money. On August 9, 1989, President Bush signed into law the Financial Institutions Reform Recovery, and Enforcement Act (the "Act"), which made bank fraud both a criminal and civil crime punishable by jail time.

Statute of Limitations

The statute of limitations has been extended from five to 10 years. The Enforcement Act provides a new 10-year statute of limitations for a violation of, or a conspiracy to violate, certain bank related offenses. The Enforcement Act also applies the new statute of limitations to offenses committed before the effective date of the Act, provided the previously applicable five-year statute of limitations has not expired as of such date. For example, if your questionable activity occurred five years, 3 months, and 11 days prior to the effective date of the act, your exposure continues for another five years and one day.

Civil and Criminal Penalties

The Enforcement Act provides civil penalties for violations of banking related offenses. The maximum civil penalty may not exceed $1 million, except in the case of a continuing violation, or a pecuniary gain or loss in excess of the dollar limits. The maximum term of fine and maximum term of imprisonment for a violation of the numerous bank related offenses statues were increased, depending on the specific statute, from $5,000 and $10,000 to $1 million and from two and five years to 20 years.

Bank Finance Fraud Include:

  • Domestic and international commercial banks
  • Bank holding companies
  • Underwriters
  • Merchant banks
  • Thrifts
  • Insurance companies
  • Institutional investors
  • Commercial finance companies
  • Finance subsidiaries of major national and multinational companies
  • Leasing companies and factors, as well as borrowers, issuers and private equity groups

Transactions Can Include:

  • Leveraged acquisition,
  • Private and re-capitalization financings
  • Tender offer financings
  • Mezzanine financings
  • Private placements
  • Rule 144A offerings
  • Asset-based lending
  • Equipment leasing
  • Workouts and debt restructurings
  • dDbtor-in-possession and plan confirmation exit financings
  • ESOP loans
  • Receivables purchases and other asset securitization transactions
  • Letter of credit facilities, letter of credit backed and other credit enhanced financings
  • trade finance
  • Real estate and project financings
  • Leveraged lease transactions
  • Synthetic lease financings
  • Taxable and tax-exempt bond financings
  • Cross-border financings
  • Factoring
  • Interest rate swaps, caps and collars
  • Equity kickers, warrants, shadow warrants, stock appreciation rights and contingent interests
  • Working capital and fixed asset financings


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