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In criminal law, the term “fraud” refers to any act of deception to illegally obtain something of value. An accusation of fraud can follow you around for your entire professional career. You may even find that people in your personal life may question your credibility. Fraud is illegal under federal and state law. Therefore, a defendant can face prosecution and sentencing in both state and federal court based on a single incident.

Federal fraud charges are especially serious. Defendants in federal court face prosecution by highly accomplished U.S. attorneys. Sentencing in federal fraud cases is generally more severe than sentencing in state cases. At Ohle & Ohle, we represent individuals at all stages of the federal investigative and criminal court processes. Count on us if you need an experienced federal fraud defense attorney.

Federal bank fraud

Bank fraud occurs when someone knowingly tries to deceive a financial institution for financial gain. The nature of bank fraud is general in scope. Therefore, a prosecutor may charge someone with bank fraud as a standalone offense or combine it with other crimes that involve deceiving a financial institution.

Elements of a bank fraud charge

The federal bank fraud statute specifies the elements a U.S. attorney must prove to obtain a conviction. A court can only lawfully convict a defendant on a federal bank fraud charge after the federal prosecutor establishes:

  • the defendant knowingly engaged in the deceptive act
  • the defendant engaged in a scheme or artifice to defraud
  • the purpose of the scheme or artifice was to defraud a financial institution or obtain property through false or fraudulent pretenses

Unlike many other criminal statutes, the federal law against bank fraud does not require the prosecutor to prove the defendant intended to engage in fraud. Instead, the statute only requires that the defendant was aware of his or her behavior. The law does not require the defendant to have known that the behavior was illegal.

PPP Loan fraud

During the COVID-19 pandemic, the federal government issued loans to small businesses through the Paycheck Protection Program. Fraudsters leveraged the opportunity to obtain funding through deceptive means. Because the loans were processed by financial institutions, PPP fraud is a variety of bank fraud. Individuals may be accused of PPP fraud if they:

  • applied for a PPP loan under a fictitious business name
  • misstated business income
  • provided false documentation in support of a PPP loan application
  • provided other false information during the PPP application

Applying for a small business loan can be a complicated process. If you have been accused of PPP fraud due to an error, a federal defense attorney may be able to help.

Healthcare and Medicare fraud

There are several angles from which healthcare fraud occurs. Patients, healthcare facilities, and medical service providers can perpetrate fraud against the government and insurance companies.

Fraud committed by medical providers

When medical providers are the perpetrators of healthcare fraud, the government and private insurance providers are usually the targets. Double billing occurs when a healthcare provider submits multiple insurance claims for a single service. Phantom billing occurs when a medical provider bills an insurance company for medical services or supplies a patient never received. Unbundling is the illegal practice of billing the government or an insurance company for multiple parts of a single service that should be billed under one price. Upcoding is the act of a medical service provider billing an insurance company for a more expensive service than the service the patient actually received.

Fraud committed by patients and others

Individuals and businesses defraud healthcare facilities, the government, insurance companies, and other people. Fraudsters pose as insurance agents and steal other people’s personal information. The fraudster may use the information to engage in financial crimes like credit card fraud, enroll the victim in a fake insurance plan, or fraudulently charge the victim’s payment card or bank account.

More elaborate schemes involve individuals posing as healthcare professionals. In these cases, the individual may provide services without a license and fraudulently and collect payment from unsuspecting patients.

Patients engage in fraud if they switch identities. In one instance, a patient may knowingly allow someone else to use his or her insurance card. In other cases, individuals who obtain other people’s personal information through identity theft may use the information to obtain and pay for medical services.

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Bankruptcy fraud

Bankruptcy is a process that allows consumers and businesses to discharge certain debts if they are unable to meet their financial obligations. Bankruptcy courts appoint a trustee to each case. The trustee represents the petitioner’s bankruptcy estate and performs certain duties, including:

  • gathering the petitioner’s assets
  • selling the bankruptcy estate’s property
  • distribute proceeds to creditors
  • participating in meetings with creditors
  • object to a bankruptcy discharge if necessary

Approximately 70 percent of bankruptcy fraud cases involve petitioners concealing their assets from the court-appointed trustee. In other instances, a petitioner may file for bankruptcy in multiple jurisdictions or under a fake name. Some cases involve third parties like petition mills, which are businesses that defraud consumers. Because bankruptcy courts are in the federal court system, conviction on a bankruptcy fraud charge results in federal sentencing.

Concealing assets during bankruptcy proceedings

In a bankruptcy case, creditors may only liquidate assets the debtor discloses. Petitioners sometimes engage in fraud by intentionally omitting some of their assets from bankruptcy court disclosures. Similarly, some petitioners illegally conceal assets by transferring their assets to a friend or family member before filing for bankruptcy.

Multiple filing fraud

Multiple filing fraud occurs if a petitioner files for bankruptcy in multiple states. The petitioner may use the same name and information, an alias and false information, or a combination of real and fictitious names and information. Fraudsters use multiple filings to slow down the bankruptcy process and to cover their efforts to conceal their assets.

Petition mills

Petition mills are businesses that pass themselves off as counseling services for tenants who are at risk of being evicted. While the tenant believes the petition mill is negotiating with the tenant’s landlord, the workers at the petition mill are actually filing for bankruptcy in the tenant’s name. The mill also drags out the bankruptcy process and charges the tenant inflated fees in the meantime. In the end, the tenant still faces eviction with a damaged credit score due to the bankruptcy.

In some cases, an individual may be accused of bankruptcy fraud. For example, someone may legitimately sell an asset before the need to file for bankruptcy arises. People who have homes in multiple states may start the bankruptcy process in multiple jurisdictions because they believe they are required to file in multiple states. A federal defense lawyer can help you prove your lack of knowledge and intent to engage in fraudulent behavior.

Credit card fraud

Practically any unauthorized use of a payment card can be prosecuted as credit card fraud. A vast expansion in digital technology has led to a substantial increase in credit card fraud cases. In years past, credit card fraud often required criminals to make a carbon copy of a payment card to collect the information or physically steal the card. Today, credit card fraud is often an accompanying charge in cases that involve identity theft, telemarketing fraud, money laundering, and cyber crimes.

Under federal law, credit card fraud is also known as access device fraud. The federal statute prohibits the following actions with the knowledge and intent to defraud:

  • use or counterfeit an access device
  • possess 15 or more counterfeit access devices
  • possess or traffic device-making equipment
  • use, traffick or possess instruments that are modified to obtain use of telecommunications services
  • use produce, traffic or possess hardware or software to modify an instrument to obtain telecommunications services
  • obtain anything with a value of $1,000 or more over one year by using a counterfeit access device
  • solicit someone to buy or sell a fraudulent access device

People who have unauthorized access to credit cards can be charged with credit card fraud even if they don’t use the cards to make purchases. A defendant may be convicted of credit card fraud if he or she has 15 or more counterfeit payment cards in his or her possession.

Insurance fraud

There are as many variations of insurance fraud as there are types of insurance. We’ve listed several examples below.

Premium diversion

Insurance agents are required to maintain a separate account into which they can deposit their customers’ premium payments. Premium diversion is a type of embezzlement that occurs when the agent uses the premium payments for his or her own purposes. The agent fails to send the premium payments to the insurance company. As a result, the customers’ policies may lapse. Premium diversion is the most common type of insurance fraud.

Fee churning

Fee churning involves a series of reinsurance transactions that take place between intermediaries. Each transaction results in a reduction in commissions until there is nothing left to pay claims. The company at the end of the chain of transactions is usually a business the parties in the original company set up to fail.

Disaster fraud scams

After a natural disaster, insurance companies are often more vulnerable to policyholder schemes. People who have property insurance policies may file claims for damage that would not normally be covered by the policy. For example, after a tornado, a policyholder may claim uncovered damage caused by a flood as damage that was caused by wind.

Contractors also defraud insurance companies and property owners. A contractor may inflate the cost of a repair in the interest of receiving a higher payout from an insurance company or from the property owner directly. Simpler schemes involve contractors requesting upfront payment from property owners and never returning to do the repair work.

Mail fraud

The federal mail fraud statute covers fraudulent schemes that utilize the U.S. Postal Service as well as schemes that involve private carriers like UPS and FedEx. Mail fraud can be a standalone offense, or it can be charged in addition to other federal crimes. Charges that are often related to mail fraud include:

  • bank fraud
  • mortgage fraud
  • telemarketing Fraud
  • inheritance scams
  • foreign lottery schemes
  • healthcare fraud

Wire fraud

Wire fraud is a general offense that refers to deceptive schemes that utilize telecommunications or the internet to advance the scheme. Similar to mail fraud, wire fraud can be a standalone offense. However, wire fraud charges are often added onto other white-collar crime cases including:

  • Ponzi schemes
  • insurance fraud
  • bank fraud
  • money laundering
  • healthcare fraud
  • identity theft

As technology continues to evolve, more communication methods are covered by the wire fraud statute. In modern-day terms, wire fraud can include messages that are posted to social media or sent via text message.

Mortgage fraud

Similar to healthcare fraud, mortgage applicants and industry professionals can be the perpetrators in mortgage fraud cases. Mortgage fraud is defined as any material misrepresentation, misstatement, or omission that a mortgage lender or underwriter relies on to fund, purchase, or insure a mortgage loan. Mortgage fraud is classified into two major categories: fraud for profit and fraud for housing.

Fraud for profit

Parties who engage in fraud for profit are most often mortgage industry insiders. Most fraud for profit involves collusion by mortgage professionals, which may include:

  • mortgage appraisers
  • bank officers
  • real estate attorneys
  • loan originators

The goal of fraud for profit is not to obtain a mortgage of their own. Instead, the fraudsters’ aim is most often to steal money and equity from homeowners and lenders.

Fraud for housing

Mortgage applicants engage in fraud to obtain or maintain a mortgage loan. Examples of fraud for housing include:

  • misstating income on a mortgage application
  • misrepresenting assets
  • inducing an appraiser to misstate property value

Telemarketing fraud

Telemarketing fraud is a classic example of wire fraud. Common telemarketing schemes target the elderly, veterans, and military families. Fraudsters induce victims to provide their personal information over the phone. Depending on the nature of the scheme, the criminal may use the information to open credit cards in the victim’s name or access financial accounts. Some telemarketing schemes are connected to mail fraud as the schemes may also involve collecting information over the phone to send deceptive advertising materials to the victim in the mail.

Let Ohle & Ohle help you!

The criminal attorneys at Ohle & Ohle can represent you if you are under investigation for a federal crime. Contacting a lawyer early in the investigative or criminal court process can afford you more legal options. Reach out to us today to receive a case evaluation.


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