Bank And Banking Crimes In Kansas And Missouri

Bank and banking crimes are dealt with under a variety of federal criminal statutes. We will discuss some of the major ones here.

Embezzlement and Misapplication (18 U.S.C. §§656 and 657). These two statutes are nearly the same, except that Sect. 656 deals with banks and Sect. 657 with credit unions and savings and loan associations. Under Sect. 657, an officer or employee of the institution may not “knowingly and willfully embezzle and misapply monies and funds” of the institution. There must also be an intent to injure and defraud the institution. Embezzlement and misapplication are separate offenses: the difference is that for embezzlement, the defendant must first have lawful possession of the funds alleged to have been appropriated for his own use. The statute is limited to acts done within a person’s official capacity, unless he or she used his position to harm the bank.

Generally, to act with intent to defraud usually means to cheat, deceive, or mislead, for the purpose of causing a financial loss to someone else. The defendant must have knowledge of what he or she is doing, rather than being merely careless or reckless. However, since direct proof of fraud is often not always available, an intent may be discerned from the facts and circumstances surrounding the loss of money. “Misapplication” is intended to cover situations where bank examiners are deceived. Another statute (18 U.S.C. §371 (bank conspiracy)) is often used with the offense of misapplication. Some examples of misapplication can be the following: bad loans, dummy loans, brokered loans, bond swapping, check kiting, collusion with loan officers in approving loans, manipulation of lending limits, and compensating balances. The defense of “good faith” is often used as a defense to embezzlement or misapplication, as it tends to defeat an accusation of an intent to defraud.

False Entries (18 U.S.C. §1105 and §1106). These sections prohibit bank insiders from making false entries in the records of a federally insured banking institution with the intent to injure or defraud the bank. The false entry should be over a material matter, not an inconsequential one. Here again there needs to be an intent to injure or defraud; that is, it is a specific intent crime. Defenses to this crime include accurate reporting, the fact that the false entry may have been immaterial or de minimis, or the fact that the reporting may have been ambiguous.

False Financial Statements (18 U.S.C. §1014). This section prohibits someone from making a false statement to a federal insured banking institution for the purpose of obtaining a loan or other extension of credit. It is generally intended to apply to situations where loan applications are falsified or materially false. Under this section, a person may not knowingly make a false statement or report, or overvalue any land, property, or security, for the purpose of influencing the decisions of a banking institution. The representations may not be implied representations; they must be true or false on their face. U.S. v. Kurlemann, 736 F.3d 438 (6th Cir. 2013). A defendant can generally prevail if he can show that what he or she said was the “literal truth.” U.S. v. Sarno, 73 F.3d 1470 (9th Cir. 1995). Normally, the government need not demonstrate that the insured institution actually relied on the fraud (note how this seems to be a lower standard than the civil standard of “reliance” for nondischargeability actions in bankruptcy court).

Fraud. (18 U.S.C. §1344). Bank fraud is knowingly executing or attempting to execute a scheme to defraud a financial institution. There is a split of authority in the federal circuits as to the details of the “knowledge” requirement. The Eleventh and Fifth Circuits require specific intent; the Second Circuit requires proof of intent to harm, but permits intent to be inferred; the Fourth and Seventh Circuits hold that a scheme or willful conduct is sufficient to show intent to defraud. The victim of the alleged fraud must be a federally insured institution. Good faith is also a defense. Section 1344 covers a wide variety of situations where fraud can be found: ATM (teller machine) misuse, false representations to banks, forgery, stolen checks, credit card fraud, mortgage fraud, and false statements to induce check cashing have all been found to fall under Section 1344.

Bribery (18 U.S.C. §215). A person may not give or promise anything of value to an officer of a financial institution with the intent to corruptly influence or reward that person. Similarly, under Section 215(a)(2), a banker cannot solicit or demand anything of value with the intent of being influenced in his capacity in the bank.

Read More:  Bankruptcy Crimes And Defenses

Bankruptcy Crimes And Defenses

In extreme cases of alleged violations of federal bankruptcy laws, criminal accusations can arise.  Bankruptcy crimes are quite rare in practice.  There is a strong presumption that issues arising in bankruptcy cases are best handled by bankruptcy judges and trustees as civil matters.  In rare situations, criminal investigations and accusations do happen, and we will here discuss some of the possible criminal charges that have historically been used by federal prosecutors.  Bankruptcy crimes typically fall within one or more of the following types:  knowingly or fraudulently concealing property, making false oaths or accounts, fraudulently doctoring evidence, or withholding documents.  We will conclude this article with a general discussion of successful defenses to accusations of a bankruptcy crime.

Fraudulent Concealment Or Transfers.  Bankruptcy crimes are described in the subparts of 18 U.S.C.A. §152.  Fraudulent concealment or transfer of assets is therefore criminally governed by 18 U.S.C.A. §152.  The requisite mental state here is one of “specific intent”:  it is necessary to prove that the action was taken “knowingly” and “fraudulently.”  This is often difficult to prove.  “Fraudulently” means making a false representation of a material fact, with knowledge of its falsity and with the intent to deceive.  U.S. v. Berry, 678 F.2d 856, 866 (10th Cir. 1982).  Intent to deceive is different from intent to defraud.  “Knowingly” means with knowledge, and not due to some mistake or accident.  Such knowledge can be inferred, in some situations, from the surrounding circumstances.  U.S. v. West, 22 F.3d 586 (5th Cir. 1994).

Debtors have a duty to disclose all property in their case, including “all legal and equitable interests.”  Concealment does not require physical “hiding” of the asset.  Concealment can be found when someone deliberately prevents discovery of an asset, or withholds knowledge of it.  U.S. v. Weinstein, 834 F.2d 1454, 1426 (9th Cir. 1987).  Concealment can also be the transfer of title coupled with the benefits of ownership.  In Re Bradley, 501 F.3d 421, 434 (5th Cir. 2007).  Section 152(1) of the 18 U.S.C.A. deals with concealing property from the bankruptcy trustee, while Section 152(7) involves deliberate concealment before a case is filed.  The act of concealment may continue for the entire period of concealment to avoid the bar of the statute of limitations.  U.S. v. Stein, 233 F.3d 6 (1st Cir., 2000).  In the Stein case just cited, for example, the bankruptcy was filed in 1990, but the federal indictment was not handed down until 1998.

Not all retaining of assets involves improper concealment.  There is a very important distinction between a transfer that relinquishes one of all interest in property, and a transfer that does not.  In Re Olivier, 819 F.2d 550, 553 (5th Cir. 1987).  If the transfer is absolute, it may not be an act of concealment, even if the creditors have been defrauded.  This distinction is important, as it bears directly on the statutes of limitations for the criminal prosecution of a transfer offense.

False Oaths.  A false oath is basically a false statement or omission in the debtor’s schedules, or a false statement made by a defendant under oath in any part of the bankruptcy proceedings.  The false oath must be made on a material issue.  In other words, a false statement on a minor issue will not suffice.  Section 152(4) of 18 U.S.C.A. deals with false claims.  A false claim is willfully and knowingly participating in the filing of a false claim for the purpose of defrauding the bankruptcy court and the other creditors in the case.

False Treatment Of Documents.  False treatment of documents is dealt with under 18 U.S.C.A. §152(8).  This would arise in cases where an individual falsifies or makes a false entry related to a document related to the affairs of a debtor.  Significantly, a court has held that false statements in disclosure statements and plans of reorganization are not considered knowing and fraudulent false entries under §152(8).  This is so because disclosure statements and plans of reorganization do not relate to a debtor’s financial recordkeeping.  U.S. v. McDaniel, 2006 WL 839095 (W.D. Mich. 2006).  Section 152(9) deals with situations where an individual fraudulently withholds documents from the trustee or the court after the filing of a bankruptcy case.

Defenses To Accusations Of Bankruptcy Crimes.  Most (but not all) defenses to bankruptcy crimes in general relate to (1) lack of materiality; (2) good faith; (3) mistake of law or fact; or (4) entrapment by estoppel.  This list is not exhaustive.  A defendant has the full range of defenses available to him under common law or case law, provided the judge allows it to be included in jury instructions.  “Lack of materiality” boils down to stating that even though a false statement was made, it was pertaining to an immaterial issue.  “Good faith” is the assertion that a defendant was acting without any culpable mental state, or may have been relying on advice from a spouse or governmental agency.  Mistake defenses are similar to the “entrapment by estoppel” defense.  In entrapment by estoppel, a defendant asserts that he or she was relying on the advice of some governmental agency, whose advice turned out to be incorrect.

Criminal charges involving bankruptcy crimes are rare, and are reserved for unusual or extreme situations.  However, if such an accusation is made, it is critical to have legal counsel who is experienced in both bankruptcy law and federal criminal defense.  At Phillips & Thomas LLC, we are uniquely placed in this regard.  Our practice focuses solely on these two areas of law.  When an issues arises that involves both the Bankruptcy Code and the federal criminal statutes, we are able to bring our more than thirty years of collective experience in these two complex areas of law to deal with the problem decisively and successfully.

Read More:  White Collar And Financial Crimes

Criminal Conspiracy Cases In Kansas And Missouri

Overland Park Criminal Attorney

In the United States, the modern laws related to criminal conspiracy began to take shape in the late nineteenth century.  In the most basic definition, conspiracy is an agreement between two or more persons formed for the purpose of committing a crime.  The purpose behind criminalizing conspiracy was twofold:  to exercise some control over “inchoate” (i.e., unripe or incomplete) activities, and to punish group behavior that had crime as its object.

The crime of conspiracy is the illegitimate agreement.  Although simple to define, the offense presents many difficult problems in further analysis.  What is an “agreement”?  At what point does it begin?  What happens if there are multiple agreements over time, or if a person withdraws from the agreement?

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Identity Theft And Identity Fraud Crimes In Kansas And Missouri

Identity theft has been a growing problem for years.  Factors driving the increased prosecution of these types of cases is greater awareness of protecting personal information, the increasing use of identity theft in furtherance of undocumented labor, and the improved electronic security systems that are being implemented in the public and private sectors.

Both Kansas and Missouri have a specific set of statutes that are used to prosecute identity theft crimes, which are similar in some ways but different in others.  There are also federal criminal penalties for identity theft.

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Violent Crimes in Kansas and Missouri

Violent crimes are defined as those crimes involving force or the threat of force, or those that involve bodily harm to another.  It is not a precisely defined category, and authorities differ precisely on what may or may not be a “violent” crime.  Some types of offenses can be in more than one category of crime:  for example, aggravated sexual battery is both a sex crime and a violent crime.

Basically, a violent crime is one viewed as violent activity against a person or property that intentionally threatens or inflicts, or attempts to inflict, physical harm. Because of the seriousness of such acts and the potential damages that can result, violent crimes are typically prosecuted very aggressively by state and federal prosecutors.  In addition, alleged victims of violent crimes often have more involvement in the prosecution of these offenses than with other types of criminal offenses.

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Property Crimes

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Property crimes are very common, and involve the alleged taking of money or property.  These offenses are generally grouped into the following categories:

Burglary.  Burglary is typically defined as the unlawful entry into almost any structure with the intent to commit any crime inside. No physical breaking and entering is required; the offender may simply trespass through an open door. There need not be any forcible taking of property, like robbery, which is usually classified as a violent crime.  The definition of burglary arises out of state law, and thus, the components of the crime may differ slightly depending on the state. Federal criminal law incorporates the meaning of burglary used by the state that the crime occurred in.  Most states use the same basic definition of burglary:

  1. The unauthorized breaking and entry.  This can be actual breaking, or “constructive” breaking, with no force used.
  2. Into a building or occupied structure.  An abandoned structure generally will not qualify.
  3. With the intent to commit a crime inside.  The crime intended inside the structure need not be stealing; it can be any felony crime.  But the crime needs to be separate from the break-in itself.

Some states further divide burglary into “degrees”, that is, “burglary in the second degree”, etc, depending on the circumstances and on whether a person was in the residence at the time of the intrusion.

Shoplifting.  Generally, shoplifting is composed of two elements: (1) willfully concealing or taking possession of items being offered for sale; and (2) the intent to deprive the items’ rightful owner (typically the store) of possession of the items, without paying for the item. 

Bad Checks.  These charges come about when something of value has been received, in return for which the vendor got a “bounced” check.  These can be a grey area between civil and criminal law, and prosecutors can look to the overall circumstances.  Our experience is that too many of these charges are really civil collection matters, and do not belong in criminal court.  Depending on the situation, some prosecutors look for some higher level of “fraud” in these cases, such as closing the bank account, or if someone has put a stop-payment order on the check.

Theft. This is the taking of something of value from another, with the intent to deprive the owner of rightful possession.

Arson.  This is the willful or malicious burning of property.  It is often seen in conjunction with attempts to commit insurance fraud.  It is a serious felony and is investigated by very trained units.  These cases, while rare, can involve a high level of scientific evidence and expert testimony.

Tampering.  This is the interference in the ownership or possession of the property of another.  It is commonly found in relation to auto cases, or other transportable property.

Property Damage.  Depending on the level of damage caused to the property of another, this can either be a felony or a misdemeanor.  It can happen when someone attempts to degrade, deface, or destroy the property of someone else.

Each of these crimes listed here has specific elements that will differ from state to state. There may also be slight variations on what these offenses are called.  If you or someone you know is facing a charge involving an allegation of a property crime, you need to speak with an experienced attorney without delay.

Read More:  Drug Crimes

Sex Crimes And Sex Offenses In Kansas City

There are few criminal accusations in today’s society that are more emotionally-charged than an alleged sex offense.  Public misperceptions and stigmas around these cases have been current for many years.  Besides facing criminal penalties, defendants are also facing the prospect of some form of offender registration upon conviction of the underlying crime.

An experienced law firm that has actually tried these cases and handled them at the state and federal level is a requirement in this area of the law.  With our extensive trial experience with sex offenses, we understand the importance of investigations, expert testimony, deposition practice, computer forensics, medical evidence and expert testimony to secure successful outcomes for our clients.

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Drug Crimes In Kansas City

drugs1

The so-called “war on drugs” has been underway now for decades, and continues in one form or another.  The recent legislative changes towards marijuana legalization in Colorado and some other states is a indication that society is somewhat changing, but there are strong institutional interests that want to keep the drug regulatory schemes in place.

In this climate, it is critical to have an attorney who is aware how to handle a drug case or drug conspiracy case.  Drug cases and drug crimes also present major issues of criminal and civil forfeiture.  Forfeiture is the legal process whereby someone convicted of a drug crime can be made to turn over assets (money or property) to the government.

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White Collar And Financial Crimes

Overland Park White Collar Crimes Attorney

Overland Park Financial Crimes Attorney

White collar crimes and financial crimes are non-violent offenses generally charged against people working in “office” types (non-manual labor) of jobs, such as corporate officers, employees, and similarly situated individuals.

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Computer Crimes And Cyber Crimes In Kansas And Missouri

crime

The increasing use of computers in every area of work and life has brought about a corresponding growth in the number and type of computer crimes being charged.  These computer crimes take various forms:  white collar type crimes, computer sex crimes, wire frauds, and others.  It is no secret that federal and state law enforcement agencies now have very broad powers to monitor internet use.

Cable companies can provide user data to law enforcement upon proper request, and such cooperation is now routine.  Federal agents and local law enforcement now have special squads to seize home or business computers.  The computers are then subject to exhaustive forensic searches, through the use of programs such as EnCase or Forensic Toolkit (FTK).

There is a record on every computer of nearly everything that has happened on that computer.  People rarely appreciate the capability, scope, and power of electronic media; and the detailed records that can be reconstructed of a person’s computer “life” is truly amazing:  search terms, downloads, sites, emails, forums, chatrooms, and electronic images can be accessed.

We have found that law enforcement is very proficient with the use of social media also:  Instagram, Facebook, Twitter, blogs, 4Chan, Reddit and associated subreddits, Tumblr, Tinder, OKCupid, and other dating sites can be accessed as the situation requires.

keyboard

Of particular concern is the advent of peer-to-peer “file sharing” software such as Frostwire, Gnutella, Kazaa, and Limewire.  Users of these file sharing sites can “share” music, movies, images, and other communications.  However, getting on these file sharing networks is not what it seems.  Just by being on these networks, without managing your settings, you can permit your computer to become a “bulletin board” or receiver of illicit material, usually child pornography.

We have seen situations where people download files en masse, only to discover that the files were mislabeled or contained contraband images.  The software’s default settings can cause participants to function as “through-ways” or passage-points for illegal material, with disastrous consequences.

An in depth knowledge of computer forensics is key to mount an effective defense.  We have this specialized knowledge.  At Phillips & Thomas LLC, our criminal defense department has defended a large number of these cases and have been able to secure outstanding results for our clients.

In our initial client interview, we will probe into the client’s degree of sophistication with computers; how the images got on the computer; statements to law enforcement, if any; possibility of entrapment (common in solicitation cases); and the lack of intent if a person didn’t know the images were of a minor.

It is critical initially to focus on the computer forensics.  It is important to:  (1) verify if a forensic exam has been done; (2) examine all internet service provider (ISP) reports; (3) request version numbers of law enforcement forensics software; (4) verify all communications between the ISP and law enforcement; (5) examine the search warrants for specificity and particularity; and (6) verify any interactions by NCMEC.

Computer sex crimes are encountered at both the state and federal levels.  In the pretrial stage is it also important to:  (1) retain a forensics expert if needed; (2) determine whether the image files were found in the web cache, which is a temporary storage location on computer hard drives that stores data from search requests; (3) see if the files were found in unallocated space, since this would show previously deleted images, and possibly lack of intent.  A working knowledge of the computer issues is what we have.

When someone has had a computer seized, a defense attorney can file motions to limit the scope of the forensic search, or even prevent the search altogether.  If overly broad searches have been conducted, motions to suppress and suppression hearings can be techniques to prevent the seized evidence from being used against a person.  Daubert motions can be filed challenging government experts.  Whether law enforcement has preserved all required communications, or can authenticate all communications, are crucial questions. It is absolutely critical to hire an attorney who can handle these issues right from the beginning.

Another commonly encountered type of computer crime is the “decoy” scenario, or the online “internet solicitation” scenario.  The increasing use (and relative anonymity) of social media and internet chatrooms means that the online world is a much more common way people have of communicating.  Law enforcement (both federal and local) have special teams that monitor these communications.

Frequently, however, we find that law enforcement goes beyond their mandate, and can stray into the region of entrapment of a defendant.  Creating a crime where none would have existed is a common feature of these online solicitation cases.

With the current requirement of sex offender registration upon conviction for these types of felony cases, the stakes are high.  It is absolutely critical to consult with an attorney at the very first stages of something bad happening.

Did you get a “friendly” call from a police detective who wants you to clarify something or “make a statement”?  Was your computer seized?  Did you get a call from a federal agent who wants to ask you some questions?  If so, you need legal counsel immediately.  Waiting is not an option.

Read More:  Different Types Of Federal Crimes