With no money lost New York fraud case may be difficult to prove

On Behalf of | Oct 25, 2018 | Firm News, Fraud

The New York court system is no stranger to fraud cases, but a recent case involving bank loans to two media companies may prove difficult to prosecute because the banks who lent the money suffered no financial loss.

Defendants in the case include executives who allegedly funneled loan money into company accounts in order to pay off other loans and maintain a particular publication’s credit profile. In order to obtain the loans, the executives allegedly provided the banks with false information and did not use the money to purchase high-end computer servers, the purpose expressed in the loan applications. 

However, because the defendants in the case paid back the loan money they owed to the banks, they now claim that no fraud occurred because there was no financial loss. Fraudulent intent is necessary for a conviction on fraud charges, and despite the allegation that the defendants created contact information for a fictitious account in order to obtain the loan, their argument is that they did not intend harm to anyone. 

In 2014, the Supreme Court ruled that it is not the damage done to the bank that constitutes a crime of fraud; rather, it is perpetrating the fraudulent scheme. Nevertheless, if the banks sustained no financial harm, a jury may decide that a willingness to pay back the money demonstrates good faith on the part of the defendants. 

While the amount of loan money obtained remains unclear, the value of the property involved must exceed $1,000 for fraud prosecution to proceed. 

It is difficult for prosecutors to demonstrate what is in a defendant’s mind, even though proving fraudulent intent is necessary for a conviction. Therefore, individuals and entities facing fraud charges may wish to consult an attorney.