Check Fraud Penalties
by : Stan Jaslar
Check fraud can take several different forms and lead steep financial losses. In some cases, a thief may forge a check for a couple hundred dollars, or they may spearhead check kiting schemes worth millions. Depending on several factors, fraud may be punished by the state or federal authorities, and because fraud varies so much, the punishments and penalties can also vary significantly. Here’s a look at some of the most common penalties for check fraud.
For misdemeanor fraud, perpetrators may face up to a year in a local jail, and felonies may result in several years in jail. One man received 20 years in federal prison for felony check fraud related to writing $195,345 in bad checks to businesses in Sacramento County, but his sentence was increased due to prior convictions.
In other cases, perpetrators can face even longer sentences. For instance, a former Vanguard employee stole over $2 million by writing checks from inactive or dead account holders. His charges include mail fraud, money laundering, and falsifying tax returns, and although his has not been sentenced at the time of writing, his prison sentence may be up to 46 years.
In some cases, check fraud perpetrators are sentenced to probation. This may be on top of a jail sentence. Often, probation is used in lieu of a long jail sentence. For instance, when one man forged two $5,000 checks from his great grandfather’s account, he received a 45-day sentence in the county jail followed by 13 months of probation.
During probation, perpetrators can walk free, but they have numerous restrictions on their freedom. Typically, they must meet with a parole officer at certain times. They may also have to submit to drug tests and of course, not commit any other crimes.
Like other check fraud penalties, fines also vary widely. Criminals may face hundreds or thousands of dollars in fines for misdemeanor fraud convictions, but for felonies, the fines may be $10,000 or more. For wire fraud, fines can be up to $250,000.
Edward Rostohar, the former CEO of CBS Employees Federal Credit Union, stole over $40 million from his employer over two decades. Because he was familiar with examiner auditor activities, he was able to avoid detection for over two decades. During that time, he made online payments to himself and forged another employee’s signature on checks made out to himself. As of April 2019, he has not been sentenced yet, but his fine alone may be up to $1 million.
To make amends to victims and to cover losses suffered by financial institutions, many check fraud perpetrators must pay restitution. Typically, restitution is close to the amount of losses suffered. In other cases, restitution may include additional amounts to cover the victim’s legal expenses or as part of a civil penalty.
These are the potential penalties assessed when someone is caught and convicted for check fraud. In many cases, the perpetrators are not found or convicted, and in those situations, financial institutions often must bear the losses and suffer their own check fraud penalties.
To protect yourself, you need quality products and services in place that can help you detect check fraud before your bank loses money. To learn more about check fraud protection, contact us today. At SQN Banking Systems, we work hard to make fraud protection easy for our clients.