Fraudulent Checks

Fraudulent checks are checks that have been counterfeited, altered, or signed with fraudulent intent so that they can be used to deceive another party and steal their money. They are sometimes used to authorize purchases that the check writer does not really have the authority to make.

Check fraud is a serious crime perpetrated at many levels, ranging from small personal purchases with bad checks to high-level criminal conspiracies. It often also involves forgery.

In What Ways Can Checks Be Fraudulent?

There are many ways in which a check can be fraudulent, including the following:

• A person writes a check knowing that they do not have the funds in their bank account to cover the check;
• The check itself was reproduced or counterfeited illegally;
• The signature of the payor on the check was forged;
• The dollar amount of the check has been altered by a person other than the person who originally wrote the check;
• There is a question as to whether the funds to cover the check will be in the account then the check is presented for payment. This is a major factor in check kiting;
• A check issued by a business has been altered without the proper authorization.

Additionally, fraudulent checks are often involved in other white-collar crimes, such as embezzlement or money order fraud. Furthermore, identity theft is sometimes commonly related to check fraud. If a person can steal a person’s identity, they may be able to write checks using the stolen name.

Some check fraudsters use sophisticated software, commercial laser printers, scanners, and blank check stock to produce counterfeit checks. Scammers identify people looking for quick cash and offer them the chance to make easy money by depositing some checks in their bank accounts. The victim is told to deposit a check in their own account and send a portion of it to someone else. The victim is “allowed” to keep the remainder as their payment.

Once the cash is withdrawn and sent, the victim learns that the check has bounced and that they are liable to the bank for hundreds, if not thousands, of dollars. Banks do not cover the loss of their client in these cases. The victim is responsible for the funds they deposited and withdrew into their account.

Another type of check fraud that is increasingly common involves the perpetrator gaining entry to a victim’s home mailbox and taking the mail the victim left for the post office to collect.

Or the perpetrators gain entry to the dark blue United States Postal Service (USPS) mailboxes with the keys they have been able to steal from a mail carrier or the post office. The perpetrators empty the boxes and get the checks people send to pay their bills or to loved ones when they want to send a gift. Once they have the checks in hand, the criminals use sophisticated technology to edit them and sell them on the dark web.

Perpetrators first screenshot the check as they found it for their records. Then they use nail polish remover to remove the payee’s name and the amount payable that the victim wrote on a check. Once they have“cleaned” the check, they take another picture and upload the picture of the clean check on several darknets, as well as encrypted communication platforms that facilitate online underground markets in fraudulent checks.

The scammers sell these “cleaned” checks, for a fee, of course. The cleaned checks are essentially blank, and the scammers who buy them fill them out and use them to complete fraudulent transactions and steal money from the victims’ bank accounts.

What Legal Penalties Are Associated with Fraudulent Checks?

Committing check fraud can lead to criminal charges. A conviction can be punished by a term of imprisonment in jail or state prison and imposition of a fine. In addition, the victim may file a civil lawsuit against the perpetrator to recover money damages to compensate them for their loss. Even if a civil lawsuit is not filed, the criminal defendant may still be required to pay restitution to the victim to compensate them for any money they lost to the victim who was defrauded.

Each state has its own criminal laws that define crimes and prescribe the punishment for them. Some of the criminal offenses that are perpetrated through the fraudulent use of checks are as follows:

Embezzlement
Taking the money or property of another person for the perpetrator’s own gain is stealing. When stealing is done by a person in a special position of trust, the crime becomes embezzlement. Some states have a stand-alone crime of embezzlement, and others categorize it as a type of theft.

Embezzlement can occur in several different circumstances. The following are examples of people who hold special positions of trust with control over the property or money of another person:

• A bank teller who has legal access to the money of the bank’s clients;
• Officers and employees in charge of company funds;
• Family members who are caring for a relative and have access to the relative’s bank accounts to pay expenses, or
• Professionals, such as lawyers or investment advisors, who handle funds for clients or investors.

These are people who are in positions that allow them to commit embezzlement. The penalties for embezzlement may be the imposition of a fine, a term of imprisonment, paying restitution, or all three. Each state has its own penalties prescribed in law. The severity of the penalty often depends on the value or type of property embezzled. There may also be aggravating factors, such as stealing from an elderly or otherwise vulnerable victim.

Also, the greater the value of the loss is, the tougher the penalty is likely to be. So, embezzling $1,000 might be charged as a misdemeanor, while any amount above that increases the charge to a felony. Misdemeanors are punished less severely than felonies. For example, a misdemeanor usually brings a maximum term of imprisonment of 1 year in the county jail, whereas a felony brings a term of imprisonment for over a year in state prison;

Forgery
Forgery can be committed by creating a false written document or altering a genuine one with the intent to defraud. As described above, forgery may be committed by filling in blanks on a document containing a genuine signature or materially altering or erasing an existing instrument. The act must be done with the intent to defraud, which is knowledge of the falsity of the instrument.

In Connecticut, for example, there are three classes of forgery. One is a Class A misdemeanor, which is punishable by up to one year in jail and a fine of up to $2,000.

The second is a class C or D felony, punishable by imprisonment for 1 to 10 years, a fine of up to $10,000, a state prison term of 1 to 5 years, and a fine of as much as $5,000. The third is a class B misdemeanor, punishable by up to 6 months in jail and a fine of up to $1,000;

Check Fraud
Fraud is the crime of deceiving another person for financial gain. Check fraud refers to any action to take money illegally using paper or digital checks. This can include a person writing a check that cannot be covered by the funds in their bank account, forging a check with someone else’s name as the payee, or altering the amount to be paid. But it can also include numerous other kinds of fraud using checks.

Again, the punishment for check fraud varies depending on the state and, generally, the amount stolen, but the punishment in Indiana is as follows:

• Level 5 Felony: The value of the check was over $50,000. The punishment is up to six years in prison and a fine of $10,000.
• Level 6 Felony: The value of the check was over $750 but less than $50,000. The punishment is two and a half years in prison and a fine of up to $10,000;

Other states may prescribe a different punishment, but it generally involves imprisonment and fines.

Do I Need a Lawyer for Help with Fraudulent Check Issues?

If you have been charged with check fraud or any other crime involving stealing through the use of checks, you should consult an experienced criminal defense lawyer. An attorney can provide you with advice and can represent you in negotiations, at court hearings, or trial, if that should become necessary.