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White-Collar Crime

Financial Institution Fraud

While armed robberies immediately catch the public's attention, the amount stolen is only a fraction of the total lost to financial institutional fraud on a yearly basis. In an attempt to protect U.S. banking, the FBI assists institutions in the identification of fraudulent schemes and aggressively pursues suspicious activity if it is reported to the agency.

Financial institution fraud, commonly called bank fraud, can range from a one-person operation at one local bank to criminal conspiracies defrauding large U.S. banking institutions. In the 1980s and early 1990s, the FBI reported that 60 percent of bank fraud involved "insider" abuse, from the bank's own employees who used institutional funds for their own use—sometimes to such an extent that the bank collapsed.

A prime example of widespread misuse of bank funds was the savings and loan industry collapse in the 1980s. Savings and loans primarily lent money to the construction and home-building industries, but bank officers at numerous institutions diverted millions of dollars, much of which was never recovered. By the time the savings and loans became aware of the missing funds, so much money had been taken the banks could no longer conduct business and were forced to closed. By the twenty-first century, financial failure cases from insider abuse had been almost entirely replaced by external or outside fraud—mostly check or loan fraud by bank customers, not employees.

Check fraud is the use of fake or doctored checks to illegally receive payment from financial institutions. Major types of check fraud include forgery and counterfeiting. Billions of dollars are lost to check fraud every year.

Check fraud generally begins with the theft of a real check—from a mailbox, the garbage, or from a home or vehicle burglary. After chemically washing out the recipient's name and the signature, the criminal signs the check and cashes it at a store or bank with false identification. This is an example of forgery. Counterfeiting means reproducing more checks to look like the original stolen check. Counterfeiting has become a criminal art that extends far beyond making fake checks.

Criminals use computer software to produce credit cards, travelers checks, payroll checks, U.S. Department of Agriculture food coupons, U.S. postage stamps, and of course, U.S. currency. Counterfeiting is easily accomplished using computers, copiers, scanners, and laser printers. Simply logging onto the Internet and entering the terms check fraud or counterfeiting into a search engine can lead to information on how to produce fraudulent documents.

Frank W. Abagnale

Frank Abagnale (1948–) has seen the criminal justice system from both sides—first as a master con (to deceive someone after gaining their confidence) and fraud (to trick someone) artist and later as an expert adviser on fraud prevention. Abagnale was raised in New York and enjoyed a comfortable upbringing. His father owned a profitable stationary store on Madison Avenue in New York City. However at sixteen years of age when his parents suddenly divorced, Frank moved into the city and began a life of sophisticated crime. For the next five years Abagnale developed numerous scams ranging from fraud such as passing bad checks to impersonating various professionals. The diverse impersonations included airline pilots for Pan Am and Trans World Airlines (TWA), a lawyer working in the Louisiana state attorney general office, a pediatrician (children's doctor) in a Georgia hospital, and a sociology professor at Brigham Young University in Utah. In five years he used eight different identities and passed bad checks in twenty-six countries amounting to over $2.5 million. He was eventually arrested in Mont-pellier, France, in 1969 while posing as a Hollywood screenwriter. Abagnale served six months in a notoriously harsh French prison and several more months in a Swedish prison before being extradited (transferred) to the United States. After briefly escaping twice from U.S. authorities, he was found guilty of numerous charges of forgery (making false documents) and sentenced to twelve years in prison.

Abagnale's life took a sudden turn while serving his sentence in a federal corrections facility in Virginia. At twenty-six years of age after only four years of confinement in the federal facility, he was released in 1974 under the condition that he assist at no pay federal law authorities in crime prevention programs to stop frauds and scams. He could teach well on the workings of a criminal mind from his firsthand experiences. Abagnale also established a successful consulting firm, Abagnale and Associates, to advise private businesses such as banks on how to design secure checks. Abagnale also went on extensive lecture tours giving advice on white-collar crime prevention. Abagnale has written numerous articles and books including Catch Me If You Can (1980), which was made into a 2002 Hollywood movie directed by Steven Spielberg, and The Art of the Steal: How to Protect Yourself and Your Business From Fraud—America's #1 Crime (2001).

Additional topics

Law Library - American Law and Legal InformationCrime and Criminal LawWhite-Collar Crime - Healthcare Fraud, Government Fraud, Financial Institution Fraud, Frank W. Abagnale, Telemarketing Fraud