If you are in the banking sector, especially as an officer, director, or employee, understanding the implications of 18 U.S.C. Section 656 is crucial. This federal statute lays out the legal consequences for theft, embezzlement, or the willful misapplication of funds within various types of banking institutions. Violating this law could result in fines up to $1,000,000 and imprisonment for up to 30 years, depending on the severity and amount involved. Below is a total explanation of what this statute covers and what the penalties could be.
Who Is Covered Under This Statute?
The law applies to officers, directors, agents, or employees of several types of financial institutions. This includes Federal Reserve banks, member banks, national banks, and insured banks. It also covers depository institution holding companies, branches or agencies of foreign banks, and organizations operating under certain Sections of the Federal Reserve Act. Individuals connected to a receiver of a national bank or an agent or employee of a Federal Reserve Agent are also included.
What Actions Are Prohibited?
The law penalizes embezzlement, abstraction, purloining, or willful misapplication of any funds, credits, assets, or securities of the bank or related institution. This also includes money, funds, or assets that have been entrusted to the care or custody of the institution or its agents, officers, directors, or employees.
Definitions Of Key Terms
The statute further clarifies several key terms:
- “National bank” is synonymous with “national banking association.”
- “Member bank” refers to any national bank, state bank, or bank and trust company that has become a member of one of the Federal Reserve banks (FRB).
- “Insured bank” means any banking institution whose deposits are insured by the Federal Deposit Insurance Corporation (FDIC).
Penalties Involved
The penalties for violating this law are severe. The extent of the penalty depends on the amount embezzled, abstracted, purloined, or misapplied. If the amount is more than $1,000, the person could be fined up to $1,000,000 and/or imprisoned for up to 30 years. For amounts not exceeding $1,000, the person could be fined and/or imprisoned for up to one year.
Possible Defenses Based On 18 U.S.C. Section 656
Lack Of Intent
One of the central elements of embezzlement, theft, or misapplication under this federal statute is the aspect of willful action. If the defendant can demonstrate that their actions were not intentional or willful, this could serve as a viable defense. In other words, if you didn’t intend to misapply, embezzle, or steal the funds, this could be a strong argument in your favor.
Insufficient Evidence
Federal prosecution must prove beyond a reasonable doubt that the accused committed the crime as specified under 18 U.S.C. Section 656. If there is insufficient evidence to support the charge, then this can serve as a defense. Raising questions about the reliability and integrity of the evidence can weaken the prosecution’s case.
Authorization Or Consent
If an officer or employee can show that they had proper authorization or consent to use the funds in the manner they did, this could negate charges of misapplication or embezzlement. However, this defense would likely require substantial documentation or testimony to prove the authorization was legitimate and fully informed.
Mistake Of Fact
If the accused believed in good faith that they had a right to the funds or assets they are accused of taking, and this belief was reasonable under the circumstances, then a mistake of fact could serve as a defense. This argument would entail showing that there was an honest and reasonable mistake regarding the facts of the fund’s ownership or usage.
Duress Or Coercion
If an individual can prove they were under duress or coercion when committing the actions in question, this might serve as a defense. For instance, if an employee misapplied funds because they were being threatened, the court might consider this as a mitigating circumstance.
Entrapment
Entrapment happens when law enforcement compel or induce an individual to engage in an illegal act that they wouldn’t have committed otherwise. However, this defense is usually hard to prove and may not be as effective as others.
Double Jeopardy
If a defendant has already been tried for the same crime based on the same facts, bringing another case against them could be a violation of the Double Jeopardy Clause of the Fifth Amendment. In such a case, the subsequent charges might be dismissed.
Statute Of Limitations
Federal crimes typically have a statute of limitations, after which a person cannot be prosecuted. If the alleged theft, embezzlement, or misapplication took place beyond this time frame, it could serve as a defense.
Frequently Asked Questions About 18 U.S.C. Section 656
What Constitutes “Willful Misapplication” Under This Statute?
“Willful misapplication” involves deliberately using bank funds, assets, or credits in a manner that is unauthorized or incorrect, and with the intent to defraud or deceive the bank.
Who Is Liable Under This Statute?
Officers, directors, agents, or employees of Federal Reserve banks, member banks, depository institution holding companies, national banks, and insured banks can be held liable. People connected to receivers of these institutions or Federal Reserve Agents are also covered.
What Are The Penalties For Violating This Statute?
If the amount involved exceeds $1,000, you can be fined up to $1,000,000 and/or imprisoned for up to 30 years. For amounts less than $1,000, the fine or imprisonment can go up to one year.
Can I Defend Myself By Saying I Didn’t Know It Was Illegal?
Lack of knowledge about the law generally is not a valid defense. However, lack of intent to commit the act is different and could serve as a potential defense.
What Does “Embezzlement” Specifically Refer To?
Embezzlement involves taking money, funds, or assets that have been entrusted to you in your official capacity and using them for unauthorized personal gain.
Is There A Statute Of Limitations For These Crimes?
Yes, federal crimes generally have a statute of limitations. After the time frame specified has passed, you may not be prosecuted for the alleged actions.
What Should I Do If I’m Charged Under This Statute?
You should immediately consult a federal criminal defense lawyer to understand your rights and explore potential defenses.
Federal Theft | Embezzlement Lawyer
If you’re facing accusations of federal theft, we’re here to help. The Law Offices of Jonathan F. Marshall federal bank theft lawyers are well-equipped to represent you. For dedicated and professional legal counsel, call us today at (877) 534-7338 or contact us online.
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