Bank fraud
These tampered records are then used to seek investment in the company's bond or security issues or to make fraudulent loan applications in a final attempt to obtain more money to delay the inevitable collapse of an unprofitable or mismanaged firm.
These companies "cooked the books" in order to appear as though they had profits each quarter, when in fact they were deeply in debt.
[citation needed] Demand draft (DD) fraud typically involves one or more corrupt bank employees.
The fraud is discovered only when the bank's head office does the branch-wide reconciliation, which normally take six months, by which time the money is gone.
These payments are always made, as the customers in question are part of the fraud, actively paying any and all bills the bank attempts to collect.
Forged documents are often used to conceal other thefts; banks tend to count their money meticulously so every penny must be accounted for.
These take a number of forms varying from individuals using false information to hide a credit history filled with financial problems and unpaid loans to corporations using accounting fraud to overstate profits in order to make a risky loan appear to be a sound investment for the bank.
The borrower may even be a non-existent entity and the loan is merely an artifice to conceal a theft of a large sum of money from the bank.
[4] A criminal overdraft can result due to the account holder making a worthless or misrepresented deposit at an automated teller machine in order to obtain more cash than present in the account or to prevent a check from being returned due to non-sufficient funds.
The emergence of ATM deposit technology that scans currency and checks without using an envelope may prevent this type of fraud in the future.
A number of malicious "Trojan horse" programmes have also been used to snoop on Internet users while online, capturing keystrokes or confidential data in order to send it to outside sites.
Fake websites can trick a visitor into downloading computer viruses that steal personal information.
However, these official-sounding phrases and more are the hallmark of the so-called "prime bank" fraud; they may sound great on paper, but the guaranteed offshore investment with the vague claims of an easy 100% monthly return are all fictitious financial instruments intended to defraud individuals.
In those instances, out of fear and desperation, they manipulate the internal controls to circumvent detection to buy more time.
Some of the largest unauthorized trading losses were discovered at Barings Bank (Nick Leeson), Daiwa Bank (Toshihide Iguchi), Sumitomo Corporation (Yasuo Hamanaka), Allfirst Bank (John Rusnak), Société Générale (Jérôme Kerviel), UBS (Kweku Adoboli), and JPMorgan Chase (Bruno Iksil).Wire transfer networks such as the international SWIFT interbank fund transfer system are tempting as targets as a transfer, once made, is difficult or impossible to reverse.
There is an annual list of unlicensed banks on the US Treasury Department web site which currently[update] is fifteen pages in length.
A new teller or corrupt officer may approve the withdrawal since it is in pending status which then the other person cancels the wire transfer and the bank institution takes a monetary loss.
Section 1344 has subsequently been bolstered by the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), Pub.
The Supreme Court has held that the first clause only requires the prosecution to show that the crime involved accounts controlled by a bank; the prosecution need not show actual financial loss to the bank or intent to cause such loss.
[16] The Supreme Court has also held that the second clause does not require a showing of intent to defraud a financial institution.
[17] In the United States, consumer liability for unauthorized electronic money transfers on debit cards is covered by Regulation E of the Federal Deposit Insurance Corporation.
