Federal misapplication of funds is a crime that occurs when an officer of a financial institution willfully converted the institution’s funds to his or her own use or benefit. 18 U.S.C.§656. In order to convict a person of misapplication of funds, the government must prove several elements:
First, the defendant must be an officer, director, agent or employee of a bank or another financial institution. Second, the bank must be a member of the FDIC, the one of certain enumerated entities. Third, the defendant must have willfully misapplied the bank’s funds with the intent to defraud the bank.
If the amount willfully misapplied is over $100, the defendant may be facing a penalty of up to $1 million and prison time of up to 30 years.
Sometimes the challenge for the government is to show that the defendant actually acted with criminal intent. As most federal courts require the proof of intent to defraud, one of the best defense strategy in misapplication cases is that the defendant committed not misapplication but maladministration. Maladministration means that the bank office did violate the rules but without criminal intent; it means that the officer did not mean to harm the bank. Maladministration is not a crime, and the matter could be resolved civilly, resulting in restitution and fines but not criminal conviction.
If you have been investigated or charged for criminal misapplication in New York, call our New York City federal criminal defense lawyers today at 212-577-6677 to schedule an immediate consultation.