Check Fraud in MN

What may stem from a difficult financial situation or a bad decision can easily turn into a criminal conviction. Under Minnesota law, check fraud can be punishable by hefty fines and even imprisonment.

What is check fraud?

Check fraud refers to a criminal act that includes making the unlawful use of checks in order to illegally acquire or borrow funds that do not exist.

Most methods involve taking advantage of the float to draw out these funds. The float refers to the amount of time it takes for money to move from one account to another. Before funds are taken out of the check writer’s account, it’s as if they’re in two places at once because the check recipient may have already deposited the funds to their account as well.

Check kiting

Check kiting refers to writing a check for more than is in the account balance, then writing another check from another account that also has non-sufficient funds to cover the first check. The purpose of check kiting is to falsely inflate the balance of a checking account in order to allow checks to clear that would otherwise bounce.

In most cases, writing a check with insufficient funds is done with the expectation that the funds will be replaced by payday to cover the fraud. This is referred to as playing the float.

Embezzlement

While check kiters fully intend to bring their accounts into good standing, others known as paper hangers only intend to commit fraud, or "take the money and run."

Bad check writing: A check is written by a “paper hanger”, fully knowing that the check will bounce. The issuer will then take possession of the cash, goods, or services purchased with the check, and hope the recipient will not take action or will do so in vain.
Abandonment: A bad check is deposited by a “paper hanger” into their account. When the bank considers the funds available, but before the bank is informed the check is bad, the paper hanger then withdraws the funds in cash. The resulting account will be in debt, but the offender will abandon the account and take the cash.

Forgery

There are three main types of check forgery:

Counterfeit: Advancements in computer technology have made it increasingly easy to produce counterfeit checks. Through computer programs, people can create fake checks, copy the routing number from valid checks, and pass them off as authentic. Chemical alterations make it possible to remove or manipulate information on checks and financial documents, including routing numbers and account numbers.
Forged signature: The check is genuine, but the signature is not that of the account holder.
Fraudulently altered: A genuine check has been made out by the genuine customer but it has been altered by a fraudster, typically by changing the recipient’s name or adding words and/or numbers to inflate the amount.

Check Washing

Check washing involves the theft of a check in transit between the writer and recipient, followed by the use of chemicals to remove the ink representing all parts other than the signature. The perpetrator then fills in the blanks to their advantage.

What happens if I write a bad check in Minnesota?

Writing a bad or dishonored check can be subject to criminal penalties. Purposely writing checks on a closed or nonexistent account or writing a check knowing that there are insufficient funds are punishable offenses under Minnesota law (MN Stat. § 609.535). If the issuer is found guilty, they can be sentenced to imprisonment and large fines.

The penalties for writing a bad check in Minnesota also include fines and potential incarceration, depending on the amount involved:

More than $500 - Felony: maximum of five years in jail and $10,000 in fines.
$250 - $500 - Gross Misdemeanor: maximum one year in jail and $3,000 in fines.
Less than $250 - Misdemeanor: up to 90 days in jail and $1,000 in fines.

What are the penalties for check fraud?

Check fraud is covered by a different statute than issuing a dishonored check (bad check), the statute is (MN Stat.§ 609.631).

Depending on the circumstances and the amount of money involved, courts may impose significant fines or prison sentences, ranging from a few months to several years:

More than $35,000 - imprisonment up to 20 years or payment of a maximum fine of $100,000, or both.
More than $2,500 - imprisonment up to ten years or payment of a maximum fine of $20,000, or both.
More than $250 but less than $2,500 - imprisonment up to five years or payment of a maximum fine of $10,000, or both.

How do I recover from check fraud?

First, you want to work with a qualified and experienced attorney. When your attorney is fully informed of your case and has reviewed all evidence against you, they will advise you about the best way to proceed in your case, whether it be a settlement or trial.

There are some possible defenses if you are facing a check fraud case or a lawsuit involving a bad check. Many of these defenses will depend on the specific circumstances of the case, and will require varying degrees of proof:

Fraudulent activity is traced to someone other than the accused
The issuer of the check did not know that the check would not be honored
The issuer does not have the intent to defraud for various reasons
The issuer is forced to commit check fraud under coercion or duress

If you’re facing charges for check fraud in MN, we can help you

There are many possible settlement options in these types of cases. Minnesota law provides alternative channels to divert some cases out of the criminal justice system and allow defendants the opportunity to avoid a criminal conviction.

If you are facing a criminal conviction for forging a check or writing a bad check, Bruno Law can defend you. You have a lot at stake, and we will work to ensure the best possible results to protect your future.