False Statements to Obtain Loans, Credit, or Government Benefits
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False Statements to Obtain Loans, Credit, or Government Benefits
Obtaining loans, credit, or government benefits through false statements is unfortunately a common problem. While it may seem harmless to exaggerate income or assets on a loan application, this can have serious legal consequences. Let’s take a look at what constitutes false statements, why people do it, what the penalties are, and how to avoid trouble.
What is Considered a False Statement?
A false statement is any inaccurate or misleading information provided on an application for credit, loans, or government benefits. This includes:
- Overstating income, assets, or net worth
- Understating debts or other liabilities
- Providing false employment history or earnings
- Using someone else’s identity or documents
- Claiming benefits you’re not entitled to
Even small exaggerations or omissions can be considered false statements. The key is whether the inaccurate information would have influenced the lender or agency’s decision.
Why Do People Provide False Information?
There are a few common reasons people may provide false information on financial applications:
- To get approved for loans or credit they likely wouldn’t qualify for truthfully
- To get better terms, like lower interest rates
- To get more government benefits than they’re entitled to
- To establish credit history or improve poor credit score
- Out of desperation due to financial difficulties
While the motives may seem reasonable to the applicant, it is still against the law.
Penalties for False Statements
Providing false information on financial applications is considered fraud and can lead to both civil and criminal penalties.
On the civil side, the lender can sue for repayment of the loan or credit plus interest, fees, and legal costs. Government agencies can also sue to recover benefits paid out due to false statements.
Criminal penalties are much more severe. Federal laws like wire fraud (18 U.S.C. § 1343), bank fraud (18 U.S.C. § 1344), and Social Security fraud (42 U.S.C. § 408) all prohibit false statements on financial applications. Those convicted can face:
- Up to 30 years in prison
- Fines up to $1,000,000
- Restitution to repay ill-gotten gains
- Forfeiture of property obtained through fraud
State laws also prohibit similar conduct. While penalties vary by state, many classify these false statement crimes as felonies punishable by years in prison and steep fines.
A conviction also leads to long-lasting consequences like:
- A permanent criminal record
- Difficulty finding employment
- Ineligibility for future loans, credit, or government benefits
- Deportation for non-citizens
Given the gravity of these potential penalties, it’s important to avoid any false statements on financial applications.
Avoiding False Statements
Here are some tips to stay on the right side of the law when applying for credit or government benefits:
- Provide complete, factual information only – even if it hurts your chances
- Review applications carefully to avoid accidental omissions or errors
- Disclose all relevant details about income, assets, debts, employment, etc.
- Ask lenders or agencies if you’re unsure what needs to be reported
- Never provide false supporting documents like pay stubs or tax returns
- Be upfront about financial difficulties rather than hiding details
- Consult a financial advisor if you need help managing your situation
The bottom line is full transparency. Only apply for what you reasonably expect to qualify for based on your true financial profile. It may require some sacrifice in the short term, but that’s far better than risking prosecution and all its consequences down the road.
What to Do if Charged with False Statements
If you find yourself under investigation or charged with making false statements on a financial application, it’s essential to consult a defense attorney immediately. An experienced lawyer understands these complex fraud laws and can build the strongest defense to minimize penalties. They may also negotiate with prosecutors for reduced charges or punishments. Don’t wait and hope the problem goes away – get experienced legal help right away.
Some potential defenses to explore include:
- You made an honest mistake and had no intent to defraud
- You were entrapped or coerced into providing false information
- The statements were opinions, not factual misrepresentations
- You corrected any inaccurate statements in a timely manner
- The statements did not actually influence the lender or agency’s decision
An attorney can advise if any of these defenses may apply in your specific case. The sooner you engage representation, the better.
The Costs Simply Aren’t Worth It
As tempting as it may be to fudge the truth on financial applications, doing so simply isn’t worth the devastating legal consequences. Take responsibility for your finances, make sound decisions, and provide only accurate information. This will pay off with long-term financial health and freedom from prosecution. If you’ve made a mistake, engage experienced legal counsel to protect your rights. And remember, transparency and honesty is always the best policy when money is on the line.
Sources:
Fraud Enforcement and Recovery Act of 2009
Office of the Comptroller of the Currency