18 U.S.C. § 1014: False Statements to a Financial Institution

Under 18 U.S.C. § 1014, false statements to a financial institution are a federal felony punishable by up to 30 years in prison and a fine of up to $1,000,000. The law reaches anyone who knowingly submits false information, or willfully inflates the value of property or collateral, in order to influence a federally connected lender’s decision on a loan, credit line, insurance agreement, or similar transaction.¹ The institution does not have to lose money. It does not even have to believe the lie.

What the Law Prohibits

Section 1014 criminalizes two acts. The first is knowingly making a false statement or report to a covered financial institution. The second is willfully overvaluing land, property, or security. Either becomes a crime when done to influence the institution’s decision.

The covered transactions are broad. They include loan applications, credit advances, purchase and repurchase agreements, insurance agreements, and guarantees. Modifications count too: renewals, extensions, deferments, and substitutions of collateral all fall within the statute.¹

Prosecutions typically involve inflated income on loan applications, hidden debts, fabricated employment records, fraudulent appraisals, and false Social Security numbers on credit applications. The statute is not limited to paperwork. Because it reaches “any false statement or report,” verbal misrepresentations during the lending process can support charges if prosecutors can prove them.

What Prosecutors Must Prove

To convict, the government must establish three elements beyond a reasonable doubt:

The defendant made a false statement or willfully overvalued property. A mistake or calculation error is not enough.
The defendant knew the information was false when submitting it. Negligence, even gross carelessness, does not satisfy this element.
The defendant acted for the purpose of influencing the institution’s decision on a covered transaction.

That third element trips up many people. The lie does not have to work. A borrower can be convicted even if the bank approved the loan for other reasons, even if the loan officer spotted the lie, and even if the loan was repaid in full. What matters is the act of submitting false information with intent to influence, not the outcome.²

Materiality Is Not an Element

One of the harshest features of § 1014 is what the government does not have to prove. In United States v. Wells, decided in 1997, the Supreme Court held that materiality is not an element of the offense. The statutory text never mentions materiality, and Congress deliberately dropped materiality requirements from the predecessor statutes it consolidated into § 1014.³ Prosecutors need not show the lie would have influenced a reasonable lender. Even a knowing lie about something relatively minor can support a conviction.

False, Not Merely Misleading

In March 2025, the Supreme Court drew an important line for defendants. In Thompson v. United States, the Court held that a statement must be actually false to violate § 1014. A statement that is technically true but misleading does not qualify.⁴ The case involved a borrower whose statements about his debts were arguably deceptive but not literally untrue. The Court rejected the government’s argument that “any false statement” reached misleading half-truths. This gives defendants real ground when the case rests on statements that are incomplete or contextually deceptive rather than flatly wrong.

Which Lenders Are Covered

Section 1014 applies only to specific federally connected entities. If the institution is not on the statutory list, federal jurisdiction fails. The covered categories include:

FDIC-insured banks and savings associations.
Federal credit unions and state-chartered credit unions insured by the National Credit Union Administration Board.
Housing-related federal entities, including the Federal Housing Administration, Federal home loan banks, and the Federal Housing Finance Agency.
The Farm Credit Administration, Farm Credit Banks, and related agricultural credit institutions.
The Federal Crop Insurance Corporation and companies it reinsures.
The Small Business Administration and small business investment companies.
Federal Reserve banks and organizations operating under sections 25 or 25(a) of the Federal Reserve Act.
Any mortgage lending business, and any person or entity that makes a federally related mortgage loan under the Real Estate Settlement Procedures Act.
Branches or agencies of foreign banks as defined in the International Banking Act of 1978.

The mortgage lender category, added in 2009 by the Fraud Enforcement and Recovery Act, matters far beyond traditional banking.⁵ A borrower who lies on an application to a private mortgage company that originates federally related loans faces the same 30-year maximum as one who defrauds a national bank.¹ Private lenders, fintech platforms, and other non-traditional lenders without a federal charter, federal deposit insurance, or a federally related mortgage connection fall outside the statute.

Penalties and Sentencing

A single count of § 1014 carries a maximum of 30 years in federal prison and a fine of up to $1,000,000.¹ That 30-year ceiling makes it a Class B felony under 18 U.S.C. § 3559, one of the most serious categories of federal crime.⁶ After prison, a defendant can be placed on supervised release for up to five years.⁷

The statutory maximum is a ceiling, not the typical sentence. Actual prison time is shaped by the federal sentencing guidelines under USSG § 2B1.1, which build a recommended range primarily around the dollar amount of loss. The guidelines define loss as the greater of actual harm or intended harm, even when the intended harm was unlikely to occur. The offense level climbs in tiers as the loss grows: a two-level increase kicks in above $6,500, and losses above $250,000,000 add 28 levels.⁸ Those increases combine with the defendant’s criminal history category to produce a range. Judges also weigh the number of victims, any leadership role in the scheme, and whether sophisticated means were used to hide the fraud.

Restitution is not optional. Because § 1014 is a fraud offense with identifiable victims, the Mandatory Victims Restitution Act requires the court to order repayment of the institution’s actual losses. Courts can bypass restitution only in narrow situations, such as when identifying victims or calculating losses would overwhelm sentencing.⁹

Consequences That Outlast the Sentence

A federal felony conviction under § 1014 leaves marks that last well beyond release. The defendant permanently loses the right to possess firearms under federal law. Jury service is barred. Voting rights are restricted in many states, though some restore them after the sentence is complete.

For anyone in financial services, real estate, or a licensed profession, the conviction can be career-ending. A fraud conviction directly tied to a licensed occupation almost always triggers disciplinary proceedings, and a federal conviction for defrauding a financial institution is among the worst fact patterns a licensing board can see.

Immigration consequences are equally severe. A § 1014 conviction can qualify as an aggravated felony for noncitizens when the loss exceeds certain thresholds, which can trigger mandatory deportation with no discretionary relief.

How Long Prosecutors Have to Charge

The government has ten years from the date of the offense to bring charges under § 1014, double the standard five-year federal limitations period.¹⁰ The clock starts when the false statement is made, not when the institution discovers the fraud or the loan defaults. A fraudulent application submitted in 2018 could still be indicted in 2028.

Defenses

The statute is written broadly, but several defenses have real traction.

The Statement Was Not False

After Thompson, defendants have stronger ground to argue that statements, while incomplete or misleading, were not literally untrue. A statement that omits context or creates a misleading impression does not violate § 1014 if every word of it is technically accurate.⁴

No Knowledge of Falsity

If the defendant genuinely believed the information was accurate, the knowledge element fails. A borrower who reported income based on a mistaken but honest reading of tax documents, or who relied on figures from a financial advisor, has a real argument. Prosecutors often counter with signed accuracy certifications or discrepancies too large to be honest mistakes.

No Intent to Influence

Even a knowing falsehood is not criminal under § 1014 unless it was made to influence the institution. If the false information was irrelevant to the transaction and not aimed at any lending decision, this element is unmet. In practice this is narrow, because courts read “for the purpose of influencing in any way” expansively.

The Institution Is Not Covered

If the entity that received the false statement does not appear on the statute’s list, federal jurisdiction fails outright. This defense occasionally succeeds with private lenders, fintech companies, and other non-traditional platforms lacking a federal charter, federal deposit insurance, or a federally related mortgage connection.¹ The government carries the burden of proving the institution qualifies, and defense counsel who can show it does not can defeat the charge at its foundation.

1
Office of the Law Revision Counsel. 18 USC 1014 – Loan and Credit Applications Generally; Renewals and Discounts; Crop Insurance
2
Ninth Circuit District and Bankruptcy Courts. 24.11 False Statement to a Bank or Other Federally Insured Institution (18 USC 1014)
3
Legal Information Institute. United States v Wells
4
Justia. Thompson v United States, 604 US ___ (2025)
5
GovInfo. Fraud Enforcement and Recovery Act of 2009
6
Office of the Law Revision Counsel. 18 USC 3559 – Sentencing Classification of Offenses
7
Office of the Law Revision Counsel. 18 USC 3583 – Inclusion of a Term of Supervised Release After Imprisonment
8
United States Sentencing Commission. 2B1.1 – Theft, Property Destruction, and Fraud
9
Office of the Law Revision Counsel. 18 USC 3663A – Mandatory Restitution to Victims of Certain Crimes
10
Office of the Law Revision Counsel. 18 USC 3293 – Financial Institution Offenses