You operate a small business and cash flow is constrained this month. A significant client delays payment, but your obligations cannot wait. You issue a check to a vendor, anticipating your deposit will clear in time. Unfortunately, it does not. The check bounces and now you face more than just an uncomfortable phone call.
So, is this a crime? The answer depends on your intent and how you respond afterwards.
How does a check bounce?
A check bounces when your bank declines to honor the amount you wrote. This typically occurs when you have insufficient funds in your account or when your account has been terminated.
When you issue a check, the recipient deposits it into their bank. Their financial institution then requests payment from yours. If your account cannot accommodate the amount, the bank rejects the transaction. Consequently, the check returns unpaid and you incur fees from both institutions.
Understanding this process clarifies when a simple oversight crosses into illegal territory. However, not every bounced check results in criminal charges.
When does it become a crime?
A bounced check becomes unlawful when you knowingly issue it without funds to cover it. Under New Jersey law, courts presume you were aware the check would bounce under specific circumstances.
In particular, you may face criminal charges if any of the following apply:
- You maintained no account with the bank: Issuing a check from a closed or nonexistent bank account demonstrates that there is an intent to deceive.
- You neglected to pay after receiving notification: If the bank refuses payment and you fail to resolve the matter within 10 days, the law presumes you knew the check was invalid.
- You engaged in check kiting. This scheme involves circulating checks between multiple accounts with no actual funds to generate artificial balances. Courts usually prosecute this as bank fraud.
Each of these actions establishes knowledge that the check would not clear. Once prosecutors demonstrate that awareness, you face substantial legal consequences.
Penalties for issuing dishonored checks
New Jersey categorizes bad check offenses according to the amount involved. Generally, the greater the value, the more severe the punishment. Here is how the state classifies each offense:
- Under $200: This constitutes a disorderly persons offense. You could face up to six months in jail and a $1,000 fine.
- $200 to $999: This constitutes a fourth-degree crime. You could face up to 18 months in prison and a $10,000 fine.
- $1,000 to $74,999: This constitutes a third-degree crime. You could face up to five years in prison and a $15,000 fine.
- $75,000 or more: This constitutes a second-degree crime. You could face up to 10 years in prison and a $150,000 fine.
Beyond fines and incarceration, a conviction can jeopardize your employment prospects and financial reputation for years.
What to do if you’re suspected of check fraud?
A cash flow problem should not cost you your business, your freedom or your future. If you face accusations of check fraud, consider consulting with a criminal defense attorney immediately. They can help review your case, challenge the evidence against you and work towards a favorable outcome. Contact a lawyer today to explore your options and protect yourself against bank fraud charges.