Mortgage Fraud – Under Which Articles It Is Punished
A mortgage loan is a form of credit secured by immovable property, and cases of fraud connected with such transactions, as well as instances of unlawful obtaining of credit, are qualified under two norms of the Criminal Code of Georgia – Article 180 (fraud) and Article 208 (unlawful obtaining of credit). Where both articles appear in the charge, it is decisive to understand exactly what is answered for under which article: this determines both the qualification and the expected penalty.
Article 180 is the general norm and covers the appropriation of another's property, or the acquisition of a property right, by deception. Article 208 addresses credit relationships specifically: supplying a bank or another creditor with a false certificate concerning one's economic or financial condition, and also the use of a targeted credit contrary to its designated purpose. In the context of mortgage transactions the two norms are often considered together, which is why the sanctions of every part of both articles are set out separately below.
What the Prosecution Asserts and Where the Defense Begins
Under the fraud qualification (Article 180) the prosecution must prove deception and the aim of appropriation – that the person supplied false information and, on that basis, appropriated property or acquired a property right. Under the credit qualification (Article 208) the case concerns supplying a bank or another creditor with a false certificate of economic or financial condition in order to obtain credit, to increase its amount, or to obtain a preferential credit, as well as the use of a targeted credit contrary to its designated purpose.
The defense position here is built along several lines. First – whether the certificate was genuinely false: it is often contested whether the submitted documentation contained the signs of a false certificate at all. Second – the existence of significant damage: parts 1 and 2 of Article 208 refer to significant damage, while the rule determining when damage is considered significant is set by other provisions. Third – intent: the existence of an intent to deceive must be confirmed by the prosecution with evidence.
Article 180 – the Sanctions for Fraud, Part by Part
Article 180 provides for the following penalties, each part standing on its own:
- part 1 – fraud, that is, the unlawful appropriation of another's property or the acquisition of a property right by deception – a fine, or community service for a term of one hundred and seventy to two hundred hours, or corrective labor for a term of up to two years, or house arrest for a term of one to two years, or imprisonment for a term of two to four years;
- part 2 – the same act committed by a group with prior conspiracy, or having caused significant damage – a fine, or imprisonment for a term of four to seven years;
- part 3 – the same act committed by using an official position, in a large amount, or more than once – a fine, or imprisonment for a term of six to nine years;
- part 4 – the same act committed by an organized group, or by a person twice or more previously convicted of unlawful appropriation of another's property or of extortion – imprisonment for a term of seven to ten years.
Article 208 – the Sanctions for Unlawful Obtaining of Credit, Part by Part
Credit relationships are covered precisely by Article 208, and the penalties of its parts must also be read separately:
- part 1 – supplying a bank or another creditor with a false certificate of one's economic or financial condition in order to obtain credit, to increase its amount, or to obtain a preferential credit, as well as the use of a targeted credit contrary to its designated purpose, having caused significant damage – a fine, or house arrest for a term of six months to two years, or imprisonment for a term of two to five years;
- part 2 – the unlawful obtaining of a state targeted credit, or its use contrary to the designated purpose, having caused significant damage – a fine, or imprisonment for a term of five to eight years.
The first parts of both articles start from a fine, but part 4 of Article 180 and part 2 of Article 208 provide for imprisonment only. The rules on individualization of punishment and on mitigating circumstances are defined by other norms of the Code.
Aggravating Forms and the Question of Damage
The aggravating forms under Article 180 are commission by a group with prior conspiracy, significant damage, use of an official position, a large amount, repetition, and an organized group. For Article 208 what matters for the qualification is whether the act caused significant damage. In mortgage-fraud practice it is precisely the amount of the damage and the content of the false certificate that often become the subject of dispute – these circumstances must be substantiated with evidence, and their verification is the defense's principal task.
How a Defense Lawyer Assists in Mortgage Fraud Cases
A mortgage fraud case is a complex economic case: it rests on financial documentation, valuations and the history of the credit relationship. A lawyer will assess the correctness of the qualification – cases are often initiated under both articles while the facts support only one – and will examine the question of the false certificate, the existence and amount of the damage, the intent to deceive, and will protect your rights at every stage of the proceedings.
The lawyers of Legal.ge work on economic crime cases and will help you form an accurate assessment based on the concrete circumstances of your mortgage transaction.