New York Federal Extortionate Extensions and Collections of Credit

Extortion is generally defined as the crime of wrongfully obtaining property from another by using an express or implied threat of force, violence, or reputational harm. In the context of the creation or collection of a loan, this crime is punished in federal courts by three different statutes: Making Extortionate Extensions of Credit (18 U.S.C. § 892), Financing Extortionate Extensions of Credit (18 U.S.C. § 893), and the Collection of Extensions of Credit by Extortionate Means (18 U.S.C. § 894). These crimes are extremely serious, with maximum sentences of 20 years imprisonment available for each. Worse, these charges are frequently accompanied by other serious allegations, such as racketeering or assault. Given the potentially grave consequences of a conviction, it is imperative that an individual charged with extortion immediately retain federal criminal attorneys who have previously – and successfully – defended against these charges in federal court.

Collections of Credits

Pursuant to 18 U.S.C. § 892, whoever makes – or conspires to make – any extortionate extension of credit shall be fined and/or imprisoned by a maximum of 20 years. The making of an extension of credit is defined as the creation or renewing of any loan or agreement whereby the repayment of any debt will be deferred. See 18 U.S.C. § 891(1). An extortionate extension of credit is one made with the understanding that a delay or failure to make repayment “could result in the use of violence or other criminal means to cause harm to the [body], reputation or property of any person.” 18 U.S.C. § 891(6). Therefore, in order to prove that an extension of credit was extortionate in nature, the government must establish that the debtor believed at the time the loan was made that his non-payment would result in this harm. See United States v. Madori, 419 F.3d 159, 167 (2d Cir. 2005) (“the government must establish that the debtor understood at the inception of the loan that a threat of violence existed”).

Further, the debtor’s understanding concerning the harm for non-payment may be based on eitheran express or implied threat from the creditor. 18 U.S.C. § 891(7). Because implied threats may be difficult to prove in court, the statute lists a number of factors that may establish the existence of an extortionate loan, including: 1) that repayment of the debt would be unenforceable by civil judicial process; 2) that the extension of credit was made at an interest rate exceeding 45 percent per year; and 3) that the debtor reasonably believed that extortionate means would be used to punish non-repayment of the debt given the debtor’s knowledge of the creditor’s previous loan collections. See 18 U.S.C. § 892. This subsection creates a “permissive inference or presumption … which allows … the trier of fact to infer” that an extortionate extension of credit was made. See United States v. Curcio, 712 F.2d 1532, 1540 (2d Cir. 1983).

Next, pursuant to 18 U.S.C. § 893, whoever finances an extortionate extension of credit may also be punished by up to 20 years imprisonment. Indeed, an individual may be charged with this crime regardless of whether the money was advanced as a loan, gift, investment, or even pursuant to a partnership agreement – as long as “reasonable grounds [exist] to believe” that the money was advanced directly or indirectly for the purpose of making an extortionate extension of credit. See 18 U.S.C. § 893.

Lastly, pursuant to 18 U.S.C. § 894, whoever knowingly uses or conspires to use extortionate means in the collection of any extension of credit – or punishment for the non-payment thereof – may be imprisoned by up to 20 years. Here, for the purposes of establishing that an implicit threat of violence existed, prosecutors are permitted to introduce evidence that other collections by this creditor – to the debtor’s knowledge – were accomplished by utilizing extortionate means. 18 U.S.C. § 894(b). If direct evidence of the debtor’s knowledge is not available, then the court, in its own discretion, may permit the government to introduce evidence of the defendant’s reputation in the community for violence or other criminal acts in order to establish the defendant’s extortionate intent. E.g., United States v. DeVincent, 632 F.2d 147, 151-52 (1st Cir. 1980); United Spears, 568 F.2d 799, 800 (10th Cir. 1978).

Hiring an experienced federal extortion attorney to defend you in any extortion prosecution is crucial and will ensure that every viable defense is explored and utilized on your behalf. The federal extortion lawyers at the Law Offices of Jeffrey Lichtman have successfully handled countless federal extortion and extortionate extensions and collections of credit cases, exploiting holes in the prosecution’s evidence to achieve the best possible result for our clients. Contact us today at (212) 581-1001 for a free consultation.

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