Is it a crime to take out a loan with no intention to repay?
<p><a href="https://money.stackexchange.com/questions/28530/defaulting-on-credit-cards-before-leaving-the-country?rq=1">This question on Money.SE</a> concerned a person who had taken out a number of loans.  He didn't intend to repay these loans in full, planning instead to default and leave the country.  Several posters on Money.SE claimed that such actions would constitute fraud or theft or some similar crime.  Would they?</p>

<p>For the purposes of this question, let us assume:</p>

<ul>
<li><p>The borrower received a single unsecured loan in the amount of $10,000.</p></li>
<li><p>The borrower did not misrepresent any facts (such as income, assets, etc) on his loan application.</p></li>
<li><p>At the time of applying for the loan, the borrower had already made up his mind that he would not fully repay the loan; and there is evidence to establish this.  (Perhaps he wrote a diary entry to that effect, or bragged about it to someone.)</p></li>
<li><p>The borrower has sufficient assets and/or income that he could make the payments without undue burden, if he wanted to.</p></li>
<li><p>The jurisdiction is California, USA (though if other jurisdictions are different, that would also be interesting).</p></li>
</ul>

<p>Followup: Suppose instead that at the time of applying for and receiving the loan, the borrower did sincerely intend to make his best efforts to repay it in full, but at some later time he changed his mind and decided that, although he had sufficient available funds to make the payments, he wasn't going to do so anymore; and did in fact stop paying.  Would that constitute a crime of any kind?</p>

<p>Obviously the borrower could be sued in civil court and have his assets seized, etc, - but the question here is whether he could be subject to <em>criminal</em> sanctions.</p>

<p>If, at the time of application for the loan, the borrower has no intention of repaying, it appears that it is a crime.  From <a href="http://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=PEN&amp;sectionNum=532.">California Penal Code section 532</a>:</p>

<blockquote>
  <p>(a) Every person who knowingly and designedly, by any false or fraudulent representation or pretense, defrauds any other person of money, labor, or property, whether real or personal, or who causes or procures others to report falsely of his or her wealth or mercantile character, and by thus imposing upon any person obtains credit, and thereby fraudulently gets possession of money or property, or obtains the labor or service of another, is punishable in the same manner and to the same extent as for larceny of the money or property so obtained.</p>
</blockquote>

<p>The false representation in this case is that you falsely represent your intention to repay the loan.  </p>

<p>Variations of your scenario invoke other sections of the law.  If the false representation is instead about the <em>ability</em> to pay, then <a href="http://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=PEN&amp;sectionNum=532a.">section 532a</a> applies.  If it's with regards to a <em>secured</em> loan, it's <a href="http://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=PEN&amp;sectionNum=532f.">section 532f</a></p>

<p>Deciding not to repay the loan after the fact appears to be a purely civil matter: nothing in <a href="http://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=PEN&amp;division=&amp;title=13.&amp;part=1.&amp;chapter=8.&amp;article=">Chapter 8 (false personation and cheats)</a> looks like it applies.</p>

<p>The crime of fraud or theft will probably have a specific definition in the California Criminal Code.</p>
<p>At common law, a person steals if</p>
<ol>
<li>without the consent of the owner, that person</li>
<li>fraudulently and</li>
<li>without a claim of right made in good faith</li>
<li>takes and caries away</li>
<li>anything capable of being stolen belonging to another</li>
<li>with the intent at the time of taking to permanently deprive the owner of it.</li>
</ol>
<p>The person you described:</p>
<ol>
<li>Does not have the owner's consent for his proposed actions (i.e. taking the money and not repaying it)</li>
<li>Has obtained the money by deception; he has not revealed his intention to not repay (i.e. fraudulently)</li>
<li>Does not have a right to the money, nor does he believe, in good faith, that he does;</li>
<li>Has taken it away; in cash or by putting it into his own bank account</li>
<li>Money; which is something capable of being stolen</li>
<li>With the intention of permanently depriving the owner of it.</li>
</ol>
<p>This is common law theft (and probably meets whatever statute definition is applied) and is a crime punishable by the state.</p>

california criminal-law theft finance