bank fraud

Loughrin v. United States

Issues

To convict someone under the federal bank fraud statute, does the government need to prove that a defendant intended to defraud a bank directly and expose the bank to risk of loss?

A federal district convicted Kevin Loughrin of bank fraud for using stolen, altered checks to purchase goods from a local Target store and returning them for cash. On appeal, Loughrin claimed he did not violate the bank fraud statute because the statute only criminalizes conduct intended to defraud a financial institution and that poses a risk of harm to that institution. Although he used fraudulent checks, Loughrin claims the target of his scheme was, in fact, Target, and not a bank. The United States argues that a scheme need not target a financial institution, nor expose that institution to risk, to constitute bank fraud. The Supreme Court’s ruling in this case will affect how broadly Congress can criminalize fraudulent financial actions and how expansively federal criminal jurisdiction can stretch.

Questions as Framed for the Court by the Parties

Whether the government must prove that the defendant intended to defraud a bank and expose it to risk of loss in every prosecution under 18 U.S.C. § 1344?

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Facts

Kevin Loughrin and his codefendant, Theresa Thongsarn, devised a scheme to make money that led to federal criminal charges. See United States v. Loughrin, 710 F.3d 1111, 1114 (10th Cir. 2013). The two defendants stole checks from people’s mail.

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Shaw v. United States

Issues

Does the term “defraud” in 18 U.S.C. § 1344(1) require proof of a specific intent to target the financial institution’s property, in addition to intent to deceive a financial institution?

This case presents the Supreme Court with an opportunity to decide whether the plain language of the federal bank fraud statute requires proof of, in addition to intent to deceive a financial institution, a specific intent to target the financial institution’s property. See Brief for Petitioner, Lawrence Eugene Shaw at 15. The case arises out of Lawrence Eugene Shaw’s conviction of bank fraud under 18 U.S.C. § 1344(1), after Shaw withdrew funds from a Taiwanese businessman’s Bank of America account, albeit without any harm to Bank of America. See United States v. Shaw, 781 F.3d 1130, 1133 (9th Cir. 2015). Shaw argues the plain language of § 1344(1) requires proof of intent to deprive that institution of its own property. See Brief for Petitioner at 15. The government responds that because the Congressional intent behind the statute was to target all forms of bank fraud, the statute must be interpreted broadly: without concern for schemers’ mental states as to whose property they sought to defraud. See Brief for Respondent, United States at 44–45. Potentially at stake is the balance between federal and state police power, with federal police power increasing the broader the Supreme Court interprets a statute. See Brief for Amicus Curiae National Association of Criminal Defense Lawyers ("NACDL"), in Support of Petitioner at 5.

Questions as Framed for the Court by the Parties

Does the bank-fraud statute, 18 U.S.C. § 1344, subsection (1)’s “scheme to defraud a financial institution” require proof of a specific intent not only to deceive, but also to cheat, a bank, as nine circuits have held?

Lawrence Eugene Shaw was convicted under 18 U.S.C. § 1344(1) for executing a scheme to obtain funds from a Bank of America (“BoA”) account belonging to Stanley Hsu, a Taiwanese businessman. See United States v. Shaw, 781 F.3d 1130, 1133 (9th Cir. 2015). Hsu, while working in the United States, opened an account with BoA.

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Acknowledgments

The authors would like to thank Professor Stephen P. Garvey for his insight into this case.

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