The year 2016 was interesting for the future of bank fraud. The US supreme court investigated if prosecutors had to prove that an alleged fraudster not only duped their victims via their bank account but also meant to harm the financial institution itself.
The question presented to the Supreme Court (15-5991) in the case of Lawrence Eugene Shaw vs. United States of America, was if ‘a bank fraud offense under 18 USC 1344(1) requires proof that the defendant intended to deceive and cheat the defrauded bank and expose the bank to a financial loss or a risk of loss‘.
Shaw’s request doesn’t stand alone. It was the second time that the definition of the 1984 Bank Fraud Act had to be defined. In 2014 (Loughrin vs United States of America) the court ruled that prosecutors merely had to prove a fraudster deceived a bank to use the Bank Fraud Act against a defendant, it left open the question of whether prosecutors must prove that there was a specific plan in place to defraud a bank in order for the statute to be used.
Court records for Lawrence Eugene Shaw vs. United States of America show that ‘The defendant’s arguments that subsection (1) of the bank fraud statute, which covers schemes to deprive a bank of money in a customer’s deposit account, does not apply to him because he intended to cheat only a bank depositor, not a bank, are unpersuasive; and (2) with regard to the parties’ dispute over whether the district court improperly instructed the jury that a scheme to defraud a bank must be one to deceive the bank or deprive it of something of value, instead of one to deceive and deprive, the U.S. Court of Appeals for the 9th Circuit is left to determine whether that question was properly presented and if so, whether the instruction given is lawful, and, if not, whether any error was harmless.‘
The 12th of December 2016, the High Court ruled unanimously against Shaw. Although Shaw’s legal representatives argued that the conviction was inappropriate due to the fact that prosecutors had no evidence to support their claim that Shaw intended to defraud the bank, the court ruled (8-0) against Shaw. In line with this order Shaw not only used personal details from a bank customer to steal 300.000 USD, but simultaneously also defrauded Bank of America with his actions.
Stephen G. Breyer, in his position of Associate Justice of the Supreme Court of the United States, wrote on behalf of the court: ‘Hence, for purposes of the bank fraud statute, a scheme fraudulently to obtain funds from a bank depositor’s account normally is also a scheme fraudulently to obtain property from a financial institution, at least where, as here, the defendant knew that the bank held the deposits, the funds obtained came from the deposit account, and the defendant misled the bank in order to obtain those funds‘.