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Shaw v. United States

United States Supreme Court

December 12, 2016


          Argued October 4, 2016


Petitioner Shaw used identifying numbers of a bank account belonging to bank customer Hsu in a scheme to transfer funds from that account to accounts at other institutions from which Shaw was able to obtain Hsu's funds. Shaw was convicted of violating 18 U.S.C. §1344(1), which makes it a crime to "knowingly execut[e] a scheme ... to defraud a financial institution." The Ninth Circuit affirmed.


1. Subsection (1) of the bank fraud statute covers schemes to deprive a bank of money in a customer's deposit account. Shaw's arguments in favor of his claim that subsection (1) does not apply to him because he intended to cheat only a bank depositor, not a bank, are unpersuasive.
First, the bank did have property rights in Hsu's bank deposits: When a customer deposits funds, the bank ordinarily becomes the owner of the funds, which the bank has a right to use as a source of loans that help the bank earn profits. Sometimes, the contract between the customer and the bank provides that the customer retains ownership of the funds and the bank only assumes possession; even then, the bank has a property interest in the funds because its role is akin to that of a bailee. 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.
Second, Shaw may not have intended to cause the bank financial harm, but the statute, while insisting upon "a scheme to defraud, " demands neither a showing that the bank suffered ultimate financial loss nor a showing that the defendant intended to cause such loss. This Court has found no case that interprets the statute as Shaw does. Cf. Carpenter v. United States, 484 U.S. 19, 26.
Third, that Shaw may have been ignorant of relevant bank-related property law is no defense to criminal prosecution for bank fraud. Shaw knew that the bank possessed Hsu's account, Shaw made false statements to the bank, Shaw believed that those false statements would lead the bank to release from that account funds that ultimately and wrongfully ended up with Shaw, and the bank in fact possessed a property interest in the account. These facts are sufficient to show that Shaw knew that he was entering into a scheme to defraud the bank even if he was not aware of the niceties of bank-related property law. Cf. Pasquantino v. United States, 544 U.S. 349, 355-356.
Fourth, Shaw mistakenly contends that the statute requires the Government to prove not just that he acted with the knowledge that he would likely harm the bank's property interest but also that such was his purpose. This Court has found no relevant authority supporting the view that a statute making criminal the "knowin[g] execution of] a scheme ... to defraud" requires something more than knowledge. Allison Engine Co. v. United States ex rel. Sanders, 553 U.S. 662, 665-668; Tanner v. United States, 483 U.S. 107, 110-112; United States v. Cohn, 270 U.S. 339, 343; and Bridges v. United States, 346 U.S. 209, 221-222, distinguished.
Fifth, subsection (2) of the bank fraud statute, which makes criminal the use of "false or fraudulent pretenses" to obtain "property . . . under the custody or control of a bank, may overlap with subsection (1), but it does not do so completely. Thus, it should not be read as excluding from subsection (1) applications that would otherwise fall within the scope of subsection (1), such as the conduct at issue in this case. See Loughrinv. United States, 573 U.S.__, __, n. 4.
Finally, because the bank fraud statute is clear enough, the rule of lenity is not implicated. Pp. 2-8.
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 Ninth 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 in this case. Pp. 8-9.

781 F.3d 1130, vacated and remanded.

          BREYER, J., delivered the opinion ...

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