Shaw v. United States
2016 U.S. LEXIS 7431, 137 S Ct 462, 196 L. Ed. 2d 373 (2016)
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Rule of Law:
A scheme to knowingly obtain funds from a bank depositor's account by making false representations to the financial institution constitutes a scheme to defraud the financial institution under 18 U.S.C. § 1344(1), as the bank has a property interest in the customer's deposits.
Facts:
- Stanley Hsu was a customer of Bank of America and held funds in a deposit account.
- Lawrence Shaw obtained the identifying numbers and other related information for Hsu's Bank of America account.
- Shaw used Hsu's information to make false representations to Bank of America.
- Relying on these representations, the bank transferred funds from Hsu's account to other accounts at different institutions.
- Shaw then obtained the transferred funds from these other accounts for his own use.
Procedural Posture:
- Lawrence Shaw was convicted in the U.S. District Court for violating the federal bank fraud statute, 18 U.S.C. § 1344(1).
- Shaw, as appellant, appealed his conviction to the U.S. Court of Appeals for the Ninth Circuit.
- The Ninth Circuit affirmed the conviction, finding that an intent to defraud a bank's customer was sufficient to support a conviction for bank fraud.
- Shaw, as petitioner, filed a petition for a writ of certiorari with the Supreme Court of the United States, which was granted.
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Issue:
Does a person 'knowingly execute a scheme to defraud a financial institution' under 18 U.S.C. § 1344(1) if they intend to cheat only a bank depositor, and not the bank itself?
Opinions:
Majority - Justice Breyer
Yes. A scheme to obtain a bank depositor's funds constitutes a scheme to defraud a financial institution because the bank itself has a cognizable property right in the deposited funds. The Court reasoned that when a customer deposits money, the bank acquires property rights, either as the owner of the funds or as a bailee with the right to possess them. Shaw's scheme to cheat Hsu by deceiving the bank was therefore also a scheme to deprive the bank of its property rights. The statute does not require the government to prove the defendant intended to cause the bank a financial loss, nor does it require the defendant to have specific knowledge of the legal nuances of bank property law; it is sufficient that the defendant knew he was deceiving the bank to obtain funds under its control.
Analysis:
This decision clarifies the scope of the federal bank fraud statute, confirming that the term 'scheme to defraud a financial institution' is not limited to acts where the bank is the ultimate intended victim of financial loss. It establishes that deceiving a bank to access a customer's account interferes with the bank's own property rights, thus satisfying the statute's requirements. This broad interpretation makes it easier for federal prosecutors to secure convictions against individuals who target bank depositors, as the focus is on the fraudulent act against the bank itself rather than the defendant's ultimate motive.
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