Summary
The Supreme Court held that 18 U.S.C. § 1344(2) does not require the Government to prove that a defendant intended to defraud a financial institution. The provision requires proof that the defendant knowingly executed or attempted to execute a scheme to obtain bank property by means of false or fraudulent pretenses, representations, or promises. The Court affirmed the Tenth Circuit’s judgment and concluded that the statute’s “by means of” language limits its application to frauds having a sufficiently direct connection to bank property.
Topics
Practice areas
Questions Presented
- Whether 18 U.S.C. § 1344(2) requires the Government to prove that the defendant intended to defraud a financial institution.
- Whether § 1344(2) requires the defendant's false statement to be the mechanism naturally inducing a bank or custodian of bank property to part with bank property.
- Whether § 1344(2) requires proof that the defendant's scheme created a risk of financial loss to the bank.
Holdings
- Section 1344(2) does not require the Government to prove that the defendant intended to defraud a financial institution. The provision requires a knowing scheme or artifice to obtain property owned by or under the custody or control of a financial institution by means of false or fraudulent pretenses, representations, or promises, but it contains no additional bank-defraud intent element.
- Section 1344(2)'s 'by means of' requirement is satisfied when the defendant's false statement is the mechanism naturally inducing a bank or custodian of bank property to part with money in its control. A forged or altered check presented to a merchant can satisfy that requirement because the merchant ordinarily forwards the check to a bank for payment.
- Section 1344(2) does not require proof that the defendant's scheme exposed the bank to a risk of financial loss.
Key quotations
“We hold that the Government need not make that showing.” (4)
“That is because the first clause of §1344, as all agree, includes the requirement that a defendant intend to “defraud a financial institution”; indeed, that is §1344(1)’s whole sum and substance.” (6)
“In other words, not every but-for cause will do.” (11-12)
“the text of §1344(2) already limits its scope to deceptions that have some real connection to a federally insured bank, and thus implicate the pertinent federal interest.” (14)
Factual background
Loughrin stole checks from residential mailboxes, altered or forged them, and used them to purchase merchandise at Target. He then returned the merchandise for cash. The checks were drawn on accounts at federally insured banks, and six checks formed the basis of the federal bank-fraud charges.
Procedural history
The District Court declined to instruct the jury that § 1344(2) required proof of an intent to defraud a financial institution, and the jury convicted Loughrin on all six counts. The Tenth Circuit affirmed, holding that intent to defraud a bank was required only under § 1344(1). The Supreme Court granted certiorari to resolve a circuit split and affirmed.