Whether, in the bank-fraud statute, 18 U.S.C. § 1344, subsection (1)’s “scheme to defraud a financial institution” requires proof of a specific intent not only to deceive, but also to cheat, a bank, as nine circuits have held, and as petitioner argued here.
Lower court opinion: United States v. Shaw, 781 F.3d 1130 (9th Cir. 2015); USSC docket; Scotusblog page
Another circuit split, another cert grant. The split in this case is about the mens rea required to be found guilty of bank fraud under 18 U.S.C. § 1344(1). Two years ago, the Court decided that prosecutions under subsection (2) of § 1344, which prohibits “knowingly execut[ing] a scheme … to obtain” property owned by, or under the custody of, a bank “by means of false or fraudulent pretenses,” requires only that the defendant intend to obtain bank property and that this end is accomplished “by means of” a false statement. Nothing in the statute requires proof of intent to defraud or deceive a bank. Loughrin v. United States, 134 S. Ct. 2384 (2014). Loughrin didn’t decide whether subsection (1)’s different language—covering schemes to defraud a financial institution, versus schemes to obtain property that could be owned by or in the custody of a bank—requires proof the defendant both (1) intended to deceive a bank and (2) intended that the bank be the principal victim of the fraud.
The Ninth Circuit rejected Shaw’s claim that the statute requires proof of both types of specific intent; instead, it held that while § 1344(1) does require proof of intent to deceive the bank directly, it does not require the government to establish the defendant intended the bank (as opposed to one of its customers, for instance) to suffer a financial loss. By Shaw’s count, nine other circuits have agreed with his argument, albeit in cases decided before Loughrin. The Seventh Circuit is one of them: United States v. Higgins, 270 F.3d 1070, 1073-74 (7th Cir. 2001), held that “[i]n order to support a conviction under §1344(1), the government must prove that the defendant engaged in a pattern or course of conduct designed to deceive a financial institution with the intent to cause actual or potential loss.” (Emphasis added). The Court will now tells us if the reasoning of those nine circuits stands after Loughrin. The case will be decided next Term.