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Opinion analysis: Government prevails in bank fraud case

Lawrence Shaw does not dispute that he stole over $300,000 from Stanley Hsu, a U.S. citizen living in Taiwan, by using Hsu’s personal information to move money out of Hsu’s Bank of America account into an account at another bank, from which Shaw then withdrew the money. But what he did not do, Shaw argued in the Supreme Court, was commit federal bank fraud, because he didn’t intend to defraud a bank – only Hsu. The Supreme Court rejected that line of reasoning today, in a unanimous nine-page opinion by Justice Stephen Breyer, but it left the door open for Shaw to continue to challenge his conviction in the lower courts.

The court made fairly quick work of each of the arguments Shaw made to support his position. First, it rebuffed his contention that the text of the statute required that he deprive the bank of its own property – which, he maintained, he did not. The bank did have a property right in Hsu’s account, the court countered: The bank owned the funds and could loan them to someone else, even if Hsu could also withdraw them. (The court was equally unmoved by Shaw’s representation that he did not know that the bank had a property right in Hsu’s account.)

It also did not matter, the court ruled, that Shaw did not intend the bank to lose money. Much like the federal laws banning mail fraud, the court concluded, the bank fraud statute does not require an intent to cause a financial loss.

The court similarly rejected Shaw’s assertion that the bank fraud statute required prosecutors to show that he intended to harm the bank’s property, rather than that he merely knew that he would do so. The court pointed out that the bank fraud statute expressly criminalizes a “knowing” execution of a scheme to defraud. Shaw’s reading, the court reasoned, calls for hair-splitting: “To hold that something other than knowledge is required would assume that Congress intended to distinguish, in respect to states of mind, between (1) the fraudulent scheme, and (2) its fraudulent elements.” “Why,” the court asked skeptically, “would Congress wish to do so?”

Although today’s decision was a victory for the government, the court did leave Shaw with one glimmer (however faint) of hope. Shaw had argued that the instructions given to the jury that convicted him were flawed because they could have allowed the jury to convict him simply by finding that he had intended to deceive the bank, without more, when in fact he must have intended to both deceive the bank and deprive it of something of value. The court did not weigh in on the merits of Shaw’s challenge to the jury instructions, though; instead, it sent the case back for the lower court to resolve.

Recommended Citation: Amy Howe, Opinion analysis: Government prevails in bank fraud case, SCOTUSblog (Dec. 12, 2016, 2:03 PM),