Shaw v. United States
137 S. Ct. 462
| SCOTUS | 2016Background
- Lawrence Shaw obtained Bank of America account identifiers for customer Stanley Hsu and used them to transfer funds from Hsu’s account to other accounts he controlled, ultimately obtaining Hsu’s money.
- Shaw was prosecuted under 18 U.S.C. §1344(1) (criminalizing the knowing execution of a scheme to defraud a financial institution) and convicted; the Ninth Circuit affirmed.
- Shaw’s principal defense: §1344(1) does not apply because he intended to defraud Hsu (a depositor), not the bank itself.
- The Government argued a depositor’s bank account constitutes bank property or is property under the bank’s custody/control, so schemes to take depositor funds can be schemes to defraud the bank.
- The Supreme Court granted certiorari to decide whether §1344(1) covers schemes like Shaw’s and to consider related jury-instruction claims.
Issues
| Issue | Plaintiff's Argument (Shaw) | Defendant's Argument (United States) | Held |
|---|---|---|---|
| Whether §1344(1) covers schemes to obtain a depositor’s funds when the defendant targeted the depositor rather than the bank | §1344(1) requires intent to wrong the bank’s property rights; Shaw only intended to steal from Hsu (the depositor), not the bank | A bank has property or qualified property rights in deposited funds (or custody/control); deceiving the bank to obtain those funds is a scheme to defraud the bank | §1344(1) can cover schemes to deprive a bank of deposit-account funds when defendant knew the bank held the deposits, the funds came from the account, and the defendant misled the bank |
| Whether the Government must prove the bank suffered actual financial loss or that the defendant intended financial loss to the bank | Shaw: statute should require intent to cause bank financial harm or ultimate loss | Government: statute requires a “scheme to defraud” but not proof of ultimate loss or an intent to cause bank loss; wrongful deprivation of bank rights suffices | Court: no requirement of ultimate monetary loss or purpose to cause bank loss; knowledge of the scheme suffices |
| Whether defendant’s ignorance of bank property law defeats §1344(1) liability | Shaw: he did not know bank held a property interest in the deposits, so he lacked intent to defraud the bank | Government: defendant’s knowledge that the bank possessed the account and that false statements would cause the bank to release funds is enough; legal ignorance is not a defense | Court: legal ignorance about property characterization is not a defense where defendant knew bank held the account and misled it to obtain funds |
| Proper mens rea under §1344(1): knowledge vs. purpose | Shaw: statute requires purpose to harm the bank (not mere knowledge) | Government: statute punishes knowingly executing a scheme to defraud; knowledge of the scheme’s likely effect on bank property is sufficient | Court: mens rea equivalent to knowledge is sufficient; purpose (conscious objective) is not required |
Key Cases Cited
- Detroit Timber & Lumber Co. v. United States, 200 U.S. 321 (discussing that syllabi/headnotes are not the Court’s opinion)
- Phoenix Bank v. Risley, 111 U.S. 125 (1884) (bank as owner or bailee of deposited funds)
- Carpenter v. United States, 484 U.S. 19 (1987) (victim’s deprivation of right to use property suffices without unreimbursed loss)
- Pasquantino v. United States, 544 U.S. 349 (2005) (statutory property can include intangible or government tax rights for fraud statutes)
- Allison Engine Co. v. United States ex rel. Sanders, 553 U.S. 662 (2008) (distinguishing fraud statutes directed at government contracts/claims)
- Tanner v. United States, 483 U.S. 107 (1987) (context for intent requirements in certain fraud statutes)
- United States v. Cohn, 270 U.S. 339 (1926) (statutory text requiring purpose to defraud the United States)
- Bridges v. United States, 346 U.S. 209 (1953) (interpretation of statutes addressing fraud "against the United States")
- Neder v. United States, 527 U.S. 1 (1999) (fraud definitions reflecting common law)
- Callanan v. United States, 364 U.S. 587 (1961) (discussing rule of lenity framework)
- Muscarello v. United States, 524 U.S. 125 (1998) (rule of lenity standard)
- Staples v. United States, 511 U.S. 600 (1994) (rule of lenity discussion)