Background

• Defendant Lawrence Shaw accessed a Bank of America customer Stanley Hsu’s mailed bank statements, used that information to open a PayPal account in Hsu’s name, and linked it to bank accounts Shaw controlled.
• Shaw opened multiple Washington Mutual accounts in his father’s name, falsified documents to link those accounts to the fake Hsu PayPal account, and funneled funds through these accounts into an account he controlled.
• Between June and October 2007 Shaw diverted about $307,000 from Hsu’s Bank of America account; Bank of America and PayPal later reimbursed portions, leaving Hsu with substantial loss.
• Shaw was charged with 17 counts under 18 U.S.C. § 1344(1) (bank fraud) and, at trial, requested a jury instruction that § 1344(1) requires proof the defendant intended the bank to be the principal financial victim. The district court refused and instructed that intent to deceive the bank, not intent that the bank bear the loss, suffices.
• The jury convicted Shaw on 14 counts; Shaw appealed arguing § 1344(1) requires proof the defendant intended to expose the bank to the primary risk of loss. The Ninth Circuit affirmed.

Issues

Key Cases Cited

• Loughrin v. United States, 134 S. Ct. 2384 (2014) (§ 1344(2) does not require intent to defraud the bank; clauses are distinct)
• United States v. Bonallo, 858 F.2d 1427 (9th Cir. 1988) (bank is defrauded when it is the target of deception even if customers are the source of funds)
• United States v. Wolfswinkel, 44 F.3d 782 (9th Cir. 1995) (even if a risk-of-loss element existed, administrative costs or potential creditor claims can satisfy it)
• United States v. Thomas, 315 F.3d 190 (3d Cir. 2002) (held clauses conjunctive; required intent to cause bank loss/risk)
• United States v. Nkansah, 699 F.3d 743 (2d Cir. 2012) (discusses purpose of statute and consequences of requiring intent that bank bear loss)
• United States v. Staples, 435 F.3d 860 (8th Cir. 2006) (addresses circuit split on whether intent to cause bank loss is required)