Intent Isn't Needed for Bank Fraud Conviction
WASHINGTON (CN) - To convict a check manipulator of federal bank fraud, the government need not show intent to defraud the bank, the Supreme Court ruled Monday.
At issue is the conviction of Kevin Loughrin, who hatched a scheme to steal checks from people's mail, alter them and use them to buy things at Target. He would then return the items for cash.
Loughrin was charged with six counts of bank fraud, two counts of aggravated identity theft and one count of possession of stolen mail.
Though Loughrin had said the jury should not be able to convict him without finding that he intended to defraud a bank, the trial judge rejected his proposal, saying the 10th Circuit did not require such a finding.
The jury convicted Loughrin on all counts, and the 10th Circuit affirmed .
The Supreme Court took up the case this past December and was essentially unanimous affirmed as well Monday.
Ultimately the text of the bank fraud statute itself, codified at Section 1344(2) of Title 18, precludes Loughrin's argument.
"Nothing in the clause additionally demands that a defendant have a specific intent to deceive a bank," according to the majority opinion by Justice Elena Kagan. "And indeed, imposing that requirement would prevent §1344(2) from applying to a host of cases falling within its clear terms. In particular, the clause covers property 'owned by' the bank but in someone else's custody and control (say, a home that the bank entrusted to a real estate company after foreclosure); thus, a person violates §1344(2)'s plain text by deceiving anon-bank custodian into giving up bank property that it holds. Yet under Loughrin's view, the clause would not apply to such a case except in the (presumably rare) circumstance in which the fraudster's intent to deceive extended beyond the custodian to the bank itself. His proposed inquiry would thus function as an extra-textual limit on the clause's compass." (Parentheses in original.)
Though Target sometimes did decline to submit the altered checks that Loughrin used to the bank, Kagan said that meant that Loughrin merely failed at those times in his scheme to obtain bank property.
"And we have long made clear that such failure is irrelevant in a bank fraud case, because §1344 punishes not 'completed frauds,' but instead fraudulent 'scheme[s],'" the decision continues.
Joined by Justice Antonin Scalia, Justice Clarence Thomas said he concurred in part and concurred in judgment.
"I agree with the court that neither intent to defraud a bank nor exposure of a bank to a risk of loss is an element of the crime codified in 18 U. S. C. §1344(2),' Thomas wrote. "But I am dubitante on the point that one obtains bank property 'by means of' a fraudulent statement only if that statement is 'the mechanism naturally inducing a bank (or custodian of bank property) to part with money in its control.' ... We have heard scant argument (nothing but the government's bare-bones assertion) in favor of the 'by means of' textual limitation, and no adversary presentation whatever opposing it. The court's opinion raises the subject in order to reply to Loughrin's argument that, unless we adopt his proposed nontextual limitations, all frauds effected by receipt of a check will become federal crimes. It seems to me enough to say that Loughrin's solutions to the problem of the statute's sweep are, for the reasons well explained by the court's opinion, not correct. What the proper solution may be should in my view be left for another day."
Justice Samuel Alito wrote separately about why he concurred in part and concurred in judgment.
"The court's statements that a defendant must intend to obtain bank property to be convicted under §1344(2) are unnecessary to its conclusion that a defendant may be convicted under this provision without proof that he either intended to defraud a bank or created a risk of loss to a bank,' Alito wrote. "Furthermore, as the court makes clear, petitioner waived any challenge to his conviction arising from an asserted statutory requirement that he must have intended to obtain bank property."