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Bank Fraud: U.S Supreme Says No Requirement That Intent To Defraud Financial Institutions Need Be Shown


white collar crime financial fraud appeals

Loughrin v. United States

The United States Supreme Court

2014 WL 2807180 

Decided: June 23, 2014

Not All Bank Fraud Cases  Require That Fraud Against The Bank Be Proven

Summary: Defendant Loughrin went door-to-door ruffling through people’s mailboxes. He stole personalized checks and forged his name to pose as the accountholder. Loughrin made out six of these checks to a Target retailer for amounts up to $250.00.  He presented an altered check to the cashier to purchase merchandise. Generally after the cashier accepted the check, Defendant would leave the store and walk back inside to return the merchandise for cash. Employees in Target identified three of the checks as fraudulent.

The Federal Government charged Loughrin with six counts of committing bank fraud under the federal bank fraud statue 18.U.S C. § 1344. At trial, the court instructed the jury that it could convict Loughrin under §1344 (2) if, in offering the fraudulent checks to Target, he had knowingly executed or attempted to execute a scheme for the purpose of obtaining money from the banks on which the checks were drawn by means of fraudulent pretenses. The jury convicted him on all six counts. Loughrin argued that 1344 (2) requires proof that he intended to defraud a financial insittuion on which the altered checks had been drawn.

The Court Of Appeals affirmed and held that under 1344 (2) casts a wide net for bank fraud liability.  The United States Supreme Court held that under 1344 (2), it is not required that Government prove that the intent led Defendant to defraud a financial institution. §1344 (2) focuses on first, the schemes goal in obtaining bank property, and second, on the schemes means; a false representation. The United States Supreme Court affirmed and held that Defendant knowingly intended to defraud a financial institution by forging his name on checks and posing as the accountholder.

See Also: Gun Laws: The Mere Posession Of A Gun Presumes The Intent To Use It Against Another

Issue: Whether the federal bank fraud statue 18 U.S.C § 1344 (2) requires the Government to show that a defendant ‘intended’ to defraud a federally insured bank or other financial institution.

Holding: No. §1344(2) does not require that Government prove that the Defendant intended to defraud a financial institution. The United States Supreme Court held under 18 U.S.C §1344 (2) requires that a Defendant knowingly execute, or attempt to execute, a scheme or artifice with at least two elements. First clause: requires that the Defendant intended to obtain money under the custody or control of a financial institution. Second clause: requires that the Defendant’s envisioned result, the obtaining of the bank property, occurred by means of false or fraudulent pretenses. The text under 1344 (2) shows that Defendant focused on first, obtaining bank property from Target retailer, and second, by means of a false representation by posing as a fraudulent account holder.

Facts: Defendant Kevin Loughrin performed a scheme to convert altered and forged checks into cash. He pretended to be a Mormon missionary going door-to-door in a neighborhood. He rifled through mailboxes and stole checks. He washed, bleached, and ironed the checks to remove the existing writing so he can fill them out as he wanted. Defendant Loughrin made out six checks to a Target retailer, for amounts up to $250.00. Loughrin went to a Target retailer, presented an altered check to the cashier to purchase merchandise.

After the cashier accepted the check, Defendant would leave the store, then turn around and walk back inside to return the merchandise for cash.  Each of the altered checks that Loughrin presented to Target was drawn on an account at a federally insured bank, including Bank Of America and Wells Fargo. Employees at Target identified three of these checks as fraudulent and declined to submit them as payment. An account holder notified the bank that she had seen a man steal her mail. The Federal Government eventually caught up with Loughrin and charged him with six counts of committing bank fraud, and one for each of the altered checks presented to Target under the Federal bank fraud statue, 18 U.S.C § 1344.

At trial, the court charged the jury that it could convict Loughrin under 1344 (2) if, in offering the fraudulent checks to Target, Defendant had ‘ knowingly executed or attempted to execute a scheme or artifice to obtain money or property from the banks in which the checks were drawn by means of false or fraudulent pretenses.’ The Court Of Appeals affirmed and held a conviction under 1344 (2) requires proof that Defendant intended to defraud the banks on which the altered checks had been drawn. The United States Supreme Court held that 18 U.S.C § 1344 (2) makes it a crime to knowingly execute a scheme to obtain property owned by, or under the custody of, a bank by means of a false or fraudulent pretenses. Defendant was charged with bank fraud after being caught forging stolen checks, using them to buy goods at a Target retailer, and then returning the goods for cash.

Legal Analysis: The U.S Supreme Court granted certiorari to resolve whether §1344 (2) requires the Government to show that a Defendant intended to defraud a federally insured bank or other financial institution. §1344 (2) does not require Government to prove that Defendant’s intent let to defraud a financial institution. The U.S Supreme Court held that 18 U.S.C. §1344 (2) requires that a Defendant knowingly execute, or attempt to execute, a scheme or artifice, with at least two elements: A) requires that Defendant intended to obtain any of the moneys or other property owned by or under the custody or control of, a financial institution. B) Requires that the Defendant’s envisioned result occurred by means of false or fraudulent pretenses, representations, or promises.

The statue’s language focuses on the schemes goal (obtaining bank property), and on the schemes means (a false representation) The U.S Supreme Court held under Section 1344 (2) does not require the Government to prove that a Defendant ‘ intended’ to defraud a financial institution. Section 1344 (2) requires only that a Defendant intended to obtain bank property and accomplished his end by means of a false statement. The United States Supreme Court affirmed the judgment.


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