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Federal White Collar Criminal Defense: Supreme Court to Review Federal Bank Fraud's Scope

The U.S. Supreme Court has granted a certiorari petition in U.S. v. Loughrin, 710 F. 3d 1111 (10th Cir. 2013) to review the federal bank fraud statute's scope.

18 U.S.C. § 1344 entitled "Bank Fraud" provides,

Whoever knowingly executes, or attempts to execute, a scheme or artifice-

(1) to defraud a financial institution; or

(2) to obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises;

shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.

Kevin Loughrin was charged and convicted of bank fraud, 18 U.S.C. 1344(2) and other charges resulting from his scheme to steal checks from people's mail boxes and altering them to make purchases at a local Target store.

On Appeal to the 10th Circuit U.S. Appeals Court, Loughrin argued that the district court erred in refusing to instruct the jury that a conviction under 1344(2) required proof that he intended to defraud the banks on which the checks had been drawn.

The 10th Circuit held that the Government was not required to prove that Loughrin intended to defraud a bank because,

"the differences in the prohibited conduct for each offense extend to the type of proof the government needs to offer. To establish that a bank was defrauded under § 1344(1), the government need not prove that the bank suffered any monetary loss, only that the bank was put at potential risk  by the scheme to defraud." United States v. Young, 952 F.2d 1252, 1257 (10th Cir.1991). Yet a conviction under § 1344(2) requires no proof that a bank was "at risk" because there is no explicit requirement that a particular bank be defrauded. United States v. Sapp, 53 F.3d 1100, 1103 (10th Cir.1995)." Loughrin at 1115-1116.

The Sixth and Ninth Circuits have similarly that 1344(2) does not require intent to defraud a bank but rather only a connection to a financial institution and the fraudulent scheme, while the First, Second, Third, Fifth, Seventh, and Eighth Circuits hold the same intent requirement under 1344(1), intent to defraud a financial institution, applies under 1344(2).

The Supreme Court's decision will resolve the circuit split and could alter the Government's ability to charge individuals under the federal bank fraud statute.

If you or someone you care about has questions regarding bank fraud or any other federal criminal law matter who please contact federal white collar criminal defense attorney Michael C. Hennenberg to schedule a consultation.

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