Shaw v. United States

DOES INTENT TO DEFRAUD INVOLVE MORE THAN INTENT TO DECEIVE?

Shaw argues that Congress intended for knowing execution of a scheme “to defraud a financial institution” to mean not only intending to deceive a bank, but also intending to cheat the bank by taking bank-owned property. Shaw notes that the focus of the statute is the scheme itself, rather than its result, which he argues is an indication that the schemer’s intent is central to the statute. Shaw contends that the Supreme Court has a long-standing precedent of interpreting “defraud” to involve schemes aimed at depriving victims of their property rights through deception. Thus, Shaw argues that the wording of the statute requires the Court to hold that convictions under § 1344(1) require not only intent to deceive a financial institution, but also intent to deprive the financial institution of its own property.

The government counters that intent to defraud a bank can be proven by mere evidence of intent to deceive the bank, citing the common law interpretation of the word “defraud.” While the government admits that intent to cause harm is often an element of “defraud” at common law, it argues that this intent is only applicable to determining punishment rather than culpability. As for Congress’s purpose for the bank-fraud statute, the government maintains that Congress discussed requiring intent to harm the bank itself in § 1344(1), but ultimately discarded that idea in favor of a broader provision. The government also argues that Shaw’s interpretation of “defraud” would create an unsound rule because it would distinguish between schemes in which the schemer aimed to deprive a bank of property and schemes in which the schemer did not care whose property he took, thereby punishing the former while allowing the latter.

IS IT NECESSARY FOR THE DEFENDANT TO INTEND TO DEPRIVE THE BANK OF THE BANK’S OWN PROPERTY?

Shaw maintains that the plain meaning of the bank-fraud statute supports his position that a conviction for intent to defraud a bank must be based upon a scheme that was directed at bank-owned property. Shaw argues that the rules of grammar support his interpretation of the statute by noting that the verb “defraud” should be directly applied to its object, “a financial institution.” Shaw also compares the two clauses of the bank-fraud statute, noting that the second clause of the statute, unlike the first, lists both bank-owned and bank-held property. . He argues that this indicates the legislature was aware of a difference and chose to have the first clause target only those individuals whose schemes were designed to take bank-owned property. Shaw contends that the existence of the second clause of the statute, which his behavior would arguably fall under, provides further support for his argument that the Court should not interpret § 1344(1) to regulate schemes targeting money the bank possesses but does not own. Beyond the text of the statute, Shaw argues that his position is aligned with Supreme Court precedent interpreting “defraud” as an act of depriving a person of his own property by deceit. He also contends that the legislative history of the bank-fraud statute indicates Congressional intent to adopt this established interpretation of “defraud.” Finally, Shaw notes that even if the Court found the statute to be unclear, any ambiguity should be resolved in his favor according to the rule of lenity, which the Court has used in interpreting other federal fraud statutes. He uses these arguments to further his case by maintaining that the money of bank customers, which he targeted in his scheme, is under the custody and control of banks but does not actually belong to the banks as property.

The government counters that the bank-fraud statute was based upon mail- and wire-fraud statutes, which have been interpreted broadly to address not only ownership interests but also other types of property interests, such as possessory interests. The government argues that the wording differences between the two clauses of the bank-fraud statute do not indicate a Congressional intent to limit application of the first clause to bank-owned property. On the contrary, the government maintains that the wording difference reflects Congress’s decision to mirror the structure of mail-and wire-fraud statutes in the first clause, which indicates that the clause is meant to apply beyond ownership interests. Further, the government asserts that Shaw’s interpretation of the bank fraud statute’s legislative history fails to account for the nature of real-world allocation of loss from bank-fraud schemes. Because a bank’s financial integrity can be put at risk by fraudulent schemes regardless of a schemer’s intention to target the bank or one of its customers, the government argues that reading § 1344(1) to only protect banks from schemes targeting the bank’s own property does not align with the Congressional intent to generally protect banks from being defrauded. The government argues that the disconnect between a schemer’s belief about who will bear the cost of a fraudulent scheme and the actual allocation of loss indicates that Congress would not have written the bank-fraud statute to rely upon whom the schemer intended to target. Accordingly, the government contends that no intent element should apply with respect to the property that the schemer targets. Beyond these responses, the government challenges Shaw’s argument that bank deposits are not bank-owned property by noting that legal precedent supports the argument that banks have an ownership interest in deposits from their customers.