Shaw v. United States

PETITIONER: Lawrence Eugene Shaw
RESPONDENT: United States
LOCATION: U.S District Court for the Central District of California, Western Division

DOCKET NO.: 15-5991
DECIDED BY:
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: US ()
GRANTED: Apr 25, 2016
ARGUED: Oct 04, 2016

ADVOCATES:
Anthony A. Yang - for respondent
Koren L. Bell - for petitioner

Facts of the case

Stanley Hsu, a Taiwanese business man, opened a Bank of America bank account while working in the United States. When he returned to Taiwan, he arranged for the daughter of one of his employees to receive his mail and forward it to him in Taiwan. Lawrence Eugene Shaw lived with the daughter and regularly checked her mail. When the Bank of America statements arrived for Hsu’s account, Shaw concocted a scheme in which he opened a PayPal account under Stanley Hsu’s name and used it to convince banks that he was Hsu for the purpose of transferring money from Hsu’s accounts to the PayPal account and from there to an account that Shaw controlled. Using this scheme, Shaw was able to transfer approximately $307,000 of Hsu’s money to himself before the fraud was discovered. Bank of America returned approximately $131,000 to Hsu, and PayPal returned approximately $106,000. Hsu lost about $170,000 by not notifying the banks within 60 days of the fraudulent transactions, as standard banking procedures require.

The government charged Shaw with violating the Bank Fraud Act of 1984, which criminalizes schemes “to defraud a financial institution.” Shaw requested a jury instruction that stated that the government had to prove that he intended not only to defraud the bank but also that he intended to target the bank as the principal financial victim. The district court refused to give the instruction and determined that the language of the Act required that the government prove only that the defendant intended to deceive the bank, not that he also intended the bank to bear the loss that resulted from the fraud. The jury convicted Shaw of 14 counts of bank fraud under the Act, and the U.S. Court of Appeals for the Ninth Circuit affirmed.

Question

In order to convict a defendant of defrauding a financial institution under the Bank Fraud Act of 1984, does the government have to prove not only that the defendant had an intent to deceive, but also that the target of that deception was a bank?

Media for Shaw v. United States

Audio Transcription for Oral Argument - October 04, 2016 in Shaw v. United States

John G. Roberts, Jr.:

We'll hear argument next in Case 15991, Shaw v. United States. Ms. Bell.

Koren L. Bell:

Thank you, Mr. Chief Justice, and may it please the Court: Clause (1) of the Federal Bank Fraud Statute premises culpability on intent to defraud a financial institution, and this case concerns what that element entails.

The settled meaning of clause (1)'s text based on a century of this Court's precedent, its fraud precedent, makes clear that intent to defraud a bank requires intent both to deceive the bank and wrong the bank in its own property rights.

Intent to wrong a bank's property rights, which includes its own possessory rights, in bank-held property means intent to cause the bank, not the customer, to bear the proper loss of a fraud scheme.

And in this sense --

Sonia Sotomayor:

I'm sorry.

Possessory right means I own something.

I'm holding it.

In most criminal charges for larceny, the issue is whether I have a possessory right, regardless of what I want to do with this property, over you who's taken it from me.

So where do you get the next step that possessory right means I have to lose something of value or that I'm going to ultimately bear the loss? Isn't the loss merely the loss of the possessory right?

Koren L. Bell:

Your Honor, the statute turns on intent, and were the government to prove the defendant's intent to deprive of you of your possessory right, and that would be sufficient.

And where that comes from is from this Court's settled fraud precedent.

Going back a hundred years, the Court has interpreted the term "defraud" to mean property lost to the victim.

And we see that --

Stephen G. Breyer:

So if you're insured and the -- or at least the defendant believes he's insured, it isn't theft?

Koren L. Bell:

If the defendant believes that the bank is insured and therefore that another party will bear the loss?

Stephen G. Breyer:

Even Kardashian's thief, if there is one, believes that all that jewelry is insured. Indeed over insured.

So it's not theft?

Koren L. Bell:

Well, so it would depend on the language of the statute.

Stephen G. Breyer:

No, it says defraud.

She lied.

He says I'm knocking on the door -- you know, I'll go as far as you want.

But I don't see that that has anything to do with it.

You mean if he -- if he defrauds him out of the money, he defrauds her out of the jewelry, says here I a.m., your local jewelry cleaner.

Gets the jewelry.

Wouldn't you think that was fraud? Even if she's insured.

Even if he thinks she's triple insured.

Even if he thinks that, in fact, this isn't even her jewelry, that it was just loaned her on the occasion by a good friend, the necklace.

Koren L. Bell:

It would depend on whether the statute in that case required the intent to defraud --

Stephen G. Breyer:

What the statute says is defraud.