Shaw v. United States Page 2

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Media for Shaw v. United States

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

Koren L. Bell:


In that case it's much like the mail and wire fraud statutes which do not specify a required victim for the fraud scheme, and therefore provided the government could prove the two undisputed components of the term "defraud" which come from --

Stephen G. Breyer:

I'm not asking you to repeat it.

I'm asking you, if the local person comes to the door and says, dear Miss Kardashian, I a.m. your local jewelry cleaner.

Please give me your jewelry. She does.

And that's not fraud.

He wanted to get the jewelry.

He tried to get the -- he also believed that the friend had just loaned it for the evening, that she's triple insured, that she won't even lose any money because the publicity will be worth it.


Koren L. Bell:


And that --

Stephen G. Breyer:

Now, my question is: There's the statute.

I would have always thought from first year of law school, criminal law, that that was fraud, but perhaps I was wrong.

So I would like you to explain it.

Koren L. Bell:

Yes, Your Honor.

That would be a scheme to defraud the insurer.

If the scheme -- if the -- and in this case of the mail and wire fraud statutes which penalize a scheme to defraud anyone, for example, and provide heightened penalties for schemes that defraud anyone and happen to affect the bank, then, yes, that would -- would satisfy the statute.

But if the statute specified a particular victim as clause (1) does here, and clause (1) says the intended victim must be the bank, not the customer. And so our argument depends on that -- on -- on two steps based on this Court's long-standing fraud precedent.

The first is how we define defraud.

But the second is the presence of the direct object there.

In the example that Your Honor posited, there -- there was no required object of the fraud scheme, and therefore at the very least it would certainly constitute a scheme to obtain money or property by means of false pretenses.

John G. Roberts, Jr.:

You get -- you get mired in some very abstract concepts of property rights. Yes, someone is insured, but here if they keep getting their property stolen, their insurance rates go up. Here, okay, it wasn't that if you -- correct, it wasn't the bank's own property, but it's somebody else's property that they use in making loans.

And, again, they will have less money to make loans if the property is -- is being taken. Now, does your case turn on what the defendant knows even if that's not right? I mean, the argument may as well -- people commonly think you put your money in the bank, it's your money, and they'll give it back, but of course it's loaned out by the bank. But if the defendant really thinks I'm not -- I don't want to take anything from the bank.

I'm taking this from two -- and he's wrong, is -- is he off the hook?

Koren L. Bell:

Yes, Your Honor.

So first of all, the standard here is not what he knows but what he intends, which this Court, going back to the Derlin case in 1896, has equated with purpose, which makes sense because we're talking about a scheme which is a plan with a purpose.

And precisely for that reason this particular liability scheme avoids the effect-based technicalities that the government complains of, because it doesn't matter whether the bank in fact has possessory interest or whether the insurer is going to in fact bear the loss.

The only thing that matters is as Your Honor says what the defendant intends, what his purpose is in devising this scheme.

John G. Roberts, Jr.:

Well, is that making -- is that ignorance of the law being the defense because the law -- he thinks the bank -- the bank doesn't have any property interest at all, but in fact the bank has the property interest as either a bailee or bailor or -- I forget which one it is -- and the bank has the property interest because it actually uses the money in its own effect, but he's wrong about that legal question of property.

So his ignorance of the law is a defense?