Bank fraud is a little-known offense. Many people don’t realize they can be charged with bank fraud without intending to take money from a financial institution.
A recent U.S. Supreme Court case concerned Lawrence Shaw, a man who was convicted of federal bank fraud after he stole $300,000 from the account of Stanley Hsu, reported FindLaw.
Although Shaw did not dispute the fact he took the cash, he appealed the bank fraud conviction. He argued he had no intent to defraud the bank itself so could not be charged with bank fraud. He just wanted Hsu’s money.
The Supreme Court rejected this argument. The justices unanimously ruled Shaw’s claim he was cheating a customer but not the bank did not save him from bank fraud charges.
The court ruled the two interests were not separate. A bank does retain property rights in a customer’s bank deposits. When a customer deposits his or her funds, a bank becomes the owner of the funds. The financial institution has the right to use the funds as a source of loans that help it earn profits.
The justices said although Shaw may not have intended to cause financial harm to the bank, the relevant statute, although it requires “a scheme to defraud,” does not require the bank to suffer ultimate financial loss. This Supreme Court found no case that interpreted the statute as Shaw did.
The court found Shaw’s ignorance of the relevant bank-related property law was no defense to criminal prosecution for bank fraud. Shaw was aware that the bank possessed Hsu’s account. He made false statements to the bank and believed these false statements would lead the bank to release funds that ended up in his possession.
Federal law has a very broad definition of bank fraud. It extends to any “scheme or artifice” intended to defraud a financial institution or the use of a deceptive means to obtain something of value under the control of the financial institution.
A conviction for bank fraud under the federal statute can lead to up to 30 years in prison, and a fine of up to $1 million, or both.
It’s worth noting that the term “financial institution” under the statue is also wide. It’s defined by federal law to include banks and credit unions that are federally insured, Federal Reserve banks, businesses that lend mortgages and other institutions that accept deposits.
Although bank fraud is a federal offense, there is variation in state laws about how they classify crimes that federal law would consider bank fraud. In New York, even issuing a bad check can be classified as bank fraud.
If you have been charged with bank fraud, you should contact an experienced criminal defense lawyer who is familiar with complicated federal cases.