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SUPREME COURT OF THE UNITED STATES
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No. 15–5991
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LAWRENCE EUGENE SHAW, PETITIONER v.
UNITED STATES
on writ of certiorari to the united states
court of appeals for the ninth circuit
[December 12, 2016]
Justice Breyer delivered the opinion of the
Court.
A federal statute makes it a crime “knowingly
[to] execut[e] a scheme . . . to defraud a financial
institution,” 18 U. S. C. §1344(1), for example, a
federally insured bank, 18 U. S. C. §20. The petitioner,
Lawrence Shaw, was convicted of violating this provision. He argues
here that the provision does not apply to him because he intended
to cheat only a bank depositor, not a bank. We do not accept his
arguments.
I
The relevant criminal statute makes it a
crime:
“knowingly [to] execut[e] a scheme
. . .
“(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.”
§1344.
Shaw obtained the identifying numbers of a Bank
of America account belonging to a bank customer, Stanley Hsu. Shaw
used those numbers (and other related information) to transfer
funds from Hsu’s account to other accounts at other institutions
from which Shaw could obtain (and eventually did obtain) Hsu’s
funds. Shaw was convicted of violating the first clause of the
statute, namely,the prohibition against “defraud[ing] a financial
insti-tution.” The Ninth Circuit affirmed his conviction. 781F. 3d
1130 (2015). Shaw then filed a petition for certiorari arguing that
the words “scheme to defraud a financial institution” require the
Government to prove that the defendant had “a specific intent not
only to deceive, but also to cheat, a bank,” rather than “a
non-bank third party.” Pet. for Cert. i. We granted
review.
II
Shaw makes several related arguments in favor
of his basic claim, namely, that the statute does not cover schemes
to deprive a bank of customer deposits. First, he says that
subsection (1) requires “an intent to wrong a victim bank [a
‘financial institution’] in its property
rights . . . .” Brief for Petitioner 23. He
adds that the property he took, money in Hsu’s bank account,
belonged to Hsu, the bank’s customer, and that Hsu is not a
“financial institution.” Id., at 25, 45. Hence Shaw’s was a
scheme “designed” to obtain only “a bank customer’s
property,” not “a bank’s own property.” Id., at
24–25.
The basic flaw in this argument lies in the fact
that the bank, too, had property rights in Hsu’s bank account. When
a customer deposits funds, the bank ordinarily becomes the owner of
the funds and consequently has the right to use the funds as a
source of loans that help the bank earn profits (though the
customer retains the right, for example, to withdraw funds). 5A
Michie, Banks and Banking, ch. 9, §1, pp. 1–7 (2014) (Michie);
id., §4b, at 54–58; id., §38, at 162; Phoenix
Bank v. Risley, 111 U. S. 125, 127 (1884) .
Sometimes, the contract between the customerand the bank provides
that the customer retains ownership of the funds and the bank
merely assumes possession. Michie, ch. 9, §38, at 162; Phoenix
Bank, supra, at 127. But even then the bank is like a
bailee, say, a garage that stores a customer’s car. Michie, ch. 9,
§38, at 162. And as bailee, the bank can assert the right to
possess the deposited funds against all the world but for the
bailor (or, say, the bailor’s authorized agent). 8A Am. Jur. 2d,
Bailment §166, pp. 685–686 (2009). This right, too, is a property
right. 2 W. Blackstone, Commentaries on the Laws of England 452–454
(1766) (referring to a bailee’s right in a bailment as a “special
qualified property”). Thus, Shaw’s scheme to cheat Hsu was also a
scheme to deprive the bank of certain bank property rights.
Hence, for purposes of the bank fraud statute, a
scheme fraudulently to obtain funds from a bank depositor’s account
normally is also a scheme fraudulently to obtain property from a
“financial institution,” at least where, as here, the defendant
knew that the bank held the deposits, the funds obtained came from
the deposit account, and the defendant misled the bank in order to
obtain those funds.
Second, Shaw says he did not intend to cause the
bank financial harm. Indeed, the parties appear to agree that, due
to standard banking practices in place at the time of the fraud, no
bank involved in the scheme ultimately suffered any monetary loss.
Brief for Petitioner 4; Brief for United States 4, 27–28. But the
statute, while insisting upon “a scheme to defraud,” demands
neither a showing of ultimate financial loss nor a showing of
intent to cause financial loss. Many years ago Judge Learned Hand
pointed out that “[a] man is none the less cheated out of his
property, when he is induced to part with it by fraud,” even if “he
gets a quid pro quo of equal value.” United States v.
Rowe, 56 F. 2d 747, 749 (CA2 1932). That is because “[i]t
may be impossible to measure his loss by the gross scales available
to a court, but he has suffered a wrong; he has lost,” for example,
“his chance to bargain with the facts before him.” Ibid. Cf.
O. Holmes, The Common Law 132 (1881) (“[A] man is liable to an
action for deceit if he makes a false representation to another,
knowing it to be false, but intending that the other should believe
and act upon it”); Neder v. United States, 527
U. S. 1 –25 (1999) (bank fraud statute’s definition of fraud
reflects the common law).
It is consequently not surprising that, when
interpreting the analogous mail fraud statute, we have held it
“sufficient” that the victim (here, the bank) be “deprived of its
right” to use of the property, even if it ultimately did not suffer
unreimbursed loss. Carpenter v. United States, 484
U. S. 19 –27 (1987). Lower courts have explained that, where
cash is taken from a bank “but the bank [is] fully insured[,] [t]he
theft [is] complete when the cash [i]s taken; the fact that the
bank ha[s] a contract with an insur-ance company enabling it to
shift the loss to that company [is] immaterial.” United
States v. Kucik, 844 F. 2d 493, 495 (CA7 1988). And
commentators have made clear that “on the criminal side, it is
generally held that the lack of financial loss is no defense to
false pretenses.” 2 W. LaFave & A. Scott, Substantive Criminal
Law §8.7(i)(3), p. 404 (1986). We have found no case from this
Court interpreting the bank fraud statute as requiring that the
victim bank ultimately suffer financial harm, or that the defendant
intend that the victim bank suffer such harm.
Third, Shaw appears to argue that, whatever the
true state of property law, he did not know that the bank
had a property interest in Hsu’s account; hence he could not have
intended to cheat the bank of its property. Shaw did know, however,
that the bank possessed Hsu’s account. He did make false statements
to the bank. He did correctly believe that those false statements
would lead the bankto release from that account funds that
ultimately and wrongfully ended up in Shaw’s pocket. And the bank
did in fact possess a property interest in the account. These facts
are sufficient to show that Shaw knew he was entering into a scheme
to defraud the bank even if he was not aware of the niceties of
bank-related property law. To require more, i.e., to require
actual knowledge of those bank-related property-law niceties, would
free (or convict) equally culpable defendants depending upon their
property-law expertise—an arbitrary result. We have found nocase
from this Court requiring legal knowledge of the kind Shaw suggests
he lacked. But we have found cases in roughly similar fraud-related
contexts where this Court has asked only whether the targeted
property was in fact property in the hands of the victim, not
whether the defendant knew that the law would characterize the
items at issue as “property.” See Pasquantino v. United
States, 544 U. S. 349 –356 (2005) (Canada’s right to
uncollected excise taxes on imported liquor counted as “property”
for purposes of the wire fraud statute); Carpenter,
supra, at 25–26 (a newspaper’s interest in the
confidentiality of the contents and timing of a news column counted
as property for the purposes of the mail and wire fraud statutes).
We conclude that the legal ignorance that Shaw claims here is no
defense to criminal prosecution for bank fraud.
Fourth, Shaw argues that the bank fraud statute
requires the Government to prove more than his simple
knowledge that he would likely harm the bank’s property
interest; in his view, the Government must prove that such was his
purpose. See Voisine v. United States, 579
U. S. ___, ___ (2016) (slip op., at 4) (“knowingly” committing
an assault requires an awareness “ ‘that [harm] is practically
certain,’ ” whereas “purposefully” committing an assault is
“to have that result as a ‘conscious object’ ” (quoting ALI,
Model Penal Code §§2.02(2)(a)–(b) (1962))). Shaw adds that his
purpose was to take money from Hsu; taking property from the bank
was not his purpose.
But the statute itself makes criminal the
“knowin[g] execut[ion of] a scheme . . . to
defraud.” To hold that something other than knowledge is required
would assume that Congress intended to distinguish, in respect to
states of mind, between (1) the fraudulent scheme, and (2) its
fraudulent elements. Why would Congress wish to do so? Shaw refers
us to a number of cases involving fraud against the Government and
points to language in those cases suggesting that the relevant
statutes required that the defendant’s purpose be to harm the
statutorily protected target and not a third party. Brief for
Petitioner 25–29. But in two of those cases, the fraudulent
statement was made not to the Government but to the third party—a
circumstance not present here. See Allison Engine Co. v.
United States ex rel. Sanders, 553 U. S. 662 –668
(2008); Tanner v. United States, 483 U. S. 107
–112 (1987). In the third, the relevant portion of the statute
expressly required a false statement “ ‘for the purpose
. . . of . . . defrauding the Government of the
United States.’ ” United States v. Cohn, 270
U. S. 339 (1926) (emphasis added). As for the fourth case, the
language Shaw cites states the uncontroversial proposition that
“defrauding or attempting to defraud the United States” means
“fraud against the Government.” Bridges v. United
States, 346 U. S. 209 –222 (1953). In any event, these
cases all involved crimes of fraud targeting the Government—an area
of the law with its own special rules and protections. We have
found no relevant authority in the area of mail fraud, wire fraud,
financial frauds, or the like supporting Shaw’s view.
Fifth, Shaw, reading the bank fraud statute as a
whole, urges us to compare subsection (1) with subsection (2).
Supra, at 1. Subsection (2), he points out, makes criminal
the use of “false or fraudulent pretenses” to obtain “property
. . . under the custody or control of” a bank. And in his
view that fact means that we should read subsection (1) not to
apply to those circumstances. That is to say, given the language of
subsection (2), efforts such as his effort fraudulently to obtain
money deposited in a bank account should not fall within the scope
of the subsection (1) phrase “scheme . . . to defraud a
financial institution.” Brief for Petitioner 30–33.
As we read the two subsections, however, they do
not demand that interpretation. The two subsections overlap
substantially but not completely. Subsection (2) makes criminal the
use of a scheme
“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.”
This language covers much that subsection (1)
also covers, for example, making a false representation to a bank
in order to obtain property belonging to that bank. See
Loughrin v. United States, 573 U. S. ___,
___–___, n. 4 (2014) (slip op., at 6–7, n. 4) (recognizing the
“substantial” overlap between the two subsections and noting that
such overlap “is not uncommon in criminal statutes”). At the same
time, it applies to a circumstance in which a shopper makes a false
statement to a department store cashier in order to pay for goods
with money “under the custody or control of a financial
institution,” say, Bank A. The shopper’s false statement, though
designed to obtain Bank A’s property, might well not amount to an
effort (under subsection (1)) to defraud Bank A (since the
statement was made not to Bank A but to an agent of the department
store). Given, on the one hand, the overlap and, on the other hand,
a plausible reading of the language that applies it to
circumstances significantly different from those at issue here, we
have no good reason to read subsection (2) as excluding from
subsection (1) applications that would otherwise fall within the
scope of subsection (1), such as conduct of the kind before us.
Finally, Shaw asks us to apply the rule of
lenity. Brief for Petitioner 40–41. We have said that the rule
applies if “at the end of the process of construing what Congress
has expressed,” Callanan v. United States, 364
U. S. 587, 596 (1961) , there is “ ‘a grievous ambiguity
or uncertainty in the statute,’ ” Muscarello v.
United States, 524 U. S. 125 –139 (1998) (quoting
Staples v. United States, 511 U. S. 600, 619, n.
17 (1994) ). The statute is clear enough that we need not rely on
the rule of lenity. As we have said, a deposit account at a bank
counts as bank property for purposes of subsection (1).
Supra, at 2–3. The defendant, in circumstances such as those
present here, need not know that the deposit account is, as a legal
matter, characterized as bank property. Supra, at 4–5.
Moreover, in those circumstances, the Government need not prove
that the defendant intended that the bank ultimately suffer
monetary loss. Supra, at 3–4. Finally, the statute as
applied here requires a state of mind equivalent to knowledge, not
purpose. Supra, at 5–6.
III
Shaw further argues that the instructions the
District Court gave the jury were erroneous. He points out that the
District Court told the jury that the
“phrase ‘scheme to defraud’ means any
deliberate plan of action or course of conduct by which
someoneintends to deceive, cheat, or deprive a financial
institution of something of value.” App. 18 (emphasisadded).
This instruction, Shaw says, could be understood
as permitting the jury to find him guilty if it found no more than
that his scheme was one to deceive the bank but notto
“deprive” the bank of anything of value. Brief for
Petitioner 22–23. The parties agree, as do we, that the scheme must
be one to deceive the bank and deprive it of something of
value.
For reasons previously pointed out, we have held
that a plan to deprive a bank of money in a customer’s deposit
account is a plan to deprive the bank of “something of value”
within the meaning of the bank fraud statute. The parties dispute
whether the jury instruction is nonetheless ambiguous or otherwise
improper. We leave to the Ninth Circuit to determine whether that
question was fairly presented to that court and, if so, whether the
instruction is lawful, and, if not, whether any error was harmless
in this case.
For these reasons, the judgment of the Ninth
Circuit is vacated, and the case is remanded for further
proceedings consistent with this opinion.
It is so ordered.
