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SUPREME COURT OF THE UNITED STATES
_________________
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.
