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Supreme Court to clarify required elements for federal bank fraud

On Behalf of | Dec 30, 2013 | Fraud

Interpretation of the federal bank fraud statute’s language has brought about a peculiar result in some of the federal circuit courts of appeal. In a Utah case, a man was convicted of bank fraud, identity theft, and possessing stolen mail after he allegedly used stolen checks to buy groceries and merchandise at a local Target store.

He doesn’t dispute the identity theft and stolen mail counts, but he appealed his bank conviction. He never intended to defraud a bank; indeed it apparently never occurred to him. Furthermore, Target was legally responsible for the losses caused by the bad checks — so no bank was ever at risk of losing any money.

One of the more fundamental aspects of what we consider criminal behavior is that the perpetrator generally must intend to commit the crime. It’s true that there are some offenses in which intent, or at least willful ignorance, isn’t a necessary element of the crime. Offenses where intent isn’t required, however, have traditionally been those posing a substantial risk of harm to others. Is it fair to be convicted of a crime you didn’t intend and which posed no harm to its purported victim?

The 10th Circuit upheld his conviction, ruling that neither intent to defraud a bank nor any risk of loss to a bank was required. But doesn’t that mean that essentially any money-related fraud is bank fraud, since virtually all financial transactions involve banks at one point or another?

If so, any penny-ante schemer could be convicted of federal bank fraud and sent to prison for 30 years. That may seem odd, but two other circuits have also said the statute requires neither intent nor risk to a bank.

“We recognize that our interpretation … may cast a wide net for bank fraud liability,” the 10th Circuit wrote in this case, “but it is dictated by the plain language of the statute and our prior precedent.” Without a U.S. Supreme Court precedent overruling that, the 10th Circuit will stand its ground.

Six other circuits, including the Iowa’s own 8th Circuit, sharply disagree. That means that people in different parts of the country are being subjected to completely different legal rules as to whether they’re guilty of a serious federal fraud.

The Supreme Court recently agreed to resolve the split in opinion. It is expected to hear arguments in the Utah man’s case next March.

Source: Courthouse News Service, “High Court to Clarify Bank Fraud Convictions,” Annie Youderian, Dec. 13, 2013