In Shaw v. United States of America, 2016 WL 7182235, 580 U.S. ---- (Dec. 12, 2016), the United States Supreme Court interpreted the reach of 18 U.S.C. 1344(1), which makes it a crime for a person to "knowingly execut[e] a scheme...to defraud a financial institution." In Shaw, the defendant was alleged to have obtained bank account numbers of a customer and transferred funds from those accounts to accounts he controlled. The defendant appealed his conviction under 1344(1), arguing that the statute did not reach the facts of his case because he stole funds from a third-party (i.e., the customer) and not the bank. The Ninth Circuit affirmed the conviction and the Supreme Court took the appeal on a petition for certiorari.
The United States Supreme Court unanimously affirmed the conviction, finding that the statute covered "schemes to deprive a bank of customer deposits" because a bank retains a property interest in a depositor's funds when they are deposited into an account: "[w]hen 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[.]" The United States Supreme Court also rejected the defendant's similar argument that he could not be liable under the statute because the bank did not suffer a pecuniary loss, noting that the statute did not require a showing of ultimate financial loss.
Finally, the United States Supreme Court remanded the matter back for further consideration in view of a jury instruction that could be interpreted to permit a conviction under the statute based on something less than proof that the "scheme must be one to deceive the bank and deprive It of something of value." Because the statute requires demonstration of both of those elements, the matter was remanded back to the Ninth Circuit to determine whether the instruction was proper.