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June 23, 2014

SCOTUS rules against defendant concerning required bank fraud intent in Loughrin

The Supreme Court this morning handed down a quasi-unanimous ruling in a federal bank fraud case this morning in Loughrin v. US, No. 13-316 (S. Ct. June 23, 2014) (available here). I call the ruling only quasi-unanimous because a few Justices only concurred in part with the opinion for the Court. Here is the vote break-down:

KAGAN, J., delivered the opinion of the Court, in which ROBERTS, C. J., and KENNEDY, GINSBURG, BREYER, and SOTOMAYOR, JJ., joined, and in which SCALIA and THOMAS, JJ., joined as to Parts I and II, Part III–A except the last paragraph, and the last footnote of Part III–B. SCALIA, J., filed an opinion concurring in part and concurring in the judgment, in which THOMAS, J., joined. ALITO, J., filed an opinion concurring in part and concurring in the judgment.

And here is how Justice Kagan's opinion for the Court in Loughrin gets started:

A provision of the federal bank fraud statute, 18 U. S. C. §1344(2), makes criminal a knowing scheme to obtain property owned by, or in the custody of, a bank “by means of false or fraudulent pretenses, representations, or promises.”  The question presented is whether the Government must prove that a defendant charged with violating that provision intended to defraud a bank. We hold that the Government need not make that showing.

June 23, 2014 at 10:12 AM | Permalink


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That whole opinion is such an embarrassing mess. In essence, the law raises serious federalism concerns but rather than facing those concerns they wave it away in a tempest of snark with Kagan, Scalia, and Alito chasing each others tails in one big circle.

Posted by: Daniel | Jun 23, 2014 8:02:36 PM


I would say the embarrassment isn't here so much as Bond, at least if you are going to accept the extremely broad reading of the commerce clause that the Court has gone with. I might agree with Scalia and Alito that the portions of the Court opinion trying to fashion some outer edge test are not necessary, that they could have simply gone with "whatever the cutoff is this is not it", but at least as far as this case goes the Court gives pretty ordinary meaning to the statute as enacted. In Bond on the other hand the Court had to go out of its way to twist the text in order to duck the constitutional issue.

Posted by: Soronel Haetir | Jun 23, 2014 11:43:26 PM


Sure the court gave meaning to the ordinary language but that ordinary language raises serious federalism concerns. Kagan tries to cabin this truth with her ridiculous test. Scalia recognizes Kagan's test is ridiculous and says so but then wants to punt on the question for another day. The problem with punting is that it assumes there is /some/ test that can set the outer boundaries that will allow the court to dodge the federalism issue--I don't think that test exists. I think Scalia knows the statute is bullshit but he'd like a more sympathetic defendant than a check kiter.

After reading the opinion again I am at a loss as to why the court just didn't dismiss the case as improvidently granted. At least that would have left the courts without Kagan's non-test test.

Posted by: Daniel | Jun 24, 2014 2:07:43 AM


They kept it because there was in fact a circuit split on the questions answered and this case provided a vehicle to provide those answers. And if someone is going to accept the Court's commerce clause jurisprudence (as all members of the Court except perhaps Thomas do) then I would say the federalism concerns in Loughrin are overblown, while being very real in Bond.

Say what you will about federalism but this case fits well inside the universe of things the Court has stated in the past as being interstate commerce. Loughrin's scheme might well even qualify under a more restrictive reading of the clause as he was using checks drawn on interstate banks and not just on federally insured institutions (which appears to be all current commerce clause jurisprudence requires). And if the subject matter is one that Congress actually can constitutionally legislate on there are no federalism concerns whatsoever. My disagreements with the Court on that score are one of range of available subject matter rather than the force of words that Congress chooses when writing a statute. Congress should not have any need of saying "We really really mean it" if the subject matter is one that the federal government can constitutionally govern, yet on the other hand it should not matter what words Congress chooses to use if the subject matter lies outside those boundaries.

Posted by: Soronel Haetir | Jun 24, 2014 10:20:53 AM


I agree you on the relative importance of Bond. My concern about the federalism angle to this case is not ideological but conceptual. Taking the federalism angle head on would have resulted in more /clarity/ as to what is required under the law. My fundamental concern is one raised by Thomas more than once, "what is a crime?"

The key sentence in Scalia's concurrence is this: "Indeed, saying that indifference is disqualifying comes close to requiring
the intent to defraud a bank that the Court properly rejects." Scalia is too kind. Kagen's test doesn't come close, conceptually it actually does require the intent that it claims to reject. Kagen's test in inherently self-contradictory and I cannot see any way that a reasonable Jury can apply it. In practice one of two things will happens (1) judges and juries will resolve this contradiction in favor of defendants and the net result is that while the Court claims to have rejected an intent requirement it has--through the back door--now written one into the law. (2) The lower courts will resolve this contradiction test in favor of prosecutors and the net effect will be a toothless monster in cabining federal overreach.

So in my view the court is lying, I'm just not sure which way. Either it's lying when it presents the case as upholding the law when it is in fact rewriting the law or the court is lying when it says it's test will cabin federalism concerns when it suspects it won't do any such thing.

Posted by: Daniel | Jun 24, 2014 12:33:13 PM


I suspect that lower courts are going to take the Court at its word and say the statutory elements are met if the lie reaches the bank (or would during the normal course of business even if some particular instance is diverted beforehand by a fraud detection unit or the like), but that the statute is not met if the bank sees only truthful instruments.

And I honestly don't see any federalism issue here, like I said either the subject is one that Congress can legislate upon or it is not. And even under a significantly more constrained commerce clause than we currently have this subject would likely qualify as one that Congress can govern. So long as the subject is one where Congress has power (even if it is shared with the states) I simply don't see any federalism concerns.

Posted by: Soronel Haetir | Jun 24, 2014 6:24:49 PM

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