Opinion ID: 782971
Heading Depth: 3
Heading Rank: 1

Heading: Sufficiency of the Evidence and Intent to Defraud

Text: 10 Reaume argues that there was insufficient evidence to find that he specifically intended to defraud the Bank, as opposed to the merchants or their insurers. He contends that an intent to defraud the payee of an NSF check does not provide a basis for a finding that there was an intent to subject the issuing bank to a loss. Accordingly, Reaume argues that the district court erred in denying his motion for a judgment of acquittal. The denial of a motion for a judgment of acquittal is reviewed de novo. United States v. Kone, 307 F.3d 430, 433 (6th Cir.2002). 11 Three elements are required for a conviction of bank fraud pursuant to § 1344:(1) the defendant must have knowingly executed or attempted to execute a scheme to defraud a financial institution; (2) the defendant must have done so with the intent to defraud; and (3) the financial institution must have been insured by the Federal Deposit Insurance Corporation. United States v. Everett, 270 F.3d 986, 989 (6th Cir.2001). 12 This Court previously addressed the intent element of the bank fraud statute in United States v. Hoglund, 178 F.3d 410 (6th Cir.1999), and Everett. While neither of these cases are directly controlling, their explication here is critical because it is from these cases that we distill the principle which we apply to the present case. 13 In Hoglund, an attorney was convicted under § 1344 after settling his clients' cases without their permission, forging their signatures on the settlement check she received, and depositing the money into his own account. 178 F.3d at 411. In Hoglund, we addressed the issue of whether the Government must prove that the defendant exposed a bank to a risk of loss as part of the scheme to defraud element. Id. at 413. Hoglund resolved this question by holding that risk of loss is simply one way of establishing intent to defraud in bank cases. Id. Thus, this Court found that a defendant need not have exposed a bank to a risk of loss as an element of bank fraud. Id. Instead, proof that the defendant intended to put a bank at a risk of loss was sufficient to maintain a bank fraud conviction. Id. Thus, Hoglund held that the bank fraud statute is violated, even when there is no actual risk of loss on the part of the bank, if the defendant's intent is to expose the bank to such a risk. While informative, Hoglund is not controlling in the present case. Here, in contrast to Hoglund, the defendant claims that, regardless of whether there was an actual risk of loss, there was no intent to expose the Bank to a risk of loss. 14 In Everett, the defendant, a certified public accountant, was found guilty of bank fraud by a jury. 270 F.3d at 989. On appeal, the defendant argued that the Government failed to prove the specific intent required by § 1344, namely, the intent to defraud a federally insured bank, or at least to put the bank at a risk of loss. Id. at 990. The defendant acknowledged that there was evidence that she intended to defraud her client, but argued that the manner in which she defrauded her client did not impose a risk of loss on the bank in question. Id. In affirming the conviction, we held that the specific intent required for bank fraud does not require putting the bank at a risk of a loss or intending to do so in the usual sense. Id. at 991. It is sufficient if the defendant in the course of committing fraud on someone causes a federally insured bank to transfer funds under its possession and control. Id. Everett, therefore, can be said to stand for the proposition that the bank fraud statute is violated, even if the intended victim of the fraudulent activity is an entity other than a federally insured financial institution, when the fraudulent activity causes the bank to transfer funds. Thus, the holding of Everett is also instructive but not squarely on point, as there was no evidence in the present case indicating that the Bank actually did transfer funds in connection with Reaume's fraudulent activities. 15 Unlike the defendant in Hoglund, Reaume contends that he harbored no intent to expose the financial institution to a risk of loss. Moreover, unlike the situation in Everett, Reaume contends, and the evidence substantiates, that the Bank never transferred any funds in connection with the fraudulent activity. Thus, it appears that Reaume's particular fact pattern does not fall neatly under the Hoglund or Everett rubric, which consider both the intended victim and actual loss. 16 We nevertheless affirm Reaume's conviction. The specific issue that Reaume appeals is the evidence of his intent to defraud the Bank itself. In Everett, this Court held that an intent to put the financial institution at a risk of loss is not required, and that the fact that thedefendant defrauded someone was sufficient, given that the fraud caused the bank to transfer funds. 270 F.3d at 991. In the present case, the Bank was clearly at a risk of loss. Evidence was presented at trial to demonstrate that, when the Bank receives an NSF check, it makes a decision to either honor the check anyway or to dishonor the check. If the check is dishonored, the Bank does not lose any money, but if the check is honored, and the account holder fails to pay back that debt to the Bank, the Bank suffers a loss. Therefore, it is clear that Reaume's fraudulent activity, regardless of the intended victim, could have caused the Bank to transfer funds. If in fact the Bank had transferred funds, then this case would clearly be governed by Everett, because an intent to defraud someone would have caused the Bank to transfer funds. The issue of Reaume's intent simply cannot logically turn on the course of action chosen by the Bank after receiving the NSF checks. Accordingly, it is a necessary extension of Everett to find the intent element of § 1344 satisfied in this case. 17 Everett contains language to support this outcome. In Everett, this Court stated that the Government is probably better advised to proceed under the wire or mail fraud statutes where the bank has minimal involvement, such as where a swindler deceives someone into voluntarily writing checks to the swindler on a good account. Id. Nevertheless, the Court indicated that even such a minimal involvement of the bank is sufficient to find liability under § 1344 when the specific intent to defraud someone is present. Id. Therefore, we need not address the question of whether the evidence presented at trial was sufficient for a reasonable jury to find that Reaume intended to defraud the Bank specifically. Applying the reasoning of Hoglund and Everett, we find that intent to defraud the federally insured institution itself is satisfied where: (1) the intent to defraud some entity was present; and (2) that intended fraud placed a federally insured financial institution at a risk of loss. 18 In providing the jury with instructions at the close of trial, the district court stated that the Government not only needed to prove that Reaume knowingly executed or participated in a scheme to defraud a federally insured financial institution, but also that Reaume did so with the intent to defraud Monroe Bank & Trust. The district court later stated that the Government must prove beyond a reasonable doubt that the scheme to defraud was employed by the defendant to defraud Monroe Bank & Trust. Given our holding in Everett that the intent to have a bank be the victim of the fraudulent conduct is not a pre requisite to maintaining a conviction under the bank fraud statute, the jury instructions given by the district court benefitted Reaume. 1 In light of Everett, therefore, Reaume's argument that the evidence presented at trial was insufficient to demonstrate the intent required by the bank fraud statute fails. 19