Sticky-Fingered Missionary Clarifies Bank Fraud

The case of Kevin Loughrin, who stole checks and used them to get cash from Target stores, gave the U.S. Supreme Court a chance to decide whether all frauds with a check are federal crimes.
Forging this might be a federal crime.

Perhaps, like me, you trust Mormon missionaries and enjoy chatting with them even if you already have your own religion. Even so, if you happen to see one with his hand in your mailbox, you should probably tell someone. Kevin Loughrin used phony LDS missionary cover to steal checks from boxes all over Salt Lake City. He then altered the checks, used them to buy stuff at Target, and later returned the goods for cash. Today, the U.S. Supreme Court held that he was guilty of federal bank fraud.

Why should you care about bad Kevin? Because Loughrin's case gave the court the opportunity to answer the important legal question of whether all frauds that involve a check are criminal under federal law. The court said they are -- provided the fraudster's lie is what makes the bank part with the money under its control.

As a practical matter, this doesn't mean it will necessarily be a federal case every time one person defrauds another and the victim pays by check. Alter a check, however, and you commit a federal crime -- even if the bank isn't the entity you were trying to defraud.

Loughrin's fraud presented a perfect vehicle to decide this legal question, because he wanted to claim at trial that he intended to steal only from Target, not a bank covered by federal law. Loughrin claimed he knew Target would eventually figure out his checks were forged, and that the bank wouldn't cash them. (In fact, one was cashed.) But because, by that time, he would already have returned the goods for cash, Target would be left holding the bag.

Read carefully, the federal bank-fraud statute says it's a crime to use false pretenses to obtain money under the bank's control. Did Loughrin do this? He certainly falsified checks to get money -- but the money, he argued, was Target's. Loughlin urged the courts to hold that you could violate the bank fraud statute only if you specifically intended to defraud the bank. That, he hoped, would get him off the hook.

Loughrin's argument isn't as crazy as it might sound. Suppose the bank-fraud statute was interpreted to mean that any fraud that in any way involves a check is a federal crime. The result would be the federalization of thousands, perhaps hundreds of thousands of frauds that presently count only as state crimes. This would represent a very substantial expansion of federal authority -- and surely was never intended by the authors of the law.

In other words, there needs to be some way to restrict the bank-fraud statute to covering check forgery, and not include every fraud involving a check. Loughrin was proposing a way to solve this problem. In this sense -- if only in this sense -- his criminal scheme was a kind of public service.

Justice Elena Kagan, writing for the majority, rejected Loughrin's defense, but accepted the idea that the bank-fraud statute shouldn't include all frauds involving a check. First, she explained that the language of the law doesn't restrict its scope to situations of intent to defraud a bank. All the justices agreed with her on this.

Then she went on to explain the law's limitation. The bank-fraud statute, Kagan said, requires that the money under a bank's control be obtained "by means of" the defendant's lie. She argued that the words "by means of" are satisfied only when the lie is in a mechanism that ordinarily gets the bank to part with money -- namely, as in Loughrin's case, a check.

Kagan provided a hypothetical counterexample. If one person sells another a fake Louis Vuitton bag, and the buyer pays by check, the statute doesn't apply, because the money wasn't acquired from the bank "by means of" the lie.

Justice Antonin Scalia wasn't buying it. Of course the fraudster got the money from the bank "by means of" his lie, Scalia insisted. Any other interpretation of the word "means" was unnecessarily "crabbed." Yet Scalia had no better answer. He would, he said, simply leave the question for a future day.

Kagan's approach isn't perfect. But it shows that statutes should be interpreted in light of their purposes. Loughrin forged checks and deserved to be punished. Plus he made missionaries look bad -- and in Utah, that's a crime of another order.

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