On Monday April 25, the U.S. Supreme Court granted certiorari in United States v. Shaw, a closely watched case out of the Ninth Circuit addressing the bank fraud statute, 18 U.S.C. § 1344. That statute has two subsections, the first of which criminalizes schemes “to defraud a financial institution.” The question presented in Shaw is whether that subsection requires that a financial institution be the principal victim of a fraudulent scheme, or whether deceiving a financial institution in the course of victimizing a third party is enough for a violation. In its decision, the Ninth Circuit joined the Sixth and Eighth Circuits in holding that a violation does not require that a fraudulent scheme victimize a financial institution. The other nine circuits have all held the opposite.
Dietrich L. Snell is a partner in the Litigation Department and co-head of the White Collar Defense & Investigations Group. As businesses globally are impacted by the Coronavirus (COVID-19) pandemic, Dieter is a member of the firm’s Coronavirus Response Team helping clients respond and solve issues across myriad fronts. Dieter has extensive experience in law enforcement-related matters spanning a wide range of disciplines. He has both federal and state level prosecutorial and investigative experience, having served as an Assistant U.S. Attorney; New York Deputy Attorney General; and Senior Counsel to the National Commission on Terrorist Attacks Upon the United States (the 9/11 Commission).
Last week, the Third Circuit issued a decision that could have major ramifications for sentencing in federal fraud cases. United States v. Nagle dealt with a fraud perpetrated against the Department of Transportation’s Disadvantaged Business Enterprise (“DBE”) program. The DBE program requires states that receive federal transportation funds to set goals for the awarding of construction contracts to certified DBEs. To receive DBE certification, a firm must be a small business that is majority owned and controlled by women or minority group members. In Nagle, a Third Circuit panel addressed the calculation of loss amount under the United States Sentencing Guidelines, where a firm fraudulently has held itself out as a DBE to win a state contract, but then in fact performs the contracted work.