Bank Fraud – Intent

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In a prosecution for bank fraud under 18 U.S.C. 1014, the district court properly excluded testimony that the defendants were told by their broker that their misstatements were legal.

“Defendants reply that although materiality is not an element of the §1014 offense, ‘subjective materiality’ (Reply Br. 12, 14, 16) is—and that as a result of Bowling’s statements they
lacked ‘subjective materiality.’ We don’t follow this. When materiality is an element of a crime, then the prosecutor must show that the defendant intended to make a material statement;
that’s a subjective inquiry. But when materiality is not an element—as it is not under §1014—then the defendant’s beliefs about materiality are irrelevant. The prosecution must show
whatever mental states matter to the statutory elements. For §1014, this means knowledge of falsity and intent to influence the lender. What Phillips and Hall thought or believed about
other matters, such as materiality, is no more relevant than whether Phillips and Hall thought that the loan would contribute to tax evasion, air pollution, or any other element of some
other statute. The district court’s order limiting the subjects on which Bowling could testify therefore was proper.”

Affirmed.

11-3822 & 11-3824 U.S. v. Phillips

Appeals from the United States District Court for the Western District of Wisconsin, Crabb, J., Easterbrook, J.
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