UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
United States of America
v. Criminal No. 13-cr-98/01-JL
Opinion No. 2015 DNH 039P
Olawaseun Adekoya
MEMORANDUM ORDER
This case raises a question as to the proof required to
secure a conviction for bank fraud under 18 U.S.C. § 1344. The
defendant, Olawaseun Adekoya, was among the targets of a sting
operation conducted by the United States Secret Service. A
Secret Service agent, impersonating as an associate of Adekoya’s,
wrote an e-mail to Adekoya inviting him to participate in an “ATM
cashout,” a scheme using fraudulently manufactured ATM cards to
make unauthorized withdrawals from actual bank accounts. Adekoya
took the bait, and recruited four other people to assist him.
Those four traveled from Georgia to New Hampshire, where they
retrieved 200 plastic cards, which they had been led to believe
were encoded to access ATMs, from a prearranged drop point.
Unbeknownst to them–-and to Adekoya--the cards, which had been
supplied by the Secret Service, were blank and incapable of
actually withdrawing any cash. All four were caught red-handed
when they attempted to use the cards; Adekoya was arrested the
next day.
Adekoya was tried in this court on charges of bank fraud,
see 18 U.S.C. § 1344, and conspiracy to commit bank fraud, see
id. §§ 371 & 1344. After the prosecution closed its evidence,
Adekoya orally moved for a judgment of acquittal on both counts.
See Fed. R. Crim. P. 29(a). He argued, among other things, that
a bank fraud conviction requires proof by the prosecution that a
bank was actually victimized or exposed to a risk of loss.
Because the cashout had been devised by the Secret Service and
the plastic cards were incapable of actually withdrawing funds,
Adekoya asserted, the prosecution had failed to prove that any
bank was victimized, or that such a risk existed. The court
denied the motion in part, but reserved decision on Adekoya’s
“actual victimization or risk of loss” argument on the bank fraud
count. See Fed. R. Crim. P. 29(b). After the jury returned a
verdict finding Adekoya guilty on both counts, the court received
supplemental written briefing from the parties regarding that
argument. Having reviewed that briefing, the court now denies
Adekoya’s motion.
As explained below, although Adekoya relies on cases stating
that the prosecution must prove that a bank “was victimized or
exposed to a risk of loss” in order to secure a conviction under
§ 1344, see, e.g., United States v. Brandon, 17 F.3d 409, 427
(1st Cir. 1994), he misinterprets those cases. They do not mean,
as Adekoya argues, that a defendant cannot be convicted of bank
fraud where, as here, his scheme to defraud has no hope of
succeeding, and thus does not put a bank at actual risk of loss.
To the contrary, those cases stand for the proposition that a
bank fraud conviction requires proof of a scheme--whether or not
it is actually capable of success–-that would, if realized,
victimize a bank (as opposed to a third party) or put it at risk
of loss. Because the evidence presented at trial proved as much,
Adekoya’s motion is denied.
I. Background1
The case against Adekoya resulted from a United States
Secret Service investigation into a wholly different person, Hieu
Minh Ngo. The Secret Service arrested Ngo for selling personally
identifiable information (“PII”) belonging to other individuals,
and Ngo, facing a lengthy term of imprisonment, agreed to assist
in further investigations into the people who had purchased PII
from him. To that end, Ngo authorized the Secret Service to both
access and use the e-mail account he had used to correspond with
his “customers.” In the account, the Secret Service discovered
correspondence between Ngo and Adekoya, in which Adekoya sought
to purchase the Social Security numbers of numerous individuals.
1
This summary, which briefly reviews the facts relevant to Adekoya’s Rule 29 motion,
examines the evidence presented at trial “in the light most favorable to the government, taking all
reasonable inferences in its favor.” United States v. Pagán-Ferrer, 736 F.3d 573, 590 (1st Cir.
2013). A more complete discussion of the background of this case can be found in the court’s
opinion denying Adekoya’s motion to suppress. See United States v. Adekoya, –- F. Supp. 3d –-,
2014 WL 5844239, *2-3 (D.N.H. Nov. 12, 2014).
Using this information, the government obtained an indictment
against, and an arrest warrant for, Adekoya in this court.
The Secret Service was faced with something of a quandary,
however. In his dealings with Ngo, Adekoya did not use his real
name; the Secret Service had been able to identify him by tracing
the IP address from which the correspondence with Ngo originated
to Adekoya’s residence in New Jersey. Suspecting that Adekoya
might, in light of this state of affairs, attempt to claim that
someone else had employed his IP address to correspond with Ngo,
the Secret Service formulated a plan to prove beyond any doubt
that it was, in fact, Adekoya on the other end of Ngo’s e-mails.
A Secret Service agent, impersonating Ngo, wrote an e-mail
from Ngo’s account to one of the accounts that originated from
Adekoya’s IP address, inviting the recipient to participate in an
ATM cashout in New Hampshire. (As already mentioned, that type
of scheme involves using fraudulently manufactured ATM cards to
make withdrawals from legitimate bank accounts belonging to other
people.) In extending this invitation, the agent hoped to lure
Adekoya from his home in New Jersey to New Hampshire, where he
would be arrested--and his ability to disclaim responsibility for
the correspondence with Ngo would be eliminated.
Adekoya readily accepted the invitation, and he and the
agent masquerading as Ngo proceeded to hammer out the specifics
of the plan through e-mails and instant messages. Adekoya would
assemble a group of people and travel with them to Manchester,
New Hampshire on the evening of October 1, 2013. There, they
would proceed to the front desk of a local hotel and retrieve a
box left for them by “Ngo.” That box would contain a list of
twelve ATMs to be targeted, 200 plastic cards that would enable
them to make withdrawals from those ATMs, and the PIN numbers to
be used in conjunction with those cards. They would then make
withdrawals totaling about $900,000–-a portion of which they
would keep, the other portion of which would go to “Ngo”–-before
returning home.
As planned, four individuals traveled from Atlanta, Georgia
to Manchester, New Hampshire on the evening of October 1, 2013,
and picked up the box containing the lists of ATMs, cards, and
PIN numbers. In a departure from the plan discussed by “Ngo” and
Adekoya, Adekoya was not among them. And, in a further departure
from that plan, the 200 plastic cards that “Ngo” had provided
could not be used to withdraw cash from the ATMs. That was, of
course, the Secret Service’s plan all along, but it was not
apparent to Adekoya’s co-conspirators, who continued on their way
to the specified ATMs. All four were arrested in the early
morning hours of October 2, 2013, while unsuccessfully attempting
to make withdrawals using the cards.
Adekoya was arrested at his home the next day, after his co-
conspirators implicated him in the scheme. Based upon the events
of October 1-2, 2013, he was charged with bank fraud, in
violation of 18 U.S.C. § 1344, and conspiracy to commit bank
fraud, in violation of
18 U.S.C. §§ 371 & 1344.2
II. Analysis
Adekoya asserts that the foregoing facts are insufficient to
prove his guilt on the charge of bank fraud under 18 U.S.C. §
1344. That statute provides for the punishment of
[w]hoever knowingly executes, or attempts to execute, a
scheme or artifice–-
(1) to defraud a financial institution; or
(2) to obtain any of the moneys, funds, credits,
assets, securities, or other property owned by, or
under the custody or control of, a financial
institution, by means of false or fraudulent
pretenses, representations, or promises[.]
Adekoya’s argument does not focus on the language of the
statute itself. It instead relies upon case law from both within
and without this circuit to the effect that “the government must
also establish that a federally insured bank . . . was victimized
or exposed to a risk of loss by the scheme to defraud” in order
to secure a conviction under the statute. Brandon, 17 F.3d at
427 (citing United States v. Blackmon,
839 F.2d 900, 906 (2d Cir.
1988)); see also, e.g., United States v. Moran,
312 F.3d 480, 489
(1st Cir. 2002) (“[T]he bank need not be the immediate victim of
2
After some pretrial wrangling, the government voluntarily chose not to pursue the
charges against Adekoya set forth in the original indictment, which had been based on his
attempts to purchase PII from Ngo.
the fraudulent scheme and need not have suffered actual loss so
long as the requisite intent is established and the bank was
exposed to a risk of loss.”); United States v. Lemons, 941 F.2d
309, 315-16 (5th Cir. 1991) (“[T]he government had to prove . . .
that at least one of the banks was at risk.”). Because the
plastic cards the Secret Service provided his co-conspirators as
part of the sting operation “were incapable of withdrawing money
from an ATM and were, in fact, nothing more than pieces of
plastic,” Adekoya says the prosecution has failed to carry its
burden of showing that any bank was victimized, or even exposed
to a risk of loss. The court does not agree with this reading of
the case law.
Adekoya’s argument takes that case law out of context. To
explain that context, the court begins with the statute itself.
As the disjunctive “or” between subsections (1) and (2) suggests,
a defendant may commit the crime of bank fraud in either of two
ways. See Loughrin v. United States, 134 S.Ct. 2384, 2391
(2014). A defendant violates the first of the two subsections by
(1) engaging in a scheme or artifice to defraud (2) a federally
insured financial institution, and (3) doing so knowingly and
with the intent to defraud the financial institution. See United
States v. Benjamin,
252 F.3d 1, 5 (1st Cir. 2001) (quoting
Brandon,
17 F.3d at 424). The second subsection, by contrast, is
violated when the defendant (1) engages in a scheme or artifice
employing materially false and fraudulent pretenses to (2) obtain
money or other property owned by, or under the custody or control
of (3) a federally insured financial institution, and (4) does so
knowingly. See Benjamin,
252 F.3d at 5; see also United States
v. Bah, — Fed. Appx. —,
2014 WL 5438380, *1 (4th Cir. Oct. 28,
2014) (discussing elements of offense post-Loughrin).
A number of courts have recognized that if the statute, and
the elements of the offenses it defines (and in particular the
variant outlined in subsection (2)), are read broadly, they could
encompass a wide variety of fraudulent schemes that only
tangentially involve banks.3 By way of example, in one Seventh
Circuit case, a jury convicted the defendant of bank fraud for
submitting a fraudulent tax return to the IRS, depositing the
resultant tax refund check into an account opened in the name of
a nonexistent company, and writing checks on the account. United
States v. Davis, 989 F.2d 244, 246 (7th Cir. 1993). Similarly,
in a Second Circuit case–-the very first appellate case, in fact,
to have articulated the concept that a bank must be “victimized
or exposed to a risk of loss” for § 1344 to apply–-a jury
convicted the defendants of bank fraud for their participation in
a scheme in which unwitting victims were, by means of deception,
induced to withdraw their own money from banks and turn it over
3
Throughout this order, the court uses the shorthand “bank” to refer to a federally insured
financial institution, since that is the term used in the case law upon which Adekoya relies.
to the defendants. Blackmon, 839 F.2d at 902-03. In both cases,
the courts noted that although no bank stood to lose any money or
property as a result of the defendants’ schemes, a broad reading
of the statute would nonetheless encompass those schemes, which
had either deceived banks or employed deception to obtain funds
in bank custody. Davis,
989 F.2d at 246; Blackmon,
839 F.2d at
904-05.
That broad reading, however, struck those courts (and others
confronted with similar facts) as incorrect. While this court is
not typically inclined to look outside the text of a statute for
its purpose, the Davis and Blackmon courts were not so reserved.
The purpose of the statute, both courts concluded, is not to
protect third parties who are victimized by fraudsters and con
artists in schemes utilizing banks in some way, but to protect
federally insured financial institutions from those schemes, and,
by so doing, protect the federal government’s interest as an
insurer of those institutions. See Davis, 989 F.2d at 246-47;
Blackmon,
839 F.2d at 905. So, to distinguish the former type of
case from the latter, those courts articulated the requirement on
which Adekoya now rests his argument for acquittal, i.e., that a
bank itself must be “victimized,” Blackmon,
839 F.2d at 904, or
“put at risk,” Davis,
989 F.2d at 247, by the scheme. As the
Court of Appeals for the Third Circuit succinctly summarized:
[W]here the bank is not the ‘target of deception,’ but
rather an ‘unwitting instrumentality,’ there is the
additional concern that § 1344 may be applied in a
manner that reaches conduct that falls well beyond the
scope of what the statute was intended to regulate.
. . . [T]he deception of a bank as an incidental part
of a scheme primarily intended to bilk a bank customer
does not undermine the integrity of banking. Thus, to
ensure that § 1344 [is] not applied to conduct falling
outside the scope of the bank fraud statute, we imposed
the additional requirement of proof of an intent to
cause a bank a loss or potential liability.
United States v. Leahy, 445 F.3d 634, 647 (3d Cir. 2006)
(internal quotation marks and citations omitted; see also United
States v. De La Mata,
266 F.3d 1275, 1298 (11th Cir. 2001) (“Our
review of the cases reveals that courts apply the risk of loss
analysis in determining whether a scheme [that is] primarily
directed at a non-bank party can still give rise to bank
fraud.”).4
In short, then, when these (and other) cases remark that a
conviction for bank fraud requires that a “bank was victimized or
exposed to a risk of loss by the scheme to defraud,” the idea
they are communicating is that a defendant’s scheme, if realized,
must threaten to harm a bank–-as opposed to some other, unrelated
party–-in some way, either directly or indirectly. These cases
do not graft onto the statute the additional requirement that
4
Indeed, in the memorandum he submitted in support of his Rule 29 motion, Adekoya
himself observes that “one reason that certain Courts required a showing of risk of loss, was to
ensure that the fraud was directed at a bank, not at some third party victim that was not a
financial institution.” Memo. in Supp. of Rule 29 Mot. (document no. 103) at 6, ¶ 20 (citing
Blackmon, 839 F.2d at 904). The remainder of the memorandum does not identify any other
potential reason for those courts’ holdings, nor does it comment upon (or even acknowledge) the
significance of this reason.
Adekoya seems to claim that they do, i.e., that the defendant’s
scheme actually must be capable of victimizing a bank or exposing
it to a risk of loss. And a survey of the numerous cases Adekoya
cites makes this clear: not a single one holds that a conviction
under § 1344 cannot stand because the defendant’s scheme did not
create a risk of loss at all, but several overturn convictions
under § 1344 because the risk of loss from the defendant’s scheme
fell on a third party rather than a bank. See, e.g., United
States v. Staples,
435 F.3d 860, 867 (8th Cir. 2006) (reversing
conviction because “the entire loss caused by the fraudulent
conduct was suffered by the title companies,” and “the banks
involved . . . were merely instrumentalities used to used to cash
legitimate checks written by the title companies”); United States
v. Laljie,
184 F.3d 180, 191 (2d Cir. 1999) (similar).
To summarize: assuming that the cases which remark that the
prosecution must prove that a “bank was victimized or exposed to
a risk of loss by the scheme to defraud” to obtain a conviction
under § 1344 correctly reflect the current state of a law,5 those
5
The court notes that the Supreme Court’s ruling in Loughrin may create some doubt as to
the continuing validity of the entire line of case law holding that a conviction under § 1344
requires proof that a bank was victimized or exposed to a risk of loss by the defendant’s scheme
(at least insofar as that case law suggests that the defendant’s intent to defraud a bank is an
element of the crime defined by § 1344(2), a suggestion Loughrin rejected). Because Adekoya
misreads that case law in any event, as just discussed at length, the court does not consider here
Loughrin’s effect on them. It is similarly unnecessary to determine whether the “risk of loss”
analysis applies to bank fraud charges brought under § 1344(1), those brought under §
1344(2), or those brought under either subsection of the statue, an issue on which the cases are
not unanimous.
cases require only that the scheme to defraud, whether or not it
is actually capable of success, would victimize a bank or expose
it to risk of loss. It is well-established in the case law that
this requirement is satisfied where, as here, the defendant’s
scheme involves fraudulently withdrawing funds from the accounts
of innocent depositors, as the bank may ultimately bear those
losses (either in the form of civil liability or through a
practice of reimbursing customers for the withdrawn funds). See,
e.g., United States v. Miller-Douglas, 146 Fed. Appx. 576, 581 &
n.6 (3d Cir. 2005); United States v. Bonallo,
858 F.2d 1427, 1434
n.9 (9th Cir. 1988). Adekoya’s Rule 29 motion is accordingly
denied.
III. Conclusion
For the foregoing reasons, the defendant’s oral motion for a
judgment of acquittal is DENIED.
SO ORDERED.
Joseph N. Laplante
United States District Judge
Dated: March 2, 2015
cc: Arnold H. Huftalen, Esq.
Theodore M. Lothstein, Esq.
