Bank Fraud Conviction Affirmed Even Though No Loan Issued; Potential Risk of Loss Sufficient

U.S. v. Williams, 865 F.3d 1302 (8/4/17) (Kan.) (Published) - The 10th affirms a bank fraud conviction, finding sufficient evidence that Mr. Williams' misrepresentations were (1) material and (2) created a potential risk of loss to the bank. Mr. Williams applied for a loan basically posing as his father, who had much better credit than he had. The loan never was made because Mr. Williams did not come up with all the documentation the bank wanted. Nonetheless, the government presented sufficient evidence for conviction. As for materiality, the test is an objective one, that is, whether the falsehood was of a type that one would normally predict would influence the given decisionmaking body. The 10th stresses misrepresentations only have to be capable of influencing a decision, not actually influence. Here the bank ran a credit report based on the misrepresentations and the underwriter would look at things like Mr. Williams' fake credit history, income, employment history, assets, etc. Mr. Williams also used his dad's military career to try to get a VA loan, which would have been on more favorable terms than a non-VA loan. The jury could have found the bank would have denied the loan if it knew Mr. Williams' true identity and financial information. It doesn't matter that: Mr. Williams never completed the loan application or dated it; only the loan officer's assistant, not the underwriter, the actual decisionmaker, ever considered the incomplete application; or the bank knew early on that the application had misrepresentations.. There was testimony the bank "sometimes" considered incomplete applications. The lies were still "objectively" material. The assistant was told to proceed even after the lies were discovered. As for the risk of potential loss, the 10th emphasizes that all that's necessary for that element---an element not all circuits recognize---is potential risk of loss. Success, or even actual capability of success, in the fraud isn't necessary. Only a really "incompetent attempt" would prevent proof of the risk element. The test again is an objective one. Mr. Williams' lies about creditworthiness and VA loan eligibility exposed the bank to a loss risk. Mr. Williams' second attempt to bolster his application also caused a potential loss risk. That risk persisted because the bank gave Mr. Williams another 5 days to support his application after his second attempt. There was potential the bank would give him a loan he couldn't repay.