§ 1344(2) Bank Fraud Requires a Bank-Directed Falsehood: Genuine Checks Paying Fraudulent Invoices Are Not Enough

1) Introduction

This consolidated appeal arises from a public-corruption kickback scheme at the Housing Authority of South Bend, a HUD-funded local housing authority. Tonya Robinson (Executive Director) and Albert Smith (Asset Director) used outside contractors to submit invoices for maintenance work that, according to tenant testimony, was never performed. The Housing Authority then issued checks paying the invoices; contractors cashed the checks and shared proceeds with Robinson and Smith.

A jury convicted both defendants of multiple federal offenses, including conspiracy (18 U.S.C. § 1349), bank fraud (18 U.S.C. § 1344(2)), wire fraud (18 U.S.C. § 1343), and federal program theft (18 U.S.C. § 666(a)(1)(A)). On appeal, the central issues were:

• Whether the evidence supported the bank fraud convictions under § 1344(2), particularly the statute’s “by means of” requirement.
• Whether a HUD “drawdown” wire transfer sufficiently furthered the fraudulent scheme to support wire fraud under § 1343.
• Whether Smith’s sentence properly included the abuse-of-trust enhancement under U.S.S.G. § 3B1.3.
• Whether Robinson’s written judgment contained a clerical omission regarding joint-and-several restitution.

2) Summary of the Opinion

The Seventh Circuit affirmed the wire fraud convictions (Count 8) but reversed the bank fraud convictions (Counts 2–7) and directed entry of judgments of acquittal on those counts. The court held that § 1344(2) requires a false statement that goes to a bank and naturally induces the bank to part with its money; here, the government proved fraud against the Housing Authority/HUD but failed to identify any bank-directed falsehood.

The court also affirmed Smith’s sentence, including the U.S.S.G. § 3B1.3 abuse-of-trust enhancement (and, alternatively, found any potential error harmless due to the district court’s unequivocal same-sentence statement). Finally, it remanded for the limited purpose of clarifying that Robinson, Smith, and contractor Archie Robinson were jointly and severally liable for a specified portion of restitution that the written judgment inadvertently failed to attribute to Smith.

3) Analysis

A) Precedents Cited

The opinion’s analysis is built around Supreme Court and Seventh Circuit precedent addressing (i) the elements of § 1344(2), (ii) plain-error review when issues are raised for the first time on appeal, (iii) what “furtherance” means for wire fraud, and (iv) sentencing enhancements for abuse of trust.

1. Defining § 1344(2) “by means of” (bank fraud)

• Loughrin v. United States, 573 U.S. 351 (2014): The controlling authority. The panel quotes Loughrin for the proposition that under § 1344(2) the defendant must obtain (or attempt to obtain) bank property “by means of” a misrepresentation—i.e., the false statement must be “the mechanism naturally inducing a bank … to part with its money,” and the statute is limited to “deceptions that have some real connection to a federally insured bank.” The “handbag hypothetical” is used to show that a victim’s payment by valid check does not automatically transform a non-bank fraud into bank fraud when the bank is only fortuitously involved.
• Williams v. United States, 458 U.S. 279 (1982): Used to reject the government’s fallback theory that the checks themselves carried an implied false representation. The panel reiterates Williams’s principle that “a check is not a factual assertion at all,” undermining any claim that presenting a genuine check to the bank is itself a bank-directed misrepresentation.

2. Plain-error review and unpreserved sufficiency challenges

• United States v. Meadows, 91 F.3d 851 (7th Cir. 1996): Cited for the Seventh Circuit’s traditional approach applying plain-error review to sufficiency challenges first raised on appeal, and for the idea (under an older version of Rule 29) that a court could err by not entering judgment of acquittal sua sponte. The panel notes Rule 29(a) changed in 2002 from mandatory (“shall”) to permissive (“may”), raising questions (highlighted by Judge Easterbrook) about whether a district court can “plainly err” by not exercising discretion sua sponte. The panel avoids deciding that broader issue by treating the government’s invocation of Meadows as a concession and proceeding through all four prongs.
• United States v. Jones, 22 F.4th 667 (7th Cir. 2022) and United States v. Page, 123 F.4th 851 (7th Cir. 2024) (en banc): Provide the four-prong plain-error framework and insistence that all four prongs are necessary. The panel uses these to structure its reversal of the bank fraud convictions despite forfeiture below.
• United States v. Boswell, 772 F.3d 469 (7th Cir. 2014): Supports prong three—substantial rights are affected where the defendant would have been acquitted absent the error.
• United States v. Paladino, 401 F.3d 471 (7th Cir. 2005) and United States v. Maez, 960 F.3d 949 (7th Cir. 2020): Used to explain prong four, framed as miscarriage of justice / substantial risk of convicting an innocent person (here, “innocent” of the specific bank-fraud offense as defined by statute).
• United States v. McCarter, 406 F.3d 460 (7th Cir. 2005) and United States v. Baldwin, 414 F.3d 791 (7th Cir. 2005), overruled by United States v. Parker, 508 F.3d 434 (7th Cir. 2007): These address whether vacating convictions that do not affect concurrent prison terms can still satisfy prong four due to collateral consequences of convictions. The panel applies Parker (and notes Judge Easterbrook’s suggestion that the issue may merit reconsideration in a future case where the only practical effect is special assessments).

3. Wire fraud “furtherance” and circumstantial proof

• United States v. Gustafson, 130 F.4th 608 (7th Cir. 2025): Supplies the elements of wire fraud under § 1343.
• United States v. Jackson, 5 F.4th 676 (7th Cir. 2021): Governs Rule 29 review and emphasizes the “nearly insurmountable” burden for defendants challenging sufficiency after conviction.
• United States v. Grandinetti, 891 F.2d 1302 (7th Cir. 1989): Supports the permissibility of drawing reasonable inferences from circumstantial timing and financial flows.
• United States v. Vizcarra-Millan, 15 F.4th 473 (7th Cir. 2021): Recognizes the “two equally plausible inferences” principle; the panel distinguishes it by pointing to additional evidence making the guilty inference more plausible.
• United States v. Durham, 766 F.3d 672 (7th Cir. 2014): Invoked by defendants to argue that the government must introduce documentation of a wire’s purpose when such documentation exists; the panel narrows Durham as requiring some purpose evidence, not every conceivable record.

4. Abuse-of-trust enhancement and harmlessness

• United States v. Bradshaw, 670 F.3d 768 (7th Cir. 2012), United States v. Peterson-Knox, 471 F.3d 816 (7th Cir. 2006), United States v. Turnipseed, 47 F.4th 608 (7th Cir. 2022), and United States v. Dickerson, 42 F.4th 799 (7th Cir. 2022): Provide the two-part § 3B1.3 test and deferential clear-error review, emphasizing that the district court need only adopt a permissible view of the evidence.
• United States v. Tiojanco, 286 F.3d 1019 (7th Cir. 2002), United States v. Emerson, 128 F.3d 557 (7th Cir. 1997), and United States v. Deal, 147 F.3d 562 (7th Cir. 1998): Illustrate what qualifies as a “position of trust” (managerial discretion, oversight, and delegated authority even if final approval rests elsewhere).
• United States v. Caraway, 74 F.4th 466 (7th Cir. 2023): Supports harmless-error treatment where the district court unambiguously states it would impose the same sentence regardless of the disputed guideline issue.

5. The concurrence’s preservation and party-presentation concerns

• Unitherm Food Systems, Inc. v. Swift-Eckrich, Inc., 546 U.S. 394 (2006): Judge Easterbrook analogizes Rule 29 (criminal) to Rule 50 (civil) and questions whether sufficiency challenges should be preserved by timely motion in the district court.
• Survey of circuits on unpreserved sufficiency review: United States v. Luciano, 329 F.3d 1 (1st Cir. 2003); United States v. Williams, 974 F.3d 320 (3d Cir. 2020); United States v. Jordan, 544 F.3d 656 (6th Cir. 2008); United States v. Quintana-Torres, 235 F.3d 1197 (9th Cir. 2000); United States v. Otuonye, 995 F.3d 1191 (10th Cir. 2021); United States v. Green, 818 F.3d 1258 (11th Cir. 2016); contrasted with United States v. Herrera, 313 F.3d 882 (5th Cir. 2002) (en banc) and United States v. Chong Lam, 677 F.3d 190 (4th Cir. 2012).
• Party-presentation principle: Clark v. Sweeney and United States v. Sineneng-Smith, 590 U.S. 371 (2020): Used to justify why the court accepts the government’s concession on the availability of plain-error review rather than independently reshaping the case around forfeiture/preservation doctrines.
• Plain-error doctrine foundations: United States v. Olano, 507 U.S. 725 (1993); Greer v. United States, 593 U.S. 503 (2021); Johnson v. United States, 520 U.S. 461 (1997); Davis v. United States, 589 U.S. 345 (2020): Judge Easterbrook criticizes the government for effectively collapsing the four-prong test into mere “error,” and questions whether a district court’s inaction (in the absence of a Rule 29 motion) should be deemed “error” at all.
• Justiciability of special assessments: Ray v. United States, 481 U.S. 736 (1987): Cited to show that even a modest special assessment prevents mootness.

B) Legal Reasoning

1. Why the bank fraud convictions failed under § 1344(2)

The government’s proof showed a classic procurement-and-payment fraud: false invoices induced the Housing Authority to issue checks. But § 1344(2) requires more than “a fraud in which a bank is somewhere in the background.” Under Loughrin v. United States, the falsehood must be the means by which bank property is obtained—functionally, the “mechanism” that naturally induces the bank to part with its money.

The panel identified the decisive evidentiary gap: the government “never identified a false statement that went to any bank.” False invoices and internal approvals were directed at the Housing Authority (and ultimately HUD), not at the bank. When contractors later presented genuine checks for deposit or payment, no misrepresentation was transmitted to the bank in the manner § 1344(2) demands.

The government attempted to treat the checks themselves as implied false statements of authorization or legitimacy. The panel rejected that theory using Williams v. United States: a check is not a factual assertion and thus cannot, without more, supply the misrepresentation element required by § 1344(2). The bank’s role was “wholly fortuitous”—a function of paying by check rather than cash—matching Loughrin’s “handbag hypothetical.”

2. Why reversal occurred under plain-error review

Because defendants did not challenge the bank fraud convictions below, the panel applied plain-error review (following its usual approach described in United States v. Meadows, and structured by United States v. Jones and United States v. Page (en banc)). The panel concluded:

• Error / plainness: After Loughrin, the absence of any bank-directed false statement made the convictions legally unsustainable, and thus “plainly” erroneous.
• Substantial rights: Under United States v. Boswell, an error affects substantial rights when acquittal would have occurred absent the error.
• Fairness/integrity: Convicting defendants of an offense whose elements were not met poses the miscarriage-of-justice concern described in United States v. Paladino and United States v. Maez. The panel additionally declined to resurrect the older “concurrent sentence” doctrine (United States v. McCarter, United States v. Baldwin) because United States v. Parker recognizes adverse collateral consequences of convictions independent of imprisonment.

At the same time, the opinion flags a live procedural debate: Rule 29(a) now says the court may consider acquittal sua sponte, raising doubt whether a district court’s failure to act can be labeled “error” in the first place. The panel did not resolve that question because the government’s briefing effectively conceded the Meadows framing. Judge Easterbrook’s concurrence stresses that the government’s concession (and failure to argue the actual four-prong requirements) drove the result under party-presentation principles.

3. Why the wire fraud conviction (Count 8) was affirmed

Unlike § 1344(2), wire fraud under § 1343 does not require a misrepresentation to a bank; it requires a scheme to defraud and use (or causation) of an interstate wire “in furtherance” of the scheme. The wire identified in Count 8 was a HUD-to-Housing Authority $80,000 drawdown transfer on September 22, 2017.

Defendants argued the government failed to trace those exact dollars to a kickback check. The panel held tracing was unnecessary: a rational jury could infer that the drawdown replenished the account from which fraudulent contractor checks were paid, supported by timing and the subsequent payment of a fraudulent invoice (including the D Fresh Contractors invoice sequence). It relied on inference principles endorsed in United States v. Grandinetti and rejected defendants’ “equally plausible inferences” argument under United States v. Vizcarra-Millan because the government offered additional check-cashing and payout evidence making furtherance more plausible than not.

The panel also narrowed United States v. Durham to its context: the government must provide some evidence of a wire’s purpose, but it need not introduce every potentially existing record (such as supposed “zero tolerance” scope-of-work documents), especially where the jury could reasonably doubt those records existed or were reliable.

4. Why Smith’s abuse-of-trust enhancement (and sentence) was affirmed

Applying U.S.S.G. § 3B1.3, the district court found Smith occupied a position of trust and used it to facilitate the fraud. The panel held there was no clear error under the deferential standards articulated in United States v. Bradshaw and United States v. Peterson-Knox. Smith’s discretion over maintenance/renovation oversight, contractor interactions, invoice flow, and supervision supported “position of trust” status consistent with United States v. Tiojanco, United States v. Emerson, and United States v. Deal. Evidence that Smith coached contractors on fraudulent invoices supported “abuse.”

Independently, the panel found harmlessness under United States v. Caraway because the district court stated it would impose the same sentence even without the enhancement, based on the 18 U.S.C. § 3553(a) factors.

C) Impact

The most significant doctrinal effect is the Seventh Circuit’s firm application of Loughrin v. United States to kickback-and-invoice frauds financed through ordinary check payments: § 1344(2) is not satisfied unless a falsehood is aimed at (and naturally induces) the bank itself. Prosecutors pursuing public corruption or procurement schemes should expect that:

• Fraudulent invoices, internal certifications, or misstatements to a non-bank victim (even if later paid via checks drawn on a bank) may fit wire/mail fraud, program theft, false statements, or bribery statutes, but not automatically § 1344(2).
• Charging decisions under § 1344(2) will likely require identifying bank-facing misrepresentations (e.g., forged endorsements, altered instruments, knowingly false deposit documentation, or other representations the bank actually receives and relies on).

Procedurally, the decision also highlights instability in two adjacent areas:

• Preservation and Rule 29: Judge Easterbrook’s concurrence—drawing on Unitherm Food Systems, Inc. v. Swift-Eckrich, Inc.—signals potential future scrutiny of whether sufficiency challenges should be reviewable at all (or only narrowly) absent a Rule 29 motion.
• Plain-error “substantial rights” and “fairness” where sentences are concurrent: The panel follows United States v. Parker, but the concurrence questions whether modest special assessments and no added collateral consequences should satisfy prongs three and four, teeing up possible future doctrinal refinement.

4) Complex Concepts Simplified

• “By means of” (18 U.S.C. § 1344(2)): Not every fraud that involves bank money is “bank fraud.” The lie must be what causes the bank to release money. If the lie is told only to the victim (here, the Housing Authority/HUD) and the bank just processes a legitimate check, § 1344(2) may not apply.
• Plain error (Fed. R. Crim. P. 52(b)): When a defendant raises an issue for the first time on appeal, the court generally grants relief only if there is (1) error, (2) that is plain, (3) that affected substantial rights, and (4) that seriously affects fairness/integrity/public reputation. This case shows that even strong merits arguments can turn on how those prongs are argued (or conceded) on appeal.
• Wire fraud “in furtherance”: The government need not always trace a specific wired dollar to a specific fraudulent payment. Jurors may infer furtherance from timing and financial context (e.g., replenishing an account used for fraudulent payments).
• Abuse-of-trust enhancement (U.S.S.G. § 3B1.3): A role can qualify even without final sign-off authority. The key is meaningful discretion and the ability to facilitate or conceal wrongdoing through entrusted responsibilities.
• Joint and several restitution: Multiple defendants can be made responsible together for the same loss amount; the victim may collect the full amount from any of them, while defendants sort out contributions among themselves.

5) Conclusion

The Seventh Circuit’s decision draws a bright statutory line for § 1344(2): frauds paid with genuine checks do not become bank fraud unless the government can identify a false statement that reaches a bank and operates as the mechanism inducing the bank to part with its money. At the same time, the court reaffirmed that wire fraud can be proved through reasonable inferences that a wire transfer financially furthered a scheme, and it endorsed a practical, deferential approach to abuse-of-trust findings (and harmlessness) at sentencing. Finally, the concurrence underscores that preservation doctrines, Rule 29 practice, and the rigor of plain-error analysis remain active fault lines likely to shape future appellate litigation.