4.18.656 Misapplication of Bank Funds, 18 U.S.C. § 656 See Statute

[Defendant] is charged with the illegal misapplication of bank funds. It is against federal law for a bank employee to misapply bank funds. For you to find [defendant] guilty of this crime, you must be convinced that the government has proven each of these things beyond a reasonable doubt:

First, that [defendant] was an [officer; director; agent; employee] of [name of bank];

Second, that [name of bank] was [state bank’s relationship to federal jurisdiction];

Third, that [defendant] willfully misapplied bank funds exceeding $1,000.

“Willfully misapply” requires proof of two things: wrongful use of the bank’s funds, and intent to injure or defraud the bank. To “defraud” means to cause the bank, through consciously dishonest means, to part with its funds.

Comment(s)

(1) “Courts have struggled to give precise definition to the crime of misapplication, consistently noting that ‘[t]he problem that has confronted and perplexed the courts is that there is no statutory definition or common law heritage that gives content to the phrase “willfully misapplies.’” These uncertain origins have posed a challenge to courts attempting to distinguish bad judgment from bad conduct that is illegal. Nevertheless, in Wester, we recently discussed the two notions that underlie the crime of misapplication: one relating to conduct, i.e., wrongful use of bank funds, the other focusing on an intent to injure or defraud a bank. The government cannot prove its claim of misapplication without establishing both elements. The interrelationship between these elements is subtle, given that ‘the same facts can easily be the basis for deeming the conduct to be wrongful and the intent fraudulent.’” United States v. Blasini-Lluberas, 169 F.3d 57, 62-63 (1st Cir. 1999) (quoting United States v. Wester, 90 F.3d 592, 595 (1st Cir. 1996)) (internal citations and footnote omitted). The reference to intent to injure the bank now seems questionable in light of the definition of defraud under 18 U.S.C. § 1344 in United States v. Kenrick, 221 F.3d 19, 26-29 (1st Cir. 2000) (en banc).

(2) If $1,000 or less is taken, the crime is a misdemeanor. 18 U.S.C. § 656.