Direct answer: Under § 1344(1), the prosecution must prove a scheme to defraud a financial institution. A § 1344(2) case can involve deception directed at a merchant or another person. Under that clause, the accused must intend to obtain property belonging to the institution or held under its custody or control, using false or fraudulent representations to obtain it. The Supreme Court explained that difference in Loughrin, discussed below.

Look first at the indictment. Write down the clause cited beside each count, then the statement or transaction the count describes. If both clauses appear, counsel should examine each theory separately. The wording of a proposed jury instruction deserves the same attention.

The distinction was central to Loughrin v. United States. Loughrin used altered checks to buy goods at Target and returned the goods for cash. The Court held that clause (2) did not require proof that he intended to defraud the banks themselves. The intent to obtain bank property, and the use of a false representation as the means of doing so, were the relevant requirements.

The words “by means of” limit clause (2). The falsehood has to do work in obtaining bank property. For a forged check, counsel can follow the instrument from the person who presented it through the merchant and into the banking system. A lie having nothing to do with obtaining the bank property presents a different problem, even if a bank appears somewhere in the payment records.

Practice example: A forged check accepted at a shop can reach the bank through the shop’s deposit. Nobody at the bank needs to have met the person who presented it for counsel to examine a possible clause (2) charge.

For a hypothetical loan secured by inventory, suppose prosecutors say the borrower inflated the figure on a signed borrowing-base certificate. Counsel would want to compare:

• The certificate the lender received.
• The dated inventory report used to calculate the figure.
• The calculation itself and messages about its preparation.

Was the person who signed aware of an overstatement? Or did that person rely on a count believed to be correct? These records may help counsel evaluate that question. Either or both statutory clauses may be alleged, depending on the facts.

Both examples are hypothetical. Neither substitutes for evidence of the accused person’s knowledge or for proof of the other requirements of the charged offense.

Shaw v. United States concerned clause (1) and a scheme involving another customer’s deposits. A bank can have a property interest in those funds. The defense therefore cannot rely solely on the argument that the customer, rather than the bank, was supposed to lose money.

Advanced analysis: A transaction timeline helps counsel test the prosecution’s theory. It should identify:

• When the alleged false statement was made and who received it.
• Where the funds were held at that point.
• What instruction or document led to their release.
• Which provision the prosecution says covers that sequence.

If the alleged deception happened only after the bank had transferred the property, counsel needs to examine whether it could have been the means of obtaining that property. Other allegations or offenses may present different issues. The timing alone is not a promise that a charge will fail.

At trial, counsel should place the requested instructions beside the indictment. If a count cites both clauses, mark the elements of each separately. An instruction that combines pieces of the two could let the jury reach a verdict without deciding everything the charged theory requires. That is a specific instruction issue to raise with the court.