The court’s decision will resolve a circuit split and could add to the court’s recent line of cases narrowing the reach of statutes used to prosecute white-collar crime.
On Jan. 14, the U.S. Supreme Court is set to hear argument in Thompson v. United States, No. 23-1095, regarding the scope of 18 U.S.C. § 1014, which bars “any false statement” made to influence certain federal financial institutions. Thompson presents the question whether “false statements” include statements that are literally true but misleading or incomplete in context.
The court’s decision will resolve a circuit split and could add to the court’s recent line of cases narrowing the reach of statutes used to prosecute white-collar crime.
Background
Petitioner Patrick Daley Thompson, a member of the prominent Chicago political dynasty, was convicted of making false statements to the Federal Deposit Insurance Corp. (FDIC).
In 2011, Thompson took out a $110,000 loan from Washington Federal Bank for Savings to make an equity contribution to a law firm. He then took out two more loans, borrowing a total of $219,000. Thompson made a single $389.58 payment on the first loan and no payments on the subsequent loans.
In 2017, Washington Federal failed and the FDIC hired a firm to collect money owed to the bank. When the firm billed Thompson for over $269,000—the loans he took out, plus interest—Thompson called customer service and, on a recorded call, stated that he “borrowed … $110,000,” and that he had “no idea where the 269 number comes from.” The loan servicer agent asked if he was claiming a “discrepancy,” and Thompson said that he was. The agent wrote in his log that Thompson was “disputing the princ[ipal] balance” and “believed that he borrowed $110,000.”
In a conversation with FDIC contractors a few days later, Thompson again asserted that he “owed $110,000” and told the contractors that the loan had been for home improvement. Eventually, Thompson and the FDIC settled for the principal amount of $219,000.
The government later charged Thompson with two counts of violating 18 U.S.C. § 1014, which imposes criminal liability on “[w]hoever knowingly makes any false statement or report … for the purpose of influencing in any way the action of” certain financial institutions, including the FDIC. In 2021, a jury convicted Thompson on both counts, finding that he falsely stated that (1) he “only owed … $110,000 … and that any higher amount was incorrect,” and (2) the borrowed funds “were for home improvement.”
After the verdict, Thompson moved for a judgment of acquittal, arguing that the evidence showed that he told the FDIC that he “borrowed $110,000,” but not that he told the FDIC that he only borrowed $110,000, that he only owed $110,000, or that he had not subsequently borrowed more. Thompson conceded that the statement that he “borrowed $110,000” was misleading because he omitted the later amounts but argued that the statement was
nevertheless literally true. Thompson cited Sixth Circuit precedent holding that a statement must be literally false to violate Section 1014. See United States v. Kurlemann, 736 F.3d 439 (6th Cir. 2013). The government argued both that literal falsity is not required and that Thompson’s statements were literally false. The district court found that literal falsity was not required to sustain a conviction, and did not reach the question of whether Thompson’s statements were literally false.
Thompson appealed to the Seventh Circuit, which ruled against him. It held that “literal truth is not a defense” under Section 1014, declining to follow the Sixth Circuit’s precedent. See United States v. Thompson, 89 F.4th 1010, 1018 (7th Cir. 2024).
The Supreme Court granted Thompson’s petition for certiorari on Oct. 4, 2024, and scheduled oral argument for Jan. 14, 2025.
Arguments Before the Court
Thompson first argues that the plain language of the statute criminalizes the making of a “false statement,” which, he argues, requires the statement to be literally false. According to Thompson, his statements, while possibly incomplete or misleading, were literally true; for example, it was true, he argues, that he “borrowed … $110,000.” Thompson next points out that other statutes explicitly prohibit “false or misleading” statements and argues that Congress’s decision to proscribe only “false” statements in Section 1014 suggests it did not intend to prohibit statements that are true but might be misleading. He then turns to legislative history, explaining that Section 1014 consolidated several earlier provisions criminalizing false statements, none of which prohibited misleading statements.
Thompson also argues that his interpretation is supported by Supreme Court precedent, citing Williams v. United States, 458 U.S. 279 (1982), in which the court held that writing a bad check does not violate Section 1014 because a false check is not a false statement, and Bronston v. United States, 409 U.S. 352 (1973), in which the court held that a misleading statement does not violate the federal perjury statute. Thompson argues that both cases
support a literal reading of the term “false statement.”
Thompson also makes a policy argument that if the government’s interpretation were adopted, many commonplace statements made in loan negotiations would be criminalized. For example, Thompson argues that the government’s interpretation would make it illegal for a homebuyer seeking a mortgage to tell a financial institution that he has an offer from a lender with a better interest rate without disclosing that the other offer requires a larger down payment. Finally, he invokes the rule of lenity, arguing that if the statute is ambiguous, the court must adopt the
narrower reading.
The government responds by arguing that Thompson made a false statement as required by the statute. It contends that Thompson’s interpretation is hyper-technical and that in ordinary English, a “false statement” includes a statement that inaccurately appears to be the whole truth.
In support of its argument that that falsity “is not limited to words that are inaccurate only when construed in a vacuum,” the government analogizes Thompson’s statements to a child telling her mother she “ate one cookie” after having eaten every cookie in the jar. This statement, the government argues, is literally true (the child did eat one cookie) but misleadingly suggests that the child did not eat the rest of the cookies.
The government also disputes the relevance of the other statutes cited by Thompson that use the phrase “false and misleading,” pointing out that Congress often uses a redundant “belt-andsuspenders” approach to legislation and that the statutes, which span a range of subjects and were enacted at various times, are not probative of Congress’s intent when drafting Section 1014.
The government also argues that its interpretation is supported by Supreme Court precedent in Kay v. United States, 303 U.S. 1 (1938), where the Supreme Court interpreted a statute that prohibited “making a statement, knowing it to be false” to include misleading statements.
In response to Thompson’s policy argument, the government contends that its interpretation “does not create a generalized disclosure obligation” about unrelated matters. And the government makes a policy argument of its own, arguing that Thompson’s interpretation would render the statute completely ineffective because individuals could “knowingly misreport crucial financial information” to these agencies and institutions without fear of repercussions.
Finally, the government argues that under any standard, Thompson’s conviction should stand because he made statements that were literally false. For example, the government argues that Thompson’s statements that he had “no idea” where the larger amount in the invoice “came from” and that he “dispute[d]” the amount were literally false.
Potential Impact of the Court’s Decision
The court could rule narrowly in this case by determining that sufficient evidence supports the jury’s determination that Thompson made literally false statements. That said, it seems unlikely that the court took this case only to make a narrow factual ruling without resolving the circuit
split regarding whether the statute requires literal falsity.
If the court decides the issue presented, it may follow its recent pattern of narrowing white collar prosecutions. In particular, the court has been wary of attempts to strain the text of criminal fraud statutes, as evidenced, for example, by its decision last term in Ciminelli v. United States, in which it declined to extend the meaning of “money or property” in the wire fraud statute. Here, such a course would likely lead the court to reverse Thompson’s conviction and come down on the side of the literal reading of the statute. Such an outcome would also appeal to the court’s textualist wing.
A ruling in the government’s favor would be somewhat surprising given the court’s recent trend of rejecting attempts to interpret criminal statutes broadly and the majority’s avowed interest in textualism. However, the court is apparently sensitive to criticism that it is “hostile” to white collar prosecutions, with Justice Samuel Alito recently asking at oral argument in Kousisis v. United States, No. 23-477, about the suggestion that the court has a “general attitude” of hostility towards federal prosecutions. If the court were to rule for the government, it would likely need to impose some constraint on the kind of misrepresentations that can be prosecuted under the statute.
One way or the other, practitioners will be watching for the court’s latest ruling on the limits of white-collar statutes.
Brook Dooley is a partner and Sara R. Fitzpatrick and Britta S. Kajimura are associates at Keker, Van Nest & Peters. They specialize in high-stakes criminal investigations and trials and complex civil litigation for publicly traded corporations, private companies, and senior executives.
Reprinted with permission from the Jan. 9, 2025 edition of the “The Recorder” © 2025 ALM Global Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-256-2472 or asset-and-logo-licensing@alm.com.