Capital Briefs: Any Lie on Loan Form Is Illegal, Court Rules

The U.S. Supreme Court ruled Wednesday that lying on a loan application is illegal, even if the false statements had no bearing on a bank's decision to extend credit.

Justice David Souter, writing for an eight-to-one majority, said the federal bank fraud law does not require the false statement to be material.

The case, U.S. v. Wells, began in 1993 when the government charged Jerry Wells and Kenneth Steele of misrepresenting the actual financial condition of their leasing business to several banks. The two were convicted of fraud, but the federal appeals court in Boston overturned the decision because the jury never decided if the banks relied on the false financial information.