In the United States v. Heinze case of 1910, Augustus Heinze was convicted for misapplying funds from a national bank in Montana where he served as director. The Supreme Court had to decide whether his actions were indeed illegal under federal law and if the lower court correctly interpreted that law. The prosecution argued that Heinze used bank funds to purchase copper shares at an inflated price from a company he controlled, thereby benefiting himself at the expense of the bank's shareholders. However, Heinze claimed his actions were legal because they did not directly harm or defraud anyone and there was no explicit prohibition against such transactions in existing banking laws. The Supreme Court upheld his conviction by interpreting broadly Section 5209 of U.S Revised Statutes which made it illegal for any officer or director of a national bank to willfully misapply its money, funds or credits with intent to injure or defraud such association (bank). It ruled that even though there might be no direct injury caused by such acts, these could still undermine public confidence in banking institutions and thus constitute fraud within meaning of this statute.

The dissenting opinion in the United States v. Heinze case argued that the defendant, F. Augustus Heinze, should not have been convicted for misapplication of bank funds because there was no evidence to suggest he acted with fraudulent intent or personal gain. The dissent emphasized that while Heinze may have made unwise business decisions as a director and officer of Mercantile National Bank, these actions did not constitute criminal conduct under federal banking laws unless they were done with an intention to defraud the bank or its depositors. Furthermore, it was pointed out that his transactions were approved by other directors and officers who had full knowledge of their nature and character - suggesting collective decision-making rather than individual misconduct on part of Heinze.