Justia White Collar Crime Opinion Summaries

Federal agents conducted a sting operation in which Rami Ghanem attempted to export military equipment from the United States to Libya. Ghanem pleaded guilty to six counts, including violations of the Arms Export Control Act, unlawful smuggling, and money laundering. He proceeded to trial on a charge of conspiring to acquire, transport, and use surface-to-air missiles, for which he was found guilty and initially sentenced to 360 months in prison.The United States Court of Appeals for the Ninth Circuit vacated Ghanem’s conviction on the missile conspiracy charge due to improper jury instructions on venue and remanded the case for resentencing. On remand, the district court recalculated the guidelines range as 78-97 months but imposed the same 360-month sentence, considering the same relevant conduct as before.The Ninth Circuit reviewed Ghanem’s appeal, rejecting his arguments that the district court committed procedural errors at resentencing. The court held that the district court applied the correct legal standards in declining to reduce Ghanem’s offense level for acceptance of responsibility and did not clearly err in finding that Ghanem’s failure to accept responsibility outweighed his guilty plea and truthful admissions. The court also found that the district court adequately explained its sentencing decision, addressed Ghanem’s argument about sentencing disparities, and correctly considered conduct underlying the dismissed charge.The Ninth Circuit affirmed the 360-month sentence, concluding that the district court did not abuse its discretion in determining that the sentence was warranted under the 18 U.S.C. § 3553(a) factors. The court also rejected Ghanem’s constitutional arguments under Apprendi v. New Jersey, holding that the district court’s reliance on conduct underlying the dismissed charge did not violate the Fifth or Sixth Amendments. View "United States v. Ghanem" on Justia Law

Mark Johnson was convicted of wire fraud and conspiracy to commit wire fraud in 2017. The charges stemmed from a 2011 transaction where HSBC, under Johnson's leadership, converted U.S. dollars into British pounds for Cairn Energy. The government presented two theories of fraud to the jury: the now-invalid right-to-control theory and the misappropriation theory. Johnson filed a Petition for a writ of coram nobis after the Supreme Court's decision in Ciminelli v. United States invalidated the right-to-control theory.The United States District Court for the Eastern District of New York dismissed Johnson's Petition, concluding that the jury would have convicted him under the valid misappropriation theory, rendering the inclusion of the invalid right-to-control theory harmless. Johnson appealed this decision.The United States Court of Appeals for the Second Circuit reviewed the case. The court found that the government's case under the misappropriation theory was weak and expressed grave doubt that the presentation of the right-to-control theory was harmless. The court noted that the misappropriation theory required proving a fiduciary relationship between Johnson and Cairn, which was not clearly established, and that Johnson misused confidential information, which was also not convincingly demonstrated.The Second Circuit held that the inclusion of the invalid right-to-control theory was not harmless and that the jury was likely influenced by it. Consequently, the court reversed the district court's judgment and remanded the case for entry of an order granting Johnson's Petition for a writ of coram nobis. View "Johnson v. United States" on Justia Law

Mark Schena operated Arrayit, a medical testing laboratory in Northern California, which focused on blood tests for allergies. Schena marketed these tests as superior to skin tests, despite their limitations, and billed insurance providers up to $10,000 per test. To maintain a steady flow of patient samples, Schena paid marketers a percentage of the revenue they generated by pitching Arrayit’s services to medical professionals, often misleading them about the tests' efficacy. During the COVID-19 pandemic, Schena transitioned to COVID testing, using similar deceptive marketing practices to bundle allergy tests with COVID tests.The United States District Court for the Northern District of California denied Schena’s motion to dismiss the EKRA counts, arguing that his conduct did not violate the statute as a matter of law. The jury convicted Schena on all counts, including conspiracy to commit healthcare fraud, healthcare fraud, conspiracy to violate EKRA, EKRA violations, and securities fraud. The district court sentenced Schena to 96 months in prison and ordered him to pay over $24 million in restitution.The United States Court of Appeals for the Ninth Circuit reviewed the case and affirmed Schena’s convictions. The court held that 18 U.S.C. § 220(a)(2)(A) of EKRA covers payments to marketing intermediaries who interface with those who do the referrals, and there is no requirement that the payments be made to a person who interfaces directly with patients. The court also concluded that a percentage-based compensation structure for marketing agents does not violate EKRA per se, but the evidence showed wrongful inducement when Schena paid marketers to unduly influence doctors’ referrals through false or fraudulent representations. The court affirmed Schena’s EKRA and other convictions, vacated in part the restitution order, and remanded in part. View "United States v. Schena" on Justia Law

Melissa Wanna discovered her profile on MyLife, an information broker, which contained a poor reputation score and references to court records. MyLife offered to provide details or remove the profile for a fee. Believing she lost employment opportunities due to this profile, Wanna filed a class action lawsuit against several Lexis entities, alleging violations of the Fair Credit Reporting Act (FCRA), Driver’s Privacy Protection Act (DPPA), and the federal Racketeer Influenced and Corrupt Organizations Act (RICO), along with several Minnesota state law claims.The United States District Court for the District of Minnesota dismissed Wanna’s claims, concluding that MyLife was not Lexis’s agent. The court found that the data-licensing agreement between Lexis and MyLife explicitly stated that their relationship was that of independent contractors, not principal and agent. As a result, Wanna’s federal claims, which depended on an agency relationship, failed. The district court also declined to exercise supplemental jurisdiction over Wanna’s state law claims and dismissed them without prejudice.The United States Court of Appeals for the Eighth Circuit reviewed the district court’s decision de novo and affirmed the dismissal. The appellate court agreed that Wanna’s federal claims required an agency relationship between Lexis and MyLife, which was not established. The court found that MyLife did not have actual or apparent authority to act on Lexis’s behalf, nor did Lexis ratify MyLife’s actions. Additionally, the appellate court held that the district court did not abuse its discretion in declining to exercise supplemental jurisdiction over the state law claims. View "Wanna v. RELX Group, PLC" on Justia Law

The case involves the appeal of Lev Aslan Dermen, who was convicted of conspiracy to commit mail fraud, conspiracy to commit money laundering offenses, and money laundering. The charges stem from a scheme orchestrated by Dermen and his co-conspirators to file false claims for federal biofuel incentives, resulting in over $500 million in fraudulent payouts. The scheme involved laundering the fraud proceeds through various channels, including domestic and foreign entities and accounts.In the lower court, the United States District Court for the District of Utah conducted a seven-week trial, after which the jury convicted Dermen on all counts. Dermen was sentenced to forty years in prison and ordered to forfeit assets and pay a money judgment. Dermen raised several issues on appeal, including juror misconduct, the impact of the COVID-19 pandemic on the trial, alleged Brady violations, improper expert testimony, insufficient evidence for some convictions, and errors in sentencing and forfeiture orders.The United States Court of Appeals for the Tenth Circuit reviewed Dermen's appeal. The court rejected all of Dermen's arguments, affirming the lower court's decisions. The court found no abuse of discretion in the district court's handling of juror misconduct and the impact of COVID-19. It also held that the alleged Brady violations were not material, the expert testimony was properly admitted, and the evidence was sufficient to support the convictions. The court upheld the sentencing and forfeiture orders, finding no error in the district court's application of the preponderance-of-the-evidence standard and its admission of hearsay evidence in the forfeiture proceedings. View "United States v. Dermen" on Justia Law

From the 1990s through the 2010s, Patrice Runner operated a mass-mailing enterprise that used false and misleading advertising to sell purportedly supernatural objects and psychic services. Customers paid for rare gems and personalized psychic services, but received junk items and generic responses. A jury convicted Runner of mail and wire fraud, among other crimes.Runner appealed, arguing that the Government’s theory of fraud was legally defective, which he claimed affected his indictment, the sufficiency of the evidence, and the jury instructions. The United States District Court for the Eastern District of New York had denied Runner’s motion to dismiss the indictment and rejected his post-trial motions for acquittal or a new trial. The court also sentenced Runner to ten years’ imprisonment, despite a Guidelines recommendation of life imprisonment, based on a loss calculation of over $150,000,000.The United States Court of Appeals for the Second Circuit reviewed the case. The court rejected Runner’s arguments, citing the Supreme Court’s decision in Kousisis v. United States, which supported the Government’s fraudulent-inducement theory. The court found that the indictment sufficiently alleged that Runner used material misstatements to induce customers to pay money. The evidence presented at trial was deemed sufficient to support the jury’s finding of fraudulent intent, as Runner’s promotions contained intentional lies about the origin and nature of the goods and services sold. The jury instructions were also found to be adequate in conveying the intent-to-harm requirement.The Second Circuit affirmed the district court’s judgment, holding that any error in the loss calculation at sentencing was harmless, as the district court would have imposed the same sentence regardless. View "United States v. Runner" on Justia Law

Thiago de Souza Prado was convicted by a jury of conspiracy to commit wire fraud, wire fraud, and aggravated identity theft. The scheme involved defrauding rideshare and food delivery companies by creating and using fraudulent accounts, and misappropriating the identities of third parties. Prado, who was ineligible to drive for these companies due to numerous driving infractions and his unauthorized status in the U.S., initially used fraudulent accounts created by others and later began creating and renting out his own fraudulent accounts. He obtained driver's license images and Social Security numbers from various sources, including associates and the dark web, and used software to spoof GPS information to inflate driver fees and generate fake referral rewards.The U.S. District Court for the District of Massachusetts sentenced Prado to seventy months in prison. Prado appealed, challenging his convictions and sentence. He argued that he was prejudiced by an amendment to the third superseding indictment during trial and by the district court's refusal to disqualify the prosecution team. He also contended that his sentence was procedurally and substantively unreasonable.The United States Court of Appeals for the First Circuit reviewed the case. The court found no error in the district court's decision to allow the amendment of the indictment, as it did not alter the substance of the charges. The court also upheld the district court's finding that the wall separating Levy, a former defense attorney who joined the U.S. Attorney's Office, from the prosecution team had not been breached. Additionally, the court determined that any potential errors in calculating loss and Prado's criminal history were harmless, as the district court indicated it would have imposed the same sentence regardless.The First Circuit affirmed Prado's convictions and sentence, concluding that the district court did not abuse its discretion and that Prado's sentence was reasonable. View "United States v. De Souza Prado" on Justia Law

Two defendants, Hernán Lopez, a top executive at Twenty-First Century Fox, and Full Play Group, S.A., a South American sports marketing company, were convicted of conspiracy to commit honest services wire fraud related to a FIFA corruption scandal. They were involved in bribery schemes to secure media rights for various soccer tournaments, including the Copa Libertadores, Copa América, and World Cup qualifiers. The government presented evidence that Full Play bribed officials from several South American soccer federations, while Lopez was implicated in a scheme involving T&T Sports Marketing, a joint venture of Fox and Torneos y Competencias, to secure undervalued media rights contracts through bribery.The United States District Court for the Eastern District of New York initially denied pre-trial motions to dismiss the indictment but later granted post-trial motions for acquittal under Rule 29(c). The district court reasoned that, following the Supreme Court’s decisions in Percoco v. United States and Ciminelli v. United States, the conduct did not fall within the scope of honest services wire fraud under 18 U.S.C. § 1346, and the evidence was insufficient to sustain the convictions.The United States Court of Appeals for the Second Circuit reviewed the case and held that the district court erred in its conclusion. The appellate court determined that the conduct of Lopez and Full Play did fall within the ambit of § 1346, as it involved bribery, which is a core application of the honest services fraud statute. The court noted that the fiduciary duties breached by the bribed officials were established by their relationships with FIFA and CONMEBOL, and these duties were informed by the organizations' codes of ethics. Consequently, the Second Circuit vacated the district court’s judgments of acquittal and remanded the case for further proceedings consistent with its opinion. View "United States v. Lopez" on Justia Law

Joff Stenn Wroy Philossaint pled guilty to conspiracy to commit wire fraud and conspiracy to commit money laundering. These charges stemmed from his involvement in a scheme to fraudulently obtain Paycheck Protection Plan (PPP) and Economic Injury Disaster Loan (EIDL) loans. He was sentenced to 50 months in prison, followed by supervised release, and ordered to pay $3.85 million in restitution. Additionally, a forfeiture judgment of $673,210 was entered against him. On appeal, Philossaint contested the forfeiture amount, arguing it was miscalculated.The United States District Court for the Southern District of Florida initially handled the case. Philossaint pled guilty to the wire fraud and money laundering conspiracy charges, and the court accepted a factual proffer detailing his role in the fraudulent loan scheme. The presentence investigation report (PSI) provided additional details, including the specific companies involved and the amounts of the fraudulent loans. The government moved for a preliminary order of forfeiture, but miscalculated the amount by assuming Philossaint received a 10% kickback on every loan funded, which was incorrect.The United States Court of Appeals for the Eleventh Circuit reviewed the case. The court found that the district court had committed a clear error in determining the forfeiture amount due to the government's miscalculation. The correct amount of forfeiture should have been $549,226.30, based on the accurate figures of the loan proceeds and kickbacks Philossaint received. The Eleventh Circuit vacated the forfeiture order and remanded the case for further proceedings, noting that the district court did not make any factual findings about whether Philossaint was a leader or mastermind of the scheme, which could affect the forfeiture amount under the Honeycutt v. United States hypothetical. View "USA v. Philossaint" on Justia Law

Richard Evans, a former Captain in the Boston Police Department (BPD), was convicted of wire fraud, conspiracy to commit wire fraud, federal programs theft, and conspiracy to commit federal programs theft. These charges stemmed from his submission of false claims for overtime pay and his involvement in a scheme to submit such claims. Evans and his subordinates falsely reported working four-hour overtime shifts, even when they worked fewer hours or when the Evidence Control Unit (ECU) was closed.The United States District Court for the District of Massachusetts found Evans guilty on all counts after a five-day jury trial. He was sentenced to one year and one day of incarceration for each count, to be served concurrently, fined $15,000, and ordered to pay $17,390.99 in restitution. Evans appealed, challenging the sufficiency of the evidence, the willful blindness instruction, and other aspects of the trial.The United States Court of Appeals for the First Circuit reviewed the case. The court affirmed Evans' convictions for wire fraud and conspiracy to commit wire fraud, finding that the willful blindness instruction was appropriate given the numerous "flags of suspicion" that Evans ignored. However, the court vacated Evans' convictions for federal programs theft and conspiracy to commit federal programs theft, concluding that the government failed to present sufficient evidence to establish that the BPD received more than $10,000 in federal benefits during the relevant period, as required by 18 U.S.C. § 666(b). The case was remanded for further proceedings consistent with the opinion. View "United States v. Evans" on Justia Law