Justia White Collar Crime Opinion Summaries

Lester Aceituno was convicted of conspiracy to commit bank fraud and two counts of aggravated identity theft. The fraudulent scheme involved using stolen identification information to open bank accounts, change addresses to rented mailboxes, deposit fraudulent checks, and withdraw funds using debit cards. Aceituno opened accounts in New Hampshire and Massachusetts using stolen identities and signed documents attesting to the accuracy of the information. He also created a mailbox using a stolen identity. The scheme was led by a man known as "Abby," who provided the stolen information.The United States District Court for the District of New Hampshire denied Aceituno's Rule 29 motion, which argued insufficient evidence to prove he knew he was using real persons' identifying information. The court also rejected his claim of prosecutorial misconduct during the government's closing argument and rebuttal. Aceituno was sentenced to 30 months in prison.The United States Court of Appeals for the First Circuit reviewed the case. The court held that sufficient evidence supported the jury's finding that Aceituno knew the identification information belonged to real people. The evidence included Aceituno's repeated use of stolen identities, the bank's verification process, and testimony from a co-conspirator. The court also found that the prosecution's statements during closing arguments were fair inferences from the evidence and did not constitute misconduct. The court affirmed Aceituno's conviction. View "United States v. Aceituno" on Justia Law

Dana A. Pullman, a former Massachusetts State Police trooper and president of the State Police Association of Massachusetts (the Union), and Anne M. Lynch, head of the lobbying firm Lynch Associates, were involved in a kickback scheme. Pullman hired Lynch Associates to assist with a grievance negotiation, initially agreeing to a $200,000 fee. Later, Pullman verbally agreed to increase the fee to $350,000. After the Union received reimbursement from the Commonwealth, Pullman pressured the Union treasurer to issue a $250,000 check to Lynch Associates. Lynch then paid $20,000 to Pullman's wife. Both Pullman and Lynch were convicted of honest-services wire fraud, among other charges.The United States District Court for the District of Massachusetts convicted Pullman and Lynch of honest-services wire fraud, wire fraud, obstruction of justice, conspiracy to defraud the United States, and a racketeering conspiracy. Pullman and Lynch challenged the sufficiency of the evidence and the jury instructions, particularly regarding the honest-services wire fraud convictions. They argued that the evidence did not support a quid pro quo arrangement and that the jury instructions improperly suggested Pullman owed a fiduciary duty to the Commonwealth.The United States Court of Appeals for the First Circuit reviewed the case. The court found sufficient evidence to support the honest-services wire fraud convictions, noting the jury could reasonably infer a quid pro quo arrangement. The court also held that any instructional error regarding Pullman's fiduciary duty to the Commonwealth was harmless, as the evidence overwhelmingly showed he breached his fiduciary duty to the Union. The court reversed the wire fraud convictions and one of Lynch's tax fraud convictions based on the government's concession. The court affirmed the other convictions, including those for honest-services wire fraud, obstruction of justice, and the RICO conspiracy. The case was remanded for resentencing. View "United States v. Pullman" on Justia Law

Lawrence Ray was convicted in the United States District Court for the Southern District of New York for multiple crimes, including racketeering conspiracy, extortion, sex trafficking, forced labor, money laundering, tax evasion, and committing a violent crime in aid of a racketeering enterprise. These convictions stemmed from Ray's operation of a criminal enterprise that targeted young adults, primarily his daughter's college roommates, for indoctrination and exploitation, including sex trafficking and forced labor in Pinehurst, North Carolina.The district court sentenced Ray to 720 months of imprisonment, followed by a lifetime term of supervised release. Ray appealed his conviction, arguing insufficient evidence to support his convictions, the unconstitutionality of the racketeering statutes, improper admission of expert testimony, and the substantive unreasonableness of his sentence.The United States Court of Appeals for the Second Circuit reviewed Ray's appeal. The court found sufficient evidence to support Ray's convictions, including the existence of an enterprise, the commission of violent crimes to maintain or increase his position in the enterprise, and the coercion of victims into sex trafficking and forced labor. The court also rejected Ray's constitutional challenge to the racketeering statutes, noting that such challenges have been consistently rejected in the past.Regarding the expert testimony, the court held that the district court did not abuse its discretion in admitting the testimony of Dr. Hughes, a clinical and forensic psychologist, who provided general background on coercive control tactics without directly linking her testimony to Ray or his victims. The court also found that the district court properly balanced the probative value of the testimony against its potential prejudicial effect.Finally, the court concluded that Ray's 720-month sentence was substantively reasonable, given the gravity of his crimes and the need for deterrence, incapacitation, and just punishment. The court affirmed the judgment of the district court. View "United States v. Ray" on Justia Law

Defendants Gary Denkberg and Sean Novis were involved in a mass-mailing fraud scheme from 2004 to 2016, sending fake prize notices to consumers, leading them to believe they had won large cash prizes. Victims were instructed to pay a small processing fee to claim their prizes, but instead received a "sweepstakes report" with publicly available information. The scheme generated approximately $80 million from over three million transactions. Despite complaints and a 2012 cease-and-desist agreement with the USPS, Defendants continued their fraudulent activities using new shell companies.The United States District Court for the Eastern District of New York convicted Denkberg and Novis of multiple counts of mail fraud, wire fraud, use of fictitious names, and aiding and abetting mail fraud. The jury acquitted Denkberg on some counts but found both defendants guilty on the remaining charges. Denkberg was sentenced to 66 months in prison, while Novis received 90 months. Both were also ordered to pay significant fines and forfeitures.The United States Court of Appeals for the Second Circuit reviewed the case. The court held that sufficient evidence supported the convictions, including evidence of fraudulent intent and material misrepresentations. The court found that the District Court's supplemental jury instructions were not in error and that the admitted testimony and letters from state attorneys general were not hearsay. The court also determined that the admission of the letters did not violate the Confrontation Clause and that the District Court did not abuse its discretion by prohibiting defense counsel from introducing certain evidence due to a failure to comply with a protective order. The Second Circuit affirmed the District Court's judgments of conviction. View "United States v. Novis" on Justia Law

The case involves Jovan Vavic, a former head coach of the men's and women's water polo teams at the University of Southern California (USC), who was implicated in the "Varsity Blues" college admissions scandal. Vavic was accused of facilitating the admission of students as fake athletic recruits in exchange for payments from Rick Singer, a college consultant orchestrating the scheme. The payments were allegedly made to benefit Vavic's water polo program and his sons' private school tuition.In the lower court, the United States District Court for the District of Massachusetts presided over the case. A jury convicted Vavic on three counts: conspiracy to commit mail and wire fraud and honest services mail and wire fraud, conspiracy to commit federal programs bribery, and wire fraud and honest services wire fraud. However, the district court granted Vavic a new trial, concluding that certain statements made by the government during its rebuttal closing amounted to prosecutorial misconduct. The court found that the government's statements misrepresented the law and facts, particularly regarding the payments to USC and the alleged $100,000 bribe for Agustina Huneeus's recruitment.The United States Court of Appeals for the First Circuit reviewed the case. The court affirmed the district court's order for a new trial on the honest services fraud charge (Count Sixteen) due to a Yates error, as it was impossible to determine if the jury's verdict rested on an invalid legal theory following the decision in United States v. Abdelaziz. However, the appellate court reversed the new trial order for the federal programs bribery conspiracy charge (Count Three), concluding that the government's statements did not constitute plain error and that there was no prejudicial variance or Napue error. The case was remanded for further proceedings consistent with the appellate court's opinion. View "US v. Vavic" on Justia Law

In this case, Kelli Prather was convicted by a jury of bank fraud, wire fraud, aggravated identity theft, and making a false statement on a loan application. The charges stemmed from her fraudulent applications for Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) funds under the CARES Act, which were intended to provide financial relief during the COVID-19 pandemic. Prather submitted multiple fraudulent loan applications for non-operational businesses and used the identity of her mentally disabled nephew, D.P., to apply for additional loans.The United States District Court for the Southern District of Ohio sentenced Prather to 84 months in prison. Prather appealed her conviction and sentence, arguing insufficient evidence for her aggravated identity theft conviction, improper admission of certain testimonies, and errors in the jury instructions and sentencing enhancements.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court found that there was ample evidence to support Prather's aggravated identity theft conviction, including testimony that D.P. did not understand the loan application process and that Prather used his identity without lawful authority. The court also determined that the testimonies of Special Agent Reier and Prather's ex-fiancé, Darrell Willis, did not constitute plain error and were cumulative of other evidence presented at trial.Regarding the jury instructions, the court held that the district court correctly informed the jury that Prather did not need to know the interstate nature of her acts to be convicted of wire fraud. Finally, the court upheld the district court's application of the vulnerable victim enhancement, finding that D.P. was indeed a victim of Prather's fraudulent scheme.The Sixth Circuit affirmed Prather's conviction and sentence, concluding that there were no reversible errors in the district court's proceedings. View "United States v. Prather" on Justia Law

Stamatios Kousisis and Alpha Painting and Construction Co. were awarded two contracts by the Pennsylvania Department of Transportation (PennDOT) for painting projects in Philadelphia. Federal regulations required subcontracting a portion of the contract to a disadvantaged business enterprise. Kousisis falsely represented that Alpha would obtain paint supplies from Markias, Inc., a prequalified disadvantaged business. However, Markias functioned only as a pass-through entity, funneling checks and invoices to and from Alpha’s actual suppliers, violating the requirement that disadvantaged businesses perform a commercially useful function. Despite this, Alpha completed the projects to PennDOT’s satisfaction and earned over $20 million in gross profit.The Government charged Alpha and Kousisis with wire fraud and conspiracy to commit wire fraud, based on the fraudulent-inducement theory. After a jury convicted them, they moved for acquittal, arguing that PennDOT received the full economic benefit of its bargain, so the Government could not prove they schemed to defraud PennDOT of money or property. The United States Court of Appeals for the Third Circuit rejected this argument, affirming the convictions and deepening the division over the validity of a federal fraud conviction when the defendant did not seek to cause the victim net pecuniary loss.The Supreme Court of the United States held that a defendant who induces a victim to enter into a transaction under materially false pretenses may be convicted of federal fraud even if the defendant did not seek to cause the victim economic loss. The Court explained that the text of the wire fraud statute does not mention economic loss and that the common law did not establish a general rule requiring economic loss in all fraud cases. The Court affirmed the Third Circuit’s decision, concluding that the fraudulent-inducement theory is consistent with both the text of the statute and the Court’s precedent. View "Kousisis v. United States" on Justia Law

Sonny Ramdeo, while working as a payroll director for Promise Healthcare, recommended the company hire PayServ Tax, which he falsely claimed was a subsidiary of Ceridian Corporation. In reality, PayServ was Ramdeo’s own company, and he diverted over $20 million from Promise to fund a charter airline service. After Promise’s auditors discovered discrepancies, Ramdeo was arrested and pled guilty to wire fraud and money laundering. He was sentenced to twenty years in prison, followed by three years of supervised release, and ordered to pay $21,442,173 in restitution.Ramdeo challenged his conviction and restitution amount on direct appeal, which was unsuccessful. He then sought a writ of audita querela to contest the restitution amount, which the district court recharacterized as a petition for coram nobis and subsequently denied. The Eleventh Circuit declined to address the merits of his claim. Ramdeo also filed a 28 U.S.C. § 2255 petition, which the district court denied as frivolous and meritless. The Eleventh Circuit affirmed this decision. Ramdeo later filed a pro se petition for a writ of error coram nobis, arguing ineffective assistance of counsel, prosecutorial misconduct, and new financial evidence. The district court denied the petition, stating that prisoners in federal custody are ineligible for coram nobis relief.The United States Court of Appeals for the Eleventh Circuit reviewed the case and determined that being in custody does not categorically bar a petitioner from seeking coram nobis relief for non-custodial aspects of their sentence, such as restitution. The court vacated the district court’s order and remanded the case for further proceedings, emphasizing that coram nobis is an extraordinary remedy available when no other remedy is available, and the petitioner presents sound reasons for not seeking relief earlier. View "Ramdeo v. United States" on Justia Law

Shakira Martinez was convicted by a jury in the District of Delaware for multiple money laundering offenses related to a drug trafficking operation run by her husband, Omar Morales Colon. The District Court sentenced her to 108 months of imprisonment. After her sentencing, the United States Sentencing Commission enacted a retroactive amendment to the Sentencing Guidelines, allowing certain offenders with no criminal history a two-point reduction in their total offense level. Martinez argued that the appellate court should vacate her sentence and remand for resentencing in light of this amendment.The District Court determined Martinez’s total offense level to be 30, with a criminal history category of I, resulting in a recommended sentencing range of 97 to 121 months. Martinez requested a downward variance due to psychological disorders, but the court denied this request and sentenced her to 108 months. Martinez appealed, and during the appeal process, the Sentencing Commission made amendments to the Guidelines retroactive. Martinez then sought to have her sentence vacated and remanded for resentencing under the new Guidelines.The United States Court of Appeals for the Third Circuit reviewed the case. The court held that it has the discretionary authority under 28 U.S.C. § 2106 to vacate a sentence and remand for resentencing in light of a retroactive Guidelines amendment. The court found that granting this relief would promote judicial economy and serve the interest of justice. Therefore, the court vacated Martinez’s sentence and remanded the case to the District Court for resentencing consistent with the retroactive Guidelines amendment. View "USA v. Martinez" on Justia Law

A cheesesteak restaurant owner, Nicholas Lucidonio, was involved in a payroll tax fraud scheme at Tony Luke’s, where he avoided employment taxes by issuing paychecks for “on-the-books” wages, requiring employees to sign back their paychecks, and then paying them in cash for both “on-the-books” and “off-the-books” wages. This led to the filing of false employer tax returns that underreported wages and underpaid employment taxes. Employees, aware of the scheme, received Form W-2s listing only “on-the-books” wages, resulting in underreported income on their personal tax returns. The conspiracy spanned ten years and involved systemic underreporting of wages for 30 to 40 employees at any given time.Lucidonio pleaded guilty to one count of conspiracy to defraud the IRS (Klein conspiracy) under 18 U.S.C. § 371. He did not appeal his conviction but challenged his sentence, specifically the application of a United States Sentencing Guideline that increased his offense level by two points. The enhancement applies when conduct is intended to encourage others to violate internal revenue laws or impede the IRS’s collection of revenue. Lucidonio argued that the enhancement was misapplied because it required explicit direction to others to violate the IRS Code, which he claimed did not occur, and that his employees were co-conspirators, not additional persons encouraged to violate the law.The United States Court of Appeals for the Third Circuit reviewed the case. The court disagreed with Lucidonio’s interpretation that the enhancement required explicit direction. However, it found that the government failed to prove by a preponderance of the evidence that Lucidonio encouraged anyone other than co-conspirators, as the employees were aware of and participated in the scheme. Consequently, the court vacated the sentence and remanded the case for resentencing without the enhancement. View "United States v. Lucidonio" on Justia Law