Justia White Collar Crime Opinion Summaries

Sean Grusd fraudulently persuaded multiple victims over two years that he was a successful investor, convincing them to entrust him with significant sums of money, including life savings and funds intended for their children’s education. He substantiated his misrepresentations with forged documents and ultimately used the money for personal luxury purchases. Grusd pleaded guilty to one count of wire fraud and acknowledged in his plea agreement that he had defrauded his victims of approximately $23,155,000. He agreed that restitution would be ordered in that amount, minus any funds repaid prior to sentencing.The United States District Court for the Northern District of Illinois, Eastern Division, oversaw Grusd’s sentencing. The Presentencing Investigative Report, consistent with the plea agreement, recommended restitution of $23,155,000. During sentencing, the prosecutor noted that approximately $1.6 million had already been recovered from third parties, a representation to which Grusd’s counsel acquiesced and clarified as voluntary returns connected with civil matters. The prosecutor then confirmed that the updated restitution figure was $21,557,739, which the district judge ordered, with credit for any further payments. Grusd did not object to this calculation or the restitution amount.On appeal to the United States Court of Appeals for the Seventh Circuit, Grusd challenged the subtraction of the $1.6 million credit from the agreed-upon total, arguing that the district judge erred by not substantiating the amount. The Seventh Circuit held that Grusd had waived his right to challenge the restitution credit by acquiescing during sentencing and failing to object. The court further held that, even if the claim was merely forfeited, Grusd could not meet the requirements for plain-error review. The judgment of the district court was affirmed. View "United States v. Grusd" on Justia Law

Several entities affiliated with Allstate sued a group of individuals and entities that own, manage, and operate Memorial Heights Emergency Center in Houston, Texas. The plaintiffs alleged that, starting in 2018, defendants entered into agreements with personal injury attorneys to refer clients to the Center under letters of protection, guaranteeing future payment from insurance settlements. Defendants billed these patients—primarily car accident victims—using emergency billing codes at rates far above standard charges, often conducting expensive diagnostic tests without documented medical necessity and discharging patients without additional treatment. The bills were then sent to attorneys, who submitted them to Allstate for inclusion in settlement demands. Between August 2018 and November 2022, Allstate settled with 635 claimants and subsequently alleged it discovered a fraudulent scheme, seeking to recover $4.7 million plus treble damages and attorney fees.The United States District Court for the Southern District of Texas dismissed all claims with prejudice. The district court held that Allstate failed to sufficiently allege reliance on the fraudulent bills, undermining its RICO, common-law fraud, conspiracy, unjust enrichment, and money-had-and-received claims. The court also found Allstate had not adequately pleaded direct or proximate causation, concluded that Allstate was “complicit” in the alleged fraud due to its continued settlements after learning of the scheme, and determined that the complexity of the case made it unmanageable as a single lawsuit.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the dismissal de novo. The Fifth Circuit held that the district court applied the wrong legal standards to Allstate’s RICO claims by requiring reliance, which is not necessary for a RICO claim predicated on mail fraud. The appellate court further found that Allstate adequately pleaded proximate cause, damages, and the elements of its common-law and equitable claims. The judgment of the district court was reversed and the case remanded for further proceedings. View "Allstate Indemnity Co v. Bhagat" on Justia Law

Charles Cui was charged with bribery and related offenses after he attempted to secure the assistance of Edward Burke, a powerful Chicago alderman, in reversing a permit denial by the Chicago Department of Buildings (CDOB) regarding a pole sign at his commercial property. Cui’s financial interests were jeopardized by the permit denial, which threatened both a lucrative lease with Binny’s Beverage Depot and tax increment financing from the City. To influence Burke, Cui offered to retain Burke’s law firm for property tax appeal work, explicitly seeking Burke’s intervention in the CDOB matter.The United States District Court for the Northern District of Illinois, Eastern Division, presided over a six-week trial in which a jury convicted Cui on all counts: bribery under 18 U.S.C. § 666(a)(2), violations of the Travel Act, and making false statements to the government. The district court admitted evidence over Cui’s objections, including a photoshopped photograph sent to the CDOB, and denied Cui’s post-trial motions for acquittal and a new trial. The court sentenced Cui to 32 months’ imprisonment and applied an obstruction-of-justice enhancement for failing to produce key emails in response to a grand jury subpoena.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed Cui’s challenges to the sufficiency of evidence, jury instructions, evidentiary rulings under Federal Rule of Evidence 404(b), and sentencing. The court held that sufficient evidence supported the convictions, that the jury instructions correctly conveyed the law’s requirements—including the quid pro quo element and the definition of “corruptly”—and that the admission of the photoshopped photograph was not an abuse of discretion. The court also found that the sentencing enhancement and the disparity between Cui’s and Burke’s sentences were justified. The Seventh Circuit affirmed the judgment of the district court. View "USA v Cui" on Justia Law

A former elected county prosecutor in Kentucky’s 21st Judicial Circuit was charged with Honest Services Wire Fraud, violations of the Travel Act, and Federal Program Bribery. The charges stemmed from an arrangement with a young woman, M.H., who repeatedly faced legal troubles. Evidence showed that the prosecutor agreed to help her with matters such as getting warrants withdrawn, charges reduced, and release from jail, in exchange for sexual acts and explicit images. The FBI discovered the scheme, leading to federal prosecution. At trial, the government presented incriminating text messages, testimony from M.H., and law enforcement, while the defendant claimed he did not solicit images and that M.H. was assisting in investigations—a claim disproved by evidence.The United States District Court for the Eastern District of Kentucky oversaw the jury trial, which resulted in convictions on all counts. The court sentenced the defendant to 41 months in prison and imposed supervised release conditions, including refraining from excessive alcohol use. On appeal to the United States Court of Appeals for the Sixth Circuit, the defendant challenged the exclusion of certain testimony about Kentucky law, sufficiency of the evidence on several elements, the federal funding nexus for the bribery charge, the supervised release condition, and the sentencing court’s refusal to consider “collateral consequences.”The Sixth Circuit held that the district court did not abuse its discretion or violate constitutional rights in excluding expert legal opinion testimony and that the jury was properly instructed on the meaning of “official acts.” The court found overwhelming evidence supporting the verdict, including proof of a quid pro quo and an interstate nexus. The federal funding requirement was satisfied by evidence that the state received sufficient funds. The supervised release condition and sentencing decisions were not plainly erroneous. The Sixth Circuit affirmed the district court’s judgment in all respects. View "United States v. Goldy" on Justia Law

Christopher Texidor was charged alongside several codefendants for participating in a large-scale drug trafficking organization that conspired to ship nearly 3,000 kilograms of marijuana from California to Pennsylvania using the United States Postal Service. Texidor used his business, Fastlane Auto Sales, LLC, and his residence to facilitate these activities. He recruited various individuals, including family members, to receive shipments and organized GPS tracking for parcels after noticing thefts. When the group determined a postal employee was responsible for stealing their parcels, Texidor and others organized violent acts to intimidate him, including drive-by shootings and theft of the employee’s vehicle containing drugs and a firearm. During searches, law enforcement discovered drugs, tracking devices, firearms, and cash at Texidor’s properties. Texidor was also separately indicted for wire fraud involving false Paycheck Protection Program loan applications, which he committed while on pretrial release.Following a six-day trial in the U.S. District Court for the Middle District of Pennsylvania, a jury convicted Texidor on most drug and firearm counts, but acquitted him of the cocaine charge and a related firearm count. Texidor later pleaded guilty to one count of wire fraud, with other fraud charges dismissed. The District Court considered both cases at sentencing, calculated a Guidelines range of 292–365 months, and imposed concurrent sentences: 292 months for the drug/firearm offenses and 240 months for wire fraud. The District Court struck one reference to cocaine from the Presentence Investigation Report but overruled objections to other references and applied a four-level leadership enhancement.The U.S. Court of Appeals for the Third Circuit affirmed the District Court’s rulings. It held that recent changes to the Sentencing Guidelines do not prevent consideration of acquitted conduct when determining an appropriate sentence outside of Guidelines calculations. The Court found no clear error in applying the leadership enhancement and concluded that the aggregate sentence was substantively reasonable. Further, under the concurrent sentence doctrine, the Court declined to review the substantive reasonableness of the wire fraud sentence. View "USA v. Texidor" on Justia Law

A group of individuals, including the appellant, participated in a scheme involving the use of stolen credit cards and fraudulent memberships at a warehouse store to purchase large quantities of cigarettes. The appellant served as the primary account holder for two business membership accounts and was a secondary member on two others. The scheme resulted in over $2 million in cigarette purchases. Following an 85-count indictment, the appellant was charged with conspiracy to commit credit card fraud, several counts of credit card fraud, and aggravated identity theft. After his codefendants pleaded guilty, the appellant proceeded to trial. During the trial, the government presented testimony from victims whose credit cards were used without authorization. The district court granted the appellant’s motion for acquittal on certain counts due to insufficient evidence, and the jury acquitted him on others, but found him guilty of the remaining charges.The United States District Court for the Northern District of Georgia sentenced the appellant, holding him accountable for the total loss amount charged by all members of the conspiracy using the shared credit cards. This figure was calculated in the presentence report and included losses attributable to the codefendants, except for those counts where the appellant was acquitted. The appellant objected, arguing that he should only be held responsible for transactions he personally conducted, but the district court overruled his objection and imposed restitution matching the total loss amount.On appeal, the United States Court of Appeals for the Eleventh Circuit concluded that the district court committed legal error by failing to make individualized findings regarding the scope of criminal activity undertaken by the appellant, as required under the Sentencing Guidelines. The appellate court vacated the appellant’s sentence and restitution order, remanding for resentencing with instructions to determine the loss amount based on the appellant’s own conduct and correct a clerical error in the judgment. View "USA v. Barry" on Justia Law

Elizabeth Holmes and Ramesh “Sunny” Balwani founded Theranos, a company that claimed its technology could run fast, accurate, and affordable blood tests using just a drop of blood. Holmes served as CEO, and Balwani as President and COO. They raised significant investments by making representations about the capabilities of Theranos’s proprietary devices, financial health, and business relationships. However, investigations revealed that the technology was unreliable, Theranos often relied on third-party devices, and its partnerships and finances were misrepresented to investors. Both Holmes and Balwani were indicted for conspiracy and wire fraud relating to investors and patients; they were tried separately, and each was convicted of multiple counts of fraud.Proceedings were held before the United States District Court for the Northern District of California. Holmes was convicted on four investor-related counts, while Balwani was convicted on all counts, including those related to patients and investors. At sentencing, both were found responsible for losses to multiple victims and given lengthy prison terms. The district court also ordered them to pay $452 million in restitution to fourteen victims, finding that the money invested constituted the lost property.On appeal, the United States Court of Appeals for the Ninth Circuit reviewed and affirmed the convictions, sentences, and restitution order. The panel held that while some testimony by former Theranos employees should have been treated as expert opinion under Rule 702, any error was harmless. The court found no abuse of discretion in admitting a regulatory report, limiting cross-examination, or excluding certain hearsay statements. It rejected arguments of constructive amendment and Napue violations. The panel clarified restitution calculations under the MVRA, holding that the victims’ actual losses equaled their total investments, affirming the district court’s order. View "United States v. Holmes" on Justia Law

Two Massachusetts State Police officers, Lieutenant Daniel Griffin and Sergeant William Robertson, were implicated in a years-long scheme involving fraudulent overtime billing between 2015 and 2017. Both routinely claimed pay for hours they did not work, either by arriving late, leaving early, or “double-dipping” by billing overtime for tasks performed during regular hours. They also encouraged subordinates to engage in the same practices. The overtime funds in question were supplied through federal grants meant to support highway safety initiatives. In addition to the overtime fraud, Griffin separately engaged in wire fraud relating to private school financial aid and tax fraud connected to a private security business.The United States District Court for the District of Massachusetts presided over a jury trial, which resulted in convictions for both defendants on all counts related to wire fraud, theft of federal funds, and conspiracy. Griffin pled guilty to additional charges of wire fraud and tax falsification before trial. Sentences were imposed: Griffin received 60 months’ imprisonment, three years’ supervised release, substantial restitution, and forfeiture; Robertson received 36 months’ imprisonment, three years’ supervised release, joint and several liability for restitution, and forfeiture.Upon appeal to the United States Court of Appeals for the First Circuit, the court reviewed a broad array of challenges. The First Circuit largely affirmed the convictions, sentences, and restitution orders. It found no reversible error in the district court’s handling of the constitutional challenge, sufficiency of the evidence, guidelines calculations, sentencing disparities, and restitution. However, the Circuit Court vacated and remanded the forfeiture order against Griffin, holding that the government failed to prove by a preponderance of the evidence that the full amount of financial aid received was “traceable to” fraud, as required by statute. All other aspects of the district court’s judgment were affirmed. View "United States v. Robertson" on Justia Law

De’Andre Owens was the subject of a controlled drug buy operation in Centralia, Illinois, on March 15, 2022. Law enforcement provided a confidential informant, Charlie Anderson, with money and recording equipment to purchase methamphetamine from Owens. The exchange occurred under police surveillance, but the recording device did not capture the transaction clearly. After the sale, Anderson was followed by Owens, prompting coordinated surveillance by detectives until Anderson safely rejoined them and turned over methamphetamine. While awaiting trial in jail for this offense, Owens attempted to bribe Anderson not to testify, orchestrating a series of calls offering Anderson $10,000 for his silence.In July 2023, Owens was indicted in the United States District Court for the Southern District of Illinois on counts of distributing methamphetamine and witness tampering. At trial, several law enforcement officers and experts testified regarding the procedures used in the controlled buy and the subsequent investigation. The jury found Owens guilty on both counts. The district court sentenced him to 360 months’ imprisonment, classifying him as a career offender based in part on a prior state drug conviction. Owens had initially objected to the career offender enhancement but withdrew that objection at sentencing.Owens appealed to the United States Court of Appeals for the Seventh Circuit, arguing errors related to expert testimony, jury instructions, handling of dual-role witnesses, and the career offender enhancement. The Seventh Circuit held that Owens forfeited or waived each argument. The court found no plain error in the admission of expert testimony, the inclusion of a witness in a jury instruction, or the handling of dual-role testimony, and concluded Owens had waived his objection to the career offender enhancement. The Seventh Circuit affirmed the judgment of the district court. View "USA v Owens" on Justia Law

Two individuals who held leadership positions at a local public housing authority in South Bend, Indiana, orchestrated a scheme in which they collaborated with several contractors to submit false invoices for maintenance work that was never performed. The contractors cashed checks issued by the housing authority for these fictitious services and shared the proceeds with the two employees. This fraudulent activity came to light after a casino employee observed the pair gambling large amounts of cash and reported the suspicious behavior to law enforcement. Following an investigation, both individuals were indicted on multiple counts, including conspiracy to commit wire and bank fraud, several counts of bank fraud, wire fraud, and federal program theft.The United States District Court for the Northern District of Indiana presided over their trial. After the government presented its case, both defendants moved for judgments of acquittal on the wire fraud charges; the court reserved ruling, and the jury ultimately convicted both individuals on the majority of counts, although one was acquitted on a wire fraud count. The district court denied the motions for acquittal, imposed prison sentences, and ordered substantial restitution. The defendants appealed their convictions and sentences.The United States Court of Appeals for the Seventh Circuit reviewed the appeals. It held that the evidence was insufficient to sustain the bank fraud convictions because the government failed to prove that any false statement was made to a bank, as required by 18 U.S.C. § 1344(2), and therefore reversed those convictions. However, the Seventh Circuit affirmed the wire fraud convictions, finding that a rational jury could conclude the fraudulent scheme furthered the transmission of funds via interstate wire. The court also affirmed one defendant’s sentence enhancement for abuse of a position of trust, finding no clear error or harmless error. The case was remanded solely to correct a clerical error in the restitution order. View "United States v. Smith" on Justia Law