Justia White Collar Crime Opinion Summaries

The defendant was charged with several financial crimes, including identity theft, forgery, and grand theft, after opening bank accounts under false pretenses and misappropriating funds that belonged to a local American Legion post. Investigations revealed that he had intercepted a donation check intended for the organization, requested a replacement, and deposited it into an account under his control, among other acts involving fraudulent documents and unauthorized transfers of large sums. The defendant was not a member of the organization but had access to its mail and financial information through his business, which operated in the same building.The Superior Court of Los Angeles County reviewed the defendant’s motion for pretrial mental health diversion under Penal Code section 1001.36. He presented a psychologist’s report diagnosing him with persistent depressive disorder with anxious distress, arguing that his mental condition was a significant factor in the commission of the offenses. The People opposed the motion, contending that his mental disorder did not contribute to his crimes, citing the sophistication and planning involved. The trial court found that, although the defendant had a qualifying mental disorder and was not a public safety risk, the evidence rebutted the statutory presumption that the mental disorder was a significant factor in the offenses, primarily because the expert report did not explain how his symptoms contributed to the criminal conduct and the court found the crimes inconsistent with those symptoms. The trial court denied the motion, and the defendant subsequently pled no contest to grand theft.On appeal, the California Court of Appeal, Second Appellate District, Division Four, considered whether the trial court properly denied the motion for mental health diversion. The appellate court held that the trial court did not abuse its discretion, properly applied the statutory presumption, and its finding that the presumption was rebutted by clear and convincing evidence was supported by substantial evidence. The judgment was affirmed. View "People v. Sacco" on Justia Law

Two business owners in Washington, D.C. sought to reduce their businesses’ tax liabilities by hiring an intermediary who, in turn, paid cash bribes to a supervisor in the D.C. Office of Tax and Revenue. The supervisor used his access to the agency’s tax system to reduce the businesses’ tax obligations without legitimate justification, sometimes using colleagues’ credentials and creating false documents to conceal the scheme. The intermediary relayed proof of these illicit adjustments to his clients, who paid him and the supervisor a share of the savings. The scheme resulted in a loss of approximately $2.3 million to the District of Columbia.After an audit uncovered suspicious tax reductions without proper documentation, authorities traced the scheme to the supervisor, the intermediary, and the clients. Two of the intermediary’s clients pleaded guilty and cooperated with the government. The United States District Court for the District of Columbia tried the case against the intermediary and one client. The jury convicted both defendants of conspiracy, bribery, and wire fraud, while acquitting one defendant on some wire fraud counts. The district court imposed sentences of 110 months and 30 months, respectively.On appeal to the United States Court of Appeals for the District of Columbia Circuit, the defendants challenged the sufficiency of the evidence, the bribery jury instructions, one defendant’s claim of ineffective assistance of counsel regarding sentencing, and an alleged sentencing penalty for going to trial. The appellate court held that the evidence was sufficient to support the convictions, the error in the bribery jury instruction was harmless because the evidence demonstrated a quid pro quo for specific official acts, there was no prejudice from counsel’s failure to challenge sentencing policy, and there was no unconstitutional penalty for exercising the right to trial. The court affirmed the district court’s judgments. View "USA v. De Moya" on Justia Law

Federal authorities were investigating an individual suspected of orchestrating transnational cyber fraud and money laundering schemes originating in Nigeria and targeting U.S. nationals. Information from two sources, including a co-conspirator, implicated him as a leader of fraudulent operations. Investigators gathered corroborating evidence, such as suspicious messages, unusually high activity on messaging apps, and bank records showing millions in transactions with no apparent legitimate source. When authorities learned he would return to the U.S. from Nigeria, they requested a manual search of his electronic devices upon arrival at Atlanta’s international airport. Customs officers searched his phones, found evidence of criminal activity, and subsequently seized the devices for forensic imaging. Two days later, law enforcement obtained search warrants for the phones and their extracted data.The United States District Court for the Northern District of Illinois, Eastern Division, reviewed the defendant’s motion to suppress evidence from the warrantless border search of his cell phones, which he argued violated his Fourth Amendment rights. After an evidentiary hearing, the district court found law enforcement witnesses credible and denied the motion, concluding that the manual search at the border was justified under the border search doctrine. The defendant then entered a conditional guilty plea to wire fraud, preserving his right to appeal the suppression ruling.The United States Court of Appeals for the Seventh Circuit reviewed the district court’s denial de novo. The court reaffirmed that routine, manual searches of electronic devices at the border do not require a warrant or individualized suspicion under circuit precedent, specifically United States v. Mendez, and Supreme Court precedent. The court held that the search was routine, reasonable, and justified by the border search exception. Even if a Fourth Amendment violation occurred, the good-faith exception would preclude suppression. The judgment of the district court was affirmed. View "USA v Eta" on Justia Law

Three individuals participated over the course of a year in a complex money laundering operation involving Target gift cards. These cards were obtained through telephone scams, with victims deceived into purchasing the cards and providing the card numbers and access codes to overseas scammers. The defendants received these codes through encrypted messaging, then employed “runners” to quickly use the cards at Target stores—often buying high-value electronics or transferring balances to new gift cards. The merchandise was resold, and most of the proceeds were sent back to the scam’s organizers in China after taking a cut for themselves. One defendant continued to participate in the conspiracy even after being arrested and released on bond.The United States District Court for the Central District of California presided over their trial. A jury convicted all three of conspiracy to commit money laundering, with one also convicted for continuing the conspiracy while on pretrial release. At sentencing, the district court adopted the presentence reports, calculated the offense levels based on the scope and nature of their conduct, and applied several enhancements, including those for the amount laundered, sophisticated laundering, aggravated roles, and for being in the business of laundering funds. The court sentenced the defendants to terms below the calculated Guidelines range, but above the mandatory minimums.The United States Court of Appeals for the Ninth Circuit reviewed the case. The court affirmed the district court’s calculation of the loss amount and its application of aggravated and minor role adjustments. However, the appellate court held that the district court erred in applying a two-level enhancement for sophisticated laundering; under the Sentencing Guidelines, this enhancement can only be imposed if a different, specific enhancement was also applied, which did not occur here. The sentences were therefore vacated in part and remanded for limited resentencing to correct the guideline computation. View "USA v. SHI" on Justia Law

Babajide Adefusi entered a plea agreement with the United States Attorney’s Office for the Southern District of Texas in 2018, pleading guilty to aiding and abetting passport fraud. The scheme involved using counterfeit passports with Adefusi’s photo and false identity information to open bank accounts, into which funds from internet scam victims were wired. The total loss from the passport fraud scheme was approximately $2.2 million. The plea agreement included a promise by the “United States” not to pursue additional charges arising out of the scheme alleged in the charging document. The agreement, however, specified that it bound only the U.S. Attorney’s Office for the Southern District of Texas and not any other U.S. Attorney.After completing his sentence, Adefusi was indicted by a federal grand jury in the Central District of Illinois in 2023 for conspiring to commit wire fraud related to a scheme defrauding E-MedRx, a pharmacy billing company. Adefusi moved to dismiss the indictment, arguing that the earlier plea agreement barred the Central District of Illinois from prosecuting him due to factual overlap between the two schemes. The United States District Court for the Central District of Illinois denied the motion, finding the plea agreement unambiguously bound only the Southern District of Texas office.The United States Court of Appeals for the Seventh Circuit reviewed the district court’s denial of Adefusi’s motion to dismiss. Applying principles of contract interpretation to the plea agreement, the Seventh Circuit held that the agreement unambiguously bound only the U.S. Attorney’s Office for the Southern District of Texas and not other U.S. Attorney’s Offices. Thus, the Central District of Illinois was not barred from prosecuting Adefusi for wire fraud conspiracy. The Seventh Circuit affirmed the district court’s decision. View "USA v. Adefusi" on Justia Law

A contractor for the City of Moline, Illinois, discovered in early 2021 that city payments totaling over $420,000 had been diverted to a fraudulent bank account at Washington Federal Bank. That account belonged to Luisito Espanola, who had opened it under the name GS International, LLC, which he controlled. Investigators found that Espanola quickly moved the stolen funds by depositing checks to a Citibank account, purchasing cryptocurrency, and sending money to other entities. Digital evidence, including WhatsApp messages between Espanola and a co-conspirator, detailed their planning and execution of the fraud.The United States District Court for the Central District of Illinois tried Espanola on two counts of wire fraud and two counts of money laundering. During discovery, Espanola produced a WhatsApp chat log as a defense exhibit; the government then moved to admit the chat log in its case-in-chief. The district court admitted the messages, relying on their distinctive characteristics and Espanola’s production of them under Rule 16(b)(1)(A). The jury convicted Espanola on all counts, and the district court sentenced him to 32 months in prison.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed whether the district court’s reliance on Espanola’s production of the messages as a basis for authentication under Federal Rule of Evidence 901(b)(4) violated his right to testify. The court held that it did not, as the admission of government evidence does not infringe upon the defendant’s right to testify, which is implicated only by the exclusion of defense evidence. The Seventh Circuit further held that, regardless of circumstances of discovery, the WhatsApp messages were authenticated by their content and corroborating records. The court affirmed the district court’s judgment. View "USA v. Espanola" on Justia Law

A former spouse filed a petition for contempt in Cobb County Superior Court, alleging that his ex-wife was behind on child support payments. He also submitted notices to the Georgia Department of Human Services claiming arrears. At a hearing, he admitted uncertainty about the arrears, attributing his calculations to his fiancée. The Cobb County court found his contempt petition frivolous, awarded attorney fees to the ex-wife, and determined the filings were intended to harass and intimidate her. Using this order, the ex-wife then filed a complaint in Paulding County Superior Court against her former spouse and his fiancée, alleging they conspired to file false documents and committed violations under the Georgia RICO Act and other statutes.The Paulding County Superior Court granted the defendants’ motion to dismiss, finding that there was no evidence they knowingly and willfully filed false documents, as required for the predicate acts under the RICO claim. The trial court concluded that the defendants believed their filings were accurate, and therefore, the RICO action failed. The court also stated that the RICO Act was not intended for civil matters of this nature. The ex-wife appealed, and the Court of Appeals affirmed, holding that it would be unreasonable to extend the Georgia RICO Act to “garden-variety domestic disputes.”The Supreme Court of Georgia reviewed the case and found that the Georgia RICO Act does not categorically exclude racketeering activity arising from domestic disputes. The Court held that the Act’s plain language applies broadly to “any person” who commits enumerated crimes, regardless of context, and the Act should not be limited by judicial interpretation to exclude domestic disputes. The Court vacated the Court of Appeals’ opinion and remanded the case for further consideration of the remaining arguments regarding the dismissal. View "WARNER v. ESPITIA" on Justia Law

Hunter was charged with ten counts of bank and wire fraud, involving a scheme that cost financial institutions approximately $500,000. He entered a written plea agreement with the government, pleading guilty to one count of aiding and abetting wire fraud. In exchange, the government dismissed the other nine charges and agreed not to prosecute Hunter for related conduct in the future. The plea agreement contained an appeal waiver, barring him from appealing his conviction and sentence, except for claims of ineffective assistance of counsel. The agreement stipulated that any modification must be in writing and signed by all parties. At sentencing, the District Court imposed 51 months’ imprisonment and three years of supervised release, including a requirement that Hunter participate in a mental-health treatment program and take any prescribed medications. Hunter objected to the medication condition, but the District Court stated he could address any disputes with the probation officer or the court. At the conclusion of sentencing, the court erroneously informed Hunter that he had a right to appeal, without objection from either party.Hunter appealed, challenging the mandatory-medication condition as violating his fundamental due process rights. The government moved to dismiss the appeal based on the plea agreement’s waiver. Hunter conceded he had knowingly and voluntarily signed the waiver, but argued it was unenforceable because the sentence allegedly infringed on a fundamental constitutional right and that the District Court’s statement at sentencing, coupled with the prosecutor’s silence, voided the waiver. The United States Court of Appeals for the Fifth Circuit dismissed the appeal, holding that the District Court’s misstatement did not invalidate the waiver and that Fifth Circuit precedent permitted appeals despite a waiver only in cases of ineffective assistance of counsel or sentences exceeding the statutory maximum.The Supreme Court of the United States held that an appeal waiver is unenforceable when its enforcement would result in a miscarriage of justice—specifically, when it would leave in place an egregious error undermining the judicial system’s integrity. The Court vacated the Fifth Circuit’s judgment and remanded the case for consideration under this miscarriage-of-justice standard. View "Hunter v. United States" on Justia Law

Three physicians—Evann Herrell, Mark Grenkoski, and Keri McFarlane—worked at Express Health Care, a clinic claiming to treat opioid addiction but operating as a pill mill. The clinic prescribed controlled substances in high volumes for cash, disregarding legitimate medical standards. Doctors spent minimal time with patients, ignored signs of diversion, and falsified records. EHC also submitted fraudulent Medicare claims by ordering unnecessary drug tests. McFarlane eventually cooperated with the FBI. Herrell, Grenkoski, and McFarlane were among the few who went to trial after most other clinic staff pleaded guilty.The United States District Court for the Eastern District of Kentucky conducted a 30-day jury trial, resulting in convictions for conspiracy to distribute controlled substances, falsifying medical records, wire and health care fraud, and money laundering. The defendants filed post-trial motions for acquittal and new trials, which the district court denied. Each defendant was sentenced to prison and filed timely appeals, raising challenges related to sufficiency of the evidence, evidentiary rulings, jury instructions, trial severance, and sentencing.The United States Court of Appeals for the Sixth Circuit reviewed the case. Applying the appropriate standards of review—including abuse of discretion for evidentiary and severance decisions and de novo review for legal questions—the court found sufficient evidence to support all convictions. It held the challenged evidentiary rulings were either correct or harmless. The jury instructions appropriately conveyed the required mens rea under Supreme Court precedent. The court determined that denial of severance for McFarlane was not an abuse of discretion and that cumulative error did not warrant reversal. Grenkoski’s challenge to sentencing correction was rejected due to jurisdictional limits. The Sixth Circuit affirmed all convictions and sentences. View "United States v. Herrell" on Justia Law

The defendant was convicted in 2014 of multiple counts of fraud and sentenced to nearly 24 years in prison and ordered to pay approximately $3.8 million in restitution. Years later, the government sought to enforce the restitution order by pursuing a writ of garnishment against funds expected from a September 11th Victims Compensation Fund award, which were to be received by a law firm on the defendant’s behalf. After being notified of the garnishment, the defendant, acting pro se, objected and requested, among other things, that proceedings be transferred to the federal district where he resided, as provided for under the Federal Debt Collection Procedures Act.The United States District Court for the Eastern District of New York denied his objections, including the transfer request. The court held that the September 11th funds were not exempt from garnishment, that the defendant was not entitled to a hearing since his objections were meritless, and that transfer of venue was not mandatory but discretionary. The district court relied on its interpretation of the statute and on prior case law, concluding it retained authority to deny transfer requests for good cause.The United States Court of Appeals for the Second Circuit reviewed the case. It held that the statutory language of the Federal Debt Collection Procedures Act makes transfer of a garnishment proceeding mandatory when timely requested by the debtor. The court found that the district court erred by treating transfer as discretionary, and further held that failure to transfer is not subject to harmless error review. Accordingly, the Second Circuit vacated the district court’s judgment and remanded the case for the district court to consider a renewed motion to transfer the proceedings to the district in which the defendant currently resides. View "United States v. Liounis" on Justia Law