Justia White Collar Crime Opinion Summaries

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The Eleventh Circuit affirmed Defendants Goldstein and Bercoon's convictions for charges related to their involvement in a market-manipulation scheme involving shares of MedCareers Group, Inc. (MCGI) and a scheme to defraud investors in Find.com Acquisition, Inc. (Find.com).The court concluded that the magistrate judge did not err in concluding that there was probable cause to support the wiretap affidavit and satisfied the necessity requirement. Furthermore, defendants have not shown that the district court erred in concluding that the wiretap evidence was admissible under the good-faith exception to the exclusionary rule, even assuming there was some deficiency in the necessity or probable cause showing. The court also concluded that, because defendants did not make a substantial preliminary showing that the law enforcement agent deliberately or recklessly omitted material information from his wiretap affidavit, the district court did not abuse its discretion in denying their motions for a Franks hearing; any variance in the indictment did not cause prejudice warranting relief; defendants' claims of prosecutorial misconduct failed; the district court did not err in suppressing Goldstein's statements to an SEC attorney; the district court did not abuse its discretion in denying Goldstein's request for an evidentiary hearing; the district court did not err in imposing joint and several liability; and the court found no basis to dismiss Bercoon's indictment. View "United States v. Goldstein" on Justia Law

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The Second Circuit affirmed Defendants Dean and Adam Skelos' convictions on multiple public corruption charges. Dean was a Republican senator from Nassau County, and was the Majority Leader of the New York State Senate. Defendants, father and son, were convicted in 2015 of conspiracy to commit extortion under color of official right; extortion under color of official right; conspiracy to commit honest services fraud; and solicitation and acceptance of bribes and gratuities. Defendants' convictions stemmed from their involvement in the Glenwood, AbTech, and PRI schemes.In 2016, while defendants' appeal was pending, the Supreme Court decided McDonnell v. United States, which narrowed the definition of the "official act" that a public official must exchange for benefits in order to be convicted of Hobbs Act extortion or honest services fraud, where those crimes have been defined by reference to the term "official act" in the federal bribery statute, 18 U.S.C. 201. In 2018, a second jury convicted defendants on all counts.The court concluded that any error in the jury instructions in the wake of McDonnell were harmless; the language in the indictment was sufficient where the language in an indictment is not required to be as precise as the attendant jury charge, nor is it required to delineate how the government will prove the elements set forth in the indictment; the district court empaneled a fair and impartial jury, and the district court did not abuse its discretion in denying the motion to transfer venue; there is no basis to vacate defendants' conviction under 18 U.S.C. 666 where a special verdict form specified that the jury found each defendant guilty under section 666 on both the gratuity theory and the unchallenged bribery theory; the district court did not abuse its discretion in deciding to quash certain subpoenas and there was no infringement of defendants' Fifth and Sixth Amendment rights in the district court's denial of requests for documents that were irrelevant, inadmissible, obtainable by other means, or part of discovery fishing expeditions; and the district court did not abuse its discretion in denying an evidentiary hearing. Finally, the court rejected Adam's evidentiary challenges and his challenges to the sufficiency of the evidence. View "United States v. Skelos" on Justia Law

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Prior to her arrest in May 2017, Defendant-Appellant Gladys Nkome participated in an international “advance-fee” conspiracy managed by individuals located in the Republic of Cameroon. The Cameroon-based organizers created websites that purportedly sold legal and illegal goods. They convinced prospective online buyers to wire purchase money to fictitious U.S.-based sellers. A U.S.-based individual posing as a seller (a so-called “money mule”) would retrieve the wired money, take a percentage, and send the remainder overseas to the conspiracy’s organizers. The buyers would never receive the items that they sought to purchase. For approximately thirteen months, Ms. Nkome used at least thirty-five (35) fraudulent identities to collect $357,078.74 in wire transfers connected to the conspiracy. Nkome challenged the district court’s denial of a mitigating-role adjustment under United States Sentencing Guideline section 3B1.2. After careful consideration of Ms. Nkome’s arguments, the Tenth Circuit concluded that the district court did not err. View "United States v. Nkome" on Justia Law

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The Eighth Circuit affirmed defendant's conviction and sentence for four counts of mail fraud, three counts of wire fraud, and one count of tax fraud. The court rejected defendant's numerous claims of Napue violations, concluding that the statements at issue were corrected and the allegedly false testimony was stricken from the record. In regard to the remaining Napue claims, the court concluded that the district court did not err in determining that the violations are harmless. The court also rejected defendant's Brady claim, concluding that the district court correctly determined that the government's failure to inform defendant of the reverse proffer did not constitute a Brady violation because the undisclosed evidence, even if favorable to defendant, was not material.The court also concluded that defendant failed to show that the district court committed clear error by concluding that the government did not violate the Jencks Act by failing to disclose an agent's report because the report included no statements made by government witnesses that related to the subject matter of their testimony. The court further concluded that the evidence was sufficient to support defendant's fraud convictions, and defendant is not entitled to a new trial based on the cumulative impact of alleged trial errors. Finally, the court concluded that defendant failed to show the existence of any legal error or clear factual error in the district court's fraud-loss calculation, and imposing an order of restitution equal to the amount of the loss was not erroneous. View "United States v. Ruzicka" on Justia Law

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Attorney Smukler ran political campaigns for 30 years and developed expertise with Federal Election Commission law. In 2012, U.S. Representative Brady ran for reelection in Pennsylvania’s First Congressional District in Philadelphia. Brady's challenger, Moore, struggled to raise money and personally loaned his campaign about $150,000. Brady agreed to give Moore $90,000 to drop out of the race. To steer the money to Moore, Smukler devised a plan that involved a bogus corporation, “dummy invoices,” and funneling cash through a political consulting firm. In the 2014 Democratic Primary for the Thirteenth Congressional District of Pennsylvania, Smukler dipped into the general election reserve on behalf of former U.S. Representative Margolies, then used friends and family as strawmen to evade federal election laws.Smukler was convicted on nine counts of election law violations. He was sentenced to 18 months’ imprisonment, plus fines and assessments. The Third Circuit vacated the convictions on two counts but otherwise affirmed. The court upheld the jury instructions defining the term “willfully,” except with respect to counts that charged Smukler with violating 18 U.S.C. 2 and 1001(a)(1) by causing the false statements of others within the Brady and Margolies campaigns. A proper charge for willfulness in cases brought under those sections in the federal election law context requires the prosecution to prove that defendant knew of the statutory obligations, that he attempted to frustrate those obligations, and that he knew his conduct was unlawful. View "United States v. Smukler" on Justia Law

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In 1999-2016, Wilkinson convinced approximately 30 people to invest $13.5 million in two hedge funds that he created. By 2008, Wilkinson lost the vast majority of their money. Wilkinson told them that the funds’ assets included a $12 million note with an Australian hedge fund, Pengana. The “Pengana Note” did not exist. Wilkinson provided fraudulent K-1 federal income tax forms showing that the investments had interest payments on the Pengana Note. To pay back suspicious investors, Wilkinson solicited about $3 million from new investors using private placement memoranda (PPMs) falsely saying that Wilkinson intended to use their investments “to trade a variety of stock indexes and options, futures, and options on futures on such stock indexes on a variety of national securities and futures exchanges.” In 2016, the Commodity Futures Trading Commission filed a civil enforcement action against Wilkinson, 7 U.S.C. 6p(1).Indicted under 18 U.S.C. 1341, 1343, Wilkinson pleaded guilty to wire fraud, admitting that he sent fraudulent K-1 forms and induced investment of $115,000 using fraudulent PPMs. The court applied a four-level enhancement because the offense “involved … a violation of commodities law and ... the defendant was … a commodity pool operator,” U.S.S.G. 2B1.1(b)(20)(B). Wilkinson argued that he did not qualify as a commodity pool operator because he traded only broad-based indexes like S&P 500 futures, which fit the Commodity Exchange Act’s definition of an “excluded commodity,” “not based … on the value of a narrow group of commodities.” The Seventh Circuit affirmed. Wilkinson’s plea agreement and PSR established that Wilkinson was a commodity pool operator. View "United States v. Wilkinson" on Justia Law

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In 2005-2007, Merchant purchased Michigan hotel properties from NRB and financed the purchases through NRB, using corporate entities as the buyers. Merchant sold interests in those entities to investors. The hotels had been appraised at inflated amounts and sold for about twice their fair values. When the corporate entities defaulted on their loan payments, NRB foreclosed in 2009. Merchant claimed that NRB’s executives colluded with an appraiser to sell overvalued real estate to unsuspecting purchasers, wait for default, foreclose, and then repeat the process.In 2010, an investor sued Merchant, Merchant’s companies, NRB, and 12 others for investor fraud. In 2014 the FDIC took NRB into receivership and substituted for NRB as a defendant. Merchant and his companies brought a cross-complaint, alleging violations of the Racketeer Influenced and Corrupt Organizations Act (RICO) and state laws. A Fifth Amended Cross-Complaint raised 14 counts against 10 defendants, including two law firms that provided NRB’s legal work. The district court dismissed several counts; others remain active.The Seventh Circuit affirmed the dismissal of claims against the law firms. The counts under state law are untimely under Illinois’s statute of repose. The cross-complaint effectively admits that one firm played no role in NRB’s alleged fraud perpetrated against Merchant in 2005-2007. The cross-complaint failed to allege that either law firm conducted or participated in the activities of a RICO enterprise; neither firm could be liable under 18 U.S.C. 1962(c). View "Muskegan Hotels, LLC v. Patel" on Justia Law

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Lucas, a financial advisor, wanted to take over Burke Farm to obtain funding from a New Jersey program that paid property owners for easements to preserve farmland. Lucas submitted a fraudulent application to assume Burke Farm’s mortgage; obtained a $250,000 loan from a client under false pretenses; and forged a signature on the promissory note. The farm was owned by Diamond, LLC. Lucas, his wife, and his father used the proceeds of his fraud to acquire the LLC. Convicted of wire fraud, engaging in an illegal monetary transaction, loan application fraud, making false statements to the IRS, aggravated identity theft, obstructing a grand jury investigation, and falsifying records in a federal investigation, Lucas consented to the criminal forfeiture of Burke Farm in conjunction with his 60-month sentence. The LLC filed an unsuccessful objection, 21 U.S.C. 853(n)(6)(A),The Third Circuit reversed. The LLC acquired Burke Farm over five years before Lucas’s crimes and is a legitimate, separate legal entity from Lucas. The court noted that the government could have sought criminal forfeiture of Lucas’s interest in the LLC and civil forfeiture of his family’s interests. Although illicit proceeds were involved in the family’s acquisition of Diamond, the LLC acquired the farm legitimately years before. The government must turn square corners when it exercises its power to confiscate private property. View "United States v. Lucas" on Justia Law

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The First Circuit affirmed the district court's order granting the government's request to garnish Appellant's husband's 401(k) account and apply the proceeds to his nearly four million dollar criminal restitution obligations, holding that Appellant had no vested legal interest in her husband's account.Appellant's husband (Husband) pleaded guilty to eight counts of wire fraud, money laundering, and unlawful monetary transactions. The district court sentenced him to a term of incarceration and ordered him to pay $3,879,750 in restitution. The government later asked the district court for a writ of garnishment directed at Husband's 401(k) plan, which Husband held individually in his own name. The district court rejected Appellant's objections and issued a garnishment order. The First Circuit affirmed, holding (1) Massachusetts law did not give Appellant a vested legal interest in Husband's 401(k) account; and (2) it was not plain error for the district court to issue the writ of garnishment without compensating Appellant for her contingent death benefit under the policy. View "United States v. Abell" on Justia Law

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Wilmington Trust financed construction projects. Extensions were commonplace. Wilmington’s loan documents reserved its right to “renew or extend (repeatedly and for any length of time) this loan . . . without the consent of or notice to anyone.” Wilmington’s internal policy did not classify all mature loans with unpaid principals as past due if the loans were in the process of renewal and interest payments were current, Following the 2008 "Great Recession," Wilmington excluded some of the loans from those it reported as “past due” to the Securities and Exchange Commission and the Federal Reserve. Wilmington’s executives maintained that, under a reasonable interpretation of the reporting requirements, the exclusion of the loans from the “past due” classification was proper. The district court denied their requests to introduce evidence concerning or instruct the jury about that alternative interpretation. The jury found the reporting constituted “false statements” under 18 U.S.C. 1001 and 15 U.S.C. 78m, and convicted the executives.The Third Circuit reversed in part. To prove falsity beyond a reasonable doubt in this situation, the government must prove either that its interpretation of the reporting requirement is the only objectively reasonable interpretation or that the defendant’s statement was also false under the alternative, objectively reasonable interpretation. The court vacated and remanded the conspiracy and securities fraud convictions, which were charged in the alternative on an independent theory of liability, View "United States v. Harra" on Justia Law