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After Kuczora lost his finance job in 2007, he styled himself as the managing director of KCS Financial, a phony finance firm he ran from his Elgin, Illinois basement. Kuczora falsely represented to unwary investors that he could help them secure millions of dollars in financing; they paid him large sums of money to cover fees, which Kuczora pocketed for personal use before disappearing. He ultimately pleaded guilty to wire fraud. His Guidelines range was 33-41 months in prison. The district judge, citing the seriousness and sophistication of the offense, the devastation to the victims, and the need to deter similar crime, imposed a sentence of 70 months. Kuczora argued that the judge did not adequately explain the upward variance and failed to give him advance notice of the grounds supporting it. The Seventh Circuit affirmed. The district judge thoroughly explained his reasoning. The Seventh Circuit has never held that a judge must give advance warning of an upward variance. Every defendant is on notice that the court has the discretion to impose a sentence above, below, or within the Guidelines range based on the 18 U.S.C. 3553 factors. The 70-month sentence is not substantively unreasonable and the judge did not exceed his broad discretion in concluding that a heavier penalty was justified here. View "United States v. Kuczora" on Justia Law

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Jared Cowen owned a semi-truck that needed extensive maintenance. To pay the $37,485.65 repair bill, Cowen borrowed $15,000 from his brother and wrote two checks from his company’s bank account, one for $9,327.65 and the other for $13,158.00. Cowen admitted at trial that he knew he did not have sufficient funds to cover the checks when he wrote them, and his bank records corroborated his testimony. Believing it had been paid in full when it received Cowen’s checks, the repair shop released the semi-truck to him. A few days later, it learned that both of Cowen’s checks had failed to clear and that Cowen had issued a stop-payment on them. Cowen was thereafter charged with two counts of fraud by check: one count for each of the checks. He defended against the charges by asserting that he did not intend to defraud the repair shop. The jury convicted Cowen of the charge related to the first check, but acquitted him of the charge related to the second check. As part of Cowen’s sentence, the State requested restitution in the amount of $22,485.65, the total amount of the two checks. Cowen objected to any restitution being imposed for pecuniary losses suffered by the repair shop as a result of the second check because he was acquitted of the charge involving that check. Following a hearing, the trial court granted the State's request, finding that they had proven by a preponderance of the evidence that Cowen had written both checks knowing he had insufficient funds in his company’s account to cover them. The trial court acknowledged Cowen’s acquittal of the charge related to the second check, but explained that it was “absolutely convinced . . . , by far more than a preponderance of the evidence,” that Cowen knew he had failed to secure the financing company’s loan to fund that check. The issue this case presented for the Colorado Supreme Court's review centered on whether Colorado’s restitution statutes authorized a trial court to order a defendant who has been acquitted of a charge to pay restitution for pecuniary losses caused by the conduct that formed the basis of that charge. A division of the court of appeals upheld the restitution order in an unpublished, unanimous decision. The Supreme Court disagreed with the appellate division, however, and reversed. View "Cowen v. Colorado" on Justia Law

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In 2000 Balsiger took the helm of IOS, a large coupon processing companies. IOS contracted with large retail chains and small, independently owned stores to collect and sort coupons redeemed at their stores and to submit invoices for reimbursement either directly to the manufacturer or indirectly to the manufacturer’s agent. For his role in designing and implementing a scheme to defraud those manufacturers, Balsiger was charged with 25 counts of wire fraud and conspiracy both to commit wire fraud and obstruct justice. After a decade of litigation, Balsiger represented himself at a bench trial with the assistance of stand-by counsel. The district court convicted Balsiger on 12 counts and sentenced him to 120 months’ imprisonment. The Seventh Circuit affirmed, rejecting Balsiger’s argument that the court deprived him of his Sixth Amendment right to retain the counsel of his choice by failing to grant an 18-month continuance and by refusing to order the government to remove a lis pendens on his home—a notice to potential buyers that title to the property might be impaired by the outcome of his criminal prosecution. The court upheld the district court’s conclusion, following the death of Balsiger’s attorney, that Balsiger waived his right to counsel and its decision to require him, over his objection, to proceed pro se. View "United States v. Balsiger" on Justia Law

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The Fifth Circuit affirmed the district court's grant of the SEC's motion for summary judgment, holding that defendant offered securities and committed securities fraud in violation of the Securities and Exchange Act. The court held that interests in defendant's drilling projects qualified as securities. In this case, the district court correctly concluded that defendant's drilling projects distributed power as if they were limited partnerships where the SEC provided unrebutted evidence showing that investors could not use their legal powers. The court also held that the district court correctly found that defendant made material misstatements to investors when he knowingly misrepresented his relationships with major oil companies. View "SEC v. Sethi" on Justia Law

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Defendant, a professional sports gambler, appealed his conviction of securities fraud and related crimes. The Second Circuit held that, although it was undisputed that a special agent's leaks to reporters violated the grand jury secrecy provision of Federal Rule of Criminal Procedure 6(e), dismissal of the indictment was not appropriate in these circumstances where defendant failed to demonstrate prejudice by the agent's actions. Furthermore, the court noted that there was no due process violation where the violations were not so systematic and pervasive as to raise a substantial and serious question about the fundamental fairness of the process resulting in the indictment, nor were they so outrageous that they violated common notions of fairness and decency. The court also held that the district court did not clearly err in its factual determinations or abuse its discretion in denying the Rule 33 motion, and the evidence was insufficient to support defendant's counts of conviction related to Darden. Finally, the court vacated and remanded the restitution order, and affirmed the forfeiture order. View "United States v. Walters" on Justia Law

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The Eighth Circuit affirmed defendant's conviction for seven counts of aggravated identity theft stemming from his involvement in preparing personal income tax returns for his clients that obtained inflated refunds by falsely claiming dependents. The court held that the district court did not err in interpreting the term "uses, without lawful authority" under 18 U.S.C. 1028A(a)(1) where defendant knowingly used the names and social security numbers of falsely claimed dependents, including his own children, in committing wire fraud, and whether the minors "consented" to the use was irrelevant. Therefore, the district court did not err by denying defendant's motion for acquittal. The district court also did not abuse its discretion by rejecting a jury instruction incorporating defendant's interpretation of the statute. View "United States v. Gatwas" on Justia Law

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From 2008-2016, Brennan and Dyer (Defendants) operated Broad Street, to incorporate Tennessee corporations (Scenic City). They claimed that once Scenic City was appropriately capitalized, Defendants would register its common stock with the SEC using Form 10, would publicly trade Scenic City, and would acquire small businesses as a legal reverse merger. Investors sent money by mail and electronic wire from other states. Defendants moved the funds through Broad Street’s bank accounts, diverting significant funds to their personal bank accounts. They issued stock certificates and mailed them to investors, but never filed Form 10 nor completed any reverse mergers. Investors lost $4,942,070.18. Defendants reported the embezzled funds as long-term capital gains, substantially reducing their personal tax liability and treated payments to themselves from Broad Street as nontaxable distributions. For 2010-2014, Dyer owed an additional $312,799 in taxes; Brennan owed $164,542. The SEC began a civil enforcement suit under 15 U.S.C. 77(q)(a)(1), 77(q)(a)(2), 77(q)(a)(3), and 78j(b), and Rule 10b-5. Defendants pleaded guilty to conspiracy to commit mail and wire fraud, 18 U.S.C. 371, 1341 and tax evasion, 26 U.S.C 7201. The court sentenced them to prison, ordered restitution ($4,942,070.18), and ordered payments for their tax evasion. The SEC sought and the court entered a disgorgement order to be offset by the restitution ordered in the criminal case. The Sixth Circuit affirmed, rejecting an argument that the disgorgement violates the Double Jeopardy Clause under the Supreme Court’s 2017 “Kokesh” holding that disgorgement, in SEC enforcement proceedings, "operates as a penalty under [28 U.S.C.] 2462.” SEC civil disgorgement is not a criminal punishment. View "United States v. Dyer" on Justia Law

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McClure-Potts contacted police about Samarin, who entered the U.S. without inspection from Ukraine. McClure-Potts claimed she was trying to adopt Samarin, who was 19 years old and that Samarin had been “speaking of Hitler against the Jews” and might have stolen a rifle. McClure-Potts provided a birth certificate indicating that Samarin was born in 1992. Police discovered that McClure-Potts had previously filed runaway reports regarding a minor son (Asher) apparently born in 1997; Samarin was posing as Asher and attending high school. The school provided a sworn statement from McClure-Potts that Samarin was born in 1997, with applications for free/reduced lunch and health benefits. Samarin claimed that he had moved in with McClure-Potts, then was told to cut ties with his family and surrender his money and his identification documents. He was forced to do household work. McClure-Potts obtained a Social Security card for "Asher," and used it to procure $7,336 in income tax credits and $13,653.28 in nutritional and health benefits. McClure-Potts was charged with Social Security Fraud, 42 U.S.C. 408(a)(6); Harboring an Illegal Alien, 8 U.S.C. 1324(a)(1)(A)(iii), (a)(2); and Unlawful Conduct Respecting Documents in Furtherance of Forced Labor, 18 U.S.C. 1589, 1590. McClure-Potts pled guilty to the Social Security Fraud and Harboring counts. Based on the amount of loss ($20,989.28) and the court’s refusal to grant an offense level reduction due to the claim that her fraud was committed “other than for profit," she was sentenced to five months. The Third Circuit affirmed. The benefits that McClure-Potts sought and received were “payment” for her harboring Samarin. View "United States v. McClure-Potts" on Justia Law

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Defendants Walter and Steven Reed appealed their convictions for conspiracy to commit wire fraud and money laundering, as well as the substantive counts of wire fraud and money laundering. Walter was also convicted of additional counts. The charges stemmed from defendants' use of Walter's District Attorney campaign funds. The Fifth Circuit vacated the district court's imposition of joint and several liability for money forfeiture in light of the Supreme Court's decision in Honeycutt v. United States, which held that joint and several forfeiture liability was not permitted for forfeiture under 21 U.S.C. 853(a)(1), which mandates forfeiture for certain drug crimes. In this case, the government conceded that the imposition of joint and several forfeiture liability should be vacated and remanded in light of Honeycutt. The court otherwise affirmed the district court's judgment. View "United States v. Reed" on Justia Law

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The Second Circuit vacated defendant's conviction of charges related to his involvement in an insider trading scheme where he provided material, nonpublic information to his father. At issue was the so-called "silver platter statement," where defendant purportedly told his father that he expected his father to invest based upon information to which defendant had access through his work as an investment banker. The court held that excluding the father's post-arrest FBI interview was not harmless. In this case, defendant should not have been precluded from impeaching the silver platter statement. The court held that, because the impeachment material might have undermined the silver platter statement in the eyes of the jury, it risked leaving the government with a substantially weaker case as to defendant's intent such that a guilty verdict would be far from assured. View "United States v. Stewart" on Justia Law