Justia White Collar Crime Opinion Summaries

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Orie, a former state senator, used her government-funded legislative staff to do fundraising and campaigning for her reelection. When the Commonwealth investigated, she tried to hide and destroy documents. Orie's sisters, including a Pennsylvania Supreme Court Justice, were also charged. At trial, Orie introduced exhibits with directives to her chief of staff, not to do political work on legislative time. The prosecution determined that these exhibits had forged signatures. The court found that the forged documents were “a fraud on the Court,” and declared a mistrial. The Secret Service subsequently found that many of the exhibits were forged. During Orie’s second trial, the prosecution's expert testified that Orie’s office lease barred her staff from using that office for anything besides legislative work. Orie unsuccessfully sought to call an expert to testify that the senate rules let staff do political work from legislative offices on comp time. Orie was convicted of theft of services, conspiracy, evidence tampering, forgery, and of using her political position for personal gain, in violation of the Pennsylvania Ethics Act. The Third Circuit affirmed the denial of her federal habeas petition, first finding that it lacked jurisdiction to consider her Ethics Act challenge because she is not in custody for those convictions. The court rejected a double jeopardy argument. The state court reasonably found that a mistrial was manifestly necessary because the forged documents could have tainted the jury’s verdict. Orie did not show that her senate-rules expert’s testimony would have been material, so she had no constitutional right to call that witness. View "Orie v. Secretary Pennsylvania Department of Corrections" on Justia Law

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The Eleventh Circuit vacated defendant's conviction for honest-services fraud through bribery for undertaking an "official act" in his capacity as a police officer. The court remanded for a new trial and held that it could not be sure beyond a reasonable doubt that the jury convicted defendant of the offenses that Congress criminalized when it enacted the honest-services fraud and bribery statutes. In this case, the jury was not instructed with the crucial analogy limiting the definition of "question" or "matter" in this context as comparable in scope to a lawsuit, hearing, or administrative determination, and the government itself did not otherwise do so. The court also affirmed defendant's conviction of computer fraud. View "United States v. Van Buren" on Justia Law

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Defendant appealed the district court's restitution order after she pleaded guilty to numerous criminal charges related to her involvement in a fraudulent tax credit scheme. The Eleventh Circuit set aside the restitution order and held that the refunds issued by the IRS due to the fraudulent tax credit scheme were all for the same exact amount — $1,000 — and the evidence the government submitted in support of its restitution request was admittedly and demonstrably inaccurate. In this case, where the appropriate restitution amount is definite and easy to calculate, the government cannot satisfy its burden of proof by relying on the oft-stated (but not always applicable) principle that restitution can be based on a reasonable estimate of loss. View "United States v. Sheffield" on Justia Law

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Beane, formerly an Air Force electrical engineer, became involved in a conspiracy theory that the government creates for each citizen a "straw man" and that the Federal Reserve holds in trust that citizen’s inherent “unlimited value.” Proponents believe that by filing the correct paperwork, they can use those funds. Beane, deeply in debt, became involved with Tucci-Jarraf, a former attorney who ran a website, contributed to talk shows, and produced faux-legal documents that purported to allow individuals to access their secret accounts. Beane found a Facebook video that purported to teach viewers how to access their accounts; it actually taught them how to commit wire fraud by exploiting a deficiency in the “Automated Clearing House” bank network. With Tucci-Jarraf's support, Beane logged onto his bank’s website, followed those instructions, and made fraudulent payments on his debts and bought $31 million in certificates of deposit with Federal Reserve funds. He started cashing the certificates and spending money. A bank froze his account. Tucci-Jarraf advised Beane to place his new assets in trust; she prepared pseudo-legal documents and made calls. Agents arrested Beane as he was driving off the dealership lot in a new motor home. Officers arrested Tucci-Jarraf in Washington, D.C., where she was requesting a meeting with the President. Beane and Tucci-Jarraf filed multiple frivolous motions and asked to represent themselves. The judge concluded that they had knowingly and intelligently waived their right to counsel but appointed standby counsel. A jury convicted Beane of bank and wire fraud, 18 U.S.C. 1343, and both of conspiracy to commit money laundering, section 1956(h). The Sixth Circuit affirmed, rejecting arguments that the court should have forced them to accept counsel. They knowingly and intelligently made their choice; self-lawyering does not require the individual to subscribe to conventional legal strategies or orthodox behavior. View "United States v. Beane" on Justia Law

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Defendant Karen McClaflin pled guilty to two counts stemming from the operation of a “fix and flip” real estate Ponzi scheme which defrauded investors of more than $14.5 million dollars. At sentencing, the district court calculated the advisory sentencing guidelines at 135 to 168 months’ imprisonment, applied a 6-level enhancement for substantial financial hardship to more than twenty-five victims, and then determined a downward variant sentence of 96 months was appropriate. On appeal, McClaflin argued the district court: (1) abused its discretion by denying her motion for an additional continuance of the sentencing hearing; (2) procedurally erred by imposing the 6-level enhancement based upon victim impact statements; and (3) failed to consider all of the requisite 18 U.S.C. 3553(a) factors. The Tenth Circuit determined the district court did not plainly err when it sentenced McClaflin, therefore it affirmed the judgment and sentence. View "United States v. McClaflin" on Justia Law

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Shortly after defendant was convicted of conspiracy to commit wire fraud and securities fraud, the Second Circuit decided United States v. Litvak, 889 2 F.3d 56 (2d Cir. 2018) (Litvak II), which held in the context of a similar prosecution that the erroneous and idiosyncratic viewpoint of a defendant's counterparty could not be relevant to the objective, "reasonable investor" standard for materiality in a securities fraud prosecution. The district court relied on Litvak II to grant defendant's motion for a new trial on the basis that counterparty testimony had been improperly admitted against defendant at trial. The court held, however, that the counterparty testimony at defendant's trial was not improperly admitted and did not implicate the court's holding in Litvak II. In this case, the testimony did not reflect the counterparty's idiosyncratic and erroneous belief, and the testimony was relevant to the jury's assessment of materiality under FRE 401. Furthermore, the testimony did not advance the government's theory of materiality in an impermissible manner. The court held that, even if the admission of the testimony did constitute error, the error was harmless. Finally, the district court's cumulative prejudice analysis did not provide a valid alternative ground for affirmance. Accordingly, the court reversed and remanded. View "United States v. Gramins" on Justia Law

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Robert Holloway was convicted by jury of four counts of wire fraud, and one count of submitting a false tax return. Holloway was the president and CEO of US Ventures, a company that traded in the futures market. Holloway told investors he had developed a special algorithm that allowed him to trade without losses. He claimed that because of the algorithm he “could trade the markets and make money whether the market went up or the market went down.” Holloway’s grandiose claims were false, and revealed to be a Ponzi scheme. The district court sentenced Holloway to 225 months’ imprisonment, after applying a six-level enhancement for crimes involving 250 or more victims under U.S.S.G. 2B1.1(b)(2)(C) (2014). After unsuccessfully challenging his conviction and sentence on direct appeal, Holloway filed a 28 U.S.C. 2255 motion, arguing: (1) a total breakdown of communication between Holloway and his trial counsel caused his trial counsel to perform ineffectively; (2) his trial counsel acted ineffectively by failing to argue that the evidence did not support the district court’s application of the six-level sentencing enhancement; and (3) the prosecution violated his due process rights by failing to turn over to the defense favorable information possessed by a prosecution witness contrary to Brady v. Maryland, 373 U.S. 83 (1963). The district court denied Holloway’s 2255 motion, but granted a certificate of appealability on all three issues. Finding no reversible error, the Tenth Circuit affirmed the district court judgment. View "United States v. Holloway" on Justia Law

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Segal was convicted in 2004 of racketeering, mail and wire fraud, making false statements, embezzlement, and conspiring to interfere with operations of the IRS. His company, NNIB, was convicted of mail fraud, making false statements, and embezzlement. Segal and his wife, Joy, divorced after his conviction. After Segal served prison time, he was ordered to forfeit $15 million and his interest in NNIB. NNIB was ordered to pay restitution and a fine. The government initially restrained $47 million worth of assets of Segal and NNIB. Joy intervened and settled her claims with the government, which released to her about $7.7 million in restrained assets. Joy relinquished all further claims—save one contingent future interest. Liquidation proceedings continue. Segal and the government agreed on a court-approved settlement that fulfilled Segal’s $15 million personal forfeiture obligation. Segal later sought to rescind or modify that agreement. The district court denied his attempt and denied Joy’s attempt to intervene in the liquidation proceedings because her contingent future interest is not yet ripe. The Seventh Circuit affirmed. The court rejected Michael’s unconscionability argument, noting that he previously won strict enforcement of the settlement agreement, preserving his right to repurchase an interest in the Chicago Bulls. He is judicially estopped from pursuing this challenge. The court also rejected a “windfall” argument and, noting the number of appeals, stated that if there are further proceedings, the parties and their counsel will be subject to Rule 11. View "United States v. Segal" on Justia Law

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The Ninth Circuit affirmed defendant's convictions for health care fraud where the evidence of actual knowledge was overwhelming, and thus the court did not need to determinate whether the district court erred in giving a deliberate ignorance instruction on the knowledge element of health care fraud. Furthermore, the panel rejected defendant's arguments regarding the sufficiency of the illegal remunerations convictions. However, the panel reversed the aggravated identity theft convictions, because defendant did not "use" the patients' identities within the meaning of 18 U.S.C. 1028A. The panel also held that United States v. Osuna-Alvarez, 788 F.3d 1183 (9th Cir. 2015), foreclosed defendant's claim that the "without lawful authority" element of aggravated identity theft was not satisfied because the patients voluntarily provided their information. Finally, the panel held that the district court did not err in applying sentencing enhancements for obstruction of justice and aggravating role in the offense. The panel remanded for resentencing. View "United States v. Hong" on Justia Law

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The Second Circuit affirmed defendant's conviction of wire fraud and conspiracy to commit wire fraud in connection with a foreign currency exchange transaction with Cairn Energy. Defendant was the former global head of the foreign exchange trading desk at the investment bank HSBC. The court held that there was sufficient evidence to convict defendant on the right‐to‐control theory because a reasonable jury could conclude that his misrepresentations to Cairn related to the price of the transaction, which was an essential element of the parties' bargain, and were capable of influencing Cairn's decisionmaking. View "United States v. Johnson" on Justia Law