Justia White Collar Crime Opinion Summaries

Two brothers residing in Massachusetts used fake passports to open numerous bank accounts between 2019 and 2020, including accounts in their own names, names of fabricated individuals, and a fictitious company. These accounts were used to deposit funds acquired from romance scams targeting vulnerable victims and unemployment scams involving stolen identities. The brothers exchanged account information with each other and with overseas collaborators, and withdrew funds using debit cards linked to the fraudulent accounts. The FBI investigated after being alerted by victims, ultimately searching the brothers’ residences and storage facilities, where they found fake identification documents and related materials.A grand jury indicted the brothers in 2021 on charges of bank fraud, conspiracy to commit bank fraud, and conspiracy to commit money laundering. After an eight-day jury trial in the United States District Court for the District of Massachusetts, both were convicted on all counts. The district court sentenced Henry to seventy-eight months and Osaretin to seventy-two months of imprisonment, both with two years of supervised release. Restitution was deferred pending a hearing, after which the district court ordered both defendants to pay $615,805.65 in restitution, jointly and severally. The brothers appealed both their convictions and the restitution order.The United States Court of Appeals for the First Circuit reviewed the consolidated appeals, addressing challenges to the sufficiency of the evidence, jury instructions, sentencing enhancements, and restitution orders. The court held that the evidence was sufficient to support the convictions for bank fraud and conspiracy, that the jury instructions were not plainly erroneous or misleading, and that the sentencing enhancement for possession or use of authentication features was appropriate. The court also concluded that the district court had jurisdiction to issue the restitution order and did not err in making the defendants jointly and severally liable. Accordingly, the First Circuit affirmed the convictions and restitution orders. View "US v. Omoruyi" on Justia Law

A company operating as a mortgage lender applied for and received a Paycheck Protection Program (PPP) loan during the COVID-19 pandemic. The company’s PPP loan was later forgiven. A private party, acting as a qui tam relator under the False Claims Act (FCA), alleged that the company and its chief executive officer made several false statements in their loan application and forgiveness process. The key allegations were that the company was ineligible for PPP funds as a financial business primarily engaged in lending, that it misrepresented its use and need for the loan, and that it falsified the number of employees to increase the loan amount. The relator argued that these misrepresentations led the government to approve and forgive the loan improperly.Previously, the United States District Court for the Southern District of California dismissed the relator’s amended complaint. The district court found that the FCA’s public disclosure bar applied, reasoning that the necessary information supporting the ineligibility allegation was already publicly available on a government website, specifically concerning the company’s business classification. The district court also concluded that the relator’s allegations regarding the inflated employee count were speculative. The relator was denied leave to further amend the complaint, on the basis that amendment would be futile.The United States Court of Appeals for the Ninth Circuit reviewed the case and held that the public disclosure bar did not apply because the information on the government website was not “substantially the same” as the relator’s allegations, and the company’s own website did not qualify as “news media” under the statute. The appellate court agreed that the relator’s claim regarding the number of employees was not sufficiently pleaded but found the district court abused its discretion by denying leave to amend. The Ninth Circuit reversed the dismissal and remanded for further proceedings. View "RELATOR, LLC V. ERSKINE" on Justia Law

Stephen Snyder, a veteran Maryland attorney, was charged with attempted extortion and Travel Act violations after threatening to launch a damaging media campaign against a hospital unless it paid him $25 million in a personal consultancy deal. Snyder had represented patients in medical malpractice cases against the hospital and, during negotiations, repeatedly demanded the payment, suggesting it would "bury" incriminating findings about the hospital’s transplant program. Despite declining health and cognitive concerns, Snyder insisted on representing himself at trial, supported by standby counsel.The United States District Court for the District of Maryland held two Faretta hearings, where Snyder’s competency and voluntary waiver of counsel were confirmed. Throughout pretrial and trial, Snyder’s health issues became evident, and the court repeatedly advised against self-representation, but Snyder persisted. During the nine-day trial, the court addressed issues including limiting testimony from a witness bound by a nondisclosure agreement, denying Snyder’s request for a reliance-on-counsel jury instruction, and refusing to voir dire the jury after Snyder’s contempt arrest. The jury convicted Snyder on all counts.The United States Court of Appeals for the Fourth Circuit reviewed the district court’s rulings. It held that Snyder’s concession of competence to stand trial precluded his argument for reversal based on self-representation, reaffirming that a defendant competent to stand trial is competent to waive counsel. The court found no abuse of discretion in the denial of the reliance-on-counsel instruction, the limitation of testimony due to the nondisclosure agreement, or the refusal to voir dire the jury regarding publicity about Snyder’s contempt. The Fourth Circuit affirmed the district court’s judgment in full. View "US v. Snyder" on Justia Law

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