Justia White Collar Crime Opinion Summaries

A former member of the Los Angeles County Board of Supervisors was convicted for conspiracy, federal program bribery, and honest services mail and wire fraud. The case centered on a scheme where the then-Dean of the University of Southern California’s School of Social Work helped channel a $100,000 donation of university funds to a nonprofit employing the supervisor’s son. In exchange, the supervisor voted in favor of a county contract for telehealth services with USC. The evidence showed the supervisor valued the indirect transfer of funds for his son’s benefit, especially after previous attempts to provide direct funding raised concerns about nepotism.The United States District Court for the Central District of California presided over a sixteen-day trial. The jury convicted the supervisor on counts specifically related to the funneling of the $100,000 payment, while acquitting him on other counts tied to his son’s admission, scholarship, or professorship at USC. Following conviction, the supervisor appealed, challenging the Government’s theory of fraud and bribery, the legal validity of the “thing of value,” and the sufficiency of evidence for materiality and intent. He also contested the jury instructions and raised Batson challenges regarding the exclusion of Black female jurors.The United States Court of Appeals for the Ninth Circuit reviewed the appeal. The court held that the funneling of $100,000 through USC for the son’s benefit was a “thing of value” sufficient to support convictions for honest services fraud and federal program bribery. The court found the evidence of intent and materiality sufficient, determined there was no error in the jury instructions, and rejected the extension of Batson to intersectional challenges. The convictions for conspiracy, federal program bribery, and honest services fraud were affirmed. View "USA V. RIDLEY-THOMAS" on Justia Law

Dallas William Rice was charged with two class A felonies relating to theft of property valued over $50,000. He was initially released on an unsecured appearance bond. Rice and the State negotiated a plea agreement under North Dakota Rule of Criminal Procedure 11(c)(1)(C), which provides for a binding sentence, and Rice entered a guilty plea to conspiracy to commit theft. However, the district court rejected the proposed plea agreement without clarifying whether it was accepted, and immediately exonerated Rice’s bond, ordering him held in custody pending further proceedings. The court did not follow the required procedures for rejecting a binding plea agreement, nor did it provide Rice with the opportunity to withdraw his plea, as mandated by Rule 11.Prior to this, a request was made to the Supreme Court of North Dakota to reassign Rice’s case to a judge outside the North Central Judicial District to avoid an appearance of impropriety, which was denied. After the district court’s actions regarding the plea and bond, Rice petitioned the Supreme Court of North Dakota for a supervisory writ to reinstate his bond and to reassign his case to a judge from outside the district.The Supreme Court of North Dakota found that the district court erred in exonerating Rice’s bond and ordering him held without properly accepting the guilty plea or providing the required advisements under Rule 11(c)(5). The court held that the district court must promptly determine Rice’s release conditions in accordance with the state constitution and Rule 46. However, the Supreme Court denied Rice’s request for reassignment to an out-of-district judge, concluding that Rice had not shown actual bias or filed a proper motion for disqualification in the district court. The petition for supervisory writ was therefore granted in part and denied in part. View "Rice v. Lee" on Justia Law

The defendant was charged in connection with a large-scale health care fraud scheme involving Arbor Homecare Services LLC, a company she controlled. Over several years, Arbor fraudulently billed Massachusetts’ Medicaid program, MassHealth, for more than $99 million. The government alleged that the defendant orchestrated the scheme, laundered proceeds through domestic and Kenyan financial accounts, and used the funds to acquire properties and businesses. After an initial mistrial, the defendant was retried and convicted by a jury on charges of conspiracy to commit health care fraud, health care fraud, and money laundering. She was sentenced to 144 months in prison, fined $250,000, and ordered to pay restitution.Prior to the retrial, the defendant cycled through numerous attorneys, at times expressing a desire to proceed without counsel and at other times seeking to hire new counsel if her assets were released from civil forfeiture. The United States District Court for the District of Massachusetts conducted multiple Faretta colloquies, warning her of the risks of self-representation. Ultimately, the court found her waiver of counsel to be knowing, intelligent, and voluntary, and permitted her to proceed pro se with standby counsel. The court also denied her motion to suppress evidence obtained from her cell phone during a border search, finding the search supported by reasonable suspicion.On appeal to the United States Court of Appeals for the First Circuit, the defendant argued that her conviction should be reversed due to alleged violations of her right to counsel and due process, and that the cell phone evidence should have been suppressed. She also challenged the calculation of her sentence, disputing the loss amount and the application of a sophisticated-means enhancement. The First Circuit affirmed the district court’s decisions, holding that her waiver of counsel was constitutionally valid, her suppression argument was waived, and her sentencing challenges were either waived or without merit. View "US v. Newton" on Justia Law

Two individuals operated a funeral home and nonprofit organization in Colorado, offering low-cost cremation services to families and marketing body donation for medical research. Over several years, they fraudulently obtained, sold, and shipped bodies and body parts without proper consent, often misrepresenting services and forging documents. They targeted particularly vulnerable victims, including those experiencing financial hardship or dealing with terminal illness and hospice care. Many families were misled, charged for services never rendered, and provided false cremains, while the defendants profited from unauthorized sales.After indictment, both defendants pleaded guilty to mail fraud charges involving the shipment of remains; other counts were dismissed pursuant to plea agreements. Their initial Presentence Investigation Reports recommended sentencing enhancements for targeting vulnerable victims and substantial upward variances. The United States District Court for the District of Colorado imposed significant sentences—240 months for one defendant and 180 months for the other—after finding the offenses involved a large number of vulnerable victims. On appeal, the United States Court of Appeals for the Tenth Circuit vacated the sentences, holding the district court had not made sufficient particularized findings of vulnerability as required under U.S.S.G. § 3A1.1(b)(2).On remand, the district court received new evidence and identified twenty-one specific victims whose vulnerabilities were directly exploited by the defendants, including those with financial hardship and families referred by hospice. The court found a sufficient nexus between each victim’s vulnerability and the fraud, applied the two-level enhancement for offenses involving a large number of vulnerable victims, and resentenced the defendants to the same terms as before. The Tenth Circuit affirmed, holding that the district court correctly applied the enhancement, rejected arguments relating to post-sentencing rehabilitative efforts and substantive reasonableness, and upheld both sentences. View "United States v. Hess" on Justia Law

Two individuals participated in a criminal conspiracy to manufacture and distribute counterfeit pills resembling the anti-anxiety medication Xanax. Over several years, they helped produce and sell millions of these fake pills—made to appear as legitimate generic Xanax—on the dark web and through other illegal channels. Both individuals pleaded guilty to conspiracy and substantive counterfeiting charges. One of them was sentenced to 80 months in prison and agreed to a forfeiture judgment of nearly $7 million, while the other received a 45-month sentence.Prior to the present appeal, a co-conspirator was sentenced by the United States District Court for the Eastern District of Kentucky to 90 months’ imprisonment. That sentence was affirmed by the United States Court of Appeals for the Sixth Circuit in United States v. Wala, which addressed the calculation of “loss” under the Sentencing Guidelines and the application of enhancements for risk to human life. Subsequently, both appellants were sentenced using pre-2024 versions of the Sentencing Guidelines, as stipulated in their plea agreements, and neither objected to this approach at sentencing. Both defendants then appealed their sentences, challenging aspects of the loss calculation, sentencing enhancements, and, in one case, the forfeiture order.The United States Court of Appeals for the Sixth Circuit reviewed the appeals and affirmed the district court’s judgments. The court held that both appellants had waived any argument for applying the 2024 Guidelines by affirmatively agreeing to use earlier versions. The calculation of “loss” and the application of sentencing enhancements were upheld based on binding circuit precedent and the facts found by the district court. The court also determined that the appellant who challenged the forfeiture order had knowingly and voluntarily waived any right to contest it, rendering the challenge unreviewable. The court found no error in the lower court’s rejection of a downward variance based on one defendant’s immigration status. View "United States v. Basalyga" on Justia Law

A chiropractor who owned and operated a clinic in Louisiana was found to have carried out a scheme to defraud a private health insurer over three and a half years. The fraudulent scheme involved submitting reimbursement claims for services that were either not rendered as described, not medically necessary, or not performed or supervised by a licensed provider as required. Testimony from employees revealed that the owner pressured staff to fabricate treatment notes, and that many records showed signs of copying and pasting with little differentiation between patients. Some employees and patients testified that certain billed services were not actually provided, while massage therapists stated they performed generic massages rather than medically necessary treatments.A jury in the United States District Court for the Eastern District of Louisiana convicted the clinic owner of six counts of health care fraud and one count of wire fraud, but acquitted him of making a false statement to federal agents. At sentencing, the district court accepted that the intended loss equaled the actual payments made by the insurer, but declined to exclude payments for claims the defendant asserted were legitimate, finding the fraud so pervasive that it was not feasible to separate legitimate from fraudulent claims. The court sentenced the defendant to 84 months in prison, below the calculated guideline range, and explained that the loss calculation was based on the evidence of a widespread fraudulent scheme.The United States Court of Appeals for the Fifth Circuit reviewed only the district court’s finding that the fraud was pervasive. Applying clear error review, the Fifth Circuit held that the district court’s finding was at least plausible given the trial evidence and affirmed the sentence. The holding is that, where fraud is pervasive and separating legitimate from fraudulent claims is not reasonably practicable, the district court may treat all claims as fraudulent for loss calculation purposes. View "USA v. Tekippe" on Justia Law

James Albert Trankle created two entities, including “Good Charity Church Inc.” and “Restaurant Buyers Club Society,” and collected over $200,000 through mail solicitations using trade names similar to those of legitimate charities. The solicitations often misled donors about the true nature of the organizations and the use of donated funds, which were largely spent on personal expenses by Trankle and his associate, Stephen Sibert. Unlike the legitimate “Good Charity Inc.,” which was a registered 501(c)(3) organization, Trankle’s entities were not bona fide charities and did not properly use or report donations.A federal grand jury in the United States District Court for the District of Columbia indicted Trankle on ten counts, including conspiracy to commit mail and bank fraud, bank fraud, and aggravated identity theft. Prior to trial, several counts of aggravated identity theft were dismissed. At trial, the jury convicted Trankle on six counts: conspiracy to commit mail and bank fraud and five counts of bank fraud. Trankle’s post-trial motions for judgment of acquittal or a new trial were denied. The court then sentenced him to 60 months imprisonment and ordered forfeiture and restitution based on the proceeds of his fraudulent scheme.The United States Court of Appeals for the District of Columbia Circuit reviewed Trankle’s appeals regarding evidentiary rulings, sufficiency of the evidence, and sentencing. The court held that the district court properly excluded certain documents as hearsay and found no abuse of discretion or reversible error. The evidence at trial was sufficient for a reasonable jury to convict Trankle. The district court’s application of sentencing enhancements and calculation of forfeiture were affirmed, as was Trankle’s sentence. The judgment and challenged rulings of the district court were affirmed in full. View "USA v. Trankle" on Justia Law

Federal officials learned in December 2015 about a scheme to launder $5 million from South Korea to the United States for the purpose of bribing General Motors executives. The aim was for Woo Kyung M.I.T., a South Korean automotive supplier, to secure a lucrative GM contract. After a first payment, further funds were transferred through hawala brokers. Following an airport search, the bribe was delivered to Hyoung Nam “Brian” So. Shortly after, Woo Kyung M.I.T. was awarded the GM contract, but later withdrew due to profitability concerns and the ongoing investigation. Most of the bribe money was eventually returned, and South Korean officials arrested Lee, who pleaded guilty and cooperated with U.S. authorities.A formal request for evidence under the Mutual Legal Assistance Treaty (MLAT) was made to South Korea in July 2017, seeking documents and certifications relevant to the investigation. Several responses followed, with South Korean officials continuing efforts to provide requested certifications until October 2021. In September 2020, the government sought to toll the statute of limitations under 18 U.S.C. § 3292, citing ongoing requests for evidence. The U.S. District Court for the Central District of California issued a tolling order, suspending the statute of limitations for offenses described in the government’s application. On March 23, 2022, So was indicted for conspiracy to commit federal funds bribery. So moved to dismiss the indictment as untimely, but the district court found the offense covered by the tolling order and denied the motion. The court also refused to instruct the jury on the statute-of-limitations issue, ruling it was a question for the judge.On appeal, the United States Court of Appeals for the Ninth Circuit held that the tolling order applied to conspiracy to commit federal funds bribery, even though the offense was not specifically cited by statute. The panel concluded the indictment was timely, as final action by South Korean authorities occurred after the natural limitations period. The court also held that the district court properly resolved the statute-of-limitations issue without submitting it to the jury. The conviction and district court decisions were affirmed. View "USA V. SO" on Justia Law

A group of medical students attended the University of Science, Arts and Technology (USAT), an international medical school based in Montserrat. USAT was licensed in Montserrat and, for years, was listed in the International Medical Education Directory, allowing its graduates to seek U.S. medical licensure. After a volcanic eruption in 2007, USAT began offering classes online and at alternative sites in the United States and Puerto Rico. In 2018, the Educational Commission for Foreign Medical Graduates (ECFMG) changed its policy, restricting certification to students educated in the country where the school was authorized. USAT students who took courses outside Montserrat after 2018 were no longer eligible for ECFMG certification, affecting their ability to obtain U.S. medical licenses. The students alleged that USAT misrepresented its accreditation and educational legitimacy, leading them to pay substantial tuition under false pretenses.The students filed suit in the United States District Court for the District of Puerto Rico, asserting federal RICO claims, as well as Puerto Rico law claims for fraudulent inducement, breach of contract, and unjust enrichment. The district court granted summary judgment in favor of the defendants, holding that the students failed to establish a “pattern of racketeering activity” as required under RICO, and dismissed the federal claims with prejudice. The court declined to exercise jurisdiction over the Puerto Rico law claims.On appeal, the United States Court of Appeals for the First Circuit reviewed the grant of summary judgment de novo. The court held that the students did not present sufficient evidence of closed- or open-ended continuity to establish a pattern of racketeering activity under RICO. As a result, the First Circuit affirmed the district court’s dismissal of the RICO claim and its decision not to exercise supplemental jurisdiction over the remaining claims. View "Pena-Torres v. University of Science, Arts and Tech" on Justia Law

During the COVID-19 pandemic, federal relief programs such as the EIDL and PPP were implemented to assist small businesses. In Puerto Rico, a scheme led by Manfred Pentzke-Lemus fraudulently obtained such loans using fabricated documents and kickbacks. Jayson Pastrana-Román, owner of a food kiosk, became involved after Pentzke contacted him and assisted with loan applications. Pastrana allowed co-conspirators to alter his documents and apply for loans in his name, resulting in approved loans and kickbacks paid to Pentzke. Pastrana also recruited his brother and friends into the scheme, relaying instructions and collecting their kickback payments, though he did not retain these funds.A federal grand jury indicted Pastrana on ten counts, including wire fraud, money laundering, and conspiracy. He initially planned to go to trial but later pleaded guilty to all counts. At sentencing in the United States District Court for the District of Puerto Rico, the court determined Pastrana acted as a "manager" in the conspiracy, applying a three-level upward adjustment under U.S.S.G. § 3B1.1(b). The court declined to grant a reduction for acceptance of responsibility under U.S.S.G. § 3E1.1, finding his acceptance was not timely and he had not admitted to his full role as recruiter and intermediary. The court imposed a 33-month concurrent sentence for all counts, below the calculated Guidelines range.On appeal to the United States Court of Appeals for the First Circuit, Pastrana challenged the sentencing enhancements and denial of the acceptance reduction. The First Circuit held the district court did not err in applying the managerial role adjustment but did clearly err in denying the reduction for acceptance of responsibility, as Pastrana had admitted relevant conduct and timely notified the government of his intent to plead guilty. The court vacated Pastrana’s sentence and remanded for resentencing. View "US v. Pastrana-Roman" on Justia Law