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Melinda Strom appealed an amended criminal judgment and order for restitution. Strom pled guilty to misapplication of entrusted property in excess of $50,000 in violation of N.D.C.C. 12.1-23-07(1). Strom was sentenced to five years, all suspended for three years of supervised probation. Strom argued the district court abused its discretion in awarding restitution because it did not consider her ability to pay as required by N.D.C.C. 12.1-32-08(1). The North Dakota declared the statute unconstitutional in part and affirmed the restitution order and judgment. The Court concluded the district court did not abuse its discretion in fixing the amount of restitution without regard to the defendant's ability to pay. "To clearly state the scope of this decision, it is necessary to articulate what we do not decide here. In this matter, we examine only an award of restitution and not a contempt hearing or probation revocation for non-payment, and thus we limit consideration of ability to pay only in the context of setting the total amount of restitution. We do not completely preclude consideration of ability to pay. There may be times when such consideration may be appropriate, i.e., when determining the time or manner of payment or whether a defendant's failure to pay is willful." View "North Dakota v. Strom" on Justia Law

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Petitioner appealed the district court's denial of his 28 U.S.C. 2255 motion to vacate his securities fraud convictions in light of United States v. Newman, 773F.3d438 (2dCir. 2014), in which the Second Circuit reversed the insider trading convictions of two tippers. The court affirmed the judgment and held that petitioner presented no viable claim that the personal benefit challenge was unavailable to his counsel on appeal; petitioner failed to show prejudice where the personal benefit instructions he challenged were so flawed as to deny him due process; and petitioner has not demonstrated his actual innocence where the evidence contained ample evidence that petitioner was in a conspiracy to trade on the basis of non public information and that petitioner benefited financially from the trading. View "Gupta v. United States" on Justia Law

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The Second Circuit affirmed defendant's conviction of conspiracy to commit securities fraud and securities fraud. In this case, defendant was a tipper who did not directly trade on material, non‐public information but rather shared it with a tippee who did. The court held that the evidence was sufficient to prove his criminal intent where the jury was not required to credit defendant's deposition testimony that he intended only to brag when he tipped his friend and financial advisor about an upcoming merger, and the evidence taken as a whole permitted the jury to find beyond a reasonable doubt that defendant intended his communication to lead to trading in securities of the company in question. View "United States v. Klein (Schulman)" on Justia Law

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The Fifth Circuit affirmed defendant's conviction on charges of wire fraud, securities fraud, making false statements to the SEC, and conspiracy to commit wire fraud and securities fraud. Defendant was the CEO of ArthroCare, a publicly traded medical device company and he, along with the company's other senior executives, had engaged in a channel-stuffing scheme. The court held that, to the extent that an FBI case agent's testimony was improper, any error was harmless; the district court did not abuse its discretion in excluding testimony of ArthroCare's former controller; the jury instructions were not erroneous under the wire fraud statute; and jury instructions on accomplice liability comported with the general aiding and abetting knowledge and intention requirements reiterated in Rosemond v. United States, 134 S. Ct. 1240 (2014). The court rejected defendant's remaining contentions. View "United States v. Baker" on Justia Law

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Neilitz purchased $125,000 worth of ECS stock; Rawah Partners invested $350,000. In 2008, Corrigan, ECS’s President and CEO, negotiated a sale of ECS. Because of the worldwide financial downturn, the sale fell through. Shortly thereafter, ECS's board authorized Corrigan to manage ECS as he saw fit. Corrigan was negotiating another sale when ECS began to suffer cash flow problems. ECS had difficulty paying expenses and officers’ compensation. It closed its Chase Bank account and opened a new LaSalle Bank account that excluded the Vice President from its signatories. ECS's employee healthcare policy was canceled in January 2009, for nonpayment. Corrigan began soliciting Neilitz and Rawah for additional investments announcing that ECS was close to closing a sale but needed funds for healthcare insurance premiums. Per Corrigan’s instructions Neilitz and Rawah each wired $50,000 to an account which, unbeknownst to them, was Corrigan’s personal account. Corrigan spent the funds for personal expenses. Corrigan was terminated from ECS in 2011. Corrigan contacted Neilitz and Rawah, attempting to buy back the fraudulently sold stock but reaffirmed his original lie. Corrigan was convicted on four counts of wire fraud, 18 U.S.C. 1343. The Seventh Circuit affirmed his conviction and an order of restitution in the full amount of the investments. The indictment adequately alleged a scheme to defraud; the evidence supported the conviction. View "United States v. Corrigan" on Justia Law

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Appellant Rainforest Chocolate, LLC appealed the grant of summary judgment motion in favor of appellee Sentinel Insurance Company, Ltd. Rainforest was insured under a business-owner policy offered by Sentinel. In May 2016, Rainforest’s employee received an email purporting to be from his manager. The email directed the employee to transfer $19,875 to a specified outside bank account through an electronic-funds transfer. Unbeknownst to the employee, an unknown individual had gained control of the manager’s email account and sent the email. The employee electronically transferred the money. Shortly thereafter when Rainforest learned that the manager had not sent the email, it contacted its bank, which froze its account and limited the loss to $10,261.36. Rainforest reported the loss to Sentinel. In a series of letters exchanged concerning coverage for the loss, Rainforest claimed the loss should be covered under provisions of the policy covering losses due to Forgery, for Forged or Altered Instruments, and for losses resulting from Computer Fraud. Sentinel denied coverage. In a continuing attempt to obtain coverage for the loss, Rainforest also claimed coverage under a provision of the policy for the loss of Money or Securities by theft. Sentinel again denied coverage, primarily relying on an exclusion for physical loss or physical damage caused by or resulting from False Pretense that concerned “voluntary parting” of the property—the False Pretense Exclusion. Finding certain terms in the policy at issue were ambiguous, the Vermont Supreme Court reversed summary judgment and remanded for the trial court to consider in the first instance whether other provisions in the policy could provide coverage for Rainforest's loss. View "Rainforest Chocolate, LLC v. Sentinel Insurance Company, Ltd." on Justia Law

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After pleading guilty to preparing false tax returns for her clients, 26 U.S.C. 7206(2), Johnson was sentenced to 18 months in prison plus $79,325 in restitution—the amount that Johnson’s clients unlawfully avoided paying (with respect to the counts of conviction) that had not been collected from the taxpayers before sentencing. The Seventh Circuit affirmed, rejecting Johnson’s argument that the prosecution should have told the judge how much more it might collect from her clients, which she characterized as exculpatory material that should have been revealed under "Brady." The collections were not concealed. The presentence report showed that the government already had collected substantial sums (the original loss exceeded $150,000) and was trying to obtain the balance from taxpayers. Johnson was free to ask how much more had been collected by the date of sentencing but did not. Brady does not apply when information is available for the asking. The restitution statute, not the Constitution, determines the prosecution’s duty—one of credit against the judgment, not of disclosure during the sentencing hearing. Johnson will receive credit against the restitution award for whatever the government collects from the taxpayers; it was unnecessary to disclose the details of collection activities before the judge determined the base restitution award. View "United States v. Johnson" on Justia Law

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Defendant-Appellant, Gunther Glaub, was convicted of violating the criminal provisions of the False Claims Act. He argued on appeal that his act of submitting personal bills and invoices to the United States for payment was protected by the First Amendment. Furthermore, he challenged jury instructions given at trial on grounds that they failed to properly define "claim." Finding no support in the trial court record for either of Glaub's claims, the Tenth Circuit affirmed his conviction. View "United States v. Glaub" on Justia Law

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From 2007-2011, a group led by District employee Palazzo defrauded the Cuyahoga Heights School District. From 2009-2011, Defendant was part of this group. The scheme involved Palazzo submitting fake invoices to the District, purporting to be for IT-related goods and services. The vendors were actually shell corporations that never supplied goods or services of any kind to the District. The shell corporations were owned by Palazzo’s brother, Boyles, and Defendant. Five shell corporations defrauded the District of approximately $3.3 million. Defendant was aware, no later than 2009, that the scheme was a fraud. When the scheme was uncovered, Defendant sold his property, moved to Europe, and cut off communications with people in the U.S. He claims he was afraid of Palazzo, who had threatened his family. He was extradited and pled guilty under 18 U.S.C. 1341, 1349 (mail fraud), 18 U.S.C. 1956(h)(money laundering). The Sixth Circuit affirmed his a 70-month sentence, rejecting Defendant’s claims that he should have only received a 14-level offense level increase for the amount of loss that resulted from his offenses—$916,948.77, that he should have received a two-level decrease for playing only a minor role in the offenses, and that he should not have received a two-level increase for obstruction of justice. View "United States v. Donadeo" on Justia Law

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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