Justia White Collar Crime Opinion Summaries

This case involved a fallout of a $3.65 billion Ponzi scheme perpetrated by Minnesota businessman Thomas J. Petters. Appellants, investment funds (collectively, Ritchie), incurred substantial losses as a result of participating in Petters' investment scheme. Ritchie subsequently sued two officers of Petters' companies, alleging that they assisted Petters in getting Ritchie to loan over $100 million to Petters' company. Ritchie's five-count complaint alleged violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1962(a), (c)-(d), common law fraud, and tortious inference with the contract. The court held that the district court erred in concluding that Ritchie's action was barred by a Receivership Order. The court also rejected arguments challenging the sufficiency of Ritchie's pleadings in the common law fraud count and did not to address other arguments related to abstention, lack of causation, and absolute privilege. Accordingly, the court reversed the judgment of the district court and remanded for further proceedings. View "Ritchie Capital Mgmt., et al. v. Jeffries, et al." on Justia Law

Defendant was convicted for the theft or embezzlement of funds from his employee's IRA accounts in violation of 18 U.S.C. 664. On appeal, defendant argued that his conviction should be reversed because, at trial, the district court barred him from presenting evidence to the jury that he eventually repaid all of the embezzled funds. The court held that because the intent to permanently deprive was neither a required element of, nor a defense to, the conversion or stealing that section 664 criminalized, the district court did not abuse its discretion when it excluded evidence of defendant's eventual repayment of his employees' funds in a bankruptcy proceeding as irrelevant. View "United States v. Van Elsen" on Justia Law

Former investors with Bernard L. Madoff appealed from an order entered by the United States Bankruptcy Court in the liquidation proceedings of Bernard L. Madoff Investment Securities LLC under the Securities Investor Protection Act (SIPA), 15 U.S.C. 78aaa et seq. At issue was whether the Net Investment Method the trustee selected for carrying out his responsibilities under SIPA was legally sound under the language of the statutes. The court held that the trustee's determination as to how to calculate "net equity" under SIPA was legally sound in light of the circumstances of the case and the relevant statutory language. Accordingly, the court affirmed the order of the bankruptcy court. View "In Re: Bernard L. Madoff" on Justia Law

Plaintiff, a plastics manufacturer, dealt with a container company that filed for bankruptcy in 2002, filed a creditor's claim for more than $7 million, and objected to the sale of assets and lien priorities. The debtor had pledged all of its assets as security for a line of credit with ANB, its primary lender. Plaintiff claimed that there was a fraudulent scheme under which the debtor would produce containers and not pay for them, so that that they would be part of inventory when a successor company, let by insiders, purchased the assets in bankruptcy. After its claims were rejected in the bankruptcy proceedings, plaintiff sued ANB and Gateway alleging violation of RICO (18 U.S.C. 1961) and common-law fraud. The district court dismissed as "res judicata" but denied Rule 11 sanctions. The Seventh Circuit affirmed the dismissal, citing collateral estoppel, issue preclusion. The court did not find that the claims were frivolous or designed to harass.

The United States has a $60 million judgment against the defendant, who fled the country, for Medicare and Medicaid fraud. The government served a writ of garnishment (28 U.S.C. 3205) against his interest in a Georgia company, which paid secured creditors, liquidated its assets, and placed slightly more than $4 million in escrow for the claim. Creditors of the Georgia company claimed $175,000. The district court ruled in favor of the government because the creditors had not obtained a writ. The Seventh Circuit vacated and remanded, reasoning that the creditors' claim was against the Georgia company, not against the defendant, and that the defendant's equity interest in the company (which was reachable by the government) may have been subordinate to the interests of creditors. The court noted many unanswered questions about the creditors' interest in the company.