Justia White Collar Crime Opinion SummariesArticles Posted in Class Action
CGC Holding Company v. Hutchens
The class’s version of events painted the Hutchenses as cunning con artists who "puppeteered" a advance-fee loan scam from afar. Defendants Sandy Hutchens, Tanya Hutchens, and Jennifer Hutchens, a three-member family who purportedly orchestrated a loan scam, challenged a district court’s rulings to avoid paying all or part of the judgment against them brought pursuant to a class action suit. The Tenth Circuit concluded almost all of those challenges failed, including their challenges to the jury’s verdict, class certification, proximate causation, and the application of the equitable unclean hands defense. However, the Court agreed with the Hutchenses’ position on the district court’s imposition of a constructive trust on some real property allegedly bought with the swindled fees. The Court therefore affirmed in part, reversed in part, and remanded to the district court for entry of a revised judgment. View "CGC Holding Company v. Hutchens" on Justia Law
Cisneros v. Petland, Inc.
After plaintiff bought a puppy from Petland and the puppy died a week later, plaintiff filed suit under the civil provisions contained in the Racketeer Influenced and Corrupt Organizations Act (RICO), alleging that the puppy's death was the result of a nationwide racketeering conspiracy. Plaintiff alleged that defendants are involved in a conspiracy to sell sick puppies for premium prices and engaged in a campaign of obfuscation after the sale to aid Petland in avoiding its warranties.The Eleventh Circuit affirmed the district court's dismissal of plaintiff's RICO complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). The court held that the complaint failed to plead facts that plausibly support the inference that defendants shared a common purpose to commit the massive fraud she alleges. Furthermore, plaintiff has failed to allege with particularity that each defendant engaged in a pattern of racketeering activity. The court also held that plaintiff adequately alleged in her complaint that the Class Action Fairness Act vested the district court with original jurisdiction over her Georgia RICO claim. Therefore, the court vacated the portion of the district court's order declining to exercise supplemental jurisdiction and remanded with instructions to dismiss plaintiff's state-law RICO claim with prejudice. View "Cisneros v. Petland, Inc." on Justia Law
Ouwinga v. Benistar 419 Plan Servs., Inc.
Lesley and Fogg presented the Benistar 419 Plan to the Ouwingas, their accountant, and their attorney, providing a legal opinion that contributions were tax-deductible and that the Ouwingas could take money out tax-free. The Ouwingas made substantial contributions, which were used to purchase John Hancock life insurance policies. In 2003, Lesley and Fogg told the Ouwingas that the IRS had changed the rules; that the Ouwingas would need to contribute additional money; and that, while this might signal closing of the “loophole,” there was no concern about tax benefits already claimed. In 2006, the Ouwingas decided to transfer out of the Plans. John Hancock again advised that there would be no taxable consequences and that the Plan met IRS requirements for tax deductible treatment. The Ouwingas signed a purported liability release. In 2008, the IRS notified the Ouwingas that it was disallowing deductions, deeming the Plan an “abusive tax shelter.” The Ouwingas filed a class action against Benistar Defendants, John Hancock entities, lawyers, Lesley, and Fogg, alleging conspiracy to defraud (RICO, 18 U.S.C. 1962(c), (d)), negligent misrepresentation, fraudulent misrepresentation, unjust enrichment, breach of fiduciary duty, breach of contract, and violations of consumer protection laws. The district court dismissed. The Sixth Circuit reversed, View "Ouwinga v. Benistar 419 Plan Servs., Inc." on Justia Law
Zavala v. Wal Mart Stores, Inc.
Wal-Mart cleaning crew members sought compensation for unpaid overtime and certification of a collective action under the Fair Labor Standards Act, civil damages under RICO, and damages for false imprisonment. The workers, illegal immigrants who took jobs with contractors and subcontractors Wal-Mart engaged to clean its stores, alleged: Wal-Mart had hiring and firing authority over them and closely directed their actions such that Wal-Mart was their employer under the FLSA; Wal-Mart took part in a RICO enterprise by transporting and harboring illegal immigrants, encouraging illegal immigration, conspiracy to commit money laundering, and involuntary servitude (18 U.S.C. 1961(1)(F)); Wal-Mart‘s practice of locking some stores at night and on weekends, without always having a manager available with a key, constituted false imprisonment. Over eight years and multiple opinions, the district court rejected final certification of an FLSA class and rejected the RICO and false imprisonment claims on several grounds, and rejected the false imprisonment claim on the merits. The Third Circuit affirmed. Plaintiffs were not “similarly situated” under the FLSA, 29 U.S.C. 626(b). View "Zavala v. Wal Mart Stores, Inc." on Justia Law
Metz v. Unizan Bank
In 1991, Carpenter pled guilty to aggravated theft and bank fraud. He served jail time and was disbarred. Between 1998 and 2000, he ran a Ponzi scheme, selling investments in sham companies, promising a guaranteed return. A class action resulted in a judgment of $15,644,384 against Carpenter. Plaintiffs then sued drawee banks, alleging that they violated the UCC "properly payable rule" by paying checks plaintiffs wrote to sham corporations, and depositary banks, alleging that they violated the UCC and committed fraud by depositing checks into accounts for fraudulent companies. The district court dismissed some claims as time-barred and some for failure to state a claim. After denying class certification, the court granted defendant summary judgment on the conspiracy claim, based on release of Carpenter in earlier litigation; a jury ruled in favor of defendant on aiding and abetting. The Sixth Circuit affirmed. Claims by makers of the checks are time-barred; the "discovery" rule does not apply and would not save the claims. Ohio "Blue Sky" laws provide the limitations period for fraud claims, but those claims would also be barred by the common law limitations period. The district court retained subject matter jurisdiction to rule on other claims, following denial of class certification under the Class Action Fairness Act, 28 U.S.C. 1332(d). View "Metz v. Unizan Bank" on Justia Law