Justia White Collar Crime Opinion Summaries

Defendants-Appellants David Banks, Kendrick Barnes, Demetrius Harper, Clinton Stewart, Gary Walker, and David Zirpolo were convicted following a jury trial on multiple counts of mail fraud and wire fraud, and conspiracy to commit mail fraud and wire fraud. Defendants contacted numerous staffing agencies to “assist in providing temporary services. Witnesses from multiple staffing companies testified that a Defendant (or someone acting as Defendants’ agent) approached them and expressed the desire for "payrolling" services. The staffing-company witnesses testified that they were induced into believing that Defendants’ companies were either doing business with major law-enforcement agencies or were on the verge of selling a specialized software to these agencies. These witnesses testified that Defendants (or Defendants’ agents) assured them that this alleged law-enforcement business would enable Defendants’ companies to pay the staffing companies’ invoices, and, critically, that they relied on these representations in choosing to do business with Defendants. Trial testimony from representatives of the law-enforcement agencies with whom Defendants claimed to be doing business revealed the falsity of Defendants’ representations to the staffing companies. When questioned about their failure to pay the staffing companies’ invoices, Defendants gave false assurances that payment would be forthcoming, and they continued to imply that they were doing business with large government law enforcement agencies. In the end, forty-two different staffing companies were left with outstanding invoices totaling in excess of $5,000,000, which could not be submitted to the government agencies, which had no business relationship with Defendants’ companies. Defendants were sentenced to terms of imprisonment ranging from 87 to 135 months. Defendants argued on appeal to the Tenth Circuit: (1) their right to a speedy trial was violated when the district court granted multiple continuances of the trial date (at Defendants’ request); (2) the district court compelled co-Defendant Barnes to testify in violation of his Fifth Amendment privilege against self-incrimination and failed to give a proper curative instruction; (3) the district court abused its discretion in excluding the testimony of two witnesses Defendants sought to call at trial; and (4) the cumulative effect of the district court’s otherwise harmless errors prejudiced them and required reversal. Finding no reversible error, the Tenth Circuit affirmed. View "United States v. Banks" on Justia Law

A jury convicted defendants James Sweeney II and Patrick Ryan of 65 counts of white-collar crime (all relating to the sale of securities) and found true three special allegations. The court sentenced Sweeney to 33 years and Ryan to 31 years. The court also imposed restitution. On appeal, both defendants challenged the sufficiency of the evidence on count 68 and the convictions on counts 67, 68, 69, 70, and 71, primarily involving multi-level marketing programs. Ryan also claimed various sentencing errors, including those related to fines and restitution.3 Sweeney makes similar arguments. The Court of Appeal found sufficient evidence for count 68. The Court also upheld convictions on counts 67 through 71. View "California v. Sweeney" on Justia Law

FutureSelect invested nearly $200 million in the Rye Funds, which pooled and fed money into Bernard Madoff's fraudulent securities investment scheme. The investments were lost when Madoff's fraud collapsed. FutureSelect sued Tremont Group Holdings (proponent of the Rye Funds), Oppenheimer Acquisition Corporation and Massachusetts Mutual Life Insurance Company (Tremont's parent companies) and Ernst & Young, LLP (Tremont's auditor) for their failure to conduct due diligence on Madoff's investments. The trial court dismissed on the pleadings, finding Washington's security law did not apply, and that Washington courts lacked jurisdiction over Oppenheimer. The Court of Appeals reversed, and the defendants sought to reinstate the trial court's findings. Finding no error with the Court of Appeals' decision, the Washington Supreme Court affirmed. View "Futureselect Portfolio Mgmt., Inc. v. Tremont Grp. Holdings, Inc." on Justia Law

Defendant, an attorney, was charged with multiple counts of, inter alia, forgery of a document and uttering a forged instrument. The charges stemmed from allegations that Defendant, through his use of computers, orchestrated a sophisticated scheme to divert to himself funds that were intended to be used to pay off large home mortgage loans. Prior to trial, the Commonwealth filed a motion to compel Defendant to enter his password into encryption software he placed on various digital media storage devices that were in the custody of the Commonwealth. Following a hearing, a judge denied the Commonwealth’s motion to compel decryption but reported a question of law to the Supreme Judicial Court. The Court reversed the denial of the Commonwealth’s motion, concluding that Defendant could be compelled to provide his key to seized encrypted digital evidence provided that the compelled decryption would not communicate facts of a testimonial nature to the Commonwealth beyond what Defendant had already admitted to investigators. Remanded. View "Commonwealth v. Gelfgatt" on Justia Law

After a jury trial, Defendant was convicted of theft by misapplication of property and securities fraud. Defendant appealed, contending that the court's jury instructions impermissibly shifted the burden of proof onto him to prove his innocence. The Supreme Court affirmed, holding that the burden of proof was not improperly shifted onto Defendant to prove his innocence where (1) there was no obvious error in the instructions the trial court gave because, as a whole, the instructions correctly stated the law; and (2) the court correctly stated the State's burden of proof and Defendant's presumption of innocence several times during the jury selection, at the beginning of the trial, in its final instructions, and in its written instructions sent to the jury room. View "State v. Philbrook" on Justia Law

Defendant was indicted for financial crimes. He applied for public defender representation and provided information about his financial status that was collected by court staff on a UDIR form. Defendant's application was granted. Because the State's investigation suggested that defendant owned substantial assets, it issued a trial subpoena to the Morris County Superior Court's custodian of records demanding the production of financial data provided to court staff, including defendant's UDIR form. Although it used a trial subpoena, the State represented that it did not intend to use defendant's UDIR form at his pending trial; instead, it would be used to determine whether the State should separately indict defendant for making intentional false statements to obtain free counsel and to determine whether to apply for the removal of defendant's appointed counsel. The trial court quashed the subpoena on its own motion pursuant to the attorney-client privilege. The trial court denied the State's motion for reconsideration, reaffirming its view that the attorney-client privilege protected disclosure of defendant's financial information. The Appellate Division affirmed, holding that the attorney-client privilege protected the information sought. Upon review of the matter, the Supreme Court concluded that the subpoena was properly quashed because defendant was "entitled to the benefit of the long-standing practice embodied in Directive 1-06 - that 'information on the intake form may not be used in grand jury proceedings or at trial.'"View "In re Subpoena Duces Tecum on Custodian of Records" on Justia Law

Plaintiffs here were Bryan Behrens, Bryan Behrens Co., Inc., National Investments, Inc., and Thomas Stalnaker. Defendants were Christian Blunk, Berkshire and Blunk, and Abrahams Kaslow & Cassman LLP. In 2008, the SEC filed a civil enforcement action against all plaintiffs except Stalnaker. In 2009, the federal government indicted Behrens on charges of securities fraud, mail fraud, wire fraud, and money laundering. Prior to the filing of the indictment, Plaintiffs filed their complaint alleging that Blunk had committed legal malpractice. Plaintiffs also sued Blunk's former partnership and the firm that later employed Blunk. Both civil and criminal cases were proceeding at roughly the same time. In 2010, Behrens pled guilty to securities fraud. Later that year, Plaintiffs filed an amended complaint against Defendants for legal malpractice. The district court found the action was barred by the applicable statute of limitations and by the doctrine of in pari delicto. The Supreme Court affirmed, holding that Plaintiffs' suit was barred by the two-year statute of limitations set forth in Neb. Rev. Stat. 25-222.View "Behrens v. Blunk" on Justia Law

Appellant Connie Powell worked as a bookkeeper for Rocky Mountain Pump Services (RMPS) from March 2005 to February 2007, when her employment was terminated. After terminating appellant's employment, RMPS contracted with Melanie Field to handle the company's books until another bookkeeper could be hired. Field immediately found the books to be incomplete, inaccurate, and in need of "rebuilding." Reconstruction of the books back to the time when Appellant was hired, revealed numerous discrepancies and missing records, with multiple paychecks to Appellant for the same pay period, copies of checks made payable to the appellant where the computer QuickBooks system showed those checks being paid to vendors, and a few checks made payable to Appellant where the issuing manager's signature appeared to be forged. The examination of the books was followed by a law enforcement investigation that included a review of Appellant's personal bank account records. Eventually, it was determined that 93 checks, totaling $78,200, and claimed to be "unauthorized" by RMPS, had been deposited into Appellant's personal account during her tenure as RMPS's bookkeeper. Appellant was arrested and charged with one count of felony larceny. A jury found her guilty. She appealed her conviction. Because there was insufficient evidence to prove beyond a reasonable doubt that Appellant committed larceny, the Supreme Court reversed her conviction.View "Powell v. Wyoming" on Justia Law

A circuit court found Appellant David Cannon in contempt of court for violating (1) an order mandating that Appellant give up all authority and cease all activities relating to the James Brown estate, the Brown trusts, and all Brown entities (which he violated by filing amended tax returns without authority); and (2) an order requiring Cannon to pay back money he had misappropriated from Brown's estate. The circuit court ordered Appellant to be incarcerated for six months for contempt. However, the circuit court stated Appellant could purge himself of the contempt "by the payment of the aforementioned [money, with a portion] to be applied towards the payment of attorneys' fees incurred by the various parties, and the payment of a fine." The Court of Appeals affirmed in part, reversed in part, and remanded for further proceedings; upholding all of the circuit court's findings regarding the contempt except for the amount awarded towards attorneys' fees and the imposition of the fine. The Court of Appeals found the circuit court abused its discretion as to attorneys' fees because it did not make the necessary factual findings to support the amount awarded, so it "reverse[d] and remand[ed] the issue of attorneys' fees to the circuit court for findings of fact as to the proper amount. On remand, the circuit court held a hearing for the sole purpose of making findings of fact regarding the proper amount of attorneys' fees to be awarded for reimbursing the parties for attorneys' time related to the issue of Appellant's contemptuous conduct, and held that Appellant should pay. Appellant appealed this order, arguing payment of fees was mooted by his serving his jail sentence. The case was transferred from the Court of Appeals to the Supreme Court. Upon review, the Supreme Court affirmed the Court of Appeals, concluding the trial court did not abuse its discretion in ordering Appellant pay attorneys' fees. Further, the Court held that the issue of attorneys' fees was not mooted by Appellant serving his jail sentence.View "Ex parte: Cannon v. Estate of James Brown" on Justia Law

Appellant John Sterling, Jr. was charged with three criminal offenses: securities fraud, making false or misleading statements to the State Securities Commission, and criminal conspiracy. He was convicted of securities fraud, acquitted of making a false or misleading statement and conspiracy, and received a five-year sentence.  Appellant appealed to the Supreme Court, arguing the trial judge abused his discretion in permitting testimony from investors, in denying appellant's directed verdict motion, and that the trial court committed reversible error in charging the jury. Charges against Appellant stemmed from a business venture related to the retail mortgage lending industry. After a merger between two companies, Appellant ceased being an employee of one of the acquired companies, but remained on the Board of Directors of the newly formed entity. The new entity had financial trouble from the onset, and began moving debts and assets among the surviving entities to hide its financial difficulties. Appellant's defense was predicated in large part on the fact that the financial maneuvers that took place were approved by outside auditors. Upon review of the trial court record, the Supreme Court found no error and affirmed Appellant's conviction.View "South Carolina v. Sterling" on Justia Law