Justia White Collar Crime Opinion Summaries

The case involves Jovan Vavic, a former head coach of the men's and women's water polo teams at the University of Southern California (USC), who was implicated in the "Varsity Blues" college admissions scandal. Vavic was accused of facilitating the admission of students as fake athletic recruits in exchange for payments from Rick Singer, a college consultant orchestrating the scheme. The payments were allegedly made to benefit Vavic's water polo program and his sons' private school tuition.In the lower court, the United States District Court for the District of Massachusetts presided over the case. A jury convicted Vavic on three counts: conspiracy to commit mail and wire fraud and honest services mail and wire fraud, conspiracy to commit federal programs bribery, and wire fraud and honest services wire fraud. However, the district court granted Vavic a new trial, concluding that certain statements made by the government during its rebuttal closing amounted to prosecutorial misconduct. The court found that the government's statements misrepresented the law and facts, particularly regarding the payments to USC and the alleged $100,000 bribe for Agustina Huneeus's recruitment.The United States Court of Appeals for the First Circuit reviewed the case. The court affirmed the district court's order for a new trial on the honest services fraud charge (Count Sixteen) due to a Yates error, as it was impossible to determine if the jury's verdict rested on an invalid legal theory following the decision in United States v. Abdelaziz. However, the appellate court reversed the new trial order for the federal programs bribery conspiracy charge (Count Three), concluding that the government's statements did not constitute plain error and that there was no prejudicial variance or Napue error. The case was remanded for further proceedings consistent with the appellate court's opinion. View "US v. Vavic" on Justia Law

In this case, Kelli Prather was convicted by a jury of bank fraud, wire fraud, aggravated identity theft, and making a false statement on a loan application. The charges stemmed from her fraudulent applications for Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) funds under the CARES Act, which were intended to provide financial relief during the COVID-19 pandemic. Prather submitted multiple fraudulent loan applications for non-operational businesses and used the identity of her mentally disabled nephew, D.P., to apply for additional loans.The United States District Court for the Southern District of Ohio sentenced Prather to 84 months in prison. Prather appealed her conviction and sentence, arguing insufficient evidence for her aggravated identity theft conviction, improper admission of certain testimonies, and errors in the jury instructions and sentencing enhancements.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court found that there was ample evidence to support Prather's aggravated identity theft conviction, including testimony that D.P. did not understand the loan application process and that Prather used his identity without lawful authority. The court also determined that the testimonies of Special Agent Reier and Prather's ex-fiancé, Darrell Willis, did not constitute plain error and were cumulative of other evidence presented at trial.Regarding the jury instructions, the court held that the district court correctly informed the jury that Prather did not need to know the interstate nature of her acts to be convicted of wire fraud. Finally, the court upheld the district court's application of the vulnerable victim enhancement, finding that D.P. was indeed a victim of Prather's fraudulent scheme.The Sixth Circuit affirmed Prather's conviction and sentence, concluding that there were no reversible errors in the district court's proceedings. View "United States v. Prather" on Justia Law

Stamatios Kousisis and Alpha Painting and Construction Co. were awarded two contracts by the Pennsylvania Department of Transportation (PennDOT) for painting projects in Philadelphia. Federal regulations required subcontracting a portion of the contract to a disadvantaged business enterprise. Kousisis falsely represented that Alpha would obtain paint supplies from Markias, Inc., a prequalified disadvantaged business. However, Markias functioned only as a pass-through entity, funneling checks and invoices to and from Alpha’s actual suppliers, violating the requirement that disadvantaged businesses perform a commercially useful function. Despite this, Alpha completed the projects to PennDOT’s satisfaction and earned over $20 million in gross profit.The Government charged Alpha and Kousisis with wire fraud and conspiracy to commit wire fraud, based on the fraudulent-inducement theory. After a jury convicted them, they moved for acquittal, arguing that PennDOT received the full economic benefit of its bargain, so the Government could not prove they schemed to defraud PennDOT of money or property. The United States Court of Appeals for the Third Circuit rejected this argument, affirming the convictions and deepening the division over the validity of a federal fraud conviction when the defendant did not seek to cause the victim net pecuniary loss.The Supreme Court of the United States held that a defendant who induces a victim to enter into a transaction under materially false pretenses may be convicted of federal fraud even if the defendant did not seek to cause the victim economic loss. The Court explained that the text of the wire fraud statute does not mention economic loss and that the common law did not establish a general rule requiring economic loss in all fraud cases. The Court affirmed the Third Circuit’s decision, concluding that the fraudulent-inducement theory is consistent with both the text of the statute and the Court’s precedent. View "Kousisis v. United States" on Justia Law

Sonny Ramdeo, while working as a payroll director for Promise Healthcare, recommended the company hire PayServ Tax, which he falsely claimed was a subsidiary of Ceridian Corporation. In reality, PayServ was Ramdeo’s own company, and he diverted over $20 million from Promise to fund a charter airline service. After Promise’s auditors discovered discrepancies, Ramdeo was arrested and pled guilty to wire fraud and money laundering. He was sentenced to twenty years in prison, followed by three years of supervised release, and ordered to pay $21,442,173 in restitution.Ramdeo challenged his conviction and restitution amount on direct appeal, which was unsuccessful. He then sought a writ of audita querela to contest the restitution amount, which the district court recharacterized as a petition for coram nobis and subsequently denied. The Eleventh Circuit declined to address the merits of his claim. Ramdeo also filed a 28 U.S.C. § 2255 petition, which the district court denied as frivolous and meritless. The Eleventh Circuit affirmed this decision. Ramdeo later filed a pro se petition for a writ of error coram nobis, arguing ineffective assistance of counsel, prosecutorial misconduct, and new financial evidence. The district court denied the petition, stating that prisoners in federal custody are ineligible for coram nobis relief.The United States Court of Appeals for the Eleventh Circuit reviewed the case and determined that being in custody does not categorically bar a petitioner from seeking coram nobis relief for non-custodial aspects of their sentence, such as restitution. The court vacated the district court’s order and remanded the case for further proceedings, emphasizing that coram nobis is an extraordinary remedy available when no other remedy is available, and the petitioner presents sound reasons for not seeking relief earlier. View "Ramdeo v. United States" on Justia Law

Shakira Martinez was convicted by a jury in the District of Delaware for multiple money laundering offenses related to a drug trafficking operation run by her husband, Omar Morales Colon. The District Court sentenced her to 108 months of imprisonment. After her sentencing, the United States Sentencing Commission enacted a retroactive amendment to the Sentencing Guidelines, allowing certain offenders with no criminal history a two-point reduction in their total offense level. Martinez argued that the appellate court should vacate her sentence and remand for resentencing in light of this amendment.The District Court determined Martinez’s total offense level to be 30, with a criminal history category of I, resulting in a recommended sentencing range of 97 to 121 months. Martinez requested a downward variance due to psychological disorders, but the court denied this request and sentenced her to 108 months. Martinez appealed, and during the appeal process, the Sentencing Commission made amendments to the Guidelines retroactive. Martinez then sought to have her sentence vacated and remanded for resentencing under the new Guidelines.The United States Court of Appeals for the Third Circuit reviewed the case. The court held that it has the discretionary authority under 28 U.S.C. § 2106 to vacate a sentence and remand for resentencing in light of a retroactive Guidelines amendment. The court found that granting this relief would promote judicial economy and serve the interest of justice. Therefore, the court vacated Martinez’s sentence and remanded the case to the District Court for resentencing consistent with the retroactive Guidelines amendment. View "USA v. Martinez" on Justia Law

A cheesesteak restaurant owner, Nicholas Lucidonio, was involved in a payroll tax fraud scheme at Tony Luke’s, where he avoided employment taxes by issuing paychecks for “on-the-books” wages, requiring employees to sign back their paychecks, and then paying them in cash for both “on-the-books” and “off-the-books” wages. This led to the filing of false employer tax returns that underreported wages and underpaid employment taxes. Employees, aware of the scheme, received Form W-2s listing only “on-the-books” wages, resulting in underreported income on their personal tax returns. The conspiracy spanned ten years and involved systemic underreporting of wages for 30 to 40 employees at any given time.Lucidonio pleaded guilty to one count of conspiracy to defraud the IRS (Klein conspiracy) under 18 U.S.C. § 371. He did not appeal his conviction but challenged his sentence, specifically the application of a United States Sentencing Guideline that increased his offense level by two points. The enhancement applies when conduct is intended to encourage others to violate internal revenue laws or impede the IRS’s collection of revenue. Lucidonio argued that the enhancement was misapplied because it required explicit direction to others to violate the IRS Code, which he claimed did not occur, and that his employees were co-conspirators, not additional persons encouraged to violate the law.The United States Court of Appeals for the Third Circuit reviewed the case. The court disagreed with Lucidonio’s interpretation that the enhancement required explicit direction. However, it found that the government failed to prove by a preponderance of the evidence that Lucidonio encouraged anyone other than co-conspirators, as the employees were aware of and participated in the scheme. Consequently, the court vacated the sentence and remanded the case for resentencing without the enhancement. View "United States v. Lucidonio" on Justia Law

The case involves codefendant brothers Joshua and Jamie Yafa, who were convicted of securities fraud and conspiracy to commit securities fraud for their involvement in a "pump-and-dump" stock manipulation scheme. They promoted the stock of Global Wholehealth Products Corporation (GWHP) through various means, including a "phone room" and social media, to inflate its price. Once the stock price rose significantly, they sold their shares, earning over $1 million. Following the sale, the stock price plummeted, causing significant losses to individual investors. A grand jury indicted the Yafas, along with their associates Charles Strongo and Brian Volmer, who pled guilty and testified against the Yafas at trial.The United States District Court for the Southern District of California sentenced the Yafas, applying the United States Sentencing Guidelines (U.S.S.G.) § 2B1.1. The court used Application Note 3(B) from the commentary to § 2B1.1, which allows courts to use the gain from the offense as an alternative measure for calculating loss when the actual loss cannot be reasonably determined. The district court found it difficult to calculate the full amount of investor losses and thus relied on the gain as a proxy. This resulted in a fourteen-level increase in the offense level for both brothers, leading to sentences of thirty-two months for Joshua and seventeen months for Jamie.The United States Court of Appeals for the Ninth Circuit reviewed the case. The court held that the term "loss" in § 2B1.1 is genuinely ambiguous and that Application Note 3(B)'s instruction to use gain as an alternative measure is a reasonable interpretation. The court concluded that the district court did not err in using the gain from the Yafas's offenses to calculate the loss and affirmed the district court's decision. View "USA V. YAFA" on Justia Law

Patrick Barkers-Woode and Nana Mensah were involved in a conspiracy to defraud Sprint Corporation by exploiting a sales promotion that offered smartphones to new customers at no upfront cost. Conspirators in Ghana obtained personal information of unsuspecting individuals and used it to sign them up as new Sprint customers, arranging for the smartphones to be sent to vacant homes. Barkers-Woode, Mensah, and others tracked, retrieved, and delivered the smartphones to a buyer. The conspiracy was responsible for 274 orders of 833 smartphones, resulting in $357,565.92 in actual loss and $595,399.76 in intended loss. A jury convicted both defendants of mail fraud, aggravated identity theft, and conspiracy to commit these offenses.The United States District Court for the Middle District of Pennsylvania sentenced Barkers-Woode to 111 months’ imprisonment and Mensah to 99 months’ imprisonment. Both defendants appealed, challenging their sentences and, in Barkers-Woode’s case, the admission of certain evidence during the trial.The United States Court of Appeals for the Third Circuit reviewed the case. The court found that the District Court erred in applying a 14-point enhancement based on intended loss rather than actual loss, as required by the court's decision in United States v. Banks. This error affected the defendants' substantial rights, leading the court to reverse and remand for resentencing based on actual loss. The court also upheld the District Court's application of a 2-point enhancement for the number of victims, recognizing that victims of identity theft are included within the definition of "victim" under the Sentencing Guidelines.Additionally, the court affirmed the District Court's decision to admit testimony about a related fraud against Walmart, as it directly proved the conspiratorial agreement. The court also upheld the decision to require Barkers-Woode to proceed pro se after his sixth attorney withdrew, citing his extremely dilatory conduct. Finally, the court rejected Mensah's argument that sentencing enhancements should be based on facts charged in the indictment and proved beyond a reasonable doubt, reaffirming the precedent set in United States v. Grier. View "USA v. Barkers-Woode" on Justia Law

Larry Householder, former Speaker of the Ohio House of Representatives, and lobbyist Matthew Borges were convicted of conspiring to solicit and receive nearly $60 million in exchange for passing a billion-dollar bailout for a failing nuclear energy company, FirstEnergy Corp. Householder used the funds to support his bid for the speakership and to recruit candidates who would vote for him. Borges played a role in the conspiracy by attempting to disrupt a referendum campaign against the bailout legislation.The United States District Court for the Southern District of Ohio at Cincinnati found both Householder and Borges guilty after a 26-day trial. Householder was convicted of multiple counts, including public-official bribery, private-citizen bribery, and money laundering. Borges was also found guilty of participating in the conspiracy.The United States Court of Appeals for the Sixth Circuit reviewed the case and found no reversible error, affirming the convictions. The court held that the evidence was sufficient to support the jury's findings that Householder and Borges engaged in a quid pro quo arrangement with FirstEnergy. The court also upheld the jury instructions, finding them consistent with applicable law, and rejected Householder's claims of insufficient evidence, right to counsel violations, and judicial bias. Additionally, the court found that the district court did not abuse its discretion in its evidentiary rulings or in admitting the guilty pleas of co-conspirators.Householder's sentence of twenty years, the statutory maximum under RICO, was deemed procedurally and substantively reasonable. The court emphasized the magnitude and severity of Householder's offense, referring to it as the "biggest corruption case in Ohio's history." Borges's arguments regarding the sufficiency of the evidence and the district court's evidentiary rulings were also rejected, and his conviction was affirmed. View "United States v. Householder" on Justia Law

Ryan Anderson pled guilty to multiple charges, including second-degree robbery, grand theft, retail theft, and second-degree burglary. These charges stemmed from a scheme where he stole "Scratchers" lottery tickets from various retailers and redeemed the winning tickets for prize money. The trial court ordered Anderson to pay $179,231.65 in restitution to the California State Lottery, which included the value of the stolen tickets, the prize money he collected, and commissions paid to retailers.The trial court's restitution order was based on a detailed chart presented by the prosecution, which outlined the value of the stolen tickets, the amounts reimbursed to retailers by the Lottery, and the prize money Anderson collected. Anderson did not dispute the Lottery's entitlement to recoup the prize money and retailer commissions but argued that the prize money should have been deducted from the retail value of the stolen tickets. The trial court rejected this argument, finding that the stolen tickets represented lost sales revenue.The California Court of Appeal, First Appellate District, reviewed the case. Anderson's appellate counsel filed a brief under People v. Wende, identifying no specific issues for appeal. The appellate court conducted an independent review and invited supplemental briefs on whether the trial court abused its discretion in calculating the restitution award. The appellate court affirmed the trial court's decision, holding that the restitution order was appropriate and that the Lottery did not receive a windfall. The court found that the Lottery's reimbursement to retailers shifted the loss from the retailers to the Lottery, and Anderson was responsible for the full amount of the stolen tickets' retail value, the prize money he collected, and the retailer commissions. The judgment was affirmed. View "People v. Anderson" on Justia Law