Justia White Collar Crime Opinion Summaries

Jon Woods, a workers' compensation attorney, was convicted of 37 felony counts of workers' compensation fraud. Woods had engaged in unlawful kickback and referral fee arrangements, referring copy and subpoena work to companies that provided financial benefits to him and his firm. This corruption affected the workers' compensation system, as the employer's insurance company had to cover the costs.The Superior Court of Orange County reviewed the case, where Woods was found guilty on all counts and received a four-year prison sentence. He was also ordered to pay $701,452 in restitution. Woods appealed, arguing that the Williamson rule precluded convictions on counts 5 through 37, and that the court erred in limiting his cross-examination of certain prosecution witnesses.The California Court of Appeal, Fourth Appellate District, Division Three, reviewed the case. The court agreed with Woods that the Williamson rule applied, as his conduct fell under a more specific statute, Labor Code section 139.32, which criminalizes kickback schemes and is a misdemeanor. Therefore, the court reversed Woods's convictions on counts 5 through 37, the white-collar sentencing enhancement, and the restitution award based on these charges. However, the court found no error in the trial court's limitation of cross-examination of prosecution witnesses and affirmed the remainder of the judgment. View "People v. Woods" on Justia Law

Joe May was indicted for conspiracy to commit wire fraud, mail fraud, and violations of the Anti-Kickback statute, among other charges, related to defrauding TRICARE. May, a medical doctor, was recruited to sign prescriptions for compounded drugs without evaluating patients. He signed 226 prescriptions, mostly without determining medical necessity. May received cash payments for his participation. When investigated, May created false medical records and lied to the FBI.The United States District Court for the Eastern District of Arkansas convicted May on all counts and sentenced him to 102 months imprisonment, ordering restitution of over $4.6 million. May appealed, challenging the admission of business records, limitations on cross-examination, jury instructions, the government's closing argument, and the sufficiency of evidence for certain charges.The United States Court of Appeals for the Eighth Circuit reviewed the case. The court found no abuse of discretion in admitting business records or limiting cross-examination. The court upheld the jury instructions and found no error in the government's closing argument. The court determined there was sufficient evidence for the conspiracy, mail fraud, and kickback charges. However, the court found plain error in one count of aggravated identity theft related to Perry Patterson, as the jury was not instructed on the correct underlying offense.The Eighth Circuit reversed the conviction on the aggravated identity theft count related to Patterson, remanded to vacate the special assessment for that count, and affirmed all other aspects of the case. View "United States v. May" on Justia Law

From 2009 to 2015, Clarence Roland engaged in a scheme to defraud mortgage lenders and title insurance companies by using aliases, fake businesses, and fraudulent documents. He promised homeowners facing foreclosure that he could help them eliminate their mortgages. Instead, he transferred property ownership to his shell entities, created fake mortgages, and sold the properties to unsuspecting buyers. Roland used fraudulent notary stamps and signatures to make these transactions appear legitimate.A jury in the United States District Court for the Southern District of Texas convicted Roland of conspiracy to commit wire fraud, wire fraud, and engaging in monetary transactions over $10,000 derived from unlawful activity. He was sentenced to ten years in prison, ordered to pay restitution of over $3 million, forfeit nearly $2 million, and assessed a $1,000 special assessment.The United States Court of Appeals for the Fifth Circuit reviewed Roland's appeal, where he raised several issues. He argued that the district court erred by admitting evidence of his and his co-conspirator’s prior convictions, limiting his good-faith defense, and denying his request for expert-witness funding. He also claimed that his conduct was not criminal and highlighted a clerical error regarding the special assessment.The Fifth Circuit found no reversible error in the district court's evidentiary rulings, determining that the admission of prior convictions was not plain error and that the limitations on Roland's good-faith defense were either appropriate or harmless. The court also upheld the denial of expert-witness funding, noting Roland's failure to make a formal request. The court agreed with Roland on the clerical error and modified the judgment to remove the $1,000 special assessment. In all other respects, Roland's conviction was affirmed. View "United States v. Roland" on Justia Law

Brian Gustafson was convicted of wire fraud in the United States District Court for the Northern District of Illinois. He was employed as a manager at a Public Storage facility in Deerfield, Illinois, where he facilitated the theft of valuable items from a tenant's storage unit. Gustafson provided a key to John Garcia, who, along with Marilyn Rothschild, sold the stolen items. The stolen goods included antiques and artwork valued at $185,000. Garcia and Rothschild sold these items to buyers, receiving payments in cash and checks, which initiated interstate wire transfers.The district court sentenced Gustafson to twenty-four months in prison, followed by two years of supervised release, and ordered him to pay $330,237 in restitution. Gustafson filed motions for a judgment of acquittal and a new trial, arguing that he did not cause the interstate wire transmissions. The district court denied these motions, concluding that while Gustafson may not have known wire transmissions would occur, their use was reasonably foreseeable given the high value of the stolen items.The United States Court of Appeals for the Seventh Circuit reviewed the case. Gustafson challenged the sufficiency of the evidence for his wire fraud conviction, prosecutorial misconduct during closing arguments, and the restitution order. The appellate court held that the use of wires was reasonably foreseeable due to the high value and volume of the stolen items and the involvement of geographically distant buyers. The court also found that the prosecutor's comments during closing arguments did not deprive Gustafson of a fair trial and that the restitution order did not violate his Sixth Amendment rights. Consequently, the Seventh Circuit affirmed the district court's judgment. View "USA v Brian Gustafson" on Justia Law

Sardar Ashrafkhan owned and operated a fraudulent medical practice where doctors wrote and billed Medicare for fake prescriptions. These prescriptions were filled at specific pharmacies, which paid Ashrafkhan kickbacks. The scheme resulted in millions of dollars in fraudulent Medicare claims and the illegal sale of opioid-based drugs. Ashrafkhan was indicted in 2013 and tried in 2015, where the government presented evidence that he masterminded the scheme. The jury convicted him of drug conspiracy, health care fraud conspiracy, and money laundering. At sentencing, he received an adjustment for being an organizer or leader of a criminal activity involving five or more participants.The United States District Court for the Eastern District of Michigan sentenced Ashrafkhan to 276 months of imprisonment, varying downward from the guidelines range of 600 months. Ashrafkhan appealed, and the United States Court of Appeals for the Sixth Circuit affirmed his conviction and sentence. After his sentencing, the United States Sentencing Commission promulgated a new guideline, USSG § 4C1.1, which provides a two-point reduction in the offense level for defendants with no criminal history points, known as "zero-point offenders." Ashrafkhan moved for a sentence reduction under this new guideline, but the district court denied his motion, reasoning that his aggravating role adjustment rendered him ineligible for the reduction.The United States Court of Appeals for the Sixth Circuit reviewed the case and affirmed the district court's decision. The court held that to be eligible for the zero-point offender reduction under USSG § 4C1.1, a defendant must not have received an aggravating role adjustment and must not have engaged in a continuing criminal enterprise. Since Ashrafkhan received an aggravating role adjustment, he was ineligible for the reduction, regardless of whether he engaged in a continuing criminal enterprise. The court's interpretation was based on the plain text and context of the guideline, as well as precedent from similar cases. View "United States v. Ashrafkhan" on Justia Law

Raymond Erker operated a Ponzi scheme that defrauded over fifty people, primarily senior citizens, out of nine million dollars. He created two companies, GenSource and Provident Securities, and solicited investments by falsely promising safe, guaranteed returns. Instead, Erker misappropriated the funds for personal use and risky investments. To cover his tracks, he created office fronts, set up call centers, and fabricated account statements. When his investments failed, he used new investor money to pay old investors, maintaining the illusion of returns. Eventually, he ran out of money and could not repay his investors.The United States District Court for the Northern District of Ohio indicted Erker on multiple counts, including conspiracy to commit mail and wire fraud, mail fraud, wire fraud, money laundering, and making a false statement under oath. After a four-day trial, a jury convicted him on all counts. The district court sentenced him to 262 months in prison and ordered restitution. Erker appealed, challenging his money laundering conviction, claiming ineffective assistance of counsel, and objecting to various aspects of his sentence.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court rejected Erker's argument that the government failed to prove he withdrew more than $10,000 of criminally derived property, noting that the evidence showed it was mathematically impossible for the withdrawals to include less than $10,000 of dirty money. The court also found no procedural error in the district court's sentencing, as it had considered the necessary factors and did not need to address national sentencing statistics. The court affirmed Erker's sentence but remanded for the district court to consider his eligibility for a sentence reduction under Amendment 821 to the Sentencing Guidelines. The court declined to address Erker's ineffective assistance of counsel claim on direct appeal. View "United States v. Erker" on Justia Law

Plaintiffs, business entities owning recovery rights assigned by health insurers and other third-party Medicare payors, alleged that Defendants, including a drug manufacturer, a specialty pharmacy, and healthcare nonprofits, colluded to inflate the price and quantity of the drug Xenazine. This alleged scheme purportedly violated the Racketeer Influenced and Corrupt Organizations Act (RICO) and various state laws, causing the Assignors to reimburse inflated Xenazine prescriptions at supra-competitive prices.The United States District Court for the Eastern District of Virginia dismissed the class-action complaint with prejudice, concluding that Plaintiffs failed to adequately allege that Defendants’ conduct proximately caused their injuries. The court emphasized that RICO’s proximate-causation requirement focuses on the directness of the harm, not its foreseeability. The court found the alleged causal chain too attenuated, involving numerous independent actors like physicians and pharmacists, and dismissed the state-law claims for similar reasons.The United States Court of Appeals for the Fourth Circuit affirmed the district court’s dismissal of the federal RICO claims, agreeing that Plaintiffs failed to establish proximate causation. The court noted that the alleged scheme had more direct victims, such as distributors and wholesalers, and that the volume of Xenazine prescriptions depended on the independent decisions of doctors. The court also affirmed the dismissal of the state-law consumer-protection and unjust-enrichment claims, finding them insufficiently pleaded.The Fourth Circuit reversed the district court’s conclusion that Plaintiffs had standing to bring claims on behalf of unidentified assignors, remanding those claims for dismissal without prejudice. The court upheld the district court’s denial of post-judgment relief and leave to amend the complaint, concluding that further amendment would be futile. View "MSP Recovery Claims, Series LLC v. Lundbeck LLC" on Justia Law

In 2019, the FBI and DEA, along with local law enforcement, investigated a Mexican drug trafficking organization operating in Mexico, California, Georgia, and North Carolina. Oscar Pliego-Pineda, based in Atlanta, Georgia, was identified as a key figure in coordinating methamphetamine deliveries and managing drug proceeds. He arranged multiple drug transactions and coordinated logistics for methamphetamine shipments, including converting liquid methamphetamine to crystal form.The United States District Court for the Middle District of North Carolina sentenced Pliego-Pineda to 120 months in prison after he pled guilty to conspiracy to distribute methamphetamine and conspiracy to commit money laundering. The court applied a three-level managerial role enhancement under the United States Sentencing Guidelines, which Pliego-Pineda contested, arguing that the district court erred in applying the enhancement and that his sentence was substantively unreasonable.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court upheld the district court's application of the managerial role enhancement, finding that Pliego-Pineda exercised significant decision-making authority, participated extensively in the conspiracy, and managed the logistics of drug transactions. The court noted that the conspiracy involved at least ten individuals and large quantities of methamphetamine. Despite an error in considering Pliego-Pineda's supervision of an undercover officer, the court found sufficient evidence to support the enhancement.The Fourth Circuit also found Pliego-Pineda's sentence substantively reasonable, affirming the district court's decision. The court emphasized that the sentence was within the properly calculated Guidelines range and thus presumptively reasonable. The court concluded that the district court did not abuse its discretion in sentencing Pliego-Pineda. View "United States v. Pliego-Pineda" on Justia Law

Joseph Cammarata and his associates, Eric Cohen and David Punturieri, created Alpha Plus Recovery, LLC, a claims aggregator that submitted fraudulent claims to securities class action settlement funds. They falsely represented that three entities, Nimello, Quartis, and Invergasa, had traded in securities involved in class action settlements, obtaining over $40 million. The fraudulent claims included falsified trade data and fabricated reports. The scheme unraveled when a claims administrator, KCC, discovered the fraud, leading to the rejection of the claims and subsequent legal action.The United States District Court for the Eastern District of Pennsylvania charged the defendants with conspiracy to commit mail and wire fraud, wire fraud, conspiracy to commit money laundering, and money laundering. Cohen and Punturieri pled guilty, while Cammarata proceeded to trial and was found guilty on all counts. The District Court sentenced Cammarata to 120 months in prison, ordered restitution, and forfeiture of certain property.The United States Court of Appeals for the Third Circuit reviewed the case. The court upheld most of the District Court's rulings but found issues with the restitution order and the forfeiture of Cammarata's vacation home. The court held that the restitution order did not fully compensate the victims, as required by the Mandatory Victims Restitution Act (MVRA), and remanded for reconsideration. The court also found procedural error in the forfeiture process, as Cammarata was deprived of his right to a jury determination on the forfeitability of his property. The court vacated the forfeiture order in part and remanded for the Government to amend the order to reflect that the property is forfeitable as a substitute asset under 21 U.S.C. § 853(p). View "USA v. Cammarata" on Justia Law

Elizabeth Holmes and Ramesh "Sunny" Balwani, founders of Theranos, were convicted of defrauding investors about the capabilities of their company's blood-testing technology. Theranos claimed it could run accurate tests with just a drop of blood, attracting significant investments. However, the technology was unreliable, and the company misled investors about its financial health, partnerships, and the validation of its technology by pharmaceutical companies.The United States District Court for the Northern District of California severed their trials due to Holmes's allegations of abuse by Balwani. Holmes was convicted on four counts related to investor fraud, while Balwani was convicted on all counts, including conspiracy to commit wire fraud against investors and patients. Holmes was sentenced to 135 months, and Balwani to 155 months in prison. The district court also ordered them to pay $452 million in restitution.The United States Court of Appeals for the Ninth Circuit reviewed the case. The court affirmed the convictions, sentences, and restitution order. It held that the district court did not abuse its discretion in admitting testimony from former Theranos employees, even if some of it veered into expert territory. The court found any errors in admitting this testimony to be harmless due to the weight of other evidence against the defendants.The Ninth Circuit also upheld the district court's decision to admit a report from the Center for Medicare and Medicaid Services, finding it relevant to Holmes's knowledge and intent. The court rejected Holmes's argument that the district court violated her Confrontation Clause rights by limiting cross-examination of a former Theranos lab director. Additionally, the court found no merit in Balwani's claims of constructive amendment of the indictment and Napue violations. The court concluded that the district court's factual findings on loss causation and the number of victims were not clearly erroneous and affirmed the restitution order. View "USA V. HOLMES" on Justia Law