Justia White Collar Crime Opinion Summaries

Kolodesh owned a home-health services company. He approached his employee, Pugman, about starting a home-based hospice care company. Pugman's agreed. Kolodesh funded the new company, Home Care Hospice. Pugman managed the operations. Kolodesh’s wife and Pugman were listed as owning equal shares; Kolodesh was intimately involved in forming and overseeing its management. In 2000 or 2001, Kolodesh, Pugman, and Pugman's wife began giving gifts and cash “kickbacks” to doctors in exchange for patient referrals. At Kolodesh’s suggestion, Pugman placed doctors or their employees on the Hospice payroll with sham job titles and issued paychecks in exchange for patient referrals. About 90% of the revenue generated by Hospice came from Medicare reimbursements. Kolodesh and Pugman had contractors submit fake invoices Hospice would pay; the contractor would give most of the money to Kolodesh and Pugman, keeping a portion. The participants were charged with conspiracy to defraud a health care benefit program, 18 U.S.C. 1349, 21 counts of health-care fraud, 18 U.S.C. 1347, two counts of mail fraud, 18 U.S.C. 1341, and 11 counts of money laundering, 18 U.S.C. 1957. Pugman testified for the government after having pled guilty. The Third Circuit affirmed Kolodesh's sentence of 176 months’ imprisonment and a restitution order of $16.2 million. View "United States v. Kolodesh" on Justia Law

The Medocks’ company, MAS, transported patients to kidney dialysis for Medicare reimbursement. Reimbursement of non-emergency ambulance transport is allowed only if medically necessary for bedridden patients; both a driver and an EMT must accompany any such passenger. Certification of medical necessity (CMN) must be signed by a doctor. A “run sheet” is reviewed by a Medicare contractor other than the ambulance company, such as AdvanceMed, to reduce fraud. AdvanceMed identified MAS as a high biller in Tennessee for dialysis ambulance transport and audited MAS. MAS’s records were missing some CMNs. Covert surveillance resulted in videotapes of patients walking, riding in the front seat, being double-loaded, being driven by single-staffed ambulances, or being transported by wheelchair. MAS had billed the transports as single-passenger and “stretcher required.” Executing a search warrant at the Medlocks’ home, agents seized CMNs and run tickets; some had been altered or forged. The Sixth Circuit reversed a conviction for aggravated identity theft, 18 U.S.C. 1028A, agreeing that misrepresentations that certain beneficiaries were transported by stretcher did not constitute a “use” of identification, but affirmed health-care fraud convictions, rejecting arguments that the court should have instructed the jury that Medicare, not merely a prudent person, was the relevant decision-maker; that Medicare would have reimbursed MAS without their misrepresentations; and that refusal to sever a defendant was prejudicial. View "United States v. Medlock" on Justia Law

In 2006-2009, the five defendants’ partial Ponzi scheme received more than $193 3 million from hundreds of investors. Only $49 million was returned, all from new investors’ money. Some investors lost their life savings. Each defendant took between $432,000 and $12.2 million. Defendants described investing in foreign currency trading, which was guaranteed and had a fixed rate of return. Some money was invested in foreign currencies, but none was invested in a safe, guaranteed currency product. They also promised instant liquidity and that each investor’s account would be “segregated.” Defendants, who used fund names such as “Oxford” and “UBS” were apparently sued by the Swiss bank, UBS. After the scheme collapsed, two pled guilty. A jury found the others guilty of committing or aiding and abetting commission of wire fraud or mail fraud, 18 U.S.C. 1341 and 1343; conspiracy to commit mail and wire fraud, 18 U.S.C. 1349; and money laundering, 18 U.S.C. 2 and 1957. Defendant Beckman, individually, was also convicted for his interactions with elderly victims; his attempt to purchase an interest in an NHL hockey team; filing false tax returns; and tax evasion. The district court sentenced Beckman to 360 months and the others to 240 months imprisonment. The Eight Circuit affirmed the convictions and sentences, View "United States v. Beckman" on Justia Law

Beltramea solicited investments to open a Subway restaurant franchise, but used the funds for personal expenses and for a real estate development, “Castlerock,” made fraudulent representations to banking institutions, and attempted to avoid paying taxes. Beltramea pled guilty to 16 counts, including: wire fraud, 18 U.S.C. 1343; aggravated identity theft, 18 U.S.C. 1028(A)(a)(1); money laundering, 18 U.S.C. 1957, 1956(a)(1)(A)(ii) and (a)(1)(B)(i); false statements to a financial institution, 18 U.S.C. 1014; and tax evasion, 26 U.S.C. 7201. The court imposed additional upward departures for understated criminal history and for dismissed and uncharged conduct. Beltramea's adjusted Guidelines' range was 70 to 87 months, before adding the mandatory 24 consecutive months for aggravated identity theft. He was sentenced to a total of 111 months. The court stated that, even if it erred in granting upward departures, it would impose the same sentence based on the factors under 18 U.S.C. 3553(a). The court entered a forfeiture order, 18 U.S.C. 981(a)(1)(C), 28 U.S.C. 2461(c) and 18 U.S.C. 982(a)(1) for rental properties, Castlerock parcels, $125,000 in wire fraud proceeds, and $65,472.02 in money laundering proceeds. The Eighth Circuit reversed the forfeiture order but otherwise affirmed. The government presented no facts connecting the rental properties and the lots to any offense for which Beltramea was convicted. View "United States v. Beltramea" on Justia Law

Eagan, Minnesota, assisted in apprehending Procknow, who had absconded while serving supervised release imposed by a Wisconsin state court for forgery. Authorities had received information that Procknow and his girlfriend were staying at an Eagan hotel. The girlfriend was registered at the hotel. Officers spotted Procknow’s car, chased Procknow through the lobby, and arrested him. Through the windows of Procknow’s car, they saw a scanner or copier. Learning of the arrests, the hotel manager stated that the their stay was being terminated and asked the officers to collect a dog, believed to be in their room and ensure that there were no other occupants. Officers knocked, and announced. No one answered, so they used a hotel key and found a dog. Entering to ensure that there were no other occupants, officers saw, in plain view, an electric typewriter, a credit card issued in the name of “Smith,” and financial forms bearing various names and social security numbers. Officer photographed the room, sealed it, and obtained search warrants for the room and car. They seized blank W‐2 forms, partially completed tax forms, lists of business employer identification numbers, and prepaid debit cards (tax refunds) in the names of different people. Further investigation revealed that Procknow had obtained the personal identifying information of at least 40 individuals, which he used to file fraudulent tax returns and claim refunds. Procknow pleaded guilty to theft of government money and aggravated identify theft. The Seventh Circuit affirmed denial of a motion to suppress evidence obtained by the warrantless entry into the hotel room and evidence obtained by grand jury subpoena following the withdrawal of IRS administrative summonses requesting the same information. View "United States v. Procknow" on Justia Law

In 2007, Suarez, a 75-year-old widower from Mexico, opened a checking account at an Illinois Chase Bank. DeMarco, the branch manager, assisted him. The two became friends. Suarez was trying to sell his three acre property, listed for $1.8 million. DeMarco convinced Suarez to break his listing contract, indicating that he had a buyer. DeMarco told Suarez that he needed a home equity line of credit (HELOC) to complete the sale. DeMarco obtained a $250,000 HELOC, under Suarez’s name, secured by Suarez’s property. DeMarco caused the lender to transfer the proceeds into a joint checking account, which he opened in his and Suarez’s name. After the transfer, DeMarco withdrew $245,000 and deposited the funds into his personal account. After Chase terminated his employment, DeMarco transferred the funds into new accounts and spent most of the proceeds to pay off his credit card debt, improve his home and on cars and vacations. He used a small fraction of the money to pay off Suarez’s debts. Suarez later noted irregularities in his bank statement and contacted the FBI. DeMarco was convicted of wire fraud, 18 U.S.C. 1343 and sentenced to 48 months in prison. The Seventh Circuit affirmed, rejecting challenges to evidentiary rulings and to the sentence, claiming that the court erred by applying a two-level increase to his base offense level for abuse of a position of trust, U.S.S.G. 3B1.3, and the use of sophisticated means, U.S.S.G. 2B1.1(b)(1). View "United States v. DeMarco" on Justia Law

In 2005, Lee, a Sevierville contractor, owed a substantial debt to Whaley, for loans that financed houses being built by Lee. Whaley proposed to recruit straw buyers for sham purchases of the properties. Eight straw buyers were referred to Bevins, a mortgage broker with whom Whaley had previously dealt. Whaley prepared the contracts and set the prices. Bevins prepared loan applications that falsely inflated the buyers’ incomes and assets and stated that they would bring funds to closing. The closings were conducted by Kerley’s title company. Although none of the buyers brought funds to the closings, Kerley signed HUD-1 forms, indicating that they did. The properties later went into foreclosure. The lenders incurred substantial losses. Lee and Bevins pled guilty and agreed to cooperate. The judge denied Kerley’s motion to sever, concluding that proposed redactions to Whaley’s statement remedied potential violation of Kerley’s Confrontation Clause rights and held that Whaley was not entitled to introduce his own hearsay statements. Both were convicted of money laundering, conspiracy to commit wire fraud affecting a financial institution and bank fraud, wire fraud affecting a financial institution, bank fraud, and making a false statement to a financial institution. They were sentenced to 60 months and 48 months imprisonment, respectively, and ordered to pay $1,901,980.31 in restitution. The Sixth Circuit affirmed the convictions and Kerley’s sentence, rejecting challenges to the sufficiency of the evidence, evidentiary rulings, and the court’s refusal to sever. View "United States v. Whaley" on Justia Law

Roy was convicted of conspiracy to commit wire fraud, 18 U.S.C. 1349; three counts of wire fraud, 18 U.S.C. 1343; and conspiracy to commit wire fraud and bank fraud, 18 U.S.C. 1349. The Second Circuit affirmed, rejecting an argument that the district court erred by failing to instruct the jury that proof of an overt act is required for a conviction under the two section 1349 conspiracy charges. Proof of an overt act is not required for a conspiracy conviction under 18 U.S.C. 1349. View "United States v. Roy" on Justia Law

In 2008, an explosion and fire substantially damaged the Hereford House, a well-known restaurant in downtown Kansas City. Surveillance footage from immediately before the incident showed individuals entering with containers of gasoline and setting an ignition device. The suspects used the security code of a former Hereford House employee to deactivate the security system. Between the employee’s firing and the fire, the same code had been used twice by Anderson, a part owner of the Hereford House, in what appeared to be practice for the arson. The Bureau of Alcohol, Tobacco, Firearms and Explosives investigated Anderson, who had infused $380,000 into the business, from cash advances on personal and business credit cards, withdrawals from his mother’s IRA and his 401(k), and a loan from his brother-in-law. In an email, Anderson had stated: “We were unable to pay our payroll taxes of $50,000. Things are not getting any better.” Anderson, Pisciotta, and Sorrentino were convicted and sentenced to 180, 240, and 180 months’ imprisonment, respectively. The Eighth Circuit affirmed, rejecting arguments that conspiracy to commit arson cannot be a predicate to convictions for the use of fire to commit another felony under 18 U.S.C. 844(h); that the convictions constituted double jeopardy; that the trials should have been severed; and challenging evidentiary rulings. View "United States v. Anderson" on Justia Law

Defendant was convicted and sentenced for conspiracy to obstruct justice, accessory after the fact to mail fraud and securities law violations, altering documents to influence a federal investigation, and aiding and abetting false testimony at an SEC deposition. A panel of the Ninth Circuit affirmed, holding (1) the district court did not err at sentencing by applying both the “Broker-Dealer” enhancement and the “Special Skill” enhancement under the Sentencing Guidelines; (2) the district court did not err in calculating loss and victim amounts, as required under the Sentencing Guidelines; (3) Defendant was competent to waive his right to a jury trial, and his waiver was knowing and intelligent; and (4) the district court did not plainly err in (a) excluding a non-lawyer’s testimony reciting facts and the legal conclusion that Defendant did not break the law; (b) determining that the district court was capable of understanding an expert’s opinion regarding Defendant’s professional and ethical duties as an attorney; and (c) admitting coconspirator nonhearsay testimony. View "United States v. Tamman" on Justia Law