Justia White Collar Crime Opinion Summaries

From 2004-2008, Georgiou and co-conspirators engaged in a stock fraud scheme resulting in more than $55 million in actual losses. The scheme centered on four stocks, all quoted on the OTC Bulletin Board or the Pink OTC Markets Inc. The conspirators opened brokerage accounts in Canada, the Bahamas, and Turks and Caicos, which they used to trade stocks, artificially inflating prices. They were able to sell their shares at inflated prices and used the shares as collateral to fraudulently borrow millions of dollars from Bahamas brokerage firms. In 2006, Waltzer, a co-conspirator, began cooperating in an FBI sting operation. A jury convicted Georgiou of conspiracy, securities fraud, and wire fraud. The district court sentenced him to 300 months’ imprisonment, ordered him to pay restitution of $55,823,398, ordered a special assessment of $900, and subjected Georgiou to forfeiture of $26,000,000. The Third Circuit affirmed, rejecting an argument that the securities and wire fraud convictions were improperly based upon the extraterritorial application of United States law. The securities were issued by U.S. companies through U.S. market makers acting as intermediaries for foreign entities. The court also rejected claims of Brady and Jencks Act violations and of error on evidentiary and sentencing issues. View "United States v. Georgiou" on Justia Law

Lawson’s business, Evangel Capital, held itself out as a lender with $250 million in assets available to churches and other religious institutions. It issued firm commitment financing letters for multi-million-dollar projects but never closed a single loan and never had more than $10,000 in its bank accounts. Potential borrowers paid fees totaling $270,000, which they were told would be used to pay for appraisals and required documents. The fees were used for personal expenses. A jury convicted Lawson of wire fraud, 18 U.S.C. 1343, and he was sentenced to 52 months’ imprisonment. The judge had allowed the prosecutor to show that Lawson failed to report his income, but not that he failed to file tax returns, telling the jury that the evidence was admitted for the purpose of showing whether Lawson acted with knowledge or fraudulent intent, but not how it illuminated those issues. Lawson did not object. The Seventh Circuit affirmed. The tax evidence could not have affected a rational jury’s verdict, even if taken as propensity evidence, given the undisputed proof that Lawson converted the fees to his personal use and did not spend the money for the purposes he told clients it was needed. View "United States v. Lawson" on Justia Law

From 2002-2010, Salutric, an investment adviser whose firm had more than 1,000 clients, defrauded clients by diverting assets from their Schwab accounts to unapproved, high-risk investments, including restaurants, car dealerships, real estate developments, and an entertainment company. Salutric or his associates had interests in the investments. Salutric’s clients were unaware of these ventures. Salutric represented via falsified paperwork, including forged signatures, that he had clients’ permission to make withdrawals from the Schwab accounts. Six individuals and retirement plans covering 72 small-business employees lost a total of $3,898,818. Salutric pleaded guilty to wire fraud. The court adopted the PSR, including its calculation of an advisory sentencing range of 151 to 188 months in prison, noting victim impact statements which were supplements to the PSR. There were no objections; neither party objected to the court’s declaration that it would consider a statement by the daughter of victims. The court discussed, in detail, 48 letters submitted on behalf of Salutric by family, friends, and community figures detailing his community service and praising his character. After evaluation of the section 3553(a) factors, the court ordered Salutric to serve 96 months. The Seventh Circuit affirmed, rejecting challenges to the court’s consideration of statements by non-victims. View "United States v. Salutric" on Justia Law

From 2005-2007, Wright, a real estate agent and the chief of staff for Philadelphia councilman Kelly, received gifts from Chawla, a developer, and attorney Teitelman, who got most of his work from Chawla's company, World Acquisition. Wright received a free stint in an apartment, free legal services, and was promised commissions. Wright shepherded a bill that Chawla favored through Kelly’s office, arranged meetings about a World Acquisition development, and communicated with city offices for World Acquisition. In 2008, a grand jury returned a 14-count indictment, charging honest services fraud, traditional fraud, conspiracy to commit both kinds of fraud, and bribery in connection with a federally funded program. The jury convicted Chawla, Teitelman, and Wright of: conspiracy to commit honest services and traditional fraud and honest services and traditional fraud for the apartment arrangement and convicted Chawla alone of honest services for offering Wright liaison work. It acquitted on the other counts. After remand, the defendants moved, unsuccessfully, to preclude the government from relitigating certain issues under the Double Jeopardy Clause and from constructively amending the indictment. the Third Circuit held that it lacked jurisdiction because the ruling is not a “collateral” order subject to immediate review and was not otherwise a “final decision” under 28 U.S.C. 1291. View "United States v. Wright" on Justia Law

Babaria, a licensed radiologist and medical director and manager of Orange Community MRI, an authorized Medicare and Medicaid provider, pleaded guilty to one count of making illegal payments (kickbacks), 42 U.S.C. 1320a-7b(b)(2)(A). From 2008 through 2011, he paid physicians to refer patients to Orange for diagnostic testing and billed Medicare and Medicaid for testing that was tainted by the corrupt referrals. Orange received $2,014,600.85 in payments that were directly traceable to the kickback scheme. There was no evidence that Babaria falsified patient records, billed Medicare or Medicaid for testing that was not medically necessary, or otherwise compromised patient care. Babaria objected to the PreSentence Investigation Report, which recommended a two-level adjustment for abuse of a position of trust (USSG 3B1.3) and a four-level adjustment for aggravating role (USSG 3B1.1(a)), resulting in a recommended Guidelines range of 70-87 months’ imprisonment. Ultimately, the Guidelines range was 60 months, capped by the statutory maximum for Babaria’s count of conviction. He argued that the correct range was 37 to 46 months. The court applied both adjustments but granted a downward variance and sentenced Babaria to 46 months’ imprisonment, a fine of $25,000, and forfeiture of the $2,014,600.85. The Third Circuit affirmed the sentence. View "United States v. Babaria" on Justia Law

Sykes pleaded guilty to participation in a bank fraud scheme, 18 U.S.C. 1344, and was sentenced to 57 months’ imprisonment. The district court determined that her total offense level was 23 and that her criminal history category was III, resulting in an advisory guidelines range of 57 to 71 months. The court applied two enhancements, holding that Sykes could reasonably have foreseen, and thus was responsible for, the scheme’s entire intended loss amount of $653,417 (14-level enhancement under USSG 2B1.1(b)(1)(H)) and that a two-level enhancement was warranted under USSG 2B1.1(b)(10)(C), because Sykes’s offense involved “sophisticated means.” The court rejected her submission that her family circumstances as sole caregiver to her children justified a below-guidelines sentence. The Seventh Circuit affirmed, holding that the district court was correct in its determination that the evidence supported the 14-level enhancement; did not clearly err in its estimation of the factual record; was correct in its view that the fraudulent scheme involved sophisticated means; and adequately took into account Sykes’s family circumstances in imposing sentence. View "United States v. Sykes" on Justia Law

Markert, President of Pinehurst Bank, approved nominee loans to friends and family of bank customer Wintz. The loan proceeds were used to cover Wintz’s $1.9 million overdraft at the Bank. A jury convicted Markert of willful misapplication of bank funds by a bank officer, 18 U.S.C. 656. At sentencing, applying U.S.S.G. 2B1.1(b)(1), the district court found that Markert’s offense caused an actual loss equal to the amount of the loans, resulting in a 16-level enhancement and a guidelines range of 87 to 108 months in prison. The court sentenced Markert to 42 months. The Eighth Circuit remanded for resentencing. After considering arguments, but without an evidentiary hearing, the court reduced its prior finding by $60,000, to reflect repayments prior to detection and re-imposed the same 42-month term. The Eighth Circuit again remanded, holding that the government failed to sustain its burden to prove actual loss. While “the loss here cannot be zero,” the court declined to give the government a third chance to present evidence and ordered that, on remand, actual loss for sentencing purposes is zero, reducing the guidelines range to 12-18 months. Markert has already served more than 18 months; the court directed that he be immediately released. View "United States v. Markert" on Justia Law

During a traffic stop, police saw evidence of possible identity theft in plain view. A vehicle search revealed mail addressed to people unrelated to Earnest or his passenger, 39 debit cards, $4,000 in cash, and documents containing names, birth dates, Social Security numbers, and addresses for 1,000 individuals, plus their online tax return personal information and debit card account numbers. Hundreds of fraudulent tax returns had been filed, seeking $1.8 million in refunds; the IRS paid out $840,000. Many refunds were loaded onto debit cards. Earnest was linked to residences where the returns were filed and was photographed using the unauthorized debit cards. Tax returns were filed from Earl's IP addresses; he also was recorded using thecards. Both were convicted of conspiracy to commit fraud against the government, conspiracy to use unauthorized access devices, use of unauthorized access devices, and aggravated identity theft. Earnest also was convicted of possessing 15 or more unauthorized access devices. Earl was sentenced to 84 months’ imprisonment. Earnest was sentenced to 172 months. Belizaire recruited people to provide addresses , exchanged identification information of victims, filed fraudulent returns, and used the debit cards; he pleaded guilty to conspiracy to defraud the government and aggravated identity theft and was sentenced to 129 months’ imprisonment. The Eleventh Circuit affirmed both convictions and all sentences. View "United States v. Baldwin" on Justia Law

Miner marketed two schemes that promised to avoid taxes. Miner’s first scheme, IRx Solutions, offered to assist clients in requesting alterations to their Individual Master Files (IMFs), which are internal IRS records pertaining to each taxpayer. Miner claimed that the IRS was engaged in widespread fraud by improperly coding individuals as businesses on their IMFs so that tax could be assessed against them. The second scheme, Blue Ridge Group, helped clients create common-law business trusts, into which he claimed that they could place any or all of their assets in order to avoid paying income tax. Affirming his conviction under 26 U.S.C. 7212(a) for corruptly endeavoring to obstruct the “due administration” of federal income tax laws, the Sixth Circuit rejected arguments that the district court reversibly erred in failing to instruct the jury that section 7212(a) required proof that he was aware of a pending IRS proceeding; that his conduct was constitutionally and statutorily protected; and that certain witness testimony was improperly introduced at trial because the witness opined about his state of mind. View "United States v. Miner" on Justia Law

Defendants appealed their convictions for securities fraud in violation of sections 10(b) and 32 of the Securities Exchange Act of 1934, 15 U.S.C. 78j(b), 78ff; Securities and Exchange Commission (SEC) Rules 10b-5 and 10b5-2, 17 C.F.R. 240.10b-5, 240.10b5-2, and 18 U.S.C. 2; and conspiracy to commit securities fraud in violation of 18 U.S.C. 371. The court concluded that, in order to sustain a conviction for insider trading, the Government must prove beyond a reasonable doubt that the tippee knew that an insider disclosed confidential information and that he did so in exchange for a personal benefit; the court held that the evidence was insufficient to sustain a guilty verdict against defendants because the Government's evidence of any personal benefit received by the alleged insiders was insufficient to establish the tipper liability from which defendants' purported tippee liability would derive, and even assuming that the scant evidence offered was sufficient, the Government presented no evidence that defendant knew that they were trading on information obtained from insiders in violation of those insiders' fiduciary duties; and, therefore, the court reversed and remanded with instructions to dismiss the indictment. View "United States v. Newman" on Justia Law