Justia White Collar Crime Opinion Summaries

Woodard was the director of a non‐profit grant organization, Gideon’s Gate, which provided educational and tutoring services to children. The Department of Education, not satisfied with Gideon’s performance, stopped providing funds. Woodard then enrolled Gideon as an Indiana Medicaid provider for outpatient mental health services, but continued to operate as an educational service provider. To fraudulently bill Medicaid, Woodard illegally obtained clients’ personal information from a welfare‐to‐work provider operated by a friend. Woodard submitted 2,437 false claims for $8.9 million worth of services to 378 patients. Woodard was charged with health care fraud, 18 U.S.C. 1347. Before trial Woodard filed several motions to change counsel. After appointing a third attorney, the court ordered a competency examination. A doctor concluded that Woodard was competent to stand trial. Two years later, after more delays and new attorneys, Woodard asked for another competency evaluation, which was denied. She pled guilty and was sentenced to 80 months in prison. The Seventh Circuit remanded for resentencing because the court applied the wrong version of the guidelines, but otherwise affirmed. The district court reached a reasonable conclusion after reviewing a previous psychological evaluation, considered advice from two mental health professionals, and considered Woodard’s interactions with her attorney. Although Woodard claimed that she did not knowingly and voluntarily plead guilty, the record shows that she did and that nothing would have alerted the court to the contrary. View "United States v. Woodard" on Justia Law

Defendant was convicted of five counts of bank fraud and two counts of mail fraud. The court held that mailings designed to avoid detection or responsibility for a fraudulent scheme fell within the mail fraud statute when they were sent before the scheme was completed. In order to determine when a scheme is completed, the court looks to the scope of the scheme as devised by the perpetrator. In this case, a reasonable jury could have found that defendant sent the September 16 letter prior to the scheme's completion. Accordingly, the court rejected defendant's argument that his conviction on count 2 must be reversed because the scheme was completed before the September 16 letter was mailed. The court also rejected defendant's alternative argument that the September 16 letter could not support a conviction for mail fraud because it was sent after the fraud was uncovered. Therefore, sufficient evidence supported defendant's mail fraud conviction on count 2 and the court affirmed the conviction. Further, the court affirmed the district court's application of a 2-level sentencing enhancement for making a misrepresentation during the course of a bankruptcy proceeding under U.S.S.G. 2B1.1(b)(9)(B) and application of a 2-level enhancement for using sophisticated means under U.S.S.G. 2B1.1(b)(10)(C). The court held, in accord with the government's concession, that the district court plainly erred by including $44,715.21 in restitution for fraudulent credit cards and $1,851.38 in restitution for wage overpayments that were not part of the offenses of conviction and by failing to note the waiver of interest on restitution on the judgment. View "United States v.Tanke" on Justia Law

In 2008-2009 Scalzo was a bank officer at two institutions. He originated and approved loans for unqualified borrowers without adequate financial information or collateral. He forged borrowers’ signatures, redirected funds from the loans to his own personal use without the knowledge of the borrowers, and took funds from some fraudulent loans to pay off balances on previous fraudulent loans, to conceal the original fraud. Scalzo pled guilty to one count of bank fraud, 18 U.S.C. 1344, and one count of money laundering, 18 U.S.C. 1956. The Information listed as part of the scheme six bank loans and three Credit Union loans. Scalzo objected to inclusion of two Credit Union loans in the restitution order. The sentencing range was the same with or without these loans, so the court deferred ruling on restitution and sentenced Scalzo to 35 months of imprisonment. The government filed its additional brief a week later. Having received no additional briefing from Scalzo for 82 days, the court relied on the PSR, the plea agreement and the government’s additional submissions; found that Scalzo arranged the Credit Union loans to conceal the bank fraud; noted that the Credit Union loans were listed as part of the fraudulent scheme detailed in the Information to which Scalzo pled guilty and that the Credit Union lost a substantial amount of money; and ordered him to pay restitution of $679,737.23. The Seventh Circuit affirmed. View "United States v. Scalzo" on Justia Law

Davis, a nurse and assistant professor of nursing at Chicago State University, ran several public health programs aimed at improving the health care of the African-American community. As program director for the Chicago Chapter of the National Black Nurses Association (CCBNA), Davis solicited and oversaw public and private grants, contracts, and funds awarded to CCBNA. Between December 2005 and March 2009, Davis solicited and obtained contracts and grants totaling approximately $1,062,000 from Illinois state agencies. Davis diverted approximately $377,000 by writing checks to herself, friends, and family members; concealing conflicts of interest; hiring unqualified family members and other acquaintances for positions in projects; forging co-signatures; and falsifying information. Davis pleaded guilty to mail fraud and money laundering. In the plea agreement, the parties concurred that based on the factors contained in 18 U.S.C. 3553, Davis could be sentenced to, and the government would recommend, no higher than a below-guidelines sentence of 41 months’ imprisonment. The advisory guidelines range was 57–71 months. Davis waived the right to appeal the reasonableness of the sentence but reserved the right to challenge any procedural error at sentencing. The Seventh Circuit affirmed, rejecting a claim that the district court erred procedurally by failing to adequately take into account her mental health in considering mitigating factors. View "United States v. Davis" on Justia Law

Castaldi, involved in fraudulent schemes since high school, operated a Ponzi scheme that collapsed in 2008. Net losses to investors and the IRS totaled about $40 million. When the scheme was near collapse, Castaldi turned himself in to the government. He eventually pled guilty to just one count of mail fraud, 18 U.S.C. 1341, and one count of corruptly impeding the IRS, 26 U.S.C. 7212(a). The district court imposed the longest prison sentence possible under the plea agreement: consecutive sentences of 20 years on the mail fraud charge and three years on the tax charge, about 50percent longer than the high end of the agreed Sentencing Guideline range. The Seventh Circuit affirmed the sentence, finding that the court adequately considered the fact that Castaldi told the government about his scheme and cooperated with its investigation, but also considered the devastating financial harm Castaldi inflicted on family members, friends, and neighbors of modest financial means.View "United States v. Castaldi" on Justia Law

When purchasing a house, the defendants submitted loan documents containing false incomes and bank statements, and failed to disclose that husband’s company was selling and his wife was buying. The company received $750,000 and rebated money paid above that amount to husband. The $1 million in loans they received resulted in $250,000 extra that was not disclosed as going to the couple. They were able to sell the house four months later for the same inflated amount, without raising any concerns. They failed to disclose on the HUD-1 forms in the second transaction that they would be giving the buyer kickbacks. The buyer received $1,090,573.06 in loans, but defaulted without making a payment. The lender eventually sold the house for $487,500. Defendants were convicted of three counts of wire fraud, 18 U.S.C. 1343 and aiding and abetting wire fraud, 18 U.S.C. 2. The Presentence Investigation Report determined that the lender’s loss was $603,073.06 and recommended a 14-point enhancement under USSG 2B1.1(b)(1)(H). The Seventh Circuit affirmed the convictions but remanded for explanation of why the loss was “reasonably foreseeable” and why the sentencing enhancement was proper. Involvement in a fraudulent scheme does not necessarily mean it was reasonably foreseeable that all the subsequent economic damages would occur; there was no evidence that defendants knew they were selling to what turned out to be a fictional buyer. View "United States v. Domnenko" on Justia Law

Defendant, while incarcerated, participated in a fraudulent scheme to obtain tax refunds by using the personal information of other inmates. Defendant pleaded guilty to 41 of the 46 counts with which he was charged. On appeal, defendant contended that the district court should amend its written judgment to conform to its oral pronouncement at sentencing that forfeited funds would be applied toward his restitution obligation. In light of the statutory framework governing restitution and forfeiture, the court held that a district court generally had no authority to offset a defendant's restitution obligation by the value of the forfeited property held by the government which was consistent with the approach taken by the Fourth, Seventh, Eighth, Ninth, and Tenth Circuits. Because the district court had no authority to offset defendant's restitution obligation by the amount of funds forfeited to the government, its oral pronouncement directing such was contrary to law. Therefore, defendant could not avail himself of the general rule that discrepancy between an oral pronouncement at sentencing and a written judgment was to be resolved in favor of the oral pronouncement. Accordingly, the court affirmed the district court's written judgment.View "United States v. Joseph" on Justia Law

Thomas and Chapman were part of a scheme to fleece real estate lenders by concocting multiple false sales of the same homes and using the loan proceeds from the later transactions to pay off the earlier lenders. They were convicted of multiple counts of wire fraud. Thomas was also convicted of aggravated identity theft for using an investor’s identity without permission to craft a phony sale of a home that the victim never owned. The Seventh Circuit affirmed, rejecting: challenges to the sufficiency of the evidence; a claim by Thomas that there was no proof that he created or used the falsified documents at issue; Chapman’s claim that there was no evidence that he was the Lamar Chapman identified by the evidence, because no courtroom witness testified to that effect; Chapman’s claim that his due process rights were violated when the government dropped a co-defendant from the indictment; and a claim that the government failed to turn over unspecified exculpatory evidence. The court noted testimony from several victims, an FBI investigator, an auditor, and an indicted co-defendant who had already pleaded guilty. View "United States v. Chapman" on Justia Law

Defendant, the former policy director of the House Transportation Committee, appealed his convictions on three counts relating to his receipt of illegal gratuities from Jack Abramoff's lobbying group. The court concluded that, because the indictment alleged that defendant accepted the World Series trip for or because of his official assistance in influencing the language of the federal highway bill, the charge on Count 2 contained the required element, and the district court correctly denied defendant's motion to dismiss. Further, the evidence was sufficient to convict defendant on all counts. Accordingly, the court affirmed the judgment of the district court. View "United States v. Verrusio" on Justia Law

Dachman was indicted on and pled guilty to 11 counts of wire fraud for stealing funds elderly individuals had invested in his sleep‐related illness‐treatment companies. By selling shares in those companies, he had raised more than $4 million from 51 people. Although Dachman had a history of seven bankruptcies, he represented that he was a successful businessman and researcher and that he had obtained a Ph.D. from Northwestern University. He actually used the money for personal expenses. At sentencing, the district court denied him credit for acceptance of responsibility and sentenced him to 120 months’ incarceration. The Seventh Circuit affirmed, rejecting challenges that the court erred in calculating the loss amount, by denying him credit for acceptance of responsibility, and by imposing an “objectively unreasonable” term of imprisonment in light of his severe infirmities. View "Unted States v. Dachman" on Justia Law