Justia White Collar Crime Opinion Summaries

After a jury trial, George Labadie and Susan Carcieri, the latter of whom was employed by a federal credit union, were convicted of violating Mass. Gen. Laws. ch. 266, 52 for embezzling a “bank.” At issue on appeal was whether an employee of a federal credit union may be found guilty under section 52 of embezzlement of the credit union’s funds. The Supreme Court reversed and vacated Defendants’ convictions, holding (1) because the Commonwealth must prove under section 52 that the victim was a “bank” and because a federal credit union is not a “bank” as defined in Mass. Gen. Laws ch. 167, 1, Defendants were entitled to judgments of acquittal on this charge; (2) larceny by embezzlement is a lesser included offense of embezzlement of a bank, and federal preemption doctrine does not bar state prosecution of a federal credit union employee for larceny by embezzlement; and (3) the jury’s verdicts demonstrated that the jurors found Defendants guilty of the required elements of the lesser included offense of larceny by embezzlement. Remanded for entry of convictions of larceny by embezzlement. View "Commonwealth v. Labadie" on Justia Law

In 2008, Musgrave, a CPA, became involved in a tire recycling venture with Goldberg. Musgrave obtained a loan, guaranteed by the Small Business Administration (SBA), through Mutual Federal Savings Bank. The venture ultimately lost the $1.7 million loan and Musgrave lost his $300,000 investment. In 2011, the two were indicted. Goldberg pled guilty to one count of misprision of felony, and the recommended a sentence of three years of probation, restitution, and a special assessment. Musgrave was convicted of: conspiracy to commit wire and bank fraud and to make false statements to a financial institution, 18 U.S.C. 1349; wire fraud, 18 U.S.C. 1343; bank fraud, 18 U.S.C. 1344. The district court sentenced him to one day of imprisonment with credit for the day of processing, a variance from his Guidelines range of 57 to 71 months and below the government’s recommendation of 30 months. The Sixth Circuit vacated, noting that economic and fraud-based crimes are more rational, cool, and calculated than sudden crimes of passion or opportunity and are prime candidates for general deterrence. The district court relied on impermissible considerations and failed to address adequately how what amounted to a non-custodial sentence afforded adequate general deterrence in this context. . View "United States v. Musgrave" on Justia Law

In 2000, Marr’s father founded Equipment Source, which sold used forklifts. Marr managed sales and daily operations, advertising online and selling online or by phone. In 2002, his father opened a merchant account at Palos Bank, to process credit card transactions, with Marr as a signatory. Marr sold forklifts that he never owned or possessed. Customers would contact Marr to complain that they received an invoice and notice of shipment, and that Equipment Source charged the credit card, but that the forklift never arrived. While Marr gave varying explanations, he rarely refunded money or delivered the forklifts. Customers had to contact their credit card companies to dispute the charges. The credit card company would send notice of the dispute to Palos Bank, which noticed a high incidence of chargebacks on Equipment Source’s merchant account and eventually froze the company’s accounts. Its loss on Equipment Source’s merchant account was $328,881.89. In 2003, the FBI executed a search warrant at Equipment Source’s offices and Equipment Source ceased doing business. Eight years later, the government charged Marr with six counts of wire fraud. At trial, the government presented testimony from 14 customers who paid for forklifts but never received them; two bank employees who dealt with chargebacks, and a financial expert witness, who confirmed the $328,881.89 loss. The Seventh Circuit affirmed Marr’s conviction, rejecting arguments that the government relied upon improper propensity evidence, that jury instructions incorrectly explained the law, and that the district court lacked the authority to order restitution. View "United States v. Marr" on Justia Law

After a jury trial, Appellant, who provided tax preparation and filing services, was convicted of ten counts of submitting fraudulent federal tax returns to the Internal Revenue Service (IRS). The First Circuit affirmed, holding that the district court did not err by (1) finding that an instruction preventing the jury from considering a co-worker’s criminal conduct as propensity evidence under Fed. R. Evid. 404(b) was harmless error; (2) declining to strike the summary testimony of a certain IRS agent; and (3) refusing to grant Appellant’s motion for acquittal on Count Eight, which involved a tax return filed on behalf of George Melo, pursuant to Fed. R. Crim. P. 29. View "United States v. Ulloa" on Justia Law

A jury convicted defendants James Sweeney II and Patrick Ryan of 65 counts of white-collar crime (all relating to the sale of securities) and found true three special allegations. The court sentenced Sweeney to 33 years and Ryan to 31 years. The court also imposed restitution. On appeal, both defendants challenged the sufficiency of the evidence on count 68 and the convictions on counts 67, 68, 69, 70, and 71, primarily involving multi-level marketing programs. Ryan also claimed various sentencing errors, including those related to fines and restitution.3 Sweeney makes similar arguments. The Court of Appeal found sufficient evidence for count 68. The Court also upheld convictions on counts 67 through 71. View "California v. Sweeney" on Justia Law

Locke and co‐conspirator engaged in real estate fraud. Locke’s presentence report recommended a 16-point addition to the offense level, calculating a loss of $2,360,914.51 based on all of the properties underlying 15 original counts, although 10 counts had been dismissed. She made a written objection. The probation office argued that relevant conduct could be considered in determining the loss amount, but that even if the loss amount was based solely on Locke’s convicted conduct, the loss amount would exceed $1 million. At sentencing, Locke’s lawyer stated that he was withdrawing the objection to the loss calculation. The district court sentenced Locke to 71 months and ordered her to pay $2,360,916.51 in restitution to 13 entities. The Seventh Circuit remanded, finding that the district court did not make the findings necessary when using relevant conduct to increase the sentence and were insufficient under the Mandatory Victim Restitution Act, 18 U.S.C. 3663A. On remand, Locke successfully moved to bar any evidence regarding relevant conduct not already in the record at the first sentencing. The district court recalculated without the two‐level enhancement for offenses involving 10 or more victims. Locke admitted that she had withdrawn her objections to the amount of loss in the first sentencing, but asserted that her loss amount should not be greater than the restitution amount calculated without regard to relevant conduct. The district court sentenced Locke to 57 months of imprisonment and ordered her to pay $340,789 in restitution, reduced by the amount recovered from sales of the property. The Seventh Circuit discussed the factors that distinguish loss and restitution, but affirmed Locke’s sentence based on waiver.View "United States v. Locke" on Justia Law

The Ho-Chunk Nation, a federally recognized Indian Tribe, operates casinos in Wisconsin and nets more than $200 million annually from its gambling operations. Cash Systems, one of three businesses involved in this case, engaged in issuing cash to casino customers via automated teller machines and kiosks, check-cashing, and credit- and debit-card advances. Whiteagle, a member of the Nation, held himself out as an insider and offered vendors an entrée into the tribe’s governance and gaming operations. Cash Systems engaged Whiteagle in 2002 as a confidential consultant. Cash Systems served as the Nation’s cash-access services vendor for the next six years, earning more than seven million dollars, while it paid Whiteagle just under two million dollars. Whiteagles’s “in” was his relationship with Pettibone, who had been serving in the Ho-Chunk legislature since 1995. Ultimately, Whiteagle, Pettibone, and another were charged with conspiracy (18 U.S.C. 371) to commit bribery in connection with the contracts with the Ho-Chunk Nation and substantive bribery (18 U.S.C. 666). Whiteagle was also charged with tax evasion and witness tampering. Pettibone pleaded guilty to corruptly accepting a car with the intent to be influenced in connection with a contract. Whiteagle admitted that he had solicited money and other things of value for Pettibone from three companies, but denied actually paying bribes to Pettibone and insisted that he and Pettibone had advocated for Whiteagle’s clients based on what they believed to be the genuine merits of those clients. Convicted on all counts, Whiteagle was sentenced, below-guidelines, to 120 months. The Seventh Circuit affirmed, rejecting challenges to the sufficiency of the evidence on the bribery charges, the loss calculation, and admission of certain evidence.View "United States v. Whiteagle" on Justia Law

Moeser was a commercial loan officer at a Milwaukee bank and, in 2004, prepared a presentation on behalf of co-conspirator Woyan for a $790,000 construction loan. Woyan operated PARC, which planned to build townhouses. Other conspirators included the project’s manager, architect, and real estate agent. Moeser told his superiors that the project’s land would serve as collateral and that PARC would provide the land up front. The bank approved the loan. Before closing, Moeser learned that Woyan did not own the land and did not have the funds to purchase it. Rather than informing his superiors, Moeser loaned Woyan $30,500 to purchase the land; Woyan paid Moeser back, plus $15,000 in interest, using funds from the loan’s initial disbursement of $111,299. Although Moeser learned that the project was not progressing and that disbursements were being used for other purposes, he continued to deceive his superiors. The project was never completed and PARC defaulted on its loan. Three contractors and a lumber supplier were never fully paid. The bank foreclosed. Moeser was charged with bank fraud, corrupt acceptance of money, fraud of a financial institution by an employee, and making false statements during an investigation. Moeser and his co-defendants pleaded guilty to conspiracy to commit bank fraud, 18 U.S.C. 1344. The district court gave Moeser a below-guidelines sentence of two years’ probation, which Moeser did not appeal, but found him jointly and severally liable for full restitution. The Seventh Circuit affirmed, rejecting an argument that he should be liable for a lesser share. View "United States v. Moeser" on Justia Law

The Hallahans engaged in fraud, 1993-1999, relating to purported tanning businesses, that bilked investors out of more than $1,000,000. They pled guilty to conspiracy to commit mail and bank fraud, 18 U.S.C. 371, 1341, and 1344, and conspiracy to commit money laundering, 18 U.S.C. 1956(h). Rather than face sentencing for their crimes, they fled the district and remained on the run in Missouri and Arizona for 12 years. After they were arrested, both pled guilty without a plea agreement to the additional crime of failing to appear for sentencing. The district court imposed above-guideline sentences of 270 months on Nelson and 195 months on Janet Hallahan. They challenged their sentences despite having waived their rights to appeal in their original plea agreements. The Seventh Circuit initially affirmed. Denying a petition for rehearing, the Seventh Circuit rejected arguments based on use of a base offense level of seven, instead of six, for calculating the advisory sentencing guideline for the conspiracy counts, stating that the error does not change the result. View "United States v. Hallahan" on Justia Law

Bokhari is a dual citizen of the U.S. and Pakistan. While living in Wisconsin, Bokhari allegedly conducted a fraudulent scheme with his brothers, bilking a nonprofit entity that administered the E‐Rate Program, a federal project to improve internet and telecommunications services for disadvantaged schools, out of an estimated $1.2 million, by submitting false invoices. In 2001, while the alleged fraud was ongoing, Bokhari moved to Pakistan, where, according to the prosecution, he continued directing the illegal scheme. In 2004, a federal grand jury in Wisconsin indicted the brothers for mail fraud, money laundering, and related charges. The brothers pleaded guilty and were sentenced to more than five years in prison. The government submitted an extradition request to Pakistan in 2005. Bokhari contested the request in Pakistani court, and the Pakistani government sent an attorney to plead the case for extradition. In 2007, following a hearing, a Pakistani magistrate declined to authorize extradition. In 2009, the U.S. secured a “red notice” through Interpol, notifying member states to arrest Bokhari should he enter their jurisdiction. In the U.S., Bokhari’s attorneys moved to dismiss the indictment and quash the arrest warrant. The district court denied Bokhari’s motion pursuant to the fugitive disentitlement doctrine. The Seventh Circuit affirmed, characterizing the appeal as an improper attempt to seek interlocutory review of a non‐final pretrial order. View "United States v. Bokhari" on Justia Law