Justia White Collar Crime Opinion Summaries

Walsh and Martin, principals of a futures and foreign currency trading company that acted as a “futures commission merchant” and as a “forex dealer member,” used customer funds for personal expenses, then concealed the company’s insolvency and their criminal conduct by misleading customers about the company’s ability to meet its obligations. Existing customers got account statements that falsely stated their available margin funds, and they solicited new customers by making false statements. They also used a Ponzi-like scheme for redemptions. Shortly before it was shut down, the company had $17,654,486 in unpaid customer liabilities and only $677,932 in assets. Walsh and Martin pleaded guilty to wire fraud, tax evasion, and to making false statements in a report to the Commodities Futures and Trading Commission, a Commodities Exchange Act (7 U.S.C. 6d(a)) violation. The district court sentenced them to terms of imprisonment of 150 and 204 months, respectively, and ordered each to pay $16,976,554 in restitution. The Seventh Circuit affirmed, rejecting challenges to a finding as to the amount of loss and restitution and to application of a sentencing enhancement based upon a finding that each was an officer or director of a futures commission merchant. View "United States v. Walsh" on Justia Law

Clark, the owner and president of an East St. Louis Illinois company, was charged with making false statements in violation of 18 U.S.C. 1001(a)(3). Clark’s company had entered into a hauling services subcontract with Gateway, general contractor on a federally funded highway project in St. Louis, Missouri. Employers must pay laborers working on certain federally-funded projects the “prevailing wage,” calculated by the Secretary of Labor based on wages earned by corresponding classes of workers employed on projects of similar character in a given area, and maintain payroll records demonstrating prevailing wage compliance, 40 U.S.C. 3142(b) The indictment charged that Clark submitted false payroll records and a false affidavit to Gateway, representing that his employees were paid $35 per hour, when they actually received $13-$14 per hour. The district court dismissed for improper venue, finding that when a false document is filed under a statute that makes the filing a condition precedent to federal jurisdiction, venue is proper only in the district where the document was filed for final agency action. The Seventh Circuit reversed. Although the effects of the alleged wrongdoing may be felt more strongly in Missouri than in Illinois, the Southern District of Illinois is a proper venue. View "United States v. Clark" on Justia Law

Defendant was convicted of conspiracy to commit honest-services wire fraud. The conviction arose out of his work for former United States Representative Curt Weldon where defendant intentionally failed to disclose certain payments made to his wife. After the Supreme Court handed down Skilling v. United States, a decision that substantially limited the permissible reach of the honest-services fraud statute, defendant filed a motion under 28 U.S.C. 2255 to vacate and set aside his conviction and sentence. The court concluded that defendant was denied an opportunity to collaterally attack his conviction and sentence because he could not demonstrate that he was also innocent of a separate and uncharged offense that had a lower sentencing range under the Sentencing Guidelines. The court reversed the order denying defendant's motion to vacate his conviction because defendant was not required to make such a showing. View "United States v. Caso, Jr." on Justia Law

Eight defendants who held positions with Clay County, Kentucky, were charged with conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1962(d), based on participation in a vote-buying scheme in three election cycles, 2002 to 2007. Candidates pooled money to pay “vote haulers” to deliver voters for a particular slate of candidates. To ensure that they voted for the correct slate, co-conspiring election officers and poll workers reviewed the ballots. When the proper slate was confirmed, the voter got a token or marking and was paid in a location away from the polls. Conspirators retained lists to avoid double payments and to keep track of whose votes could be bought in future elections and used absentee voting and voter-assistance forms to implement the scheme. When electronic voting machines were introduced, conspiring poll workers misinformed voters that they did not need to click “cast ballot” after selecting candidates; poll workers would enter the voting booth after the voter exited and change the electronic ballot to reflect the slate before casting the ballot. The Clay County Board of Elections was alleged to be the racketeering enterprise in the conspiracy. They were convicted after a seven week trial. The Sixth Circuit vacated, based on cumulative errors in evidentiary rulings. View "United States v. Adams" on Justia Law

Defendant, the founder and former CEO of HealthSouth, was found guilty of federal funds bribery, honest services fraud, and conspiracy to commit the latter offenses. Defendant subsequently appealed the district court's denial of his motion for a new trial filed while Siegelman I was before the Supreme Court on certiorari, and the denial of his motion to recuse the trial judge. The court concluded that there was no abuse of discretion in Judge Henkle's denial of the motion to recuse under 28 U.S.C. 455(b) where the judge's ex parte meeting with the Marshals regarding a disputed factual issue did not lead an objective disinterested lay observer to entertain significant doubt about the judge's impartiality and the judge did not have personal knowledge of disputed evidentiary facts concerning the proceeding, nor was he likely to be a material witness. Addressing five of the six grounds defendant relied on in seeking a new trial, the court also concluded that there was no abuse of discretion in Judge Fuller's handling of the motion for new trial under Federal Rule of Criminal Procedure 33(b)(1). Accordingly, the court affirmed the judgment of the district court. View "United States v. Scrushy" on Justia Law

Kluger and Bauer were charged as conspirators in an insider-trading scheme in which Robinson was the third participant. The conspiracy spanned 17 years and was likely the longest such scheme in U.S. history. Kluger entered a guilty plea to conspiracy to commit securities fraud; securities fraud; conspiracy to commit money laundering; and obstruction of justice, 18 U.S.C. 371, 15 U.S.C. 78j(b) and 78ff(a); 18 U.S.C. 1956(h), 18 U.S.C. 1512(c)(2), and 18 U.S.C. 2. The plea agreement did not include a stipulation as to the guidelines sentencing range. The district court imposed a 60-month term on Count I and 144-month custodial terms on each other count, all to be served concurrently, thought to be the longest insider-trading sentence ever imposed. After a separate hearing on the same day, the court sentenced Bauer to a 60-month term on Count I and 108-month terms on each other count to be served concurrently. Robinson, who was the “middleman,” in the scheme, pled guilty to three counts and was sentenced to concurrent 27-month terms. Robinson’s sentence was far below his guidelines range of 70 to 87 months but the prosecution sought a downwards departure because Robinson was cooperating in its investigation and prosecution. The Third Circuit upheld Kluger’s sentence. View "United States v. Kluger" on Justia Law

Defendants appealed their securities fraud and conspiracy convictions stemming from their involvement in a double-blind, high-volume insider trading network that led the participants to acquire over $10 million in profits. The court held that wiretap evidence was lawfully obtained and therefore properly admitted; the jury had sufficient evidence to convict Defendant Kimelman of securities fraud; the conscious avoidance jury instructions were proper; evidence of Kimelman's rejection of a plea bargain was properly excluded; and defendants' sentences were reasonable. Accordingly, the court affirmed the convictions and sentences. View "United States v. Goffer" on Justia Law

Defendants in this case were a Puerto Rico legislator and a Commonwealth businessman who were charged with unlawfully exchanging favorable action on legislation for a trip to Las Vegas to attend a prize fight. After a jury trial, Defendants were convicted of, inter alia, federal program bribery in violation of 18 U.S.C. 666. Defendants appealed, contending, among other issues, that the district court erred in instructing the jury to find guilt on the section 666 counts based on a gratuity theory rather than a bribery theory. The First Circuit Court of appeals (1) vacated Defendants' section 666 convictions, holding that because section 666 does not criminalize gratuities in addition to bribes, the district court erred in its instructions; and (2) directed the district court to enter a judgment of acquittal on Defendants' conspiracy charges, holding that the Double Jeopardy Clause entitled both men to acquittal on their respective conspiracy charges. View "United States v. Bravo-Fernandez" on Justia Law

Defendants, former executives of the retail drugstore chain Duane Reede, appealed their convictions for securities fraud. Defendants had executed a number of schemes to inflate the company's earnings in quarterly and annual financial statements filed with the SEC. The court concluded that the district court did not abuse its discretion in admitting the testimony of non-expert witnesses. The court also concluded that Defendant Tennant's claims that his conviction should be overturned for insufficient evidence to prove his knowledge of the fraud and that it was error for the district court to give a conscious avoidance jury instruction were without merit. Accordingly, the court affirmed the judgment. View "United States v. Cuti" on Justia Law

FBI agents Freeman and Howell investigated the Hinds, who worked for Indiana criminal defense attorney Alexander, for bribery of witnesses, including Kirtz. They equipped Kirtz and Chrisp with recording devices for a meeting, during which Alexander stated that he did not know about Hinds’s bribery and would attempt to find out what was going on. Although Kirtz and Chrisp later confirmed that this meeting occurred and that they delivered the recordings, the agents never produced the recordings and claimed that the meeting never occurred. Months later, McKinney, who had a grudge against Alexander, became the new prosecutor. Alexander claims that McKinney conspired with Kirtz and Chrisp (then under investigation for participation in an arson ring) to destroy the recording and manufacture evidence against Alexander. Alexander was acquitted of bribery charges and filed a Notice of Tort Claim with the FBI, stating his intention to sue under the Federal Tort Claims Act, 28 U.S.C. 2671-2680. The FBI declined to act. Alexander filed suit, alleging malicious prosecution and intentional infliction of emotional distress. The district court dismissed, based on failure to state a claim for malicious prosecution and untimely filing of the intentional infliction of emotional distress claim. The Seventh Circuit reversed. Alexander alleged specific events that fell within the limitations period. View "Alexander v. United States" on Justia Law