Justia White Collar Crime Opinion Summaries

Arroyo served in the Illinois House of Representatives from 2006-2019, while also managing a lobbying firm. In 2018-2019, Arroyo’s firm received $32,500 in checks from Weiss’s sweepstakes-gaming company in exchange for his official support for the sweepstakes industry in the General Assembly. Despite never previously expressing a view on sweepstakes gaming, Arroyo began pushing for sweepstakes-friendly legislation and encouraging other legislators and executive-branch officials to support the same. Arroyo concealed his financial arrangement with Weiss.When the government uncovered the bribery scheme, Arroyo pleaded guilty to wire fraud, 18 U.S.C. 666(a)(2). The court sentenced him to 57 months’ imprisonment and ordered that he forfeit $32,500 in bribe money. The Seventh Circuit affirmed, rejecting Arroyo’s contention that the judge erred by finding his 57-month sentence necessary to deter public corruption. District judges need not marshal empirical data on deterrent effects before considering whether a sentence adequately deters criminal conduct. The judge presumed that public officials are rational actors who pay attention when one of their own is sentenced. That presumption that sentences influence behavior at the margins was reasonable. The court also rejected arguments that the judge erred by deeming several of his allocution statements aggravating and ordering him to forfeit too much money. View "United States v. Arroyo" on Justia Law

Vepuri is the de facto director of KVK-Tech, a generic drug manufacturer. He employed Panchal as its director of quality assurance. KVK-Tech manufactured and sold Hydroxyzine, a prescription generic drug used to treat anxiety and tension. The government alleges that Vepuri, Panchal, and KVK-Tech sourced active ingredient for the Hydroxyzine from a facility (DRL) that was not included in the approvals that they obtained from the FDA and that they misled the FDA about their practices.An indictment charged all three defendants with conspiracy to defraud and to commit offenses against the United States and charged KVK-Tech with an additional count of mail fraud. The district court dismissed the portion of the conspiracy charge that alleges that the three conspired to violate the Food, Drug, and Cosmetic Act (FDCA), which prohibits introducing a “new drug” into interstate commerce unless an FDA approval “is effective with respect to such drug,” 21 U.S.C. 355(a).The Third Circuit affirmed, rejecting an argument that a deviation from the approved drug application means that the approval is no longer effective. The approval ceases being effective only when it has been withdrawn or suspended. The indictment does not include any allegations that the KVK-Tech Hydroxyzine manufactured with active ingredients from DRL had a different composition or labeling than the KVK-Tech Hydroxyzine with the effective approval. View "United States v. Vepuri" on Justia Law

For 15 years, Charles ran 26 payday-lending companies, violating state criminal laws against usury, charging fees roughly equal to 780% interest per year. The companies grossed nearly half a billion dollars. Charles was convicted of 17 counts, including two for RICO conspiracy. He was sentenced to 14 years in prison, fined $2.5 million, and had to forfeit $64 million in illicit gains from the RICO conspiracy. Charles had already given some of the forfeited property to his daughter Linda. After the forfeiture orders, Linda filed ancillary claims to recover her interest in the assets.The Third Circuit affirmed the denial of her claims. For a RICO conviction, the defendant “shall forfeit” any interest in or proceeds from the conspiracy, 18 U.S.C. 1963(a). Third parties may neither intervene in that forfeiture proceeding nor bring separate suits to assert their interests. Any person, other than the defendant, asserting a legal interest in the forfeited property may bring an ancillary claim; the court can amend the forfeiture order if that party shows that she either was a bona fide purchaser for value or has an interest in the forfeited property that was vested or superior at the time of the crime. The third party cannot “relitigate” the underlying forfeiture order. View "United States v. Hallinan" on Justia Law

Jumper, a securities broker-dealer, arranged financing on behalf of private investors for the purchase of a Pennsylvania fire-brick manufacturer. Jumper fraudulently obtained authority to transfer the company’s pension plan assets by forging the majority stakeholder’s signature on several documents. Between 2007-2016, Jumper transferred $5.7 million from the pension plan to accounts he controlled.The SEC filed a civil complaint against Jumper for securities fraud in the Western District of Tennessee. The Department of Justice filed criminal charges against Jumper in the Middle District of Pennsylvania. The Tennessee court entered a default judgment for the SEC and ordered Jumper to disgorge $5.7 million and to pay prejudgment interest of $726,758.79. In Pennsylvania, Jumper pleaded guilty to wire fraud and agreed to make full restitution; the parties stipulated a loss of $1.5-$3.5 million.The district court considered Jumper’s request for a downward departure based on medical issues, discussed the relevant 18 U.S.C. 3553(a) factors, and denied Jumper’s requests, explaining, the Bureau of Prisons (BOP) is equipped to provide consistent, adequate medical care. The court sentenced Jumper to 78 months’ incarceration, at the bottom of the Guidelines range of 78–97 months, and ordered him to pay $2,426,550 in restitution. The Third Circuit affirmed, rejecting arguments that the sentence violated the Double Jeopardy Clause and principles of collateral estoppel and that the court improperly concluded that the BOP could treat his medical issues. View "United States v. Jumper" on Justia Law

You, a U.S. citizen of Chinese origin, worked as a chemist, testing the chemical coatings used in Coca-Cola’s beverage cans. You was one of only a few Coca-Cola employees with access to secret BPA-free formulas. You secretly planned to start a company in China to manufacture the BPA-free chemical and received business grants from the Chinese government, claiming that she had developed the world’s “most advanced” BPA-free coating technology. On her last night as a Coca-Cola employee, You transferred the formula files to her Google Drive account and then to a USB drive. You certified that she had not kept any confidential information. You then joined Eastman, where she copied company files to the same account and USB drive. Eastman fired You and became aware of her actions. Eastman retrieved the USB drive and reported You to the FBI.You was convicted of conspiracy to commit theft of trade secrets, 18 U.S.C. 1832(a)(5), possessing stolen trade secrets, wire fraud, conspiracy to commit economic espionage, and economic espionage. The Sixth Circuit remanded for resentencing after rejecting You’s claims that the district court admitted racist testimony and gave jury instructions that mischaracterized the government’s burden of proof as to You’s knowledge of the trade secrets and their value to China. In calculating the intended loss, the court clearly erred by relying on market estimates that it deemed speculative and by confusing anticipated sales of You’s planned business with its anticipated profits. View "United States v. You" on Justia Law

Defendant-Appellant Derald Geddes was convicted by a jury of tax obstruction, tax evasion, and three counts of willfully filing false tax returns in the years 2011, 2012, and 2013. He was sentenced to five years in prison, three years of supervised release, and ordered to pay about $1.8 million in restitution. On appeal, he argued: (1) restitution was impermissibly ordered to begin during his imprisonment; (2) 16 conditions of supervised release not pronounced orally at sentencing improperly appeared in the written judgment; and (3) one of those 16 conditions, the risk notification to third parties condition, was invalid under United States v. Cabral, 926 F.3d 687 (10th Cir. 2019). After review, the Tenth Circuit Court of Appeals reversed the district court’s imposition of restitution to the extent it was ordered to be paid outside the term of supervised release and remanded for the court to modify the written judgment. The Court affirmed the district court’s imposition of the mandatory conditions of supervised release in the written judgment and reversed the imposition of the discretionary standard conditions of supervised release. The case was remanded for the district court to conform the written judgment to what was orally pronounced in a manner consistent with the Tenth Circuit's opinion. View "United States v. Geddes" on Justia Law

Hansen promised hundreds of noncitizens a path to U.S. citizenship through “adult adoption,” earning nearly $2 million from his fraudulent scheme. The government charged Hansen under 8 U.S.C. 1324(a)(1)(A)(iv), which forbids “encourag[ing] or induc[ing] an alien to come to, enter, or reside in the United States, knowing or in reckless disregard of the fact that such [activity] is or will be in violation of law.” The Ninth Circuit found Clause (iv) unconstitutionally overbroad, in violation of the First Amendment.The Supreme Court reversed. Because 1324(a)(1)(A)(iv) forbids only the purposeful solicitation and facilitation of specific acts known to violate federal law, the clause is not unconstitutionally overbroad. A statute is facially invalid under the overbreadth doctrine if it “prohibits a substantial amount of protected speech” relative to its “plainly legitimate sweep.” Here, Congress used “encourage” and “induce” as terms of art referring to criminal solicitation and facilitation (capturing only a narrow band of speech) not as those terms are used in ordinary conversation. Criminal solicitation is the intentional encouragement of an unlawful act, and facilitation—i.e., aiding and abetting—is the provision of assistance to a wrongdoer with the intent to further an offense’s commission. Neither requires lending physical aid; both require an intent to bring about a particular unlawful act. The context of these words and statutory history indicate that Congress intended to refer to their well-established legal meanings. Section 1324(a)(1)(A)(iv) reaches no further than the purposeful solicitation and facilitation of specific acts known to violate federal law and does not “prohibi[t] a substantial amount of protected speech” relative to its “plainly legitimate sweep.” View "United States v. Hansen" on Justia Law

Smagin won a multimillion-dollar arbitration award against Yegiazaryan stemming from the misappropriation of funds in Moscow. Because Yegiazaryan lives in California, Smagin, who lives in Russia, filed suit to enforce the award in California under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The district court froze Yegiazaryan’s California assets before entering judgment. While the action was ongoing, Yegiazaryan himself obtained an unrelated multimillion-dollar arbitration award and sought to avoid the asset freeze by concealing the funds.Smagin filed a civil suit under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1964(c), alleging Yegiazaryan and others worked together to frustrate Smagin’s collection on the judgment through a pattern of RICO predicate racketeering acts, including wire fraud, witness tampering, and obstruction of justice. The district court dismissed the complaint, finding that Smagin failed to plead a “domestic injury.”The Ninth Circuit and the Supreme Court disagreed. The “domestic-injury” requirement for private civil RICO suits is context-specific and turns largely on the facts alleged; it does not mean that foreign plaintiffs may not sue under RICO. The circumstances surrounding Smagin’s injury indicate that the injury arose in the United States. Smagin’s alleged injury is his inability to collect his judgment. Much of the alleged racketeering activity that caused that injury occurred in the United States. While some of Yegiazaryan’s actions to avoid collection occurred abroad, the scheme was directed toward frustrating the California judgment. The injurious effects of the racketeering activity largely manifested in California and undercut the orders of the California court. The Court rejected arguments that fraud is typically deemed felt at the plaintiff’s residence and that intangible property is generally located at the owner’s domicile as not necessarily supporting the presumption against extraterritoriality, with its distinctive concerns for comity and discerning congressional meaning. View "Yegiazaryan v. Smagin" on Justia Law

Susan Coons appealed a criminal judgment finding her guilty of forgery. During jury selection, the district court informed the jury panel that the potential jurors had the option to speak with the court “in private” in a separate room if they had information to share that might be embarrassing or intrusive. After general questioning of the panel, the court, Coons, the attorneys for both Coons and the State, and an officer met in a private room and conducted individual questioning of three prospective jurors on the record. Coons argued on appeal that this procedure for individual questioning constituted a trial closure and violated her right to public trial. The North Dakota Supreme Court concluded the district court’s findings were sufficient to show an overriding interest but that the court’s limited consideration of the scope of closure and failure to consider alternatives to closure were erroneous. "Although the court identified one interest that may support closure, it did not narrowly tailor to that interest." The Court concluded this error was obvious error and the judgment was reversed. View "North Dakota v. Coons" on Justia Law

Dubin was convicted of healthcare fraud, 18 U.S.C. 1347 after he overbilled Medicaid for psychological testing performed by his company. The prosecution argued that, in defrauding Medicaid, he also committed “[a]ggravated identity theft” under section 1028A(a)(1), which applies when a defendant, “during and in relation to any [predicate offense, such as healthcare fraud], knowingly transfers, possesses, or uses, without lawful authority, a means of identification of another person.” Dubin’s fraudulent Medicaid billing included the patient’s Medicaid reimbursement number. The Fifth Circuit affirmed Dubin’s aggravated identity theft conviction.The Supreme Court vacated. Under section 1028A(a)(1), a defendant “uses” another person’s means of identification “in relation to” a predicate offense when the use is at the crux of what makes the conduct criminal. Under the government’s view, section 1028A(a)(1) would apply automatically any time a name or other means of identification happens to be part of the payment or billing used in the commission of a long list of predicate offenses. The Court concluded that the use of a means of identification must entail using a means of identification specifically in a fraudulent or deceitful manner, not as a mere ancillary feature of a payment or billing method. The inclusion of “aggravated” in 1028A’s title suggests that Congress contemplated a particularly serious form of identity theft, not ordinary overbilling offenses. View "Dubin v. United States" on Justia Law