Justia White Collar Crime Opinion Summaries

Appellants were executives at the Purdue Frederick Company when it misbranded the painkiller OxyContin a schedule II controlled substance. The Company was convicted of fraudulent misbranding, and the executives were convicted under the "responsible corporate officer" doctrine of the misdemeanor of misbranding a drug. Based upon their convictions, the Secretary of Health and Human Services later excluded the individuals from participation in federal health care programs for twelve years under 42 U.S.C. 1320a-7(b). Appellants sought review, arguing that the statute did not authorize their exclusion and the Secretary's decision was unsupported by substantial evidence and was arbitrary and capricious. The district court granted summary judgment for the Secretary. The D.C. Circuit Court of Appeals reversed, holding (1) the statute authorized the Secretary's exclusion of Appellants, but (2) the Secretary's decision was arbitrary and capricious for want of a reasoned explanation for the length of the exclusions. View "Friedman v. Sebelius" on Justia Law

In 2005 Truman and partners purchased a vacant commercial building for $175,000, insured for $4,250,000 in fire-related losses. The property, without the building, was worth more than with the building. After a minor accidental fire, Truman told an employee that if it ever caught fire again, just get out. Considering leasing, Truman stated that it would make more money if it burnt. By late 2006, Truman had less than $5,000 in personal bank accounts. Premiums were paid through November 17. The building burned down November 12. Truman, Jr. confessed that he had burned the building at his father’s direction. State charges were dismissed because of inability to corroborate junior’s testimony, as required under New York law. Truman was charged with aiding and abetting arson, 18 U.S.C. 844(i); mail fraud, 18 U.S.C. 1341; use of fire in commission of a felony, 18 U.S.C. 844(h); and loan fraud, 18 U.S.C. 1341. Following a guilty verdict the district court granted acquittal and conditionally granted a new trial. The Second Circuit vacated and remanded for sentencing. Junior’s refusal to answer certain questions did not render his testimony incredible as a matter of law, and his prior state testimony was nonhearsay. Truman was not prejudiced by improper cross-examination or summation argument references to the cooperation agreement. View "United States v. Truman" on Justia Law

Venti’s father received federal Civil Service Retirement System benefits. Venti’s father died in 1990, which should have terminated his benefits. The Office of Personnel Management continued to deposit the CSRS funds into a checking account that Venti had shared with his father. In 2003, Venti opened a new joint checking account at RFCU in the names of himself and his father and arranged for the CSRS benefits, as well as his own Social Security benefits, to be deposited in the new account. In 2005, OPM learned of the death of Venti's father and stopped depositing the CSRS benefits. In 2009, Venti was convicted of theft of government property (18 U.S.C. 641), one count for each of nine checks written in his father’s name during 2005, and was sentenced to 15 months. The First Circuit affirmed, rejecting an argument that one count was time-barred. If the count had been time-barred, the sentence would have been limited to one year because Venti would be treated as a misdemeanant rather than as a felon. View "United States v. Venti" on Justia Law

The Federal Deposit Insurance Corporation (FDIC) sought an order to prohibit brothers George and Robert Michael, former owners, directors, (Robert), officer of Citizens Bank, from participation in the affairs of any insured depository, 12 U.S.C. 1818(e)(7), and civil penalties, 12 U.S.C. 1818(i), for violations of Federal Reserve regulations, breaches of fiduciary duty, and unsafe and unsound practices. The ALJ issued a 142-page decision with detailed findings showing that the Michaels engaged in insider transactions and improper lending practices and recommending that the FDIC Board issue a prohibition order and civil penalties. The FDIC Board affirmed the decision. The Seventh Circuit affirmed. The Michaels urged overturn of numerous adverse credibility determinations and proposed inferences from the record in a way that paints a picture of legitimacy despite the Board’s contrary determinations. The court noted the deference owed the agency determination and found substantial evidence to support the Board’s decision.. View "Michael v. Fed. Deposit Ins. Corp." on Justia Law

In 2005, Banks, a construction worker, wanted to flip houses, but did not have capital. John, a mortgage broker, suggested that they purchase homes from distressed owners at inflated prices, with the sellers promising to return money above what they owed their own lenders. Owners cooperated rather than face foreclosure. Banks renovated the houses using funds received from sellers and resold them. Johns collected a broker’s fee. When they purchased a house from owners in bankruptcy, they wanted a mortgage to secure payment from the sellers and informed the trustee of the bankruptcy estate. Despite protestations by the trustee, the sale went through, and Banks used the rinsed equity to pay off sellers’ creditors through the trustee. The sellers’ lawyer discovered the scheme, which led to indictments. Johns was convicted of making false representations to the trustee regarding the second mortgage and for receiving property from a debtor with intent to defeat provisions of the Bankruptcy Code. With enhancements for financial loss and for targeting vulnerable victims, Johns was sentenced to 30 months. The Seventh Circuit affirmed the conviction, rejecting challenges to sufficiency of the evidence and jury instructions, but remanded for clarification of sentencing enhancements. View "United States v. Johns" on Justia Law

Defendants were employees of subcontractor that provided concrete for Boston's Central Artery/Tunnel project, the "Big Dig." The government charged that over nine years, the company knowingly provided concrete that failed to meet project specifications and concealed that failure by creating false documentation purporting to show that the concrete provided complied with specifications. Several employees, including defendants, were convicted of mail fraud, highway project fraud, and conspiracy to defraud the government. The district court calculated the guidelines sentencing range as 87- to 108-months incarceration, then sentenced defendants to six months of home monitoring, three years of probation, and 1,000 hours of community service. The First Circuit affirmed. The district court's explanation ultimately supports the reasonableness of the sentences, based on its finding that the loss amount caused by the crimes, the most significant factor in determining the GSR, was imprecise and did not fairly reflect the defendants' culpability. The court also found that there was insufficient evidence to conclude that the defendants' conduct made the Big Dig unsafe in any way or that the defendants profited from the offenses and considered personal circumstances. View "United States v. Stevenson" on Justia Law

McKinney and his brother own a construction business. In 2003, the IRS filed notice of tax liens and pursued collection. McKinney avoided payment by transferring money from the business into accounts used for personal expenses. He made false statements about his ability to pay. He failed to pay taxes during 1999, 2000, 2002, 2003, 2004, 2005, and 2006. Because of the tax liens, McKinney was unable to obtain a residential mortgage. His wife obtained a loan to purchase a home, falsely stating that she was a full-time manager of the construction business with a gross monthly income of $15,374.23. Her husband signed a false employment verification; he earned the income used to pay the mortgage. His brother and his brother’s wife acted similarly. McKinney entered a plea to charges of conspiracy to defraud, impede, impair, obstruct, and defeat functions of the IRS in collection of income taxes, 18 U.S.C. 371; tax evasion, 26 U.S.C. 7201; and false statements to revenue agents, 26 U.S.C. 1001. He received a two-level enhancement to his base offense level for failing to report income exceeding $10,000 from criminal activity, U.S.S.G. 2T1.1(b)(1), and a two-level enhancement for obstruction of justice, U.S.S.G. 3C1.1. The Seventh Circuit affirmed. View "United States v. McKinney" on Justia Law

A member of the Boston City Council was convicted of attempted extortion under color of official right (Hobbs Act, 18 U.S.C. 1951) and three counts of making a false statement to FBI agents, 18 U.S.C. 1001 for accepting $1,000 in exchange for performing official acts to assist a local businessman in obtaining a liquor license for a supper club. That businessman was cooperating with the FBI. The First Circuit affirmed, rejecting challenges to sufficiency of the evidence and to jury instructions on reciprocity and interstate commerce. The court upheld the 36-month sentence against a contention that the government impermissibly sought vindictively to punish defendant. View "United States v. Turner" on Justia Law

One defendant pled guilty to seven counts of aggravated identity theft, 18 U.S.C 1028 A, and access device fraud, 18 U.S.C. 1029 (a)(2) and the other was convicted of aggravated identity theft and two counts of identity fraud, arising from their participation in a substantial credit card fraud scheme. The First Circuit affirmed, rejecting challenges to the indictment, evidentiary rulings, and the sentences of 81 months and 168 months. View "United States v. Savarese" on Justia Law

Brinley operated an investment company; his investors were friends, neighbors, and family. He told them that the certificates of deposit were FDIC insured and that their principal was not at risk, and promised above-market returns. He used their money to pay returns to other investors, overhead and living expenses. Brinley lied to investors who attempted to withdraw funds. In 2009, unable to continue the scheme, Brinley, accompanied by his attorney confessed that he owed investors approximately four million dollars. He entered a plea of guilty to wire fraud, 18 U.S.C. 1343. The probation officer calculated a Guidelines sentence range of 63-78 months. Brinley presented evidence of depression and argued for downward departure pursuant to U.S.S.G. 5K2.16 for acceptance of responsibility. The court rejected a claim that the offense would not have been detected absent disclosure, concluded that the guidelines failed to capture the severity of the offense, given the number and vulnerability of the victims, the need for deterrence, and the amount of loss, and imposed a sentence of 108 months. The Sixth Circuit affirmed, rejecting arguments that the court failed to notify of intent to vary upward, gave unreasonable weight to certain factors, considered impermissible factors, and imposed an unreasonable sentence. View "United States v. Brinley" on Justia Law