Justia White Collar Crime Opinion Summaries

Defendants, two of three lawyers who represented several hundred Kentucky clients in a mass-tort action against the manufacturer of the defective diet drug "fen-phen," settled the case for $200 million, which entitled them under their retainer agreements to approximately $22 million each in attorney fees. By visiting clients and obtaining their signatures on "confidential settlements," for lesser amounts, the two actually disbursed slightly more than $45 million, less than 23 percent of the total settlement. The lawyers kept the remainder for themselves and associated counsel, transferring much of it from the escrow account to various other accounts, including out-of-state accounts. The scheme was discovered; the lawyers were disbarred and convicted of conspiracy to commit wire fraud, 18 U.S.C. 1343, 1349. One was sentenced to 240 months, the other to 300 months. They were ordered to pay more than $127 million in restitution. The Sixth Circuit affirmed, rejecting a variety of challenges to the sufficiency of the evidence and trial procedures. View "United States v. Cunningham" on Justia Law

Defendant pleaded guilty to two counts of price fixing and one count of bid rigging in violation of 15 U.S.C. 1. Defendant subsequently appealed his sentence, contending that the district court abused its discretion by not accepting the binding plea agreement. Defendant also contended that the sentence of 48 months, as well as the amount of the fine, was substantively unreasonable. The court found no basis for concluding the final sentence was substantively unreasonable. The district court considered appropriate factors in varying from the guidelines and adequately explained its sentence. Similarly, the district court considered appropriate factors in selecting the fine amount, and adequately explained its chosen amount. Therefore, the court found no basis for concluding the amount of the fine was substantively unreasonable. View "United States v. Vandebrake" on Justia Law

Defendants owned an engineering and surveying company. Between 2002 and 2008, it failed to pay the IRS more than $500,000 in taxes withheld from employee paychecks. They were convicted of conspiracy to defraud the United States, 18 U.S.C. 371, and 21 counts of failure to account and pay over employment taxes, 26 U.S.C. 7202. The Third Circuit affirmed the convictions, rejecting claims of evidentiary errors, but remanded for resentencing. The district court erred in imposing a two-level increase to the offense levels for abuse of a position of trust, pursuant to U.S.S.G. 3B1.3.View "United States v. DeMuro" on Justia Law

Defendant, a securities broker, pleaded guilty to charges related to his conduct involving a bribe greater than $70,000. On appeal, defendant contended that the district court erred in calculating restitution insofar as it ordered both restitution and forfeiture in the amount of defendant's gains from the fraudulent scheme underlying his conviction. The court held that it was error for the district court to substitute defendant's gains for the victims' losses in calculating restitution, but declined to exercise the court's discretion to notice the error, as defendant failed to object in the district court, and had failed on appeal to show that the error affected his substantial rights or undermined the fairness, integrity, and public reputation of judicial proceedings. View "United States v. Zangari" on Justia Law

In 2004, actor John Stamos visited a resort with a group of male friends and met Coss, then 17 years old. Coss and her friend attended a party at Stamos's hotel room. Alcohol was served. Stamos and Coss corresponded for several years and, in 2005, Coss flew to Chicago to visit Stamos while he was filming a television show. In 2008, Coss began dating Sippola. After Sippola saw photographs that Coss had of Stamos, the two devised a plan to obtain money from Stamos in exchange for the photographs. They created two fictitious personas. Emails from a fictional 17-year-old girl whom Stamos had purportedly impregnated while on vacation resulted in a cease-and-desist letter. Coss then indicated that another party had pictures of them using drugs and trashing the hotel room. Stamos's lawyer contacted law enforcement. The FBI stepped in and reached an agreement with Sippola’s fictional character to purchase the photographs for $680,000. Sippola and Coss were convicted of conspiracy to commit extortion 18 U.S.C. 371; 875(d) and sentenced to 48 months.. The Sixth Circuit affirmed, rejecting a challenge to sufficiency of the evidence and a claim to downward adjustment for acceptance of responsibility under USSG 3E1.1.View "United States v. Sippola" on Justia Law

Former Massachusetts state senator Wilkerson, pleaded guilty to attempted extortion (18 U.S.C. 1951) based on her acceptance of money in exchange for favorable influence in her official capacity on issuance of a liquor license and sale and development of publicly-owned land. The district court received a lengthy presentence report, conducted a thorough hearing, and stated reasons for imposing a sentence of 42 months, near the middle of the guidelines. The First Circuit affirmed. The court’s statement that "tax violation by a public official is not a personal matter" is most plausibly interpreted as a segue to make a "larger point" about the public implications of an over-engaged official's failure to attend to her own legal responsibilities. Its statement that Wilkerson "was simply inattentive and inattentive in a way that permitted her to have access to money that she should not have had" was fair comment on the implications of non-compliance with campaign-finance requirements. Its statement that Wilkerson's engagement as a college "consultant" was one of "a series of very embarrassing things" she did in response to her financial troubles was specific to the circumstances of the arrangement. The district court's skeptical appraisal of the arrangement was reasonable. View "United States v. Wilkerson" on Justia Law

Willie Keen, a former zoning official for Dixie County, Florida, appealed convictions arising from two different cases consolidated on appeal. In Case No. 09-16027, a jury convicted Keen of fraudulently obtaining low-income housing funds in violation of federal criminal law. In Case Nos. 09-16028, 10-10438, and 10-10439, a jury convicted Keen, together with former Dixie County Commissioners John Driggers and Alton Land, of federal bribery charges that stemmed from an undercover investigation of corruption in Dixie County. On appeal, Keen, Driggers, and Land challenged their convictions. The court confirmed all convictions after careful review of the record and the parties' briefs, and after having had the benefit of oral argument. However, because the court concluded that the district court erred in calculating Keen's sentence, the court remanded to the district court with a mandate to vacate the sentence and re-sentence him. View "United States v. Keen, Jr.; United States v. Driggers, et al." on Justia Law

In 2002 Bell established mutual funds and raised about $2.5 billion for investment. Most of the firms to which the funds routed money were controlled by Petters. He was running a Ponzi scheme. There was no inventory. New investments paid older debts, with some money siphoned off for personal use. When Petters was caught in 2008, the funds collapsed; about 60% of the money was gone. The funds' bankruptcy trustee filed suit against the funds' auditor, alleging negligence. The district court dismissed without deciding whether the auditor had acted competently, invoking the doctrine of in pari delicto, based on Bell's knowledge of the scheme. The Seventh Circuit vacated, noting that Bell was not stealing funds and that the extent of his knowledge cannot be determined at this stage. An allegation that Bell was negligent but not criminally culpable in 2006 and 2007 makes the claim against the auditor sufficient. View "Peterson v. McGladrey & Pullen, LLP" on Justia Law

In 1996 defendant and his cousin formed companies that bought, stored, and sold grain, and provided farming services. In 1999, the cousins obtained bank loan by falsely representing that valuable contracts existed for future grain deliveries from one company to the other and inflating balances of bank accounts by writing bad checks between accounts. Charged with loan fraud and check-kiting (18 U.S.C. 1344) that cost the bank more than $2.5 million, the cousin pled guilty. Defendant testified that the transactions were in good faith, but was convicted and sentenced to 70 months in prison and restitution in the amount of $1,967,055.30, the outstanding balance on the loans. The Seventh Circuit affirmed, rejecting arguments that the indictment was multiplicitous; that there was insufficient evidence of guilt beyond a reasonable doubt; that sentencing under 2009 guidelines violated the ex post facto clause; that loss and restitution amounts were miscalculated; that an enhancement for obstruction of justice was improper; and that the disparity between defendant’s sentence and that of his cousin was improper.View "United States v. Peugh" on Justia Law

Petitioner, in his capacity as the State Director of the United Public Workers, AFSCME, Local 646, AFL-CIO (UPW), negotiated contracts with dental and health insurance providers, HDS and PGMA, on behalf of UPW members and their families. A jury subsequently convicted petitioner of fifty counts of "theft of honest services" from the UPW and its members, as well as conspiracy, embezzlement, money laundering, and health care fraud. At issue was the instructional omission to the jury regarding honest services fraud in light of the Supreme Court's holding in Skilling v. United States. The court held that the error had no "substantial and injurious effect or influence in determining the jury's verdict." Accordingly, the court affirmed the theft of honest services, money laundering, and health care fraud judgments of conviction against petitioner and affirmed the judgment of the district court. View "United States v. Gary Rodrigues" on Justia Law