Justia White Collar Crime Opinion Summaries

Appellants Walter Teel, Paul Minor and John Whitfield raised several appellate issues arising from their final amended judgments of convictions and sentences entered by the district court after the Fifth Circuit Court of Appeals remanded the case for resentencing in United States v. Whitfield. The Fifth Circuit Court of Appeals affirmed the district court's judgment on remand, holding (1) Appellants' argument that the jury instructions erroneously defined honest-services fraud were barred by the mandate rule; (2) Appellants' argument that the indictment was erroneous for failure to state an offense was also barred by the mandate rule; and (3) the district court did not err in sentencing Minor and Whitfield. View "United States v. Teel" on Justia Law

The Eleventh Circuit consolidated two criminal cases involving sophisticated financial structuring arrangements between related corporate subsidiaries. Appellants, William Allen Broughton and Richard William Peterson were convicted of conducting a "modern-day financial shell game" in which they falsified financial statements, exchanged paper ownership over non-extant fraudulent assets, and collected insurance premiums and monthly payments from unwitting innocents. Collectively, they stated two bases for reversal: (1) Broughton contended that the Government's purported failure to file charges within the relevant statutes of limitations "demand[ed]" reversal; and (2) both Appellants claimed that the district court erred in denying their motions for judgment of acquittal due to an insufficiency of evidence. Finding no error, the Eleventh Circuit affirmed Appellants' convictions. View "United States v. Peterson" on Justia Law

Defendant Donald Branham pleaded guilty to numerous counts of bank fraud and was sentenced to thirty months in prison and ordered to pay $1.8 million in restitution. The district court issued a writ of garnishment to garnish specified accounts that belonged to Donald and his wife Charlotte. The Branhams moved to dissolve the writ of garnishment on the ground that Charlote's accounts were not community property. They also requested a hearing. The district court denied the Branhams' motions without a hearing. The Branhams appealed. The Fifth Circuit Court of Appeals dismissed the appeal without prejudice for want of appellate jurisdiction, holding that the order appealed from was not a final order. View "United States v. Branham" on Justia Law

After being rejected for a mortgage because Hall had a bankruptcy and their joint income was too low, Phillips and Hall applied with Bowling, a mortgage broker, under the “stated income loan program.” Bowling prepared an application that omitted Hall’s name, attributed their combined income to Phillips, doubled that income, and falsely claimed that Phillips was a manager. Phillips signed the application and employment verification form. Fremont extended credit. They could not make the payments; the lender foreclosed. Bowling repeated this process often. He pleaded guilty to bank fraud and, to lower his sentence, assisted in prosecution of his clients. Phillips and Hall were convicted under 18 U.S.C. 1014. The district court prohibited them from eliciting testimony that Bowling assured them that the loan program was lawful and from arguing mistake of fact when in signing the application and employment verification. They argued that they were hindered in showing the lack of intent for a specific-intent crime. The district judge concluded that they sought to argue mistake of law. Jury instructions required acquittal absent a finding, beyond a reasonable doubt, that defendants knew that the statements were false; genuine mistake of fact would have led to acquittal.. The Seventh Circuit affirmed.View "United States v. Phillips" on Justia Law

Traders employed by brokerage firms were indicted for conspiring with employees of Watley, a day trading firm, to commit securities fraud by providing their employers’ confidential information to Watley. After a mistrial on conspiracy to commit securities fraud, 18 U.S.C. 1348, 1349, the government retried the conspiracy count with honest services fraud and property fraud as the charged objects of conspiracy. The jury convicted under each theory. The Supreme Court subsequently decided Skilling, limiting honest services fraud to schemes effectuated through bribes or kickbacks. After sentencing, the SEC initiated administrative proceedings and disclosed transcripts of investigative depositions taken as early as 2004. With access to those transcripts, defendants moved for a new trial, contending that the transcripts included material required to be disclosed under Brady because it contradicted or undermined testimony of key government witnesses on a central question: whether allegedly misappropriated information was confidential under Carpenter v. U. S. The district court concluded that the jury would not have reached a different result had the transcripts been disclosed. The Second Circuit vacated. Failure to disclose portions of the transcripts violated Brady and undermined confidence in the verdict. The court also did not adequately instruct the jury on the scope of honest services fraud. View "United States v. Mahaffy" on Justia Law

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