Justia White Collar Crime Opinion Summaries

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

Appellant appealed his criminal convictions for forty-two counts of prescribing a controlled substance without a legitimate medical purpose under 21 U.S.C. Section 841(a) and two counts of money laundering under 18 U.S.C. Section 1957. Appellant argued that the evidence at trial was insufficient to convict him. He contends that each of his actual patients included in the indictment, despite the fact that they were ultimately pill-seekers addicted to oxycodone, had real ailments to which he properly responded in good faith, and the government did not prove otherwise. He also argues that the two undercover DEA agents presented real MRIs with real injuries, leading Appellant to believe he was treating them appropriately.   The DC Circuit reversed and remanded the district court’s judgment of conviction and sentencing. The court held that the evidence at trial was sufficient to convict Appellant, and the court affirmed the district court on its Napue and expert testimony rulings. However, the court reversed the district court on its Brady decision and remand this case for a new trial due to the government’s suppression of the favorable and material Pryor Reports and CCN Report. The court explained that although the Brady error is dispositive of this appeal, the remand will open the possibility of a new trial, and Appellant’s remaining arguments as to the evidentiary questions in the case are likely to arise again on retrial. View "USA v. Ivan Robinson" on Justia Law

Defendant, a physician assistant, evaluated patients and prescribed their physical therapy. The clinics where Defendant worked then billed the patients' health insurance both for the evaluations and for the subsequent physical therapy. The problem—for Defendant and for the health-insurance company—was that the “patients” didn’t really need the physical therapy and didn’t actually receive any treatment. When the health insurance company grew suspicious of the abnormally high rate of physical-therapy prescriptions from the clinics, it cooperated with an FBI investigation into the clinics. That investigation led a grand jury to indict Defendant on eight healthcare fraud-related charges. After a trial, a jury convicted Defendant on three counts. On appeal, Defendant raised several challenges to his conviction—sufficiency, evidentiary, and instructional—and to his sentence.   The Eleventh Circuit affirmed. The court held that sufficient evidence allowed the jury to find beyond a reasonable doubt that Defendant knew the bills were fraudulent. Moreover, the court wrote that the minimal leading questions Defendant points to here do not allow Defendant to overcome the overwhelming evidence of his guilt at trial. Moreover, the court reasoned that here, the district court sentenced Defendant to 48 months— below his Guidelines range of 51–63 months. Given that Defendant had previously participated in very similar schemes, been investigated by the Florida regulatory board for similar conduct, and had attempted to defraud the victim of millions of dollars, the court could not say that the 48-month sentence the district court imposed—slightly below the Guidelines range—was an abuse of discretion. View "USA v. Carlos Alfredo Verdeza" on Justia Law

The First Circuit affirmed the judgment of the district court convicting Defendant of conspiracy to commit wire fraud, wire fraud, and engaging in monetary transactions in property derived from specified unlawful activity and sentencing him to thirty years' imprisonment, holding that there was no error in the underlying sentence.Defendant pled guilty to participating in two fraud schemes - business email compromise and online romance. Defendant pled guilty to his convictions. The district court applied two enhancements to Defendant's sentence - one for the unauthorized use of a means of identification unlawfully to produce another means of identification and another for the substantial financial hardship caused to one victim. The First Circuit affirmed, holding that the district court did not clearly err or abuse its discretion in applying the sentencing enhancements. View "United States v. Iwuanyanwu" on Justia Law

After defendants Frayba and William Tipton pled guilty to committing insurance fraud, they were ordered to pay victim restitution to Nationwide Insurance Company of America (Nationwide). Later, Nationwide petitioned the trial court to convert the criminal restitution orders to civil judgments against both defendants. Defendants opposed. Relying on Penal Code1 section 1214, the trial court granted Nationwide’s petition and entered civil judgments against the defendants. On appeal, defendants argued the trial court erred because (1) Nationwide “failed to provide citation to any . . . authority supporting” conversion of the victim restitution orders to civil judgment; and (2) Nationwide’s petition lacked supporting evidence. The Court of Appeal found no reversible error and affirmed the trial court's judgment. View "Nationwide Ins. Co. of Am. v. Tipton" on Justia Law

A grand jury charged Appellee with wire fraud and obstructing an official proceeding. Appellee moved to dismiss the indictment for failure to state an offense. The district court granted the motion, and the Government appealed to contest the dismissal of the section 1343 (wire fraud) count. Before the District Court, Appellee moved to suppress certain evidence obtained pursuant to a search warrant issued in this case and requested a hearing pursuant to Franks v. Delaware, 438 U.S. 154 (1978).  The Government does not appeal the dismissal of the section 1512(c)(2) (obstructing an official proceeding) count.   The DC Circuit affirmed the district court’s dismissal of the indictment. The court dismissed Appellee’s cross-appeal of the district court’s denial of his motion to suppress and request for a Franks hearing. The court explained that regardless of whether Appellee lied to “obtain” future salary or “maintain” his existing salary, the court affirmed the district court’s dismissal because the indictment fails to allege that the State Department was deprived of something more than Appellee’s honesty. The court wrote that the wire fraud statute, as interpreted through the lens of Supreme Court precedent, does not support an indictment on the facts proffered by the Government in this case. Moreover, the court explained that Appellee is the prevailing party in this case. As such, he has no right to seek review of the district court’s denial of his motion to suppress and request for a Franks hearing. View "USA v. Paul Guertin" on Justia Law

Then-New York Governor Cuomo’s “Buffalo Billion” initiative administered through Fort Schuyler Management Corporation, a nonprofit affiliated with SUNY, aimed to invest $1 billion in upstate development projects. Investigations later uncovered a scheme that involved Cuomo’s associates--a member of Fort Schuyler’s board of directors and a construction company made payments to a lobbyist with ties to the Cuomo administration. Fort Schuyler’s bid process subsequently allowed the construction company to receive major Buffalo Billion contracts.The participants were charged with wire fraud and conspiracy to commit wire fraud 18 U.S.C. 1343, 1349. Under the Second Circuit’s “right to control” theory, wire fraud can be established by showing that the defendant schemed to deprive a victim of potentially valuable economic information necessary to make discretionary economic decisions. The jury instructions defined “property” as including “intangible interests such as the right to control the use of one’s assets,” and “economically valuable information” as “information that affects the victim’s assessment of the benefits or burdens of a transaction, or relates to the quality of goods or services received or the economic risks.” The Second Circuit affirmed the convictions.The Supreme Court reversed. Under Supreme Court precedents the federal fraud statutes criminalize only schemes to deprive people of traditional property interests. The prosecution must prove that wire fraud defendants “engaged in deception,” and also that money or property was “an object of their fraud.” The "fraud statutes do not vest a general power in the federal government to enforce its view of integrity in broad swaths of state and local policymaking.” The right-to-control theory applies to an almost limitless variety of deceptive actions traditionally left to state contract and tort law. The Court declined to affirm Ciminelli’s convictions on the ground that the evidence was sufficient to establish wire fraud under a traditional property-fraud theory. View "Ciminelli v. United States" on Justia Law

Percoco served as the Executive Deputy Secretary to New York Governor Cuomo from 2011-2016. During an eight-month hiatus in 2014, Percoco resigned from government service to manage the Governor’s reelection campaign; he accepted payments totaling $35,000 to assist a real-estate development company in dealings with Empire State Development, a state agency. Percoco urged a senior ESD official to drop a requirement of an agreement with local unions as a precondition to receiving state funding. ESD informed the company the following day that the agreement was not necessary.Percoco was convicted of conspiracy to commit honest-services wire fraud, 18 U.S.C. 1343, 1346. The court instructed the jury that Percoco could be found to have had a duty to provide honest services to the public during the time when he was not serving as a public official if the jury concluded that “he dominated and controlled any governmental business” and that “people working in the government actually relied on him because of a special relationship he had with the government.” The Second Circuit affirmed.The Supreme Court reversed, finding the jury instruction erroneous. The instructions did not define “the intangible right of honest services” with sufficient definiteness. The Court cited its 2010 “Skilling” rejection of the prosecution’s argument that section 1346 should apply to cases involving undisclosed self-dealing by a public official or private employee, While a person nominally outside public employment could have the necessary fiduciary duty to the public “the intangible duty of honest services” does not extend a duty to the public to all private persons. View "Percoco v. United States" on Justia Law

Upshur and Thompson operated a trust; people wired fees to Upshur and allowed the defendants to file tax forms representing that the Trust had withheld income tax on their behalf, hopefully yielding sizable refunds. The defendants themselves also participated. Though this scheme was largely unsuccessful, the IRS issued one $1.5 million refund but, realizing, its mistake, froze the payment. In another scheme, they made large fraudulent tax overpayments, hoping to generate refunds. This scheme apparently did not generate any payments from the IRS, but the two schemes, together, resulted in over $325 million in fraudulent tax claims.Upshur was convicted of conspiracy to defraud the United States and eight counts of aiding and assisting in the preparation of false tax returns, 18 U.S.C. 371, 26 U.S.C. 7206(2). The court recognized there was no actual loss to the U.S. Treasury, and calculated Upshur’s base offense level under U.S.S.G. 2T1.4 using the intended-loss figure of $325 million, for a Guidelines range of 324-348 months. The Third Circuit affirmed his 84-month sentence. The court acknowledged its 2022 “Banks” holding that for theft offenses, absent Guideline text extending “loss” to intended loss, U.S.S.G. 2B1.1’s loss table reached only actual loss. However. the texts of sections 2T1.1 and 2T1.4, applicable to tax fraud, indicated that 2T4.1’s loss table covers the loss the perpetrator intended. View "United States v. Upshur" on Justia Law