Justia White Collar Crime Opinion Summaries

The question presented in this case is whether Appellants, a cannabis entrepreneur and two cannabis businesses, have standing to bring claims arising pursuant to the Racketeer Influenced and Corrupt Organizations Act (RICO), based on alleged harms to their cannabis business and related property. The district court granted Appellees’ motion to dismiss with prejudice, holding that Appellants lacked standing to bring their RICO claims. The court also dismissed Appellants’ Lanham Act claims on standing grounds as well as their state law claims, declining to exercise supplemental jurisdiction. Appellants appealed the district court’s order only as to their RICO claims.   The Ninth Circuit affirmed the district court’s dismissal. The panel held that while Appellants had Article III standing, they lacked statutory standing under RICO. As to Article III standing, the panel held that Appellants satisfied the injury requirement, which requires a showing of an invasion of a legally protected interest because cannabis-related property interests are recognized under California law. Appellees argued that Appellants’ alleged injuries were not redressable because they related to a cannabis business, which was illegal under the Controlled Substances Act. The panel held that the fact that Appellants sought damages for economic harms related to cannabis was not relevant to whether a court could, theoretically, fashion a remedy to redress their injuries. Further, the panel held that Appellants lacked statutory standing to bring their claims under RICO Section 1964(c).  The panel concluded that the statutory purpose of RICO and the congressional intent animating its passage conflicted with the California laws recognizing a business and property interest in cannabis. View "FRANCINE SHULMAN, ET AL V. TODD KAPLAN, ET AL" on Justia Law

Defendant appealed his sentence of 36 months imprisonment for wire fraud, which is an upward variance from the guidelines range of 8 to 14 months. The district court imposed that sentence after Defendant pleaded guilty to providing false information to obtain an $85,000 Economic Injury Disaster Loan under the Coronavirus Aid, Relief, and Economic Security Act. He challenged the procedural and substantive reasonableness of his sentence.   The Eleventh Circuit affirmed, holding that the district court appropriately considered the relevant Sections 3553(a) factors, provided a sufficiently compelling justification for varying from the guidelines range, and imposed a sentence that is both procedurally and substantively reasonable. The court explained that the district court was not required to state on the record that it explicitly considered each Section 3553(a) factor or to discuss each factor. It is enough that the record reflects the court’s consideration of the sentencing factors and the parties’ arguments. Further, the court held that the district court did not rely on any clearly erroneous facts in making its decision and adequately explained why it didn’t consider this to be a mine-run case, particularly because Defendant used his education and ability to exploit a government relief program. Moreover, the court wrote that the record shows that the district court considered the importance of deterrence along with other Section 3553(a) factors in varying upward. Those factors included the applicable guidelines range, Defendant’s history and characteristics, the seriousness of his crime, the nature and circumstances of it, and the need to promote respect for the law and to provide just punishment. View "USA v. Vinath Oudomsine" on Justia Law

Appellant Mark Dunham, was a door-to-door salesman for Capital Connect. On or about June 15, 2016, Appellant rang the doorbell of Eloise Moody, an 81- year-old lady recently widowed and diagnosed with cancer. When Moody answered, Appellant pointed at the “Central Security Group” alarm sign in Moody’s front yard and said: “I’m here to update your security.” Appellant also said, referring to the Central Security Group sign, “I’ll put a light on it, make it visible from the street” which he explained would be helpful to “update the neighborhood.” Appellant was not wearing a uniform or name tag and did not say what company he worked for. Moody, therefore, understood Appellant to be employed by her alarm company (Central) and that he was intending to place a light on the sign in her front yard. Appellant managed to gain access to Moody's home and convinced her to cancel her existing security contract and enter a five-year agreement with Capital Security at a higher cost. Appellant was charged with deceptive business practices to which he pled not guilty. A jury found him guilty, and he was sentenced to one year in jail. The Texas Court of Criminal Appeals granted review to determine whether the evidence was sufficient to support Appellant’s conviction and whether the jury charge erroneously authorized a non-unanimous verdict. Based on its construction of Texas Penal Code § 32.42(b), and its review of the record, viewing the evidence in the light most favorable to the verdict, the Court agreed with the court of appeals on both points: (1) there was sufficient evidence to support the conviction; and (2) jury unanimity was not required on the specific manner and means of the offense because it was not an “essential element” of the offense. View "Dunham v. Texas" on Justia Law

Defendant challenges his convictions of healthcare fraud, illegal kickbacks, and money laundering and the related restitution award and forfeiture judgment. After Defendant filed this appeal, President Trump commuted his sentence of imprisonment and rendered any challenge to it moot. In his remaining challenges, Defendant argued that his indictment should have been dismissed because of prosecutorial misconduct, that the district court erroneously admitted expert opinion testimony against him, that the admissible evidence against him was insufficient to sustain his convictions, and that the restitution award and forfeiture judgment should be vacated.   The Eleventh Circuit affirmed. The court explained that that the presidential commutation renders Defendant’s appeal of his prison sentence moot but does not otherwise affect his appeal. Second, the court explained that the district court did not abuse its discretion when it declined to dismiss the indictment or to disqualify the prosecutors due to misconduct. Third, the court affirmed the admission of the expert-opinion testimony. Fourth, the court affirmed the restitution amount as not clearly erroneous. And fifth, the court held that there was sufficient evidence for the jury to convict Defendant of money laundering and that the forfeiture judgment based on money laundering was lawfully calculated. View "USA v. Philip Esformes" on Justia Law

Mongol Nation is an unincorporated association whose members include the official, or “full-patch,” members of the Mongols Gang. A jury convicted the association of substantive RICO and RICO conspiracy violations; it also found various forms of Mongol Nation property forfeitable. That property included the collective membership marks—a type of intellectual property used to designate membership in an association or other organization. The district court denied forfeiture of those marks, holding that the forfeiture would violate the First and Eighth Amendments.   The Ninth Circuit affirmed the district court’s judgment. The court explained that in Mongol Nation’s appeal, it argued for the first time that it is not an indictable “person” under RICO because the indictment alleges that the association was organized for unlawful purposes only. The panel concluded that this unpreserved argument is non-jurisdictional. The panel did not resolve the Government’s contention that Mongol waived it. The panel wrote that regardless of the merits of Mongol Nation’s argument, it mischaracterizes the allegations in the indictment.    On the Government’s cross-appeal of the order denying its second preliminary order of forfeiture, the panel did not need to decide whether forfeiture of the membership marks would violate the First and Eighth Amendments. Nor did the panel reach the question of whether the marks may be forfeitable without the transfer of any goodwill associated with the marks. The panel held that the forfeiture was improper for a different reason—the Government effectively sought an order seizing and extinguishing the Mongols’ right to exclusive use of its marks without the Government itself ever seizing title to the marks. View "USA V. MONGOL NATION" on Justia Law

Barsanti was delinquent on $1.1 million of senior secured debt it owed to BMO Harris Bank. Barsanti’s owner, Kelly, hired attorney Filer and Gereg, a financing consultant. After negotiations with BMO failed, Filer introduced Gereg to BMO as a person interested in purchasing Barsanti’s debt. Filer created a new company, BWC, to purchase the loans. BWC purchased the loans from BMO for $575,000, paid primarily with Barsanti’s accounts receivable. Barsanti also owed $370,000 in delinquent benefit payments to the Union Trust Fund. Filer, Kelly, and Gereg used BWC’s senior lien to obtain a state court judgment against Barsanti that allowed them to transfer Barsanti’s assets beyond the reach of the Union Fund, using backdated documents to put confession-of-judgment clauses into the loan documents and incorrectly claiming that Barsanti owed BWC $1.58 million. Filer then obtained a court order transferring Barsanti’s assets to BWC, which then transferred the assets to Millwork, another new entity, which continued Barsanti’s business after the Illinois Secretary of State dissolved Barsanti for unpaid taxes. Gereg was Millwork's nominal owner in filings with the Indiana Secretary of State. Barsanti filed for bankruptcy. Filer instructed others not to produce certain documents to the bankruptcy trustee.After a jury convicted Filer of wire fraud 18 U.S.C. 1343., the district court granted his motions for a judgment of acquittal. The Seventh Circuit reversed and remanded. The evidence was sufficient to support the jury’s verdicts. View "United States v. Filer" on Justia Law

Kwasnik was an estate-planning attorney who convinced clients to open irrevocable family trusts in order to avoid federal and state taxes and to ensure that they earned interest on the funds. Kwasnik named himself as a trustee, with authority to move assets into and out of the trust accounts. He received the account statements. In reality, Kwasnik moved the funds from his clients’ trust accounts to accounts of entities that he controlled. Within days, the funds were depleted. Clients were defrauded of approximately $13 million.Kwasnik pleaded guilty to money laundering, 18 U.S.C. 1956(a)(1)(B)(i), then moved to withdraw his plea. The district court denied the motion and sentenced him. Kwasnik then filed a notice of appeal. He later filed three more post-appeal motions in the district court concerning his guilty plea. The court denied them. The Third Circuit affirmed with respect to the denial of the first motion. The district court did not abuse its discretion in finding that Kwasnik did not have “newly discovered” evidence. The court declined to consider the others. A party must file a new or amended notice of appeal when he seeks appellate review of orders entered by a district court after he filed his original appeal, Fed.R.App.P. 4(b). View "United States v. Kwasnik" on Justia Law

Convicted of wire fraud, for his scheme to defraud Gains Capital, Banks was sentenced to 104 months’ imprisonment. Banks made fraudulent deposits of $324,000 and unsuccessfully executed 70 withdrawals/transfers totaling $264,000. Gain Capital, however, did not transfer any to Banks and suffered no loss.The Third Circuit remanded for resentencing. The district court erred in applying the loss enhancement to the U.S.S.G. fraud guideline. The loss enhancement in the Guideline’s application notes impermissibly expands the word “loss” to include both intended loss and actual loss. The court affirmed the conviction, rejecting an argument that the court erred in denying Cross his constitutionally protected right to self-representation. The court predicated its finding that Banks could not understand the risks of self-representation on Banks’s voluminous filings and the court’s own observations of Banks over several years, including his “unrelenting and persistent focus on CIA-managed ‘voice-to-skull’ technology, a construct as to which he admits he has no factual basis to conclude was ever applied to him.” The court properly concluded Banks could not knowingly and voluntarily waive his right to counsel. The court upheld special device-purchase and financial-transactions conditions of supervised release and a requirement that Banks participate in DNA collection. View "United States v. Banks" on Justia Law

Gan lived in Mexico and worked with U.S. associates to launder money for drug trafficking organizations. One of Gan’s couriers began cooperating with the government and participated undercover in three cash pickups coordinated by Gan. Recordings from those undercover operations and testimony from the courier were central to the government’s case. Gan was convicted on three counts of money laundering and one count of operating an unlicensed money-transmitting business but was acquitted on one count of participating in a money laundering conspiracy. He was sentenced to 168 months in prison.The Seventh Circuit affirmed, rejecting an argument that a law enforcement expert improperly provided testimony interpreting communications the jury could have understood itself. Gan waived an argument that jury instruction misstated the mens rea required for the money-laundering convictions. The prosecution’s closing remarks were not improper. Binding Supreme Court precedent allows consideration of acquitted conduct at sentencing when, as in this case, the judge finds the conduct proved by a preponderance of the evidence. View "United States v. Gan" on Justia Law

Defendant was convicted of numerous wire fraud and money-laundering charges arising from a fraudulent scheme to cause the Department of Veterans Affairs to pay over $71 million in GI-Bill funding to his trade school. Defendant raised several challenges to his convictions and his sentence.   The Fifth Circuit affirmed in nearly all respects, except that it vacated the forfeiture order and remanded it for further proceedings. The court held that Defendant fails to show the evidence was insufficient to allow a rational jury to convict him on the money-laundering counts. Further, the court concluded that conclude that the indictment was not faulty and the district court did not err in declining to order a bill of particulars.   Moreover, the court explained that illegally provided services that could have “hypothetically” been provided in a “legal manner”—like Defendant’s operation of the school—implicate the second definition of proceeds under Section 981(a)(2)(B), under which a defendant may deduct “the direct costs incurred in providing the goods or services.” The focus of any Section 981(a)(2) analysis is the underlying criminal conduct, not the crime itself.   That subsection further provides that Defendant “shall have the burden of proof with respect to the issue of direct costs” and also that those costs “shall not include any part of the overhead expenses of the entity providing the goods and services, or any part of the income taxes paid by the entity.” Therefore the court remanded for determining whether Defendant can prove any offset under the terms of Section 981(a)(2)(B). View "USA v. Davis" on Justia Law