Justia White Collar Crime Opinion Summaries

Several members of the Romania-based “Alexandria Online Auction Fraud Network,” including Nedelcu, were charged with conspiracy to violate RICO, 18 U.S.C 1962(d); conspiracy to commit wire fraud, 18 U.S.C. 1349; and conspiracy to commit money laundering, 18 U.S.C. 1956(h). Romania extradited Nedelcu to the U.S. He pleaded guilty to RICO conspiracy in exchange for the dismissal of his other charges and admitted that the government could prove certain facts beyond a reasonable doubt including that a Confidential Source would, in accordance with Nedelcu’s instructions, launder the proceeds of fraud by exchanging fraud proceeds into bitcoin to conceal the source, nature, ownership, and control of those proceeds. Nedelcu and the CS laundered approximately $5,600. The PSR concluded that two money-laundering provisions applied: U.S.S.G. 2S1.1(b)(2)(B) increases a defendant’s offense level by two “[i]f the defendant was convicted under 18 U.S.C. 1956” and section 2S1.1(b)(3), provides that, if 2S1.1(b)(2)(B) applies and the offense involved “sophisticated laundering” a further two-level increase is necessary.With a Guidelines Range of 78-97 months’ imprisonment, the court imposed a sentence of 82 months. The Sixth Circuit affirmed. Because the factual basis for Nedelcu’s plea agreement specifically established that he committed money laundering as a predicate for his RICO conviction, the Guidelines compelled the district court to sentence him “as if” he had been convicted of money laundering. View "United States v. Nedelcu" on Justia Law

Following proceedings in district court, the trial court t entered a final judgment, finding Defendant liable, ordering him to disgorge over $4,000,000 in funds, and placing two of his entities under receivership in order to sell and reorganize assets to repay investors. Later, a federal grand jury sitting in Miami returned a superseding indictment that described consistent with the district court’s findings of fact.   After an extradition request was filed by the United States, the Supreme Court of Brazil allowed him to be extradited. He returned to the United States, and on the eve of trial, following over a year of pretrial proceedings, Defendant entered into a plea agreement, agreeing to plead guilty to one count of mail fraud. The district court later sentenced Defendant to 220 months’ imprisonment and ordered him to pay $169,177,338 in restitution.   On appeal, Defendant broadly argues: (1) that the custodial sentence imposed and the order of restitution violate the extradition treaty; and (2) that his guilty plea was not made freely and voluntarily. The Eleventh Circuit affirmed. The court explained that the district court fully satisfied the core concerns of Rule 11, and the court could discern no reason to conclude that the district court plainly erred in finding that Defendant’s guilty plea was entered knowingly and voluntarily. The court explained that in this case, the record fully reflects that Defendant agreed to be sentenced subject to a 20-year maximum term, and his 220-month sentence is near the low end of his agreed-upon 210-to-240-month range. View "USA v. John J. Utsick" on Justia Law

Nine Illinois energy consumers sued their electricity provider, ComEd, and its parent, Exelon, on behalf of themselves and those similarly situated for damages under the Racketeer Influenced and Corrupt Organizations Act (RICO) alleging injury from increased electricity rates. These rates increased, they allege, because ComEd bribed former Illinois Speaker of the House Michael Madigan to shepherd three bills through the state’s legislature: the Energy Infrastructure and Modernization Act of 2011 (EIMA); 2013 amendments to that legislation; and the Future Energy Jobs Act of 2016. Although Illinois law still required public utilities to file rates with the Illinois Commerce Commission (ICC), EIMA implemented statutorily prescribed, performance-based rate increases that limited ICC discretion in reviewing rates and authorized at least $2.6 billion in ComEd spending on smart meters and smart grid infrastructure, costs that were required to be passed on to customers. In 2016, FEJA provided $2.35 billion in funding for nuclear power plants operated, paid for through a new fee for utility customers, and allowed ComEd to charge ratepayers for all energy efficiency programs and for some expenses relating to employee incentive compensation, pensions, and other post-employment benefits.The Seventh Circuit affirmed the dismissal of the suit. Paying a state’s required filed utility rate is not a cognizable injury for a RICO damages claim. View "Brooks v. Commonwealth Edison Co." on Justia Law

Defendant Brim Bell was convicted by jury on four class A felony counts of theft by deception. Defendant ran a business at several New Hampshire locations restoring primarily Volkswagen vehicles. Between January 1, 2011 and November 17, 2015, each of the victims, A.M., J.M., J.K., and J.T., hired defendant to restore a vehicle. During the time defendant had their vehicles, he repeatedly asked each of the victims to send him more money, ostensibly for parts or other expenses related to the restoration of their vehicles. Each victim made a series of payments to defendant, but none of the victims received a restored car back from defendant. Defendant testified to a series of events that negatively affected his business during 2010 and 2011 and increased his debt. As a result, at the end of 2011, defendant started gambling at casinos. He testified that his “plan was to save the business.” Defendant admitted that he gambled with some of his customers’ money and that none of them gave him permission to do so. Following a jury trial, defendant was convicted on four counts and acquitted on two. He argued on appeal that the evidence was insufficient to convict him and that the trial court erred in granting the State’s motion for joinder. Finding no reversible error, the New Hampshire Supreme Court affirmed defendant's convictions. View "New Hampshire v. Bell" on Justia Law

The Court of Appeals affirmed the judgment of the court of special appeals affirming the judgment of the circuit court denying Petitioner's petition for a writ of error coram nobis, holding that the circuit court did not abuse its discretion in denying Petitioner's coram nobis petition.Petitioner had twenty-year old convictions for forgery and fraud/identity theft, which rendered her ineligible to receive the license required to work as a mortgage loan originator under Maryland law. After three appeals, the intermediate appellate court affirmed. The Court of Appeals affirmed, holding that, considering the legislative purpose of the Maryland mortgage loan originator license statute and the circumstances of this case, the circuit court did not abuse its discretion in denying Petitioner's petition for a writ of coram nobis. View "Smith v. State" on Justia Law

A Romanian organization, the Alexandria Online Auction Fraud Network (AOAF), used fraudulent online advertisements on websites like eBay, Craigslist, and Amazon to convince unknowing U.S. purchasers to send payments for high-value items that did not actually exist. After receiving the payments through vehicles like gift cards and prepaid debit cards, AOAF money launderers in the U.S., including Brown, converted the payments into Bitcoin currency, which was then transferred back to Romania. Foreign Bitcoin exchange businesses including RG, Iossifov’s Bulgaria-based business, then transferred the Bitcoin balances to cash on behalf of AOAF fraudsters. About 900 victims never received the items for which they paid. The government learned about the scheme in 2014 when it discovered that an American citizen living in Kentucky was laundering funds on behalf of an online fraud organization; the individual became a confidential source.The Sixth Circuit affirmed Iossifov and Brown’s convictions and sentences under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1962(d), and Iossifov’s additional conviction for conspiring to launder money 18 U.S.C. 1956(h). The court rejected venue, jurisdiction, and Due Process claims, a contention that Bitcoin does not fall under the money laundering statute, and challenges to sentencing enhancements and evidentiary rulings. View "United States v. Iossifov" on Justia Law

The American subsidiary of Alstom Power, Inc. (“API”), a global power and transportation services company, hired two consultants to bribe Indonesian officials to help secure a $118 million power contract. Defendant, who worked in Paris for API’s United Kingdom subsidiary, was allegedly responsible for approving the selection of the consultants and authorizing payments to them. For his role in the alleged bribery scheme, Defendant was charged in an American court with (among other things) violating the Foreign Corrupt Practices Act  (“FCPA”), which makes it unlawful for officers, directors, and agents “of a domestic concern” to use interstate commerce corruptly to bribe or attempt to bribe foreign officials. Defendant appealed. Defendant moved for acquittal, arguing he was not an agent within the meaning of the FCPA. The district court granted that motion; the government appealed and Defendant cross-appealed.The Second Circuit affirmed the district court’s ruling holding that the district court properly acquitted Defendant under Rule 29 because there was no agency or employee relationship between Defendant and API. The court also affirmed on the cross‐appeal, finding no error in either the district court’s speedy trial analysis or its jury instructions.     The court explained that while there is some evidence that Defendant supported API in his working relationship with the corporation, it is not sufficient to establish that API exercised control over the scope and duration of its relationship with Defendant. Further, the district court’s analysis of the Barker factors and dismissal of Defendant’s Sixth Amendment claim falls “within the range of permissible decisions. View "United States v. Hoskins" on Justia Law

Defendant filed various false liens against John Koskinen, the former Commissioner of the Internal Revenue Service, and Jacob Lew, the former Secretary of the Treasury. There is no dispute that Pate filed the false liens to retaliate against Lew and Koskinen for acts they performed as part of their official duties. Defendant filed the false liens after Lew and Koskinen had left their positions with the federal government.The Eleventh Circuit was therefore presented d with the following question: Does Section 1521 apply to false liens filed against former federal officers and employees for official actions they performed while in service with the federal government? The court concluded that the answer to this question is yes—the plain language of Section 1521 covers both current and former federal officers and employees. The court explained that a reading of the statute’s plain language—“any person assisting such an officer or employee in the performance of such duties or on account of that assistance”—does not suggest that its protection ends at some ascertainable point in time. Like the language regarding a federal officer or employee, the language regarding a person who lends assistance to a federal officer or employee has both a temporal qualification on liability. Thus, the court affirmed Defendant’s convictions predicated on violations of Section 1521. View "USA v. Timothy Jermaine Pate" on Justia Law

Plaintiff alleged that Defendants Kinetic Concepts, Inc., and its indirect subsidiary KCI USA, Inc. (collectively, “KCI”) submitted claims to Medicare in which KCI falsely certified compliance with certain criteria governing Medicare payment for the use of KCI’s medical device for treating wounds. The district court granted summary judgment to KCI, concluding that Plaintiff failed to establish a genuine issue of material fact as to the False Claims Act elements of materiality and scienter.   The Ninth Circuit reversed the district court’s summary judgment. The court agreed that compliance with the specific criterion that there be no stalled cycle would not be material if, upon case-specific review, the Government routinely paid stalled-cycle claims. In other words, if stalled-cycle claims were consistently paid when subject to case-specific scrutiny, then a false statement that avoided that scrutiny and instead resulted in automatic payment would not be material to the payment decision. The court concluded, however, that the record did not show this to be the case. The court considered administrative rulings concerning claims that were initially denied, post-payment and pre-payment audits of particular claims, and a 2007 report by the Office of Inspector General of the U.S. Department of Health and Human Services. The court concluded that none of these forms of evidence supported the district court’s summary judgment ruling.   The court held that the district court further erred in ruling that there was insufficient evidence that KCI acted with the requisite scienter and that the remainder of the district court’s reasoning concerning scienter rested on a clear failure to view the evidence in the light most favorable to Plaintiff. View "STEVEN HARTPENCE V. KINETIC CONCEPTS, INC." on Justia Law

Defendant was indicted tried, convicted, and sentenced to 28 months imprisonment for her part in a broader scheme to defraud the federal government out of relief funds intended for farmers affected by drought and fire. She challenged both her conviction and her sentence. As to her conviction, she contends that the evidence preponderated against a guilty verdict such that the district court abused its discretion when it denied her motion for a new trial. As to her sentence, she asserts that her bottom-of-the-Guidelines term of imprisonment is substantively unreasonable.   The Eleventh Circuit affirmed holding that the district court did not abuse its discretion when it denied Defendant’s motion for a new trial. Neither did it abuse its discretion when it imposed a bottom-of-the-Guidelines sentence of 28 months’ imprisonment. The court explained that allowing the verdict to stand in the face of an arguable inconsistency—of which the jury was made aware, and which doesn’t bear on an element of the conviction—is not a miscarriage of justice. Further, the court reasoned that the weight of the evidence does not preponderate against a guilty verdict in this case. Finally, the court explained that Defendant never mentioned the Section 3553(a) factors or explains how the court committed reversible error when it considered them. Accordingly, she has failed to carry her burden of establishing that the sentence is unreasonable in the light of both the record and the factors in Section 3553(a). View "USA v. Danyel Michelle Witt" on Justia Law