Justia White Collar Crime Opinion Summaries

The Eighth Circuit affirmed defendant's conviction for 14 counts of aiding and abetting wire fraud, one count of conspiracy to commit securities fraud, and six counts of aiding and abetting securities fraud. Defendant's convictions stemmed from his involvement in a market manipulation scheme.The court held that the evidence was sufficient for a reasonable jury to find that defendant's conduct was fraudulent and manipulative within the meaning of the statutes in question; the evidence was sufficient to show nondisclosure or active concealment of a material fact where a jury could easily find that a reasonable investor would have found material the fact that a corporate insider had, through a nominee, purchased more than half of the freely tradeable stock and was directing that nominee and others to trade the stock at pre-arranged prices for the purpose of triggering tens of millions of dollars in bonus payments that would likely cripple the corporation; the district court did not abuse its discretion or plainly err in admitting lay opinion testimony; and the district court did not abuse its discretion in ordering restitution in the amount of $15,135,361. View "United States v. Gilbertson" on Justia Law

In 2001, two chiropractors, defendant-appellant Dr. Thomas Forster Gehrmann, Jr., and Dr. Eric Carlson, opened Atlas Chiropractic Center in Colorado Springs, Colorado. They hired a newly graduated chiropractor, Dr. John Davis, as a preceptee, who eventually completed his preceptorship at Atlas, enabling him to become an associate at the business. In the last few months of 2006, Dr. Davis negotiated with the other two doctors for a one-third share of the business. In January 2007, Dr. Davis became a full partner in the practice. Drs. Gehrmann and Carlson advised Dr. Davis of an income-diversion scheme: placing cash payments and checks written to the treating doctor (as opposed to the business) in a cookie jar and regularly split those proceeds. Dr. Davis understood that the purpose of the scheme was to avoid claiming the diverted money as income on their tax forms. After splitting the money, each doctor deposited his share of this diverted money into his personal bank account instead of Atlas’s business account. They neither reported this income to Atlas’s bookkeeper or tax preparer nor paid taxes on it. Federal agents executed a search warrant at Atlas' office in 2011. By July 2015, a grand jury indicted Drs. Gehrmann and Carlson on four felony charges each: one count of conspiracy to defraud the United States, and three counts of filing false tax returns. A month later, Dr. Davis, who was cooperating with investigators, and not indicted, pleaded guilty to misdemeanor willfully delivering a false tax return to the Internal Revenue Service. In October 2018, after the Tenth Circuit reversed the district court’s order suppressing evidence seized under the search warrant, Dr. Carlson pleaded guilty to a felony count of filing a false tax return; Dr. Gehrmann went to trial, and a jury convicted him on all four counts. Dr. Gehrmann appealed a portion of the sentence he received. At district court, Dr. Gehrmann never objected to the adequacy of the sentencing court's explanation of its sentencing decision. The Tenth Circuit determined the district court did not adequately explain its basis for imposing its level adjustment to the sentence. But the Court also concluded that Dr. Gehrmann could not show a reasonable probability of a different sentencing outcome on a remand. The sentence was therefore affirmed. View "United States v. Gehrmann" on Justia Law

In 1998, Pennsylvania and 45 other states entered into a settlement agreement with certain cigarette manufacturers, who agreed to disburse funding to the states to cover tobacco-related healthcare costs. Pennsylvania’s 2001 Tobacco Settlement Act established the "EE Program" to reimburse participating hospitals for “extraordinary expenses” incurred for treating uninsured patients according to a formula. The Department of Human Services (DHS) determines the eligibility of each hospital for EE Program payments. The Pennsylvania Auditor General reported that for Fiscal Years 2008-2012, some participating hospitals received disbursements for unqualified claims, and recommended that DHS claw back funds from overpaid hospitals and redistribute the money to hospitals that had been underpaid. DHS followed that recommendation for fiscal years prior to 2010 but discovered methodological discrepancies and discontinued the process for Fiscal Years 2010-2012.Plaintiffs, on behalf of all “underpaid” hospitals, sued an allegedly overpaid hospital, alleging conspiracy to defraud the EE Program in violation of RICO, 18 U.S.C. 1961–1964. The plaintiffs alleged that the defendants submitted fraudulent claims for reimbursement, in violation of the wire fraud statute, 18 U.S.C. 1343 (a RICO predicate offense). The Third Circuit reversed the dismissal of the claims, finding that the theory of liability adequately alleges proximate causation. No independent factors that accounted for the plaintiffs’ injury and no more immediate victim was better situated to sue. View "St. Lukes Health Network, Inc. v. Lancaster General Hospital" on Justia Law

Defendant was convicted of four counts of structuring financial transactions for the purpose of evading reporting requirements, a violation of 31 U.S.C. 5324(a)(3) and (d).The Fifth Circuit held that the Count 4 indictment fails to state an offense but, given the evidence introduced at trial, the defect is harmless. The court also held that the $52,042 forfeiture judgment is not excessive under the Eighth Amendment. In this case, defendant's offenses were intentional efforts to evade a reporting requirement, related to other criminal activity, conducted over a 27-month period, and the $52,042 forfeiture is a fraction of the statutory maximum and less than double the Guidelines maximum. View "United States v. Suarez" on Justia Law

The Ninth Circuit reversed defendants' conviction for federal mortgage fraud. In this case, the government disclosed after the close of evidence information impeaching a government witness in violation of Brady v. Maryland.The panel held that there is a reasonable likelihood that the undisclosed evidence impeaching the government witness could have affected the judgment of the jury. The panel explained that the impeachment substantially weakened the credibility of the government's cooperating witnesses and the strength of its case, and the panel could not conclude that the district court's instruction fully cured the prejudice. Furthermore, given the difficulty the jury faced in reaching a verdict, the panel could not say with confidence that the undisclosed impeachment did not affect the jury's judgment. Accordingly, the panel remanded for further proceedings. View "United States v. Obagi" on Justia Law

In 2006-2009,, Ghuman and Khan “flipped” 44 gas stations. Ghuman would recruit a buyer before they purchased the station. The buyers lacked the financial wherewithal to qualify loans. Ghuman and Khan's co-defendant, AEB loan officer Brahmbhatt, arranged loans based on fraudulent documentation. They also created false financial statements for the gas stations. Co-defendant Mehta, an accountant, prepared fictitious tax returns. The loans, which were guaranteed by the Small Business Administration, went into arrears. In 2008-2009 the SBA began auditing the AEB loans; the FBI began looking into suspected bank fraud. AEB ultimately incurred a loss in excess of $14 million.Khan cooperated and pled guilty to one count of bank fraud, 18 U.S.C. 1344, in connection with a $331,000 loan. Ghuman pleaded guilty to another count of bank fraud in connection with a $744,000 loan and to one count of filing a false tax return, 26 U.S.C. 7206. The district court denied Ghuman credit for acceptance of responsibility and imposed a below-Guidelines prison term of 66 months. The court ordered Khan to serve a 36-month prison term and ordered Ghuman to pay $11.8 million and Khan to pay $10.8 million in restitution. The Seventh Circuit affirmed the sentences with an adjustment to Ghuman’s term of supervised release. View "United States v. Khan" on Justia Law

The Eighth Circuit affirmed defendant's sentence imposed after she pleaded guilty to nine counts of wire fraud, two counts of tax evasion, and one count of making and subscribing a false tax return. The court held that the district court did not err by applying a two-level sentencing enhancement pursuant to USSG 3B1.3 for abusing a position of private trust. In this case, it is clear that defendant would not have been able to commit or conceal her fraud if not for the discretion she was granted through her position as an office manager and bookkeeper in the company. View "United States v. Natysin" on Justia Law

The term "false or fictitious" as used in 18 U.S.C. 514 refers to both wholly contrived types of documents or instruments and fake versions of existing documents or instruments. The Second Circuit affirmed defendant's conviction under section 514, holding that the evidence was sufficient to support his conviction. In this case, defendant used fake government transportation requests and purchase orders to various companies while posing as a "Commissioner and Head of Delegation" of a nongovernmental organization he created. View "United States v. Jones" on Justia Law

In 2015, the SEC initiated enforcement proceedings in the District of Arizona against appellant for illegitimate investment activities. In 2017, appellant entered into a consent agreement with the SEC, and the United States District Court for the District of Arizona ultimately held appellant liable for disgorgement in the amount of $4,494,900. Then the grand jury in the Eastern District of Virginia returned an indictment charging appellant with, inter alia, securities fraud and unlawful sale of securities, based in part on the same conduct underlying the SEC proceeding. Appellant filed a motion to dismiss the indictment, which the district court denied.The Fourth Circuit joined with every other circuit to have decided the issue in holding that disgorgement in an SEC proceeding is not a criminal penalty pursuant to the Double Jeopardy Clause, such that an individual cannot be later prosecuted for the conduct underlying the disgorgement. Accordingly, the court affirmed the district court's denial of appellant's motion to dismiss the indictment. View "United States v. Bank" on Justia Law

The Eleventh Circuit affirmed defendant's conviction and sentence for healthcare fraud and conspiracy to commit healthcare fraud. The court held that sufficient evidence supported defendant's convictions, and that the indictment was plainly sufficient. The court rejected defendant's two evidentiary claims, holding that the district court did not err in permitting an FBI forensic accountant to testify as a lay witness or in allowing a government witness to testify as an expert. The court also held that the district court did not abuse its discretion in denying defendant's motions for continuance; there was no cumulative error requiring reversal; and the district court did not clearly err in calculating the loss amount and thus the guidelines range. View "United States v. Chalker" on Justia Law