Justia White Collar Crime Opinion Summaries

Defendant appealed his conviction and sentence for various tax offenses, including making and subscribing to a false tax return, tax evasion, and attempting to interfere with the administration of the internal revenue laws. Defendant's charges stemmed from his efforts, over the course of 14 years, to engage in a concerted campaign to obstruct the IRS's efforts to collect his delinquent tax payments and to secure overdue tax returns.The Second Circuit held that the district court lacked authority to require restitution payments to begin immediately following defendant's sentencing. However, the court held that, in assessing tax loss under USSG 2T1.1 application note 1, the district court was permitted to rely on uncharged relevant conduct constituting "willful evasion of payment" in violation of 26 U.S.C. 7201 and "willful failure to pay" in violation of 26 U.S.C. 7203. The court held that defendant's remaining claims were unavailing and affirmed the judgment as modified. View "United States v. Adams" on Justia Law

Torres was a long-time employee at Vitale’s Italian Restaurants located throughout Western Michigan. Although Torres and other Vitale’s employees often worked more than 40 hours per week, they allege that they were not paid overtime rates for those hours. Vitale’s required the workers to keep two separate timecards, one reflecting the first 40 hours of work, and the other, reflecting overtime hours. The employees were paid via check for the first card and via cash for the second. The pay was at a straight time rate on the second card. Torres alleged that employees were deprived of overtime pay and that Vitale’s did not pay taxes on the cash payments.Torres sought damages under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961. The district court dismissed, holding that the remedial scheme of the Fair Labor Standards Act (FLSA), 29 U.S.C. 201, precluded the RICO claim. The Sixth Circuit reversed in part. The claims based on lost wages from the alleged “wage theft scheme” cannot proceed. However, the FLSA does not preclude RICO claims when a defendant commits a RICO-predicate offense giving rise to damages distinct from the lost wages available under the FLSA. The court remanded Torres’s claim that Vitale’s is liable under RICO for failure to withhold taxes. View "Torres v. Vitale" on Justia Law

After defendant pleaded guilty to honest services wire fraud, he claimed that the district court should have dismissed the indictment against him after alleged government misconduct came to light. Defendant was a college president involved in a bribery-and-kickback scheme with three main participants, including a state senator and a business consultant.The Eighth Circuit affirmed, holding that defendant lacked standing to assert a violation of his Sixth Amendment right to counsel and he failed to show the constitutional violation that the senator allegedly suffered specifically affected his right to a fair trial. In this case, the senator's attorney had previously represented a law enforcement agent, who was present at an interview between the senator and government agents, in a divorce proceeding. The court also held that a co-defendant's decision to record numerous conversations was made on his own and there was no government action involved that violated defendant's constitutional rights. Finally, the court held that the agent's decision to erase his laptop's hard drive did not entitle defendant to dismissal. View "United States v. Paris" on Justia Law

The Ninth Circuit affirmed defendant's conviction of wire fraud and filing false tax returns. The jury found that defendant embezzled over $300,000 from the company for which he served as managing member and president.The panel overruled its prior decisions in light of the Supreme Court's intervening decision in Shaw v. United States, 137 S. Ct. 462 (2016), and held that wire fraud under 18 U.S.C. 1343 requires the intent to deceive and cheat, and that the jury charge instructing that wire fraud requires the intent to "deceive or cheat" was therefore erroneous. However, in this case, the panel held that the erroneous instruction was harmless. The panel noted that it was deeply troubled by an Assistant U.S. Attorney's disregard for elementary prosecutorial ethics, but that the misconduct did not entitle defendant to any relief. The attorney here had a personal and financial interest in the outcome of the case. The panel wrote that as soon as the Department of Justice became aware of the impropriety, it took every necessary step to cure any resulting taint, including turning over the entire prosecution of the case to disinterested prosecutors from the Southern District of California. Finally, the panel found defendant's remaining arguments to be without merit. View "United States v. Miller" on Justia Law

The Eleventh Circuit affirmed defendants' sentence for defrauding hundreds of undocumented aliens into paying about $740,000 for falsified federal immigration forms. The court held that the district court committed no plain error in holding defendant jointly and severally liable for repaying the proceeds of their illegal conduct. In this case, defendants failed to establish that they did not mutually obtain, possess, and benefit from their criminal proceeds.The court also held that defendants' sentences were not procedurally unreasonable and that the Sentencing Guidelines direct that they be sentenced for fraud and deceit. The court wrote that United States v. Baldwin, 774 F.3d 711, 733 (11th Cir. 2014), was controlling here. In Baldwin, the court upheld the district court's application of USSG 2B1.1 on facts comparable to those in this case. View "United States v. Pazos Cingari" on Justia Law

William Lindsey persuaded six investors to advance roughly $3 million toward a new technology that he claimed would harness the energy of bioluminescent algae to light signs and panels. In soliciting these funds, Lindsey told his investors that he had already secured contracts to sell his lighting products to several large clients. As it turned out, neither the technology nor the contracts existed; Lindsey diverted the funds he collected to his own personal use. Trial setting was continued at least seven times in three years. David Tyler was Lindsey’s fourth attorney in this case, and judges had admonished Tyler and Lindsey there would be no more continuances. A month before trial, Tyler moved to withdraw from the case, but his motion was denied after a hearing in front of a different judge who found no irreconcilable conflict. On the eve of trial, Tyler filed another motion, this one challenging Lindsey’s competency. The factual assertions in this motion were the same factual assertions on which Tyler relied during the hearing on the motion to withdraw ten days earlier: Lindsey had failed to be completely forthright with him, to keep promises to furnish information and funds for an effective defense, and to diligently work and communicate with him. In all the years the case had been pending, this was the first time anyone had ever raised a question about Lindsey’s competency. During the hearing on the competency motion, just as during previous hearings, Lindsey was lucid and coherent, showing no signs of incompetency. Tyler believed that Colorado's competency statutes required the trial court to either make a preliminary finding regarding competency or indicate that there was insufficient evidence to do so. But the trial judge found the motion’s factual assertions had nothing to do with competency and did not support a good-faith doubt about Lindsey’s competency. Accordingly, the judge refused to postpone the trial. The case thus proceeded to a jury trial, where Lindsey was convicted of securities fraud and theft. Lindsey then appealed, and a division of the court of appeals vacated his convictions. Because the Colorado Supreme Court found no abuse of discretion by the trial court, it reversed the appeals court's judgment. View "Colorado v. Lindsey" on Justia Law

O’Brien was convicted of mail fraud, 18 U.S.C. 1341, and bank fraud, 18 U.S.C. 1344, based on a 2004-to-2007 scheme in which O’Brien misrepresented her income and liabilities to cause lenders to issue and refinance loans related to two Chicago investment properties O’Brien owned., O’Brien was a licensed attorney with a background and experience in the real estate industry, including as a registered loan originator, mortgage consultant, and licensed real estate broker.The Seventh Circuit affirmed, rejecting O’Brien’s arguments that the charges against her were duplicitous and that under a properly pled indictment the statute of limitations would have barred three of the four alleged offenses. She also argued that the district court should not have admitted evidence offered to prove those time-barred offenses and that there was insufficient evidence to support the jury’s guilty verdict. The government appropriately acted within its discretion to allege an overarching scheme to commit both bank fraud and mail fraud affecting a financial institution. Each count included an execution of the fraudulent scheme within the applicable 10-year statute of limitations, and the jury’s guilty verdict rested upon properly admitted and sufficient evidence. View "United States v. O'Brien" on Justia Law

Before acquiring cars for resale, Elite obtained financing; its lenders held the title of each car until it received payment for the car. Lenders dispatched auditors to ensure the dealership was not selling cars without repaying the loan after each sale. From 2012-2015 Elite’s employees obtained copies of car titles from the Indiana Bureau of Motor Vehicles online portal. If a copy could not be acquired, employees could avoid asking lenders to release car titles by continually issuing the customer temporary license plates. Employees would call customers and request that their cars be returned to the lot for a free oil change before an auditor’s inspection or would lie to the auditor, saying that the car was out for a test drive or repairs. Elite’s employees also defrauded consumer lenders by helping customers submit fraudulent applications and defrauded insurance companies by using a chop shop behind the dealership to disassemble their own vehicles before reporting the vehicles as stolen.Elite employee Dridi was convicted of conspiring to violate the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1962(d), and interstate transportation of stolen property, 18 U.S.C. 2314, sentenced to 72 months in prison, and ordered $1,811,679.25 in restitution. The Seventh Circuit affirmed Dridi’s prison sentence but vacated the restitution order, The district court should have made specific factual findings about Dridi’s participation in the conspiracy. View "United States v. Dridi" on Justia Law

Bowling worked for the City of Gary, Indiana for 25 years, eventually becoming a network administrator, with access to the email system. Her responsibilities included ordering the city's computer equipment. Bowling ordered 1,517 Apple products, totaling $1,337,114.06. She sold iPads and MacBooks for cash. To conceal her scheme, Bowling submitted duplicate invoices from legitimate purchases. Eventually, the fraudulent purchases outstripped the duplicate invoices she could process and one vendor, CDW, turned the city’s account over to a senior recovery analyst, Krug. Krug contacted Green, the city’s controller and sent Green invoices via FedEx. Bowling intercepted the package, accessed Green’s email account, and sent a fabricated message to Krug to reassure CDW but her scheme unraveled.The Seventh Circuit affirmed her conviction for theft from a local government that received federal funds, 18 U.S.C. 666, and her 63-month sentence. The federal funds element was satisfied; the parties stipulated that Gary as a whole received more than $10,000 in federal benefits in a one-year period. Krug’s testimony about the email was direct evidence of Bowling’s attempt to stall the city’s ultimate discovery of her fraud; there was no error in admitting the testimony under Rule 404(b). A two-level obstruction of justice sentencing enhancement was justified because Bowling faked mutism, causing a one-year delay in the proceedings. View "United States v. Bowling" on Justia Law

Holland, a songwriter, sold his song-rights to music companies, in exchange for royalty payments. Holland failed fully to report his income. In 1986-1990, the IRS levied Holland’s royalty assets and recovered $1.5 million. In 1997, the IRS informed him that it intended again to levy those assets. Holland converted his interest in future royalty payments into a lump sum and created a partnership wholly owned by him, to which he transferred title to the royalty assets ($23.3 million). The partnership borrowed $15 million, for which the royalty assets served as collateral. Bankers Trust paid $8.4 million directly to Holland, $5 million in fees, and $1.7 million for Holland’s debts, including his taxes. The IRS did not assess any additional amounts against Holland until 2003. In 2005, the partnership refinanced the 1998 deal, using Royal Bank. In 2012, the IRS concluded that the partnership held the royalty assets as Holland’s alter ego or fraudulent transferee and recorded a $20 million lien against the partnership.In an enforcement suit, the partnership sold the royalty assets. The proceeds ($21 million) went into an interpleader fund, to be distributed to the partnership’s creditors in order of priority. The government’s lien ($20 million), if valid against the partnership, would take priority over Royal Bank’s security interest. The Sixth Circuit affirmed a judgment for Royal Bank. Transactions to monetize future revenue, using a partnership or corporate form, are common and facially legitimate. Holland received adequate consideration in 1998. The IRS’s delay in making additional assessments rather than the 1998 transfer caused the government’s collection difficulties. View "United States v. Holland" on Justia Law