Justia White Collar Crime Opinion Summaries

Defendant Riordan Maynard, the former chief executive officer of two related companies, was convicted by a jury of twenty-six criminal counts arising out of his gross mismanagement of those companies. The district court sentenced Maynard to 78 months’ imprisonment. The district court also ordered Maynard to pay restitution to the Internal Revenue Service and to the employee-victims. On appeal, Maynard argued: argues that: (1) the district court misapplied the Sentencing Guidelines in calculating his offense level for Counts 1 and 2 (failure to pay corporate payroll taxes); (2) his convictions on Counts 14 through 26 were not supported by sufficient evidence (theft or embezzlement of employee health care contributions); (3) the district court erred in calculating the restitution award for Counts 4 through 13 (theft or embezzlement of employee benefit plan contributions); and (4) the district court plainly erred in calculating the restitution award for Counts 14 through 26. Rejecting these arguments, the Tenth Circuit affirmed Maynard's convictions and sentence. View "United States v. Maynard" on Justia Law

A felony complaint alleged that on seven different dates in 2014, Martinez committed a felony under Insurance Code section 1814 by entering into an agreement and having an understanding with a person incarcerated in jail, to inform and notify Martinez, a bail licensee, of the fact of an arrest in violation of California Code of Regulations, title 10, section 2076. Martinez was associated with Luna Bail Bonds.The court of appeal reversed her subsequent conviction, finding the regulation facially invalid. Section 2076 prohibits bail licensees from entering, indirectly or directly, any arrangement or understanding with specified types of people— including a “person incarcerated in a jail”—“or with any other persons” to inform or notify any bail licensee, directly or indirectly, of information pertaining to (1) an existing criminal complaint, (2) a prior, impending, or contemplated arrest, or (3) the persons involved therein, which impliedly includes arrestees and named criminals. The section is not unconstitutionally vague but is a content-based regulation, which unduly suppresses protected speech and fails to survive even intermediate judicial scrutiny. While section 2076 might indirectly deter unlawful solicitation of arrestees, an indirect effect is not enough to survive intermediate scrutiny. View "People v. Martinez" on Justia Law

Meza, deep in debt, fell for fraudulent international trading programs promising incredible profits. He then tricked people he knew into investing in these programs. The scam involved ridiculous promises. The district judge called the dupes “the most improbable victims” she had ever seen. Meza was acquitted on one count of wire fraud and acquitted on another The judge sentenced him to 19 months in prison and ordered him to pay $881,500 in restitution. The Seventh Circuit affirmed. The trial court adequately explained its reasons for aggregating losses and excluded all losses around the time of the wire supporting the acquitted count: $295,000. The sentencing hearing covered the misrepresentations and losses in detail. Meza’s restitution did not include unconvicted and acquitted conduct. View "United States v. Meza" on Justia Law

In 2012, Rad and others were charged with acquiring penny stocks, “pumping” the prices of those stocks by bombarding investors with misleading spam emails, and then “dumping” their shares at a profit. Rad was convicted of conspiring to commit false header spamming and false domain name spamming under the Controlling the Assault of Non-Solicited Pornography And Marketing Act (CAN-SPAM), 15 U.S.C. 7701(a)(2), which addresses unsolicited commercial email. The PSR recommended raising Rad’s offense level to reflect the losses inflicted on investors, estimating that Rad realized about $2.9 million in “illicit gains” while acknowledging that because “countless victims” purchased stocks, the losses stemming from Rad’s conduct could not “reasonabl[y] be determined.” Rad emphasized the absence of evidence that any person lost anything. Rad was sentenced to 71 months’ imprisonment. The record is silent as to how the court analyzed the victim loss issue. The Third Circuit affirmed. DHS initiated removal proceedings under 8 U.S.C. 1227(a)(2)(A)(iii), which renders an alien removable for any crime that “involves fraud or deceit” “in which the loss to the victim or victims exceeds $10,000.” The IJ and the BIA found Rad removable.The Third Circuit remanded. Rad’s convictions for CAN-SPAM conspiracy necessarily entail deceit under 8 U.S.C. 1101(a)(43)(M)(i). The second element, requiring victim losses over $10,000, however, was not adequately addressed. The court noted that intended losses, not just actual ones, may meet the requirement. View "Rad v. Attorney General United States" on Justia Law

James Stanley Koenig was convicted by jury on 33 counts of securities fraud, mostly involving Corporations Code section 25401, in addition to two counts of residential burglary. He was sentenced to an aggregate term of 42 years eight months. On appeal, defendant raised 15 contentions. The Court of Appeal concluded the trial court erred by not instructing on mistake of law as to some counts and it erred in failing to define the term “indirect” for the jury as to one count. However, the Court concluded these errors were harmless and found no merit to the other contentions. Accordingly, Koenig's convictions were affirmed. View "California v. Koenig" on Justia Law

The First Circuit affirmed Defendants' convictions for securities fraud and conspiracy to commit securities fraud, holding that Defendants' claims of trial and sentencing error were unavailing.Defendants were two biostaticians employed by two publicly traded biopharmaceutical companies. The jury found Defendants guilty of conspiracy of commit securities fraud and all counts of securities fraud with which they were charged. The First Circuit affirmed, holding that the district court (1) did not err in denying Defendants' motions for judgments of acquittal as to the conspiracy and securities fraud convictions; (2) did not abuse its discretion in denying Defendants' motion to compel production of a letter from the Financial Industry Regulatory Authority; (3) imposed sentences that were without error; and (4) did not err in awarding restitution. View "United States v. Chan" on Justia Law

Elmer owned and operated multiple healthcare-related companies including Pharmakon, a compounding pharmacy that mixes and distributes drugs—including potent opioids like morphine and fentanyl—to hospitals across the U.S.. Pharmakon conducted its own internal potency testing and contracted with a third party to perform additional testing to evaluate whether its compounded drugs had too little of the active ingredient (under-potent) or too much (over-potent). In 2014-2016, testing showed 134 instances of under- or over-potent drugs being distributed to customers. Elmer knew the drugs were dangerous. Rather than halting manufacturing or recalling past shipments, sales continued and led to the near-death of an infant. Elmer and Pharmakon lied to the FDA.Elmer was charged with conspiracy to defraud the FDA (18 U.S.C. 371); introducing adulterated drugs into interstate commerce (21 U.S.C. 331(a), 333(a)(1) & 351); and adulterating drugs being held for sale in interstate commerce (21 U.S.C. 331(k), 331(a)(1) & 351). Pharmakon employees, FDA inspectors, and Community Health Network medical staff testified that Elmer was aware of and directed the efforts to conceal out-of-specification test results from the FDA. The district court sentenced Elmer to 33 months’ imprisonment. The Seventh Circuit affirmed, rejecting challenges to rulings related to the evidence admitted at trial and Elmer’s sentence. The evidence before the jury overwhelmingly proved Elmer’s guilt. The sentence was more than reasonable given the gravity of Elmer’s crimes. View "United States v. Elmer" on Justia Law

The Second Circuit affirmed defendant's conviction and sentence for charges related to his operation of an illegal payday-loan scheme. The jury found that defendant violated the Racketeer Influenced and Corrupt Organizations Act (RICO), the Truth in Lending Act (TILA), and federal wire fraud and identity theft statutes from 2004 through 2014.As to the RICO counts, the court rejected defendant's contention that the district court erred as a matter of law by instructing the jury that, as to his business's loans to New York borrowers, New York usury laws governed the transaction rather than the laws of the jurisdictions specified in the loan agreements, which set no interest rate caps. Rather, the court ruled that New York law applies and that the district court was correct when it so instructed the jury. As to the TILA conviction, the court rejected defendant's contention that his loan agreements disclosed the "total of payments" borrowers would make, as TILA requires, and that the evidence was insufficient to show that these disclosures were inaccurate. The court held that the evidence supported the jury's guilty verdict under TILA. The court rejected defendant's remaining contentions, finding them unpersuasive. View "United States v. Moseley" on Justia Law

For about three years, Nulf, an Illinois licensed loan originator, and two co-defendants participated in a mortgage-fraud scheme, causing approximately $2.2 million in losses. Nulf was charged with bank fraud, 18 U.S.C. 1344, and making a false statement to a financial institution, 18 U.S.C. 1014. Each crime carries a 30-year maximum prison term. The government filed a superseding information charging Nulf with a single count of making a false statement to HUD, a misdemeanor punishable by up to one year in prison. 18 U.S.C. 1012. Nulf pleaded guilty to the misdemeanor; the government agreed to dismiss the felony charges. The one-year statutory maximum was the recommended sentence. The plea agreement included an appeal waiver. Sentenced to 12 months' imprisonment, Nulf claims that the judge interfered with her allocution, wrongly denied credit for acceptance of responsibility, and committed other sentencing mistakes, amounting to a miscarriage of justice, making the appeal waiver unenforceable.The Seventh Circuit dismissed the appeal, stating that it has not announced a general “miscarriage of justice” exception to the enforcement of appeal waivers. A narrow set of extraordinary circumstances can justify displacing an otherwise valid appeal waiver. Nulf’s case is far from extraordinary, so the appeal waiver is enforceable unless the underlying guilty plea was invalid. Nulf does not claim that her plea was unknowing or involuntary. View "United States v. Nulf" on Justia Law

While working for Vanguard, Capps fraudulently caused funds from dormant accounts to be mailed to co-conspirators, one of whom then wrote checks conveying back to him some of the proceeds. Capps received at least two checks, one for $555,200 and another for $29,750, and did not report the income on his federal tax returns. Capps pled guilty to conspiracy to commit mail fraud, 18 U.S.C. 1349, money laundering, sections 1956(a)(1)(B)(i) and 2, and filing a false tax return, 26 U.S.C. 7206(1). At sentencing, he did not raise any objections to the PSR and the court adopted its calculation of the applicable guidelines range (63-78 months), including two separate 2-level adjustments based on abuse of trust and gross receipts. The court sentenced Capps to 48 months’ imprisonment and ordered Capps to pay $2,137,580.81 in restitution.The Third Circuit vacated, finding that the district court plainly erred in applying the abuse of trust adjustment. As to the application of the gross receipts adjustment, the court reasoned that, while the district court did not plainly err in deciding the adjustment could be applicable, it is not clear on this record whether Capps met the threshold for the adjustment to actually apply. View "United States v. Capps" on Justia Law