Justia White Collar Crime Opinion Summaries

Lee was a member of the Summit County Council. The FBI obtained wiretaps and investigated the relationship between Lee and Abdelqader, a store owner, after complaints that Abdelqader “was insisting on monthly cash payments from other local businesses” that he would give to Lee in exchange for political favors. Abdelqader’s nephews were arrested for felonious assault. Abdelqader called Lee for help; they discussed Lee’s financial problems. Abdelqader promised that they would “work it out.” Lee placed calls to the juvenile court bailiff and the judicial assistant; Lee subsequently deposited 200 dollars in her bank account and placed calls to the judge who was handling the case. Lee also took payment for attempting to intervene in an IRS investigation. The Sixth Circuit affirmed Lee’s convictions on four counts of conspiracy to commit honest services mail and wire fraud, honest services mail fraud, Hobbs Act conspiracy, and Hobbs Act extortion, 18 U.S.C. 1341, 1343, 1346, 1349, and 1951 and two counts concerning obstruction of justice and false statements to law enforcement, 18 U.S.C. 1512(c)(2); 18 U.S.C. 1001 and her 60-month sentence. The court rejected challenges to the sufficiency of the evidence and to the sufficiency of her indictment in light of the Supreme Court’s 2016 “McDonnell” decision. At a minimum, the indictment supports an inference that Lee agreed to perform an official act or pressure or advise other officials to perform official acts in exchange for gifts or loans from Abdelqader. View "United States v. Lee" on Justia Law

The Fourth Circuit affirmed defendant's conviction for three counts of major fraud against the United States, three counts of wire fraud, and three counts of presentation of false or fraudulent claims. This case involved parallel False Claims Act (FCA) and criminal proceedings arising from defendant's failure to provide multinational forces in Iraq with contracted-for armored vehicles.The court held that defendant's criminal prosecution was not estopped by the prior FCA action where defendant failed to demonstrate that all five Fiel factors must be resolved in his favor. The court also held that the government was a party to the contract with Armet and that the government both sufficiently alleged such party status in the indictment and provided sufficient evidence at trial to establish this element of the charged crimes. Finally, the court held that the district court's denial of defendant's motion for a new trial was proper. View "United States v. Whyte" on Justia Law

In this case, a Supplemental Nutrition Assistance Program (“SNAP”) recipient, Cindy Gonzalez, was found to have defrauded the federal government of $6,159 worth of SNAP benefits by representing that she lived alone and did not receive any income, when in fact she was not living alone and was receiving income. After discovering this wrongdoing, the Delaware Department of Health and Social Services (“DHSS”) brought an administrative proceeding against Gonzalez to disqualify her from continued participation in SNAP and claw back the benefits she received through her misrepresentations. The hearing officer found that DHSS had established intentional program violations and disqualified Gonzalez from continued participation in SNAP for one year, and DHSS’s audit and recovery arm assessed an overpayment of $6,159, which the federal government has started to collect by offsetting the other federal benefits she receives against her SNAP obligations. About five months after the DHSS final decision, the State of Delaware brought a civil action against Gonzalez under Delaware common law and the Delaware False Claims and Reporting Act based on the same circumstances underlying the DHSS administrative proceeding. This time, however, the State sought between approximately $200,000 and $375,000 in restitution, damages, and penalties; attorneys’ fees and costs; and an order enjoining Gonzalez from participating in SNAP until she pays the judgment. Gonzalez in turn filed an answer asserting an affirmative defense that federal law preempted the State’s Delaware law claims, and the State moved for judgment on the pleadings. The Superior Court granted the State’s motion, holding that federal law did not preempt the State’s claims. Gonzalez brought an interlocutory appeal of that determination. After review, the Delaware Supreme Court reversed, finding federal law prohibited the State from bringing consecutive administrative and civil actions against a SNAP recipient based on the same fraud. View "Gonzalez v. Delaware" on Justia Law

The Eighth Circuit affirmed defendant's conviction for corruptly endeavoring to obstruct and impede the due administration of the internal revenue laws, in violation of 26 U.S.C. 72121(a). After defendant's trial, the Supreme Court decided Marinello v. United States, 138 S. Ct. 1101 (2018), which held that, for a section 7212(a) offense, the government must show that there is a nexus between the defendant's conduct and a particular administrative proceeding. The government conceded that, post Marinello, the jury instruction in defendant's trial was erroneous. Nonetheless, the court held that the error was harmless because the evidence supporting the jury's verdict was so overwhelming that no rational jury could find otherwise.The court also held that the district court did not abuse its discretion in admitting expert testimony; the district court did not err in denying defendant's motion to suppress evidence obtained during a civil audit; and the district court did not err in denying defendant's motion for mistrial. View "United States v. Beckham" on Justia Law

The Second Circuit affirmed the district court's order requiring defendant to pay a civil penalty of almost $93 million in a civil suit brought by the SEC. Defendant was the managing general partner and portfolio manager of Galleon Management and its affiliated hedgefunds. Defendant was found to have executed trades in Galleon's accounts and in the account of Rajiv Goel, an Intel executive who had provided tips to defendant, in the stock of five companies on the basis of inside information.The court held that a plain reading of Section 21A(a)(2) of the Securities and Exchange Act indicates that it permits a civil penalty to be based on the total profit resulting from the violation. In this case, defendant executed Galleon's and Goel's illegal trades and thus his civil penalty could be calculated under subsection (a)(2) based on the profit gained or loss avoided as a result of defendant's unlawful purchases and sales. The court also held that the district court did not abuse its discretion by determining that every factor in SEC v. Haligiannis, 470 F. Supp. 2d 373, 386 (S.D.N.Y. 2007), favored the use of a treble penalty. View "SEC v. Rajaratnam" on Justia Law

Bradley worked as the general contractor on Ingersoll’s project converting an old Michigan church into a charter school, Bay City Academy (BCA). Ingersoll had previously misappropriated state funding meant for a charter school he already ran, Grand Traverse Academy, and used the funding for the new charter school project to cover his tracks. At trial, Bradley was shown to have conducted fraudulent transfers of the newly misappropriated money, failed to report the resulting sizeable deposits into his accounts in his 2011 tax filing and underpaid his taxes, and failed to file W-2s reporting his BCA employees’ wages to the IRS and to provide them with 1099s. Bradley was convicted of conspiring to defraud the United States, 18 U.S.C. 371. The Sixth Circuit affirmed, rejecting Bradley’s arguments that testimony that he underpaid his 2011 taxes constituted a prejudicial constructive amendment or variance to the indictment; that the government made improper arguments during its opening statement and rebuttal, and that the court improperly refused to instruct the jury on a lesser-included offense. The evidence of his tax filing constituted a presentation of additional evidence to substantiate charged offenses, which did not include facts materially different from those charged. The prosecutor’s statements were improper but did not constitute flagrant prosecutorial misconduct. View "United States v. Bradley" on Justia Law

Defendant challenged the validity of his guilty plea for aggravated identity theft, and various aspects of sentencing for possession of at least fifteen access devices with intent to defraud and possession of device-making equipment with intent to defraud. The Fourth Circuit affirmed the district court's judgment and held that defendant never objected to purported errors in the Rule 11 proceeding, and his challenges on appeal were insubstantial and did not come close to meeting a plain error standard. The court also held that the district court did not err in calculating the amount of loss; even if there was error in calculating the amount of loss, it was harmless; the district court did not err in concluding that the eighteen persons identified were victims; and the district court did not clearly err by denying defendant an acceptance of responsibility reduction under USSG 3E1.1(a). View "United States v. Carver" on Justia Law

The defendants took part in a decade-long scheme surreptitiously to sell tax-free cigarettes, thereby defrauding federal, state, and local governments of more than $45 million in tax revenue. The federal government eventually uncovered the scheme and charged them with 34 counts, including conspiracy to commit mail or wire fraud 18 U.S.C. 1349; conspiracy to launder money, 18 U.S.C. 1956(h); and conspiracy against the United States, 18 U.S.C. 371. Maddux pleaded guilty to 29 counts; Carman, Coscia, and Smith went to trial, where a jury convicted each of them on various counts. The Sixth Circuit affirmed their convictions and sentences--Maddux to 120 months’ imprisonment, Carman to 60 months, Smith to 42 months, and Coscia to 36 months. The scheme involved use of interstate wire communications and the United States mails; it was Congress’s prerogative to punish this combination of conduct more severely than a violation of the Jenkins Act, 15 U.S.C. 376(a), which requires cigarette sellers to file monthly reports. The court rejected an argument that the trial court should have specifically instructed the jury that defendants were not charged with a violation of either the Jenkins Act or the Cigarette Trafficking Act, 15 U.S.C. 377(a). The indictment sufficiently alleged a scheme to defraud. View "United States v. Smith" on Justia Law

Tantchev, a native of Bulgaria, owned a trucking business that operated out of a warehouse in Chicago. Chogsom, a Mongolian immigrant, worked for Tantchev. Large deposits into Tantchev’s bank account prompted an investigation. After a six-day trial involving 29 witnesses, a federal jury convicted Tantchev of exporting and attempting to export stolen cars, submitting false documents to customs officials, and structuring financial transactions to avoid federal reporting requirements. That same jury acquitted Tantchev’s co-defendant, Chogsom, of charges related to the stolen cars and false documents, but convicted Chogsom of making a false statement to an IRS agent. The district court sentenced Tantchev to 40 months’ imprisonment and Chogsom to three years’ probation. The Seventh Circuit affirmed. The court rejected Tantchev’s argument that the district court should not have given a deliberate avoidance or “ostrich” instruction. The jury was entitled to conclude Tantchev purposely did not subject the shipping containers to the scrutiny he exercised in the other part of his business and draw a negative inference from that change in behavior. The court upheld the use of a jury instruction, “If you find that the defendant was in possession of property that recently had been stolen, you may infer that he knew it was stolen.” View "United States v. Chogsom" on Justia Law

Diana Merritt was convicted of ten counts of mortgage fraud in 2015. The actual crimes were committed between 2008 and 2009, but law enforcement did not discover the extent of those crimes until 2014. Merritt argued the charging document did not sufficiently provide information that the alleged charges occurred within the applicable statute of limitations. She also argued failure to comply with the statute of limitations constituted a violation of her due process rights. The Court of Appeals affirmed Merritt's convictions, and finding no reversible error, so too did the Washington Supreme Court. View "Washington v. Merritt" on Justia Law