Justia White Collar Crime Opinion Summaries

After pleading guilty to preparing false tax returns for her clients, 26 U.S.C. 7206(2), Johnson was sentenced to 18 months in prison plus $79,325 in restitution—the amount that Johnson’s clients unlawfully avoided paying (with respect to the counts of conviction) that had not been collected from the taxpayers before sentencing. The Seventh Circuit affirmed, rejecting Johnson’s argument that the prosecution should have told the judge how much more it might collect from her clients, which she characterized as exculpatory material that should have been revealed under "Brady." The collections were not concealed. The presentence report showed that the government already had collected substantial sums (the original loss exceeded $150,000) and was trying to obtain the balance from taxpayers. Johnson was free to ask how much more had been collected by the date of sentencing but did not. Brady does not apply when information is available for the asking. The restitution statute, not the Constitution, determines the prosecution’s duty—one of credit against the judgment, not of disclosure during the sentencing hearing. Johnson will receive credit against the restitution award for whatever the government collects from the taxpayers; it was unnecessary to disclose the details of collection activities before the judge determined the base restitution award. View "United States v. Johnson" on Justia Law

Defendant-Appellant, Gunther Glaub, was convicted of violating the criminal provisions of the False Claims Act. He argued on appeal that his act of submitting personal bills and invoices to the United States for payment was protected by the First Amendment. Furthermore, he challenged jury instructions given at trial on grounds that they failed to properly define "claim." Finding no support in the trial court record for either of Glaub's claims, the Tenth Circuit affirmed his conviction. View "United States v. Glaub" on Justia Law

From 2007-2011, a group led by District employee Palazzo defrauded the Cuyahoga Heights School District. From 2009-2011, Defendant was part of this group. The scheme involved Palazzo submitting fake invoices to the District, purporting to be for IT-related goods and services. The vendors were actually shell corporations that never supplied goods or services of any kind to the District. The shell corporations were owned by Palazzo’s brother, Boyles, and Defendant. Five shell corporations defrauded the District of approximately $3.3 million. Defendant was aware, no later than 2009, that the scheme was a fraud. When the scheme was uncovered, Defendant sold his property, moved to Europe, and cut off communications with people in the U.S. He claims he was afraid of Palazzo, who had threatened his family. He was extradited and pled guilty under 18 U.S.C. 1341, 1349 (mail fraud), 18 U.S.C. 1956(h)(money laundering). The Sixth Circuit affirmed his a 70-month sentence, rejecting Defendant’s claims that he should have only received a 14-level offense level increase for the amount of loss that resulted from his offenses—$916,948.77, that he should have received a two-level decrease for playing only a minor role in the offenses, and that he should not have received a two-level increase for obstruction of justice. View "United States v. Donadeo" on Justia Law

After Kuczora lost his finance job in 2007, he styled himself as the managing director of KCS Financial, a phony finance firm he ran from his Elgin, Illinois basement. Kuczora falsely represented to unwary investors that he could help them secure millions of dollars in financing; they paid him large sums of money to cover fees, which Kuczora pocketed for personal use before disappearing. He ultimately pleaded guilty to wire fraud. His Guidelines range was 33-41 months in prison. The district judge, citing the seriousness and sophistication of the offense, the devastation to the victims, and the need to deter similar crime, imposed a sentence of 70 months. Kuczora argued that the judge did not adequately explain the upward variance and failed to give him advance notice of the grounds supporting it. The Seventh Circuit affirmed. The district judge thoroughly explained his reasoning. The Seventh Circuit has never held that a judge must give advance warning of an upward variance. Every defendant is on notice that the court has the discretion to impose a sentence above, below, or within the Guidelines range based on the 18 U.S.C. 3553 factors. The 70-month sentence is not substantively unreasonable and the judge did not exceed his broad discretion in concluding that a heavier penalty was justified here. View "United States v. Kuczora" on Justia Law

Jared Cowen owned a semi-truck that needed extensive maintenance. To pay the $37,485.65 repair bill, Cowen borrowed $15,000 from his brother and wrote two checks from his company’s bank account, one for $9,327.65 and the other for $13,158.00. Cowen admitted at trial that he knew he did not have sufficient funds to cover the checks when he wrote them, and his bank records corroborated his testimony. Believing it had been paid in full when it received Cowen’s checks, the repair shop released the semi-truck to him. A few days later, it learned that both of Cowen’s checks had failed to clear and that Cowen had issued a stop-payment on them. Cowen was thereafter charged with two counts of fraud by check: one count for each of the checks. He defended against the charges by asserting that he did not intend to defraud the repair shop. The jury convicted Cowen of the charge related to the first check, but acquitted him of the charge related to the second check. As part of Cowen’s sentence, the State requested restitution in the amount of $22,485.65, the total amount of the two checks. Cowen objected to any restitution being imposed for pecuniary losses suffered by the repair shop as a result of the second check because he was acquitted of the charge involving that check. Following a hearing, the trial court granted the State's request, finding that they had proven by a preponderance of the evidence that Cowen had written both checks knowing he had insufficient funds in his company’s account to cover them. The trial court acknowledged Cowen’s acquittal of the charge related to the second check, but explained that it was “absolutely convinced . . . , by far more than a preponderance of the evidence,” that Cowen knew he had failed to secure the financing company’s loan to fund that check. The issue this case presented for the Colorado Supreme Court's review centered on whether Colorado’s restitution statutes authorized a trial court to order a defendant who has been acquitted of a charge to pay restitution for pecuniary losses caused by the conduct that formed the basis of that charge. A division of the court of appeals upheld the restitution order in an unpublished, unanimous decision. The Supreme Court disagreed with the appellate division, however, and reversed. View "Cowen v. Colorado" on Justia Law

In 2000 Balsiger took the helm of IOS, a large coupon processing companies. IOS contracted with large retail chains and small, independently owned stores to collect and sort coupons redeemed at their stores and to submit invoices for reimbursement either directly to the manufacturer or indirectly to the manufacturer’s agent. For his role in designing and implementing a scheme to defraud those manufacturers, Balsiger was charged with 25 counts of wire fraud and conspiracy both to commit wire fraud and obstruct justice. After a decade of litigation, Balsiger represented himself at a bench trial with the assistance of stand-by counsel. The district court convicted Balsiger on 12 counts and sentenced him to 120 months’ imprisonment. The Seventh Circuit affirmed, rejecting Balsiger’s argument that the court deprived him of his Sixth Amendment right to retain the counsel of his choice by failing to grant an 18-month continuance and by refusing to order the government to remove a lis pendens on his home—a notice to potential buyers that title to the property might be impaired by the outcome of his criminal prosecution. The court upheld the district court’s conclusion, following the death of Balsiger’s attorney, that Balsiger waived his right to counsel and its decision to require him, over his objection, to proceed pro se. View "United States v. Balsiger" on Justia Law

Defendant, a professional sports gambler, appealed his conviction of securities fraud and related crimes. The Second Circuit held that, although it was undisputed that a special agent's leaks to reporters violated the grand jury secrecy provision of Federal Rule of Criminal Procedure 6(e), dismissal of the indictment was not appropriate in these circumstances where defendant failed to demonstrate prejudice by the agent's actions. Furthermore, the court noted that there was no due process violation where the violations were not so systematic and pervasive as to raise a substantial and serious question about the fundamental fairness of the process resulting in the indictment, nor were they so outrageous that they violated common notions of fairness and decency.The court also held that the district court did not clearly err in its factual determinations or abuse its discretion in denying the Rule 33 motion, and the evidence was insufficient to support defendant's counts of conviction related to Darden. Finally, the court vacated and remanded the restitution order, and affirmed the forfeiture order. View "United States v. Walters" on Justia Law

The Eighth Circuit affirmed defendant's conviction for seven counts of aggravated identity theft stemming from his involvement in preparing personal income tax returns for his clients that obtained inflated refunds by falsely claiming dependents. The court held that the district court did not err in interpreting the term "uses, without lawful authority" under 18 U.S.C. 1028A(a)(1) where defendant knowingly used the names and social security numbers of falsely claimed dependents, including his own children, in committing wire fraud, and whether the minors "consented" to the use was irrelevant. Therefore, the district court did not err by denying defendant's motion for acquittal. The district court also did not abuse its discretion by rejecting a jury instruction incorporating defendant's interpretation of the statute. View "United States v. Gatwas" on Justia Law

From 2008-2016, Brennan and Dyer (Defendants) operated Broad Street, to incorporate Tennessee corporations (Scenic City). They claimed that once Scenic City was appropriately capitalized, Defendants would register its common stock with the SEC using Form 10, would publicly trade Scenic City, and would acquire small businesses as a legal reverse merger. Investors sent money by mail and electronic wire from other states. Defendants moved the funds through Broad Street’s bank accounts, diverting significant funds to their personal bank accounts. They issued stock certificates and mailed them to investors, but never filed Form 10 nor completed any reverse mergers. Investors lost $4,942,070.18. Defendants reported the embezzled funds as long-term capital gains, substantially reducing their personal tax liability and treated payments to themselves from Broad Street as nontaxable distributions. For 2010-2014, Dyer owed an additional $312,799 in taxes; Brennan owed $164,542. The SEC began a civil enforcement suit under 15 U.S.C. 77(q)(a)(1), 77(q)(a)(2), 77(q)(a)(3), and 78j(b), and Rule 10b-5. Defendants pleaded guilty to conspiracy to commit mail and wire fraud, 18 U.S.C. 371, 1341 and tax evasion, 26 U.S.C 7201. The court sentenced them to prison, ordered restitution ($4,942,070.18), and ordered payments for their tax evasion. The SEC sought and the court entered a disgorgement order to be offset by the restitution ordered in the criminal case. The Sixth Circuit affirmed, rejecting an argument that the disgorgement violates the Double Jeopardy Clause under the Supreme Court’s 2017 “Kokesh” holding that disgorgement, in SEC enforcement proceedings, "operates as a penalty under [28 U.S.C.] 2462.” SEC civil disgorgement is not a criminal punishment. View "United States v. Dyer" on Justia Law

McClure-Potts contacted police about Samarin, who entered the U.S. without inspection from Ukraine. McClure-Potts claimed she was trying to adopt Samarin, who was 19 years old and that Samarin had been “speaking of Hitler against the Jews” and might have stolen a rifle. McClure-Potts provided a birth certificate indicating that Samarin was born in 1992. Police discovered that McClure-Potts had previously filed runaway reports regarding a minor son (Asher) apparently born in 1997; Samarin was posing as Asher and attending high school. The school provided a sworn statement from McClure-Potts that Samarin was born in 1997, with applications for free/reduced lunch and health benefits. Samarin claimed that he had moved in with McClure-Potts, then was told to cut ties with his family and surrender his money and his identification documents. He was forced to do household work. McClure-Potts obtained a Social Security card for "Asher," and used it to procure $7,336 in income tax credits and $13,653.28 in nutritional and health benefits. McClure-Potts was charged with Social Security Fraud, 42 U.S.C. 408(a)(6); Harboring an Illegal Alien, 8 U.S.C. 1324(a)(1)(A)(iii), (a)(2); and Unlawful Conduct Respecting Documents in Furtherance of Forced Labor, 18 U.S.C. 1589, 1590. McClure-Potts pled guilty to the Social Security Fraud and Harboring counts. Based on the amount of loss ($20,989.28) and the court’s refusal to grant an offense level reduction due to the claim that her fraud was committed “other than for profit," she was sentenced to five months. The Third Circuit affirmed. The benefits that McClure-Potts sought and received were “payment” for her harboring Samarin. View "United States v. McClure-Potts" on Justia Law