Justia White Collar Crime Opinion Summaries

McKnight, a bartender, became friends with Fewlas. McKnight rented an apartment in his duplex. For 17 years, McKnight lived in this upstairs apartment with her boyfriend, Kurt. Fewlas and McKnight did not always get along. Fewlas disliked Kurt. Fewlas died, having accumulated more than $2.2 million. McKnight went on a spending spree. She withdrew over $600,000 in 171 different transactions—all in amounts less than $10,000. This suspicious conduct got the IRS’s attention; the IRS suspected that Fewlas had not left his estate to McKnight. Kurt confessed that he had forged Fewlas’s signature on a fake will, prepared by attorney Pioch. His confession resulted in multiple convictions. The Sixth Circuit affirmed in part, rejecting a Confrontation Clause claim based on the admission of Kurt’s videotaped deposition testimony. Kurt was 76 years old, in poor health, and unable to travel at the time of trial. The court also upheld the admission of testimony concerning handwriting analysis. The court remanded for reconsideration of a motion for a new trial because the court conflated the rules, repeatedly characterizing its task as evaluating the sufficiency of the evidence, rather than weighing the evidence for itself. The court vacated the sentences: the court enhanced sentencing ranges after concluding that the defendants caused financial hardship to the putative beneficiary of Fewlas’s estate but the Guidelines did not contain that enhancement at the time of the misconduct. View "United States v. Pioch" on Justia Law

A conspiracy to defraud financial institutions in the Minneapolis-St. Paul area involved cashing counterfeit checks. Participants, including 25 co-defendants, created the counterfeit checks using check-printing software and blank check stock. “Bank insiders” provided bank account information for use on counterfeit checks. "Runners" were enlisted to serve as payees and take the checks to the bank to cash or deposit. Conspiracy members acquired account information through various means. Using social media, participants searched the hashtag “#myfirstpaycheck” and found photographs of legitimate paychecks that unwitting victims had posted online. Bank insiders sometimes provided account information. Some conspirators used their own payroll or personal checks to be counterfeited. During the period between November 2007 and September 2013 alone, more than 500 runners negotiated over 1500 counterfeit or fraudulent checks. Gaye pleaded guilty to conspiracy to commit bank fraud, 18 U.S.C. 1344 and 1349, 20 counts of aiding and abetting bank fraud, and two counts of aiding and abetting aggravated identity theft, 18 U.S.C. 1028A. Fillie pleaded guilty to conspiracy to commit bank fraud and one count of aiding and abetting aggravated identity theft. Sumoso pleaded guilty to conspiracy to commit bank fraud and four counts of aiding and abetting bank fraud. The Eighth Circuit affirmed sentences of (respectively) 144, 134, and 54 months’ imprisonment and restitution orders, rejecting arguments that the district court committed procedural error in applying the guidelines. View "United States v. Gaye" on Justia Law

An Indiana judge appointed Stochel as receiver for Tip Top Supermarkets, while its proprietors were embroiled in protracted litigation. Over several years Stochel stole more than $330,000 from the receivership. Stochel evaded detection by diverting funds from other sources to pay bills. As the litigation and receivership were winding down, the principals had suspicions and asked the court to appoint an independent auditor. The judge ordered Stochel to turn over the receivership’s files. To delay discovery, Stochel moved to vacate the order, falsely stating that the receivership had sufficient funds to pay the auditor and claiming that he needed more time to assemble the records. The judge removed Stochel as the receiver; the auditor uncovered the fraud. Stochel was charged with mail fraud, 18 U.S.C. 1341, based on Stochel’s motion, which he had mailed to the court; the indictment alleged that the motion perpetuated the fraudulent scheme by delaying the detection of Stochel’s embezzlement. The district judge imposed a sentence of 24 months in prison. The Seventh Circuit affirmed, rejecting challenges to the sufficiency of the evidence’ the denial of credit for acceptance of responsibility, U.S.S.G. 3E1.1(a); the loss-amount calculation, U.S.S.G. 2B1.1(b)(1)(G); and the application of a two-level enhancement for violating a judicial order, U.S.S.G. 2B1.1(b)(9)(C). View "United States v. Stochel" on Justia Law

Matthew Sample pled guilty to one count of frauds and swindles and two counts of wire fraud. Sample worked as a licensed investment advisor and registered broker for several large brokerage firms, and was recognized as a top advisor. In 2006, Sample began operating the Vega Opportunity Fund (the “Vega Fund”). One year later, in 2007, he closed the fund after it had lost sixty-five percent of its value. Sample had been diverting funds invested in the Vega Fund for his own personal expenses, and had been providing investors with false account statements and quarterly updates on their purported investments. After closing the Vega Fund, Sample moved from Chicago, Illinois, to Albuquerque, New Mexico. In October of 2009, he began a hedge fund called the Lobo Volatility Fund, LLC (the “Lobo Fund”). In a scheme similar to that perpetrated on investors in the Vega Fund, Sample provided false monthly statements showing appreciation in value, engaged in misleading email correspondence about market strategies, and provided false tax reports to Lobo Fund investors. All the while, Sample diverted a total of $1,086,453.62 from investors for his personal use. Sample was sentenced to a five-year term of probation on a rationale that that such a sentence would allow him to repay his victims. The government appealed the sentence, and the Tenth Circuit concurred with the government that this sentence was unreasonable. The case was remanded for resentencing. View "United States v. Sample" on Justia Law

Ayers, an experienced Kentucky criminal-defense attorney, was indicted in 2008 on five counts of failing to file state tax returns. Ayers represented himself throughout the 21 months between his indictment and trial, but never formally elected to do so. He never waived his right to counsel on the record, filed a notice of appearance, or moved to be allowed to proceed pro se. The court allegedly failed to inform him at his arraignment that he had a right to counsel and never subsequently sought to determine whether Ayers’s self-representation was a voluntary, intelligent, and knowing waiver of his right to counsel. When Ayers asked for a continuance a day before trial was scheduled to begin so that he could hire an attorney with whom he attested he was already in negotiations, the court denied his request and forced him to proceed pro se. Ayers was convicted. The Sixth Circuit reversed the district court’s denial of habeas relief. The Kentucky Supreme Court acted contrary to clearly established Supreme Court precedent when it held that trial courts need not “obtain a waiver of counsel” before allowing “experienced criminal trial attorneys” to represent themselves. Applying de novo review, the court concluded that Ayers did not validly waive his right to counsel. View "Ayers v. Hall" on Justia Law

In 2009, Scott pleaded guilty to engaging in two schemes to defraud investors and potential investors, 18 U.S.C. 1341. One of the supervised release conditions the district court imposed at sentencing was that he could not incur new credit charges or open additional lines of credit without the approval of the probation officer. After his release, Scott violated his supervised release conditions several times. At the revocation hearing for one of these violations, the district court found Scott violated one of his probation conditions and sentenced him to an additional 36 months of supervised release. The district court declined to impose further custody due to Scott’s regular restitution payments. Defense counsel stated, “we have no objection to extending the period of mandatory supervised release.” The Seventh Circuit affirmed, rejecting Scott’s argument that the district court committed procedural errors at the revocation hearing in failing to calculate or discuss the advisory Sentencing Guidelines range and in failing to afford him an opportunity to allocute, finding that Scott waived both issues. View "United States v. Scott" on Justia Law

Before trial on a 77-count indictment that charged Appellants with operating a ticket-fixing scheme in the Philadelphia Traffic Court, the district court denied a motion to dismiss charges of conspiracy (18 U.S.C. 1349), mail fraud (18 U.S.C. 1341), and wire fraud (18 U.S.C. 1343). A private citizen and the Traffic Court administrator subsequently pleaded guilty to all counts, then appealed whether the indictment properly alleged mail fraud and wire fraud. Three Traffic Court Judges proceeded to a joint trial and were acquitted of fraud and conspiracy but convicted of perjury for statements they made before the Grand Jury. They disputed the sufficiency of the evidence, arguing that the prosecutor’s questions were vague and that their answers were literally true; claimed that the jury was prejudiced by evidence on the fraud and conspiracy counts; and argued that the court erred by ruling that certain evidence was inadmissible. The Third Circuit affirmed the convictions. The Indictment sufficiently alleged that the defendants engaged in a scheme to defraud the Commonwealth and the city of money in costs and fees; it explicitly states that the scheme deprived the city and the Commonwealth of money, and describes the object of the scheme as obviating judgments of guilt that imposed the fines and costs. View "United States v. Hird" on Justia Law

In 2010, the defendants formed PremierTox, a urinalysis testing company: Doctors Peavler and Wood owned a substance abuse treatment company, SelfRefind; Doctor Bertram previously worked for SelfRefind. Bottom and Walters owned a drug testing service and laboratory. Physicians at clinics ordered urinalysis tests to check if their patients used illicit drugs and to monitor their medications. PremierTox was to receive those urine samples, perform the testing, and report back. In October 2010, SelfRefind began to send frozen urine samples to PremierTox for testing, but PremierTox did not have the correct equipment. In 2011, after PremierTox bought the necessary, expensive machines, they broke down. Urine samples from SelfRefind piled up. PremierTox started testing them between February and April 2011 and finished testing them in October. Over the same period, it tested and billed for fresh samples as they came in, aiming for a 48-hour turnaround. PremierTox billed insurers, saying nothing about the delays. The defendants were charged with 99 counts of health care fraud and with conspiracy. A jury acquitted them of conspiracy and 82 of the health care fraud charges and convicted them of 17 health care fraud charges. The trial judge imposed sentences of 13-21 months in prison. The Sixth Circuit affirmed the convictions. A reasonable jury could find that the defendants violated 18 U.S.C. 1347 by requesting reimbursement for tests that were not medically necessary. View "United States v. Walters" on Justia Law

The Fifth Circuit affirmed the district court's denial of claimants' motion to release property under civil forfeiture law. The property at issue stemmed from the sale of synthetic cannabinoids that were a controlled substance or controlled substance analogues intended for human consumption.Determining that the court had jurisdiction over the appeal, the court held that, assuming arguendo, Supplemental Rule G(2)(f) applied in reviewing pretrial property restraints outside the motion-to-dismiss context, the district court used the right standard. In this case, the district asked whether the government's complaint "demonstrated with sufficient particularity for the current stage of the proceedings that defendants intentionally commingled tainted funds with untainted funds for the purpose of facilitating the alleged money laundering.” The court held that the facts here were sufficient to support this standard. The court also held that probable cause for forfeiture existed based on the charge for conspiracy to commit mail and wire fraud. View "United States v. $472,871.95 in Funds Seized" on Justia Law

Petitioner William Avignone, at the time of this appeal, was in custody awaiting trial on charges of multiple counts of grand theft of personal property and fraud in connection with the offer, purchase, or sale of security. As part of a plea deal, Avignone pled guilty to three counts of fraud and two counts of grand theft while the prosecution dismissed the remaining counts. The trial court sentenced him to five years four months to be served in the custody of the sheriff. Before December 2017, he had been out on bail for four years. During that time, he made all court appearances and did not engage in criminal activity. Avignone appealed his sentence, arguing, among other things, the court abused its discretion in denying probation. The Court of Appeal rejected that contention, but allowed Avignone to withdraw his guilty plea. He did, and the superior court held a bail review hearing. After multiple hearings, the court increased Avignone's bail to $300,000. Avignone appealed, arguing the court abused its discretion in increasing his bail and setting it at an amount that violated In re Humphrey, 19 Cal.App.5th 1006 (2018), the Eighth Amendment of the United States Constitution, and article 1, section 12 of the California Constitution. To this point the Court of Appeal agreed that the sentencing court abused its discretion. As such, the court vacated the superior court's bail determination, and directed reconsideration of the amount of bail. View "In re Avignone" on Justia Law