Justia White Collar Crime Opinion SummariesArticles Posted in Family Law
United States v. Abell
The First Circuit affirmed the district court's order granting the government's request to garnish Appellant's husband's 401(k) account and apply the proceeds to his nearly four million dollar criminal restitution obligations, holding that Appellant had no vested legal interest in her husband's account.Appellant's husband (Husband) pleaded guilty to eight counts of wire fraud, money laundering, and unlawful monetary transactions. The district court sentenced him to a term of incarceration and ordered him to pay $3,879,750 in restitution. The government later asked the district court for a writ of garnishment directed at Husband's 401(k) plan, which Husband held individually in his own name. The district court rejected Appellant's objections and issued a garnishment order. The First Circuit affirmed, holding (1) Massachusetts law did not give Appellant a vested legal interest in Husband's 401(k) account; and (2) it was not plain error for the district court to issue the writ of garnishment without compensating Appellant for her contingent death benefit under the policy. View "United States v. Abell" on Justia Law
Henricks v. United States
Henricks owned a towing business, an auto body shop, and a vehicle dealership, which he used to defraud insurance companies by filing fraudulent claims. Henricks’s wife, Catherine, worked at the companies sporadically and was an officer of two of them and a member of the other. She opened bank accounts and signed loan documents on behalf of the companies. Henricks pleaded guilty to mail fraud and immediately began to hide assets. He was sentenced to imprisonment and ordered to pay restitution of $1,306,608.72. Catherine filed for divorce and for bankruptcy. Catherine entered an appearance as an interested person in Henricks’s criminal case. The district court found that Henricks had defaulted on his restitution payments and that the divorce was a sham, then determined the parties’ interests in properties so that Henricks’s property could be directed toward restitution. The Seventh Circuit vacated. The court had jurisdiction under the Fair Debt Collection Procedures Act to decide the parties’ property interests in Henricks’s criminal case and did not violate Catherine’s due process rights. The court, however, improperly relied upon post‐judgment conduct instead of determining the parties’ property interests as of the date of the judgment lien. Whether the divorce was a sham was relevant to whether Henricks’s defaulted on restitution, but is irrelevant to the parties’ ownership interests on the judgment date. View "Henricks v. United States" on Justia Law
Commodity Futures Trading Commission v. Walsh, et al.
Plaintiffs sued the former spouse of Stephen Walsh, who was a defendant in related actions brought by plaintiffs, alleging that the property derived from Walsh's illegal securities activities went into the former spouse's possession under the parties' separation agreement and divorce decree. At issue, in certified questions to the court, was whether the former spouse had a legitimate claim to those funds, which would prevent plaintiffs from obtaining disgorgement from her. The court held that an innocent spouse who received possession of tainted property in good faith and gave fair consideration for it should prevail over the claims of the original owner or owners consistent with the state's strong public policy of ensuring finality in divorce proceedings.View "Commodity Futures Trading Commission v. Walsh, et al." on Justia Law
Peel v. Peel
Gary and Deborah divorced in 2003 and agreed to a marital settlement. Gary purchased an annuity, to pay him $200 per month until his death; the settlement required him to pay her “$200 per month…in lieu of her interest in [the annuity].” Two years later, Gary filed for Chapter 7 bankruptcy and asked the court to discharge financial obligations to his ex-wife under the settlement. Gary attempted to blackmail Deborah into cooperation, using nude photos of her sister as a child. He is now in prison for bankruptcy fraud and possession of child pornography. 18 U.S.C. 152(6), 2252A(a)(5)(B). Deborah and the bankruptcy trustee agreed that she had an unsecured claim for $158,455.63, including $12,400 representing 62 monthly payments that the trustee had received under the annuity. Gary owned the annuity, so these payments were part of the bankruptcy estate and their inclusion in her claim was a mistake. The trustee successfully moved the bankruptcy judge to permit transfer to Deborah of $1000 in annuity payments collected since settling her claim, and to direct the company to make future payments to her directly. The Seventh Circuit reversed, directing the court either to order Deborah to return the $1000 or order the trustee to deduct it from her claim and to instruct the company to resume making payments to the trustee. View "Peel v. Peel" on Justia Law
Cohen v. Cohen
Plaintiff appealed from the district court's judgment dismissing her claims against her ex-husband and his brother for failure to state a claim and untimeliness. Plaintiff alleged that, in representing a certain investment as worthless and concealing the $5.5 million received on its account, defendants conspired in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1962(d), committed common law fraud, and breached fiduciary duties, and that her ex-husband was unjustly enriched. The court held that the district court's reasons for dismissing the fraud-based claims were erroneous and that the district court erred in ruling on the existing record that the RICO, common law fraud, and breach of fiduciary duty claims were time-barred. The court sustained the dismissal of the unjust enrichment claim as untimely. Accordingly, the court affirmed in part and vacated and remanded in part. View "Cohen v. Cohen" on Justia Law
United States v. Duran
The United States obtained a judgment for restitution of more than $85 million against Lawrence Duran for crimes that he committed in a conspiracy to defraud Medicare. After the United States obtained a writ of execution against an apartment that, according to property records, was owned jointly by Lawrence and his former wife, Carmen Duran, she moved to dissolve or stay the writ on the ground that she had acquired sole title to the property as part of their divorce settlement several months before his prosecution. The district court denied the motion without prejudice on the grounds that it lacked jurisdiction. Because the Fair Debt Collection Practices Act, 28 U.S.C. 3203(a), provided that the United States could levy only property in which a judgment debtor had a substantial nonexempt interest, the district court erred in refusing to adjudicate Carmen's motion. Accordingly, the court vacated the order and remanded for further proceedings. View "United States v. Duran" on Justia Law
Heinrich v. Waiting Angels Adoption Serv., Inc.
Plaintiffs, seven couples who sent money to the defendants (adoption agency and individuals) to facilitate adoptions, in some cases of specific children, believed they had been defrauded and filed federal claims. The case was stayed, pending resolution of state criminal charges. The district court subsequently dismissed claims under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1962. The complaint identified the agency as the enterprise; identified predicate violations of mail fraud and wire fraud, 18 U.S.C. 341 and 1343, extortion, 18 U.S.C. 1951; transmitting or transferring in interstate commerce goods, wares, merchandise, or money knowing the same to have been stolen, converted, or taken by fraud, 18 U.S.C. 2314; and traveling in interstate or foreign commerce with the intent to distribute the proceeds of extortion, 18 U.S.C. 1952; and alleged a conspiracy among the individual defendants. The Sixth Circuit reversed. Four of plaintiffs' claims adequately alleged predicate acts of mail or wire fraud and adequately alleged a threat of continued criminal activity and, therefore, a pattern of racketeering activity. View "Heinrich v. Waiting Angels Adoption Serv., Inc." on Justia Law
United States v. Mitrano
Defendant, a patent attorney and licensed engineer, the divorced father of children born in 1985, 1986, and 1991, was ordered in 2002 to pay weekly child support of $1,406 per week plus $300 per week toward past medical expenses. He has paid no child support since issuance of the final order. He attempted to appeal the order to the U.S. Supreme Court and filed unsuccessful suits and appeals in four states (New Hampshire, Vermont, Virginia, and Maryland) and in two federal courts, arguing that the order was invalid because the New Hampshire court lacked subject matter jurisdiction. Convicted of willful failure to pay child support, 18 U.S.C. 228(a)(3), defendant was sentenced to 24 months in prison. The First Circuit affirmed, finding the evidence sufficient to support findings that he was able to pay and willfully refused to pay. The district court properly charged the jury on willful blindness. View "United States v. Mitrano" on Justia Law
Commodity Futures Trading Comm’n v. Walsh, et al.; SEC v. WG Trading Investors, L.P., et al.
This case arose out of the attempts of two federal agencies to disgorge funds from Janet Schaberg, the ex-wife of alleged Ponzi-scheme artist Stephen Walsh. Schaberg subsequently appealed from a memorandum decision and orders of the district court granting preliminary injunctions freezing Schaberg's assets. In response to certified questions, the New York Court of Appeals held that (a) proceeds of a fraud could constitute marital property, and (b) when part or all of the marital estate consisted of the proceeds of fraud, that fact did not, as a matter of law, preclude a determination that a spouse paid fair consideration according to the terms of New York's Debtor and Creditor Law section 272. The court held that because those rulings undermined the key legal assumptions supporting the preliminary injunctions, the court vacated those orders, without prejudice to further proceedings applying the legal principles pronounced by the New York Court of Appeals. View "Commodity Futures Trading Comm'n v. Walsh, et al.; SEC v. WG Trading Investors, L.P., et al." on Justia Law
United States v. Underwood
Appellant pled guilty to wire fraud and was sentenced to 108 months imprisonment. Appellant argued that his son, who suffered from muscular dystrophy, required around-the-clock care that his wife could not provide by herself. At issue was whether the district court, in consideration of appellant's caretaker duties, erred in denying his request for a downward departure under U.S.S.G. 5H1.6, failed to properly consider the 18 U.S.C. 3553(a) factors, and imposed an unreasonable sentence by declining to vary below the Guidelines range. The court held that the district court correctly explained at sentencing that family circumstances were not a factor ordinarily considered when sentencing a defendant under the Guidelines. The court also held that the district court clearly considered appellant's son's medical condition and appellant's role as a caretaker as relevant factors under section 3553(a). The court further held that the sentence was not substantively unreasonable where the district court thoroughly considered appellant's role in caring for his son and therefore, affirmed the sentence.