Justia White Collar Crime Opinion Summaries

The Mississippi Secretary of State found that David Watkins and Watkins Development, LLC, committed four securities-fraud violations in connection with revenue bonds sold to finance a renovation project at the Metrocenter mall in Jackson. Watkins appealed and the chancery court vacated one count but affirmed the other three. The Court of Appeals affirmed the Secretary on all four counts. The Mississippi Supreme Court granted certiorari and reversed the Court of Appeals in part because the Secretary failed to cross-appeal the chancellor’s decision to vacate Count I. That said, the Court affirmed the Secretary’s findings on the other three counts. View "Watkins Development, LLC v. Hosemann" on Justia Law

Blair Olsen served as sheriff of Jefferson County from January 1989 until May 2015, when he resigned due to his conviction in this case. While he was the sheriff, the county provided Olsen with two cell phones and paid the bills for those phones. It initially did so because of unreliable service in different sides of the county. He also carried a personal cell phone and paid the charges for that service plan from his own funds. Once county-wide coverage was available from one of the providers, he discontinued service with the other provider and had both of his county-provided cell phones with the same provider. One cell phone was to be his primary cell phone and the other was to be his backup cell phone. At the same time, he terminated his personal cell phone service, but had the telephone number of his personal cell phone transferred to the backup cell phone. At some point, he permitted his wife to carry the backup cell phone for her personal use. The issue of Olsen’s wife using the backup cell phone became an election issue. Olsen asked the county commissioners to refer the matter to the Attorney General in an attempt to clear his name. A deputy attorney general obtained an indictment against Olsen charging him with three felony counts of knowingly using public money to make purchases for personal purposes based upon his wife’s use of the backup cell phone. Prior to trial, Olsen moved to dismiss the indictment or merge the three counts into one on the ground that the prosecution for three counts violated his right against double jeopardy. The charges were tried to a jury, and Olsen was found guilty of all three counts. The district court withheld judgment and placed Olsen on three years’ probation, and he appealed. The district court ruled that "I think the statute gives the prosecutor very clearly a substantial amount of discretion that says that the incidents may be aggregated into one count, but it doesn’t say they have to be aggregated into one count." In so holding, Supreme Court found that the district court erred. The Supreme Court affirmed the conviction of one count of misuse of public funds and remanded this case to vacate two other counts and amend the order withholding judgment accordingly. View "Idaho v. Olsen" on Justia Law

From 2009-2012, the federal government appropriated $150 million annually to the government of the Virgin Islands; Willis was Executive Director of the Legislature for the Virgin Islands, with authority to administer contracts. During Willis’s tenure, the legislature’s main building underwent major renovations. Willis was substantially involved in securing contractors. Three contractors later testified that they gave cash or other items of value to Willis to secure more government work or to ensure payment of their invoices. In 2010, the U.S. Department of the Interior audited the legislature’s administrative section while the renovations were taking place and concluded that the legislature had mismanaged public funds. After an investigation, an indictment issued for Willis’s prosecution on extortion charges (18 U.S.C. 1951(a)) and bribery charges (18 U.S.C. 666(a)(1)). The Third Circuit affirmed his conviction and five-year prison term, upholding admission of evidence of Willis’s prior acceptance of bribes. The indictment adequately alleged all required elements of bribery: the parties, the relevant amounts of money exchanged, where the illegal transactions occurred, that Willis used his public position unlawfully, specific details of each transaction, and improper purposes under the federal statutes. The government proved a sufficient nexus between Willis’s conduct or his status as Executive Director and a corresponding effect on federal funds. View "United States v. Willis" on Justia Law

Former Virginia Governor McDonnell, and his wife were indicted on honest services fraud and Hobbs Act extortion charges related to their acceptance of $175,000 in loans, gifts, and other benefits from Williams, the CEO of Star Scientific, which developed Anatabloc, a nutritional supplement made from a compound found in tobacco. Williams wanted McDonnell’s assistance in getting public universities to perform research studies on the product. The government asserted that McDonnell committed (or agreed to commit) an “official act” in exchange for the loans and gifts. An “official act” is “any decision or action on any question, matter, cause, suit, proceeding or controversy, which may at any time be pending, or which may by law be brought before any public official, in such official’s official capacity, or in such official’s place of trust or profit,” 18 U.S.C. 201(a)(3). The claimed “official acts,” included “arranging meetings” for Williams with other Virginia officials, “hosting” events at the Governor’s Mansion, and “contacting other government officials” concerning the studies. The district court instructed the jury that “official act” encompasses “acts that a public official customarily performs,” including acts “in furtherance of longer-term goals” or “in a series of steps to exercise influence or achieve an end.” The court declined to give McDonnell’s requested instruction that “merely arranging a meeting, attending an event, hosting a reception, or making a speech are not, standing alone, ‘official acts.’” The Fourth Circuit affirmed the convictions. A unanimous Supreme Court vacated. An “official act” involves a decision or action (or an agreement to act or decide) on “question, matter, cause, suit, proceeding or controversy,” by a formal exercise of governmental power. The pertinent matter must be more focused and concrete than “Virginia business and economic development,” and a decision or action is more than merely setting up a meeting, hosting an event, or calling another official. The government’s expansive interpretation of “official act” would raise significant constitutional concerns. Conscientious public officials arrange meetings for constituents, contact other officials on their behalf, and include them in events all the time. The jury instructions, therefore, were significantly overinclusive. View "McDonnell v. United States" on Justia Law

Before the 2008 presidential election, federal agents were investigating then-Governor Blagojevich and obtained warrants authorizing the interception of his phone calls. When Barack Obama, then a Senator from Illinois, won the election, Blagojevich was to appoint his replacement. Interceptions revealed that Blagojevich viewed the opportunity to appoint a new Senator as a bonanza. After two trials, Blagojevich was convicted of 18 crimes, including attempted extortion from campaign contributors, corrupt solicitation of funds, wire fraud, and lying to federal investigators. The district court sentenced Blagojevich to 168 months’ imprisonment. The Seventh Circuit vacated convictions on five counts, concerning Blagojevich’s proposal to appoint Valerie Jarrett to the Senate in exchange for an appointment to the Cabinet, and remanded. The court rejected a challenge to the sufficiency of the evidence, but concluded the instructions permitted the jury to convict even if it found that his only request of Obama was for a Cabinet position. A proposal to trade one public act for another, logrolling, is unlike the swap of an official act for a private payment. The instructions do not ensure that the jury found that Blagojevich offered to trade the appointment for a private salary. Because the court affirmed on most counts and concluded that the sentencing range lies above 168 months, Blagojevich is not entitled to release pending further proceedings. View "United States v. Blagojevich" on Justia Law

From 2005-2007, Wright, a real estate agent and the chief of staff for Philadelphia councilman Kelly, received gifts from Chawla, a developer, and attorney Teitelman, who got most of his work from Chawla's company, World Acquisition. Wright received a free stint in an apartment, free legal services, and was promised commissions. Wright shepherded a bill that Chawla favored through Kelly’s office, arranged meetings about a World Acquisition development, and communicated with city offices for World Acquisition. In 2008, a grand jury returned a 14-count indictment, charging honest services fraud, traditional fraud, conspiracy to commit both kinds of fraud, and bribery in connection with a federally funded program. The jury convicted Chawla, Teitelman, and Wright of: conspiracy to commit honest services and traditional fraud and honest services and traditional fraud for the apartment arrangement and convicted Chawla alone of honest services for offering Wright liaison work. It acquitted on the other counts. After remand, the defendants moved, unsuccessfully, to preclude the government from relitigating certain issues under the Double Jeopardy Clause and from constructively amending the indictment. the Third Circuit held that it lacked jurisdiction because the ruling is not a “collateral” order subject to immediate review and was not otherwise a “final decision” under 28 U.S.C. 1291. View "United States v. Wright" on Justia Law

Salahuddin was Newark’s Deputy Mayor for Public Safety. He allegedly conspired to use his official position to obtain charitable and political contributions and to direct Newark demolition contracts to Cooper, with whom Salahuddin was allegedly in business. Both were convicted of conspiring to extort under color of official right, under the Hobbs Act, 18 U.S.C. 1951(a). The Third Circuit affirmed, rejecting Salahuddin’s claims that the government failed to prove that one of the alleged co-conspirators committed an overt act in furtherance of the conspiracy; that the district court erred in omitting an overt act requirement from its jury instructions; and that the rule of lenity requires that his conviction be vacated. The court rejected Cooper’s claim that the jury’s guilty verdict as to the Hobbs Act conspiracy charge was against the weight of the evidence. View "United States v. Salahuddin" on Justia Law

Illinois legalized riverboat casino gambling in 1990. Since then, the state’s once‐thriving horseracing industry has declined. In 2006 and 2008, former Governor Blagojevich signed into law two bills that imposed a tax on in‐state casinos of 3% of their revenue and placed the funds into a trust for the benefit of the horseracing industry. Casinos filed suit under the Racketeering Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1964, alleging that defendants, members of the horseracing industry, bribed the governor. On remand, the district court granted summary judgment for the racetracks, finding sufficient evidence from which a reasonable jury could find that there was a pattern of racketeering activity; that a jury could find the existence of an enterprise‐in‐fact, consisting of Blagojevich, his associates, and others; sufficient evidence that the defendants bribed Blagojevich to secure his signature on the 2008 Act; but that the casinos could not show that the alleged bribes proximately caused their injury. The Seventh Circuit reversed in part. Viewing the evidence in the light most favorable to the plaintiffs, there was enough to survive summary judgment on the claim that the governor agreed to sign the Act in exchange for a bribe. View "Empress Casino Joliet Corp. v. Johnston" on Justia Law

George Schussel’s former company fraudulently transferred millions of dollars to him in order to avoid paying income taxes. The IRS, which is authorized by statute to collect a person’s tax debt by reclaiming assets the debtor has transferred to someone else, claimed that Schussel was liable as a transferee for the company’s tax deficiencies. The United States Tax Court held Schussel liable for the company’s back taxes of over $4.9 million plus interest of at least $8.7 million. Schussel appealed, disputing the amount he owed the IRS as a result of the fraudulent transfers. The First Circuit reversed in part and affirmed in part, holding (1) the tax court erred in calculating prejudgment interest on the fraudulently transferred funds under the federal tax interest statute rather than assessing the prejudgment interest at the Massachusetts rate; (2) the tax court did not err in accepting as a proper measure of the assets Schussel received the actual amount transferred from the company into Schussel-controlled accounts; and (3) Schussel’s loans to the company to pay Schussel’s litigation expenses did not reduce the net amount transferred to him. View "Schussel v. Werfel" on Justia Law

In 2009, the Securities and Exchange Commission indicted Stanford for operating a multi-billion dollar Ponzi scheme. The government seized most of his assets rendering him an indigent defendant. Court-appointed counsel obtained authorization for legal services under the Criminal Justice Act (CJA), 18 U.S.C. 3006A(e), and employed Marcum for forensic accounting and litigation support, with an estimated budget of $4.5 million. The district court approved the budget, but Marcum did not obtain the Fifth Circuit's approval, as required by the CJA. Marcum’s work far exceeded the budget. Marcum received payment for work performed in June- August 2011,then submitted vouchers for work performed in September-November totaling $845,588.48. The district court certified only the September and October vouchers. Marcum attempted to resign from the case. Chief Judge Jones of the Fifth Circuit issued a Service Provider Continuity and Payment Order, authorizing payment of $205,000 for the September and October vouchers and ordered Marcum to continue working because “[i]t would be neither feasible nor economical to obtain a replacement.” Under threat of contempt sanctions, Marcum continued to work through the end of trial and claims unpaid fees of $1.2 million. Marcum filed an emergency motion for reconsideration, an emergency application for a stay before the U.S. Supreme Court, an emergency motion for a stay or a petition for writ of mandamus before the Fifth Circuit, and a petition for mandamus to the Supreme Court. All were denied. Marcum sued the Court of Federal Claims, which dismissed the claim for lack of subject matter jurisdiction. The Federal Circuit affirmed. Because the CJA provides its own remedial scheme, Marcum cannot collaterally attack the Fifth Circuit’s determination of Marcum’s fee awards under the Tucker Act. View "Marcum LLP v. United States" on Justia Law