Justia White Collar Crime Opinion Summaries

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

The former Pennsylvania State Senator was sentenced to 55 months' imprisonment, a $411,000 fine, and $2,340,839 in restitution, after conviction on 137 counts of fraud, tax evasion, and obstruction of justice. His former aide was sentenced to imprisonment of one year and one day, a $45,000 fine, and joint and several restitution of up to $792,802, after conviction on 45 counts. The Third Circuit affirmed the senator's conviction, but vacated both sentences. The court acted within its discretion in admitting evidence concerning the state Ethics Act. The content and enforcement of the Act were relevant to the claim that there were rules that the senator broke repeatedly, that those rules were clear enough for him to understand, and to show that he was deceiving the Senate when he misrepresented or omitted aspects of his actions and expenditures to avoid the perception that he had violated those rules. A juror's social media comments did not merit a new trial, nor did another juror's exposure to excluded evidence. The district court's failure to calculate a final guidelines range left the court unable to review the procedural and substantive bases of the sentence and affects the substantial rights of the parties; the court abused its discretion with respect to several aspects of sentencing. View "United States v. Fumo" on Justia Law

Doctors filed suit, alleging violations of the False Claims Act, 31 U.S.C. 3279 and the Michigan Medicaid False Claim Act, as qui tam relators on behalf of the United States/ The claimed that the business defrauded the government by submitting Medicare and Medicaid billings for defective radiology studies, and that the billings were also fraudulent because the business was an invalid corporation. The federal government declined to intervene. The district court dismissed. Sixth Circuit affirmed. The doctors failed to identify any specific fraudulent claim submitted to the government, as is required to plead an FCA violation with the particularity mandated by the FRCP. A relator cannot merely allege that a defendant violated a standard (in this case, with respect to radiology studies), but must allege that compliance with the standard was required to obtain payment. The doctors had no personal knowledge that claims for nondiagnostic tests were presented to the government, nor do they allege facts that strongly support an inference that such billings were submitted.View "Chesbrough v. VPA, P.C." on Justia Law

Appellant was the target of a grand jury investigation seeking to determine whether he used secret Swiss bank accounts to evade paying federal taxes. The district court granted a motion to compel appellant's compliance with a grand jury subpoena dueces tecum demanding that he produce certain records related to his foreign bank accounts. The court declined to condition its order compelling production upon a grant of limited immunity, and pursuant to the recalcitrant witness statute, 28 U.S.C. 1826, held appellant in contempt for refusing to comply. The court held that because the records sought through the subpoena fell under the Required Records Doctrine, the Fifth Amendment privilege against self-incrimination was inapplicable, and appellant could not invoke it to resist compliance with the subpoena's command. The court also held that because appellant's Fifth Amendment privilege was not implicated, it need not address appellant's request for immunity. Accordingly, the judgment of the district court was affirmed. View "In re: Grand Jury Investigation of M.H." on Justia Law

The United States brought this civil action under 26 U.S.C. 7408 to enjoin defendant from promoting several fraudulent tax schemes. After a court trial, the district court permanently enjoined defendant from promoting his schemes, ordered him to advise the IRS of any tax arrangements or business entities formed at his discretion, and required him to provide a copy of its order to his clients. On appeal, defendant argued that the injunction was not supported by adequate factual findings and legal conclusions, and that it was overbroad, an impermissible delegation of Article III power, and an unconstitutional prior restraint. The court rejected defendant's hypertechnical criticisms of the district court's order where section 6700 was a linguistically complex and intricate statute and where the district court need not include the entire statutory language in each of its findings and conclusions. Therefore, the court held that the district court's exhaustive order more than satisfied each of the requirements in section 6700 and affirmed the judgment of the district court.

Defendants ran the township trustee's office, which provides various social services. They defrauded the office by taking substantial payments for work they did not perform, deposited checks made out to the office into their personal bank accounts. They were convicted of two counts of mail fraud (18 U.S.C. 1341, 1346). The Seventh Circuit affirmed. While evidence of mailing was circumstantial, based on usual office practice, it was sufficient. The 2010 Supreme Court decision in Skilling v. U.S. did not mandate acquittal; even if honest services fraud is erased from the picture, the jury would have convicted defendants on a monetary fraud theory. The jury was properly instructed on both theories.

This case involved serious allegations against Robert E. Stark, the auditor-controller of Sutter County where the Sutter County District Attorney's Office claimed that Stark violated statutes, county rules, and Sutter County Board of Supervisors (Board) resolutions detailing the requirements of his office. At issue were four provisions of Penal Code section 424, all of which proscribe general intent offenses. Three of those provisions criminalize acting without authority or failing to act as required by law or legal duty. The court held that those offenses additionally required that defendant knew, or was criminally negligent in failing to know, the legal requirements that governed the act or omission. The court also held that a claim of misinstruction on the mens rea of a crime could be challenged under Penal Code section 995, subdivision (a)(1)(B) where it raised the possibility that, as instructed, the grand jury could have indicted on less than reasonable or probable cause. The court further held that based on the record, the court need not decide the question of whether willful misconduct under Government Code section 3060 required a knowing and purposeful refusal to follow the law. Stark did not disagree with the instruction on mental state given by the district attorney and accompanying PowerPoint slides invalidated the instruction on mental state, requiring that the accusation be set aside. The court addressed these claims as to the district attorney's argument and PowerPoint slides and concluded that it was without merit. The court finally held that, in a motion to set aside an indictment or accusation, a defendant claiming that the district attorney suffered from a conflict of interest during the grand jury proceeding must establish that his right to due process was violated. Accordingly, the judgment of the district court was affirmed.

Defendant Catherine Senninger was convicted on six counts of mail fraud and one count of making a false claim against the Government. She was acquitted on several other counts, including conspiracy and additional mail fraud counts. At trial, the Government presented evidence that Defendant, through her involvement with Olympia Financial and Tax Services, participated in a scheme to defraud the Internal Revenue Service and the Colorado Department of Revenue by preparing false tax returns. Defendant was sentenced to 36 months' imprisonment, which was an upward departure from the advisory guidelines range. Defendant challenged her sentence and subsequent restitution order. Upon review, the Tenth Circuit found the district court "properly rejected" Defendant's arguments. Accordingly, the Court affirmed Defendant's sentence.

Defendant Herman Ransom appealed a district court's denial of his motion for acquittal or for a new trial after he was convicted on wire fraud and theft of public money. Defendant was accused of falsifying his time sheets from work at the Department of Housing and Urban Development (HUD). When Defendant took full-day leaves, he listed "8:00 a.m. to 4:30 p.m." as his working hours. Though an assistant prepared the time sheets, he signed them and a supervisor approved them. The records were then forwarded via wire to a central processing unit. HUD received an anonymous complaint about Defendant's frequent absences from the office, and an internal investigation would reveal the discrepancy in his time sheets. On appeal to the Tenth Circuit, Defendant challenged the validity of the evidence presented against him at trial. Upon review of the record and the applicable legal standard, the Tenth Circuit found sufficient evidence to support Defendant's conviction on wire fraud and theft charges. The Court affirmed the lower court's decision and Defendant's conviction.

Former Arizona Congressman Richard G. Renzi sought to invoke the Speech or Debate Clause ("Clause") of the Constitution to preclude his prosecution for allegedly using his public office to benefit himself rather than his constituents. Renzi denied the charges against him but argued on interlocutory appeal that he was protected by the Clause from even the burden of defending himself. Specifically, Renzi claimed that the public corruption charges against him amounted to prosecution on account of his privileged "legislative acts"; that "legislative act" evidence was improperly presented to the grand jury; that the United States must show that its investigation did not benefit from its review of "legislative act" evidence; and that the district court erred by declining to wholly suppress all of the evidence against him relating to his illicit "negotiations." The court held that it lacked jurisdiction under the collateral order doctrine to consider Renzi's suppression claim and therefore, dismissed that part of his appeal. The court also held that the Clause was a privilege that "had enabled reckless men to slander and even destroy others with impunity," but the Supreme Court had made equally clear that the Clause did not "make Members of Congress super-citizens, immune from criminal responsibility." Accordingly, the court held that Renzi's actions fell beyond the Clause's protections and denied him the relief that he sought.