Justia White Collar Crime Opinion Summaries

As a school principal, Buendia took kickbacks from Shy. Detroit Public Schools (DPS) paid Shy for supplies he never delivered. Some of the money came from the federal government. The FBI searched Shy’s home and found a ledger of kickbacks Shy owed Buendia. Buendia was convicted of federal-programs bribery, 18 U.S.C. 666(a)(1)(B), and sentenced to 24 months’ imprisonment. The Sixth Circuit affirmed, rejecting her argument that the district court violated her constitutional right to present a complete defense when it excluded evidence of her kickback expenditures and the alleged receipts of expenditures for school purposes. The right to present a complete defense yields to reasonable evidentiary restrictions. The court correctly excluded as irrelevant evidence of how Buendia spent the kickback money and correctly excluded the receipts of school expenditures as hearsay. Regardless of how Buendia eventually spent the money, she “corruptly solicit[ed]” it because, by awarding contracts to Shy in exchange for kickbacks, she subverted the normal bidding process in a manner inconsistent with her duty to obtain goods and services for her school at the best value. Nor did the government open the door" by introducing testimony that Buendia bought massages using a gift card from Shy to show that she accepted kickbacks. View "United States v. Buendia" on Justia Law

Dillard was the executive director of ACAP, an agency created by Alameda County and several cities. Daniels was the grants manager. The two married. The Agency was awarded a $500,000 Department of Health and Human Services AFI grant to fund programs for low-income people, who deposit money in an individual bank account, matched with federal AFI grant funds and equal nonfederal funds, which can be withdrawn for higher education, starting a business, or buying a house. Dillard and Daniels were charged with: Count I, conspiracy to commit grand theft by false pretenses in a letter to HHS “falsely attesting” that ACAP had more than $426,000 in non-federal match funds. Count 2: Grand theft by false pretenses by unlawfully taking grant funds exceeding $200,000. Count 3: Making a false account of public money. Count 4: Using public money for a purpose not authorized by law to fund Agency payroll and other expenses. Count 5: Dillard was charged with instructing employees to work on her residence at below-market rates and obtaining reimbursement for improper business expenses. Count 6: Preparing false documentary evidence regarding the residency status of Agency clients and a seminar agenda. They were convicted on Counts 2, 3, and 6. The court of appeal affirmed the Count 6 convictions but found the other convictions preempted by federal law. View "People v. Dillard" on Justia Law

The Guard Recruiting Assistance Program (G-RAP), designed to increase recruiting to the Air National Guard during the “War on Terror” was run by Docupak, a private corporation. Docupak selected and trained Recruiting Assistants (RAs) to find and direct potential airmen to full-time recruiters. The program paid a $1,000 pre-loaded gift card upon actual enlistment of a potential airman and another $1,000 upon the airman’s completion of training. The RAs were to identify individuals that were not already working with a full-time recruiter and were prohibited from splitting the payment with full-time recruiters. Osborne, a full-time recruiter, was accused of referring names of pre-existing recruits to RA Andolsek so that they could claim the incentive, with kickbacks to Osborne. Osborne was charged with aiding Andolsek in embezzling from the Department of Defense, 18 U.S.C. 641; 18 U.S.C. 2, which “caused” the Department to reimburse Docupak for $9,000. Andolsek pleaded guilty and testified against Osborne. Osborne argued that the funds were stolen from a private contractor, so they only violated Docupak’s internal policy, not a federal regulation. The Sixth Circuit reversed Osborne’s conviction. No reasonable jury could have found that the funds were something of value to the government beyond a reasonable doubt, given the evidence of control. The government did not retain a reversionary interest in the funds and imposed few restrictions. Docupak gave the government access to information, but the government did not retain the right to conduct audits. View "United States v. Osborne" on Justia Law

RTSI produces and maintains traffic safety systems. Rosenberg was RTSI’s Vice President of Sales. RTSI contracted to manage Chicago's automated red light enforcement program. In 2012, the Chicago Tribune published articles, disclosing an improper relationship between a city employee (Bills) and RTSI. The city removed RTSI’s bid for the new contract. The City Office of Inspector General (OIG) investigated the bribery scheme. RTSI conducted an independent investigation and provided OIG with information. OIG advised Rosenberg that he had a duty to cooperate and that his statements would not be used against him in a criminal proceeding. Rosenberg described the bribery scheme between RTSI and Bills. RTSI terminated Rosenberg’s employment.The Tribune reported that RTSI courted Bills with thousands of dollars in free trips. Rosenberg sued RTSI under the qui tam provision of the City’s False Claims Ordinance, alleging that RTSI engaged in bribery and other illegal activities to obtain a city contract. The city intervened, making additional claims. The court dismissed Rosenberg as relator. The remaining parties settled and moved for dismissal with prejudice. Rosenberg unsuccessfully sought an award of a relator’s share of the settlement and attorney’s fees for his lawyer’s contributions to the case. The Seventh Circuit affirmed, noting that Rosenberg helped to perpetrate the fraud and referring to Rosenberg’s “audacity.” Rosenberg was neither the original source of the information nor was he a volunteer under the ordinance. View "Rosenberg v. Redflex Traffic Systems, Inc." on Justia Law

Brown, the manager of a company that provided home physician visits, and Talaga, who handled the company’s billing, were convicted of conspiracy to commit health-care fraud, 18 U.S.C. 1349; six counts of health-care fraud, 18 U.S.C. 1347; and three counts of falsifying a matter or providing false statements, 18 U.S.C. 1035(a). The district court sentenced Mr. Brown to 87 months’ imprisonment, 34 months below the Guidelines’ range, stating that a significant sentence was warranted because of the duration of the scheme, the amount of the fraud, the need for general deterrence, and Brown’s failure to accept responsibility. Ms. Talaga was sentenced to 45 months. The Seventh Circuit affirmed, rejecting Brown’s argument that the court’s assumptions about the need for general deterrence were unfounded and constituted procedural error and Talaga’s arguments that the court calculated the amount of loss for which she was responsible by impermissibly including losses that occurred before she joined the conspiracy. The district court was under no obligation to accept or to comment further on Brown’s deterrence argument. Talaga, as a trained Medicare biller, knew that that the high-volume billings were fraudulent. View "United States v. Talaga" on Justia Law

In 2014, following investigations by the Indiana Attorney General and FBI, a grand jury indicted Shorter and her company, Empowerment, which provided transportation to Medicaid patients, for health care fraud, 18 U.S.C. 1347, and three counts of misusing a means of identification, 18 U.S.C. 1028A. The government submitted evidence of Shorter’s personal involvement in Empowerment’s billing practices; the results of an Indiana Attorney General Investigation into Empowerment’s billing practices; an FBI search of Empowerment’s records; and the experiences of Empowerment employees and of clients who used its services. The Seventh Circuit affirmed her convictions rejecting arguments challenging the indictment, the admission of certain evidence at trial and the sufficiency of the evidence as a whole. The court noted “powerful” circumstantial evidence that permitted the jury to convict her, especially because the jury could reasonably infer from the evidence that she “caused” the fraudulent billings. View "United States v. Shorter" on Justia Law

Kolbusz, a dermatologist, submitted thousands of claims to the Medicare system and private insurers for the treatment of actinic keratosis, a skin condition that sometimes leads to cancer. He received millions of dollars in payments. Convicted of six counts of mail or wire fraud, 18 U.S.C. 1341, 1343, he was sentenced to 84 months in prison plus $3.8 million in restitution. The Seventh Circuit affirmed. The evidence permitted a reasonable jury to conclude that many, if not substantially all, of the claims could not have reflected an honest medical judgment and that the treatment Kolbusz claimed to have supplied may have failed to help any patient who actually had actinic keratosis. Because the indictment charged a scheme to defraud, the prosecutor was entitled to prove the scheme as a whole, and not just the six exemplars described in the indictment. The judge did not err in excluding evidence that, after his arrest and indictment, Kolbusz continued to submit claims to Medicare, and many were paid. “It would have been regrettable to divert the trial into an examination of Medicare’s claims-processing procedures in 2013 and 2014, rather than whether Kolbusz knew that he was submitting false claims in 2010 and earlier." View "United States v. Kolbusz" on Justia Law

Former FBI agent Robert Lustyik wanted to help his friend and business partner, Michael Taylor, in return for payment. Taylor owned American International Security Corporation (AISC), a company that offered security and defense contracting services. The Department of Defense awarded AISC a contract in 2007 to provide training and related services to Afghan Special Forces. In mid-2010, the United States began investigating AISC regarding fraud and money laundering in connection with the 2007 contract. In September 2011, the United States filed a civil forfeiture action against assets owned by Taylor and AISC, which resulted in the seizure of more than $5 million dollars from AISC’s bank account. Lustyik used his status as an FBI agent to impair the government’s investigation of Taylor, including attempting to establish Taylor as a confidential source. Lustyik was indicted on charges related to the obstruction of justice. Prior to trial, Lustyik pleaded guilty to all charges in the indictment without a plea agreement. After his plea, his lead counsel withdrew and Lustyik obtained new counsel. On the eve of sentencing, counsel sought an order allowing him to obtain security clearance to review classified material he believed might be relevant for sentencing. The district court, having previously reviewed the documents, deemed them irrelevant to the sentencing issues, denied the motion, and subsequently sentenced Lustyik to 120 months’ imprisonment. Lustyik argued on appeal that the district court’s order denying his counsel access to the classified materials violated his Sixth Amendment rights at sentencing. Finding that the district court’s decision was not presumptively prejudicial to Lustyik’s advocacy at sentencing, nor did the district court abuse its discretion in concluding the documents were not relevant for sentencing, the Tenth Circuit affirmed. View "United States v. Lustyik" on Justia Law

In 2003, the government awarded Laguna a contract for Worldwide Environmental Remediation and Construction (WERC). Under the contract, Laguna received 16 cost-reimbursable task orders to perform work in Iraq, and awarded subcontracts to several subcontractors. The physical work under the contract was completed by 2010. Laguna sought reimbursement of past costs, a portion of which the government refused to pay after an audit by the Defense Contract Audit Agency. Before the Armed Services Board of Contract Appeals, the government alleged that it was not liable because Laguna had committed a prior material breach by accepting subcontractor kickbacks (18 U.S.C. 371, 41 U.S.C. 53), excusing the government’s nonperformance. Three of Laguna’s officers were ultimately indicted for kickbacks. The Board granted the government summary judgment on that ground, The Federal Circuit affirmed. Laguna committed the first material breach by violating the contract’s Allowable Cost and Payment clause because its vouchers were improperly inflated to include the payment, Federal Acquisition Regulation 52.216-7. View "Laguna Constr. Co. v. Carter" on Justia Law

In 2008, Javidan shadowed Shahab, who was involved with fraudulent home-health agencies. Javidan, Shahab, and two others purchased Acure Home Care. Javidan managed Acure, signing Medicare applications and maintaining payroll. She had sole signature authority on Acure’s bank account and, was solely responsible for Medicare billing. Javidan illegally recruited patients by paying “kickbacks” to corrupt physicians and by using “marketers” to recruit patients by offering cash or prescription medications in exchange for Medicare numbers and signatures on blank Medicare forms. Javidan hired Meda as a physical therapist. Meda signed revisit notes for patients that he did not visit. He told Javidan which patients were not homebound and which demanded money for their Medicare information. The government charged both with health care fraud conspiracy (18 U.S.C. 1347) and conspiracy to receive kickbacks (18 U.S.C. 371). At trial, Javidan testified that she did not participate in and was generally unaware of Acure’s fraudulent business practices. Meda called no witnesses. Javidan and Meda were sentenced to terms of 65 and 46 months of imprisonment, respectively. The Sixth Circuit affirmed, rejecting Meda’s claims that his conviction violated the Double Jeopardy Clause and that he was subjected to prosecutorial vindictiveness for refusing to plead guilty and requesting a jury trial in prior case and Javidan’s claims of improper evidentiary rulings and sentence calculation errors. View "United States v. Javidan" on Justia Law