Justia White Collar Crime Opinion Summaries

A jury found Ferrell, a licensed psychologist, and Bryce, Ferrell’s employee, guilty of six counts of healthcare fraud, 18 U.S.C. 1347. Ferrell was sentenced to 88 months of imprisonment. The Seventh Circuit affirmed, upholding the district court’s refusal to admit two out-of-court statements made by Bryce’s brother (also Ferrell’s employee), and contained in a voicemail and an email. The district court held that these statements were hearsay and did not fall within Rule 804(b)(3)’s hearsay exception. The district court held that although the brother was unavailable to testify, the statements were not against his interest and the corroborating circumstances did not indicate that his statements were trustworthy. The court also upheld admission of testimony by another doctor concerning Ferrell’s conduct while in Texas. The court found that the testimony did not constitute impermissible character evidence under Fed. R. Evid. 404(b). View "United States v. Ferrell" on Justia Law

Nagle and Fink were co-owners and executives of concrete manufacturing and construction businesses. The businesses entered into a relationship with a company owned by a person of Filipino descent. His company would bid for subcontracts on Pennsylvania transportation projects as a disadvantaged business enterprise. Federal regulations require states that receive federal transportation funds to set annual goals for participation in transportation construction projects by disadvantaged business enterprises, 49 C.F.R. 26.21. If his company won the bid for the subcontract, Nagle and Fink’s businesses would perform all of the work. Fink pled guilty to conspiracy to defraud the United States. A jury found Nagle guilty of multiple charges relating to the scheme. The Third Circuit affirmed Nagle’s conviction, upholding the admission of electronic evidence discovered during searches of the businesses’ offices, but vacated both sentences, based on loss calculation errors. View "United States v. Nagle" on Justia Law

Beginning in 2008 Mullins served as Cook County’s Director of Public Affairs and Communications. At that time, contracts requiring the county to spend $25,000 or more had to be approved by its Board of Commissioners. Contracts that required the county to spend less than $25,000 only required the approval of the county’s purchasing agent. The government charged Mullins and co-defendants—vendors to whom the county awarded contracts—with manipulating the system. Mullins helped these vendors obtain payment under county service contracts, without the vendors having to complete any work, and in exchange they paid Mullins $34,748 in bribes. Jurors convicted him of four counts of wire fraud, 18 U.S.C. 1343, and four counts of bribery, section 666. The Seventh Circuit rejected Mullins’s challenge to the sufficiency of the evidence and claim of prosecutorial misconduct. View "United States v. Mullins" on Justia Law

The six-month trial of former Detroit mayor Kilpatrick and Detroit contractor Ferguson, included almost 100 government witnesses and over 700 exhibits. The government’s main theory was that Kilpatrick and Ferguson conspired to extort money from other Detroit-area contractors by pressuring them to include Ferguson’s companies in their city contracts—even when Ferguson’s companies were not the most qualified candidates and even when Ferguson’s companies did no work. Kilpatrick was convicted of 24 counts: RICO conspiracy, 18 U.S.C. 1962(d); four counts of extortion, 18 U.S.C. 1951; attempted extortion, 18 U.S.C. 1951; bribery, 18 U.S.C. 666(a); 11 counts of mail and wire fraud, 18 U.S.C. 1341, 1343; five counts of subscribing a false tax return, 26 U.S.C. 7206(a); and income tax evasion, 26 U.S.C. 7201. Ferguson was convicted of nine counts: RICO conspiracy, six counts of extortion, attempted extortion, and bribery. The Sixth Circuit affirmed the convictions but vacated a restitution order, rejecting arguments that Kilpatrick was denied conflict-free counsel because his lead attorneys had recently become “of counsel” to a firm that was suing Kilpatrick for alleged conduct related to his criminal charges; extensive testimony by two case agents violated the Rules of Evidence; and the court erred in allowing witnesses to report what other people had told them about Kilpatrick and Ferguson as evidence that witnesses feared the defendants. View "United States v. Ferguson" on Justia Law

McClellan operated T&M Daycare. Nearly all of its clients participated in an Illinois program that reimbursed daycare centers. To qualify, a parent or guardian had to reside in Illinois, be employed or attend school, and have an income below a specified amount. McClellan instructed T&M’s director to falsify records so that T&M could receive state reimbursement. McClellan was also seen changing numbers on sheets submitted for state reimbursement of meals. McClellan purchased Paragon restaurant. The Department of Homeland Security had been investigating information that illegal aliens were working there. Paragon’s manager agreed to record conversations with McClellan and to provide documentary evidence that McClellan was paying wages in cash and was not reporting those wages to the state. McClellan used T&M’s account to purchase a house, where undocumented kitchen staff lived rent‐free. Recorded conversations revealed McClellan’s knowledge of the workers’ illegal status. Agents executed search warrants and found 12 workers without legal status. McClellan was charged with harboring illegal aliens, 8 U.S.C. 1324(a)(1)(A)(iii); mail fraud, 18 U.S.C. 1341, based on his submission of fraudulent employment tax reports; and engaging in a monetary transaction involving criminally derived property, 18 U.S.C. 1957, based on the transfer of T&M funds for the house purchase. The Seventh Circuit affirmed his convictions, rejecting challenges to the sufficiency of the evidence and to jury instructions. View "United States v. McClellan" on Justia Law

Clark’s trucking business was hired to perform hauling services on a state‐ and federally funded highway project in Missouri. Because federal funds were involved, Clark’s contract with the project’s general contractor required that he pay his truck drivers the federal prevailing wage pursuant to the Davis‐Bacon Act (then $35.45/hour). Clark did not do so, but individually contracted with his drivers for roughly $15/hour instead. Throughout the project, Clark submitted weekly payroll certifications in which he falsely attested to paying his workers $35.45/hour. After his work concluded, he submitted an affidavit to the Missouri Department of Transportation, certifying compliance with Missouri state law and its state wage order. Based on these attestations, the government charged Clark with 10 counts of making false statements,18 U.S.C. 1001. The Seventh Circuit affirmed his convictions on nine counts, rejecting An argument that there was insufficient evidence to conclude that his false statements were material to the federal government. The court agreed that the government failed to prove that his affidavit to MODOT had a natural capability of influencing the federal government and reversed conviction on Count 10. View "United States v. Clark" on Justia Law

The Medocks’ company, MAS, transported patients to kidney dialysis for Medicare reimbursement. Reimbursement of non-emergency ambulance transport is allowed only if medically necessary for bedridden patients; both a driver and an EMT must accompany any such passenger. Certification of medical necessity (CMN) must be signed by a doctor. A “run sheet” is reviewed by a Medicare contractor other than the ambulance company, such as AdvanceMed, to reduce fraud. AdvanceMed identified MAS as a high biller in Tennessee for dialysis ambulance transport and audited MAS. MAS’s records were missing some CMNs. Covert surveillance resulted in videotapes of patients walking, riding in the front seat, being double-loaded, being driven by single-staffed ambulances, or being transported by wheelchair. MAS had billed the transports as single-passenger and “stretcher required.” Executing a search warrant at the Medlocks’ home, agents seized CMNs and run tickets; some had been altered or forged. The Sixth Circuit reversed a conviction for aggravated identity theft, 18 U.S.C. 1028A, agreeing that misrepresentations that certain beneficiaries were transported by stretcher did not constitute a “use” of identification, but affirmed health-care fraud convictions, rejecting arguments that the court should have instructed the jury that Medicare, not merely a prudent person, was the relevant decision-maker; that Medicare would have reimbursed MAS without their misrepresentations; and that refusal to sever a defendant was prejudicial. View "United States v. Medlock" on Justia Law

DiFoggio worked as an FBI cooperating witness and introduced Medrano to a man purporting to be Castro, a health care consultant. Castro told Medrano that by bribing a corrupt official he could obtain contract approval from Los Angeles County for the purchase of bandages for its hospital system. Castro was an undercover FBI agent. There was no corrupt official. When the medical bandages deal was concluded, Medrano approached Castro about making another deal to involve his friend, Buenrostro. Buenrostro and Castro brought Barta into the discussions; A bribe would be paid to the corrupt official by Castro to obtain a county contract for Sav‐Rx, a company founded by Barta, to provide pharmaceutical dispensing services. Sav‐Rx would service the contract through a business started by Buenrostro and Medrano. Barta wrote a check for $6,500 to Castro. Buenrostro and Medrano were to pay their 35 percent share after that last meeting. Before that happened, they were arrested. In a separate opinion, the Seventh Circuit held that Barta was entrapped as a matter of law. Neither Buenrostro nor Medrano argued entrapment. The Seventh Circuit affirmed their convictions for conspiracy to commit bribery, rejecting challenges to the sufficiency of the evidence and the sentences. View "United States v. Buenrostro" on Justia Law

In 2006, Robinson opened Paideia Academy, a non-profit charter St. Louis charter school. State and federal monies, disbursed through the Missouri Department of Elementary and Secondary Education, exclusively funded the school, and were restricted to operating kindergarten through eighth grade. Robinson directed $242,533 from Paideia to develop a pre-kindergarten child care center. Robinson also worked, beginning in 1990, purporting to inspect parking meters. On weekly timesheets, he always recorded 40 hours, regardless of holidays, and even after parking meter services were outsourced. In 2009, the FBI investigated his “employment,” interviewing former Parking Division employees and watching Robinson’s car. They reasonably suspected that Robinson did not inspect meters. The agents installed, without a warrant, a GPS device on his car while parked on a public street. Tracking confirmed that Robinson did not inspect meters. The government charged Robinson with Paideia-related wire fraud, 18 U.S.C. 1343; two Paideia-related counts of federal program theft, 18 U.S.C. 666(a)(1)(A); and five parking-related counts of federal program theft. The district court denied Robinson’s motion to suppress the GPS evidence, motion to sever counts 1-3 from counts 4-8, and Batson objection to the jury’s composition. At trial, the court rejected his challenges to certain testimony and parking-related jury instructions. The court sentenced him to 24 months’ imprisonment and awarded $419,333 in restitution. The Eighth Circuit affirmed View "United States v. Robinson" on Justia Law

Chicago’s Minority and Women-owned Procurement Program requires companies contracting with the city to hire or subcontract with minority-owned businesses (MBEs). An MBE must be at least 51 percent owned by members of a minority group, and its management and operations must be controlled by those members. RCN, a cable provider, participates in the MBE program. RCN seeks out MBE subcontractors using the city’s directory, where it found defendants in 2003. Defendants, white men, held out their cable installation business, ICS, as an MBE, but used false documentation and hired a black front-man to pose as ICS’s president. ICS fired defendant Giovenco before the fraud was discovered, but he continued to receive checks. In total, RCN paid ICS $8,303,562 before the city investigated. Its members dissolved ICS, trying to avoid detection. Convicted of mail fraud, 18 U.S.C. 1341, Potter was sentenced to 54 months’ imprisonment, and Giovenco was sentenced to 36 months. The Seventh Circuit affirmed, rejecting Giovenco’s claim that, because he no longer worked for ICS at the time of the mailings underlying the charges, he could not be held legally accountable for the scheme, and Potter’s challenge to his sentence, arguing that RCN did not actually suffer a loss. View "United States v. Potter" on Justia Law