Justia White Collar Crime Opinion Summaries

In 2009, fire severely damaged the insureds' home. They submitted a claim to under their homeowners’ policy the next day. The insurer began requesting documents, authorizations, and interviews and learned that the insureds had at least two businesses, held numerous personal and business accounts, and were involved in several lawsuits. A fire investigator concluded that the fire was intentionally set. The insurer requested additional documents: detailed phone records, bank histories, tax returns, and mortgage information and reminded the insureds that proof of loss was due by May 2. The insurer granted extensions; on the day of the final deadline the insureds delivered almost 1,000 pages of documents. Several months later, the insurer had not received most of the requested documents or an explanation why they could not be produced. After initially acknowledging their failure to produce the documents, the insureds attempted to impose a deadline for settlement of the $2.6 million claim. The district court entered summary judgment for the insurer in the insureds' breach of contract suit. The Seventh Circuit affirmed. The insureds failed to perform the specific "duties after loss" listed in the policy.View "Foster v. State Farm Fire and Cas. Co." on Justia Law

In this case, an insurance agency had a contract with an insurance company that allowed the agency to commingle collected insurance premiums with its other funds in its general operating account. The government contended that the premiums collected by the agency were the property of the insurance company and held "in trust" by the agency; it alleged that when the funds were not remitted but used for other purposes, they were embezzled by the agency's treasurer, defendant. Defendant was charged with ten counts of embezzlement of insurance premiums in violation of 18 U.S.C. 1033(b)(1) and one count of conspiracy to commit embezzlement. The court held that under long-standing Arizona law, the contract between the agency and the company, which permitted agency commingling, required monthly agency payments whether premiums were collected or not, and created a right of interest on late payments, created a creditor-debtor relationship, not a trust. The agency had contractual and fiduciary duties to the company, but was not a trustee. Because the funds in question were not held "in trust" by the agency as a matter of law, an essential element of embezzlement was lacking. Therefore, the court reversed the denial of defendant's motion for judgment of acquittal. View "United States v. Lequire" on Justia Law

This criminal appeal arose from a "finite reinsurance" transaction between American International Group, Inc. (AIG) and General Reinsurance Corporation (Gen Re). Defendants, four executives of Gen Re and one of AIG, appealed from judgments convicting them of conspiracy, mail fraud, securities fraud, and making false statements to the Securities and Exchange Commission. Defendants appealed on a variety of grounds, some in common and others specific to each defendant, ranging from evidentiary challenges to serious allegations of widespread prosecutorial misconduct. Most of the arguments were without merit, but defendants' convictions must be vacated because the district court abused its discretion by admitting the stock-price data and issued a jury instruction that directed the verdict on causation.

After a jury trial, Defendant David Hillman was convicted on several money laundering charges arising from a scheme to steal hundreds of thousands of dollars from the insurance company for which he worked. Defendant's defense at trial was that he was duped by his then-girlfriend and co-worker, Hillary Shaffer, as to the source of the money. Defendant maintained that Ms. Shaffer told him the money they deposited in their joint bank account came from her grandmother's trust. The trial record revealed that the source of the money came from inactive annuities of the company's clients. On appeal to the Tenth Circuit, Defendant argued multiple errors at trial: prosecutorial misconduct, a violation of his due process rights, and misguided jury instructions all denied him a fair trial. Upon review of Defendant's arguments against the trial record, the Tenth Circuit concluded that none of his claims fundamentally affected the fairness of his trial or were otherwise an abuse of discretion by the trial court. Accordingly, the Court affirmed Defendant's conviction.

Defendants, the chairman and chief executive officer of Lunde Electric Company ("company"), appealed convictions stemming from the misappropriation of employee 401(k) contributions to pay the company's operating expenses. At issue was whether there was sufficient evidence to support defendants' convictions under 18 U.S.C. 664, for embezzlement or conversion of elective deferrals, and 18 U.S.C. 1027, for false or misleading statements in a required Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C 1001 et seq., document. The court held that there was sufficient evidence to support defendants' convictions on Counts 17 and 18 under section 664 where there was sufficient evidence for the jury to conclude that the 1991 Profit Sharing Plan had been restated before defendants retained their employees' elective deferrals in the company's general account; where defendants commingled their employees' contributions with the company's assets to prop up their failing business and therefore, intentionally used their employees' assets for an unauthorized purpose; where they sent participants account statements showing 401(k) balances which were in fact non-existent; where defendants' decision to deviate was the wilful criminal misappropriation punished by section 664; and where defendants were alerted repeatedly about their obligation to remit the deferrals and defendants hid their actions from employees. The court also held that there was sufficient evidence to support defendants' convictions on Count 21 under section 1027 where defendants' initial decision to mislead their own employees about the solvency of their retirement plans by filing false account statements and false Form 5500s were the behaviors targeted by section 1027.