Justia White Collar Crime Opinion Summaries

In January 2009, Defendant-Appellant Robert Blechman and a codefendant, Itsik (Issac) Yass, were tried together in the District of Kansas on charges of mail fraud, aggravated identity theft, and conspiracy to commit mail fraud and aggravated identity theft. Evidence introduced at trial showed that Yass operated a business that he used to temporarily halt home foreclosures by "attaching" foreclosure properties to fraudulent bankruptcy cases in order to take advantage of the Bankruptcy Code’s automatic stay provision. After a two-week trial, the jury found Blechman and Yass guilty of all of the counts charged against them. The district court granted Blechman's motion for judgment of acquittal on the identity theft counts and ultimately sentenced Blechman to a total of eighteen months' imprisonment on the remaining counts. Blechman appealed, challenging the district court’s admission of an America Online (AOL) record that connected him to an e-mail address and three PACER records revealing that he accessed fraudulent bankruptcy cases in Tennessee that were similar to the Kansas bankruptcies identified in the indictment. Blechman argued that these records contained double hearsay and that the district court erroneously admitted them under the business records exception to the hearsay rule. Upon review, the Tenth Circuit held that the district court erred in admitting the challenged AOL and PACER records under Rule 803(6). Nevertheless, because the Court concluded that the error was harmless, it affirmed Blechman's convictions. View "United States v. Blechman" on Justia Law

Defendant was convicted of bank fraud (18 U.S.C. 1344) and wire fraud (18 U.S.C. 1343), based a scheme to acquire a house for $1.4 million, intending to resell for a profit. The purchase involved recruiting a third-party with good financial credit to act as nominal purchaser. Defendant and her now-deceased husband provided the straw buyer with $30,000 that she deposited in her bank account, and falsified documents so that she appeared as president of defendants' sales group since 2003, earning a salary of $30,000-to-$40,000 per month. Within months of the purchase, the loan went into default. The lien holder foreclosed and resold the house, resulting in a net loss of $376,070.16. The straw buyer was not prosecuted, but testified without a nonprosecution agreement. The Sixth Circuit affirmed denial of a motion for a new trial. The prosecution's failure to disclose that the straw buyer was testifying without an agreement was not material, for purposes of a "Brady" violation or a claim of ineffective assistance. View "United States v. Holder" on Justia Law

Defendant, a participant in a major mortgage fraud scheme, pled guilty to committing wire fraud as part of that scam and was sentenced to 37 months in prison and ordered to pay $1,792,000 in restitution. His role was to act as a "straw," or fake, buyer of seven properties, and to cause $4,473,161.55 to be transferred from unwitting mortgage companies to their banking partners; he received $90,000 from his co-schemers. The Seventh Circuit affirmed in part, reversed in part, and remanded. The district court acted within its discretion in rejecting defendant's assertion that his sentence should be lower because he gave the government substantial assistance. The court should have explained its rationale in attributing a "reasonably foreseeable" loss amount to defendant. The court also erred in interpreting the minor role sentencing adjustment guideline when it stated that an act otherwise deemed minor could, if repeated, necessarily preclude the adjustment, and that a person playing a necessary role cannot play a minor role. The court should evaluate his role in context of other participants in the scheme, keeping in mind that a minor player is substantially less culpable than the average participant, not the leaders. View "United States v. Leiskuna" on Justia Law

Appellants F. Jeffrey Miller and Hallie Irvin were charged in an eleven-count indictment with a variety of crimes stemming from an alleged conspiracy to defraud mortgage lenders in connection with the subprime housing market. After a month-long jury trial, Miller and Irvin were each convicted on several of the charges and sentenced. They appealed their convictions, citing numerous evidentiary and legal errors. Miller also challenged his sentence. Miller was a builder and developer involved in residential construction in Kansas, Missouri, and other states. With many competing developers marketing their homes to well-qualified buyers, Miller chose to focus his business on buyers with low income and poor credit. The marketing of Miller’s homes was handled by Stephen Vanatta, who would refer potential buyers to a mortgage broker named James Sparks for financing. Because a prior felony conviction for passing a bad check prohibited Vanatta from maintaining a checking account, his portion of commissions were paid by checks issued to his wife, appellant Irvin. Upon review, the Tenth Circuit found the district court erred on three of the eleven charges against Defendant Miller, but affirmed the district court in all other aspects. The Court remanded the case for further proceedings. View "United States v. Irvin" on Justia Law

Count One of the multi-count indictment in this case charged Robert and Patrick Singletary, and others, with conspiring between 1997 and September 16, 2004, in violation of 18 U.S.C. 371, to commit three offenses: (1) to defraud a federally insured bank, in violation of 18 U.S.C. 1344; (2) to make false representations with respect to material facts to the United States Department of Housing and Urban Development (HUD), in violation of 18 U.S.C. 1001; and (3) to defraud purchasers of residential property and mortgage lenders, in violation of 18 U.S.C. 1343. The Singletarys eventually pled guilty to Count One to the extent that it alleged a conspiracy to commit the section 1343 offense in addition to the section 1001 offense. At issue was whether the district court abused its discretion in ordering restitution in the sum of $1 million. The court held that the district court failed to determine by a preponderance of the evidence which of the 56 mortgages the loan officers handled was obtained through a false "gift" letter, a false "credit explanation" letter, or a false employment verification form; and where fraud was found, to determine the extent of the actual loss HUD could have incurred due to the mortgage's foreclosure. Accordingly, the court vacated the restitution provisions and remanded for further proceedings.

Defendants were convicted of mail fraud and wire fraud (18 U.S.C. 1341, 1346) for participating in a fraudulent scheme to obtain mortgage loans. The scheme involved: recruiters, who enlisted buyers to buy properties with fraudulently obtained funds; financiers, who provided funds to buyers to facilitate the transactions; administrators, who bought fake documents to enable buyers to obtain mortgages; loan officers, who prepared fraudulent applications and sent them to lenders. Between 2003 and 2005, the group acquired more than 70 properties for which lenders provided $7.2 million in loans. Most of the properties went into foreclosure, resulting in losses to the lenders of $2.2 million. The Seventh Circuit affirmed the convictions and sentences. The use of the term "straw buyer" in the confession of a nontestifying co-defendant did not obviously refer to the defendant and violate his Sixth Amendment right of confrontation under the "Bruton" doctrine. The court properly applied a "sophisticated means" sentence enhancement and gave an "ostrich" instruction concerning defendant's knowledge.

Petitioners appealed from a Memorandum and Order and Final Order of Forfeiture entered by the district court dismissing their petition for an ancillary hearing and rejecting their claim as beneficiaries of a putative constructive trust in defendant's forfeiture assets. At issue was whether the remission provision of 21 U.S.C. 853(i) precluded the imposition of a constructive trust in petitioners' favor and whether imposing a constructive trust would be consistent with a forfeiture statutory scheme provided by section 853. Because the court concluded that section 853(i) did not preclude, as a matter of law, recognizing a constructive trust and because a constructive trust was not inconsistent with the forfeiture statute, the court vacated the Final Order of Forfeiture and remanded the case to the district court to consider whether, pursuant to Vermont law, a constructive trust should be recognized in favor of petitioners.

A real estate broker received money for contracting work never completed, used false addresses in invoices from companies that did not exist, submitted loan applications with inflated incomes and account balances, and forged documentation. At trial on charges of wire fraud, aiding and abetting and conspiracy to commit wire fraud (18 U.S.C. 2, 371, and 1343), witnesses used the words "fraud" and "misrepresentation." The district court directed acquittal on aiding and abetting and conspiracy charges and sentenced defendant to 71 months’ imprisonment and payment of $2,360,914.51 in restitution. The Seventh Circuit upheld the conviction. The testimony of the lay witnesses could have been helpful and did not amount to legal conclusions about intent or "de facto" instructions to the jury. Defendant would not have been acquitted had the court struck the sporadic, repeated use of two words with potential legal baggage in otherwise appropriate testimony. The court vacated the sentence. The district court erred in considering transactions underlying dismissed counts as relevant conduct without making sufficient findings regarding the number of victims and in ordering defendant to pay restitution to victims not clearly harmed by conduct in her counts of conviction.

Plaintiffs sued defendants alleging claims under the federal RICO statute, 18 U.S.C. 1962(c),(d), and under various state laws based on allegations that defendants defrauded individuals throughout the United States by devising an investment scheme through which investors could purchase real estate interests in luxury vacation properties in the Dominican Republic. At issue was whether the district court properly severed the 232 plaintiffs, and their claims, and instructed each plaintiff to file his or her complaint in a separate action. The court held that it lacked jurisdiction because the severance order was not final and the collateral order doctrine did not apply to an interlocutory order severing claims.

The owner of a mortgage company was sentenced to 96 months for fraud and money laundering. The Sixth Circuit affirmed, holding that the conviction was supported by substantial evidence. Evidence of a government witness's prior inconsistent statements that referred to a conviction more than 10 years prior was properly excluded; the trial judge gave the defense proper latitude to impeach the witness. The sentence was properly enhanced for attempting to obstruct the investigation, use of "sophisticated means," and acting as the organizer or leader.