Justia White Collar Crime Opinion Summaries

The owner of supermarkets involved his family in a scheme to provide cash for food stamps, beyond what is permitted by Puerto Rico law. A conservative estimate put receipts from the fraud above $4 million, which was intermingled with more than $20 million in food stamp proceeds. Family members testified and he was convicted of conspiracy to commit food stamp fraud, 7 U.S.C. 2024(b) and 18 U.S.C. 371, and for knowingly conducting and attempting to conduct financial transactions affecting interstate commerce involving the proceeds of unlawful activity, 18 U.S.C. 1956(a)(1)(A)(i) and 1956(a)(1)(B)(i), and 2, sentenced to 108 months in prison, and ordered to forfeit $20 million. The First Circuit affirmed. The district court properly applied a sentencing enhancement for the owner's leadership participation in the scheme. Even legitimate funds are subject to forfeiture when they become involved in a scheme to conceal illegal funds. The court properly weighed the harm caused by the crime. View "United States v. Aguasvivas-Castillo" on Justia Law

Husband and wife filed returns for tax years 1997-1999 reporting zero income, despite having reportable income. Based on advice from their dentist and their own research, they concluded that no provision of the Internal Revenue Code imposed liability on them for taxes, and attached this explanation to their returns. They succeeded in stopping their employer from withholding taxes claiming exemptions and having the employer treat them as independent contractors, not subject to withholding of social security and medicare taxes. Between 2000 and 2008, despite reportable income asserted by the government to exceed $100,000 in each year, they filed no returns and took steps that made it more difficult for the government to track their assets. Between 1999 and 2007, the IRS repeatedly informed them that their position was frivolous and specifically warned of criminal sanctions. Convicted of conspiracy to defraud the U.S., 18 U.S.C. 371 (2006); attempted evasion of payment of tax, 26 U.S.C. 7201; and four counts of willful failure to file income tax returns, each was sentenced to 36 months in prison. The First Circuit affirmed, reasoning that the convictions were based on defendants' conduct, not guilt by association. View "United States v. Allen" on Justia Law

Defendant was prohibited from possessing a computer or accessing the internet while on home confinement, after being released from prison following a 2005 plea of guilty to wire, mail, and bank fraud. He nonetheless used the internet for a check-kiting scheme and, in 2010, was charged under 18 U.S.C. 1344 (bank fraud), 18 U.S.C. 1341 (mail fraud) and with escape. He was found guilty and sentenced to concurrent terms of 80 months, followed by supervised release with limits on internet and computer use. The First Circuit affirmed, first holding that a jury could reasonably infer that the banks were FDIC-insured at the time of the offenses and that defendant used the mail as part of his schemes. The special conditions imposed on release are reasonably related to the goals of supervised release. The calculation of loss, including a fraudulent $1.4 million check that did not result in any actual loss, was not clear error. View "United States v. Stergio" on Justia Law

Defendant, a patent attorney and licensed engineer, the divorced father of children born in 1985, 1986, and 1991, was ordered in 2002 to pay weekly child support of $1,406 per week plus $300 per week toward past medical expenses. He has paid no child support since issuance of the final order. He attempted to appeal the order to the U.S. Supreme Court and filed unsuccessful suits and appeals in four states (New Hampshire, Vermont, Virginia, and Maryland) and in two federal courts, arguing that the order was invalid because the New Hampshire court lacked subject matter jurisdiction. Convicted of willful failure to pay child support, 18 U.S.C. 228(a)(3), defendant was sentenced to 24 months in prison. The First Circuit affirmed, finding the evidence sufficient to support findings that he was able to pay and willfully refused to pay. The district court properly charged the jury on willful blindness. View "United States v. Mitrano" on Justia Law

Plaintiff wished to open a franchise in Puerto Rico and sought assistance from defendants, who asserted that it was a "done deal" and accepted a $400,000 retainer, a $100,000 business brokers' fee, and another $125,000 before informing plaintiff that the company at issue does not offer franchises. The district court awarded plaintiff $625,000. The First Circuit affirmed and remanded, rejecting a challenge to jury instructions on "dolo" (fraud) as involving harmless error. The evidence supported the verdict; the district court properly excluded evidence of a settlement agreement, but should have used that settlement to offset the verdict. View "Portugues-Santana v. Rekomdiv Int'l, Inc., " on Justia Law

The defendant referred two investors to a friend who invested their money in a company of which the defendant and his friend were directors. They were defrauded of their entire $290,000 investment. The defendant received nearly $20,000 of the misappropriated funds. He was convicted on ten counts of wire fraud and the district court sentenced him to 37 monthsâ imprisonment. The First Circuit affirmed. A reasonable jury could conclude, beyond a reasonable doubt, that the defendant participated in his friend's wire fraud scheme with knowledge and intent to defraud the investors. The court properly imposed a two-level vulnerable victim sentence enhancement, noting that a victim was an elderly widow who died before the trial, and properly imposed a loss enhancement because the amount of the reasonably foreseeable pecuniary harm was between $200,000 and $400,000.

The company filed civil claims under Massachusetts state laws and the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961 after discovering a scheme under which its employees and outsiders duped it into paying fraudulent invoices. Other defendants settled. After a trial, a former employee and an outsider, who advanced funds for the scheme, were found liable to the company. The First Circuit affirmed. There was sufficient evidence that the outsider knowingly and willfully participated in the scheme to support a verdict under RICO. That the jury did not find her liable for conspiracy to violate RICO is irrelevant. The evidence also supported a verdict of common law fraud; any error in a "willful blindness" jury instruction was harmless. Inclusion of anticipated attorney fees in an appeal bond was appropriate.