Justia White Collar Crime Opinion Summaries

Hardesty, a resident of Utah, solicited Schneider, a physician and resident of Ohio, for an investment involving purchase of medical-malpractice insurance from Hardesty's foreign-based company. The investment was to provide federal-tax benefits and make him a partial owner of an insurance company. Hardesty's $500,000 was transferred and eventually frozen because of SEC proceedings against a Ponzi scheme involving more than $100,000,000. Hardesty hired Nelson, a Utah attorney, to recover the funds. Nelson corresponded with Schneider and the defendants, but did not recover the money. Schneider sued multiple defendants, including Hardesty and Nelson, alleging fraud and misrepresentation. Schneider alleged that letters written by Nelson contained false statements by which Nelson furthered the scheme to defraud Schneider. The district court dismissed for lack of jurisdiction. The Sixth Circuit reversed. The district court improperly applied the preponderance-of-the-evidence standard, as opposed to the prima facie standard, in determining whether Schneider pleaded facts sufficient to establish personal jurisdiction over Nelson, but the exercise of jurisdiction comports with due process and is proper under Ohio's long-arm statute even under the more demanding standard. View "Schneider v. Hardesty" on Justia Law

Plaintiffs, seven couples who sent money to the defendants (adoption agency and individuals) to facilitate adoptions, in some cases of specific children, believed they had been defrauded and filed federal claims. The case was stayed, pending resolution of state criminal charges. The district court subsequently dismissed claims under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1962. The complaint identified the agency as the enterprise; identified predicate violations of mail fraud and wire fraud, 18 U.S.C. 341 and 1343, extortion, 18 U.S.C. 1951; transmitting or transferring in interstate commerce goods, wares, merchandise, or money knowing the same to have been stolen, converted, or taken by fraud, 18 U.S.C. 2314; and traveling in interstate or foreign commerce with the intent to distribute the proceeds of extortion, 18 U.S.C. 1952; and alleged a conspiracy among the individual defendants. The Sixth Circuit reversed. Four of plaintiffs' claims adequately alleged predicate acts of mail or wire fraud and adequately alleged a threat of continued criminal activity and, therefore, a pattern of racketeering activity. View "Heinrich v. Waiting Angels Adoption Serv., Inc." on Justia Law

Defendant, a businessman, was convicted on 10 counts of bank fraud (18 U.S.C. 1344) involving creation of 10 fraudulent entries on the books of a small bank in Benton, Tennessee. At trial, the government offered the theory that defendant and the bank's president jointly created the phony entries in an effort to disguise earlier, troubled loans to defendant's business. The Sixth Circuit reversed, finding that the evidence was insufficient to prove guilt beyond a reasonable doubt. The court improperly excluded evidence that the bank president had, unassisted, previously engaged in a large number of identical frauds. The prosecutor suggested to the jury that acquittal would deliver a financial windfall to defendant. The government offered no direct evidence and insufficient circumstantial evidence to show that defendant knew about or participated in the bank president's fraud, a fraud that the bank president had independent reasons for creating. View "United States v. Parkes" on Justia Law

Defendant hacked the email account of then-Alaska governor and Vice Presidential candidate Sarah Palin. After forensic examinations revealed that he took action to remove information from his computer relating to the incident, he was indicted on several counts, including identity theft, but only convicted of obstruction of justice, 18 U.S.C. 1519. Section 1519, part of the Sarbanes-Oxley Act of 2002, prohibits knowing destruction or alteration of any record with intent to impede, obstruct, or influence investigation of any matter within the jurisdiction of any federal department or agency or in relation to or in contemplation of any such matter or case. The Sixth Circuit affirmed, rejecting an argument that the law was unconstitutionally vague and that there was not sufficient evidence to support his conviction. Defendant's posts indicated "contemplation" of a federal investigation.View "United States v. Kernell" on Justia Law

Checking accounts were opened in the name of Diallo by a man with a passport bearing that name. The IRS deposited $3,787 into the account. Diallo withdrew $2,500 before the bank discovered that the money was a tax refund belonging to another. The account was blocked and the bank notified the IRS. The IRS made additional deposits for tax refunds. Diallo attempted to make a withdrawal, but the transaction was blocked. Later that day, at the airport, defendant was flagged for additional screening. The search revealed envelopes containing large amounts of cash and unsealed envelopes containing passports bearing defendant's picture but different names, including the name Diallo. He was indicted for possession of a false passport, 18 U.S.C. 1546(a), and bank fraud, 18 U.S.C. 1344 and 1028A(a)(1). The district court suppressed the evidence, finding that the government failed to establish that the search was constitutional, and barred admission of the bank records. The Sixth Circuit reversed. Although actual documentation seized during the search must be suppressed, evidence obtained legally and independently of the search is not suppressible, even if the government cannot show that it would have discovered its significance without the illegal search. The minimal deterrent effect of suppression is outweighed by the burden on the truth-seeking function of the courts.View "United States v. Fofana" on Justia Law

Taxpayer took business and individual tax deductions for the cost of "Loss of Income" insurance policies. The policies were back-dated, had a high premium to coverage ratio, were described as tax-savings products, and allowed taxpayer access to and control over the funds. A significant part of the premium was invested for later distribution to the policy holder. He was convicted of: subscribing a false tax return, 26 U.S.C. 7206(1); attempting to evade taxes, 26 U.S.C. 7201; and conspiracy to defraud the government, 18 U.S.C. 371. The Sixth Circuit affirmed, holding that the government presented sufficient evidence of the crimes. The court rejected a challenge to prior bad acts evidence and an argument that the government was required by the nature of the charges to forgo charging him under the general crime of conspiracy to defraud the U.S. The district court properly ordered payment of restitution for the personal income taxes of his co-conspirator.View "United States v. Rozin" 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 was convicted of obstruction of justice, witness tampering, and conspiracy and sentenced to 120 months in prison and payment of fines and assessments. In a separate trial he was convicted of conspiracy to commit securities fraud, wire fraud, and money laundering and sentenced to 360 months, to run concurrently. in a consolidated appeal, the Sixth Circuit affirmed. The district court properly denied an entrapment instruction; there was never any meeting of defendant and the government agents and, hence, no inducement. Wiretap evidence was properly admitted. There was no evidence that the warrant contained intentional or reckless falsehoods and there was probable cause. Evidence concerning the amount of loss was properly admitted with respect to both cases and sentencing was reasonable, regardless of the defense theories about other possible causes of the loss.View "United States v. Poulsen" on Justia Law

Doctors filed suit, alleging violations of the False Claims Act, 31 U.S.C. 3279 and the Michigan Medicaid False Claim Act, as qui tam relators on behalf of the United States/ The claimed that the business defrauded the government by submitting Medicare and Medicaid billings for defective radiology studies, and that the billings were also fraudulent because the business was an invalid corporation. The federal government declined to intervene. The district court dismissed. Sixth Circuit affirmed. The doctors failed to identify any specific fraudulent claim submitted to the government, as is required to plead an FCA violation with the particularity mandated by the FRCP. A relator cannot merely allege that a defendant violated a standard (in this case, with respect to radiology studies), but must allege that compliance with the standard was required to obtain payment. The doctors had no personal knowledge that claims for nondiagnostic tests were presented to the government, nor do they allege facts that strongly support an inference that such billings were submitted.View "Chesbrough v. VPA, P.C." on Justia Law

Defendant, convicted of obstruction of justice, witness tampering, and conspiracy, in connection with offering a bribe for favorable testimony in a business fraud case, was sentenced to 84 months' imprisonment. The Sixth Circuit affirmed. The district court acted within its discretion in refusing to give an entrapment jury instruction, in defining the corrupt intent required to convict as "characterized by improper conduct." Defendant acted for profit, was not reluctant to commit the offense, made the initial suggestion of the offense, and had little to no inducement from the government. The definition amounted to "invited error" and was not manifestly unjust. The sentence was reasonable; defendant knew the size and scope of the underlying crime at the outset. View "United States v. Demmler" on Justia Law