Justia White Collar Crime Opinion Summaries

Sheneman and his son purchased distressed properties, then flipped the properties by operating an elaborate mortgage fraud scheme that convinced unwitting buyers to purchase properties they could neither afford nor rent out after purchasing. Mortgage lenders were duped into financing the purchases through misrepresentations about the buyers and their financial stability. Four buyers with few assets and no experience in the real estate market purchased 60 homes. Most of the homes were eventually foreclosed upon. The buyers and lenders each suffered significant losses. Sheneman was convicted of four counts of wire fraud, 18 U.S.C. 1343, and sentenced to 97 months' imprisonment. The Seventh Circuit affirmed, rejecting challenges to the sufficiency of the evidence and to application of sentencing enhancements for use of sophisticated means and for losses of more than one million dollars. View "United States v. Sheneman" on Justia Law

Between 2004 and 2008, Brown ran an elaborate scheme that tricked lenders into issuing fraudulent mortgage loans in Chicago and Las Vegas. Brown recruited or directed dozens of individuals: lawyers, accountants, loan officers, bank employees, realtors, home builders, and nominee buyers. Of his accomplices, 32 people were criminally charged. The Chicago scheme resulted in about 150 fraudulent loans, totaling more than $95 million in proceeds from victim lenders. The Las Vegas scheme resulted in approximately 33 fraudulent loans totaling about $16 million. Brown entered guilty pleas and was sentenced to 216 months’ imprisonment for the Las Vegas scheme and 240 months’ imprisonment for the Chicago scheme, to run concurrently. The district court also imposed a restitution amount of more than $32.2 million. The Seventh Circuit affirmed Brown’s sentence, rejecting a challenge to the loss calculation. The court remanded the 66-month sentence and $7.1 restitution order against another participant in the Chicago scheme because the court incorrectly determined the number of victims. View "United States v. Love" on Justia Law

Defendant owned tobacco stores. Currency sales accounted for roughly half of the revenue. He directed employees to separate currency from credit-card and check receipts. He used currency to pay employees and suppliers and failed to report currency receipts on federal and state tax forms from 2002 to 2009. He channeled much of the currency (more than $60 million) to bank accounts in Lebanon, his homeland. He pleaded guilty to mail fraud, 18 U.S.C. 1341, and impeding administration of the Internal Revenue Code, 26 U.S.C. 7212(a). With an upward adjustment of 2 levels for using sophisticated means, U.S.S.G. 2B1.1(b)(10)(C), 2T1.1(b)(2), he was sentenced to 76 months. The Seventh Circuit affirmed. Although defendant did not create phony corporations, use fake names to open accounts, or employ technology to conceal assets, his conduct was sophisticated because he directed employees to separate currency receipts, he withheld funds from corporate bank accounts, and concealed the magnitude of his sales. He secreted money into foreign accounts by carrying currency and cashier’s checks during his travels, avoided reporting by depositing currency in multiple transactions (structuring or smurfing) 31 U.S.C. 5324; and washed money through the accounts of relatives and associates. View "United States v. Ghaddar" on Justia Law

Defendants operated auto dealerships, and from 1995 to 2005, more than half their sales were to drug traffickers, who preferred to deal with defendants because they were willing to accept large cash payments in small bills without question. They falsified sales contracts and liens, ignored federal tax-reporting requirements, and arranged bank deposits to avoid triggering federal bank-reporting requirements. Defendants were convicted of 97 counts of RICO conspiracy, money laundering, mail fraud, illegal transaction structuring, bank fraud, and aiding and abetting a drug conspiracy. The Seventh Circuit affirmed, rejecting challenges to management of the trial and sufficiency of the evidence. The court rejected an argument that conviction of money-laundering, 18 U.S.C. 1956(a), required to proof that defendants engaged in specified financial transactions for the purpose of laundering the "proceeds" of an underlying crime, and that "proceeds" means net profit of the underlying crime, not gross receipts. They were convicted of concealment and transaction-avoidance forms of money-laundering. At the time of trial, it was unclear whether proof of “proceeds” in a concealment or avoidance prosecution required proof that defendant laundered net profits of the underlying criminal activity. View "United States v. Hosseini" on Justia Law

In 2002 Bell established mutual funds and raised about $2.5 billion for investment. Most of the firms to which the funds routed money were controlled by Petters. He was running a Ponzi scheme. There was no inventory. New investments paid older debts, with some money siphoned off for personal use. When Petters was caught in 2008, the funds collapsed; about 60% of the money was gone. The funds' bankruptcy trustee filed suit against the funds' auditor, alleging negligence. The district court dismissed without deciding whether the auditor had acted competently, invoking the doctrine of in pari delicto, based on Bell's knowledge of the scheme. The Seventh Circuit vacated, noting that Bell was not stealing funds and that the extent of his knowledge cannot be determined at this stage. An allegation that Bell was negligent but not criminally culpable in 2006 and 2007 makes the claim against the auditor sufficient. View "Peterson v. McGladrey & Pullen, LLP" on Justia Law

A new customer of the bank (Ott) obtained a loan to finance the purchase of a motor home from the dealership that Ott himself owned. Ott presented the certificate of origin and pledged the motor home as collateral. When Ott defaulted two years later, the bank discovered that the certificate of origin was a fake and the motor home did not exist. The bank’s insurer denied recovery because the fake certificate of origin did not meet the insurance bond definition of "Counterfeit." The district court ruled in favor of the insurer. The Seventh Circuit affirmed. The certificate of origin did not imitate an actual, original certificate of origin for a 2007 motor home because there never was an actual, valid, original certificate for the vehicle pledged as collateral: the manufacturer never produced the vehicle described.View "North Shore Bank, FSB v. Progressive Cas. Ins. Co." on Justia Law

In 1996 defendant and his cousin formed companies that bought, stored, and sold grain, and provided farming services. In 1999, the cousins obtained bank loan by falsely representing that valuable contracts existed for future grain deliveries from one company to the other and inflating balances of bank accounts by writing bad checks between accounts. Charged with loan fraud and check-kiting (18 U.S.C. 1344) that cost the bank more than $2.5 million, the cousin pled guilty. Defendant testified that the transactions were in good faith, but was convicted and sentenced to 70 months in prison and restitution in the amount of $1,967,055.30, the outstanding balance on the loans. The Seventh Circuit affirmed, rejecting arguments that the indictment was multiplicitous; that there was insufficient evidence of guilt beyond a reasonable doubt; that sentencing under 2009 guidelines violated the ex post facto clause; that loss and restitution amounts were miscalculated; that an enhancement for obstruction of justice was improper; and that the disparity between defendant’s sentence and that of his cousin was improper.View "United States v. Peugh" on Justia Law

Three individuals (once known as the "Bad Boys' of Chicago Arbitrage") established "Loop" as a closely-held corporation for their real estate holdings in 1997. A family trust for Loop's corporate secretary (50% owner) owns Banco, which gave Loop a $9.9 million line of credit in 2000. On the same day, Loop subsidiaries entered into a participation agreement on the line of credit through which they advanced $3 million to Loop, giving the subsidiaries senior secured creditor status over Loop's assets. The now-creditor subsidiaries were also collateral for funds loaned Loop. In 2001 Loop received a margin call from Wachovia. The Banco-Loop line of credit matured and Loop defaulted. Banco extended and expanded the credit. Loop’s debt to Wachovia went unpaid. Loop invested $518,338 in an Internet golf reservation company; moved real estate assets to Loop Properties (essentially the same owners); and paid two owners $210,500 “compensation” but never issued W-2s. Wachovia obtained a $2,478,418 judgment. The district court pierced Loop’s corporate veil, found the owners personally liable, and voided as fraudulent Banco’s lien, the “compensation” payments, and payments to the golf company. The Seventh Circuit affirmed, except with respect to the golf company. View "Wachovia Secs., LLC v. Banco Panamericano, Inc." on Justia Law

Romasanta worked in Chicago as an expediter, helping developers obtain construction permits. In testifying against Curescu, a developer, she admitted bribing 25 to 30 city employees between 2004 and 2007. She paid an $8,000 bribe to a zoning inspector on behalf of Curescu. Convicted of bribery of an agency that receives federal assistance, 18 U.S.C. 666 and conspiracy, 18 U.S.C. 371, Curescu was sentenced to six months and the zoning inspector to 41 months in prison. The Seventh Circuit affirmed, rejecting various challenges to testimony and to the court's refusal to severe the cases. View "United States v. Olivella" on Justia Law

Sanchez rose through the ranks of Chicago politics and became Commissioner of Streets and Sanitation. He was a leader of the Hispanic Democratic Organization, and, acting as a city official and a political operative, participated in a scheme to award city jobs to campaign workers in violation of orders and consent decrees, known as the Shakman decrees, enjoining the city from patronage hiring for most positions. Del Valle managed campaigns staffed by Sanchez's branch of the HDO and had significant influence in choosing individuals for positions. On retrial, Sanchez was convicted of mail fraud, 18 U.S.C. 1341 and Del Valle of perjury, 18 U.S.C. 1623. The Seventh Circuit affirmed, rejecting arguments concerning the court's handling of testimony about driving while intoxicated and arguing with a police officer; denial of severance; and the government's failure to prove economic loss. City jobs are money or property for purposes of mail fraud and the indictment sufficiently alleged deprivation of money or property.View "United States v. Delvalle" on Justia Law