Justia White Collar Crime Opinion Summaries

Kenneth Courtright operated Today’s Growth Consultant (TGC), also known as The Income Store, which promised investors guaranteed, perpetual monthly payments based on website advertising revenue. Investors, called “site partners,” paid upfront fees under Consulting Performance Agreements (CPAs), which stated that these fees would be used exclusively for website-related expenses and that TGC was in satisfactory financial condition. In reality, TGC’s advertising revenue and business loans were insufficient to meet its payment obligations, and Courtright used new investors’ upfront fees to pay existing investors, misrepresenting the company’s financial health and the use of funds.The United States District Court for the Northern District of Illinois, Eastern Division, presided over Courtright’s criminal trial for seven counts of wire fraud. The government presented evidence of TGC’s financial shortfall and improper use of upfront fees, including testimony from employees and financial experts. The jury convicted Courtright on all counts. At sentencing, the parties debated the loss calculation, with the court ultimately adopting a $69.3 million loss figure and granting certain deductions, resulting in a final loss amount of $52.5 million. Courtright was sentenced to 90 months in prison and two years of supervised release.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed Courtright’s challenges to the sufficiency of the evidence and the loss calculation. The court held that the evidence was sufficient for a rational jury to find Courtright guilty of wire fraud, as he made material false statements about the use of upfront fees and TGC’s financial condition, and acted with intent to defraud. The court also found that Courtright waived his causation argument regarding loss calculation and that the district court did not clearly err in denying deductions for operating expenses. The Seventh Circuit affirmed the conviction and sentence. View "USA v Courtright" on Justia Law

A pharmaceutical company participated in a federal program that required it to report the average price it received for drugs sold to wholesalers, which in turn affected the rebates it owed the government under Medicaid. From 2005 to 2017, the company sold drugs to wholesalers at an initial price, but if it raised the price before the wholesaler resold the drugs to pharmacies, it required the wholesaler to pay the difference. The company reported only the initial price as the average manufacturer price (AMP), excluding the subsequent price increases, which resulted in lower reported AMPs and thus lower rebate payments to the government. The company justified this exclusion by categorizing the price increases as part of a bona fide service fee to wholesalers, even though the increased value was ultimately paid by pharmacies.The United States District Court for the Northern District of Illinois reviewed the case after a qui tam action was filed by a relator, who alleged that the company’s AMP calculations were false and violated the False Claims Act (FCA). The district court granted summary judgment to the relator on the issue of falsity, finding the AMP calculations and related certifications were factually and legally false. The issues of scienter (knowledge) and materiality were tried before a jury, which found in favor of the relator and awarded substantial damages. The company appealed, challenging the findings on falsity, scienter, and materiality, while the relator cross-appealed on the calculation of the number of FCA violations.The United States Court of Appeals for the Seventh Circuit affirmed the district court’s judgment. The court held that the company’s exclusion of price increase values from AMP was unreasonable and contradicted the plain language and purpose of the relevant statutes, regulations, and agreements. The court also held that the jury reasonably found the company acted knowingly and that the false AMPs were material to the government’s payment decisions. The court rejected the cross-appeal on damages, finding the issue was not properly preserved for appeal. View "Streck v Eli Lilly and Company" on Justia Law

Miguel Salinas-Salcedo pled guilty to conspiracy to commit money laundering, admitting that over a two-and-a-half-year period he helped Mexican drug cartels launder nearly $3 million through 24 transactions. His role was to connect cartel members with individuals in the United States who could deposit and transfer large sums of cash into bank accounts without attracting government attention. Salinas-Salcedo acted as the intermediary, relaying instructions, authenticating transactions, and confirming deposits, ultimately earning over $44,000 in commissions. Unbeknownst to him, some of his contacts were undercover law enforcement agents.The United States District Court for the Northern District of Illinois, Eastern Division, sentenced Salinas-Salcedo after applying a four-level enhancement under U.S.S.G. §2S1.1(b)(2)(C) for being “in the business of laundering funds.” Salinas-Salcedo argued that he was merely a “middleman” and not in the business of laundering funds as contemplated by the guidelines. The district court rejected this argument, finding his participation integral to the conspiracy and imposing a below-guidelines sentence of 96 months.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed the district court’s interpretation of the Sentencing Guidelines de novo, as the facts were undisputed. The appellate court held that Salinas-Salcedo’s conduct fell squarely within the scope of the “business of laundering funds” enhancement, as defined by the guidelines and relevant statutes. The court found that his regular, multi-year involvement, substantial earnings, and discussions with undercover agents satisfied the enhancement’s factors. The Seventh Circuit also rejected Salinas-Salcedo’s claim of procedural error, concluding that the district court adequately addressed his objections. The judgment was affirmed. View "United States v. Salinas-Salcedo" on Justia Law

James Weiss owned a company that manufactured sweepstakes machines, which in 2018 operated in a legal gray area under Illinois law. Seeking to secure favorable legislation, Weiss arranged for his company to make monthly payments to a lobbying firm owned by State Representative Luis Arroyo, who then became a vocal advocate for legalizing sweepstakes machines. After initial legislative efforts failed, Weiss and Arroyo sought to amend existing gaming legislation by enlisting the support of State Senator Terrance Link. Unbeknownst to them, Link was cooperating with federal authorities. During meetings, Arroyo assured Link he would be compensated for his support, and Weiss’s company provided checks intended for Link under a fictitious name created by the FBI. Weiss was later stopped by FBI agents, interviewed without Miranda warnings, and made false statements during the encounter.The United States District Court for the Northern District of Illinois, Eastern Division, denied Weiss’s pretrial motions to suppress his statements to the FBI and to exclude Arroyo’s recorded statements. At trial, the jury heard evidence of the bribery scheme, including testimony from Link and federal agents, and found Weiss guilty on all charges after deliberation. The district court sentenced Weiss to 66 months’ imprisonment, exceeding the calculated guidelines range, and declined to delay sentencing for anticipated changes to the Sentencing Guidelines.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed Weiss’s challenges to the admission of his statements, the admission of Arroyo’s statements as coconspirator statements, the jury instructions regarding “official acts,” and the sentence imposed. The Seventh Circuit held that Weiss was not in custody for Miranda purposes during the FBI interview, the district court did not err in admitting Arroyo’s statements, the jury instructions did not constitute plain error, and the sentence was both procedurally and substantively reasonable. The court affirmed the district court’s judgment in all respects. View "United States v. Weiss" on Justia Law

Earl Miller, who owned and operated several real estate investment companies under the 5 Star name, was responsible for soliciting funds from investors, primarily in the Amish community, with promises that their money would be used exclusively for real estate ventures. After becoming sole owner in 2014, Miller diverted substantial investor funds for personal use, unauthorized business ventures, and payments to friends’ companies, all in violation of the investment agreements. He also misled investors about the nature and use of their funds, including issuing false statements about new business activities. The scheme continued even as the business faltered, and Miller ultimately filed for bankruptcy.A federal grand jury in the Northern District of Indiana indicted Miller on multiple counts, including wire fraud and securities fraud. At trial, the government presented evidence, including testimony from an FBI forensic accountant, showing that Miller misappropriated approximately $4.5 million. The jury convicted Miller on one count of securities fraud and five counts of wire fraud, acquitting him on one wire fraud count and a bankruptcy-related charge. The United States District Court for the Northern District of Indiana sentenced Miller to 97 months’ imprisonment, applying an 18-level sentencing enhancement based on a $4.5 million intended loss, and ordered $2.3 million in restitution to victims.The United States Court of Appeals for the Seventh Circuit reviewed Miller’s appeal, in which he challenged the district court’s loss and restitution calculations. The Seventh Circuit held that the district court reasonably estimated the intended loss at $4.5 million, as this amount reflected the funds Miller placed at risk through his fraudulent scheme, regardless of when the investments were made. The court also upheld the restitution award, finding it properly included all victims harmed by the overall scheme. The Seventh Circuit affirmed the district court’s judgment. View "USA v Miller" on Justia Law

Three individuals who worked as precious metals futures traders at major financial institutions were prosecuted for engaging in a market manipulation scheme known as spoofing. This practice involved placing large orders on commodities exchanges with the intent to cancel them before execution, thereby creating a false impression of market supply or demand to benefit their genuine trades. The traders’ conduct was in violation of both exchange rules and their employers’ policies, and the government charged them with various offenses, including wire fraud, commodities fraud, attempted price manipulation, and violating the anti-spoofing provision of the Dodd-Frank Act.The United States District Court for the Northern District of Illinois, Eastern Division, presided over separate trials for the defendants. In the first trial, two defendants were convicted by a jury on all substantive counts except conspiracy, after the court denied their motions for acquittal and a new trial. The third defendant, tried separately, admitted to spoofing but argued he lacked the requisite criminal intent; he was convicted of wire fraud, and his post-trial motions were also denied. The district court made several evidentiary rulings, including admitting lay and investigator testimony, and excluded certain defense exhibits and instructions.The United States Court of Appeals for the Seventh Circuit reviewed the convictions and the district court’s rulings. The appellate court held that spoofing constitutes a scheme to defraud under the federal wire and commodities fraud statutes, and that the anti-spoofing statute is not unconstitutionally vague. The court found sufficient evidence supported all convictions, and that the district court did not abuse its discretion in its evidentiary or jury instruction decisions. The Seventh Circuit affirmed the convictions and the district court’s denial of post-trial motions for all three defendants. View "United States v. Smith" on Justia Law

In early 2015, Daniel Stewart was stopped by Indianapolis police for a traffic violation, leading to the discovery of a handgun, over $9,000 in cash, and more than 800 grams of illegal narcotics in his car. A subsequent search of his home revealed additional drugs, nearly $500,000 in cash, and five more firearms. Stewart was found to be laundering drug proceeds through sham businesses. He was convicted in November 2016 on multiple counts, including drug distribution, firearm possession, and money laundering.The United States District Court for the Southern District of Indiana initially sentenced Stewart to life imprisonment plus five years. Stewart appealed, but the Seventh Circuit affirmed his convictions. He then sought postconviction relief, arguing that recent case law invalidated his sentence enhancements. The government conceded, and the district court ordered resentencing. At resentencing, the court imposed a 360-month term of imprisonment, considering Stewart's efforts at rehabilitation but also the severity of his crimes.The United States Court of Appeals for the Seventh Circuit reviewed Stewart's appeal of his resentencing. Stewart argued that the district court miscalculated his sentencing range under the career-offender guideline and misunderstood its discretion regarding his rehabilitation efforts. The Seventh Circuit found that the district court correctly applied the career-offender guideline and did not err in its consideration of Stewart's rehabilitation. The court also held that the district court provided a sufficient explanation for the increased sentences on the money laundering counts, which did not affect the overall sentence. The Seventh Circuit affirmed the district court's decision, upholding Stewart's 360-month sentence. View "United States v. Stewart" on Justia Law

Brian Fenner and Dennis Birkley were convicted of seventeen counts related to a fraud scheme involving the manipulation of Indiana’s mechanic’s lien statute. Fenner, who ran a towing company, and Birkley, who financed the operation, conspired to inflate the value of mechanic’s liens on vehicles and conducted sham auctions to obtain clean titles, which they then sold for profit. The scheme involved towing vehicles from across the country to Indiana, inflating lien values, and holding fake auctions at unreasonable hours to ensure no legitimate buyers attended. Birkley would then falsely claim to have purchased the vehicles at these auctions and apply for clean titles, which extinguished the creditors' interests.The United States District Court for the Southern District of Indiana convicted both defendants on all counts. Fenner and Birkley were sentenced to 70 and 60 months in prison, respectively, and ordered to pay $49,045.84 in restitution. Fenner and Birkley appealed, arguing that the district court made several errors, including allowing improper testimony and violating Fenner’s Sixth Amendment rights by admitting Birkley’s unredacted statement to law enforcement.The United States Court of Appeals for the Seventh Circuit reviewed the case and found that the district court did not abuse its discretion in its evidentiary rulings. The court held that the testimony of the government witnesses was proper and that any potential errors were harmless given the overwhelming evidence of guilt. The court also found no plain error in the admission of Birkley’s statement, as it was consistent with Fenner’s defense and did not significantly impact the jury’s verdict. Additionally, the court rejected Birkley’s ex post facto argument and upheld the restitution calculation, finding it supported by the evidence.The Seventh Circuit affirmed the convictions and sentences of Fenner and Birkley. View "United States v. Birkley" on Justia Law

Federal agents investigated a drug trafficking conspiracy in Fort Wayne, Indiana, using a confidential source to conduct controlled buys from Zachary Barnes. Barnes coordinated the sales, supplied methamphetamine, and directed his co-conspirator, Marquese Neal, to make deliveries. Neal testified that Barnes paid him in marijuana for his services. Barnes was arrested, and law enforcement found drugs and ammunition in his home.Barnes pleaded guilty to conspiracy to distribute methamphetamine and to possess it with intent to distribute. The United States District Court for the Northern District of Indiana applied a two-level enhancement under section 3B1.1(c) of the Sentencing Guidelines for Barnes' role as a manager or supervisor. This enhancement made Barnes ineligible for safety-valve relief under 18 U.S.C. § 3553(f), resulting in a mandatory minimum sentence of ten years. Barnes objected to the role enhancement and the denial of safety-valve relief, but the district court overruled his objections, finding Neal's testimony credible and supported by other evidence.The United States Court of Appeals for the Seventh Circuit reviewed the case. The court affirmed the district court's application of the role enhancement, agreeing that Barnes' actions—recruiting Neal, coordinating logistics, supplying drugs, and directing deliveries—fit the criteria for a manager or supervisor under section 3B1.1(c). The court also upheld the denial of safety-valve relief, as Barnes' supervisory role made him ineligible. The Seventh Circuit found no clear error in the district court's credibility determinations or factual findings and affirmed Barnes' ten-year sentence. View "United States v. Barnes" on Justia Law

Gary Matthews and Monte Brannan collaborated on a project to redevelop a landmark hotel in Peoria, Illinois. Instead of fulfilling their financial obligations to lenders, they diverted project revenue for personal gain. This led to federal charges of mail fraud and money laundering, resulting in guilty verdicts by a jury.The United States District Court for the Central District of Illinois oversaw the initial trial. Matthews and Brannan were convicted of mail fraud, money laundering, and, in Brannan’s case, conspiracy to commit money laundering. They appealed their convictions, raising multiple issues.The United States Court of Appeals for the Seventh Circuit reviewed the case. The court found the evidence against Matthews and Brannan overwhelming, affirming their convictions. The court noted that Matthews and Brannan failed to comply with Circuit Rule 30(b)(1) by not including necessary district court rulings in their appendices, which hindered the appellate review process. Despite this, the court ensured a fair review by independently locating the relevant rulings. The court ordered Matthews’s and Brannan’s counsel to show cause why they should not be sanctioned for their violations of Circuit Rule 30. The court affirmed the district court’s judgment, ensuring that Matthews and Brannan received fair consideration of their appeals. View "USA v Brannan" on Justia Law