Justia White Collar Crime Opinion Summaries

Articles Posted in U.S. Court of Appeals for the Seventh Circuit

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Attorney Goodson received an email from “Fumiko Anderson,” stating that she wanted to hire Goodson to recover money that she was owed in a divorce. Fumiko later stated that her ex-husband had agreed to settle and would mail a check to cover Goodson’s fee plus the settlement amount. The check was drawn on the First American account of an Illinois manufacturer. Goodson deposited the $486,750.33 check in his Citizens Bank client trust account. Fumiko told Goodson she needed the money immediately. Goodson directed the bank to transfer it to a Japanese entity that he believed to be Fumiko. It actually was an Internet-based fraudulent scheme: the “Fumiko Bandit.” When the fraud was discovered First American reimbursed its depositor and sought recovery from Citizens Bank, Goodson, and the Federal Reserve Bank. The Seventh Circuit affirmed judgment for the defendants, rejecting a breach of warranty argument. First American had received a “truncated” electronic image from the Federal Reserve but could have demanded a “substitute check” or could have refused to honor the check. First American was the victim of a mistake, but Illinois law provides no remedy for such a victim against “a person who took the instrument in good faith and for value.” The lawyer and the banks reasonably believed that they were engaged in the commonplace activity of forwarding a check; they did not fall below “reasonable commercial standards of fair dealing.” There was no “negligent spoliation of evidence” in Citizens Bank’s destruction of the original paper check. Goodson owed no professional duty to First American. View "First American Bank v. Federal Reserve Bank of Atlanta" on Justia Law

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From 2006-2013, Lewis fraudulently held herself out as a Fidelity account representative to at least 12 “investors,” ages 75-92. Although she had been a Financial Industry Regulatory Authority registered broker, 1990-2006, she was neither a registered broker nor affiliated with Fidelity. Lewis set up joint accounts for her investors, including her name on each. Lewis obtained debit cards and forged signatures on checks associated with the accounts to embezzle more than $2 million. She pled guilty to wire fraud, 18 U.S.C. 1343; the government agreed to recommend no more than 10 years’ imprisonment. The court imposed a sentence of 15 years’ imprisonment. The Seventh Circuit remanded for resentencing based on her conditions of supervised release. Before the resentencing hearing, Lewis filed a motion, arguing for the first time, that the government had breached the plea agreement. The district court denied the motion, holding that Lewis had waived this argument, then again sentenced Lewis to a 15‐year term. The Seventh Circuit affirmed, upholding the court’s refusal to consider Lewis’s argument. The court erred by not affirmatively acknowledging that it could have considered it, but the error was harmless because it alternatively rejected the argument, and the argument is meritless. The court did not err with respect to the vulnerable-victim enhancement; the sentence was substantively reasonable. View "United States v. Lewis" on Justia Law

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Kolbusz, a dermatologist, submitted thousands of claims to the Medicare system and private insurers for the treatment of actinic keratosis, a skin condition that sometimes leads to cancer. He received millions of dollars in payments. Convicted of six counts of mail or wire fraud, 18 U.S.C. 1341, 1343, he was sentenced to 84 months in prison plus $3.8 million in restitution. The Seventh Circuit affirmed. The evidence permitted a reasonable jury to conclude that many, if not substantially all, of the claims could not have reflected an honest medical judgment and that the treatment Kolbusz claimed to have supplied may have failed to help any patient who actually had actinic keratosis. Because the indictment charged a scheme to defraud, the prosecutor was entitled to prove the scheme as a whole, and not just the six exemplars described in the indictment. The judge did not err in excluding evidence that, after his arrest and indictment, Kolbusz continued to submit claims to Medicare, and many were paid. “It would have been regrettable to divert the trial into an examination of Medicare’s claims-processing procedures in 2013 and 2014, rather than whether Kolbusz knew that he was submitting false claims in 2010 and earlier." View "United States v. Kolbusz" on Justia Law

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In 2008, Johnston, a horse racetrack executive, promised a $100,000 campaign contribution to then-Governor Blagojevich in exchange for his signature on a bill to tax the largest casinos in Illinois for the direct benefit of the Illinois horse racing​ industry. After Blagojevich’s corruption came to light, the casinos sued the racetracks, alleging a conspiracy to violate the federal Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961, and state‐law claims for civil conspiracy and unjust enrichment. A jury awarded the casinos $25,940,000 in damages, which was trebled under RICO to $77,820,000. The Seventh Circuit affirmed in part, holding that the jury did not have legally sufficient evidence to support a verdict finding a conspiracy to engage in a “pattern” of racketeering activity, as required for liability on a RICO conspiracy theory. The casinos are still entitled to the $25,940,000 in damages on the state‐law claims, but not to have those damages trebled under RICO. View "Empress Casino Joliet Corp. v. Balmoral Racing Club, Inc." on Justia Law

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Eberts is a film producer whose credits include Lord of War (2005) and Lucky Number Slevin (2006). After a string of failed movies, in 2009, he filed for bankruptcy. He was introduced to Elliott, an Illinois novice author who wanted to adapt his book into a movie. Eberts and Elliott formed a limited liability company. Both agreed to invest money. Eberts did not disclose his insolvency. Over the next year Elliott wired $615,000 to accounts controlled by Eberts. Eberts applied only 10% of that money toward the movie; he paid his father and bankruptcy attorney and spent the rest on personal items like art, furniture, designer clothing, and fine wines. Eberts also solicited and received a $25,000 loan from Elliott for an unrelated project and never repaid it. After Elliott discovered the scam, he filed suit. Later, Eberts pleaded guilty to seven counts of wire fraud, 18 U.S.C. 1343, and three counts of money laundering, section 1957, and was sentenced to 46 months’ imprisonment, the top of the guidelines range. The Seventh Circuit affirmed, rejecting an argument that the court failed to consider the 18 U.S.C. 3553(a) sentencing factors or Eberts’s mitigation arguments, but based the sentence on unsupported facts. View "United States v. Eberts" on Justia Law

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Stoller, the beneficiary of a trust that holds title to a house, assigned his beneficial interest to his daughter but reserved a “power of direction” with the right to obtain loans for himself, secured by the property. He directed the trust to rent out the property; he received the income. IStoller filed for bankruptcy. None of his filings mentioned the property. A question specifically asked about “all property owned by another person that [he] [held] or control[led].” Under penalty of perjury, he answered “none.” Stoller was charged with two counts of knowingly and fraudulently concealing property that belonged to a bankruptcy estate, 18 U.S.C. 152(1), and seven counts of knowingly and fraudulently making a false statement in a bankruptcy proceeding, 18 U.S.C. 152(3). Represented by an appointed lawyer, he pled guilty to one count of making a false statement; the government dismissed the remaining counts. Before sentencing, Stoller considered moving to withdraw his plea on the ground that he was not mentally competent. A new lawyer was appointed. Stoller was examined by a board‐certified neuropsychologist, who concluded that Stoller was competent to plead guilty. Stoller’s lawyer then unsuccessfully moved to withdraw the plea based on alleged defects in the plea colloquy. Stoller was sentenced to 20 months’ imprisonment. The Seventh Circuit affirmed. Stoller was competent to plead guilty, his plea was not coerced, the colloquy included most of the basics, and Stoller was not prejudiced by any deficiency. View "United States v. Stoller" on Justia Law

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The Bickarts prepared and filed an income tax return containing false income and withholding amounts, supported by fabricated 1099‐OID forms, appearing to come from major financial institutions. The IRS paid a claimed refund of $115,412. Their legitimate refund would have been $263. The IRS discovered the fraud and sent a bill for $217,923. For years, the Bickarts engaged in obstructive conduct, sending a 1040‐V payment coupon and continuing to insist that the bill had been paid. They made baseless accusations against IRS agents. They were convicted of conspiring to file and filing a false claim to defraud the government, 18 U.S.C. 286 and 287. The Bickarts represented themselves at trial, asserting “sovereign citizen” claims and making nonsensical accusations. The PSR applied a two‐level enhancement for sophisticated means based on the fictitious Forms 1099‐OID and a two‐level enhancement for obstruction of justice, resulting in a guidelines imprisonment range of 33-41 months. Neither objected to the calculations. The court sentenced each defendant to 24 months in prison. Defendants objected to supervised release conditions requiring them to notify third parties of risks related to their criminal history when directed by the probation office. The court modified it to require the probation office to seek court approval. They also objected to the condition permitting a probation officer to visit them at home or at work at any reasonable time. The court overruled the objection. The Seventh Circuit vacated the third‐party notification condition, but otherwise affirmed the remaining conditions of supervised release and sentence. View "United States v. Bickart" on Justia Law

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In 2013-2015, defendant and her accomplices defrauded several people in the U.S. and Canada, whom they had met on dating websites, by persuading them to wire money to bank accounts controlled by the schemers to help their fictitious selves deal with fictitious personal tragedies or take advantage of fictitious money‐making opportunities. They repeatedly victimized some of the same people.The defendant pleaded guilty to wire fraud, 18 U.S.C. 1343, was sentenced to 120 months in prison (half the statutory maximum). At sentencing the district judge focused on 21 of the defendant’s victims, who had lost a total of some $2.2 million and who ranged in age from 47 to 71. The judge added a two‐level vulnerable‐victim enhancement, U.S.S.G. 3A1.1(b)(1), without which the guidelines range would have been 63 to 78 months. The Seventh Circuit affirmed, noting the district court’s concern that the defendant continued to pose a risk and that that “the impact on the victims, although considered under the guidelines to the extent that the guidelines contemplate vulnerable victims … doesn’t actually fully appreciate or really contemplate the specific emotional and financial impact on the victims, and so that is the basis for my departure from the guideline range.” View "United States v. Iriri" on Justia Law

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Peterson, a Madison Wisconsin entrepreneur, owned a polyurethane scrap-foam material company and a development company, with Shapiro and Spahr. Peterson made unauthorized intercompany loans and used corporate funds to pay off his personal gambling debts. Eventually all of his businesses failed, the companies defaulted, and federal agents investigated. Peterson was indicted on 13 counts: bank fraud, making false statements to banks, money laundering, and pension theft. The judge entered judgment of acquittal on two counts and at sentencing imposed a within-guidelines prison term of 84 months on the remaining six. The Seventh Circuit rejected claims of evidentiary and instructional error and his arguments for judgment of acquittal or a new trial as having no merit; the evidence was easily sufficient to support the jury’s verdict. The court also upheld the joinder of the pension-theft count for trial with the others. The court vacated the sentence. The judge correctly calculated the gross receipts Peterson derived from his fraud; because he was the sole perpetrator, all proceeds of the fraud were properly attributed to him. But Peterson repaid in full a $300,000 wire transfer before detection of his fraud, so that sum should not have been included in the total loss amount. View "United States v. Peterson" on Justia Law

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Four persons were charged with arranging the murder of “Montes” in Mexico to reduce competition against a Chicago-based criminal organization that created bogus immigration documents. The Seventh Circuit reversed dismissal on grounds that the indictment proposed the extraterritorial application of U.S. law. On remand, one defendant pleaded guilty. Three were convicted under 18 U.S.C. 1959, the Racketeer​ Influenced and Corrupt Organizations Act (RICO); 18 U.S.C. 956(a)(1), which forbids any person “within the jurisdiction of the United States” from conspiring to commit a murder abroad; and conspiring to produce false identification documents, 18 U.S.C. 371. On appeal, defendants cited the Supreme Court’s 2010 decision, Morrison v. National Australia Bank, which reiterated the presumption against extraterritorial application of civil statutes. The Seventh Circuit affirmed, noting that its earlier decision recognized that presumption and thought it not controlling, because of the differences between criminal and civil law, and because the murder in Mexico was arranged and paid for from the U.S., and was committed with the goal of protecting a criminal organization that conducted business in the U.S., to defraud U.S. officials and employers. View "United States v. Leija-Sanchez" on Justia Law