Justia White Collar Crime Opinion Summaries

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

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

American Litho was owed $113,772 by Union Transport (Las Vegas), a large amount by Alcan (Wisconsin), and $146,167 by Concrete Media (New Jersey). Dziuban, American's part-owner, unsuccessfully attempted to obtain repayment through legal means, including litigation. In 2010, Dziuban contacted Orlando, a salesman at American, to help collect the debts. Orlando recruited Carparelli and Brown. The four men implied, upon meeting, that they would use physical violence and threats. Dziuban promised half of any money they collected. The men began travelling and making threats. McManus eventually joined them. Brown began cooperating with the FBI. In 2013, acting under the government’s instructions, Brown told Carparelli that he had received a call from New Jersey state police. This prompted recorded conversations between Orlando, Carparelli, and Brown, in which they discussed the scheme and attempted to cover it up. Dziuban, Orlando, Brown, Iozzo, Carparelli, and McManus were charged with Hobbs Act violations, 18 U.S.C. 1951; Orlando and McManus were charged with conspiracy to commit extortion; McManus was also charged with attempted extortion. A jury convicted Orlando and McManus. The court sentenced McManus to two concurrent sentences of 60 months and sentenced Orlando to 46 months imprisonment. The Seventh Circuit affirmed McManus’s conviction and Orlando’s sentence. View "United States v. Orlando" on Justia Law

The defendant was convicted for defrauding Medicare and Blue Cross Blue Shield by submitting claims for reimbursement for respiratory therapy that had not been provided and was sentenced to 75 months in prison and also ordered to pay restitution of some $2.5 million. Three days after the jury rendered its guilty verdict, a juror sent the court a three-page “report on jury misconduct.” It was a follow-on to a phone call, in which he’d told a staff member that he wanted to retract his vote to convict. The Seventh Circuit affirmed, rejecting his argument that his constitutional right to be tried by an impartial jury was violated because the judge refused to order the jurors to return to court for a hearing about alleged juror misconduct or to order a new trial. The court also upheld the application of a four-level enhancement for crimes involving more than 50 victims, U.S.S.G. 2B1.1(b)(2)(B), and a two-level increase in his offense level for abuse of a position of public or private trust. The patients, whose identification information was used, were victims, although they suffered no financial loss. View "United States v. Roy" on Justia Law

During the 2008–09 financial crisis, Wisconsin’s AnchorBank was struggling. Needing cash to pay its lenders, the bank’s president told vice president Weimert to try to sell the bank’s share in a Texas commercial real estate development. Weimert arranged a sale that exceeded the bank’s target price by one-third. Weimert persuaded potential buyers that he would be a useful partner. Their offer letters included having Weimert buy a minority interest in the property. The bank agreed and agreed to pay Weimert an unusual bonus to enable him to buy that interest. The government prosecuted Weimert for wire fraud on the theory that his actions established a scheme to obtain money or property by fraud. He was convicted on five of six counts under 18 U.S.C. 1343. The Seventh Circuit reversed and ordered judgment of acquittal. Federal wire fraud is an expansive tool, but does not criminalize a person’s lack of candor about the negotiating positions of parties to a business deal. Weimert led the buyer to believe the seller wanted him to have a piece of the deal. He led the seller to believe the buyer insisted he have a piece of the deal. All the actual terms, however, were fully disclosed and subject to negotiation. View "United States v. Weimert" on Justia Law

Defendant pled guilty to mail fraud and aggravated identity theft pursuant to a written plea agreement. Defendant's conviction stemmed from his multi‐year scheme to fraudulently obtain and use credit cards. On appeal, defendant alleged that the government materially breached the plea agreement by presenting evidence of twenty‐eight victims when only four were referred to by name in the agreement. The court enforced defendant's appellate waiver and dismissed the appeal, concluding that the plea agreement made clear that the named victims were either an example or just one of the companies he defrauded and therefore the government did not commit a material breach by introducing evidence that there were more victims than those specifically named. View "United States v. Malone" on Justia Law

NBI honored White’s check, resulting in an overdraft of his payroll account of $382,000. Unable to recover the money, NBI closed White’s accounts and obtained a judgment in Indiana state court. White was also convicted on criminal charges. In his subsequent bankruptcy, NBI won its adversary proceeding. White sued current and former NBI officers under the Federal Reserve Act, 12 U.S.C. 503, which establishes civil liability for bank officers and directors who violate the Federal Reserve Act and the False Entry Statute. White alleged violation of the False Entry Statute, 18 U.S.C. 1005, by falsifying official bank reports in order to cover up unauthorized transfers made from White’s NBI business accounts. The district court dismissed for failure to allege that he relied on the false statements. The Seventh CIrcuit affirmed: White did not plead that he was harmed as a consequence of the alleged violations. Finding White’s appeal frivolous, the court granted a motion for sanctions.t View "White v. Keely" on Justia Law

Pu, a 28-year-old quantitative finance professional, worked for two financial institutions that traded stock and other assets for clients: “A” and Citadel. While working at each company, Pu copied proprietary software from his employer’s computer system to personal storage devices . The software allowed them to execute strategic trades at high speeds and were company trade secrets. Pu’s copying of the files was a significant data breach. Normally, crimes involving the theft of computer trade secrets lead to the sale of the data to, or the thief being hired by, a company that will use the data. Pu, however, used the data to conduct computerized stock market trades for himself and lost $40,000. Pu pleaded guilty to unlawful possession of a trade secret belonging to A and unlawful transmission of a trade secret belonging to Citadel and was sentenced to 36 months in prison and ordered him to pay over $750,000 in restitution. The Seventh Circuit vacated the sentence, stating that the district court’s factual findings did not support its conclusion that Pu intended to cause a loss of approximately $12 million and that the court erred by awarding restitution without evidence that reflected a complete accounting of the victims’ investigation costs. View "United States v. Pu" on Justia Law

Trudeau “spent his career hawking miracle cures and self-improvement systems of dubious efficacy.” The FTC sued him under consumer-protection laws. Trudeau entered a consent decree, promising not to misrepresent his books in TV infomercials. Later, Trudeau published The Weight Loss Cure “They” Don’t Want You to Know About and promoted it in infomercials, as “simple” and “inexpensive,” able to be completed at home, and not requiring food restrictions or exercise. The book described a regimen mandating prescription hormone injections and severe dietary and lifestyle constraints. The court imposed a civil contempt sanction and issued an order to show cause why Trudeau should not face imprisonment of up to six months. At Trudeau’s request, the case was reassigned. The new judge issued a new show-cause order, removing the six-month cap. Trudeau was sentenced to 10 years in prison. The Seventh Circuit affirmed, rejecting an argument based on the Speedy Trial Act, 18 U.S.C. 3161. More than 70 nonexcludable days elapsed between the date the government agreed to prosecute the first show-cause order and the commencement of trial. The Act applies only to crimes punishable by more than six months’ imprisonment. Because the first show-cause order capped the potential penalty at six months, the Act did not apply. The second show-cause order removed the cap, starting the clock, but Trudeau’s trial began within 70 days from that date. The court also rejected challenges to jury instruction on “willfulness,” the sufficiency of the evidence, evidentiary rulings, and the reasonableness of his sentence. View "United States v. Trudeau" on Justia Law

Segal, a lawyer, CPA, and insurance broker, and his company, were indicted for racketeering, mail and wire fraud, making false statements, embezzlement, and conspiring to interfere with operations of the IRS. Convicted in 2004, Segal was sentenced to 121 months in prison. After further proceedings, in 2011, he was resentenced to time served and ordered to pay $842,000 in restitution and to forfeit to the government his interest in the company and $15 million. In 2013, the parties entered a binding settlement that specified the final disposition of Segal’s assets. After the district judge approved the settlement the parties disagreed and returned to court. The agreement gave Segal two of eight insurance policies on his life outright and an option to purchase the others, but required that he exercise the option within six months of approval of the settlement. He opted to purchase one policy before the deadline and asked for an extension, claiming that the government had not promptly released money owed to him and had delayed his efforts to obtain information from the insurance companies. The Seventh Circuit affirmed refusal to extend the deadline, but reversed with respect to claims relating to Segal’s right to repurchase his shares of the Chicago Bulls basketball team. View "United States v. Segal" on Justia Law