Justia White Collar Crime Opinion Summaries

Ajayi, an electrical engineer, wanted to start a business selling MRI products in Africa. He incorporated GRI in Illinois and another company in Africa and sought investors. While traveling, he solicited a $45,000 investment from Brown. After returning home, Ajayi received a $344,657.84 check, payable to another company . He called Brown, who explained that the accounting department had made an error, told Ajayi to deposit the check, and stated that they would work out a way for Ajayi to refund the difference. Ajayi deposited the check through an ATM into his GRI account, which previously had a balance of $90.08, After the check cleared, Brown flew to Chicago and demanded repayment. Pursuant to Brown’s instructions, between December 9 and December 12, 2009, Ajayi wrote at least five checks to himself from the GRI account and cashed them. Ajayi was convicted of five counts of bank fraud, 18 U.S.C. 1344(1) and (2) and money laundering, 18 U.S.C. 1957(a) and was sentenced to 44 months’ imprisonment. The Seventh Circuit found that there was sufficient evidence that Ajayi knew that the check was altered and upheld the exclusion of the emails, but concluded that four bank fraud counts were multiplicitous. View "United States v. Ajayi" on Justia Law

Defendant pleaded guilty to fraud consisting of having abused her position as a Chicago public-school board member by accepting kickbacks of more than $500,000 from bus companies to which she steered transportation contracts worth $21 million. The parties stipulated that the value of the benefit received from the fraud was $7-$20 million, and so the guidelines range would have been 360 months to life. The guidelines in effect at the time required a 20-level enhancement for honest services fraud when “the value of the payment, the benefit received or to be received in return for the payment, the value of anything obtained or to be obtained by a public official or others acting with a public official, or the loss to the government from the offense, whichever is greatest,” was between $7 and $20 million, U.S.S.G. 2C1.1(b)(2), 2B1.1(b), but the statutory maximums for the two counts were 20 years and 3 years respectively, and that changed the range to 276 months. The judge imposed a below-guidelines sentence of 120 months, ordered the defendant to pay restitution of $7.2 million, and imposed a year of supervised release, which the judge may have thought mandatory. The Seventh Circuit reversed, finding the district court’s explanation inadequate. View "United States v. Harper" on Justia Law

A jury found Ferrell, a licensed psychologist, and Bryce, Ferrell’s employee, guilty of six counts of healthcare fraud, 18 U.S.C. 1347. Ferrell was sentenced to 88 months of imprisonment. The Seventh Circuit affirmed, upholding the district court’s refusal to admit two out-of-court statements made by Bryce’s brother (also Ferrell’s employee), and contained in a voicemail and an email. The district court held that these statements were hearsay and did not fall within Rule 804(b)(3)’s hearsay exception. The district court held that although the brother was unavailable to testify, the statements were not against his interest and the corroborating circumstances did not indicate that his statements were trustworthy. The court also upheld admission of testimony by another doctor concerning Ferrell’s conduct while in Texas. The court found that the testimony did not constitute impermissible character evidence under Fed. R. Evid. 404(b). View "United States v. Ferrell" on Justia Law

Faruki, a computer technology consultant, met Tishfield in 2006 while Tishfield was working as a portfolio manager at SAC Capital, a Connecticut-based hedge fund. In 2010, Faruki informed Tishfield that he had launched his own investment fund, Neural Markets, using mathematically-driven trading strategies. Faruki stated that he was currently investing his own money in the fund to establish a trading history he could pitch to prospective investors. He told Tishfield that in December 2009 his fund had achieved investment returns exceeding 12%, and that his investment return in January 2010 was 32%. Faruki made several other false statement about the fund and about his own credentials. In December 2010, Tishfield received his first account statement, which reported significant losses associated with his $1 million investment. Faruki was charged with seven counts of wire fraud, 18 U.S.C. 1343. The Seventh CIrcuit affirmed his conviction, rejecting challenges to the sufficiency of the evidence and to evidentiary rulings. View "United States v. Faruki" on Justia Law

In 1997, Player and his wife established EAR, purportedly to refurbish high-tech machinery . In 2005-2009, EAR defrauded creditors and the couple obtained $17 million in fraudulent transfers from EAR. Before the fraud was detected, they used funds for their personal benefit and spent large amounts at the Horseshoe Casino, Player was known to “walk with chips,” rather than cashing them in, and giving chips to a third party to cash in. Neither is illegal, but are potentially indicative of “structuring” transactions to avoid triggering the $10,000 reporting requirement, a federal crime, 31 U.S.C. 5324. When the fraud was discovered, EAR filed for Chapter 11 bankruptcy. The plan administrator sought to avoid transfers to Horseshoe, alleging that Horseshoe had reasons to believe that Player’s money came from EAR. Horseshoe objected to a motion to compel under 31 C.F.R. 1021.320(e), which governs Suspicious Activity Reports filed by financial institutions, including casinos, to detect money laundering and other violations of the Bank Secrecy Act. The district court ordered an ex parte filing by Horseshoe, which was inaccessible to EAR. The Seventh Circuit affirmed denial of the motion, finding that Horseshoe accepted the transfers without knowledge of the fraud at EAR and could not have uncovered the fraud if it had investigated. View "Brandt v. Horseshoe Hammond, LLC" on Justia Law