Justia White Collar Crime Opinion Summaries

Larry Householder, former Speaker of the Ohio House of Representatives, and lobbyist Matthew Borges were convicted of conspiring to solicit and receive nearly $60 million in exchange for passing a billion-dollar bailout for a failing nuclear energy company, FirstEnergy Corp. Householder used the funds to support his bid for the speakership and to recruit candidates who would vote for him. Borges played a role in the conspiracy by attempting to disrupt a referendum campaign against the bailout legislation.The United States District Court for the Southern District of Ohio at Cincinnati found both Householder and Borges guilty after a 26-day trial. Householder was convicted of multiple counts, including public-official bribery, private-citizen bribery, and money laundering. Borges was also found guilty of participating in the conspiracy.The United States Court of Appeals for the Sixth Circuit reviewed the case and found no reversible error, affirming the convictions. The court held that the evidence was sufficient to support the jury's findings that Householder and Borges engaged in a quid pro quo arrangement with FirstEnergy. The court also upheld the jury instructions, finding them consistent with applicable law, and rejected Householder's claims of insufficient evidence, right to counsel violations, and judicial bias. Additionally, the court found that the district court did not abuse its discretion in its evidentiary rulings or in admitting the guilty pleas of co-conspirators.Householder's sentence of twenty years, the statutory maximum under RICO, was deemed procedurally and substantively reasonable. The court emphasized the magnitude and severity of Householder's offense, referring to it as the "biggest corruption case in Ohio's history." Borges's arguments regarding the sufficiency of the evidence and the district court's evidentiary rulings were also rejected, and his conviction was affirmed. View "United States v. Householder" on Justia Law

Federal law enforcement investigated crystal-methamphetamine trafficking in rural eastern Tennessee in July 2019, leading them to Derrick Mitchell in Knoxville. In October 2020, authorities executed a search warrant at Mitchell’s home, finding drugs, firearms, ammunition, and cash. Mitchell pleaded guilty to conspiring to distribute methamphetamine and to commit money laundering. He waived his right to appeal unless the district court imposed an above-Guidelines sentence. The district court accepted his plea and imposed a below-Guidelines sentence.The United States District Court for the Eastern District of Tennessee accepted Mitchell’s plea agreement, which included a stipulation that no other upward enhancements would apply apart from a two-level increase for money laundering. However, the probation office recommended additional enhancements, including one for possessing a firearm in connection with a drug-trafficking offense. Mitchell’s counsel did not initially object to the presentence report, and the district court adopted it in full. Later, Mitchell’s counsel raised the issue of the firearm enhancement, but the court explained that the stipulations in the plea agreement were not binding.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court held that Mitchell’s appeal must be dismissed because he waived his right to appeal under the plea agreement, which was voluntarily accepted. The court found no plain error in the district court’s acceptance of Mitchell’s plea, as the court had adequately informed him of the consequences, and Mitchell understood the nature of his plea. The court also determined that the government did not breach the plea agreement, as it had not promised that only one enhancement would apply and had not objected to the probation office’s recommendation. The appeal was dismissed in accordance with the plea agreement’s appellate waiver provision. View "United States v. Mitchell" on Justia Law

Jeffrey Campbell, the owner and lead doctor at Physicians Primary Care (PPC), and Mark Dyer, a nurse practitioner at PPC, were indicted in 2020 on multiple counts related to overprescribing opioids and engaging in a scheme to seek fraudulent reimbursements from health insurance providers. The indictment included charges of unlawfully distributing controlled substances, conspiracy to unlawfully distribute controlled substances, health-care fraud, conspiracy to commit health-care fraud, and money laundering.The case proceeded to trial in the United States District Court for the Western District of Kentucky. The jury found Campbell guilty on several counts, including conspiracy to unlawfully distribute controlled substances, health-care fraud, conspiracy to commit health-care fraud, and money laundering. Dyer was also found guilty on similar counts. The district court sentenced Campbell to 105 months of imprisonment and Dyer to 60 months, followed by three years of supervised release for both. The district court also ordered restitution payments from both defendants.The United States Court of Appeals for the Sixth Circuit reviewed the case. The defendants challenged the jury instructions, sufficiency of the evidence, and the district court’s evidentiary rulings. The appellate court found that the jury instructions, although not fully compliant with the Supreme Court's decision in Ruan v. United States, were adequate under the court's precedents. The court also found sufficient evidence to support the convictions for conspiracy to unlawfully distribute controlled substances, health-care fraud, and money laundering. The court held that the district court did not abuse its discretion in admitting the testimony of government experts and other evidence.The appellate court affirmed the convictions and sentences, concluding that any potential errors in the district court’s intended-loss calculation for sentencing were harmless, as the sentences imposed were well below the applicable Guidelines range. The court also noted that the defendants failed to properly appeal the restitution order, making it outside the scope of the current appeal. View "United States v. Campbell" on Justia Law

Raymond Erker operated a Ponzi scheme that defrauded over fifty people, primarily senior citizens, out of nine million dollars. He created two companies, GenSource and Provident Securities, and solicited investments by falsely promising safe, guaranteed returns. Instead, Erker misappropriated the funds for personal use and risky investments. To cover his tracks, he created office fronts, set up call centers, and fabricated account statements. When his investments failed, he used new investor money to pay old investors, maintaining the illusion of returns. Eventually, he ran out of money and could not repay his investors.The United States District Court for the Northern District of Ohio indicted Erker on multiple counts, including conspiracy to commit mail and wire fraud, mail fraud, wire fraud, money laundering, and making a false statement under oath. After a four-day trial, a jury convicted him on all counts. The district court sentenced him to 262 months in prison and ordered restitution. Erker appealed, challenging his money laundering conviction, claiming ineffective assistance of counsel, and objecting to various aspects of his sentence.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court rejected Erker's argument that the government failed to prove he withdrew more than $10,000 of criminally derived property, noting that the evidence showed it was mathematically impossible for the withdrawals to include less than $10,000 of dirty money. The court also found no procedural error in the district court's sentencing, as it had considered the necessary factors and did not need to address national sentencing statistics. The court affirmed Erker's sentence but remanded for the district court to consider his eligibility for a sentence reduction under Amendment 821 to the Sentencing Guidelines. The court declined to address Erker's ineffective assistance of counsel claim on direct appeal. View "United States v. Erker" on Justia Law

Sardar Ashrafkhan owned and operated a fraudulent medical practice where doctors wrote and billed Medicare for fake prescriptions. These prescriptions were filled at specific pharmacies, which paid Ashrafkhan kickbacks. The scheme resulted in millions of dollars in fraudulent Medicare claims and the illegal sale of opioid-based drugs. Ashrafkhan was indicted in 2013 and tried in 2015, where the government presented evidence that he masterminded the scheme. The jury convicted him of drug conspiracy, health care fraud conspiracy, and money laundering. At sentencing, he received an adjustment for being an organizer or leader of a criminal activity involving five or more participants.The United States District Court for the Eastern District of Michigan sentenced Ashrafkhan to 276 months of imprisonment, varying downward from the guidelines range of 600 months. Ashrafkhan appealed, and the United States Court of Appeals for the Sixth Circuit affirmed his conviction and sentence. After his sentencing, the United States Sentencing Commission promulgated a new guideline, USSG § 4C1.1, which provides a two-point reduction in the offense level for defendants with no criminal history points, known as "zero-point offenders." Ashrafkhan moved for a sentence reduction under this new guideline, but the district court denied his motion, reasoning that his aggravating role adjustment rendered him ineligible for the reduction.The United States Court of Appeals for the Sixth Circuit reviewed the case and affirmed the district court's decision. The court held that to be eligible for the zero-point offender reduction under USSG § 4C1.1, a defendant must not have received an aggravating role adjustment and must not have engaged in a continuing criminal enterprise. Since Ashrafkhan received an aggravating role adjustment, he was ineligible for the reduction, regardless of whether he engaged in a continuing criminal enterprise. The court's interpretation was based on the plain text and context of the guideline, as well as precedent from similar cases. View "United States v. Ashrafkhan" on Justia Law

Sixth Circuit upholds allowing jury questions in online extortion case.Using the pseudonym “Dr. Evil,” an extortionist demanded $1 million in Bitcoin in exchange for an encryption key to Mitt Romney’s unreleased tax returns, which he claimed to have stolen from an accounting firm. He posted an image of Mike Myers’s Dr. Evil, from an Austin Powers movie, in the accounting firm’s Franklin, Tennessee office lobby. Agents traced the scheme to Brown, who had not actually stolen Romney’s returns. With 12 convictions for wire fraud and extortion, Brown was given a four-year prison sentence, and ordered to pay restitution. The Sixth Circuit affirmed his conviction, rejecting arguments that the search warrant lacked probable cause and that Brown was prejudiced by the judge allowing questions from the jury. The affidavit offered “a fair probability” that Brown’s home would contain evidence of the crime. Understanding the evidence required the jury to grasp the Secret Service’s forensic analysis of thumb drives, online posts, and Brown’s computers, Bitcoin, fingerprint matching, and digital photo manipulation-- enough complexity for a court to believe that permitting questions might aid jurors. The court vacated the sentence. Brown’s statements to prosecutors did not significantly impede the investigation, to justify the obstruction of justice enhancement. View "United States v. Brown" on Justia Law

Simmerman began working at Shoreline Federal Credit Union in 1987 and became manager in 2006. She began embezzling money, by complex manipulation of ledgers, in 1998 and was discovered in 2014. She pled guilty to embezzling $1,528,000, 18 U.S.C. 657, and to structuring the deposits of the money she stole to evade the reporting requirements of 31 U.S.C. 5313(a), in violation of 31 U.S.C. 5324(a)(3) and (d)(1). The district court assessed Simmerman’s total offense level at 28, based on a base offense level of seven, a 16-level increase for a loss amount between $1 million and $2.5 million, a two-level increase for sophisticated means, four-level increase for jeopardizing the soundness of a financial institution, a two-level increase for abuse of a position of trust, and a three-level reduction for acceptance of responsibility and a timely plea. With a criminal history category of I, Simmerman’s guideline range was 78-97 months and she was sentenced to 78 months on Count 1 and 60 months on Count 2, to be served concurrently. The Sixth Circuit affirmed, upholding the imposition of enhancements for sophisticated means (U.S.S.G. 2B1.1(10)(C)); jeopardizing the soundness of a financial institution (U.S.S.G. 2B1.1(b)(16)(B)(i)); and abuse of a position of trust (U.S.S.G. 3B1.3). View "United States v. Simmerman" on Justia Law

Between 2012 and 2014, three University of Michigan students (plaintiffs) rented rooms from Alawi, which collected $2550 in security deposits from the three. When they moved out, they received their security deposits back, minus small deductions for minor damages to the properties. Plaintiffs believed that Alawi had not complied with Michigan law, which requires landlords to deposit security deposits in a regulated financial institution and to provide the address of that institution to the tenant. The plaintiffs sued Alawi for $6.6 million on behalf of a putative class of six years’ worth of tenants, alleging violations of Racketeer Influenced and Corrupt Organizations Act (RICO) and Michigan law; alleging that Alawi was not entitled to hold security deposits at all (given these alleged breaches of Michigan law), and that knowingly taking security deposits anyway constituted a pattern of federal wire, mail, and bank fraud. The Sixth Circuit affirmed dismissal, finding that the plaintiffs lacked standing to bring the RICO claim. The complaint failed to articulate any concrete injury; its allegations were too vague to meet the particularity requirement of fraud allegations under Civil Rule 9(b). View "Wall v. Michigan Rental" on Justia Law

The Internal Revenue Service classified Ballard, a securities broker, as a non-filer in 2008 and investigated. Ballard lied about his income, hid money in family members’ bank accounts, and filed then dismissed several Chapter 13 bankruptcy petitions, attempting to avoid paying $848,798 in taxes arising from his income between 2000 and 2008. He eventually pled guilty to violating 26 U.S.C. 7212(a), which prohibits “corruptly . . . obstruct[ing] or imped[ing] . . . administration of [the tax laws].” Ballard urged the court to use the U.S.S.G. for obstruction of justice. The district court rejected Ballard’s argument that he never intended to evade paying his taxes but was merely delaying the payments and used the tax evasion guideline to calculate a higher offense level and an increase in the sentencing range from eight–14 months to 24–30 months. Ballard was sentenced to 18 months’ incarceration. The Sixth Circuit affirmed. What matters in the choice between guidelines sections is which section is more precisely tailored to reflect offense characteristics—like tax evasion and tax loss—and which section covers a more closely related group of crimes. What Ballard did, and what the government charged, was a lie to the tax collector about his earnings. View "United States v. Ballard" on Justia Law

The accreditation of White’s travel agency, CTC, was revoked in 2003 after audits conducted by United Airlines uncovered fraudulent ticketing schemes that cost the airline $100,000 in airfares. White continued working as a subcontractor for other travel agencies and continued to obtain fraudulent ticket fares by providing false information about her clients’ ages, possession of discount certificates, and military status. White charged service fees and airfare directly to her clients’ credit cards, sometimes for persons other than those clients, and sometimes without their permission. When travel agencies violate an airline’s fare policy and cause financial loss, the airline issues Agency Debit Memoranda (ADM), requiring payment. A travel agent testified that within two years, his agency received more than $100,000 in ADMs based on airfare that White booked. When White was asked for proof that her customers qualified for military discounts, she created false Armed Forces Identification cards using customers’ real names and dates of birth. The airlines determined that the cards were fraudulent and notified the Secret Service. White was charged with wire fraud and aggravated identity theft. The district court permitted White to examine witnesses about actual repayments that were made to victims; White was not permitted to disclose loss-recoupment negotiations that took place long after White was confronted by her victims. White was sentenced to a total of 94 months in prison. The Sixth Circuit affirmed, rejecting arguments the district court read an improper definition of the term “use” into the aggravated identity theft statute; erred in refusing to admit evidence of White’s intention to repay some of the losses; and erred in calculating victims’ losses. View "United States v. White" on Justia Law