Justia White Collar Crime Opinion Summaries

Repak was the Executive Director of the Johnstown Redevelopment Authority (JRA), which receives federal and state funding. JRA’s Board of Directors awards contracts to remediate industrial proprieties and issues grants, relying on the Executive Director for recommendations. Repak solicited from JRA contractors, items such as concert tickets, sporting event tickets, and golf outings. One contractor testified, Repak “would sometimes . . . provide some innuendos like, ‘I’m reviewing some invoice here of yours.’” In 2009, JRA contractor EADS replaced the roof on Repak’s home at no cost to Repak and another JRA contractor performed excavating services at a gym owned by Repak’s son. Repak was convicted under the Hobbs Act, 18 U.S.C. 1951(a), for knowing obstruction, delay, or effect on commerce “by extortion” through the solicitation and receipt of goods and services, “which were not due him or his office, and to which he was not entitled, . . . in exchange for [his] official action and influence … to facilitate the award of [JRA] contracting work,” and of violations of the federal program bribery statute, 18 U.S.C. 666(a)(1)(B). The Third Circuit affirmed. While the district court’s Rule 404(b) analysis, was lacking, even under a proper Rule 404(b) analysis, the government’s other-acts evidence was admissible. View "United States v. Repak" on Justia Law

Doe was president and “sole proprietor” of Company A, but a 2008 document purports to memorialize Doe’s sale of all shares to Company B for $10,000. Numerous filings and tax documents suggested that Doe maintained control and ownership of Company A after the transfer. Multiple individuals have sued Doe and his businesses in state courts. Doe and the companies were investigated by a federal grand jury. The government obtained access to Doe’s email. Doe filed an interlocutory appeal to prevent its disclosure. While the appeal was pending, the district court granted permission to present the email to the grand jury, finding that although the email was protected by the work product privilege, the crime-fraud exception applied; in 2016, the grand jury returned an indictment, charging conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act, conspiracy, mail fraud, wire fraud, and money laundering. The Third Circuit initially dismissed an interlocutory appeal, but, on rehearing, reversed, concluding that, while the grand jury investigation continues, it retains jurisdiction, and that the crime-fraud exception did not apply. The court stripped an attorney’s work product of confidentiality based on evidence suggesting only that the client had thought about using that product to facilitate fraud, not that the client had actually done so. An actual act to further the fraud is required before attorney work product loses its confidentiality. View "In re: Grand Jury Matter #3" on Justia Law

From 2009-2012, the federal government appropriated $150 million annually to the government of the Virgin Islands; Willis was Executive Director of the Legislature for the Virgin Islands, with authority to administer contracts. During Willis’s tenure, the legislature’s main building underwent major renovations. Willis was substantially involved in securing contractors. Three contractors later testified that they gave cash or other items of value to Willis to secure more government work or to ensure payment of their invoices. In 2010, the U.S. Department of the Interior audited the legislature’s administrative section while the renovations were taking place and concluded that the legislature had mismanaged public funds. After an investigation, an indictment issued for Willis’s prosecution on extortion charges (18 U.S.C. 1951(a)) and bribery charges (18 U.S.C. 666(a)(1)). The Third Circuit affirmed his conviction and five-year prison term, upholding admission of evidence of Willis’s prior acceptance of bribes. The indictment adequately alleged all required elements of bribery: the parties, the relevant amounts of money exchanged, where the illegal transactions occurred, that Willis used his public position unlawfully, specific details of each transaction, and improper purposes under the federal statutes. The government proved a sufficient nexus between Willis’s conduct or his status as Executive Director and a corresponding effect on federal funds. View "United States v. Willis" on Justia Law

Company A was incorporated in Florida in 2008. Doe was its president and “sole proprietor,” but a November 2008 document purports to memorialize Doe’s sale of all shares of Company A to Company B for $10,000. Numerous filings and tax documents suggested that Doe maintained control and ownership of Company A after the transfer. Multiple individuals have sued Doe and his businesses in state courts around the country based on Doe’s business practices. Doe and the companies became the subjects of a federal grand jury. The government obtained access to Doe’s email. Doe filed an interlocutory appeal to prevent its disclosure. While the appeal was pending, the district court granted permission to present the email to the grand jury, finding that although the email was protected by the work product privilege, the crime-fraud exception to that doctrine applied; in 2016, the grand jury returned a 17-count indictment, charging conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act, conspiracy, mail fraud, wire fraud, and money laundering. The Seventh Circuit dismissed the interlocutory appeal for lack of jurisdiction. The damage of disclosure has already been done. Should a jury convict the defendants, they will have another, equally adequate opportunity to claim privilege. View "In re: Grand Jury Matter #3" on Justia Law

In 2010, Free, as the sole proprietor of Electra Lighting, filed a voluntary bankruptcy petition. He also owns Freedom Firearms, selling WWII-era guns. After Free fell behind on payments on business-related properties, the lender purchased them in foreclosure; Free purportedly filed for bankruptcy in an effort to “stay” the sale and “work out an agreement.” He had sufficient assets to pay his debts. He then hid assets worth hundreds of thousands of dollars from the Bankruptcy Court. Free was eventually convicted for multiple counts of bankruptcy fraud. His creditors received 100 cents on the dollar. The Sentencing Guidelines increase a fraudster’s recommended sentence based on the amount of loss he causes, or intends to cause. The district court treated the estimated value of the assets that Free concealed and the amount of debt sought to be discharged as the relevant “loss” under the Guidelines. The Third Circuit vacated. On remand, the court must determine whether Free intended to cause a loss to his creditors or what he sought to gain from committing the crime. Free will not necessarily receive a lower sentence on remand. Free’s repeated lying to the Bankruptcy Court and his manifest disrespect for the judicial system may merit an upward variance from the Guidelines. View "United States v. Free" on Justia Law

With little formal education (a high school GED) Miller passed several securities industry examinations and “maintained a public persona of a very successful entrepreneur.” Miller sold investors over $41 million in phony “promissory notes,” which were securities under the Securities Act of 1933 and the Securities Exchange Act of 1934, 15 U.S.C. 77b(a)(1), 78c(a)(10), and not exempt from federal or state registration requirements. Miller did not register the notes; he squandered the money, operating a Ponzi scheme. Miller pled guilty to one count of securities fraud, 15 U.S.C. 78j(b), and one count of tax evasion, 26 U.S.C. 7201. He was sentenced to 120 months’ imprisonment. The Third Circuit affirmed, rejecting an argument that the court improperly applied the Sentencing Guidelines investment adviser enhancement, U.S.S.G. 2B1.1(b)(19)(A)(iii). The court interpreted the Investment Advisers Act of 1940, 15 U.S.C. 80b-2(a)(11) to apply broadly, with exceptions that do not apply to Miller. The court also rejected arguments that the government breached Miller’s plea agreement and that his sentence was substantively unreasonable. View "United States v. Miller" on Justia Law

Moreno was involved in a mortgage-fraud scheme as an appraiser who supplied inflated appraisals to other members of the scheme in exchange for money. He was also involved as broker, buyer, or seller, in other fraudulent transactions. Moreno was found guilty of five counts of wire fraud and two counts of conspiracy to commit wire fraud and sentenced to 96 months’ imprisonment. The Third Circuit affirmed the conviction, but vacated the sentence. The court rejected claims of violation of the Confrontation Clause and the hearsay rule, based on the testimony of a cooperating witness, who read statements of a non-testifying U.S. Secret Service Special Agent into the record. The court also upheld a finding that there were more than 50 victims and a resulting application of a four-level enhancement under the Sentencing Guidelines. The court erred in permitting the prosecutor, during Moreno’s sentencing allocution and without leave of court, to engage in a vigorous cross-examination of Moreno. View "United States v. Moreno" on Justia Law