Justia White Collar Crime Opinion Summaries

The question presented in this case is whether Appellants, a cannabis entrepreneur and two cannabis businesses, have standing to bring claims arising pursuant to the Racketeer Influenced and Corrupt Organizations Act (RICO), based on alleged harms to their cannabis business and related property. The district court granted Appellees’ motion to dismiss with prejudice, holding that Appellants lacked standing to bring their RICO claims. The court also dismissed Appellants’ Lanham Act claims on standing grounds as well as their state law claims, declining to exercise supplemental jurisdiction. Appellants appealed the district court’s order only as to their RICO claims.   The Ninth Circuit affirmed the district court’s dismissal. The panel held that while Appellants had Article III standing, they lacked statutory standing under RICO. As to Article III standing, the panel held that Appellants satisfied the injury requirement, which requires a showing of an invasion of a legally protected interest because cannabis-related property interests are recognized under California law. Appellees argued that Appellants’ alleged injuries were not redressable because they related to a cannabis business, which was illegal under the Controlled Substances Act. The panel held that the fact that Appellants sought damages for economic harms related to cannabis was not relevant to whether a court could, theoretically, fashion a remedy to redress their injuries. Further, the panel held that Appellants lacked statutory standing to bring their claims under RICO Section 1964(c).  The panel concluded that the statutory purpose of RICO and the congressional intent animating its passage conflicted with the California laws recognizing a business and property interest in cannabis. View "FRANCINE SHULMAN, ET AL V. TODD KAPLAN, ET AL" on Justia Law

Mongol Nation is an unincorporated association whose members include the official, or “full-patch,” members of the Mongols Gang. A jury convicted the association of substantive RICO and RICO conspiracy violations; it also found various forms of Mongol Nation property forfeitable. That property included the collective membership marks—a type of intellectual property used to designate membership in an association or other organization. The district court denied forfeiture of those marks, holding that the forfeiture would violate the First and Eighth Amendments.   The Ninth Circuit affirmed the district court’s judgment. The court explained that in Mongol Nation’s appeal, it argued for the first time that it is not an indictable “person” under RICO because the indictment alleges that the association was organized for unlawful purposes only. The panel concluded that this unpreserved argument is non-jurisdictional. The panel did not resolve the Government’s contention that Mongol waived it. The panel wrote that regardless of the merits of Mongol Nation’s argument, it mischaracterizes the allegations in the indictment.    On the Government’s cross-appeal of the order denying its second preliminary order of forfeiture, the panel did not need to decide whether forfeiture of the membership marks would violate the First and Eighth Amendments. Nor did the panel reach the question of whether the marks may be forfeitable without the transfer of any goodwill associated with the marks. The panel held that the forfeiture was improper for a different reason—the Government effectively sought an order seizing and extinguishing the Mongols’ right to exclusive use of its marks without the Government itself ever seizing title to the marks. View "USA V. MONGOL NATION" on Justia Law

In a case in which the Supreme Court vacated the Ninth Circuit’s decision filed April 7, 2020, and reported at 954 F.3d 1251 (9th Cir. 2020), the panel filed an amended order granting the government’s motion to reinstate portions of April 7, 2020, opinion, to the following extent:   The panel reversed the district court’s judgment on Counts Four (money laundering) and Ten (possession of a firearm in furtherance of a crime of violence). The panel affirmed—for the reasons explained in April 7, 2020, opinion—on all remaining Counts: One, Eight (conspiracy to commit Hobbs Act robbery); Two (Hobbs Act robbery); Three (possession of a firearm in furtherance of a crime of violence); and Nine (attempt to commit Hobbs Act robbery). The panel remanded to the district court for resentencing consistent with United States v. Taylor, 596 U.S. —, 2022 WL 2203334 (June 21, 2022), which held that attempted Hobbs Act robbery does not qualify as a “crime of violence” under 18 U.S.C. Section 924(c)(3)(A) because no element of the offense requires proof that the defendant used, attempted to use, or threatened to use force. View "USA V. MONICO DOMINGUEZ" on Justia Law

Defendant appealed his convictions for conspiracy to distribute a controlled substance, money laundering conspiracy, and conspiracy under the Racketeer Influenced and Corrupt Organizations Act of 1970 (RICO).   The Ninth Circuit affirmed Defendant’s convictions. The panel held that sufficient evidence supported Defendant’s conviction for money laundering conspiracy, which required the government to prove beyond a reasonable doubt that there was an agreement to commit money laundering, Defendant knew the objective of the agreement, and Defendant joined the agreement with the intent to further its unlawful purpose. Defendant did not dispute that the CRO conspired to launder money by transferring extortionate “taxes” collected by foot soldiers to incarcerated gang leaders.   The panel concluded that there was sufficient evidence that Defendant himself knew of and intended to support the CRO’s money laundering, and that he was not convicted solely on the basis of his CRO membership. The panel held that, as related to the money laundering conspiracy charge, the district court did not plainly err in instructing the jury, in the course of generally defining the term “knowingly,” that the government was “not required to prove that the defendant knew that his acts or omissions were unlawful.”   The panel held that a conspiracy conviction can stand if one of the objects is only factually, but not legally, insufficient. Thus, even if there had been insufficient evidence for money laundering conspiracy, the RICO conviction would still stand because there was sufficient evidence for the other two valid predicate activities, drug distribution conspiracy and extortion. View "USA V. ALEXIS JAIMEZ" on Justia Law

Plaintiff alleged that Defendants Kinetic Concepts, Inc., and its indirect subsidiary KCI USA, Inc. (collectively, “KCI”) submitted claims to Medicare in which KCI falsely certified compliance with certain criteria governing Medicare payment for the use of KCI’s medical device for treating wounds. The district court granted summary judgment to KCI, concluding that Plaintiff failed to establish a genuine issue of material fact as to the False Claims Act elements of materiality and scienter.   The Ninth Circuit reversed the district court’s summary judgment. The court agreed that compliance with the specific criterion that there be no stalled cycle would not be material if, upon case-specific review, the Government routinely paid stalled-cycle claims. In other words, if stalled-cycle claims were consistently paid when subject to case-specific scrutiny, then a false statement that avoided that scrutiny and instead resulted in automatic payment would not be material to the payment decision. The court concluded, however, that the record did not show this to be the case. The court considered administrative rulings concerning claims that were initially denied, post-payment and pre-payment audits of particular claims, and a 2007 report by the Office of Inspector General of the U.S. Department of Health and Human Services. The court concluded that none of these forms of evidence supported the district court’s summary judgment ruling.   The court held that the district court further erred in ruling that there was insufficient evidence that KCI acted with the requisite scienter and that the remainder of the district court’s reasoning concerning scienter rested on a clear failure to view the evidence in the light most favorable to Plaintiff. View "STEVEN HARTPENCE V. KINETIC CONCEPTS, INC." on Justia Law

Plaintiff, a Russian citizen who resides in Russia, filed a civil RICO suit against Defendant Russian citizen who resides in California, and eleven other defendants. After securing a foreign arbitration award against Defendant. Plaintiff obtained a judgment from a United States district court confirming the award and giving Plaintiff the rights to execute that judgment in California and to pursue discovery. Plaintiff alleged that Defendants engaged in illegal activity, in violation of RICO, to thwart the execution of that California judgment.   Consistent with the Second and Third Circuits, but disagreeing with the Seventh Circuit’s residency-based test for domestic injuries involving intangible property, the court held that the alleged injuries to a judgment obtained by Plaintiff from a United States district court in California were domestic injuries to property such that Plaintiff had statutory standing under RICO. The court concluded that, for purposes of standing under RICO, the California judgment existed as property in California because the rights that it provided to Plaintiff existed only in California. In addition, much of the conduct underlying the alleged injury occurred in or was targeted at California. View "VITALY SMAGIN V. COMPAGNIE MONEGASQUE DE BANQUE" on Justia Law

The government accused Orrock of tax evasion for concealing income he received from the sale of a vacant lot that he controlled. Rather than report the sale proceeds on his personal tax return, Orrock belatedly disclosed the sale in the tax return for a partnership that he also controlled. In that return, he significantly underreported the sale proceeds.The Ninth Circuit affirmed his conviction for evading the assessment of taxes, 26 U.S.C. 7201, rejecting Orrock’s argument that the statute of limitations barred his conviction because it ran from the date he filed his false personal tax return, not from the later act of filing the partnership return. Acknowledging that some language in precedent may seemingly support that argument, the court clarified that the statute of limitations for evasion of assessment cases under section 7201 runs from the last act necessary to complete the offense, either a tax deficiency or the last affirmative act of evasion, whichever is later. The court aligned evasion of assessment cases with evasion of payment cases and joined all the other circuit courts that have addressed the issue. The indictment was filed within six years of Orrock’s last affirmative act of evasion, the filing of the partnership tax return, and was timely. View "United States v. Orrock" on Justia Law

In schemes involving Sonoma County, California real estate, attorney Lonich conspired with Sonoma Valley Bank (SVB) officers Melland and Cutting to obtain fraudulent loans. The Ninth Circuit affirmed their convictions but vacated their sentences.The Sixth Amendment’s Speedy Trial Clause was not violated with respect to charges first brought in a superseding indictment. Even assuming the clock started with the original indictment, the delay caused no relevant prejudice. With respect to money laundering (18 U.S.C. 1957) and misapplication of bank funds (18 U.S.C. 656) charges, the district court’s general “knowingly” jury instruction was permissible. Sufficient evidence supported Melland’s conviction for bribery by a bank employee (18 U.S.C. 215(a)(2)). The district court appropriately instructed the jury that, to find Melland “acted corruptly,” the jury must determine he “intend[ed] to be influenced or rewarded in connection with any business or transaction of” a financial institution. Sufficient evidence also supported Lonich’s conviction for attempted obstruction of justice (18 U.S.C. 1512(c)(2)) by encouraging a straw buyer to mislead the grand jury about his role in the scheme.The district court applied several enhancements that dramatically increased the recommended Guidelines sentencing ranges, premised on a finding that defendants caused SVB to fail, making them responsible for associated losses. The court applied a “clear and convincing evidence” standard and noted the district court made no independent findings about the cause of the bank’s collapse. Restitution orders ($20 million) were premised on the same theory. View "United States v. Lonich" on Justia Law

In 2004-2005, the government filed forfeiture actions against a Credit Suisse account, owned by a corporation organized by Kim’s sister . The government alleged the $15 million account included proceeds of fraudulent activities involving Kim’s control of Optional. The district court ordered the seizure of the Account. The putative owners (Kim Claimants) contested the forfeiture. Optional, no longer under Kim's control, and DAS, an alleged victim of Kim's fraud, filed competing claims.In 2011, after years of parallel litigation, the Swiss Attorney General’s Office unfroze the Account and ordered the bank to wire $12.6 million to DAS, which filed a “Notice of Withdrawal of Claims” in the forfeiture proceeding. The court ordered that no party disturb money remaining in the Credit Suisse accounts and requested that the government investigate how the transfer to DAS was accomplished. The court declined to hold DAS in contempt, concluded that it “cannot compel DAS to surrender the funds,” then granted DAS’s opposed motion to be dismissed from the forfeiture proceedings.Optional, the sole remaining claimant, submitted a 2013 proposed final judgment, which the district court adopted. Five years later, Optional sought to hold DAS in contempt for allegedly violating that judgment because DAS failed to surrender the money transferred in 2011; the 2013 judgment had awarded Optional all funds in the Account as of August 2005. The Ninth Circuit affirmed the denial of the contempt motion. The 2013 judgment did not require DAS to turn over $12.6 million to Optional. At the 2013 trial, the court did not have before it, and did not undertake to decide, the competing claims to the transferred money. In awarding Optional “all funds” the district court unmistakably was referring only to the remaining funds. View "Optional Capital, Inc. v. DAS Corp." on Justia Law

Prasad owned and operated Maremarks, through which he filed petitions seeking H-1B status for nonimmigrant, foreign workers in specialty occupations to come to the U.S. as Maremarks’ employees performing work for Maremarks’ clients. Prasad falsely represented in the H-1B petitions that there were specific, bona fide positions available for the H-1B beneficiaries. Prasad was convicted of 21 counts of visa fraud, 18 U.S.C. 1546(a), and two counts of aggravated identity theft, 18 U.S.C. 1028A(a)(1). The district court ordered forfeiture under 18 U.S.C. 982(a)(6)(A)(ii): $1,193,440.87.The Ninth Circuit affirmed, rejecting Prasad’s argument that he did not “obtain” the entire $1,193,440.87 because he eventually paid portions of the money to the H1B beneficiaries. Prasad possessed the full $1,193,440.87 paid by the end-clients and had control over the money before he paid a percentage of it to employees. Considering the term “proceeds” in the context of the forfeiture statute, the statute’s punitive purpose, and its prior construction of virtually identical criminal forfeiture provisions, the court concluded that the term extends to receipts and is not limited to profit. Although the H-1B beneficiary employees performed legitimate work for end-clients, the portions of the money that Maremarks received for that work and subsequently paid to the beneficiary employees was, nonetheless, “obtained directly or indirectly from” Prasad’s unlawful conduct. View "United States v. Prasad" on Justia Law