Justia White Collar Crime Opinion Summaries

Articles Posted in US Court of Appeals for the Second Circuit
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The Second Circuit affirmed defendants' convictions for honest services fraud and honest services fraud conspiracy, conspiracy to violate the Travel Act, and conspiracy to commit money laundering. However, the court held that the district court failed to employ a sound methodology to determine the victim's actual loss for restitution; the district court erred in ordering forfeiture of an amount that exceeded the amount of the criminal proceeds; and, under the circumstances of this case, Honeycutt v. United States, 137 S. Ct. 1626 (2017), did not foreclose ordering defendants jointly and severally to forfeit the proceeds each possessed as a result of their crimes. Accordingly, the court affirmed in part, vacated in part, and remanded for further proceedings. View "United States v. Tanner" on Justia Law

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Shortly after defendant was convicted of conspiracy to commit wire fraud and securities fraud, the Second Circuit decided United States v. Litvak, 889 2 F.3d 56 (2d Cir. 2018) (Litvak II), which held in the context of a similar prosecution that the erroneous and idiosyncratic viewpoint of a defendant's counterparty could not be relevant to the objective, "reasonable investor" standard for materiality in a securities fraud prosecution. The district court relied on Litvak II to grant defendant's motion for a new trial on the basis that counterparty testimony had been improperly admitted against defendant at trial. The court held, however, that the counterparty testimony at defendant's trial was not improperly admitted and did not implicate the court's holding in Litvak II. In this case, the testimony did not reflect the counterparty's idiosyncratic and erroneous belief, and the testimony was relevant to the jury's assessment of materiality under FRE 401. Furthermore, the testimony did not advance the government's theory of materiality in an impermissible manner. The court held that, even if the admission of the testimony did constitute error, the error was harmless. Finally, the district court's cumulative prejudice analysis did not provide a valid alternative ground for affirmance. Accordingly, the court reversed and remanded. View "United States v. Gramins" on Justia Law

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The Second Circuit affirmed defendant's conviction of wire fraud and conspiracy to commit wire fraud in connection with a foreign currency exchange transaction with Cairn Energy. Defendant was the former global head of the foreign exchange trading desk at the investment bank HSBC. The court held that there was sufficient evidence to convict defendant on the right‐to‐control theory because a reasonable jury could conclude that his misrepresentations to Cairn related to the price of the transaction, which was an essential element of the parties' bargain, and were capable of influencing Cairn's decisionmaking. View "United States v. Johnson" on Justia Law

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Defendant appealed the district court's denial of the government's motion under Federal Rules of Criminal Procedure 35(b)(2)(B) to resentence defendant based on his substantial assistance in the prosecution of others. The Second Circuit rejected the government's argument that the court lacked jurisdiction to hear the appeal. In a separate summary order filed under seal, the court affirmed the judgment on the merits. View "United States v. Doe" on Justia Law

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Defendant appealed the district court's imposition of a condition of supervised release that required him to perform 300 hours of community service a year over his term of supervision for a total of 695 hours. Defendant's conviction stemmed from his role in two different fraud schemes. The Second Circuit vacated and remanded for resentencing, holding that the challenged condition was not reasonably related to any of the relevant sentencing factors, was inconsistent with the pertinent Guidelines policy statements, and involved a greater deprivation of liberty than was reasonably needed to achieve the purposes of sentencing. The court held that the pertinent policy statement issued by the Sentencing Commission must be read to advise that courts should generally refrain from imposing more than a total of 400 hours of community service as a condition of supervised release. View "United States v. Parkins" on Justia Law

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The Second Circuit affirmed defendant's conviction of paying and conspiring to pay bribes, in violation of 18 U.S.C. 371, 666, and the Foreign Corrupt Practices Act (FCPA), and gratuities to United Nations officials and of related money laundering. Defendant's charges stemmed from his sustained effort to bribe two U.N. officials to designate one of his properties as the permanent site of an annual U.N. convention. The court held that the word "organization" as used in section 666, and defined by 1 U.S.C. 1 and 18 U.S.C. 18, applies to all non‐government legal persons, including public international organizations such as the U.N. The court also held that the "official act" quid pro quo for bribery as proscribed by 18 U.S.C. 201(b)(1), defined by id. section 201(a)(3), and explained in McDonnell v. United States, does not delimit bribery as proscribed by section 666 and the FCPA. Thus, the district court did not err in failing to charge the McDonnell standard for the FCPA crimes of conviction. Insofar as the district court nevertheless charged an "official act" quid pro quo for the section 666 crimes, that error was harmless beyond a reasonable doubt. Finally, the evidence was sufficient to convict defendant, and the jury did not misconstrue the "corruptly" element of section 666 and the FCPA and the "obtaining or retaining business" element of the FCPA. View "United States v. Ng Lap Seng" on Justia Law

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The Second Circuit affirmed defendant's conviction for money laundering and conducting transactions in property criminally derived through bribery in the Republic of Guinea. The court held that McDonnell v. United States, 136 S. Ct. 2355 (2016), does not apply to Articles 192 and 194 of Guinea's Penal Code, and therefore defendant's claim that the jury instructions were improper because they did not include the definition of "official act" relative to a bribery conviction necessarily failed. The court also held that the evidence was sufficient to support a finding of a quid pro quo exchange necessary for defendant's conviction and that he committed an "official act" as defined in McDonnell. Finally, the court held that defendant's remaining evidentiary challenges failed and his other arguments were without merit. View "United States v. Thiam" on Justia Law

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The Second Circuit affirmed defendants' convictions of multiple counts arising out of their roles in the operation of an illegal Bitcoin exchange and a scheme to use a federal credit union for illegal purposes. The court held that the evidence was sufficient to convict Defendant Lebedev of wire fraud, bank fraud, and conspiracy to commit wire and bank fraud; the court rejected Defendant Gross' evidentiary challenges; there was no constructive amendment of the indictment; Gross' claim that his due process rights were violated based on government intimidation of witnesses was meritless; and there was no cumulative effect of the district court's errors causing Gross to be deprive of a fair trial. The court also held that the district court did not clearly err by applying a four level sentencing enhancement for Gross' role as an organizer or leader in the criminal activity under USSG 3B1.1, for commercial bribery under USSG 2B4.1, and for abuse of a position of trust by use of a special skill under USSG 3B1.3. Finally, the district court's findings as to the restitution order were not clearly erroneous. View "United States v. Lebedev" on Justia Law

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The Second Circuit affirmed defendant's conviction of securities fraud and wire fraud, finding no errors in the district court's jury instructions, admission of lay testimony, and calculation of loss. The court also held that, as a matter of law, forfeiture is not limited to the amount of funds acquired through illegal transactions in an insider‐trading scheme; rather, forfeiture may extend to appreciation of those funds. Accordingly, the court affirmed the district court's forfeiture calculation and order. Finally, Lagos v. United States, 138 S. Ct. 1684 (2018), was decided after defendant's sentence and addressed the categories of fees recoverable under the Mandatory Victims Restitution Act. Therefore, the court held that a limited remand to recalculate the restitution was appropriate. View "United States v. Afriyie" on Justia Law

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Plaintiffs filed suit alleging that defendants, while located in foreign nations, used the mail or wires to order fraudulent asset transfers from plaintiffs' New York bank accounts to defendants' own accounts. The district court held that all but one of the schemes were impermissibly extraterritorial under either civil RICO, 18 U.S.C. 1964(c), or the mail, wire, and bank fraud statutes plaintiffs cited as predicates to the civil RICO cause of action. The district court found the remaining scheme, standing alone, did not constitute a pattern of racketeering activity under RICO. At issue was whether the conduct violating the predicate statutes was extraterritorial, the application of civil RICO to plaintiff's alleged injuries was extraterritorial, and whether the surviving schemes amounted to a pattern of racketeering activity. The Second Circuit held that each of the schemes to defraud, except for the Sham Management Fees Scheme, calls for domestic applications of 18 U.S.C. 1962(c), 1962(d), 1341, 1343, and 1344(2). The court also held that the district court abused its discretion by dismissing the state law claims for lack of supplemental jurisdiction. Therefore, the court reversed and remanded for further proceedings. View "Bascuñán v. Elsaca" on Justia Law