Justia White Collar Crime Opinion Summaries

Defendant was convicted of conspiring to misappropriate and sell property of AOL and was ordered to pay AOL restitution. On appeal, defendant challenged the district court's denial of his motion for a reduction of his remaining restitution obligation by amounts recovered by AOL in civil litigation against other persons. The district court concluded that defendant failed to show that those amounts recovered by AOL were compensation for the same loss caused by defendant or that AOL has been fully compensated for the loss caused by him. The Second Circuit considered defendant's contentions and found that they were without merit. The court affirmed the judgment and held that the district court did not abuse its discretion in determining that justice required that defendant have the burden of proving that recoveries by AOL in civil litigation were for the same loss that he caused and that AOL has been compensated in full for the loss defendant caused. View "United States v. Smathers" on Justia Law

Defendant was convicted of one count of conspiracy to commit securities fraud and two counts of securities fraud in connection with an insider trading scheme. After defendant's conviction, the Second Circuit issued a decision in United States v. Newman, 773 F.3d 438 (2d Cir. 2014), which elaborated on the Supreme Court's ruling in Dirks v. S.E.C., 463 U.S. 646 (1983), concerning liability for a "tippee" who trades on confidential information obtained from an insider, or a "tipper." While defendant's appeal was pending, the Supreme Court issued a decision in Salman v. United States, 137 S. Ct. 420 (2016), which rejected certain aspects of Newman's holding. The court held that the logic of Salman abrogated Newman's "meaningfully close personal relationship" requirement and that the district court's jury instruction was not obviously erroneous. The court also held that any instructional error would not have affected defendant's substantial rights because the government presented overwhelming evidence that at least one tipper received a financial benefit from providing confidential information to defendant. Accordingly, the court affirmed the judgment. View "United States v. Martoma" on Justia Law

The Fifth Amendment's prohibition on the use of compelled testimony in American criminal proceedings applies even when a foreign sovereign has compelled the testimony.  When the government makes use of a witness who had substantial exposure to a defendant's compelled testimony, it is required under Kastigar v. United States, 406 U.S. 441 (1972), to prove, at a minimum, that the witness's review of the compelled testimony did not shape, alter, or affect the evidence used by the government.  A bare, generalized denial of taint from a witness who has materially altered his or her testimony after being substantially exposed to a defendant’s compelled testimony is insufficient as a matter of law to sustain the prosecution’s burden of proof. In this case involving the London Interbank Offered Rate (LIBOR), defendants were convicted of wire fraud and conspiracy to commit wire fraud and bank fraud. The Second Circuit held that defendants' compelled testimony was "used" against them, and this impermissible use before the petit and grand juries was not harmless beyond a reasonable doubt.  Accordingly, the court reversed the judgments of conviction and dismissed the indictment. View "United States v. Allen" on Justia Law

The Second Circuit vacated and remanded defendant's conviction for all counts related to the abuse of his public position by engaging in two quid pro quo schemes in which he performed official acts in exchange for bribes and kickbacks. Defendant, the former Speaker of the New York State Assembly, then laundered the proceeds of his schemes into private investment vehicles. Although the court rejected defendant's sufficiency challenges, the court held that the district court's instructions on honest services fraud and extortion did not comport with McDonnell v. United States, 136 S. Ct. 2355 (2016), and were therefore in error. McDonnell clarified the definition of an "official act" in honest services fraud and extortion charges. The court further held that this error was not harmless because it was not clear beyond a reasonable doubt that a rational jury would have reached the same conclusion if properly instructed, as was required by law for the verdict to stand. View "United States v. Silver" on Justia Law

Contractual disclaimers of reliance on prior misrepresentations do not render those misrepresentations immaterial under the criminal mail and wire fraud statutes. The Second Circuit affirmed defendant's conviction and sentence for conspiring to commit mail and wire fraud, substantive counts of both, and making false statements to a government agent. Defendant's conviction stemmed from his work at Vendstar, a company that sold valueless vending machine business opportunities to its victims. The court held that, although contractual disclaimers were relevant to the jury's determination of defendant's guilt, they did not render extra-contract misrepresentations immaterial as a matter of law. View "United States v. Weaver" on Justia Law