Justia White Collar Crime Opinion Summaries

Articles Posted in US Court of Appeals for the Seventh Circuit
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O’Brien was convicted of mail fraud, 18 U.S.C. 1341, and bank fraud, 18 U.S.C. 1344, based on a 2004-to-2007 scheme in which O’Brien misrepresented her income and liabilities to cause lenders to issue and refinance loans related to two Chicago investment properties O’Brien owned., O’Brien was a licensed attorney with a background and experience in the real estate industry, including as a registered loan originator, mortgage consultant, and licensed real estate broker. The Seventh Circuit affirmed, rejecting O’Brien’s arguments that the charges against her were duplicitous and that under a properly pled indictment the statute of limitations would have barred three of the four alleged offenses. She also argued that the district court should not have admitted evidence offered to prove those time-barred offenses and that there was insufficient evidence to support the jury’s guilty verdict. The government appropriately acted within its discretion to allege an overarching scheme to commit both bank fraud and mail fraud affecting a financial institution. Each count included an execution of the fraudulent scheme within the applicable 10-year statute of limitations, and the jury’s guilty verdict rested upon properly admitted and sufficient evidence. View "United States v. O'Brien" on Justia Law

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Before acquiring cars for resale, Elite obtained financing; its lenders held the title of each car until it received payment for the car. Lenders dispatched auditors to ensure the dealership was not selling cars without repaying the loan after each sale. From 2012-2015 Elite’s employees obtained copies of car titles from the Indiana Bureau of Motor Vehicles online portal. If a copy could not be acquired, employees could avoid asking lenders to release car titles by continually issuing the customer temporary license plates. Employees would call customers and request that their cars be returned to the lot for a free oil change before an auditor’s inspection or would lie to the auditor, saying that the car was out for a test drive or repairs. Elite’s employees also defrauded consumer lenders by helping customers submit fraudulent applications and defrauded insurance companies by using a chop shop behind the dealership to disassemble their own vehicles before reporting the vehicles as stolen. Elite employee Dridi was convicted of conspiring to violate the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1962(d), and interstate transportation of stolen property, 18 U.S.C. 2314, sentenced to 72 months in prison, and ordered $1,811,679.25 in restitution. The Seventh Circuit affirmed Dridi’s prison sentence but vacated the restitution order, The district court should have made specific factual findings about Dridi’s participation in the conspiracy. View "United States v. Dridi" on Justia Law

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Bowling worked for the City of Gary, Indiana for 25 years, eventually becoming a network administrator, with access to the email system. Her responsibilities included ordering the city's computer equipment. Bowling ordered 1,517 Apple products, totaling $1,337,114.06. She sold iPads and MacBooks for cash. To conceal her scheme, Bowling submitted duplicate invoices from legitimate purchases. Eventually, the fraudulent purchases outstripped the duplicate invoices she could process and one vendor, CDW, turned the city’s account over to a senior recovery analyst, Krug. Krug contacted Green, the city’s controller and sent Green invoices via FedEx. Bowling intercepted the package, accessed Green’s email account, and sent a fabricated message to Krug to reassure CDW but her scheme unraveled. The Seventh Circuit affirmed her conviction for theft from a local government that received federal funds, 18 U.S.C. 666, and her 63-month sentence. The federal funds element was satisfied; the parties stipulated that Gary as a whole received more than $10,000 in federal benefits in a one-year period. Krug’s testimony about the email was direct evidence of Bowling’s attempt to stall the city’s ultimate discovery of her fraud; there was no error in admitting the testimony under Rule 404(b). A two-level obstruction of justice sentencing enhancement was justified because Bowling faked mutism, causing a one-year delay in the proceedings. View "United States v. Bowling" on Justia Law

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Hernandez co-founded the Trust and marketed it as a company designed to assist homeowners struggling to pay their mortgages. She and her codefendants promised prospective “members” that, in exchange for fees of $3,500-$10,000, the Trust would negotiate with their lenders to take over their mortgages and stop or prevent foreclosure proceedings. The Trust promised to refund the fees if it could not purchase the mortgages. More than 50 homeowners became members and paid fees. In 2013, Illinois authorities discovered that the Trust was not licensed and did not have enough funds to purchase a single mortgage. Hernandez and her codefendants had spent the fees (more than $220,000) on meals, travel, and vehicles. The Trust did not help any homeowners; at least three homeowners who paid the Trust had their homes foreclosed on. A jury found Hernandez guilty of mail fraud. The Seventh Circuit affirmed, rejecting arguments that the government did not prove that she used the mails in furtherance of the scheme to defraud and that the district court improperly delegated its authority to the Bureau of Prisons by not entering a specific restitution payment schedule for her while serving her prison sentence. There was sufficient evidence to support the verdict and the court permissibly deferred Hernandez’s restitution payments until after her release. View "United States v. Hernandez" on Justia Law

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Simon, a CPA, was convicted of filing false tax returns, mail fraud related to financial aid, and federal financial aid fraud. The court imposed a prison term, and restitution of $886,901.69 to the IRS, $48,070.35 to the Department of Education, $17,000 to Canterbury School, and $101,600 to Culver Academies. Simon made no objections to the restitution. The Seventh Circuit affirmed Simon’s convictions. Simon had not challenged his restitution obligations. Simon later unsuccessfully moved to vacate his conviction, alleging ineffective assistance of counsel, but not with respect to restitution. At the government's request, the court removed Canterbury as a payee, directing Simon’s restitution payments to Culver (private victims receive restitution ahead of the government, 18 U.S.C. 3664(i)) and approved an updated balance of $48,376, without a hearing. Days later, Simon received notice of the order. Seven months later, Simon moved for reconsideration, arguing that he had a due process right to be heard on the government’s motion and that the amended balance constituted a new obligation. The schools had disclaimed any interest in restitution. Simon urged the court to eliminate his restitution and requested that the court strike all restitution to the Department of Education, claiming that his daughter had paid off her student loans so the Department was no longer at risk. The Seventh Circuit affirmed. Most of Simon’s challenges could and should have been raised at sentencing and on direct appeal and were waived; the remainder were untimely. View "United States v. Simon" on Justia Law

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Grayson does business under the name Gire Roofing. Grayson and Edwin Gire were indicted for visa fraud, 18 U.S.C. 1546 and harboring and employing unauthorized aliens, 8 U.S.C. 1324(a)(1)(A)(iii). On paper, Gire had no relationship to Grayson as a corporate entity. He was not a stockholder, officer, or an employee. He managed the roofing (Grayson’s sole business), as he had under the Gire Roofing name for more than 20 years. The corporate papers identified Grayson’s president and sole stockholder as Young, Gire’s girlfriend. Gire, his attorney, and the government all represented to the district court that Gire was Grayson’s president. The court permitted Gire to plead guilty on his and Grayson’s behalf. Joint counsel represented both defendants during a trial that resulted in their convictions and a finding that Grayson’s headquarters was forfeitable. Despite obtaining separate counsel before sentencing, neither Grayson nor Young ever complained about Gire’s or prior counsel’s representations. Neither did Grayson object to the indictment, the plea colloquy, or the finding that Grayson had used its headquarters for harboring unauthorized aliens. The Seventh Circuit affirmed. Although Grayson identified numerous potential errors in the proceedings none are cause for reversal. Grayson has not shown that it was deprived of any right to effective assistance of counsel that it may have had and has not demonstrated that the court plainly erred in accepting the guilty plea. The evidence is sufficient to hold Grayson vicariously liable for Gire’s crimes. View "United States v. Grayson Enterprises, Inc." on Justia Law

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In 2011-2016, Collins was the executive director of the Kankakee Valley Park District. The Park District, which is not tax-exempt, works with the Kankakee Valley Park Foundation, which does have tax-exempt status and raises funds for Park District programs. Collins served as treasurer for the Foundation. It came to light that he had been lining his own pockets with the Park District and Foundation’s money. He pleaded guilty to mail and wire fraud, 18 U.S.C. 1341 and 1343, and was sentenced to concurrent terms of 42 months’ imprisonment, two-year terms of supervised release, and overall restitution of $194,383.51. The Seventh Circuit affirmed, concluding that the district court did not err in calculating his sentencing range and that Collins forfeited the right to complain about the restitution because he failed to file a timely notice of appeal from the district court’s amended judgment. The actual loss amount easily exceeded $150,000, which is the amount associated with a 10-level boost in the base guideline level for U.S.S.G. 2B1.1. More than a guilty plea is necessary before a district court ought to award a discount for acceptance of responsibility. The court fully supported its factual finding that Collins had not fully acknowledged his crimes. View "United States v. Collins" on Justia Law

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Around 2004, LeBeau's health club located on 10 acres in Aurora, Illinois, ran into difficulties. LeBeau teamed up with Bodie to redevelop the land as a condominium project. Bodie ran two mortgage companies. They submitted a loan application to Amcore, a federally insured financial institution. The bank gave them a $1,925,000 mortgage loan. LeBeau and Bodie executed full personal guarantees on the loan and listed Bodie’s two companies as guarantors. LeBeau failed to disclose more than $130,000 in outstanding personal loans. The two fell behind on the loan and obtained a forbearance agreement (later amended) from Amcore. The two men were indicted in 2014 on multiple counts of bank fraud and making false statements to the bank in connection with the loan and forbearance agreements. In 2017, they were convicted. The court sentenced each one to 36 months’ imprisonment and restitution of more than a million dollars. The Seventh Circuit affirmed, rejecting arguments that the district court erred by failing to give the jury an instruction on materiality for the bank-fraud offenses; that the court should not have admitted evidence related to certain victims’ losses in the scheme and their status as prior victims of fraud; and that LeBeau received ineffective assistance of counsel at the sentencing stage, where his lawyer failed to challenge the amount of restitution. The court also rejected Bodie’s argument that his superseding indictment was time-barred and his challenge to the sufficiency of the evidence. View "United States v. Lebeau" on Justia Law

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The Drug Enforcement Administration investigated Dr. Ley and his opioid addiction treatment company, DORN, conducted undercover surveillance, and decided Ley did not have a legitimate medical purpose in prescribing Suboxone. Indiana courts issued warrants, culminating in arrests of four physicians and one nurse and seven non-provider DORN employees. Indiana courts dismissed the charges against the non-providers and the nurse. Ley was acquitted; the state dismissed the charges against the remaining providers. DORN’s providers and non-provider employees sued, alleging false arrest, malicious prosecution, and civil conspiracy. The district court entered summary judgment for the defendants, holding probable cause supported the warrants at issue. The Seventh Circuit affirmed as to every plaintiff except Mackey, a part-time parking lot attendant. One of Ley’s former patients died and that individual’s family expressed concerns about Ley; other doctors voiced concerns, accusing Ley of prescribing Suboxone for pain to avoid the 100-patient limit and bring in more revenue. At least one pharmacy refused to fill DORN prescriptions. Former patients reported that they received their prescriptions without undergoing any physical exam. DORN physicians prescribed an unusually high amount of Suboxone; two expert doctors opined that the DORN physicians were not prescribing Suboxone for a legitimate medical purpose. There was evidence that the non-provider employees knew of DORN’s use of pre-signed prescriptions and sometimes distributed them. There were, however, no facts alleged in the affidavit that Mackey was ever armed, impeded investigations, handled money, or possessed narcotics. View "Vierk v. Whisenand" on Justia Law

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Insurance executive Menzies sold over $64 million in his company’s stock but did not report any capital gains on his 2006 federal income tax return. He alleges that his underpayment of capital gains taxes (and related penalties and interest imposed by the IRS) was because of a fraudulent tax shelter peddled to him and others by a lawyer, law firm, and financial services firms. Menzies brought claims under the Racketeer Influenced and Corrupt Organizations Act (RICO) and Illinois law. The district court dismissed all claims. The Seventh Circuit affirmed in part. Menzies’s RICO claim falls short on the statute’s pattern-of-racketeering element. Menzies failed to plead not only the particulars of how the defendants marketed the same or a similar tax shelter to other taxpayers, but also facts to support a finding that the alleged racketeering activity would continue. A fraudulent tax shelter scheme can violate RICO; the shortcoming here is one of pleading and it occurred after the district court authorized discovery to allow Menzies to develop his claims. Menzies’s Illinois state law claims were untimely as to the lawyer and law firm defendants. The claims against the remaining financial services defendants can proceed. View "Menzies v. Seyfarth Shaw LLP" on Justia Law