Justia White Collar Crime Opinion Summaries

Fadden earned over $100,000 per year but did not submit tax returns. After an audit, the IRS garnished his wages. Fadden filed for bankruptcy, triggering an automatic stay. Fadden claimed that he had no interest in any real property nor in any decedent’s life insurance policy or estate. Fadden actually knew that he would receive proceeds from the sale of his mother’s home (listed by the executor of her estate for $525,000) and would receive thousands of dollars as a beneficiary on his mother’s life insurance policies. A week later, Fadden mentioned his inheritance to a paralegal in the trustee’s office and asked to postpone his bankruptcy. When Fadden finally met with his bankruptcy trustee and an attorney, he confirmed that his schedules were accurate and denied receiving an inheritance. The Seventh Circuit affirmed his convictions under 18 U.S.C. 152(1) for concealing assets in bankruptcy; 18 U.S.C. 152(3) for making false declarations on his bankruptcy documents; and 18 U.S.C. 1001(a)(2) for making false statements during the investigation of his bankruptcy. Counts 1 and 2 required proof of intent to deceive. Fadden proposed a theory-of-defense instruction based on his assertion that his conduct was “sloppiness.” The Seventh Circuit upheld the use of pattern instructions, including that “knowingly means that the defendant realized what he was doing and was aware of the nature of his conduct and did not act through ignorance, mistake or accident.” View "United States v. Fadden" on Justia Law

In 2014, following investigations by the Indiana Attorney General and FBI, a grand jury indicted Shorter and her company, Empowerment, which provided transportation to Medicaid patients, for health care fraud, 18 U.S.C. 1347, and three counts of misusing a means of identification, 18 U.S.C. 1028A. The government submitted evidence of Shorter’s personal involvement in Empowerment’s billing practices; the results of an Indiana Attorney General Investigation into Empowerment’s billing practices; an FBI search of Empowerment’s records; and the experiences of Empowerment employees and of clients who used its services. The Seventh Circuit affirmed her convictions rejecting arguments challenging the indictment, the admission of certain evidence at trial and the sufficiency of the evidence as a whole. The court noted “powerful” circumstantial evidence that permitted the jury to convict her, especially because the jury could reasonably infer from the evidence that she “caused” the fraudulent billings. View "United States v. Shorter" on Justia Law

El-Bey, a "Moorish national," created an EIN for the Trust, naming himself as the trustee and fiduciary. El-Bey filed six tax returns for the Trust, each seeking a $300,000 refund, signing each return, identifying himself as the fiduciary, and listing his date of birth as the date of trust creation. The IRS flagged these returns as frivolous and notified El-Bey that he would be assessed a $5,000 penalty per return if he failed to file a corrected return. El-Bey returned the letters to the IRS, including vouchers and tax forms bearing no relation to the returns. Based on the fourth and fifth tax returns, the IRS mailed two $300,000 refund checks, which El-Bey deposited, using the funds to purchase vehicles and to buy a house. After the sixth return, El-Bey was indicted on two counts of mail fraud, 18 U.S.C. 1341, and six counts of making false claims to the IRS, 18 U.S.C. 287. The district court allowed El-Bey to proceed pro se and appointed standby counsel over El-Bey’s objection. El-Bey advanced irrelevant arguments, interrupted the judge, and made it challenging to manage the trial. The court expressed frustration, but later instructed the jurors, who indicated that they could continue to be impartial. The Seventh Circuit remanded for a new trial. Statements by the court in the presence of the jury conveyed that El-Bey was guilty or dishonest and impaired El-Bey’s credibility in the eyes of the jury. View "United States v. El-Bey" on Justia Law

El-Bey, a "Moorish national," created an EIN for the Trust, naming himself as the trustee and fiduciary. El-Bey filed six tax returns for the Trust, each seeking a $300,000 refund, signing each return, identifying himself as the fiduciary, and listing his date of birth as the date of trust creation. The IRS flagged these returns as frivolous and notified El-Bey that he would be assessed a $5,000 penalty per return if he failed to file a corrected return. El-Bey returned the letters to the IRS, including vouchers and tax forms bearing no relation to the returns. Based on the fourth and fifth tax returns, the IRS mailed two $300,000 refund checks, which El-Bey deposited, using the funds to purchase vehicles and to buy a house. After the sixth return, El-Bey was indicted on two counts of mail fraud, 18 U.S.C. 1341, and six counts of making false claims to the IRS, 18 U.S.C. 287. The district court allowed El-Bey to proceed pro se and appointed standby counsel over El-Bey’s objection. El-Bey advanced irrelevant arguments, interrupted the judge, and made it challenging to manage the trial. The court expressed frustration, but later instructed the jurors, who indicated that they could continue to be impartial. The Seventh Circuit remanded for a new trial. Statements by the court in the presence of the jury conveyed that El-Bey was guilty or dishonest and impaired El-Bey’s credibility in the eyes of the jury. View "United States v. El-Bey" on Justia Law

After participating in a scheme that involved “retirement investment seminars,” Oliver pled guilty to wire fraud, 18 U.S.C. 1343, for defrauding investors. Because Oliver used their money for personal expenses or invested it in high-risk schemes, investors lost a total of $983,654. The district court sentenced Oliver to 51 months in prison followed by three years of supervised release. The Seventh Circuit affirmed the sentence, rejecting arguments that the district court erred by failing to consider unwarranted sentencing disparities, relying on inaccurate information, not calculating the Guidelines range for supervision, and imposing a two‐level leadership enhancement. The sentence fell within the recommended Guidelines range and Oliver failed to object at the time of sentencing. View "United States v. Oliver" on Justia Law

Popovski pleaded guilty to wire fraud, 18 U.S.C. 1343, for obtaining credit-card or debit-card numbers from abroad, encoding them onto blank cards and using those cards to withdraw money. Popovski was responsible for more than 1,000 account numbers but planned to use 800 of them in Peru. The district judge disregarded those 800 numbers, calculating intended loss based on actual or planned U.S. transactions, to conclude that the intended loss attributable to Popovski was $131,000, which added eight offense levels under U.S.S.G. 2B1.1. The judge sentenced Popovski to 30 months’ imprisonment; his Guidelines range was 27-33 months. The Seventh Circuit affirmed. Section 2B1.1 Application Note 3(F)(i) provides: “loss includes any unauthorized charges made with the counterfeit access device or unauthorized access device and shall be not less than $500 per access device.” Popovski unsuccessfully argued that cards with canceled numbers or with credit limits exhausted by earlier withdrawals should not count toward the number of devices. Popovski did not deny that he intended to steal from all of the persons whose account information he possessed; the Application Note indicates that his inability to carry out that intent does not diminish “loss.” That aggregate approach takes account of the possibility that some access devices won’t work, while others could produce more than $500. View "United States v. Popovski" on Justia Law

In 2009, Lopez created financial investment business entities and solicited funds from family and friends. He received approximately $450,000 total from five people, stating that he intended to invest in companies such as Coca-Cola, ExxonMobil, Wells Fargo, Visa, American Express, and Procter & Gamble. Documents the investors signed reserved Lopez’s discretion to invest where he saw fit. Lopez deposited their funds into accounts that he controlled and never invested in the companies listed in his advertising materials. Lopez used much of the money for personal expenses. Lopez unilaterally changed the terms of each investors’ promissory note; they were not aware of these changes, did not give Lopez permission to make them, and did not sign documents. After an investor complained to the Indiana Secretary of State and the IRS investigated Lopez’s businesses, Lopez was convicted of 15 counts of wire fraud, 18 U.S.C. 1343; four counts of money laundering, 18 U.S.C. 1957; and securities fraud, 15 U.S.C. 78j(b), 77ff(a). The Seventh Circuit affirmed, rejecting claims that the district court erred in allowing a government witness to testify that payments Lopez made to his investors were “lulling payments,” that the government’s references to Bernie Madoff in its closing argument denied him a fair trial, that the court erred in denying Lopez’s request to label his witness an “expert” in front of the jury, that the court improperly prevented him from introducing extrinsic evidence of a government witness's prior inconsistent statement. View "United States v. Lopez" on Justia Law

DiCosola started a business that produced compact discs in novelty shapes, for use as promotional items. The business morphed into a full‐service printing business, reaching about $1 million in gross annual sales and employing up to 10 people, including DiCosola’s immigrant father, who invested his retirement savings. In 2005, DiCosola started a side business for producing music, which sapped cash from the printing business. DiCosola’s 2007 loan application was rejected. He reapplied in 2008, providing fabricated tax returns that inflated his income by hundreds of thousands of dollars. Citibank issued DeCosola a loan of $273,500. DiCosola similarly used fabricated tax returns to obtain loans from Amcore, for $450,000 and $300,000. In 2009, after a few payments, DiCosola defaulted on the loans. In 2009, DiCosola falsified IRS forms to claim a refund of $5.5 million. In 2012, DiCosola was indicted for bank fraud, 18 U.S.C. 1344; making false statements to a bank, 18 U.S.C. 1014; wire fraud affecting a financial institution, 18 U.S.C. 1343; filing false statements against the United States, 18 U.S.C. 287. DiCosola was found guilty, sentenced to 30 months’ imprisonment, and ordered to pay restitution of $822,088.00. The Seventh Circuit affirmed, rejecting challenges relating to the testimony of DiCosola’s accountant. View "United States v. DiCosola" on Justia Law

Most commodities trading takes place with the participants using computers to execute hyper‐fast trading strategies at speeds, and in volumes, that far surpass those common in the past. Coscia commissioned and used a computer program to place small and large orders simultaneously on opposite sides of the commodities market in order to create illusory supply and demand, to induce artificial market movement. He was convicted under the anti‐spoofing provision of the Commodity Exchange Act, 7 U.S.C. 6c(a)(5)(C) and 13(a)(2), and of commodities fraud, 18 U.S.C. 1348(1) and was sentenced to 36 months’ imprisonment. The Act defines “spoofing” as “bidding or offering with the intent to cancel the bid or offer before execution.” The Seventh Circuit affirmed, finding the convictions supported by sufficient evidence. The anti‐spoofing provision provides clear notice and does not allow for arbitrary enforcement; it is not unconstitutionally vague. With respect to the commodities fraud violation, the court upheld a jury instruction on materiality: that the alleged wrongdoing had to be “capable of influencing the decision of the person to whom it is addressed.” The district court properly applied a 14‐point loss enhancement in calculating the sentence, given the nature and complexity of Coscia’s criminal enterprise. View "United States v. Coscia" on Justia Law

Coexist was formed by Hubman, an admitted con man, after a court found that his previous enterprise, Hubman Foundation was not a charity but a sham designed to insulate Hubman from his debts and obligations. Hubman was introduced to Fehrenbacher, the president of a wholesale banking institution that packaged and sold mortgage notes to investment banks, and of a retail loan broker. In 2009, Fehrenbacher offered Hubman a deal via email that promised returns of 25-30% per week and that any invested funds would not be at risk and would be held in escrow. Coexist ultimately wired $2 million from Coexist, plus $2.8 million of Hubman's money to Assured Capital, following Fehrenbacher’s instructions. It was a Ponzi scheme. Hubman complained to the FBI and filed a civil suit. Assured ultimately paid him $4.3 million. Fehrenbacher then returned $1,494,250 to Coexist. The $2 million that Coexist “invested” was actually the money of Stewart, a retired professional baseball player. The Stewarts obtained a judgment for $2 million against Hubman and Coexist. Hubman did not pay. Coexist filed suit against Fehrenbacher and his companies. The Seventh Circuit affirmed a finding that the defendants violated a Florida law prohibiting the sale of unregistered securities and an order of rescission. View "Coexist Foundation, Inc. v. Fehrenbacher" on Justia Law