Justia White Collar Crime Opinion Summaries

Articles Posted in US Court of Appeals for the Sixth Circuit
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Ashrafkhan came to the U.S. in 1991 after receiving a scholarship to study at Michigan State University. He earned a Ph.D. with a research focus on pathology and the genetics of cancer. In 2006, he founded Compassionate Doctors, a medical practice outside of Detroit, that was actually a “pill mill,” where unscrupulous doctors wrote fraudulent prescriptions for fake patients. Compassionate billed Medicare for the fake patient visits and collected millions of dollars in Medicare payments over the course of several years. The fraudulent prescriptions were filled by individuals recruited by Compassionate at pharmacies that paid Compassionate kickbacks. Those drugs were then sold on the street, resulting in hundreds of thousands of opioid-based drugs being distributed onto the illegal drug market. Ashrafkhan was convicted of conspiracy to distribute controlled substances, conspiracy to commit healthcare fraud, and money laundering and was sentenced to 23 years of imprisonment. The Sixth Circuit affirmed, rejecting a challenge to the jury instruction on “reasonable doubt.” The instruction stressed to the jury the need to base its decision on “the evidence or lack of evidence” and that a reasonable doubt was one that was “still standing” after all of the evidence had been considered. View "United States v. Ashrafkhan" on Justia Law

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Igboba was convicted on 18 counts under 18 U.S.C. 286, 18 U.S.C. 1343, 18 U.S.C. 287, and 18 U.S.C. 1028A(a)(1), (b), and (c)(5), based on his participation in a conspiracy to defraud the government by preparing and filing false federal income tax returns using others’ identities. He was sentenced to 162 months’ imprisonment, followed by three years of supervised release, and required to pay restitution, special assessment, and forfeiture sums. The Sixth Circuit affirmed, rejecting arguments that when the district court increased his base offense level based on the total amount of loss his offense caused, U.S.S.G. 2B1.1(b)(1), it failed to distinguish between the loss caused by his individual conduct and that caused by the entire conspiracy and that the district court erred in applying a two-level sophisticated-means enhancement, section 2B1.1(b)(10). the district court could rightly attribute $4.1 million in losses to “acts and omissions committed, aided, abetted, counseled, commanded, induced, procured, or willfully caused by” Igboba. The court noted his “sophisticated” use of technology and multiple aliases. View "United States v. Igboba" on Justia Law

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The Spriggs’ bank account was established to receive social security checks. The Spriggs’ great-grandson, Vance, filled out an application in Mr. Spriggs’s name for a debit card to draw on the checking account. Mr. Spriggs had never used a debit card. The Spriggses did not authorize Vance to do so. Bank cameras photographed Vance using the card to withdraw cash. Vance also used the card for personal expenses. At another bank, Vance used Mr. Spriggs’s social security number to establish an account and obtain a $15,000 cash advance. Vance made other, unsuccessful loan applications. Upon being notified by the banks about suspicious activities involving his identity, Mr. Spriggs filed a police report. The police arrested Vance. While searching Vance’s car, the police located a large stash of personal and financial documents belonging to the Spriggses, including bank statements, tax return forms, property-tax bills, and a car title. The Sixth Circuit affirmed Vance’s convictions for access-device fraud, 18 U.S.C. 1029(a)(5), and two counts of aggravated identity theft, 18 U.S.C. 1028A(a)(1), and his 65-month sentence. The court rejected arguments that the district court failed to make adequate findings of fact after the bench trial, improperly denied a motion for judgment of acquittal, and failed to correctly calculate the loss amount connected to Vance’s charges under Sentencing Guidelines 2B1.1. View "United States v. Vance" on Justia Law

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Torres was a long-time employee at Vitale’s Italian Restaurants located throughout Western Michigan. Although Torres and other Vitale’s employees often worked more than 40 hours per week, they allege that they were not paid overtime rates for those hours. Vitale’s required the workers to keep two separate timecards, one reflecting the first 40 hours of work, and the other, reflecting overtime hours. The employees were paid via check for the first card and via cash for the second. The pay was at a straight time rate on the second card. Torres alleged that employees were deprived of overtime pay and that Vitale’s did not pay taxes on the cash payments. Torres sought damages under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961. The district court dismissed, holding that the remedial scheme of the Fair Labor Standards Act (FLSA), 29 U.S.C. 201, precluded the RICO claim. The Sixth Circuit reversed in part. The claims based on lost wages from the alleged “wage theft scheme” cannot proceed. However, the FLSA does not preclude RICO claims when a defendant commits a RICO-predicate offense giving rise to damages distinct from the lost wages available under the FLSA. The court remanded Torres’s claim that Vitale’s is liable under RICO for failure to withhold taxes. View "Torres v. Vitale" on Justia Law

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Holland, a songwriter, sold his song-rights to music companies, in exchange for royalty payments. Holland failed fully to report his income. In 1986-1990, the IRS levied Holland’s royalty assets and recovered $1.5 million. In 1997, the IRS informed him that it intended again to levy those assets. Holland converted his interest in future royalty payments into a lump sum and created a partnership wholly owned by him, to which he transferred title to the royalty assets ($23.3 million). The partnership borrowed $15 million, for which the royalty assets served as collateral. Bankers Trust paid $8.4 million directly to Holland, $5 million in fees, and $1.7 million for Holland’s debts, including his taxes. The IRS did not assess any additional amounts against Holland until 2003. In 2005, the partnership refinanced the 1998 deal, using Royal Bank. In 2012, the IRS concluded that the partnership held the royalty assets as Holland’s alter ego or fraudulent transferee and recorded a $20 million lien against the partnership. In an enforcement suit, the partnership sold the royalty assets. The proceeds ($21 million) went into an interpleader fund, to be distributed to the partnership’s creditors in order of priority. The government’s lien ($20 million), if valid against the partnership, would take priority over Royal Bank’s security interest. The Sixth Circuit affirmed a judgment for Royal Bank. Transactions to monetize future revenue, using a partnership or corporate form, are common and facially legitimate. Holland received adequate consideration in 1998. The IRS’s delay in making additional assessments rather than the 1998 transfer caused the government’s collection difficulties. View "United States v. Holland" on Justia Law

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Four men from Miami drove to Louisville to set up chiropractic clinics. Lezcano, the mastermind, decided to file false claims with the patients’ insurers and get paid for treatments that never happened. The others, Chavez, Betancourt, and Diaz joined in. The plan worked due to aggressive marketing. The conspirators recruited and paid patients both to come to the clinics and to recruit others. Many of the patients worked at the Jeffboat shipyard. Jeffboat (through its claim administrator, United Healthcare) paid the clinics more than $1 million for fake injections of a muscle relaxant. The government discovered the scheme and brought criminal charges. Chavez went to trial, claiming he had no idea that Lezcano was cooking the books. Convicted of healthcare fraud, conspiracy to commit healthcare fraud, aggravated identity theft, and conspiracy to commit money laundering for purposes of concealment. Chavez was sentenced to 74 months’ imprisonment. The Sixth Circuit affirmed, rejecting his challenges to the sufficiency of the evidence and a related challenge to the prosecutor’s closing argument; two hearsay arguments; three objections to the jury instructions; and a sentencing argument. View "United States v. Chavez" on Justia Law

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Beane, formerly an Air Force electrical engineer, became involved in a conspiracy theory that the government creates for each citizen a "straw man" and that the Federal Reserve holds in trust that citizen’s inherent “unlimited value.” Proponents believe that by filing the correct paperwork, they can use those funds. Beane, deeply in debt, became involved with Tucci-Jarraf, a former attorney who ran a website, contributed to talk shows, and produced faux-legal documents that purported to allow individuals to access their secret accounts. Beane found a Facebook video that purported to teach viewers how to access their accounts; it actually taught them how to commit wire fraud by exploiting a deficiency in the “Automated Clearing House” bank network. With Tucci-Jarraf's support, Beane logged onto his bank’s website, followed those instructions, and made fraudulent payments on his debts and bought $31 million in certificates of deposit with Federal Reserve funds. He started cashing the certificates and spending money. A bank froze his account. Tucci-Jarraf advised Beane to place his new assets in trust; she prepared pseudo-legal documents and made calls. Agents arrested Beane as he was driving off the dealership lot in a new motor home. Officers arrested Tucci-Jarraf in Washington, D.C., where she was requesting a meeting with the President. Beane and Tucci-Jarraf filed multiple frivolous motions and asked to represent themselves. The judge concluded that they had knowingly and intelligently waived their right to counsel but appointed standby counsel. A jury convicted Beane of bank and wire fraud, 18 U.S.C. 1343, and both of conspiracy to commit money laundering, section 1956(h). The Sixth Circuit affirmed, rejecting arguments that the court should have forced them to accept counsel. They knowingly and intelligently made their choice; self-lawyering does not require the individual to subscribe to conventional legal strategies or orthodox behavior. View "United States v. Beane" on Justia Law

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The IRS searched Ellis’s apartment and found personal identifying information for more than 400 people on printouts from the Alabama Department of Corrections’ database and in a TurboTax database on laptops seized from Ellis’s bedroom. Her computers had been used to file hundreds of electronic tax returns in 2008-2012. Ellis was charged with devising a scheme to submit fraudulent tax returns in “2012,” including eight counts of wire fraud, 18 U.S.C. 1343, and eight counts of aggravated identity theft, 18 U.S.C. 1028A(a)(1), (c)(5) and 18 U.S.C. 2. After the government admitted that some of Agent Ward’s grand jury statements had been wrong, Ellis unsuccessfully moved to dismiss the indictment. The court found that the “inaccurate statements did not have a substantial influence" given "overwhelming other evidence he presented.” Agent Ward testified that the intended loss from Ellis’s scheme was approximately $700,000, based on the total requested refunds, not the actual refunds. The court agreed and applied a 12-step ioffense level increase (U.S.S.G. 2B1.1(b)(1)(H)), with a resulting Guidelines range for the wire fraud counts of 51-71 months. The court imposed a 48-month sentence for wire fraud and a consecutive, mandatory, 24-month sentence for aggravated identity theft and ordered forfeiture of $11,670, the total of the eight tax returns for which Ellis was convicted. The court imposed the government’s requested $352,183.20, in restitution to governmental entities. The Sixth Circuit affirmed the denial of the motion to dismiss, the calculation of the forfeiture, and the restitution order, rejecting arguments that the government had not presented evidence that all of the refunds used to calculate restitution were part of the same scheme and that some of that amount was tied to conduct that occurred outside of the limitations period. View "United States v. Ellis" on Justia Law

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Bank of America advances funds whenever customers deposit checks. During this “float” period, it permits the customer to withdraw the funds while the bank confirms the check’s validity. In Michigan, Thomas would enlist BoA customers and give the customers’ information (account numbers, debit card numbers, and PINs) to Illinois conspirators led by Cobb. The Illinois conspirators would steal corporate checks, alter the checks to list the customers as payees, and deposit the checks at BoA. In Michigan, Thomas would withdraw the funds before the bank uncovered that the checks were bad. Thomas would then divvy up the funds. The fraud caused bank losses of $214,286.03. All the defendants were charged with a conspiracy to commit bank fraud, 18 U.S.C. 1344(2) and 1349. Thomas, listed on 25 counts, pleaded guilty to a conspiracy count and to one count of bank fraud, which generated a guidelines range of 46-57 months. His probation officer found that he lied during his presentence interview. Thomas denied leading the Michigan cohort, denied recruiting others, and denied knowing of Cobb’s role. (2016). The government sought an obstruction enhancement, U.S.S.G. 3C1.1 and compiled evidence that Thomas oversaw the Michigan recruiters and facilitated the withdrawals. The court applied the obstruction enhancement and declined the acceptance-of-responsibility reduction U.S.S.G. 3E1.1, which produced a guidelines range 70-87 months; concluded that this range was insufficient under the 18 U.S.C. 3553(a) sentencing factors; and imposed an above-guidelines 102-month sentence. The Sixth Circuit affirmed. View "United States v. Thomas" on Justia Law

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In operating his companies, Rankin failed to remit to the IRS employees’ withholding taxes and inaccurately reported his own earnings as royalties (26 U.S.C. 7202, 7206, 7212). Rankin interfered with and delayed IRS investigations, filing amended returns containing false information and falsely claiming that fire had destroyed his records. Rankin bragged about his efforts to beat the IRS at its own game. He was convicted of 17 tax-related counts, sentenced to 60 months in prison, and required to pay restitution. The Sixth Circuit affirmed his conviction and sentence, modifying his judgment to reflect that he need not pay restitution until his term of supervised release commences. The court rejected a challenge to Count 17, which alleged that during the relevant time, Rankin had “willfully misl[ed] agents of the IRS by making false and misleading statements to those agents and by concealing information sought by those agents who he well knew were attempting to ascertain income, expenses and taxes for [Rankin] and his various business entities and interests.” The indictment contains the elements of the charged offense and does more than merely track the language of the statute. It alleges a nexus between Rankin’s misleading conduct and the agents’ attempts “to ascertain [his] income, expenses and taxes,” an investigation that went beyond the “routine, day-to-day work carried out in the ordinary course by the IRS.” The indictment reflects that the investigation was pending and that Rankin was aware of it. View "United States v. Rankin" on Justia Law