Justia White Collar Crime Opinion Summaries

Joseph Scott Gray, a decorated U.S. Army veteran, was convicted of defrauding the Department of Veterans Affairs (VA) by lying about his health to obtain benefits. After leaving the military in 2003, Gray falsely claimed severe disabilities to receive increased benefits, including "individual unemployability" and "aid and attendance" benefits. His fraudulent activities were exposed when investigators videotaped him performing daily activities without assistance, contradicting his claims of severe disability.The United States District Court for the Western District of Michigan convicted Gray of several fraud-related offenses. The jury found him guilty, and the district court sentenced him to five years in prison and ordered him to pay $264,631 in restitution, covering benefits received from 2004 onward. Gray appealed, challenging the exclusion of an expert witness, the calculation of his criminal history score, the reasonableness of his sentence, and the restitution order.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court upheld the exclusion of Gray's expert witness, Dr. Ennis Berker, as the proposed testimony was deemed irrelevant to the issues at trial. The court also found no procedural error in the calculation of Gray's criminal history score and deemed the five-year sentence substantively reasonable, considering the severity and duration of his fraudulent conduct.However, the court vacated the restitution order, ruling that it should not cover losses before January 2015, as the indictment only charged Gray with a conspiracy beginning in 2015. The case was remanded for recalculation of the restitution amount, limited to the period specified in the indictment. View "United States v. Joseph Gray" on Justia Law

In 2011, the automaker FCA transferred the work that plaintiffs (engineers) had previously performed at FCA’s company headquarters to a new location. The plaintiffs filed a grievance with their union, UAW, in 2016. UAW failed to pursue it. In 2017, plaintiffs filed essentially the same grievance, but UAW again did not pursue it. By this time, plaintiffs had learned of a massive bribery scheme involving FCA and UAW; they believed that those bribes had affected the 2011 job-relocation process and UAW’s treatment of their grievances. In 2018, plaintiffs filed the same grievance again. Nearly two years later, UAW found the grievance meritorious.Plaintiffs sued FCA, UAW, and individual defendants in 2020, raising claims under the Labor Management Relations Act (LMRA), 29 U.S.C. 185(a), and the Racketeer Influenced and Corrupt Organizations Act (RICO). The Sixth Circuit affirmed the dismissal of the claims as untimely under the LMRA’s six-month limitations period. Plaintiffs pursuing a hybrid LMRA claim must sue once they “reasonably should know that the union has abandoned” their claim. Plaintiffs learned of their RICO injuries as early as 2011 and learned of the bribery allegations in 2017 but waited until 2020 to file their complaint, with no explanation for the delay. View "Baltrusaitis v. United Auto Workers" on Justia Law

During a traffic stop, Tellez agreed to a car search. After the search, the officer asked, “Do you have your wallet?” Tellez handed it over. Inside, the officer discovered three Visa gift cards, each with numbers written on the back, which the officer believed was indicative of fraud. The officer asked whether he could swipe the cards. Tellez agreed but then said, “I don’t give permission.” The officer nevertheless swiped the cards. The numbers did not match the cards, indicating they had been altered. Tellez was indicted for conspiracy to defraud the U.S., bank fraud, and aggravated identity theft. He moved to suppress all evidence derived from the wallet search but did not challenge the officer’s decision to swipe the cards.After reviewing a video recording of the traffic stop and the officer’s testimony, the court denied Tellez’s motion, concluding that Tellez’s gesture of handing over his wallet reflected his nonverbal, voluntary consent. Tellez entered a conditional guilty plea. Tellez objected to the intended loss calculations used to derive his Guidelines offense level. The three cards had been used to spend or withdraw an average of $1,400 per card. The probation office calculated the intended loss by multiplying the number of accounts associated with Tellez—303, including 300 other accounts found on a thumb drive in Tellez’s possession—by $1,400. The court agreed with the government. The Sixth Circuit affirmed the denial of the motion to suppress and Tellez’s 70-month sentence. View "United States v. Crespo" on Justia Law

Bauer worked as a physician for over 50 years, most recently in pain management at ANA. Bauer’s practice, which included regular prescribing controlled substances, became the subject of a DEA investigation. Bauer was indicted for knowingly or intentionally” distributing or dispensing controlled substances “except as authorized,” 21 U.S.C. 841(a), concerning 14 patients. The prosecution’s expert, Dr. King, opined that Bauer did not sufficiently establish a diagnosis and ignored “red flags.” Each patient had a history of at least two mental health conditions; several had histories of illegal drug use. Bauer drastically exceeded recommended thresholds and prescribed opioids together with other controlled substances. One patient died from an accidental overdose. None showed improvement. A drug task force officer alerted Bauer that a patient was selling his pills. Bauer did not terminate the patient but provided additional prescriptions. Several pharmacies would not fill his prescriptions. Dr. King opined that Bauer prescribed opioids “in most cases” to support “addiction and dependency,” “without a legitimate medical purpose.”The Sixth Circuit affirmed Bauer’s convictions and 60-month sentence (below the Guidelines range). A jury could reasonably find that Bauer knew his prescriptions were without authorization, satisfying the mens rea requirement clarified by the Supreme Court in 2022. The district court did not plainly err in its jury instruction on the good-faith defense. The court rejected Bauer’s challenges to the exclusion of his proffered expert witnesses and his argument that he had a constitutional right to testify as an expert in his own defense. View "United States v. Bauer" on Justia Law

Johnson was the councilman in Cleveland’s Buckeye-Shaker neighborhood for 41 years. Jamison was his executive assistant. For years, Johnson used his position to fraudulently claim federal reimbursements for payments he never made. He also secured employment for his children in federally funded programs, although they were not legally eligible to work in such positions. Johnson deposited their earnings into his own account. In addition, Johnson fraudulently claimed a series of tax deductions. He encouraged and assisted his son Elijah in submitting falsified records for Elijah’s grand-jury testimony. Jamison assisted Johnson in these crimes. Johnson and Jamison were convicted on 15 charges, including federal program theft under 18 U.S.C. 371, 666(a)(1)(A) and (2); tax fraud, 26 U.S.C. 7206(2); and obstruction of justice, 18 U.S.C. 1512(b) and 1519. Johnson was sentenced to 72 months in prison. Jamison was sentenced to 60 months.The Sixth Circuit affirmed, rejecting challenges to the district court’s loss calculations and to sentencing enhancements for being an organizer or leader of a criminal activity involving five or more participants, for using a minor, and for obstructing justice. The district court properly admitted “other acts” evidence of prior misuse of campaign funds. Any other errors in evidentiary rulings were harmless. View "United States v. Jamison" on Justia Law

In 1997-2009, Chappelle managed Terra and withheld federal income, Social Security, and Medicare taxes (trust fund taxes) from Terra’s employees’ wages, 26 U.S.C. 3102, 3402, 7501, but failed to remit them to the IRS in 2007-2009. The IRS imposed “trust fund recovery penalties” on Chappelle. To avoid paying, Chappelle misstated his income and assets. He used business funds to pay personal expenses. He purchased real estate in others’ names rather than his own. Chappelle repeated this cycle in 2009-2016 after he closed Terra and sequentially opened three more companies. Chappelle repeatedly moved assets.In a 2016 IRS interview, Chappelle made false statements about his real estate purchases. Chappelle subsequently falsely claimed that the latest company did not have any employees and was entitled to a tax refund. Chappelle pleaded guilty to willfully attempting to evade the payment of the Trust Fund Recovery Penalties in 2008-2009. Chappelle’s PSR calculated a total tax loss of $1,636,228.28 and recommended increasing Chappelle’s offense level by two levels for his use of sophisticated means, U.S.S.G. 2T1.1(b). The district court overruled Chappelle’s objections, calculated his guideline range as 37-46 months, considered the 18 U.S.C. 3553(a) factors, and sentenced Chappelle to 38 months’ imprisonment. The Sixth Circuit affirmed, rejecting arguments that the court miscalculated the tax loss and erroneously found that his offense involved sophisticated means. View "United States v. Chappelle" on Justia Law

You, a U.S. citizen of Chinese origin, worked as a chemist, testing the chemical coatings used in Coca-Cola’s beverage cans. You was one of only a few Coca-Cola employees with access to secret BPA-free formulas. You secretly planned to start a company in China to manufacture the BPA-free chemical and received business grants from the Chinese government, claiming that she had developed the world’s “most advanced” BPA-free coating technology. On her last night as a Coca-Cola employee, You transferred the formula files to her Google Drive account and then to a USB drive. You certified that she had not kept any confidential information. You then joined Eastman, where she copied company files to the same account and USB drive. Eastman fired You and became aware of her actions. Eastman retrieved the USB drive and reported You to the FBI.You was convicted of conspiracy to commit theft of trade secrets, 18 U.S.C. 1832(a)(5), possessing stolen trade secrets, wire fraud, conspiracy to commit economic espionage, and economic espionage. The Sixth Circuit remanded for resentencing after rejecting You’s claims that the district court admitted racist testimony and gave jury instructions that mischaracterized the government’s burden of proof as to You’s knowledge of the trade secrets and their value to China. In calculating the intended loss, the court clearly erred by relying on market estimates that it deemed speculative and by confusing anticipated sales of You’s planned business with its anticipated profits. View "United States v. You" on Justia Law

The DEA received a tip from a local pharmacist that Dr. Anderson, an Ohio physician, was seeing patients who had been discharged by other physicians for non-compliance. The pharmacist was one of several who had grown concerned about Anderson’s prescribing practices relating to pain medications. The State Medical Board of Ohio expressed concern that Anderson was not prescribing in the usual course of practice or for a legitimate medical purpose. Separately, one of Anderson’s patients contacted the local sheriff’s office, voicing his concern that he sometimes would not get to see Anderson at his appointments and would occasionally retrieve his prescriptions from the receptionist rather than from Anderson himself. The DEA launched an investigation into Anderson, used a confidential informant, and then executed a search warrant to obtain evidence.Anderson was convicted of one count of conspiracy to distribute controlled substances, eight counts of unlawful distribution of controlled substances, and one count of healthcare fraud. The Sixth Circuit affirmed, rejecting challenges to the sufficiency of the evidence supporting his convictions, the district court’s refusal to give a good faith jury instruction, and the admission of the government’s expert testimony. View "United States v. Anderson" on Justia Law

Palma worked for FCA starting in 2013 and allegedly participated in a scheme that manipulated FCA's new diesel engine’s function during testing to produce artificially impressive results with respect to features that FCA was targeting to customers, including fuel economy greater than 30 mpg and a frequency of fluid changes similar to that of gasoline-powered cars. When the vehicles were tested for emissions, the program activated Exhaust Gas Recirculation, sacrificing fuel economy. When the vehicles were tested for fuel economy, Recirculation was lowered, increasing emissions. Palma knew that these results were critical to receiving the “best-in-class” fuel economy ratings and that the vehicles did not meet EPA requirements. A sticker affixed to the cars stated they complied with regulations and provided detailed emissions information, as influenced by Palma's scheme. FCA sold more than 100,000 of these vehicles. Customers who purchased the vehicles said that the misleading representations were material to their purchase decisions.Palma was charged with 13 counts, including conspiracy to commit wire fraud, 18 U.S.C. 1349. The district court held that there was an insufficient causal nexus between Palma’s conduct and customers being induced to purchase vehicles and that Palma’s conduct was less a deprivation of consumer property and more a deception of regulators. The Seventh Circuit reversed the dismissal of that count, reasoning that Palma was only charged with conspiracy, not wire fraud itself, and the indictment alleges adequate facts tying Palma to a fraudulent scheme. View "United States v. Palma" on Justia Law

Memphis attorney Skouteris practiced plaintiff-side, personal injury law. He routinely settled cases without permission, forged client signatures on settlement checks, and deposited those checks into his own account. Skouteris was arrested on state charges, was disbarred, and was indicted in federal court for bank fraud. At Skouteris’s federal trial, lay testimony suggested that Skouteris was not acting under any sort of diminished cognitive capacity. Two psychologists examined Skouteris. The defense expert maintained that Skouteris suffered from a “major depressive disorder,” “alcohol use disorder,” and “seizure disorder,” which began during Skouteris’s college football career, which, taken together, would have “significantly limited” Skouteris’s “ability to organize his mental efforts.” The government’s expert agreed that Skouteris suffered from depression and alcohol use disorder but concluded that Skouteris was “capable of having the mental ability to form and carry out complex thoughts, schemes, and plans.” Skouteris’s attorney unsuccessfully sought a jury instruction that evidence of “diminished mental capacity” could provide “reasonable doubt that” Skouteris had the “requisite culpable state of mind.”Convicted, Skouteris had a sentencing range of 46-57 months, with enhancements for “losses,” abusing a position of trust or using a special skill, and committing an offense that resulted in “substantial financial hardship” to at least one victim. The district court varied downward for a sentence of 30 months plus restitution of $147,406. The Sixth Circuit affirmed, rejecting challenges to the sufficiency of the evidence, the jury instructions, and the sentence. View "United States v. Skouteris" on Justia Law