Justia White Collar Crime Opinion Summaries

Nicolescu, Miclaus, and coconspirators posted fake eBay car auctions. Operating from Romania, they concealed their IP addresses, and employed US-based “money mules,” to collect payments from unsuspecting buyers, taking in $3.5-$4.5 million. In 2014, a virus created by Nicolescu was embedded in the eBay auctions and in spam emails to collect more than 70,000 account credentials, including 25,000 stolen credit-card numbers. Their network of virus-infected computers “mined” for cryptocurrency, reaping $10,000–$40,000 per month, 2014-2016. The FBI and Romanian police executed a search warrant on members’ residences and retrieved electronic devices. Nicolescu and Miclaus were convicted of conspiracy to commit wire fraud, 12 counts of wire fraud, conspiracy to commit computer fraud, conspiracy to traffic in counterfeit service marks, five counts of aggravated identity theft, and conspiracy to commit money laundering.The district court added 18 levels to their Guidelines calculation (U.S.S.G. 2B1.1(b)(1)(J)) for causing a loss of $3.5-$9.5 million, two levels (2B1.1(b)(4)) for being in the business of receiving and selling stolen property, two levels (2B1.1(b)(11)(B)(i)) for trafficking unauthorized access devices, four levels (2B1.1(b)(19)(A)(ii)) for being convicted under 18 U.S.C. 1030(a)(5)(A), and four levels (3B1.1(a)) for being an organizer or leader. They were sentenced to 216 and 240 months’ imprisonment.The Sixth Circuit affirmed the convictions, rejecting challenges to the sufficiency of the evidence and to jury instructions, but vacated the sentences. The court upheld the loss calculation and leadership enhancement. The court erred in applying the stolen property enhancement and in applying a 2B1.1(b)(19)(A)(ii) enhancement because the men were convicted of conspiracy, not a substantive section 1030(a)(5)(A) offense. View "United States v. Miclaus" on Justia Law

Based on activity related to former Kentucky Secretary of State Alison Lundergan Grimes’ campaign for the U.S. Senate seat held by Mitch McConnell in 2014, Emmons and Lundergan (Grimes’s father) were convicted for knowingly and willfully making unlawful corporate contributions aggregating $25,000 or more, Federal Election Campaign Act, 52 U.S.C. 30109(d)(1)(A)(i), 30118, and 18 U.S.C. 2; conspiracy to defraud the United States, 18 U.S.C. 371; willfully causing the submission of materially false statements, 18 U.S.C 1001(a)(2) and 2; and the falsification of records or documents, 18 U.S.C. 1519 and 2.The Sixth Circuit affirmed, rejecting a challenge to the constitutionality of the ban on corporate contributions as applied to intrafamilial contributions from a closely-held, family-run corporation. Such contributions present a risk of quid pro quo corruption. The district court adequately distinguished between independent expenditures and contributions in the jury instructions. The district court properly admitted evidence of Lundergan’s uncharged acts in connection with Grimes’ campaigns for Kentucky Secretary of State as res gestae evidence and under 404(b). The government presented sufficient evidence for a rational juror to find that Emmons had the requisite intent to cause unlawful corporate contributions and the Grimes campaign to submit false campaign-finance reports. View "United States v. Emmons" on Justia Law

The IRS began a criminal investigation of Gaetano, who owns Michigan cannabis dispensaries. Portal 42, a software company that provides the cannabis industry with point-of-sale systems, confirmed that Gaetano was a client. Agents served a summons, ordering Portal 42 to produce records “and other data relating to the tax liability or the collection of the tax liability or for the purpose of inquiring into any offense connected with the administration or enforcement of the internal revenue laws concerning [Gaetano] for the periods shown.” The IRS did not notify Gaetano about the summons. Portal 42 sent the IRS an email with a hyperlink to the requested records. An IRS computer specialist copied the documents. None of the personnel in the IRS’s Criminal Investigation Division have viewed the records.Gaetano filed a petition under 26 U.S.C. 7609, seeking to quash the summons, arguing that the IRS should have notified Gaetano about the summons and that it was issued in bad faith. The Sixth Circuit affirmed the dismissal of the action for lack of subject-matter jurisdiction because Gaetano lacked standing. Section 7609 waives the government’s sovereign immunity to allow taxpayers to bring an action to quash certain third-party IRS summonses. An exception applies because the summons here was issued by an IRS criminal investigator “in connection” with an IRS criminal investigation and the summoned party is not a third-party recordkeeper. Without a statutory waiver of sovereign immunity, subject-matter jurisdiction cannot obtain. View "Gaetano v. United States" on Justia Law

In March 2012, Edington and his father agreed Edington would apply for a Farm Services Agency (FSA) farm operating loan and list assets belonging to his father as collateral. Edington listed as collateral many assets he did not own. In 2012, Edington also presented documents to the FSA falsely claiming he had purchased cattle from his friend. Edington defaulted on the loans; his father died. Edington did not inherit the assets listed in the security agreement. In 2019, the U.S. Attorney’s Office filed felony charges for conspiring to violate 18 U.S.C. 1014, which prohibits: “knowingly make[] a false statement or report . . . for the purpose of influencing in any way the action of the” FSA. The district court dismissed, citing the five-year statute of limitations under 18 U.S.C. 3282(a).The Sixth Circuit reversed and remanded; 18 U.S.C. 3293(1) expressly provides a 10-year limitations period for certain offenses including “a violation of, or a conspiracy to violate . . . section . . . 1014.” Section 3293 extends the statute of limitations from five to 10 years for certain crimes including a violation of and conspiracy to violate section 1014. The most recent alleged overt acts listed in the information occurred in 2012; the charges were timely. View "United States v. Edington" on Justia Law

A jury convicted Sandra, Calvin, and their son Bryan Bailey of conspiring to commit healthcare fraud and other related crimes (18 U.S.C. 371, 1343, 1347; 42 U.S.C. 1320a-7b). The three, working for medical equipment companies, used fraud, forgery, and bribery to sell power wheelchairs and other equipment that was not medically necessary. The district court sentenced Sandra to 120 months’, Calvin to 45 months, and Bryan to 84 months’ imprisonment.The Sixth Circuit affirmed the convictions and the sentence imposed on Bryan. The court rejected challenges to the sufficiency of the evidence and to various evidentiary rulings and upheld the admission of certain out of court statements made in furtherance of the conspiracy. The district court miscalculated Sandra’s Guidelines-range sentence when it erroneously imposed a two-level increase in her offense level for using “mass marketing” in her scheme and incorrectly calculated the loss amount for which Calvin was responsible—and by extension, his Guidelines-range sentence—by holding him responsible for losses beyond those he agreed to jointly undertake. View "United States v. Bailey" on Justia Law

In 1998-2010, Dimora served as one of three Cuyahoga County Commissioners. An FBI investigation revealed that Dimora had received over $250,000 in gifts from individuals with business before the County, including home renovations, trips to Las Vegas, and encounters with prostitutes. Dimora had used his position to help with the awarding of County contracts, hiring, the results of at least one County election, and civil litigation outcomes. Dimora’s “influence” ranged from casting formal votes as Commissioner to pressuring other officials.Dimora was charged with Hobbs Act offenses, bribery concerning programs receiving federal funds, making false statements on tax returns, conspiracy to commit mail fraud and honest services mail fraud, conspiracy to commit bribery concerning programs receiving federal funds, conspiracy to commit wire fraud and honest services wire fraud, RICO conspiracy, mail fraud, conspiracy to obstruct justice and obstructing a federal investigation. A jury convicted Dimora on 33 counts. The Sixth Circuit upheld the jury instructions defining “official acts” as having “fairly trace[d] the line between permissible gifts and impermissible bribes.” A ruling that state ethics reports were inadmissible hearsay was harmless in light of “overwhelming evidence.”In its 2016 “McDonnell” decision, the Supreme Court gave a narrow construction to a key element included within several of Dimora’s offenses. The term “official acts” does not include “setting up a meeting, calling another public official, or hosting an event.” Official acts are limited to “formal exercise[s] of governmental power.” Dimora petitioned to vacate his convictions under 28 U.S.C. 2255. The Sixth Circuit vacated a denial of relief. The court declined to decide whether the instructional error was harmless with respect to most of the counts or whether the “cumulative effect” of instructional and evidentiary errors entitles Dimora to relief. View "Dimora v. United States" on Justia Law

Kozerski owned two construction companies in Detroit. He formed the second one, CA, to bid on Veterans Administration contracts set aside for small businesses owned by service-disabled veterans. Kozerski does not have a service-related disability. He convinced J.R., a service-disabled veteran, to pretend to be the company’s owner. CA handled six contracts. Kozerski forged J.R.’s signature and sent the government emails supposedly from J.R.. For five contracts, Kozerski did not pay J.R. anything, lying to him that CA did not receive any contracts after the first one.The government eventually discovered the scheme and charged Kozerski with wire fraud, 18 U.S.C. 1343. Kozerski pleaded guilty. The PSR recommended a loss amount of $9.5 million to $25 million, calculated by adding the amounts the government paid CA on all six contracts without crediting the value of the work performed on the contracts: $11,891,243.45, resulting in a Guidelines range of 37-46 months. Kozerski argued the loss should be the amount of profit a qualifying veteran-owned business would receive from the contract, yielding a guidelines range of eight-14 months. The district court adopted Kozerski’s formula and sentenced him to a year and a day. The Sixth Circuit affirmed, upholding the district court’s calculation of the loss as the aggregate difference between Kozerski’s bids and the next-lowest bids, about $250,000. View "United States v. Kozerski" on Justia Law

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

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

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