Justia White Collar Crime Opinion Summaries

Over seven years, Dr. Greenspan referred more than 100,000 blood tests to Biodiagnostic Laboratory, which made more than $3 million off these tests. In exchange, the Lab gave Greenspan and his associates more than $200,000 in cash, gifts, and other benefits. A jury convicted Greenspan of accepting kickbacks, 42 U.S.C. 1320a-7(b)(1)(A); using interstate facilities with the intent to commit commercial bribery, 18 U.S.C. 1952(a)(1), (3); honest-services wire fraud, 18 U.S.C. 1343, 1346; and conspiracy to do all of those things. The Third Circuit affirmed, characterizing the evidence of his guilt as overwhelming. The district court erred in instructing the jury that Greenspan had to “demonstrate” the prerequisites for an advice-of-counsel defense; in excluding as hearsay some of his testimony about that legal advice; in asking only Greenspan’s counsel, not Greenspan personally, whether he wished to speak at sentencing; and in limiting the scope of the defense to five particular agreements rather than all eight, but all of those errors were harmless. The court properly excluded evidence that the blood tests were medically necessary. That evidence was only marginally relevant and risked misleading the jury. View "United States v. Greenspan" on Justia Law

Nita and her husband, Kirtish, pled guilty to defrauding Medicare (18 U.S.C. 1347), based on having forged physicians’ signatures on diagnostic reports and having conducted diagnostic testing without the required physician supervision. The government then brought this civil action for the same fraudulent schemes against Nita, Nita’s healthcare company (Heart Solution), Kirtish, and Kirtish’s healthcare company (Biosound). The district court granted the government summary judgment, relying on the convictions and plea colloquies in the criminal case, essentially concluding that Nita had admitted to all elements and issues relevant to her civil liability. Nita and Heart Solution appealed. The Third Circuit affirmed Nita’s liability under the False Claims Act, 31 U.S.C. 3729(a)(1)(A) and for common law fraud but vacated findings that Heart Solution is estopped from contesting liability and damages for all claims and Nita is estopped from contesting liability and damages for the remaining common law claims. The district court failed to dissect the issues that were determined in the criminal case from those that were not, lumping together Nita and Heart Solution, even though Heart Solution was not involved in the criminal case. It also failed to disaggregate claims Medicare paid to Nita and Heart Solution from those paid to Kirtish and Biosound. The plea colloquy did not clarify ownership interests in the companies; who, specifically, made certain misrepresentations; nor whether one company was paid the entire amount or whether the payments were divided between the companies. View "Doe v. Heart Solution PC" on Justia Law

McClure-Potts contacted police about Samarin, who entered the U.S. without inspection from Ukraine. McClure-Potts claimed she was trying to adopt Samarin, who was 19 years old and that Samarin had been “speaking of Hitler against the Jews” and might have stolen a rifle. McClure-Potts provided a birth certificate indicating that Samarin was born in 1992. Police discovered that McClure-Potts had previously filed runaway reports regarding a minor son (Asher) apparently born in 1997; Samarin was posing as Asher and attending high school. The school provided a sworn statement from McClure-Potts that Samarin was born in 1997, with applications for free/reduced lunch and health benefits. Samarin claimed that he had moved in with McClure-Potts, then was told to cut ties with his family and surrender his money and his identification documents. He was forced to do household work. McClure-Potts obtained a Social Security card for "Asher," and used it to procure $7,336 in income tax credits and $13,653.28 in nutritional and health benefits. McClure-Potts was charged with Social Security Fraud, 42 U.S.C. 408(a)(6); Harboring an Illegal Alien, 8 U.S.C. 1324(a)(1)(A)(iii), (a)(2); and Unlawful Conduct Respecting Documents in Furtherance of Forced Labor, 18 U.S.C. 1589, 1590. McClure-Potts pled guilty to the Social Security Fraud and Harboring counts. Based on the amount of loss ($20,989.28) and the court’s refusal to grant an offense level reduction due to the claim that her fraud was committed “other than for profit," she was sentenced to five months. The Third Circuit affirmed. The benefits that McClure-Potts sought and received were “payment” for her harboring Samarin. View "United States v. McClure-Potts" on Justia Law

Plaintiffs founded ChinaWhys, which assists foreign companies doing business in China with American anti-bribery regulations compliance. Plaintiffs allege that the GSK Defendants engaged in bribery in China, with the approval of Reilly, the CEO of GSK China. In 2011, a whistleblower sent Chinese regulators correspondence accusing GSK of bribery. Defendants tried to uncover the whistleblower’s identity. Plaintiffs met with Reilly. According to Plaintiffs, GSK China representatives stated they believed Shi, a GSK China employee who had been fired, was orchestrating a “smear campaign.” ChinaWhys agreed to investigate Shi under an agreement to be governed by Chinese law, with all disputes subject to arbitration in China. Plaintiffs were arrested, convicted, imprisoned, and deported from China. Reilly was convicted of bribing physicians and was also imprisoned and deported. The Chinese government fined GSK $492 million for its bribery practices; GSK entered a settlement agreement with the U.S. SEC. Plaintiffs sued under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1961–1968, contending that their business was “destroyed and their prospective business ventures eviscerated” as a result of Defendants’ misconduct. RICO creates a private right of action for a plaintiff injured in his business or property as a result of prohibited conduct; for racketeering activity committed abroad, section 1964(c)’s private right of action requires that the plaintiff “allege and prove a domestic injury to its business or property.” The Third Circuit held that Plaintiffs did not plead sufficient facts to establish that they suffered a domestic injury under section 1964(c). View "Humphrey v. GlaxoSmithKline PLC" on Justia Law

Before trial on a 77-count indictment that charged Appellants with operating a ticket-fixing scheme in the Philadelphia Traffic Court, the district court denied a motion to dismiss charges of conspiracy (18 U.S.C. 1349), mail fraud (18 U.S.C. 1341), and wire fraud (18 U.S.C. 1343). A private citizen and the Traffic Court administrator subsequently pleaded guilty to all counts, then appealed whether the indictment properly alleged mail fraud and wire fraud. Three Traffic Court Judges proceeded to a joint trial and were acquitted of fraud and conspiracy but convicted of perjury for statements they made before the Grand Jury. They disputed the sufficiency of the evidence, arguing that the prosecutor’s questions were vague and that their answers were literally true; claimed that the jury was prejudiced by evidence on the fraud and conspiracy counts; and argued that the court erred by ruling that certain evidence was inadmissible. The Third Circuit affirmed the convictions. The Indictment sufficiently alleged that the defendants engaged in a scheme to defraud the Commonwealth and the city of money in costs and fees; it explicitly states that the scheme deprived the city and the Commonwealth of money, and describes the object of the scheme as obviating judgments of guilt that imposed the fines and costs. View "United States v. Hird" on Justia Law

Fattah, a prominent fixture in Philadelphia politics, financially overextended himself in both his personal life and his professional career during an ultimately unsuccessful run for mayor. Fattah received a substantial illicit loan to his mayoral campaign and used his political influence and personal connections to engage friends, employees, and others in an elaborate series of schemes aimed at preserving his political status by hiding the source of the illicit loan and its repayment. Fattah and his allies engaged in shady and, at times, illegal behavior, including the misuse of federal grant money and federal appropriations, the siphoning of money from nonprofit organizations to pay campaign debts, and the misappropriation of campaign funds to pay personal obligations. Based upon their actions, Fattah and four associates were charged in a 29-count indictment. Each was convicted on multiple counts. The Third Circuit affirmed in part, rejecting various challenges to evidentiary rulings, jury instructions, and the sufficiency of the evidence, but vacated certain convictions involving jury instructions concerning the meaning of the term “official act” as used in the bribery statute and the honest services fraud statute. In light of the Supreme Court’s 2016 “McDonnell” decision, released the week after the jury verdict, the instructions were incomplete and erroneous. View "United States v. Fattah" on Justia Law

In 2015, former Virgin Islands Senator James was charged with wire fraud, 18 U.S.C. 1343, and federal programs embezzlement, 18 U.S.C. 666(a)(1)(A), stemming from his use of legislative funds to ostensibly obtain historical documents from Denmark related to the Fireburn, an 1878 St. Croix uprising. The indictment specified: obtaining cash advances from the Legislature but retaining a portion of those funds for his personal use; double-billing for expenses for which he had already received a cash advance; submitting invoices and receiving funds for translation work that was never done; and submitting invoices and receiving funds for translation work that was completed before his election to the Legislature. James, who argued that he was engaged in legislative fact-finding, moved to dismiss the indictment on legislative immunity grounds. The district court denied the motion, stating that James’ actions were not legislative acts worthy of statutory protection under the Organic Act of the Virgin Islands. The Third Circuit affirmed. Under 48 U.S.C. 1572(d) legislators are protected from being “held to answer before any tribunal other than the legislature for any speech or debate in the legislature." The conduct underlying the government’s allegations concerning James is clearly not legislative conduct protected by section 1572(d). View "United States v. James" on Justia Law

In 2015, former Virgin Islands Senator James was charged with wire fraud, 18 U.S.C. 1343, and federal programs embezzlement, 18 U.S.C. 666(a)(1)(A), stemming from his use of legislative funds to ostensibly obtain historical documents from Denmark related to the Fireburn, an 1878 St. Croix uprising. The indictment specified: obtaining cash advances from the Legislature but retaining a portion of those funds for his personal use; double-billing for expenses for which he had already received a cash advance; submitting invoices and receiving funds for translation work that was never done; and submitting invoices and receiving funds for translation work that was completed before his election to the Legislature. James, who argued that he was engaged in legislative fact-finding, moved to dismiss the indictment on legislative immunity grounds. The district court denied the motion, stating that James’ actions were not legislative acts worthy of statutory protection under the Organic Act of the Virgin Islands. The Third Circuit affirmed. Under 48 U.S.C. 1572(d) legislators are protected from being “held to answer before any tribunal other than the legislature for any speech or debate in the legislature." The conduct underlying the government’s allegations concerning James is clearly not legislative conduct protected by section 1572(d). View "United States v. James" on Justia Law

Metro, a managing clerk at a New York City law firm, engaged in a five-year scheme in which he disclosed material nonpublic information concerning corporate transactions to his friend Tamayo. Tamayo told his stockbroker, Eydelman, who made trades for Tamayo, himself, his family, his friends, and other clients. Metro did not hold the involved stocks himself and did not collect proceeds but relied on Tamayo to reinvest the proceeds from their unlawful trades in future insider trading. During the government’s investigation, Tamayo promptly admitted his role in the scheme and cooperated with the government. The insider trading based on Metro’s tips resulted in illicit gains of $5,673,682. The court attributed that entire sum to Metro in determining his 46-month sentence after Metro pled guilty to conspiracy to violate securities laws, 18 U.S.C. 371, and insider trading, 15 U.S.C. 78j(b) and 78ff. Metro denies being aware of Eydelman’s existence until one year after he relayed his last tip to Tamayo, and contends that he never intended any of the tips to be passed to a broker or any other third party. The Third Circuit vacated the sentence. The district court failed to make sufficient factual findings to support the attribution of the full $5.6 million to Metro and gave too broad a meaning to the phrase “acting in concert.” View "United States v. Metro" on Justia Law

From 2006 through 2011, Poulson tricked homeowners facing foreclosure into selling him their homes and engaged in a multi-million-dollar Ponzi scheme that defrauded investors in those distressed properties. Poulson pleaded guilty to one count of mail fraud, 18 U.S.C. 1341. The district court calculated his total fraud to be $2,721,240.94; concluded that this fraud resulted in “substantial financial hardship” for more than 25 victims; and sentenced Poulson to 70 months’ imprisonment followed by three years of supervised release, with a condition prohibiting Poulson from working in the real estate industry for five years. The Third Circuit affirmed in part, upholding the court’s determination of the number of victims who suffered a “substantial financial hardship” under U.S.S.G 2B1.1. The court reasoned that the Guidelines give the court considerable discretion. The court vacated the imposition of a five-year occupational restriction on his three-year term of supervised release, the statutory maximum, and remanded for resentencing. View "United States v. Poulson" on Justia Law