Justia White Collar Crime Opinion Summaries

Elizabeth Holmes and Ramesh “Sunny” Balwani founded Theranos, a company that claimed its technology could run fast, accurate, and affordable blood tests using just a drop of blood. Holmes served as CEO, and Balwani as President and COO. They raised significant investments by making representations about the capabilities of Theranos’s proprietary devices, financial health, and business relationships. However, investigations revealed that the technology was unreliable, Theranos often relied on third-party devices, and its partnerships and finances were misrepresented to investors. Both Holmes and Balwani were indicted for conspiracy and wire fraud relating to investors and patients; they were tried separately, and each was convicted of multiple counts of fraud.Proceedings were held before the United States District Court for the Northern District of California. Holmes was convicted on four investor-related counts, while Balwani was convicted on all counts, including those related to patients and investors. At sentencing, both were found responsible for losses to multiple victims and given lengthy prison terms. The district court also ordered them to pay $452 million in restitution to fourteen victims, finding that the money invested constituted the lost property.On appeal, the United States Court of Appeals for the Ninth Circuit reviewed and affirmed the convictions, sentences, and restitution order. The panel held that while some testimony by former Theranos employees should have been treated as expert opinion under Rule 702, any error was harmless. The court found no abuse of discretion in admitting a regulatory report, limiting cross-examination, or excluding certain hearsay statements. It rejected arguments of constructive amendment and Napue violations. The panel clarified restitution calculations under the MVRA, holding that the victims’ actual losses equaled their total investments, affirming the district court’s order. View "United States v. Holmes" on Justia Law

Two Massachusetts State Police officers, Lieutenant Daniel Griffin and Sergeant William Robertson, were implicated in a years-long scheme involving fraudulent overtime billing between 2015 and 2017. Both routinely claimed pay for hours they did not work, either by arriving late, leaving early, or “double-dipping” by billing overtime for tasks performed during regular hours. They also encouraged subordinates to engage in the same practices. The overtime funds in question were supplied through federal grants meant to support highway safety initiatives. In addition to the overtime fraud, Griffin separately engaged in wire fraud relating to private school financial aid and tax fraud connected to a private security business.The United States District Court for the District of Massachusetts presided over a jury trial, which resulted in convictions for both defendants on all counts related to wire fraud, theft of federal funds, and conspiracy. Griffin pled guilty to additional charges of wire fraud and tax falsification before trial. Sentences were imposed: Griffin received 60 months’ imprisonment, three years’ supervised release, substantial restitution, and forfeiture; Robertson received 36 months’ imprisonment, three years’ supervised release, joint and several liability for restitution, and forfeiture.Upon appeal to the United States Court of Appeals for the First Circuit, the court reviewed a broad array of challenges. The First Circuit largely affirmed the convictions, sentences, and restitution orders. It found no reversible error in the district court’s handling of the constitutional challenge, sufficiency of the evidence, guidelines calculations, sentencing disparities, and restitution. However, the Circuit Court vacated and remanded the forfeiture order against Griffin, holding that the government failed to prove by a preponderance of the evidence that the full amount of financial aid received was “traceable to” fraud, as required by statute. All other aspects of the district court’s judgment were affirmed. View "United States v. Robertson" on Justia Law

De’Andre Owens was the subject of a controlled drug buy operation in Centralia, Illinois, on March 15, 2022. Law enforcement provided a confidential informant, Charlie Anderson, with money and recording equipment to purchase methamphetamine from Owens. The exchange occurred under police surveillance, but the recording device did not capture the transaction clearly. After the sale, Anderson was followed by Owens, prompting coordinated surveillance by detectives until Anderson safely rejoined them and turned over methamphetamine. While awaiting trial in jail for this offense, Owens attempted to bribe Anderson not to testify, orchestrating a series of calls offering Anderson $10,000 for his silence.In July 2023, Owens was indicted in the United States District Court for the Southern District of Illinois on counts of distributing methamphetamine and witness tampering. At trial, several law enforcement officers and experts testified regarding the procedures used in the controlled buy and the subsequent investigation. The jury found Owens guilty on both counts. The district court sentenced him to 360 months’ imprisonment, classifying him as a career offender based in part on a prior state drug conviction. Owens had initially objected to the career offender enhancement but withdrew that objection at sentencing.Owens appealed to the United States Court of Appeals for the Seventh Circuit, arguing errors related to expert testimony, jury instructions, handling of dual-role witnesses, and the career offender enhancement. The Seventh Circuit held that Owens forfeited or waived each argument. The court found no plain error in the admission of expert testimony, the inclusion of a witness in a jury instruction, or the handling of dual-role testimony, and concluded Owens had waived his objection to the career offender enhancement. The Seventh Circuit affirmed the judgment of the district court. View "USA v Owens" on Justia Law

Two individuals who held leadership positions at a local public housing authority in South Bend, Indiana, orchestrated a scheme in which they collaborated with several contractors to submit false invoices for maintenance work that was never performed. The contractors cashed checks issued by the housing authority for these fictitious services and shared the proceeds with the two employees. This fraudulent activity came to light after a casino employee observed the pair gambling large amounts of cash and reported the suspicious behavior to law enforcement. Following an investigation, both individuals were indicted on multiple counts, including conspiracy to commit wire and bank fraud, several counts of bank fraud, wire fraud, and federal program theft.The United States District Court for the Northern District of Indiana presided over their trial. After the government presented its case, both defendants moved for judgments of acquittal on the wire fraud charges; the court reserved ruling, and the jury ultimately convicted both individuals on the majority of counts, although one was acquitted on a wire fraud count. The district court denied the motions for acquittal, imposed prison sentences, and ordered substantial restitution. The defendants appealed their convictions and sentences.The United States Court of Appeals for the Seventh Circuit reviewed the appeals. It held that the evidence was insufficient to sustain the bank fraud convictions because the government failed to prove that any false statement was made to a bank, as required by 18 U.S.C. § 1344(2), and therefore reversed those convictions. However, the Seventh Circuit affirmed the wire fraud convictions, finding that a rational jury could conclude the fraudulent scheme furthered the transmission of funds via interstate wire. The court also affirmed one defendant’s sentence enhancement for abuse of a position of trust, finding no clear error or harmless error. The case was remanded solely to correct a clerical error in the restitution order. View "United States v. Smith" on Justia Law

Two brothers sought multimillion-dollar loans from a bank to fund oil and gas investments. Because the bank required collateral, one brother arranged for a third party to create fraudulent documents making it appear that a securities account was worth millions. The brothers paid the third party for these fake statements, and, over several years, borrowed millions from the bank. They used some of the loan proceeds for improper purposes, including personal expenses and paying for the fake account statements. The bank eventually discovered the fraud after questioning the third party, who confessed and cooperated with the government, leading to indictments for conspiracy to commit bank fraud and money laundering.Prior to trial, the case was assigned to a district judge who had previously represented the victim bank in unrelated civil matters. One brother pled guilty to conspiracy to commit bank fraud before trial, while the other, Phillip, went to trial. The district court denied motions to dismiss the indictment, sever the defendants, and for the judge’s recusal. It also admitted certain evidence and denied several of Phillip’s proposed jury instructions. After a jury found Phillip guilty on all counts, he was sentenced to concurrent prison terms and supervised release. He appealed, raising issues related to the judge’s recusal, evidentiary rulings, prosecutorial delay, instructions, and sufficiency of the evidence.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court held that the district judge was not required to recuse himself due to his prior, unrelated representation of the bank. The court found no reversible error in the handling of co-conspirators’ pleas or other evidentiary rulings, found no grounds for dismissal due to prosecutorial delay, and held that the jury instructions were adequate. The court also found the evidence sufficient to support the convictions and rejected the cumulative error argument. The convictions were affirmed. View "USA v. Page" on Justia Law

A special agent with Homeland Security Investigations was discovered to have stolen money from criminal targets, embezzled agency funds, and entered into a cash-for-protection arrangement with a confidential source. The agent’s conduct came to light after the confidential source was arrested by the DEA, and text messages between the two were uncovered. Investigators found that the agent deleted incriminating messages, misappropriated cash from drug dealers and agency sources, manipulated controlled buys for personal gain, and protected his source from law enforcement scrutiny. The agent was also shown to have structured cash deposits to evade bank reporting requirements and failed to report significant taxable income.The United States District Court for the Northern District of Illinois, Eastern Division, conducted a thirteen-day jury trial in 2023. The jury found the agent guilty on all counts, including filing false tax returns, structuring cash transactions, and concealing material facts from the government. The district court denied the agent’s post-trial motions for acquittal and a new trial, then imposed sentence. The agent appealed, contesting the sufficiency of the evidence supporting his conviction.The United States Court of Appeals for the Seventh Circuit reviewed the case. Applying the appropriate standards of review, the court held that there was sufficient evidence for a rational jury to convict on all counts. The evidence included direct and indirect proof of unreported income, clear indications of structuring to evade reporting requirements, and material omissions on government forms. The court found no grounds to disturb the jury’s credibility determinations or the district court’s denial of post-trial motions. Accordingly, the Seventh Circuit affirmed the judgment of the district court. View "USA v Sabaini" on Justia Law

An employee was hired by a nonprofit organization to help organize a fundraiser and was given access to a board member’s email account for work purposes. After a dispute about the nature of her employment, the employee resigned and requested payment for her services, but the organization stopped communicating with her and did not pay. The former employee, still having technical access to the email account, began accessing it, downloaded internal documents, and sent them to a friend. The friend subsequently threatened the organization with releasing these documents unless both were paid substantial sums. The organization eventually revoked the employee’s access and reported the matter to the authorities.A grand jury in the United States District Court for the Eastern District of Pennsylvania indicted both individuals on several counts of violating the Computer Fraud and Abuse Act (CFAA), which prohibits intentionally accessing a computer “without authorization.” At trial, the prosecution’s theory was that the employee’s resignation automatically ended her authorization to access the email account, making her subsequent access a crime. The district court denied defense motions for acquittal and a new trial, the latter of which challenged both the jury instructions on authorization and the prosecutor’s remarks about extortion.The United States Court of Appeals for the Third Circuit held that, in the absence of any evidence the organization took affirmative steps to revoke the employee’s authorization—or any contract linking authorization to employment—the mere act of resignation did not terminate authorization under the CFAA. The court found the jury instruction on authorization erroneous and determined there was insufficient evidence to support the conviction. The Third Circuit vacated the conviction and ordered a judgment of acquittal. The court also found that any improper remarks by the prosecutor were harmless given the curative instructions. View "USA v. Eddings" on Justia Law

Christopher Kirchner, the founder and CEO of a Dallas-based logistics software startup, raised substantial funds from investors over several rounds of stock offerings. While some of these funds were used for legitimate business expenses, Kirchner misappropriated millions for personal use, including luxury purchases such as private jet charters and stadium suites. To secure additional investments and conceal his misuse of earlier funds, Kirchner made false statements about the company’s financial health and fabricated documents. When the company began missing payroll, he launched another unauthorized funding round and continued his pattern of deception. Eventually, internal scrutiny and investor complaints led to his suspension and termination, and the company was forced to liquidate.The United States District Court for the Northern District of Texas presided over Kirchner’s trial, where a jury convicted him on four counts of wire fraud and seven counts of money laundering. The district court sentenced him to 240 months in prison and issued a Presentence Report applying the money-laundering Guideline with an abuse-of-trust enhancement, resulting in a higher offense level. Kirchner appealed, arguing that the district court’s questioning of witnesses showed judicial bias, that there was insufficient evidence to support two wire fraud convictions, and that there were errors in the sentencing calculations, including the application of the abuse-of-trust enhancement and the calculation of loss amounts.The United States Court of Appeals for the Fifth Circuit reviewed the appeal. The court held that the district court’s questioning did not amount to plain error or violate due process, as its interventions were limited and the jury received proper instructions. The evidence was sufficient to support all convictions, including the challenged wire fraud counts. The court also affirmed the sentencing approach, concluding that the abuse-of-trust enhancement properly applied and that the loss calculation was reasonable. Accordingly, the Fifth Circuit affirmed Kirchner’s conviction and sentence. View "United States v. Kirchner" on Justia Law

A Malaysian national who worked as a managing director for Goldman Sachs in Malaysia was prosecuted for his role in a large-scale financial scheme involving 1Malaysia Development Berhad (1MDB), a Malaysian state-owned investment fund. The government presented evidence showing that, along with other conspirators, he participated in three major bond offerings raising $6.5 billion, from which more than $2.5 billion was diverted for bribes and kickbacks to officials and participants, including himself. The funds were laundered through shell companies, and the defendant received $35.1 million that was deposited in an account controlled by his family members. The defendant’s wife asserted at trial that these funds were legitimate investment returns, not criminal proceeds.Prior to this appeal, the United States District Court for the Eastern District of New York denied several motions by the defendant. The court rejected his arguments that the indictment should be dismissed for lack of venue, concluding that acts in furtherance of the conspiracy passed through the Eastern District of New York. The court also found that the government did not breach an agreement regarding his extradition from Malaysia, since the superseding indictments did not charge new offenses. The district court excluded a video recording offered by the defense as inadmissible hearsay, and ultimately, a jury found him guilty on all counts. He was sentenced to 120 months’ imprisonment and ordered to forfeit $35.1 million.On appeal to the United States Court of Appeals for the Second Circuit, the defendant argued improper venue, breach of extradition agreement, erroneous exclusion of evidence, and that the forfeiture was an excessive fine under the Eighth Amendment. The Second Circuit held that the district court had not erred in any respect. Venue was proper, the extradition agreement was not breached, the evidentiary ruling was not an abuse of discretion, and the forfeiture was not grossly disproportionate to the offense. Accordingly, the judgment of conviction and forfeiture order were affirmed. View "USA v. NG CHONG HWA" on Justia Law

In October 2021, a Florida attorney, Ross, held a trust account at Regions Bank that received a $29.6 million wire transfer, the result of a business email compromise fraud perpetrated on a company called Phoenix. Most of the funds were rapidly transferred out of the account, with some recalled by the bank. Federal authorities seized approximately $4.9 million remaining or recovered from the account and initiated a civil forfeiture action, alleging the funds were proceeds of fraud or involved in money laundering.The United States District Court for the Northern District of New York oversaw the initial proceedings. Ross filed a verified claim to $1.21 million of the seized funds, asserting they were legitimate client funds or proceeds from his home sale, but made no claim to the remaining $3.69 million. Another claimant, Phoenix, also asserted interest in the $1.21 million. The district court entered default judgment forfeiting the unclaimed $3.69 million to the government, dismissed without prejudice the forfeiture proceedings as to the $1.21 million, and issued a certificate of reasonable cause for the seizure. It denied Ross’s subsequent motion for attorney fees, costs, and interest under CAFRA, finding he did not “substantially prevail,” and denied reconsideration.On appeal, the United States Court of Appeals for the Second Circuit held that Ross lacked standing to contest the forfeiture of the $3.69 million because he had not filed a claim as to those funds. The court rejected Ross’s due process challenge to the stay of proceedings, finding the delay reasonable, and upheld the denial of attorney fees, costs, and interest, concluding that dismissal without prejudice did not make Ross a prevailing party under CAFRA. The court also found no abuse of discretion in dismissing the forfeiture action without prejudice. However, the Second Circuit vacated the issuance of a certificate of reasonable cause, as no judgment for Ross had been entered. All other aspects of the district court’s judgments were affirmed. View "United States v. Ross" on Justia Law