Justia White Collar Crime Opinion Summaries

Based on their involvement in promoting or selling stock for Petro America, an unregistered company that had no value, eight coconspirators were charged with conspiracy to commit securities fraud and wire fraud 18 U.S.C. 371. Hawkins was also charged with aiding and abetting securities fraud, 15 U.S.C. 77q and 18 U.S.C. 2, aggravated currency structuring, 31 U.S.C. 5324(a)(3) and (d)(2), money laundering, 18 U.S.C. 1957, and two counts of wire fraud, 18 U.S.C. 1343. Brown was also charged with securities fraud and wire fraud; Heurung was charged with two additional counts of wire fraud; and Miller was charged with money laundering and wire fraud. The others pled guilty to various charges. Hawkins, Brown, Heurung, Miller and Roper proceeded to trial. Hawkins argued that Petro America was a legitimate company and that the government was prosecuting so that it could confiscate the company's substantial assets. The others acknowledged that Petro America was a sham but claimed they had believed in good faith that the company was real and that they could promote or sell its stock. The Eighth Circuit affirmed their convictions on all counts, rejecting challenges concerning jury selection and evidentiary rulings. View "United States v. Hawkins" on Justia Law

Kaplan operated an illegal sports-booking business in New York that moved to Costa Rica in the 1990s. In 2004, the company went public on the London Stock Exchange. Before going public, Kaplan placed $98 million in trusts off the coast of France. Kaplan neglected to pay federal income or capital gains tax for the trusts for 2004 and 2005. In 2006, Kaplan was indicted for operating an illegal online gambling business within the U.S. Kaplan accepted a plea agreement, which stated: [N]othing contained in this document is meant to limit the rights and authority of the United States … to take any civil, civil tax or administrative action against the defendant. The court asked: Do you understand … that there is a difference between a criminal tax proceeding and a civil tax proceeding … that [this] doesn't preclude the initiation of any civil tax proceeding or administrative action against you? Kaplan replied, "I understand." The court sentenced Kaplan to 51 months of imprisonment, and ordered forfeiture of $43,650,000. Later, the IRS issued Kaplan a notice of deficiency with penalties, totaling more than $36,000,000. The Eighth Circuit affirmed: since Kaplan failed to file a return, the period to assess taxes never began to run; the plea agreement was unambiguous; and the government's failure to object to the Presentence Report did not prevent the government from bringing a civil tax proceeding. View "Kaplan v. Comm'r of Internal Revenue" on Justia Law

Just before investing in Zhongpin on behalf of Prestige, Yang, a Chinese citizen employed at a U.S. investment firm, purchased Zhongpin shares and option contracts for himself. Yang was Prestige’s only officer and employee and sole investment manager. Yang did not disclose the purchases to Prestige. After its purchases, Prestige owned more than five percent of Zhongpin’s common stock, triggering an obligation to file Schedule 13D, 15 U.S.C. 78m(d). Yang and two others associated with Prestige filed Schedule 13D on behalf of Prestige, disclosing that Yang shared voting and dispositive power over Prestige’s Zhongpin shares, but failing to list the shares that Yang had purchased for himself, as required. The Schedule 13D misleadingly stated that, except for transactions listed on the form, “no transactions in the Common Stock were effected by any Reporting Person” in 60 days prior to Prestige’s attainment of its interest. Claiming deceptive “front-running,” the Securities and Exchange Commission instituted a civil suit. The jury found that Yang had violated the law by front-running and by filing a fraudulent disclosure. The court imposed a $150,000 penalty and enjoined Yang from future violations of U.S. securities law. The Seventh Circuit affirmed. Yang forfeited his arguments regarding the illegality of front-running and the materiality of his disclosure. View "Sec. & Eexch. Comm'n v. Yang" on Justia Law

Defendants appealed from judgments following a jury trial convicting them of conspiracy to commit mail and wire fraud in connection with the sale of coins and conspiracy to engage in money laundering. The court concluded that the district court did not abuse its discretion in admitting the testimony of experts or its decision that the admission of their testimony does not warrant a new trial. The court concluded, however, that the district court failed to review de novo the recommendations of the magistrate judge for restitution and forfeiture. The court concluded that defendants' remaining arguments lacked merit. Accordingly, the court affirmed the judgment of the district court in all respects except that the matter is remanded for de novo review of the magistrate judge's reports and recommendations concerning restitution and forfeiture. View "United States v. Romano" on Justia Law

Defendants appealed from judgments following a jury trial convicting them of conspiracy to commit mail and wire fraud in connection with the sale of coins and conspiracy to engage in money laundering. The court concluded that the district court did not abuse its discretion in admitting the testimony of experts or its decision that the admission of their testimony does not warrant a new trial. The court concluded, however, that the district court failed to review de novo the recommendations of the magistrate judge for restitution and forfeiture. The court concluded that defendants' remaining arguments lacked merit. Accordingly, the court affirmed the judgment of the district court in all respects except that the matter is remanded for de novo review of the magistrate judge's reports and recommendations concerning restitution and forfeiture. View "United States v. Romano" on Justia Law

Defendant Jeffrey Zander was convicted of two counts of mail fraud, two counts of wire fraud, one count of money laundering, and three counts of willful failure to file federal tax returns. The fraud and money laundering counts at issue in this appeal all arose out of Defendant’s scheme to divert federal grant money intended for the Paiute Indian Tribe for his own personal use. Defendant began working for the Tribe as a tribal planner in 1998, and he subsequently became the Tribe’s trust resource and economic development director. As a director, Defendant worked independently with minimal supervision. In about 2004 or 2005, Defendant suggested the Tribe seek federal grant money to fund the development of an Integrated Resource Management Plan (IRMP) for each of the Tribe's bands. The agency approved and awarded the following five IRMP development grants. Instead of hiring an outside consultant and facilitator to help develop IRMPs for each band, Defendant created false invoices and purchase orders for four fictitious companies and represented to the Tribe that these companies had provided consulting and facilitating services for the IRMP development projects. Based on these representations, the Tribe issued checks made out to these nonexistent companies and, at Defendant’s direction, either mailed the checks to post office boxes that were actually owned or controlled by Defendant or gave them to Defendant to hand-deliver to the purported companies. Defendant was sentenced to sixty-eight months of imprisonment and ordered to pay $202,543.92 in restitution to the Tribe. On appeal, he challenged his convictions on the mail fraud, wire fraud, and money laundering counts. He also challenged the length of his sentence and the amount of restitution awarded to the Tribe. Upon review, the Tenth Circuit found the trial court miscalculated defendant's sentence and restitution amount. It reversed and remanded for recalculation. The Court affirmed in all other respects, finding no reversible error. View "United States v. Zander" on Justia Law

McClellan operated T&M Daycare. Nearly all of its clients participated in an Illinois program that reimbursed daycare centers. To qualify, a parent or guardian had to reside in Illinois, be employed or attend school, and have an income below a specified amount. McClellan instructed T&M’s director to falsify records so that T&M could receive state reimbursement. McClellan was also seen changing numbers on sheets submitted for state reimbursement of meals. McClellan purchased Paragon restaurant. The Department of Homeland Security had been investigating information that illegal aliens were working there. Paragon’s manager agreed to record conversations with McClellan and to provide documentary evidence that McClellan was paying wages in cash and was not reporting those wages to the state. McClellan used T&M’s account to purchase a house, where undocumented kitchen staff lived rent‐free. Recorded conversations revealed McClellan’s knowledge of the workers’ illegal status. Agents executed search warrants and found 12 workers without legal status. McClellan was charged with harboring illegal aliens, 8 U.S.C. 1324(a)(1)(A)(iii); mail fraud, 18 U.S.C. 1341, based on his submission of fraudulent employment tax reports; and engaging in a monetary transaction involving criminally derived property, 18 U.S.C. 1957, based on the transfer of T&M funds for the house purchase. The Seventh Circuit affirmed his convictions, rejecting challenges to the sufficiency of the evidence and to jury instructions. View "United States v. McClellan" on Justia Law

Before the 2008 presidential election, federal agents were investigating then-Governor Blagojevich and obtained warrants authorizing the interception of his phone calls. When Barack Obama, then a Senator from Illinois, won the election, Blagojevich was to appoint his replacement. Interceptions revealed that Blagojevich viewed the opportunity to appoint a new Senator as a bonanza. After two trials, Blagojevich was convicted of 18 crimes, including attempted extortion from campaign contributors, corrupt solicitation of funds, wire fraud, and lying to federal investigators. The district court sentenced Blagojevich to 168 months’ imprisonment. The Seventh Circuit vacated convictions on five counts, concerning Blagojevich’s proposal to appoint Valerie Jarrett to the Senate in exchange for an appointment to the Cabinet, and remanded. The court rejected a challenge to the sufficiency of the evidence, but concluded the instructions permitted the jury to convict even if it found that his only request of Obama was for a Cabinet position. A proposal to trade one public act for another, logrolling, is unlike the swap of an official act for a private payment. The instructions do not ensure that the jury found that Blagojevich offered to trade the appointment for a private salary. Because the court affirmed on most counts and concluded that the sentencing range lies above 168 months, Blagojevich is not entitled to release pending further proceedings. View "United States v. Blagojevich" on Justia Law

H & Q and the Doll Companies owned membership units of Double D Excavating, LLC. The Doll Companies opened account 121224 in the name of "Double D Excavating" and deposited a check payable to the LLC and opened account 119992 in the name of David Doll. The Doll Companies deposited into Account 121224 multiple payments that LLC customers made to the LLC and then transferred funds from Account 121224 to Account 119992, commingled funds from Account 119992 with funds belonging to the Doll Companies, and used those funds to pay Doll Companies' expenses. H&Q claims that the Doll Companies failed to give notice or obtain consent for any of those activities and represented to H&Q that the LLC was struggling financially and needed additional financial assistance. The Doll Companies contributed a portion of the funds from Account 119992 back to the LLC and, according to H&Q, represented to H&Q that these were fresh capital contributions. H&Q also invested additional capital. After discovering the Doll Companies' alleged conduct, H&Q filed suit asserting state law claims and claims under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1961. The Eighth Circuit affirmed dismissal, agreeing that the complaint did not sufficiently allege any racketeering activity. View "H & Q Props, Inc. v. Doll" on Justia Law

Defendant, convicted of access device fraud, appealed from the district court's judgment sentencing him to pay restitution both to his victims and to third-party providers of compensation for losses arising from his fraudulent activities. Because the Mandatory Victims Restitution Act (MVRA), 18 U.S.C. 3663A, limits a defendant’s restitution amount to the actual losses suffered by his victims, and because third-party providers of compensation do not qualify as “victims” whose losses may expand the defendant’s restitution liability, the district court erred in ordering defendant to pay more in restitution than the victims’ actual losses. Therefore, the court vacated the restitution order and remanded for recalculation. View "United States v. Thompson" on Justia Law