Justia White Collar Crime Opinion Summaries

Defendant was indicted for financial crimes. He applied for public defender representation and provided information about his financial status that was collected by court staff on a UDIR form. Defendant's application was granted. Because the State's investigation suggested that defendant owned substantial assets, it issued a trial subpoena to the Morris County Superior Court's custodian of records demanding the production of financial data provided to court staff, including defendant's UDIR form. Although it used a trial subpoena, the State represented that it did not intend to use defendant's UDIR form at his pending trial; instead, it would be used to determine whether the State should separately indict defendant for making intentional false statements to obtain free counsel and to determine whether to apply for the removal of defendant's appointed counsel. The trial court quashed the subpoena on its own motion pursuant to the attorney-client privilege. The trial court denied the State's motion for reconsideration, reaffirming its view that the attorney-client privilege protected disclosure of defendant's financial information. The Appellate Division affirmed, holding that the attorney-client privilege protected the information sought. Upon review of the matter, the Supreme Court concluded that the subpoena was properly quashed because defendant was "entitled to the benefit of the long-standing practice embodied in Directive 1-06 - that 'information on the intake form may not be used in grand jury proceedings or at trial.'"View "In re Subpoena Duces Tecum on Custodian of Records" on Justia Law

Plaintiffs here were Bryan Behrens, Bryan Behrens Co., Inc., National Investments, Inc., and Thomas Stalnaker. Defendants were Christian Blunk, Berkshire and Blunk, and Abrahams Kaslow & Cassman LLP. In 2008, the SEC filed a civil enforcement action against all plaintiffs except Stalnaker. In 2009, the federal government indicted Behrens on charges of securities fraud, mail fraud, wire fraud, and money laundering. Prior to the filing of the indictment, Plaintiffs filed their complaint alleging that Blunk had committed legal malpractice. Plaintiffs also sued Blunk's former partnership and the firm that later employed Blunk. Both civil and criminal cases were proceeding at roughly the same time. In 2010, Behrens pled guilty to securities fraud. Later that year, Plaintiffs filed an amended complaint against Defendants for legal malpractice. The district court found the action was barred by the applicable statute of limitations and by the doctrine of in pari delicto. The Supreme Court affirmed, holding that Plaintiffs' suit was barred by the two-year statute of limitations set forth in Neb. Rev. Stat. 25-222.View "Behrens v. Blunk" on Justia Law

Appellants Consipio Holding, BV; Ilan Bunimovitz; Tisbury Services, Inc.; and Claudio Gianascio (collectively, Consipio) are shareholders of Private Media Group, Inc. (PRVT). In August 2010, Consipio filed a complaint in the Nevada district court, seeking injunctive relief and the appointment of a receiver for PRVT. Consipio also asserted derivative claims on behalf of PRVT against PRVT's former CEO and president, Berth H. Milton, Jr., and against officer and director respondents Johan Carlberg (PRVT director), Peter Dixinger (PRVT director), Bo Rodebrant (PRVT director), Johan Gillborg (former PRVT CFO), and Philip Christmas (PRVT subsidiary CFO). The claims focused on respondents' alleged conduct in assisting Milton, Jr., to financially harm PRVT for their personal gain. The complaint alleged that respondents assisted Milton, Jr., in obtaining significant loans for himself and entities he controls. It further stated that respondents failed to demand repayment on these loans and that they helped Milton, Jr. by removing funds from PRVT and concealing the wrongdoing. Given these allegations, Consipio contended that respondents collectively were guilty of misfeasance, malfeasance, and breach of their fiduciary duties. The issue before the Supreme Court was whether Nevada courts could properly exercise personal jurisdiction over nonresident officers and directors who directly harm a Nevada corporation. The Court concluded that they can. In this case, the district court failed to conduct adequate factual analysis to determine whether it could properly exercise personal jurisdiction over the respondents before dismissing the complaint against them. Accordingly, the Supreme Court vacated the dismissal order and remanded this case to the district court for further proceedings.View "Consipio Holding, BV v. Carlberg" on Justia Law

Appellant Connie Powell worked as a bookkeeper for Rocky Mountain Pump Services (RMPS) from March 2005 to February 2007, when her employment was terminated. After terminating appellant's employment, RMPS contracted with Melanie Field to handle the company's books until another bookkeeper could be hired. Field immediately found the books to be incomplete, inaccurate, and in need of "rebuilding." Reconstruction of the books back to the time when Appellant was hired, revealed numerous discrepancies and missing records, with multiple paychecks to Appellant for the same pay period, copies of checks made payable to the appellant where the computer QuickBooks system showed those checks being paid to vendors, and a few checks made payable to Appellant where the issuing manager's signature appeared to be forged. The examination of the books was followed by a law enforcement investigation that included a review of Appellant's personal bank account records. Eventually, it was determined that 93 checks, totaling $78,200, and claimed to be "unauthorized" by RMPS, had been deposited into Appellant's personal account during her tenure as RMPS's bookkeeper. Appellant was arrested and charged with one count of felony larceny. A jury found her guilty. She appealed her conviction. Because there was insufficient evidence to prove beyond a reasonable doubt that Appellant committed larceny, the Supreme Court reversed her conviction.View "Powell v. Wyoming" on Justia Law

In 2000 Go-Best wired $5 million to an account entitled "Morris M. Goldings client account" at Citizens Bank, based on representations made by Morris M. Goldings, who was then a Massachusetts attorney. Goldings later admitted that the representations were false and that he had used the money to pay other debts. Go-Best filed suit against Citizens Bank, bringing claims of misrepresentation, conversion, aiding and abetting a fraud, aiding and abetting a breach of fiduciary duty, aiding and abetting a conversion, and negligence. Citizens Bank had no knowledge of Goldings's scheme to defraud Go-Best but failed to notify the Board of Bar Overseers of dishonored checks issued on the client account more than six months before Go-Best wired funds into that account. The trial court dismissed, but a divided Appeals Court reversed in part, vacating dismissal of claims of negligence and of aiding and abetting. The Massachusetts Supreme Court reinstated dismissal. Without actual knowledge, the bank's duty to notify the board of dishonored checks from trust accounts arose only from its contractual duty, not from any duty in tort, so the bank could not be liable to Go-Best for any negligence in fulfilling that duty.View "Go-Best Assets Ltd. v. Citizens Bank of MA" on Justia Law

Draughon was admitted to the Florida Bar in 1987. In 1993, he formed NLMC to purchase property for $315,000, and lease it to a client. The seller, Onusic, received a $7,500 down payment and accepted a promissory note which required NLMC to make monthly payments. Onusic signed the deed with the understanding that Draughon would hold the deed in escrow and not record it until she received full payment. In 1997, Draughon recorded the deed. In 2001, Draughon transferred the property from NLMC to himself, took out a mortgage of $274,975, and used the money to pay personal tax liabilities; none of the funds were used to pay the $110,000 owed Onusic. In 2003 Onusic filed suit, but Draughon filed for bankruptcy. The bankruptcy court found actual intent to defraud. A referee recommended that Draughon be found guilty of violating Bar Rule 3-4.3: commission by a lawyer of any act that is unlawful or contrary to honesty and justice, whether committed in the course of the attorney’s relations as an attorney or otherwise. The referee recommended that Draughon be found not guilty of violating Rule 4-4.3(a) concerning dealings with persons not represented by counsel, and recommended public reprimand. The supreme court imposed a one-year suspension.View "FL Bar v. Draughon" on Justia Law

Defendant Paul Wentzlaff, an insurance agent, stole thousands of dollars from Harvey Severson, an elderly man who asked Defendant to help manage his financial affairs. Plaintiff Donald Hass, as personal representative for Severson’s estate, sued Defendant and two insurance companies who appointed Defendant as an agent, North American Company for Life and Health Insurance (North American) and Allianz Life Insurance of North America (Allianz). Hass and North American each moved for summary judgment and Allianz joined North American’s motion. After a hearing, the circuit court denied Plaintiff's motion and granted the insurance companies’ motion. Plaintiff appealed, arguing that the insurance companies were vicariously liable for Defendant's acts. Based on undisputed material facts on the record in this case, the Supreme Court found that Defendant Wentzlaff was not acting within the scope of his employment when he stole money from Severson, and thus, as a matter of law, North American and Allianz were not vicariously liable for his acts. The Court affirmed the circuit court's grant of summary judgment in favor of the insurance companies. View "Hass v. Wentzlaff" on Justia Law

A circuit court found Appellant David Cannon in contempt of court for violating (1) an order mandating that Appellant give up all authority and cease all activities relating to the James Brown estate, the Brown trusts, and all Brown entities (which he violated by filing amended tax returns without authority); and (2) an order requiring Cannon to pay back money he had misappropriated from Brown's estate. The circuit court ordered Appellant to be incarcerated for six months for contempt. However, the circuit court stated Appellant could purge himself of the contempt "by the payment of the aforementioned [money, with a portion] to be applied towards the payment of attorneys' fees incurred by the various parties, and the payment of a fine." The Court of Appeals affirmed in part, reversed in part, and remanded for further proceedings; upholding all of the circuit court's findings regarding the contempt except for the amount awarded towards attorneys' fees and the imposition of the fine. The Court of Appeals found the circuit court abused its discretion as to attorneys' fees because it did not make the necessary factual findings to support the amount awarded, so it "reverse[d] and remand[ed] the issue of attorneys' fees to the circuit court for findings of fact as to the proper amount. On remand, the circuit court held a hearing for the sole purpose of making findings of fact regarding the proper amount of attorneys' fees to be awarded for reimbursing the parties for attorneys' time related to the issue of Appellant's contemptuous conduct, and held that Appellant should pay. Appellant appealed this order, arguing payment of fees was mooted by his serving his jail sentence. The case was transferred from the Court of Appeals to the Supreme Court. Upon review, the Supreme Court affirmed the Court of Appeals, concluding the trial court did not abuse its discretion in ordering Appellant pay attorneys' fees. Further, the Court held that the issue of attorneys' fees was not mooted by Appellant serving his jail sentence.View "Ex parte: Cannon v. Estate of James Brown" on Justia Law

American Family Care, Inc. (AFC) petitioned the Supreme Court for a writ of mandamus to direct the Jefferson Circuit Court to vacate its order staying a civil action filed by AFC against Anita Salters. Salters was a former employee of AFC, acting as the director of the center from 2007 to June 2010 before her employment was terminated. As director, she was responsible for handling billing issues and claim audits performed by insurance companies and governmental agencies. In some instances, Salters had the only copies of communications related to billing inquiries and claim audits. In April 2011, the Federal Bureau of Investigation executed a search warrant at AFC's corporate office. The FBI removed mostly billing records. After the search warrant was executed, AFC determined that it was missing corporate records it would need to defend itself against any criminal charges that might be filed as a result of the FBI investigation. According to AFC, several of its employees reported that Salters had been seen removing files and records from the corporate offices shortly before she was fired. AFC made written demand upon Salters for the return of the records, but she did not respond. AFC then sued Salters seeking the return of any business records she might have. Salters answered the complaint, denying that she had removed any AFC records from its offices. The trial court, sua sponte, entered an order staying AFC's action "until further notice." The trial court expressed no reason for entering the indefinite stay. Upon review, the Supreme Court found that the indefinite stay ordered by the trial court, with no stated justification for it, was "immoderate" and beyond the scope of the trial court's discretion. For that reason, the Court granted AFC's petition and issued a writ of mandamus ordering the trial court to vacate its order staying AFC's action against Salters. View "American Family Care, Inc., v. Salters" on Justia Law

Appellant John Sterling, Jr. was charged with three criminal offenses: securities fraud, making false or misleading statements to the State Securities Commission, and criminal conspiracy. He was convicted of securities fraud, acquitted of making a false or misleading statement and conspiracy, and received a five-year sentence.  Appellant appealed to the Supreme Court, arguing the trial judge abused his discretion in permitting testimony from investors, in denying appellant's directed verdict motion, and that the trial court committed reversible error in charging the jury. Charges against Appellant stemmed from a business venture related to the retail mortgage lending industry. After a merger between two companies, Appellant ceased being an employee of one of the acquired companies, but remained on the Board of Directors of the newly formed entity. The new entity had financial trouble from the onset, and began moving debts and assets among the surviving entities to hide its financial difficulties. Appellant's defense was predicated in large part on the fact that the financial maneuvers that took place were approved by outside auditors. Upon review of the trial court record, the Supreme Court found no error and affirmed Appellant's conviction.View "South Carolina v. Sterling" on Justia Law