Justia White Collar Crime Opinion Summaries

Defendant appealed his securities fraud conviction for insider trading. The court held that the district court properly analyzed the misstatements and omissions in the government's Title III wiretap application under the analytical framework prescribed in Franks v. Delaware; the alleged misstatements and omissions in the wiretap application did not require suppression; and the district court's jury instructions on the use of inside information satisfied the "knowing possession" standard. Accordingly, the court affirmed the judgment. View "United States v. Rajaratnam" on Justia Law

The government alleged Defendant-Appellant Richard Clark, along with other co-conspirators, manipulated shares of several penny-stocks by using false and backdated documents to make those shares publically tradable, then coordinated the trading among themselves to create the false appearance of an active market for those shares. The shares were sold after the prices surged. The conspirators laundered the proceeds through multiple bank accounts and nominees (a "pump-and-dump" scheme). Defendant was charged and convicted on multiple counts for his participation in the scheme. He appealed his conviction to the Tenth Circuit, arguing: (1) the pretrial placement of a caveat on his property violated his constitutional rights; (2) the evidence presented at trial was insufficient to support his conviction; (3) the district court erred in refusing to appoint additional or substitute counsel better versed in complex securities issues; (4) the district court erred by failing to sever his case from his co-conspirator's; and (5) his rights under the Speedy Trial Act were violated by a fourteen-month delay between filing of the indictment and the start of trial. The Tenth Circuit addressed each of Defendant's contentions in its opinion, but found no discernible error. View "United States v. Clark" on Justia Law

Defendant appealed the district court's denial of his 28 U.S.C. 2255 federal habeas corpus petition based upon the Supreme Court's decision in Skilling v. United States, which narrowed the scope of the honest services fraud theory. Defendant,a former attorney and trustee of private trusts, pleaded guilty to honest services fraud. The government conceded that defendant was actually innocent of honest services fraud in light of Skilling, which confined the reach of the offense to cases of bribes and kickbacks. The court vacated the district court's dismissal of defendant's honest services fraud claim where no evidence suggested that defendant either engaged in bribery or received kickbacks. View "United States v. Avery" on Justia Law

Loffredi’s securities brokerage firm offered investments in certificates of deposit, mutual funds, and Treasury bills. Instead of actually purchasing investments requested by customers, Loffredi diverted their money to his personal expenses and business debts. He fraudulently misappropriated about $2.8 million over four years. A customer alerted the Securities and Exchange Commission to irregularities in his financial statements. After an investigation, Loffredi was charged with five counts of mail fraud, 18 U.S.C. 1341. He pleaded guilty to one count. The judge applied a two-level upward adjustment under U.S.S.G. 2B1.1(b)(2)(A)(i) for an offense involving at least 10 victims and imposed a sentence of 78 months. The presentence report counted as victims each of the 14 defrauded customers whose funds Loffredi had misappropriated. Loffredi argued that the only victim of the offense was his broker-dealer parent firm, which had reimbursed the losses of 12 of the 14 customers (Loffredi reimbursed the other two). The Seventh Circuit affirmed, noting that Loffredi never asserted that his fraud was painless for his customers and rejecting his “all-or-nothing” defense that the customers cannot be victims if they were reimbursed. View "Unted States v. Loffredi" on Justia Law

Defendants, Baldwin and Gladys Ihenacho, were the owners and operators of a neighborhood pharmacy. Defendants were convicted of dispensing and shipping drugs to customers pursuant to invalid online prescriptions for Internet pharmacy operations headquartered in the Dominican Republic. Baldwin pled guilty to almost all of the charges. Gladys went to trial, and a jury convicted of her eight counts. The First Circuit Court of Appeals affirmed Baldwin's sentence and Gladys's convictions, holding (1) the district court did not err in applying the fraud sentencing guideline to Baldwin and in calculating the loss caused by Baldwin's offenses for purposes of the fraud guideline; and (2) the evidence was sufficient to support Gladys's convictions for distributing controlled substances, conspiracy, and money laundering. View "United States v. Ihenacho" on Justia Law

Defendant, a lawyer, deposited lucre in his law firm's bank accounts after he was convicted of criminal activity, where it was commingled with the firm's receipts from legitimate clients. At issue was whether the money in the bank accounts at the time defendant was charged was subject to forfeiture. The sheer volume of financial information available and required to separate tainted from untainted monies in this case lead the court to apply the Third Circuit's rule in United States v. Voigt; in this case, the district court erred in ordering forfeiture of the funds as proceeds; consequently, all proceedings the court held subsequent to the imposition of defendant's sentence must be vacated; the court's conclusion did not foreclose the Government's attempt to forfeit a property interest held by defendant individually; and, after addressing the parties' remaining arguments, the court reversed and remanded the judgment of the district court. View "United States v. Rothstein" on Justia Law

Natale,a vascular surgeon, was compensated by Medicare for repairing a patient’s aortic aneurysm. Another doctor reviewed the post-surgical CT scan, which did not match the procedure Natale described in his operative reports. After an investigation, Natale was indicted for health care fraud related to his Medicare billing, mail fraud, and false statements related to health care. A jury acquitted Natale on the fraud counts but convicted him of making false statements, 18 U.S.C. 1035. The trial court used jury instructions that seemingly permitted conviction for false statements completely unrelated to Medicare reimbursement. The Seventh Circuit affirmed, finding the error harmless, but clarified that under the statute, even conviction for false statements made in connection with items or services still must relate to a “matter involving a health care benefit program.” View "United States v. Natale" on Justia Law

Defendants each pled guilty to one count of conspiracy to steal government funds and one count of theft of government funds. The convictions stemmed from their participation in a scheme that involved submitting fraudulent tax returns to the IRS using stolen Social Security numbers, receiving refund checks from the federal government, and depositing these proceeds in various bank accounts of corporate entities controlled by them. On appeal, defendants challenged their sentence. The court concluded that the district court did not err in imposing the six-level enhancement under U.S.S.G. 2B1.1(b)(2)(C) for a crime involving 250 or more victims. Accordingly, the court affirmed the sentence. View "United States v. Philidor" on Justia Law

Defendant, the former CEO of Medisys, was convicted of honest services mail and wire fraud and honest services fraud conspiracy, as well as conspiracy to commit bribery and violate the Travel Act, 18 U.S.C. 371. Defendant's convictions stemmed from bribing three legislators in exchange for their commitment to perform official acts "as specific opportunities arose" within the New York State legislature and State agencies. The court rejected defendant's argument that the federal bribery and honest services fraud statutes under which he was convicted were unconstitutionally vague as applied to his conduct; there was sufficient evidence to prove the existence of the requisite quid pro quo arrangements and to support defendant's convictions beyond a reasonable doubt; and the district court did not err in denying defendant's motion to compel the government to provide defense witness immunity to a partner at MediSys's outside general counsel. View "United States v. Rosen" on Justia Law

Beginning in 2003, Schmitz convinced financial institutions and others to lend him money, ostensibly for real estate development, by stating that he was the beneficiary of a multi-million dollar trust fund whose assets were available as collateral. There was no trust; Schmitz concocted a trail of paper and digital documents, even creating a phony financial services firm (with a website and virtual office space), and filing suit against fictitious employees of the (non-existent) firm claiming mishandling of the trust. Schmitz obtained more than $6 million from seven banks and two additional lenders. He used about half to pay off previous lenders, and the rest for personal expenses. Schmitz pleaded guilty to mail fraud affecting a financial institution, 18 U.S.C. 1341. Because Schmitz began the charged fraud in 2003, while on supervised release in connection with a prior state conviction, the advisory Guidelines range was 87 to 108 months in prison. The court imposed an 87-month sentence. The Seventh Circuit affirmed, rejecting arguments that “factor creep” in the Guidelines has inflated beyond reason the sentencing range for white collar frauds, particularly for someone of Schmitz’s age (60) and health and concerning the timespan of the fraud. View "United States v. Schmitz" on Justia Law