Justia White Collar Crime Opinion Summaries

In 2004, defendant spent approximately $38,000 on home repairs for a Chicago alderman, a crucial player in defendant's attempt to have industrial property rezoned for commercial and residential development. Defendant also convinced business associates to donate, at his expense, to the alderman's aunt's congressional campaign. During an investigation, defendant fabricated an invoice for the home repairs, purportedly sent from his general contractor to defendant. The Seventh Circuit affirmed convictions for bribing a local official (18 U.S.C. § 666(a)(2)); exceeding federal campaign contribution limits through straw-man donations (Federal Election Campaign Act, 2 U.S.C. 441a(a)(1),441f & 437g(d)(1)(A)(ii)); and endeavoring to obstruct justice (18 U.S.C. 1503(a)). The government was not required to establish a specific quid pro quo of money in exchange for a legislative act. The district court acted within its discretion in holding an adversarial in camera hearing to determine the existence of the crime-fraud exception. Section 441f unambiguously proscribes straw man, as well as false name, contributions. View "United States v. Boender" on Justia Law

In 1991, Carpenter pled guilty to aggravated theft and bank fraud. He served jail time and was disbarred. Between 1998 and 2000, he ran a Ponzi scheme, selling investments in sham companies, promising a guaranteed return. A class action resulted in a judgment of $15,644,384 against Carpenter. Plaintiffs then sued drawee banks, alleging that they violated the UCC "properly payable rule" by paying checks plaintiffs wrote to sham corporations, and depositary banks, alleging that they violated the UCC and committed fraud by depositing checks into accounts for fraudulent companies. The district court dismissed some claims as time-barred and some for failure to state a claim. After denying class certification, the court granted defendant summary judgment on the conspiracy claim, based on release of Carpenter in earlier litigation; a jury ruled in favor of defendant on aiding and abetting. The Sixth Circuit affirmed. Claims by makers of the checks are time-barred; the "discovery" rule does not apply and would not save the claims. Ohio "Blue Sky" laws provide the limitations period for fraud claims, but those claims would also be barred by the common law limitations period. The district court retained subject matter jurisdiction to rule on other claims, following denial of class certification under the Class Action Fairness Act, 28 U.S.C. 1332(d). View "Metz v. Unizan Bank" on Justia Law

This case stemmed from appellant's participation in the Bayou Hedge Fund Group (Bayou), a classic Ponzi scheme masked as a group of domestic and offshore hedge funds. Appellant appealed from his sentencing, following a plea of guilty to misprision of felony in violation of 18 U.S.C. 4. At issue was whether the district court's order of restitution in the amount of $60 million was improper because it relied on events occurring outside the relevant time period and the putative victims' losses were neither directly nor proximately caused by his actions as required by the Mandatory Victims Restitution Act of 1996 (MVRA), 18 U.S.C. 3663A. The court found no error, much less plain error, in the district court's use of appellant's fraudulent 2003 faxes at sentencing. The court also found no error in the district court's conclusion that appellant's failure to report the Bayou fraud was both the direct and the proximate cause of the victim investors' losses. Accordingly, the judgment was affirmed. View "United States v. Marino" on Justia Law

Companies filed suit, alleging that an employee engaged in a collusive trading scheme in violation of the Securities Exchange Act of 1934. Under section 9(a) of the Act, a private plaintiff must plead that: a series of transactions in a security created actual or apparent trading in that security or raised or depressed its market price; scienter; the purpose of the transactions was to induce the security's sale or purchase by others; plaintiffs relied on the transactions; and the transactions affected plaintiff's purchase or selling price. The district court dismissed for failure to state a claim. The Seventh Circuit reversed and remanded. The complaint adequately stated with particularity the circumstances constituting the securities fraud, and the economic loss impact on the plaintiffs as a result of the fraud and satisfied the pleading requirements of FRCP 9(b). View "Anchor Bank, FSB v. Hofer" on Justia Law

Former investors with Bernard L. Madoff appealed from an order entered by the United States Bankruptcy Court in the liquidation proceedings of Bernard L. Madoff Investment Securities LLC under the Securities Investor Protection Act (SIPA), 15 U.S.C. 78aaa et seq. At issue was whether the Net Investment Method the trustee selected for carrying out his responsibilities under SIPA was legally sound under the language of the statutes. The court held that the trustee's determination as to how to calculate "net equity" under SIPA was legally sound in light of the circumstances of the case and the relevant statutory language. Accordingly, the court affirmed the order of the bankruptcy court. View "In Re: Bernard L. Madoff" on Justia Law

The United States brought this civil action under 26 U.S.C. 7408 to enjoin defendant from promoting several fraudulent tax schemes. After a court trial, the district court permanently enjoined defendant from promoting his schemes, ordered him to advise the IRS of any tax arrangements or business entities formed at his discretion, and required him to provide a copy of its order to his clients. On appeal, defendant argued that the injunction was not supported by adequate factual findings and legal conclusions, and that it was overbroad, an impermissible delegation of Article III power, and an unconstitutional prior restraint. The court rejected defendant's hypertechnical criticisms of the district court's order where section 6700 was a linguistically complex and intricate statute and where the district court need not include the entire statutory language in each of its findings and conclusions. Therefore, the court held that the district court's exhaustive order more than satisfied each of the requirements in section 6700 and affirmed the judgment of the district court.

Count One of the multi-count indictment in this case charged Robert and Patrick Singletary, and others, with conspiring between 1997 and September 16, 2004, in violation of 18 U.S.C. 371, to commit three offenses: (1) to defraud a federally insured bank, in violation of 18 U.S.C. 1344; (2) to make false representations with respect to material facts to the United States Department of Housing and Urban Development (HUD), in violation of 18 U.S.C. 1001; and (3) to defraud purchasers of residential property and mortgage lenders, in violation of 18 U.S.C. 1343. The Singletarys eventually pled guilty to Count One to the extent that it alleged a conspiracy to commit the section 1343 offense in addition to the section 1001 offense. At issue was whether the district court abused its discretion in ordering restitution in the sum of $1 million. The court held that the district court failed to determine by a preponderance of the evidence which of the 56 mortgages the loan officers handled was obtained through a false "gift" letter, a false "credit explanation" letter, or a false employment verification form; and where fraud was found, to determine the extent of the actual loss HUD could have incurred due to the mortgage's foreclosure. Accordingly, the court vacated the restitution provisions and remanded for further proceedings.

Defendant-Appellant Michael Cooper was convicted by jury on one count of conspiracy to defraud, and multiple counts of mail and wire fraud, money laundering and engaging in transactions derived from unlawful activity. Defendant filed several motions with the district court including motions for a judgment of acquittal, a post-verdict motion for a new trial, and a motion to suppress evidence under the Fourth Amendment. The district court denied them all. On appeal, Defendant challenged the district court's denial of those motions. Upon review of the trial court record and the applicable legal authority, the Tenth Circuit found Defendant failed to prove that the evidence presented against him at trial was insufficient to support his convictions. Therefore the Court affirmed the district court's denials of Defendant's motions for judgment of acquittal, for a new trial, and to suppress evidence, and affirmed Defendant's convictions.

Defendant Jodi Hoskins was convicted of tax evasion after she and her husband failed to pay taxes for income they earned through their Salt Lake City escort service. The government contended the Hoskins' failed to account for more than one million dollars in income generated in cash payments and credit card receipts. At sentencing, the government's tax loss was relevant to potential jail time and restitution under the United States Sentencing Guidelines. To minimize the tax loss for sentencing purposes, the Hoskins' offered hypothetical tax returns to account for the unreported income and attempted to take deductions they claimed they would have been entitled to but for the tax evasion. The district court rejected the hypothetical tax returns and accepted the government's tax-loss estimate. Defendant appealed her eventual sentence, arguing the sentencing judge abused his discretion in establishing the lost taxes. Furthermore, Defendant challenged the sufficiency of the evidence presented against her and the reasonableness of her sentence. Finding no abuse of discretion, and that the evidence presented at trial sufficient to support her sentence, the Tenth Circuit affirmed Defendant's conviction.

This appeal arose from an earlier trial relating to the Enron scandal. The government alleged that Enron loaned out the stake in the barges that it owned off the Nigerian coast to Merill Lynch, risk-free and with a guaranteed return, but made it seem like a sale so that it could book a pretend profit. Defendant, a managing director at Merrill Lynch and the head of its Strategic Asset and Lease Finance group at the time of the transaction, challenged his convictions related to the sale on the grounds that the government violated his right to due process by withholding materially favorable evidence that it possessed pre-trial. The court affirmed and held that the district court did not clearly err in holding that the evidence at issue was not material.