Justia White Collar Crime Opinion Summaries

Defendants were convicted of mail fraud and wire fraud (18 U.S.C. 1341, 1346) for participating in a fraudulent scheme to obtain mortgage loans. The scheme involved: recruiters, who enlisted buyers to buy properties with fraudulently obtained funds; financiers, who provided funds to buyers to facilitate the transactions; administrators, who bought fake documents to enable buyers to obtain mortgages; loan officers, who prepared fraudulent applications and sent them to lenders. Between 2003 and 2005, the group acquired more than 70 properties for which lenders provided $7.2 million in loans. Most of the properties went into foreclosure, resulting in losses to the lenders of $2.2 million. The Seventh Circuit affirmed the convictions and sentences. The use of the term "straw buyer" in the confession of a nontestifying co-defendant did not obviously refer to the defendant and violate his Sixth Amendment right of confrontation under the "Bruton" doctrine. The court properly applied a "sophisticated means" sentence enhancement and gave an "ostrich" instruction concerning defendant's knowledge.

This case arose when defendant was charged with one count of embezzlement and theft of labor union assets. At issue was whether the district court's employment of supplemental arguments impermissibly coerced a guilty verdict and whether the district court committed plain error by failing to instruct the jury regarding defendant's defense that her actions were authorized by the union's president. The court held that the district court neither coerced a guilty verdict nor abused its discretion by ordering supplemental closing arguments under the circumstances presented in this case. The district court also did not commit reversible plain error by failing to instruct the jury on an authorization defense, as the evidence presented and relied on by defendant at trial did not support a finding that her actions were authorized by the union. Accordingly, the judgment of the district court was affirmed.

Defendant was convicted of four counts of tax evasion and sentenced to 18 months imprisonment. Defendant appealed his convictions, arguing that the government constructively amended the indictment through the evidence presented at trial; the instructions erroneously defined "taxable income" and "good faith"; and the evidence was insufficient to support his convictions. The government appealed defendant's sentence, contending that the district court erroneously relied on a fact rejected by the jury in imposing a sentence below the applicable Sentencing Guidelines range. The court held that neither a constructive amendment nor a variance occurred; the jury was properly instructed and defendant's arguments to the contrary were rejected; and there was sufficient evidence for the jury to convict defendant. The court also held that the district court did not commit a procedural error and that the sentence was substantively reasonable. Accordingly, the judgment of the district court was affirmed.

Defendants ran the township trustee's office, which provides various social services. They defrauded the office by taking substantial payments for work they did not perform, deposited checks made out to the office into their personal bank accounts. They were convicted of two counts of mail fraud (18 U.S.C. 1341, 1346). The Seventh Circuit affirmed. While evidence of mailing was circumstantial, based on usual office practice, it was sufficient. The 2010 Supreme Court decision in Skilling v. U.S. did not mandate acquittal; even if honest services fraud is erased from the picture, the jury would have convicted defendants on a monetary fraud theory. The jury was properly instructed on both theories.

In this political corruption case, Larry P. Langford, formerly a Commissioner for Jefferson County, Alabama and mayor of Birmingham, Alabama, appealed his convictions for multiple counts of bribery, conspiracy, money laundering, mail fraud, tax fraud, and criminal forfeiture. Langford broadly argued that the evidence was insufficient to support his convictions for mail and wire fraud; the district court fatally erred in some of its evidentiary rulings; the district court wrongfully charged the jury about the bribery statute; and the district court mistakenly denied his post-voir-dire motion for a change of venue. After thorough review, the court affirmed the judgment of the district court.

This case involved serious allegations against Robert E. Stark, the auditor-controller of Sutter County where the Sutter County District Attorney's Office claimed that Stark violated statutes, county rules, and Sutter County Board of Supervisors (Board) resolutions detailing the requirements of his office. At issue were four provisions of Penal Code section 424, all of which proscribe general intent offenses. Three of those provisions criminalize acting without authority or failing to act as required by law or legal duty. The court held that those offenses additionally required that defendant knew, or was criminally negligent in failing to know, the legal requirements that governed the act or omission. The court also held that a claim of misinstruction on the mens rea of a crime could be challenged under Penal Code section 995, subdivision (a)(1)(B) where it raised the possibility that, as instructed, the grand jury could have indicted on less than reasonable or probable cause. The court further held that based on the record, the court need not decide the question of whether willful misconduct under Government Code section 3060 required a knowing and purposeful refusal to follow the law. Stark did not disagree with the instruction on mental state given by the district attorney and accompanying PowerPoint slides invalidated the instruction on mental state, requiring that the accusation be set aside. The court addressed these claims as to the district attorney's argument and PowerPoint slides and concluded that it was without merit. The court finally held that, in a motion to set aside an indictment or accusation, a defendant claiming that the district attorney suffered from a conflict of interest during the grand jury proceeding must establish that his right to due process was violated. Accordingly, the judgment of the district court was affirmed.

This case arose from the infamous Ponzi scheme perpetrated by Bernard Madoff. Between October and December 2008, Plaintiff MLSMK Investment Company invested $12.8 million with Madoff's investment company. Defendants JP Morgan Chase & Co. (JPMC) and JP Morgan Chase Bank (Chase) were trading partners in Madoff's legitimate market-making business and the bank with which Madoff maintained his accounts. MLSMK lost its money when Madoff was arrested and his assets seized. MLSMK subsequently filed suit, alleging that Defendants had conspired with Madoff to "fleece" his victims in violation of federal racketeering laws. Furthermore, MLSMK alleged that Defendants knew of Madoff's fraudulent scheme, and "eagerly" continued to receive the substantial fees derived from Madoff's market-making and banking activities. The district court dismissed MLSMK's petition in its entirety, concluding that the complaint did not adequately plead any of the claims purportedly contained therein. The Second Circuit previously upheld the district court's decision to dismiss MLSMK's petition on its state-law claims, but the federal racketeering issue was one of first impression for the Court. Upon review of the submitted briefs and the applicable legal authority, the Court concluded that the racketeering claim must also be dismissed because it was barred by a section of the Private Securities Litigation Reform Act (PSLRA). Accordingly, the court affirmed that portion of the district court's judgment pertaining to federal law.

Defendant Afuhia Masiu Manatau was in the business of stealing identities. Defendant stole social security numbers, credit cards and checks for which he would eventually be charged with and indicted for bank fraud and aggravated identity theft. This case turns on the question of an appropriate sentence. Seeking to calculate the applicable advisory guidelines sentence, the district court had to "identify the greater figure [of the actual or intended loss], and then proceed to one of the guidelines' inevitable charts." The question before the Tenth Circuit in this case is "what counts as an 'intended' loss? Unsurprisingly, [the Tenth Circuit] held that the term means exactly what it says: to be included in an advisory guidelines calculation the intended loss must have been an object of the defendant's purpose." Defendant argued that the government's "intended loss" analysis rested on a legal error. The Court remanded the case to the district court to properly determine Defendant's intended loss compared with the actual loss he caused, and to use the greater of the two to calculate Defendant's applicable sentencing enhancement.

Defendant, once a practicing psychiatrist, defrauded Medicare by receiving funds he was not entitled to receive and then fled the country to live as a fugitive in the Philippines. There, defendant created the website www.liver4you.org, fraudulently promising to provide critically ill patients liver or kidney transplants for certain sums of money. Defendant was subsequently convicted of one count of health care fraud and five counts of wire fraud. Defendant appealed, arguing that the district court committed four procedural errors in calculating defendant's offense level and imposed a substantively unreasonable sentence. The government argued that the court should not consider the four procedural errors because at sentencing the district court stated it would impose "the same sentence" even without some of the alleged errors. The court rejected this contention and emphasized that such predictions were only rarely appropriate. Defendant argued that his website was not mass-marketing pursuant to U.S.S.G. 2B1.1(b)(2)(A)(ii) because he did not initiate contact with his victims where they found his website, which was publicly available online, and emailed him at an address listed on the website. The court rejected defendant's distinction and held that he committed fraud by using the internet to solicit a large number of persons to buy his organ transplant services. Therefore, the court held that the enhancement applied even if defendant did not use the most active marketing method possible. Accordingly, the court affirmed the judgment of the district court.

This criminal appeal arose from a "finite reinsurance" transaction between American International Group, Inc. (AIG) and General Reinsurance Corporation (Gen Re). Defendants, four executives of Gen Re and one of AIG, appealed from judgments convicting them of conspiracy, mail fraud, securities fraud, and making false statements to the Securities and Exchange Commission. Defendants appealed on a variety of grounds, some in common and others specific to each defendant, ranging from evidentiary challenges to serious allegations of widespread prosecutorial misconduct. Most of the arguments were without merit, but defendants' convictions must be vacated because the district court abused its discretion by admitting the stock-price data and issued a jury instruction that directed the verdict on causation.