Justia White Collar Crime Opinion Summaries

Federal agents investigated a drug trafficking conspiracy in Fort Wayne, Indiana, using a confidential source to conduct controlled buys from Zachary Barnes. Barnes coordinated the sales, supplied methamphetamine, and directed his co-conspirator, Marquese Neal, to make deliveries. Neal testified that Barnes paid him in marijuana for his services. Barnes was arrested, and law enforcement found drugs and ammunition in his home.Barnes pleaded guilty to conspiracy to distribute methamphetamine and to possess it with intent to distribute. The United States District Court for the Northern District of Indiana applied a two-level enhancement under section 3B1.1(c) of the Sentencing Guidelines for Barnes' role as a manager or supervisor. This enhancement made Barnes ineligible for safety-valve relief under 18 U.S.C. § 3553(f), resulting in a mandatory minimum sentence of ten years. Barnes objected to the role enhancement and the denial of safety-valve relief, but the district court overruled his objections, finding Neal's testimony credible and supported by other evidence.The United States Court of Appeals for the Seventh Circuit reviewed the case. The court affirmed the district court's application of the role enhancement, agreeing that Barnes' actions—recruiting Neal, coordinating logistics, supplying drugs, and directing deliveries—fit the criteria for a manager or supervisor under section 3B1.1(c). The court also upheld the denial of safety-valve relief, as Barnes' supervisory role made him ineligible. The Seventh Circuit found no clear error in the district court's credibility determinations or factual findings and affirmed Barnes' ten-year sentence. View "United States v. Barnes" on Justia Law

Matthew A. Zayas was indicted on three counts of money laundering and one count of causing or attempting to cause a domestic financial institution to fail to file a currency transaction report under 31 U.S.C. § 5324(a)(1). After a jury trial, Zayas was acquitted of the money laundering counts but convicted of violating 31 U.S.C. § 5324(a)(1). The case involved Zayas making three cash withdrawals from his Wells Fargo account, each below the $10,000 reporting threshold, within a short period, which the government argued was an attempt to evade the bank's reporting requirements.The United States District Court for the Southern District of Florida denied Zayas's motions for a mistrial and judgment of acquittal. Zayas argued that the government constructively amended the indictment by presenting evidence and arguments related to structuring under § 5324(a)(3) instead of the charged § 5324(a)(1). The district court also provided jury instructions that included a definition of "structuring," which Zayas contended was inappropriate for the charge under § 5324(a)(1).The United States Court of Appeals for the Eleventh Circuit reviewed the case and affirmed the conviction. The court held that the government's evidence was consistent with a violation of § 5324(a)(1), as it demonstrated that Zayas made multiple withdrawals exceeding $10,000 in one business day, triggering the bank's duty to file a currency transaction report. The court found that the district court's jury instructions, while including a definition of "structuring," correctly conveyed the elements of § 5324(a)(1). The court also determined that the district court did not abuse its discretion in responding to a jury question during deliberations by referring the jury back to the original instructions, which accurately stated the law. View "USA v. Zayas" on Justia Law

Island Industries, Inc. filed a lawsuit under the False Claims Act (FCA) against Sigma Corporation, alleging that Sigma made false statements on customs forms to avoid paying antidumping duties on welded outlets imported from China. Island claimed that Sigma falsely declared that the products were not subject to antidumping duties and misrepresented the products as steel couplings instead of welded outlets. The jury found in favor of Island, concluding that Sigma was liable under the FCA.The United States District Court for the Central District of California presided over the case. Sigma requested a scope ruling from the Department of Commerce, which determined that Sigma’s welded outlets fell within the scope of the antidumping duty order on certain carbon steel butt-weld pipe fittings from China. The Court of International Trade and the Federal Circuit affirmed this ruling. Sigma’s appeal was stayed pending the Federal Circuit’s decision, which ultimately affirmed the scope ruling.The United States Court of Appeals for the Ninth Circuit reviewed the case and affirmed the district court’s judgment. The Ninth Circuit held that it had jurisdiction over the case and that the action did not need to be initiated in the Court of International Trade. The court also held that 19 U.S.C. § 1592, which provides a mechanism for the United States to recover fraudulently avoided customs duties, does not displace the FCA. The court rejected Sigma’s argument that it lacked an “obligation to pay” antidumping duties under the FCA and concluded that Island’s theory that Sigma violated the FCA by knowingly falsely declaring that no antidumping duties were owed was legally valid and supported by sufficient evidence. The court also found that the evidence at trial was sufficient to support the jury’s verdict under either of Island’s theories of liability. View "ISLAND INDUSTRIES, INC. V. SIGMA CORPORATION" on Justia Law

Gary Matthews and Monte Brannan collaborated on a project to redevelop a landmark hotel in Peoria, Illinois. Instead of fulfilling their financial obligations to lenders, they diverted project revenue for personal gain. This led to federal charges of mail fraud and money laundering, resulting in guilty verdicts by a jury.The United States District Court for the Central District of Illinois oversaw the initial trial. Matthews and Brannan were convicted of mail fraud, money laundering, and, in Brannan’s case, conspiracy to commit money laundering. They appealed their convictions, raising multiple issues.The United States Court of Appeals for the Seventh Circuit reviewed the case. The court found the evidence against Matthews and Brannan overwhelming, affirming their convictions. The court noted that Matthews and Brannan failed to comply with Circuit Rule 30(b)(1) by not including necessary district court rulings in their appendices, which hindered the appellate review process. Despite this, the court ensured a fair review by independently locating the relevant rulings. The court ordered Matthews’s and Brannan’s counsel to show cause why they should not be sanctioned for their violations of Circuit Rule 30. The court affirmed the district court’s judgment, ensuring that Matthews and Brannan received fair consideration of their appeals. View "USA v Brannan" on Justia Law

Three defendants, Jose Ordonez-Zometa, Jose Hernandez-Garcia, and Jose Ortega-Ayala, were convicted in the District of Maryland for their involvement in a racketeering enterprise under the Racketeer Influenced and Corrupt Organizations Act (RICO), murder in aid of racketeering, and conspiracy to destroy and conceal evidence. The case centers around the brutal murder of a 16-year-old gang member, John Doe, by members of the Los Ghettos Criminales Salvatruchas (LGCS), a branch of the MS-13 gang. The defendants were implicated in the planning, execution, and cover-up of the murder, including the disposal of the victim's body and the destruction of evidence.In the lower court, the defendants filed several motions to suppress evidence obtained from traffic stops, custodial interrogations, and searches of residences, cell phones, and social media accounts. The District Court for the District of Maryland denied these motions, finding that the traffic stop and subsequent arrest of Ordonez-Zometa were lawful, the search warrants were supported by probable cause, and the defendants' statements were voluntary. The court also denied Hernandez-Garcia's motion for a new trial, concluding that the evidence presented at trial was sufficient to support the jury's verdict.The United States Court of Appeals for the Fourth Circuit reviewed the case and affirmed the lower court's decisions. The appellate court held that the traffic stop and arrest of Ordonez-Zometa were justified by an outstanding arrest warrant and probable cause. The court also found that the search warrants for Ortega-Ayala's residence, cell phones, and Facebook account were supported by probable cause and were not overly broad. Additionally, the court ruled that Hernandez-Garcia's motion for a new trial was properly denied, as the evidence presented at trial was sufficient to support the convictions. Finally, the court concluded that the government had presented sufficient evidence to establish that the LGCS enterprise's activities affected interstate commerce, satisfying the requirements for RICO and VICAR convictions. The defendants' convictions and sentences were thus affirmed. View "US v. Ordonez-Zometa" on Justia Law

Roberto Adams, a police officer, was convicted of wire fraud and money laundering related to the misuse of a small-business loan he received under the Paycheck Protection Program (PPP) of the Coronavirus Aid, Relief, and Economic Security Act. Adams did not testify at his trial, and his counsel requested a jury instruction to not draw any adverse inference from this decision. The district court agreed but inadvertently omitted the instruction. Adams' counsel failed to object until after the jury's verdict, which led to a motion for a new trial.The United States District Court for the District of Columbia granted Adams' motion for a new trial, finding that the omission of the no-adverse-inference instruction was plain error and prejudicial. The court noted that the government's case relied heavily on circumstantial evidence to prove Adams' knowledge and intent, and the jury's split verdict indicated that the case was close. The court concluded that the error likely affected the outcome of the trial.The United States Court of Appeals for the District of Columbia Circuit reviewed the case and affirmed the district court's decision. The appellate court agreed that the omission of the instruction was plain error and that it affected Adams' substantial rights. The court emphasized that the government's case was not overwhelming and relied on inferences from circumstantial evidence. The appellate court also found that the error seriously affected the fairness, integrity, and public reputation of the judicial proceedings, warranting a new trial. View "USA v. Adams" on Justia Law

Derrick Clark and Shawn Mesner worked for Didion Milling, Inc., a corn milling company. In May 2017, Didion’s grain mill exploded, killing five employees. The Occupational Health and Safety Administration (OSHA) investigated and referred Didion for criminal prosecution. The government charged Didion and several employees with federal crimes related to their work at the mill. Clark and Mesner proceeded to trial, challenging the district court’s evidentiary rulings, jury instructions, the indictment, the sufficiency of the evidence, and the constitutionality of their convictions.The United States District Court for the Western District of Wisconsin convicted Clark on four counts and Mesner on two counts. Clark was found guilty of conspiracy to commit federal offenses, false entries in records, using false documents within the EPA’s jurisdiction, and obstruction of agency proceedings. Mesner was found guilty of conspiracy to commit mail and wire fraud and conspiracy to commit federal offenses. Both defendants were sentenced to 24 months’ imprisonment and one year of supervised release.The United States Court of Appeals for the Seventh Circuit reviewed the case. The court vacated Mesner’s conviction on Count 4, remanding for an entry of judgment of acquittal and further proceedings consistent with the opinion. The court affirmed the district court’s evidentiary rulings and jury instructions, as well as Clark’s convictions and Mesner’s conviction on Count 1. The court found sufficient evidence to support the convictions and determined that the jury instructions, when considered as a whole, accurately reflected the law. The court also rejected challenges to the constitutionality of the OSHA regulation involved. View "USA v Mesner" on Justia Law

From 2016 to 2021, Irene Michelle Fike worked at an accounting firm and later as an independent contractor for a client, J.M., and J.M.'s family. Fike used her access to J.M.'s financial accounts to pay her personal credit card bills and make purchases from online retailers. She concealed her fraud by misrepresenting J.M.'s expenditures in financial reports. Fike defrauded J.M. of $363,657.67 between April 2018 and September 2022.Fike pleaded guilty to wire fraud and aggravated identity theft in 2024. The United States District Court for the Eastern District of Kentucky sentenced her to thirty-six months' imprisonment and three years of supervised release. The court also ordered her to pay $405,867.08 in restitution, which included the principal amount stolen and $42,209.41 in prejudgment interest. Fike appealed, arguing that the Mandatory Victims Restitution Act (MVRA) does not authorize prejudgment interest and that the interest calculation was speculative.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court held that the MVRA allows for prejudgment interest to ensure full compensation for the victim's losses. The court found that the district court did not abuse its discretion in awarding prejudgment interest, as it was necessary to make J.M. whole. The court also determined that the district court had a sufficient basis for calculating the interest, relying on J.M.'s declaration of losses, which was submitted under penalty of perjury and provided a reliable basis for the award. The Sixth Circuit affirmed the district court's decision. View "United States v. Fike" on Justia Law

The plaintiffs, a group of consumers, filed a lawsuit against General Motors (GM) and Robert Bosch LLC, alleging that the companies misled consumers about the emissions produced by certain Chevrolet Cruze vehicles. They claimed that the vehicles emitted higher levels of nitrogen oxides (NOx) than advertised and that the emissions control systems were manipulated to pass regulatory tests. The plaintiffs sought damages under various state fraud laws and the Racketeer Influenced and Corrupt Organizations (RICO) Act.The United States District Court for the Eastern District of Michigan initially dismissed some of the plaintiffs' claims, ruling that those based on the Environmental Protection Agency (EPA) standards were preempted by the Clean Air Act. The court allowed other claims to proceed, particularly those alleging that GM's advertising misled consumers about the vehicles' emissions. However, after the Sixth Circuit's decision in a similar case (In re Ford Motor Company F-150 and Ranger Truck Fuel Economy Marketing and Sales Practices Litigation), the district court revisited its decision and dismissed the remaining fraud claims, concluding they were preempted by federal law. The court also granted summary judgment to the defendants on the RICO claims.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court held that the district court should determine whether the plaintiffs' remaining claims could proceed without relying on a disagreement with the EPA's determinations. The court remanded the case for the district court to decide if the claims were preempted under the analysis described. The court affirmed the dismissal of the RICO claims and the denial of the plaintiffs' post-judgment motion to vacate the judgment in part and approve a preliminary settlement agreement. The case was remanded for further proceedings consistent with the opinion. View "Counts v. General Motors, LLC" on Justia Law

Quintan Cockerell, a marketer for two compounding pharmacies, was convicted for receiving illegal kickbacks as part of a conspiracy to induce physicians to prescribe highly lucrative prescriptions. These pharmacies, including Xpress Compounding, focused on formulating expensive topical creams, resulting in significant reimbursements from federal insurers like TRICARE. Cockerell was involved in recruiting physicians, developing new formulas, and receiving commissions disguised as payments to his then-wife. He also provided financial incentives to physicians, including lavish vacations and investment opportunities, to encourage them to prescribe these creams.The United States District Court for the Northern District of Texas convicted Cockerell of violating the Anti-Kickback Statute, conspiracy, and money laundering. He was sentenced to 29 months of imprisonment, two years of supervised release, and ordered to pay $59,879,871 in restitution. Cockerell appealed, challenging the sufficiency of the evidence, alleged misstatements of law by the Government during trial, and the restitution order.The United States Court of Appeals for the Fifth Circuit reviewed the case and found that a reasonable jury could have convicted Cockerell based on the evidence presented. The court held that the Government provided sufficient evidence of Cockerell's involvement in the illegal kickback scheme and his intent to influence physicians. The court also found no reversible error in the Government's statements during closing arguments and upheld the restitution order, noting that Cockerell failed to provide evidence of legitimate services to offset the loss amount. Consequently, the Fifth Circuit affirmed the district court's judgment. View "United States v. Cockerell" on Justia Law