Justia White Collar Crime Opinion Summaries

Defendant Troy Gregory, a former senior vice president of University National Bank (UNB) in Lawrence, Kansas, was charged with one count of conspiracy to commit bank fraud, four counts of bank fraud, and two counts of making false bank entries. These charges arose from Defendant’s arrangement of a $15.2 million loan by 26 banks to fund an apartment development by established clients of UNB. After a ten-day trial, including two days of deliberations, a jury found Defendant guilty on all counts except the conspiracy count, on which the jury could not reach a unanimous verdict. The court sentenced Defendant to 60 months in prison and three years of supervised release. Defendant appealed the district court’s denial of: (1) his motion for a judgment of acquittal; and (2) his motion for a new trial on the ground that the government’s extended hypothetical in closing argument was not based on facts in evidence and constituted prosecutorial misconduct. After review, the Tenth Circuit affirmed the district court, finding defendant’s conviction was supported by sufficient evidence and the government’s closing argument was rooted in evidence presented at trial or reasonable inferences drawn from that evidence. View "United States v. Gregory" on Justia Law

Defendant was sentenced to 22 years for conspiracy to commit wire fraud and for three substantive wire-fraud counts, based on the three wire transmissions sent to victims in Maryland.The Fourth Circuit affirmed in part, vacated in part, and remanded. The court explained that Defendant hatched a massive fraudulent scheme that targeted victims in the United States using wires in the United States. Even though the court agreed that the wire-fraud statute does not apply extraterritorially, its focus is the misuse of wires in the United States for fraudulent purposes, so Defendant was convicted of the domestic act of using wires in the United States. The district court did not err in refusing to impose the extraordinary remedy of granting use immunity to witnesses, and the court sufficiently cleansed the proceeding of any prejudice caused by the juror who overheard outside the discussion of the defendant. Any error based on the district court’s consideration of Defendant’s extraterritorial conduct at sentencing was harmless. But the district court too broadly imposed restitution, so the court remanded for a new restitution order. Finally, the court did not plainly err when imposing supervised release conditions, and the conditions were both reasonable and constitutional. The conviction and sentence are therefore affirmed except for the restitution order. View "US v. Lee Elbaz" on Justia Law

The First Circuit affirmed Defendant's sentence of twenty-four months' imprisonment imposed in connection with his plea of guilty to health care fraud, holding that the sentence was neither procedurally nor substantively unreasonable.Defendant pleaded guilty to health care fraud for his multiyear scheme to defraud MaineCare, a state-run program that administers Medicaid benefits in the state of Maine and reimburses Maine health care providers for MaineCare services. After a hearing, the court varied downward and imposed a sentence of twenty-four months' imprisonment. The First Circuit affirmed Defendant's sentence, holding (1) the district court did not err in its loss calculations or in imposing a four-level leader/organizer enhancement; and (2) Defendant's downward variant sentence satisfied the substantive reasonableness standard. View "United States v. Ahmed" on Justia Law

As early as 2009, Dickey recruited followers for her church, “DTM,” grooming vulnerable victims and forcing them to disavow their families, live in the church, and work multiple full-time jobs. The victims gave Dickey all their wages, which she kept for herself. She required multiple victims to find employment at Hyatt hotels, where Dickey forced them to falsify reservation bookings, thereby fraudulently misdirecting kickbacks to Dickey’s own travel company. If someone disobeyed, Dickey threatened them with violence and required them to be homeless until she considered them redeemed. Her scheme netted $1.5 million, most of which came from DTM members. She spent over $1 million on personal expenses, such as travel, rental and vacation properties, and luxury hotels.The Seventh Circuit affirmed Dickey’s convictions for wire fraud, 18 U.S.C. 1343, and forced labor, 18 U.S.C. 1589, upholding the district court’s denial of her fourth motion to continue her trial, rejection of a proposed jury instruction regarding religious liberty, and the imposition of restitution ordering her to pay for future mental health treatment for her victims. Dickey’s proposed instruction would have excused her criminal conduct based on her religious assertions and was not an accurate statement of the law. View "United States v. Dickey" on Justia Law

Memphis attorney Skouteris practiced plaintiff-side, personal injury law. He routinely settled cases without permission, forged client signatures on settlement checks, and deposited those checks into his own account. Skouteris was arrested on state charges, was disbarred, and was indicted in federal court for bank fraud. At Skouteris’s federal trial, lay testimony suggested that Skouteris was not acting under any sort of diminished cognitive capacity. Two psychologists examined Skouteris. The defense expert maintained that Skouteris suffered from a “major depressive disorder,” “alcohol use disorder,” and “seizure disorder,” which began during Skouteris’s college football career, which, taken together, would have “significantly limited” Skouteris’s “ability to organize his mental efforts.” The government’s expert agreed that Skouteris suffered from depression and alcohol use disorder but concluded that Skouteris was “capable of having the mental ability to form and carry out complex thoughts, schemes, and plans.” Skouteris’s attorney unsuccessfully sought a jury instruction that evidence of “diminished mental capacity” could provide “reasonable doubt that” Skouteris had the “requisite culpable state of mind.”Convicted, Skouteris had a sentencing range of 46-57 months, with enhancements for “losses,” abusing a position of trust or using a special skill, and committing an offense that resulted in “substantial financial hardship” to at least one victim. The district court varied downward for a sentence of 30 months plus restitution of $147,406. The Sixth Circuit affirmed, rejecting challenges to the sufficiency of the evidence, the jury instructions, and the sentence. View "United States v. Skouteris" on Justia Law

Plaintiff brought this putative class action against more than twenty banks and brokers, alleging a conspiracy to manipulate two benchmark rates known as Yen-LIBOR and Euroyen TIBOR. Plaintiff brought claims under the Commodity Exchange Act (“CEA”), and the Sherman Antitrust Act, and sought leave to assert claims under the Racketeer Influenced and Corrupt Organizations Act (“RICO”). The district court dismissed the CEA and antitrust claims and denied leave to add the RICO claims. Plaintiff appealed, arguing that the district court erred by holding that the CEA claims were impermissibly extraterritorial, that he lacked antitrust standing to assert a Sherman Act claim, and that he failed to allege proximate causation for his proposed RICO claims.   The Second Circuit affirmed. The court explained that the conduct—i.e., that the bank defendants presented fraudulent submissions to an organization based in London that set a benchmark rate related to a foreign currency—occurred almost entirely overseas. Indeed, Plaintiff fails to allege any significant acts that took place in the United States. Plaintiff’s CEA claims are based predominantly on foreign conduct and are thus impermissibly extraterritorial. Further, the court wrote that the district court also correctly concluded that Plaintiff lacked antitrust standing because he would not be an efficient enforcer of the antitrust laws. Lastly, the court agreed that Plaintiff failed to allege proximate causation for his RICO claims. View "Laydon v. Coöperatieve Rabobank U.A., et al." on Justia Law

Defendant was convicted after a jury trial of conspiracy to commit mail, wire, and bank fraud. On appeal, Defendant argued that her pretrial counsel was constitutionally ineffective for failing to transmit a plea offer from the government to Defendant before it expired, thereby depriving her of the chance to plead guilty under the terms of the offer.   The Second Circuit affirmed the district court’s judgment of conviction. The court concluded that Defendant has waived any claim that the alleged error violated her Sixth Amendment rights. Unlike the defendant in Frye, Defendant learned of her expired plea offer and received new court-appointed counsel two months before trial. She nonetheless chose to go to trial rather than to plead guilty or to petition the court for reinstatement of the offer. This knowing and the voluntary choice was inconsistent with seeking the benefit of the expired plea offer and thus constitutes waiver.
The court further found that the district court did not abuse its discretion by admitting evidence of Defendant’s other fraudulent activity that was similar and/or related to the charged conduct; the court did not err by allowing the government to introduce certain “red flag” emails from an outside attorney for the limited purpose of proving her knowledge, and the court’s decision to instruct the jury on conscious avoidance was proper. View "United States v. Graham" on Justia Law

Lightning, a Delaware start-up company that owns intellectual property protecting designs for a pallet used for transporting cold foods, sought $26 million in outside funding to retire debt, cover operational expenses, and purchase equipment to begin production. GrowMI, an entity created by the Michigan Economic Development Corporation, agreed to loan Lightning $5 million and used its relationship with Flagstar Bank to secure an additional $7 million loan. GrowMI and Flagstar conditioned their loans on Lightning’s securing the rest of the $26 million by selling equity and securing lines of credit from Lightning shareholders. Lightning’s creditor LT sent GrowMI a letter indicating that Lightning owed LT $3.3 million, secured by an interest in Lightning’s intellectual properties. GrowMI allowed Lightning to use a portion of GrowMI’s loan to repay LT, ensuring GrowMI’s first secured position on Lightning’s intellectual properties.GrowMI subsequently became aware of wrongdoing at Lightning, which defaulted on its debt to GrowMI. GrowMI sued LT and its principals, Lightning shareholders, Lightning employees, and a consulting company, alleging violation of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1962, by a pattern of racketeering activity that included bank fraud, transactions involving money derived from that bank fraud, trade secrets misappropriation, and wire fraud. The Sixth Circuit affirmed the dismissal of the suit. GrowMI’s claims rest on its status as Lightning’s creditor, making its injury derivative of the harm incurred by Lightning. GrowMI does not plausibly allege that it was directly injured by reason of the alleged racketeering activities. View "Grow Michigan, LLC v. LT Lender, LLC" on Justia Law

The Haistens sold discounted animal pesticides and drugs online from their South Carolina home. They operated in violation of multiple FDA and EPA regulations. They sold counterfeit DVDs of movies and television shows that they obtained from China. The Haistens ignored cease-and-desist letters from state regulators and animal pesticides companies. Department of Homeland Security agents began making undercover purchases from the Haistens. Customs and Border Protection (CBP) seized shipments of counterfeit DVDs. Agents then searched the Haistens’ home, which revealed unapproved animal pesticides and drugs, counterfeit DVDs, and business records. In the ensuing prosecution, Count 14 charged the Haistens with trafficking counterfeit DVDs that were seized by CBP officers in Cincinnati. Count 15 charged them with trafficking counterfeit DVDs, that were seized at their home. Defense counsel did not request a jury instruction on improper venue or move for acquittal on Counts 14 or 15 for lack of proper venue in the Eastern District of Pennsylvania. The Haistens appealed, challenging an evidentiary ruling and a statement the government made during its summation. The Third Circuit affirmed.The Haistens then sought relief under 28 U.S.C. 2255, arguing that their trial counsel was ineffective for failing to challenge venue on Counts 14 and 15. The Third Circuit remanded the denial of that motion for the district court to conduct an evidentiary hearing on whether their counsel had a strategic reason for not raising a defense based on improper venue. View "United States v. Haisten" on Justia Law

Guaranteed was a “reverse distributor,” paid by healthcare providers to return unused or expired pharmaceutical drugs to the drug manufacturers, for refunds for the healthcare-provider clients. Refunds were wired directly to Guaranteed’s general operating account; the company then issued refund checks to the relevant clients, less a service fee. In 2001, the Department of Defense contracted with Guaranteed. The government began investigating Guaranteed after the District of Columbia noticed that it did not receive the full refund on a return of some of its pharmaceuticals. The investigation uncovered a series of schemes that Guaranteed used to defraud its clients.Guaranteed, its CEO, and its CFO, were convicted of multiple counts of wire fraud, mail fraud, conspiracy to launder money, and theft of government property. In addition to prison sentences, the court imposed more than $100 million in restitution and forfeitures. The Third Circuit reversed the money laundering convictions and remanded for resentencing. Viewing the evidence in the light most favorable to the government, there is not sufficient evidence to prove beyond a reasonable doubt that the alleged complex financial transactions—after the initial receipt of “commingled” fraudulent and lawfully obtained funds—were designed for "concealment money laundering." The court otherwise affirmed, rejecting challenges to a search warrant, the sufficiency of the evidence, the jury instructions, and the court’s refusal to permit proposed expert testimony. View "United States v. Fallon" on Justia Law