Justia White Collar Crime Opinion Summaries

Miller and Krasilnikova are married. Miller pled guilty to wire fraud. His sentence included an order to pay approximately $1.1 million in restitution. Days after Miller received his sentence, Krasilnikova agreed to sell their family home to a third party for $855,000. The United States then gave notice of a lien on the property, 18 U.S.C. 3613(c), asserting that Miller had a one-half interest in the proceeds and that his share should be used to pay restitution. Krasilnikova argued that she was the sole owner; the title to the property was only in Krasilnikova’s name.The Seventh Circuit upheld an order dividing the sale proceeds equally so that Miller’s share will be applied to the restitution order. The district court properly considered additional evidence. Under Illinois law, courts evaluating ownership can look past title and instead ask who actually exercised control over the property at issue. A series of property transfers and mortgages casts significant doubt on the legitimacy of Krasilnikova’s paper title. Ample evidence suggests that Miller and Krasilnikova manipulated property and financial records and even forged signatures to conceal the true ownership of the property. View "Krasilnikova v. United States" on Justia Law

Goulding, an accountant and lawyer, has a history of mail fraud and tax fraud. Goulding formed 15 funds that hired Nutmeg’s advisory services, which he managed. The funds invested in illiquid securities, many of which were close to insolvent. Gould wrote all of the disclosure documents, which overvalued the funds. Goulding made baseless statements about increases in value. Goulding did not use outside advisors and engaged in commingling, holding some securities in his own name.The Securities and Exchange Commission charged Goulding under the Investment Advisers Act of 1940, 15 U.S.C. 80b, with running Nutmeg through a pattern of fraud, including touting his supposed financial expertise while failing to disclose his crimes, in addition to violating the Act’s technical rules. The district court issued an injunction removing Goulding from the business and appointing a receiver. A magistrate judge enjoined Goulding from violating the securities laws, required him to disgorge $642,422 (plus interest), and imposed a $642,422 civil penalty. The Seventh Circuit affirmed the finding of liability and the financial awards. The extent of Goulding’s wrongdoing makes it hard to determine his net unjustified withdrawals; as the wrongdoer, he bears the consequence of uncertainty. The restitution reflects a conservative estimate of Goulding’s ill-got gains. Nor did the judge err by declining to trace funds from their source to Goulding’s pocket. View "Securities and Exchange Commission v. Goulding" on Justia Law

Weller was convicted of insider trading, Securities Exchange Act, 15 U.S.C. 78j(b). Fleming, a vice president of Life Time Fitness, had learned that his company was likely to be acquired by a private equity firm at an above-market price. Fleming told a friend, Beshey, who told Clark and Kourtis (who knew that the information had been misappropriated), who told others, including Weller. Most of them profited by trading on the information and showed their appreciation by “kickbacks.”Weller unsuccessfully argued that he did not know that Fleming violated a duty to his employer by passing the information to Beshey and that the government did not prove a financial benefit to Fleming. The Seventh Circuit affirmed his convictions. Although Weller did not interact with all of the others, he did conspire with at least Kourtis to misuse material non-public information for their own benefit. The court upheld Weller’s 366-day below-Guidelines sentence, noting that Weller profited more than the others. View "United States v. Weller" on Justia Law

Inman was part of the majority of the Michigan House of Representatives who, along with a majority of the Senate, voted to repeal the prevailing-wage law. Inman was charged with soliciting bribes for his prevailing-wage vote: attempted extortion under color of official right, 18 U.S.C. 1951; soliciting a bribe, 18 U.S.C. 666(a)(1)(B); and making a false statement to the FBI, 18 U.S.C. 1001(a)(2) (Count III). A jury acquitted Inman on Count III but hung on Counts I and II. The district court dismissed those counts, concluding that the acquittal precluded a retrial on the other counts.The Sixth Circuit reversed. The acquittal on the false-statement charge did not decide any fact that necessarily precludes a verdict against Inman on the extortion and bribery-solicitation charges, so issue preclusion does not apply. To show the underlying corrupt agreement, the prosecution did not need to produce evidence that Inman lied to the FBI. It needed to produce evidence that Inman extorted or attempted to solicit an agreement where Inman would vote on the prevailing-wage law in exchange for payment. At retrial, a jury must decide whether Inman actually extorted or attempted to solicit such an agreement—a question not answered by the acquittal on Count III. View "United States v. Larry Inman" on Justia Law

Deutsche Bank employed Chanu and Vorley as precious metals traders. They received training that “market manipulation” was prohibited. The two engaged in “spoofing,” placing orders for precious metals futures contracts on one side of the market that, at the time the orders were placed, they intended to cancel prior to execution. At times they placed opposite orders. The government alleged that they placed such orders with the intent “to create and communicate false and misleading information regarding supply or demand in order to deceive other traders” and entice them to react to the false and misleading increase in supply or demand. After the court rejected Speedy Trial Act motions, the two were acquitted of conspiracy to commit wire fraud affecting a financial institution. 18 U.S.C. 1343. Vorley was convicted of three counts of wire fraud; Chanu was found guilty of seven counts of wire fraud.The Seventh Circuit affirmed. Manual spoofing violated the wire fraud statute; the defendants’ s actions amounted to a scheme to defraud by means of false representations or omissions and the implied misrepresentations were material. The court upheld the denial of the defendants’ request to modify jury instructions explaining the term “scheme to defraud” and to issue a good‐faith instruction. The court found no legal error in the district court's ends‐of‐justice rationale for excluding time in considering Speedy Trial issues. View "United States v. Chanu" on Justia Law

VanDemark owns the Used Car Supermarket, which sells cars from two lots in Amelia, Ohio. In 2013-2014, VanDemark funneled away his customers’ down payments and left them off his tax returns. He used this stashed-away cash to finance the mortgage on his mansion.The Sixth Circuit affirmed VanDemark’s convictions for helping prepare false tax returns, 26 U.S.C. 7206(2), structuring payments, 31 U.S.C. 5324(a)(3), and making false statements to federal agents, 18 U.S.C. 1001. The down payments were taxable upon receipt, not, as VanDemark argued, when customers purchased the cars after leasing them. With respect to his missing 2013 personal return, the court stated that a defendant is guilty even if he helps prepare, without presenting, the fraudulent return. View "United States v. VanDemark" on Justia Law

Two medical doctors, licensed to prescribe controlled substances, were convicted for violating 21 U.S.C. 841, which makes it a crime, “[e]xcept as authorized[,] . . . for any person knowingly or intentionally . . . to manufacture, distribute, or dispense . . . a controlled substance.” Registered doctors may dispense controlled substances via prescription only if the prescription is “issued for a legitimate medical purpose by an individual practitioner acting in the usual course of his professional practice.” 21 CFR 1306.04(a).The Supreme Court vacated their convictions. Section 841’s “knowingly or intentionally” mental state applies to the statute’s “except as authorized” clause. Once a defendant meets the burden of producing evidence that his conduct was “authorized,” the government must prove beyond a reasonable doubt that the defendant knowingly or intentionally acted in an unauthorized manner. Section 885 does not provide a basis for inferring that Congress intended to do away with, or weaken ordinary and longstanding scienter requirements but supports applying normal scienter principles to the “except as authorized” clause. The Court of Appeals in both cases evaluated the jury instructions relating to "mens rea" under an incorrect understanding of section 841’s scienter requirements. View "Ruan v. United States" on Justia Law

Eaden defrauded his employer, SIT, of more than $200,000 by falsely inflating the profits at his store (to obtain unearned performance‐based bonuses) by billing SIT’s largest customer (Gibson) for products it did not purchase and by submitting false claims to a rewards program sponsored by a tire manufacturer. After receiving a tip, police investigated, and SIT hired a forensic accounting firm, which concluded that Eaden received more than $47,000 in unearned bonuses. At sentencing, the district court imposed 46 months’ imprisonment, three years of supervised release, and ordered restitution of $244,673.00, and the forfeiture of Eaden’s bonuses from 2014-2016, $88,106.78.The Seventh Circuit affirmed his convictions, rejecting arguments that the court deprived him of a fair trial by informing prospective jurors that a grand jury had issued Eaden’s indictment based on probable cause, meaning “it’s probably true that [Eaden] had some connection with criminal activity” and wrongly admitted a lay witness’s opinion testimony regarding a subset of his fraud charges. The witness used the word "fraudulent" in discussing Eaden's submissions to the rewards program. Based on miscalculation, the court reduced Eaden’s restitution and forfeiture obligations by $189,709 and $40,817.81, respectively. View "United States v. Eaden" on Justia Law

Defendant and several others were indicted on various healthcare fraud offenses stemming from a scheme in which Defendant and others would pay TRICARE beneficiaries to order certain creams and vitamins. At a jury trial, Defendant was convicted of one count of conspiracy to commit health care fraud, one count of receiving an illegal kickback payment, and six counts of making illegal kickback payments. The District Court sentenced Defendant to 240 months imprisonment.On appeal, Defendant challenged, among other things, the sufficiency of the evidence pertaining to his convictions for paying illegal kickbacks. The Fifth Circuit agreed with Defendant's reasoning that he did not "induce" TRICARE beneficiaries to order the substances by paying them because the substances were for their own use. Thus, the court reversed Defendant's convictions for paying illegal kickback payments. The court affirmed Defendant's other convictions and remanded for resentencing. View "USA v. Cooper" on Justia Law

Tinimbang invested $811,400, founding Donnarich Home Health in 2005 with his then-wife Josephine and their children. In 2006-2007, the others forced him out of management; Tinimbang maintained his equity position. Josephine and their son, Richard, later incorporated two healthcare businesses: Josdan and Patient Home; some of the funding came from Donnarich’s assets. Tinimbang later asserted that he was not compensated for those asset transfers or for his removal as Donnarich’s president.Josephine and others were charged with conspiracy to commit healthcare fraud (18 U.S.C. 1349) and conspiracy to launder the proceeds of healthcare fraud and unlawful payments for patient referrals (18 U.S.C. 1956(h)) by using Donnarich and Josdan to fraudulently bill Medicare and creating shell companies to deposit checks. The government sought the forfeiture of assets involved in or traceable to the conspiracies. Josephine fled. Guerrero, an employee, pled guilty and agreed to forfeit assets. The district court entered a preliminary order of forfeiture.Tinimbang asserted a claim to the assets by instituting ancillary proceedings, citing his investment in Donnarich, his removal without compensation, and the allegedly improper transfers from Donnarich to Josdan and Patient. Tinimbang did not provide any financial tracing. The government “reviewed the movement of funds” and did not trace any of Tinimbang’s investment to the forfeiture assets. The Seventh Circuit affirmed summary judgment in favor of the government. Tinimbang had not carried his burden to show a vested or superior interest in the forfeited assets at the time of the criminal acts. View "United States v. Tinimbang" on Justia Law