Justia White Collar Crime Opinion Summaries

The Second Circuit reversed the district court's grant of defendant's motion for a new trial under Federal Rule of Criminal Procedure 33, following defendant's conviction for conspiracy to commit securities fraud and securities fraud. The court clarified that the preponderates heavily standard requires that the district court determine whether all the evidence at trial, taken as a whole, preponderated heavily against the verdict. It does not, however, permit the district court to elect its own theory of the case and view the evidence through that lens. The court held that the weight of the evidence at trial did not preponderate heavily against the jury's verdict, and thus the district court abused its discretion in vacating the judgment and granting a new trial. The court reinstated the conviction and remanded to the district court for sentencing. View "United States v. Archer" on Justia Law

The Idaho Department of Finance ("Department") filed a civil enforcement action against appellant appellant, Sean Zarinegar, Performance Realty Management LLC ("PRM") and other nominal defendants, alleging Zarinegar and PRM committed securities fraud. The Department moved for summary judgment; Zarinegar and PRM responded with their own motion for partial summary judgment and a motion to strike several documents submitted by the Department in support of its motion for summary judgment. A few days before the district court was set to hear arguments on the motions, counsel for Zarinegar and PRM moved the district court for leave to withdraw as counsel of record. At the hearing, the district court preliminary denied the motion to withdraw, entertained the parties’ arguments, and took all matters under advisement. The district court later issued a memorandum decision and order denying, in part, Zarinegar’s, and PRM’s motions to strike. The district court also denied Zarinegar’s and PRM’s motion for partial summary judgment. The district court granted summary judgment for the Department after finding Zarinegar and PRM had misrepresented and omitted material facts in violation of Idaho Code section 30-14-501(2) and fraudulently diverted investor funds for personal use in violation of section 30-14-501(4). The district court then granted the motion to withdraw. The district court entered its final judgment against Zarinegar and PRM September 30, 2019. Zarinegar, representing himself pro se, appealed the judgment, arguing: (1) the district court lacked jurisdiction to enter judgment against him; (2) the district court violated his constitutional right to a jury trial and right to proceed pro se; (3) the district court’s denial of Zarinegar’s motions to strike as to certain documents was an abuse of discretion; and (4) the district court erroneously granted summary judgment for the Department. Finding no reversible error, the Idaho Supreme Court affirmed the district court's judgment. View "Idaho v. Zarinegar" on Justia Law

The Eighth Circuit affirmed defendant's 58 month sentence imposed after he was convicted of conspiracy to commit theft of public funds, theft of public funds, aggravated identity theft, money laundering, and mail fraud. Defendant's conviction stemmed from improper billing practices related to a federal program called the Child Care and Development Fund.The court held that the record supports the district court's conclusion that defendant was responsible for a loss amount between $250,000 and $550,000, and thus the offense level (and resulting guidelines range) was correct. In this case, defendant presented no evidence that he provided legitimate services or submitted legitimate bills. Furthermore, he provided no evidence differentiating legitimate from illegal billing. The court also held that the district court did not clearly err in concluding that the $536,833.75 paid to defendant's daycares by Missouri is the loss amount under the Mandatory Victims Restitution Act. View "United States v. Karie" on Justia Law

The Fifth Circuit affirmed defendant's 120 month sentence imposed after she was convicted of conspiracy to commit health care fraud and conspiracy to commit money laundering.The court held that defendant failed to show that the district court imposed an unconstitutional trial penalty on her at sentencing and rejected her claim that she was treated more harshly than her co-conspirators because she chose to go to trial rather than to plead guilty. In this case, her only direct co-conspirator was charged with different crimes that carried different statutory maximum sentences. The court also held that defendant's sentence was not procedurally unreasonable where the district court did not abuse its discretion by improperly presuming the Guidelines range to be reasonable; the district court considered the need to avoid unwarranted sentencing disparities; and defendant failed to show a reasonable probability that an explanation by the district court for running the sentences consecutively would have changed her total punishment. Finally, the court held that defendant's sentence was not substantively unreasonable and upheld the district court's restitution order, rejecting procedural and constitutional challenges. View "United States v. Gozes-Wagner" on Justia Law

After the Bernie Madoff Ponzi scheme collapsed, Picard was appointed under the Securities Investor Protection Act, 15 U.S.C. 78aaa (SIPA), as the liquidation trustee for Bernard L. Madoff Investment Securities LLC (BLMIS). The Act established a priority system to make customers of failed brokerages whole before other general creditors. Where customer property is insufficient to satisfy customers' claims, the trustee may recover property transferred by the debtor that would have been customer property but for the transfer if and to the extent that the transfer is void or voidable under the Bankruptcy Code. 15 U.S.C. 78fff–2(c)(3). The provisions of the Bankruptcy Code apply only to the extent that they are consistent with SIPA.Picard attempted to recover transfers of money that the defendants had received from BLMIS in excess of their principal investments. The defendants are BLMIS customers who were unaware of the fraud but profited from it by receiving what they thought were legitimate profits; the funds were actually other customers' money. The Second Circuit affirmed summary judgment in favor of Picard. The Bankruptcy Code affirmative defense that permits a transferee who takes an interest of the debtor in property "for value and in good faith" to retain the transfer to the extent of the value given does not apply in this SIPA liquidation. The transfers were not "for value" and recovery would not violate the two-year limitation. View "In re: Bernard L. Madoff Investment Securities LLC" on Justia Law

The Second Circuit affirmed defendant's conviction of two counts of insider trading in violation of Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b–5. The court held that defendant had a duty to refrain from trading on nonpublic inside information and that the evidence was sufficient to convict him. In this case, defendant served as a principal investigator for a clinical trial of a cardiac drug developed by Regado Biosciences, a publicly traded biopharmaceutical company, that was designed to prevent blood clotting. After defendant learned that patients suffered adverse effects during the trial, he traded on that nonpublic inside information to avoid a loss and earn a profit in the shares of the company. The court concluded that, taken together, the evidence of defendant's deceptive activity was sufficient for the jury to find that he was a sophisticated investor that knew his actions were unlawful under the charge given by the district court. Finally, there was no abuse of discretion in the district court's evidentiary rulings. View "United States v. Kosinski" on Justia Law

Defendant Keith Fitzgerald appealed a superior court order denying his motion for a new trial based on ineffective assistance of counsel. In December 2015, defendant was indicted on five counts of theft by unauthorized taking. Defense counsel, whose assistance is alleged to have been ineffective, was retained by defendant in March 2016, after defendant’s prior counsel withdrew. Defense counsel, defendant, and the prosecutor engaged in several plea discussions leading up to trial. Plea negotiations ultimately failed and the case went to trial. The jury heard testimony from the defendant that his father authorized the transactions. On cross-examination however, the State elicited a number of admissions from defendant, which defense counsel did not anticipate, that severely damaged defendant’s credibility and undercut his defense. The jury returned verdicts of guilty on all five counts of theft by unauthorized taking. Ultimately, the court sentenced defendant to a term of not less than nine and one-half years and not more than 25 years in the New Hampshire State Prison. After an evidentiary hearing on defendant's new trial motion, the court ruled that defendant failed to sustain his burden of showing that the outcome of his case would have been different but for his counsel’s performance. On appeal, defendant argued the trial court erred by concluding that, even if defense counsel rendered ineffective assistance, defendant was not prejudiced by: (1) defense counsel’s failure to adequately advise defendant regarding the merits of the State’s plea offer; or (2) counsel’s failure either to object to the trial court’s jury instructions on a sentence enhancement provision on the basis that it had not been presented to the grand jury for indictment, or to move for dismissal of the indictment on that same basis. The New Hampshire Supreme Court determined defense counsel did not adequately advise defendant about a sentence enhancement and the merits of the State's plea offer relative to defendant's likelihood of success at trial, and but for counsel's deficient performance, there was a reasonable probability that defendant would have accepted the State's plea offer. The Court therefore affirmed in part, reversed in part and remanded for further proceedings. View "New Hampshire v. Fitzgerald" on Justia Law

In a split decision, the Supreme Court reversed Defendant's negligent homicide convictions but upheld his convictions on nine counts of criminal endangerment and eleven counts of criminal distribution of dangerous drugs, holding that there was insufficient evidence to establish that Defendant's actions in prescribing narcotics was the cause in fact of the deaths of two of his patients.After a jury trial, Defendant, a licensed medical doctor, was convicted of several crimes related to the repeated prescribing of copious amounts of opiates and other narcotics to eleven individuals. Two of Defendant's patients died from drug overdoses. The Supreme Court reversed in part and affirmed in part the convictions, holding (1) the State did not present sufficient evidence to establish that Defendant's actions were the direct cause of the two drug overdose deaths; and (2) Defendant was operating outside the bounds of a professional medical practice, and therefore, the exemption for medical practitioners acting within the course of a professional practice did not apply to the facts of this case. View "State v. Christensen" on Justia Law

The class’s version of events painted the Hutchenses as cunning con artists who "puppeteered" a advance-fee loan scam from afar. Defendants Sandy Hutchens, Tanya Hutchens, and Jennifer Hutchens, a three-member family who purportedly orchestrated a loan scam, challenged a district court’s rulings to avoid paying all or part of the judgment against them brought pursuant to a class action suit. The Tenth Circuit concluded almost all of those challenges failed, including their challenges to the jury’s verdict, class certification, proximate causation, and the application of the equitable unclean hands defense. However, the Court agreed with the Hutchenses’ position on the district court’s imposition of a constructive trust on some real property allegedly bought with the swindled fees. The Court therefore affirmed in part, reversed in part, and remanded to the district court for entry of a revised judgment. View "CGC Holding Company v. Hutchens" on Justia Law

Steven Thompson was a real estate developer and sole member and manager of SGD Timber Canyon, LLC (“Timber Canyon”), a real estate company that held an interest in a number of undeveloped lots in Castle Rock, Colorado. To buy those properties, Timber Canyon initially obtained a $11.9 million loan from Flagstar Bank. The properties went into foreclosure in October 2009. In February 2010, Timber Canyon filed for bankruptcy; Flagstar Bank sought relief from the automatic stay to allow it to proceed with the foreclosure. In the spring of 2010, Thompson met John Witt (“John”), who had worked in the construction industry in Denver but wanted to become a real estate developer. John eventually began working with Thompson and signed a letter of intent indicating that John would eventually obtain an ownership interest in Thompson’s company. Shortly thereafter, and without disclosing the fact that the Timber Ridge properties were in foreclosure and subject to a forbearance agreement, Thompson obtained an “investment” from John’s parents, Thomas and Debra Witt (“the Witts”). Ultimately, the Witts agreed to increase their initial $400,000 investment to $2.4 million. At no point did Thompson disclose to the Witts that Timber Canyon's properties were already highly leveraged; the company was in bankruptcy, the properties were in foreclosure, and the properties had been valued at only $6.75 million (an amount significantly less than the $31 million value that Thompson had represented to the Witts during negotiations). When the Witts’ note ultimately came due in the winter of 2011, Thompson defaulted. The Witts filed a civil lawsuit against him and contacted law enforcement. Thereafter, the State charged Thompson with two counts of securities fraud and one count of theft. A jury convicted Thompson on all counts, and the court sentenced him to the Department of Corrections for twelve years on each of the securities fraud counts, to be served concurrently, and eighteen years on the theft count, to be served consecutively to the securities fraud counts. As pertinent here, Thompson argued on appeal: (1) because the note at issue was not a security, insufficient evidence supported his securities fraud convictions; (2) the trial court erred by tendering an incorrect jury instruction regarding the meaning of “security”; and (3) his theft conviction had to run concurrently with his securities fraud convictions. The issue this case presented for the Colorado Supreme Court's review was whether: (1) the promissory note at issue was a security under the "family resemblance" test; (2) any error in the jury instruction defining “security” was not plain; and (3) consecutive sentences were permissible because different evidence supported defendant Steven Thompson’s securities fraud and theft convictions. Finding the note at issue was indeed a security under Colorado law, and no other reversible error, the Supreme Court affirmed Thompson's convictions. View "Thompson v. Colorado" on Justia Law