Justia White Collar Crime Opinion Summaries

The Second Circuit affirmed defendant's conviction of securities fraud and wire fraud, finding no errors in the district court's jury instructions, admission of lay testimony, and calculation of loss.The court also held that, as a matter of law, forfeiture is not limited to the amount of funds acquired through illegal transactions in an insider‐trading scheme; rather, forfeiture may extend to appreciation of those funds. Accordingly, the court affirmed the district court's forfeiture calculation and order. Finally, Lagos v. United States, 138 S. Ct. 1684 (2018), was decided after defendant's sentence and addressed the categories of fees recoverable under the Mandatory Victims Restitution Act. Therefore, the court held that a limited remand to recalculate the restitution was appropriate. View "United States v. Afriyie" on Justia Law

The Eighth Circuit affirmed defendant's sentence after he pleaded guilty to passing counterfeit securities. The court held that the district court did not clearly err in determining the intended-loss calculation and in determining the amount of restitution. In this case, trying to rent a jet without intending to pay for it satisfied the definition of an intended loss, and the district court reasonably estimated the victims' ultimate losses. View "United States v. Smith" on Justia Law

The Fifth Circuit affirmed defendants' convictions stemming from their involvement in a fraudulent scheme to collect disaster assistance. Defendant Walter was convicted of conspiracy to commit wire fraud, eleven counts of wire fraud, two counts of theft from a program receiving federal funds, and three counts of money laundering; Defendant Rosie was convicted of the conspiracy count, ten counts of wire fraud, and a money laundering count; and Defendant Anita was convicted of the conspiracy count.The court held that there was sufficient evidence to convict defendants. The court also held that the district court did not misapply a two-level sentencing enhancement under USSG 2B1.1(b)(9)(A) to Rosie's sentence where the offense involved a misrepresentation that the defendant was acting on behalf of a charitable, educational, religious, or political organization, or a government agency. The court vacated the no-new-credit special condition and remanded for the district court to reform the written no-new-credit condition to match the one implied by the oral sentence of restitution. The court also vacated the no-gambling special condition, because it was not so clearly consistent with an oral pronouncement of restitution as to be reasonably encompassed within that pronouncement. The court affirmed the remaining two challenged conditions. View "United States v. Diggles" on Justia Law

Brooks, Debtor's CEO, was charged with financial crimes. In class action and derivative lawsuits, Debtor proposed a global settlement that indemnified Brooks for liability under the Sarbanes Oxley Act (SOX), 15 U.S.C. 7243. Cohen, Debtor’s former General Counsel and a shareholder, claimed that the indemnification was unlawful. The district court approved the settlement, Cohen, represented by CLM, appealed. The Second Circuit vacated, noting that the EDNY would determine CLM’s attorneys’ fees award. Debtor initiated Chapter 11 bankruptcy proceedings. The Bankruptcy Court confirmed Debtor’s liquidation plan, with a trustee to pursue Debtor’s interest in recouping its losses from the ongoing actions.Brooks died in prison. Because his appeal had not concluded, some of his convictions and restitution obligations were abated. Stakeholders negotiated a second global settlement agreement, under which $142 million of Brooks’ restrained assets were to be distributed to his victims; $70 million has been remitted to Debtor. The Bankruptcy Court awarded CLM fees for the SOX 304 claim; the amount would be determined if Debtor received any funds on account of the claim. CLM’s Fee Appeal remains pending at the district court.CLM requested a $25 million reserve for payment of its fees. The Bankruptcy Court ordered Debtor to set aside $5 million. CLM’s Fee Reserve Appeal remains pending. CLM then moved, unsuccessfully, for a stay of Second Settlement Agreement distributions. In its Stay Denial Appeal, CLM’s motion requesting a stay of distributions was denied. The Third Circuit affirmed. The $5 million reserve is sufficient. A $5 million attorneys’ fees award for 1,502.2 hours of legal work totaling $549,472.61 of documented fees would yield an hourly rate of $3,328.45 and a lodestar multiplier of over nine. In common fund cases where attorneys’ fees are calculated using the lodestar method, multiples from one to four are the norm. View "SS Body Armor I, Inc. v. Carter Ledyard & Milburn, LLP" on Justia Law

Harmelech pled guilty to one count of mail fraud, 18 U.S.C. 1341; the government dismissed the remaining count. Harmelech, who owned and operated multiple cable installation companies, admitted to setting up about 384 DIRECTV accounts under a fraudulent scheme that involved multi-family buildings. He pocketed money that should have been paid for servicing those accounts for six years. Harmelech involved several employees in his scheme and attempted to prevent DIRECTV from discovering his scheme by instructing the building managers not to cooperate in an investigation. At sentencing, Harmelech claimed his scheme actually benefited the company by bringing in additional business. The district court adopted the government’ loss calculation and found Harmelech owed: $108,000 in account delinquencies; $39,000 in unrecovered DIRECTV receivers; and $29,600 in promotional customer credits; $166,0001 for stolen channels and $35,000 for the price DIRECTV paid for its internal investigation. The court ordered $372,600 in restitution, assessed a four-level sentencing enhancement for Harmelech’s role as the organizer and leader of an otherwise extensive fraudulent scheme U.S.S.G. 3B1.1(a), and sentenced Harmelech to 48 months’ imprisonment. The Seventh Circuit affirmed. The district court’s loss calculation was concrete, specific, conservative in its results, and consistent with Seventh Circuit precedent. View "United States v. Harmelech" on Justia Law

Plaintiffs filed suit alleging that defendants, while located in foreign nations, used the mail or wires to order fraudulent asset transfers from plaintiffs' New York bank accounts to defendants' own accounts. The district court held that all but one of the schemes were impermissibly extraterritorial under either civil RICO, 18 U.S.C. 1964(c), or the mail, wire, and bank fraud statutes plaintiffs cited as predicates to the civil RICO cause of action. The district court found the remaining scheme, standing alone, did not constitute a pattern of racketeering activity under RICO. At issue was whether the conduct violating the predicate statutes was extraterritorial, the application of civil RICO to plaintiff's alleged injuries was extraterritorial, and whether the surviving schemes amounted to a pattern of racketeering activity.The Second Circuit held that each of the schemes to defraud, except for the Sham Management Fees Scheme, calls for domestic applications of 18 U.S.C. 1962(c), 1962(d), 1341, 1343, and 1344(2). The court also held that the district court abused its discretion by dismissing the state law claims for lack of supplemental jurisdiction. Therefore, the court reversed and remanded for further proceedings. View "Bascuñán v. Elsaca" on Justia Law

The DC Circuit affirmed defendants' convictions and sentences for health care fraud, conspiracy to commit health care fraud, money laundering, and conspiracy to commit money laundering. The court rejected statutory and constitutional speedy trial claims. The court also held that the district court abused its discretion in denying severance; even assuming a Rule 16 violation, defendants failed to establish the requisite prejudice to their substantial rights for the court to conclude that the district court abused its discretion by not excluding Exhibit 439; the evidence was sufficient to convict defendants; and challenges to the unanimity and aiding-and-abetting instructions rejected on plain error review.The court also held that the district court properly concluded that the $80.6 million in payments from D.C. Medicaid to Global constituted loss under the Mandatory Victims Rights Act; the district court did not plainly violate the Excessive Fines Clause by ordering forfeitures without considering defendants' ability to pay them; and the district court did not abuse its discretion by imposing four sentencing enhancements for committing crimes involving a loss of approximately $80 million, abusing positions of trust, playing a managerial role in the crimes, and violating an administrative order. View "United States v. Bikundi" on Justia Law

Plaintiffs appealed the district court's grant of summary judgment to Serco in an action alleging numerous claims arising out of a failed business relationship. Plaintiffs alleged that Serco conspired with Jaxon Engineering to "rig" a bidding process related to work for the Air Force, and thus interfered with plaintiffs' reasonable business expectancy in that work.The Court of Appeal held that the district court properly awarded summary judgment to Serco on the claims of tortious interference with business expectancy, because those claims failed as a matter of law. However, the court held that the district court erred in awarding summary judgment to Serco with respect to plaintiffs' conspiracy claims, because they were not time-barred and, in the alternative, the evidence that plaintiffs were the sole providers of HEMP-related services to Serco for several years was sufficient to create a dispute of material fact regarding whether plaintiffs had a valid business expectancy in the task orders awarded to Jaxon. In regard to the Colorado Organized Crime Control Act (COCCA) claims, the court agreed with the district court that the two year statute of limitations applied to the claims but remanded for the district court to determine as a factual matter the particular limitations period for each of the COCCA claims. Therefore, the court affirmed in part, vacated in part, and remanded for further proceedings. View "L-3 Communications Corp. v. Serco, Inc." on Justia Law

Anthony, his brother Christopher, their sister Sharon, and Sharon’s husband, Durand, sought tax refunds for 21 separate fictitious trusts that they created. They were successful in obtaining refund checks based upon many of these returns, receiving over $360,000. They were convicted of mail fraud, conspiracy to commit mail fraud, aggravated identity theft, conspiracy to commit identity theft, and illegal monetary transactions. The Seventh Circuit affirmed, rejecting arguments that insufficient evidence supported Sharon’s convictions; that insufficient evidence supported the finding that Anthony and Sharon knew that they were using the names and personal identifying information of real people; that Anthony and Christopher were deprived of the effective assistance of counsel because their state-bar grievances against their attorneys created conflicts of interest; that the indictment was duplicitous regarding the aggravated-identify-theft charges and the district court failed to cure this defect by issuing a specific unanimity jury instruction; that the court’s aiding-and-abetting jury instruction was legally incorrect, and that insufficient evidence supported the court’s aiding-and-abetting jury instruction. View "United States v. Gandy" on Justia Law

Medicare pays for doctors’ home visits if a patient is homebound. Mobile Doctors offered physician services to homebound Medicare beneficiaries, hiring doctors who assigned their Medicare billing rights to the company. Upon receipt of payment, Mobile would pay the physician-employee a percentage of what Mobile received from billing Medicare. Many of Mobile’s patients did not actually qualify as homebound. Some doctors signed certifications for additional unneeded treatment from companies that provided at-home nursing or physical therapy services—companies that had referred the patients to Mobile. Mobile submitted Medicare codes for more serious and more expensive diagnoses or procedures than the provider actually diagnosed or performed. Mobile instructed physicians to list at least three diagnoses in the patient file; if the doctors did not list enough, a staff member added more. Mobile only paid the physicians if they checked at least one of the top two billing codes. Doctors who billed for the higher of the top two codes were paid more. Mobile also paid for “standing orders” for testing, although Medicare prohibits testing done under standing orders. Daneshvar joined Mobile as a physician in 2012. After following Mobile’s policies Daneshvar was convicted of conspiracy to commit healthcare fraud but found not guilty of healthcare fraud; he was sentenced to 24 months' imprisonment. The Sixth Circuit affirmed. Daneshvar’s trial was fair; none of the district court’s rulings during that proceeding should be reversed. There was no reversible error with his sentencing. View "United States v. Daneshvar" on Justia Law