Justia White Collar Crime Opinion Summaries

The Fifth Circuit affirmed the district court's grant of the SEC's motion for summary judgment, holding that defendant offered securities and committed securities fraud in violation of the Securities and Exchange Act. The court held that interests in defendant's drilling projects qualified as securities. In this case, the district court correctly concluded that defendant's drilling projects distributed power as if they were limited partnerships where the SEC provided unrebutted evidence showing that investors could not use their legal powers. The court also held that the district court correctly found that defendant made material misstatements to investors when he knowingly misrepresented his relationships with major oil companies. View "SEC v. Sethi" on Justia Law

Defendant, a professional sports gambler, appealed his conviction of securities fraud and related crimes. The Second Circuit held that, although it was undisputed that a special agent's leaks to reporters violated the grand jury secrecy provision of Federal Rule of Criminal Procedure 6(e), dismissal of the indictment was not appropriate in these circumstances where defendant failed to demonstrate prejudice by the agent's actions. Furthermore, the court noted that there was no due process violation where the violations were not so systematic and pervasive as to raise a substantial and serious question about the fundamental fairness of the process resulting in the indictment, nor were they so outrageous that they violated common notions of fairness and decency.The court also held that the district court did not clearly err in its factual determinations or abuse its discretion in denying the Rule 33 motion, and the evidence was insufficient to support defendant's counts of conviction related to Darden. Finally, the court vacated and remanded the restitution order, and affirmed the forfeiture order. View "United States v. Walters" on Justia Law

The Eighth Circuit affirmed defendant's conviction for seven counts of aggravated identity theft stemming from his involvement in preparing personal income tax returns for his clients that obtained inflated refunds by falsely claiming dependents. The court held that the district court did not err in interpreting the term "uses, without lawful authority" under 18 U.S.C. 1028A(a)(1) where defendant knowingly used the names and social security numbers of falsely claimed dependents, including his own children, in committing wire fraud, and whether the minors "consented" to the use was irrelevant. Therefore, the district court did not err by denying defendant's motion for acquittal. The district court also did not abuse its discretion by rejecting a jury instruction incorporating defendant's interpretation of the statute. View "United States v. Gatwas" on Justia Law

From 2008-2016, Brennan and Dyer (Defendants) operated Broad Street, to incorporate Tennessee corporations (Scenic City). They claimed that once Scenic City was appropriately capitalized, Defendants would register its common stock with the SEC using Form 10, would publicly trade Scenic City, and would acquire small businesses as a legal reverse merger. Investors sent money by mail and electronic wire from other states. Defendants moved the funds through Broad Street’s bank accounts, diverting significant funds to their personal bank accounts. They issued stock certificates and mailed them to investors, but never filed Form 10 nor completed any reverse mergers. Investors lost $4,942,070.18. Defendants reported the embezzled funds as long-term capital gains, substantially reducing their personal tax liability and treated payments to themselves from Broad Street as nontaxable distributions. For 2010-2014, Dyer owed an additional $312,799 in taxes; Brennan owed $164,542. The SEC began a civil enforcement suit under 15 U.S.C. 77(q)(a)(1), 77(q)(a)(2), 77(q)(a)(3), and 78j(b), and Rule 10b-5. Defendants pleaded guilty to conspiracy to commit mail and wire fraud, 18 U.S.C. 371, 1341 and tax evasion, 26 U.S.C 7201. The court sentenced them to prison, ordered restitution ($4,942,070.18), and ordered payments for their tax evasion. The SEC sought and the court entered a disgorgement order to be offset by the restitution ordered in the criminal case. The Sixth Circuit affirmed, rejecting an argument that the disgorgement violates the Double Jeopardy Clause under the Supreme Court’s 2017 “Kokesh” holding that disgorgement, in SEC enforcement proceedings, "operates as a penalty under [28 U.S.C.] 2462.” SEC civil disgorgement is not a criminal punishment. View "United States v. Dyer" on Justia Law

McClure-Potts contacted police about Samarin, who entered the U.S. without inspection from Ukraine. McClure-Potts claimed she was trying to adopt Samarin, who was 19 years old and that Samarin had been “speaking of Hitler against the Jews” and might have stolen a rifle. McClure-Potts provided a birth certificate indicating that Samarin was born in 1992. Police discovered that McClure-Potts had previously filed runaway reports regarding a minor son (Asher) apparently born in 1997; Samarin was posing as Asher and attending high school. The school provided a sworn statement from McClure-Potts that Samarin was born in 1997, with applications for free/reduced lunch and health benefits. Samarin claimed that he had moved in with McClure-Potts, then was told to cut ties with his family and surrender his money and his identification documents. He was forced to do household work. McClure-Potts obtained a Social Security card for "Asher," and used it to procure $7,336 in income tax credits and $13,653.28 in nutritional and health benefits. McClure-Potts was charged with Social Security Fraud, 42 U.S.C. 408(a)(6); Harboring an Illegal Alien, 8 U.S.C. 1324(a)(1)(A)(iii), (a)(2); and Unlawful Conduct Respecting Documents in Furtherance of Forced Labor, 18 U.S.C. 1589, 1590. McClure-Potts pled guilty to the Social Security Fraud and Harboring counts. Based on the amount of loss ($20,989.28) and the court’s refusal to grant an offense level reduction due to the claim that her fraud was committed “other than for profit," she was sentenced to five months. The Third Circuit affirmed. The benefits that McClure-Potts sought and received were “payment” for her harboring Samarin. View "United States v. McClure-Potts" on Justia Law

Defendants Walter and Steven Reed appealed their convictions for conspiracy to commit wire fraud and money laundering, as well as the substantive counts of wire fraud and money laundering. Walter was also convicted of additional counts. The charges stemmed from defendants' use of Walter's District Attorney campaign funds.The Fifth Circuit vacated the district court's imposition of joint and several liability for money forfeiture in light of the Supreme Court's decision in Honeycutt v. United States, which held that joint and several forfeiture liability was not permitted for forfeiture under 21 U.S.C. 853(a)(1), which mandates forfeiture for certain drug crimes. In this case, the government conceded that the imposition of joint and several forfeiture liability should be vacated and remanded in light of Honeycutt. The court otherwise affirmed the district court's judgment. View "United States v. Reed" on Justia Law

The Second Circuit vacated defendant's conviction of charges related to his involvement in an insider trading scheme where he provided material, nonpublic information to his father. At issue was the so-called "silver platter statement," where defendant purportedly told his father that he expected his father to invest based upon information to which defendant had access through his work as an investment banker.The court held that excluding the father's post-arrest FBI interview was not harmless. In this case, defendant should not have been precluded from impeaching the silver platter statement. The court held that, because the impeachment material might have undermined the silver platter statement in the eyes of the jury, it risked leaving the government with a substantially weaker case as to defendant's intent such that a guilty verdict would be far from assured. View "United States v. Stewart" on Justia Law

The Second Circuit affirmed defendant's conviction for conspiring to engage in racketeering in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO). The court held that the government was not precluded from using acquitted substantive offenses as racketeering predicates in the second RICO conspiracy charge; the government was not precluded from using acquitted non-RICO conspiracy offenses as racketeering predicates in the second RICO conspiracy charge; and the district court properly admitted evidence from the first trial because the evidence was used for different, non-precluded purposes in the second trial.The court also held that the district court did not err by allowing a transcript that identified defendant as the speaker to serve as a jury aid with respect to the properly-admitted recording, and in allowing the transcript to be reviewed by the jury during its deliberations. Finally, the court rejected defendant's claim of cumulative error. View "United States v. Zemlyansky" on Justia Law

In 2016, a federal grand jury in Utah returned a single count indictment against Kemp & Associates, Inc. (“Kemp”) and its Vice President/COO Daniel Mannix (collectively, “Defendants”) for knowingly entering into a combination and conspiracy in violation of the Sherman Act. Kemp was an “Heir Location Service,” a company that “identif[ies] heirs to estates of intestate decedents and, in exchange for a contingency fee, develop evidence and prove heirs’ claims to an inheritance in probate court.” The Government alleged at some point before January 29, 2014, Defendants “knowingly entered into and engaged in a combination and conspiracy with Richard Blake, Jr., [a competitor Heir Location Service] and other unindicted co-conspirators to suppress and eliminate competition by agreeing to allocate customers of Heir Location Services sold in the United States.” Under this agreement, when the two companies both contacted a potential heir, “the co-conspirator company that first contacted that heir would be allocated certain remaining heirs to that estate who had yet to sign a contract with an Heir Location Services provider.” In return, the company to which heirs were allocated “would pay to the other co-conspirator company a portion of the contingency fees ultimately collected from those allocated heirs.” The Government alleged that, in furtherance of this scheme, Defendants “made payments to the co- conspirator company, and received payments from the co-conspirator company, in order to effectuate this agreement.” Defendants moved for an order that the antitrust case would proceed pursuant to the rule of reason, as opposed to the per se rule, and to dismiss the indictment. As to the statute of limitations, Defendants noted that the limitations period for criminal violations of the Sherman Act was five years, and they argued that the indictment was thus untimely because any agreement between the alleged co- conspirators ended prior to a Mannix email from July 2008, whereas the charging Indictment wasn’t returned until August 2016, and served on defendants on September 1, 2016. The Tenth Circuit determined that the indictment at issue here was timely, but that it did not have jurisdiction over the district court's rule of reason order, and that mandamus was inappropriate in this circumstance. Therefore, the Court reversed the district court's dismissal of the indictment, dismissed the Government's appeal of the rule of reason order for lack of jurisdiction, and remanded this matter for further proceedings. View "United States v. Kemp & Associates" on Justia Law

A federal grand jury indicted Steven DeLia on one count of healthcare fraud. But the government filed the indictment outside the ordinarily applicable statute of limitations. Notwithstanding this filing, the government argued the indictment was timely because: (1) the Wartime Suspension of Limitations Act suspended the limitations period from running in this case; and (2) DeLia waived his asserted statute-of-limitations defense. The Tenth Circuit rejected both reasons and concluded the prosecution was time-barred. DeLia’s conviction was vacated and the indictment was dismissed. View "United States v. DeLia" on Justia Law