Justia White Collar Crime Opinion Summaries

The Fourth Circuit affirmed the district court's restitution calculation, determination of loss for purposes of sentencing, and denial of defendant's motion for recusal. In this case, defendant was convicted of orchestrating a scheme to defraud mortgage companies. The court held that the evidence supported the district court's restitution calculation; the district court did not abuse its discretion in determining the loss amount where it used the correct loss figure in sentencing defendant under the advisory Guidelines; and the district court did not abuse its discretion in its determination not to recuse where the district court's ownership of stock in some of the victim lenders did not require recusal. View "United States v. Stone" on Justia Law

Coexist was formed by Hubman, an admitted con man, after a court found that his previous enterprise, Hubman Foundation was not a charity but a sham designed to insulate Hubman from his debts and obligations. Hubman was introduced to Fehrenbacher, the president of a wholesale banking institution that packaged and sold mortgage notes to investment banks, and of a retail loan broker. In 2009, Fehrenbacher offered Hubman a deal via email that promised returns of 25-30% per week and that any invested funds would not be at risk and would be held in escrow. Coexist ultimately wired $2 million from Coexist, plus $2.8 million of Hubman's money to Assured Capital, following Fehrenbacher’s instructions. It was a Ponzi scheme. Hubman complained to the FBI and filed a civil suit. Assured ultimately paid him $4.3 million. Fehrenbacher then returned $1,494,250 to Coexist. The $2 million that Coexist “invested” was actually the money of Stewart, a retired professional baseball player. The Stewarts obtained a judgment for $2 million against Hubman and Coexist. Hubman did not pay. Coexist filed suit against Fehrenbacher and his companies. The Seventh Circuit affirmed a finding that the defendants violated a Florida law prohibiting the sale of unregistered securities and an order of rescission. View "Coexist Foundation, Inc. v. Fehrenbacher" on Justia Law

Defendant and her son appealed from their convictions for conspiracy to commit tax fraud and related offenses. The DC Circuit held that the prosecutor's blatant misstatements of key evidence during closing arguments, in the absence of any steps to mitigate the resulting prejudice, required reversal of the son's convictions; because the evidence against the son was insufficient, he was not subject to retrial; defendant was not prejudice from the closing arguments; and defendant's evidentiary challenges were unpersuasive. The court affirmed defendant's convictions but remanded her case for resentencing and for reconsideration of her claims of ineffective assistance of counsel. View "United States v. Davis" on Justia Law

The Fifth Amendment's prohibition on the use of compelled testimony in American criminal proceedings applies even when a foreign sovereign has compelled the testimony.  When the government makes use of a witness who had substantial exposure to a defendant's compelled testimony, it is required under Kastigar v. United States, 406 U.S. 441 (1972), to prove, at a minimum, that the witness's review of the compelled testimony did not shape, alter, or affect the evidence used by the government.  A bare, generalized denial of taint from a witness who has materially altered his or her testimony after being substantially exposed to a defendant’s compelled testimony is insufficient as a matter of law to sustain the prosecution’s burden of proof. In this case involving the London Interbank Offered Rate (LIBOR), defendants were convicted of wire fraud and conspiracy to commit wire fraud and bank fraud. The Second Circuit held that defendants' compelled testimony was "used" against them, and this impermissible use before the petit and grand juries was not harmless beyond a reasonable doubt.  Accordingly, the court reversed the judgments of conviction and dismissed the indictment. View "United States v. Allen" on Justia Law

The Eleventh Circuit affirmed in part defendant's 84-month sentence for identity theft and conspiracy to commit wire fraud. The court held that the loss amount of $165,500 from 331 debit and credit cards ($500 times 331) was properly attributed to defendant; a social security number qualifies as an "access device" under the definition in 18 U.S.C. 1029(e)(1) and for purposes of the Special Rules in the Sentencing Guidelines; and there was no error in including the loss amount of $500 for each of the "numerous" social security numbers shown on defendant's computer. The court remanded to the district court to address, and make fact findings about, the loss amount. On remand, both sides may submit additional evidence as to what types of personal information were found in the apartment. The evidence supported the district court's finding that defendant did not meet her burden of proving her minor role and the district court did not err when it denied defendant the benefit of an acceptance of responsibility reduction. However, the court remanded for additional factfinding as to the criminal history category points. View "United States v. Wright" on Justia Law

The Second Circuit vacated and remanded defendant's conviction for all counts related to the abuse of his public position by engaging in two quid pro quo schemes in which he performed official acts in exchange for bribes and kickbacks. Defendant, the former Speaker of the New York State Assembly, then laundered the proceeds of his schemes into private investment vehicles. Although the court rejected defendant's sufficiency challenges, the court held that the district court's instructions on honest services fraud and extortion did not comport with McDonnell v. United States, 136 S. Ct. 2355 (2016), and were therefore in error. McDonnell clarified the definition of an "official act" in honest services fraud and extortion charges. The court further held that this error was not harmless because it was not clear beyond a reasonable doubt that a rational jury would have reached the same conclusion if properly instructed, as was required by law for the verdict to stand. View "United States v. Silver" on Justia Law

The Eighth Circuit affirmed defendant's convictions for tax evasion, mail fraud, and wire fraud for conduct relating to the operation of three companies that he owned. The court held that the district court did not abuse its discretion by limiting defendant's cross-examination of a prosecution witness; the district court did not clearly err in determining that defendant's base offense level was 22 based on a tax loss of greater than $1,000,000; and the district court did not clearly err by applying and two-level adjustment under USSG 3C1.1 for obstruction of justice. Because the government concedes that it did not establish sufficient evidence to support the application of the USSG 2T1.1(b)(1) enhancement for failing to report income exceeding $10,000 from criminal activity, the court vacated the sentence and remanded for resentencing. View "United States v. Montanari" on Justia Law

From 2003-2006, while employed as Director of Application for the American Hospital Association (AHA), Sayyed directed overpriced contracts to companies in exchange for kickbacks. Sayyed eventually pled guilty to mail fraud, 18 U.S.C. 1341, was sentenced to three months’ imprisonment, and was ordered to pay the AHA $940,450.00 restitution under the Mandatory Victims Restitution Act. 18 U.S.C. 3663A. As of November 2015, Sayyed still owed $650,234.25. In post‐conviction proceedings, the government sought to enforce the restitution judgment under 18 U.S.C. 3613, which permits such enforcement “in accordance with the practices and procedures for the enforcement of a civil judgment.” The government served citations to Vanguard and Aetna to discover assets in Sayyed’s retirement accounts, then sought turnover orders alleging that the companies possessed retirement accounts with approximately $327,000 in non‐exempt funds. Sayyed argued that his retirement accounts were exempt “earnings” subject to the 25% garnishment cap of the Consumer Credit Protection Act. The district court granted the government’s motion. The Seventh Circuit affirmed, agreeing that because Sayyed, who was 48‐years‐old at the time, had the right to withdraw the entirety of his accounts at will, the funds were not “earnings.” The CCPA garnishment cap only protects periodic distributions pursuant to a retirement program. View "United States v. Sayyed" on Justia Law

The Illinois Department of Public Health furnishes funds to organizations that provide health services, including the Broadcast Ministers Alliance, Access Wellness and Racial Equity, and Medical Health Association, which, collectively, received more than $11 million from the Department between 2004 and 2010. About $4.5 million of those dollars flowed through the grantees to Advance Health, Social & Educational Associates which was owned and controlled by the Dingles, who spent the diverted funds on personal luxuries, such as yachts and vacation homes. In 2012, Leon was charged with conspiracy to commit mail fraud (18 U.S.C. 371), 13 counts of mail fraud (18 U.S.C. 1341), and two counts of money laundering (18 U.S.C. 1957(a)). The charges against Karin were similar. A jury convicted them on all counts. The district court apparently considered their ages (Leon was 78 and Karin 76 at the time): Leon received a 72‐month sentence based on a range of 78-97 months; Karin received a 36‐month sentence based on a range of 41-51 months. The Seventh Circuit affirmed, rejecting arguments that the jury instructions violated the Fifth Amendment because they allegedly made acquittal only optional upon a finding of reasonable doubt; the court abused its discretion under Federal Rule of Evidence 403 when it permitted the admission of evidence of Leon’s marital infidelity; and the sentences were unreasonable. View "United States v. Dingle" on Justia Law

King obtained personal identifying information for more than 100 people, including the Director of the National Security Agency, then created and attempt to use 185 credit and debit cards. He also prepared and submitted 62 false tax refund claims. Reported actual losses from his crimes totaled only $10,980. King was arrested in June 2014. He was not detained before trial. In November King was arrested again, having resumed his fraudulent activities. King pled guilty to five counts, including aggravated identity theft, 18 U.S.C. 1028A(a)(1), which requires a minimum sentence of 24 months consecutive to any other sentence. The court sentenced King to concurrent terms of 24 and 30 months on three access device fraud counts, 18 U.S.C. 1029(a) and 1029(b)(1) and the fraudulent tax refund count, 18 U.S.C. 287, which was below the applicable guideline range, then added the mandatory consecutive 24 months. The Seventh Circuit affirmed. The district judge did what he was supposed to do: calculate the offense level and criminal history category under the Guidelines, then use his independent judgment under 18 U.S.C. 3553(a) to impose a sentence tailored to the individual offender and his crimes. The court rejected King’s argument that section 3553(a)'s “parsimony principle,” which instructs the court to impose a sentence “sufficient, but not greater than necessary,” to serve the statutory purposes of sentencing, required an adjustment of the guideline calculations themselves. View "United States v. King" on Justia Law