Justia White Collar Crime Opinion Summaries

Kolbusz, a dermatologist, submitted thousands of claims to the Medicare system and private insurers for the treatment of actinic keratosis, a skin condition that sometimes leads to cancer. He received millions of dollars in payments. Convicted of six counts of mail or wire fraud, 18 U.S.C. 1341, 1343, he was sentenced to 84 months in prison plus $3.8 million in restitution. The Seventh Circuit affirmed. The evidence permitted a reasonable jury to conclude that many, if not substantially all, of the claims could not have reflected an honest medical judgment and that the treatment Kolbusz claimed to have supplied may have failed to help any patient who actually had actinic keratosis. Because the indictment charged a scheme to defraud, the prosecutor was entitled to prove the scheme as a whole, and not just the six exemplars described in the indictment. The judge did not err in excluding evidence that, after his arrest and indictment, Kolbusz continued to submit claims to Medicare, and many were paid. “It would have been regrettable to divert the trial into an examination of Medicare’s claims-processing procedures in 2013 and 2014, rather than whether Kolbusz knew that he was submitting false claims in 2010 and earlier." View "United States v. Kolbusz" on Justia Law

Defendant appealed his conviction of wire fraud, access device fraud, aggravated identity theft, and money laundering in connection with a scheme to make unauthorized credit card charges to the credit cards of customers of defendant's digital retail company. The court concluded that the district court did not err in denying defendant's motion to dismiss the Superseding Indictment for spoliation of evidence where, pursuant to Arizona v. Youngblood, there is no evidence of the government's bad faith. The court joined its sister circuits and held that wire fraud does not require convergence between the parties intended to be deceived and those whose property is sought in a fraudulent scheme. Therefore, the district court did not err in denying defendant's motion to dismiss the wire fraud counts in the Superseding Indictment for failure to plead a legally cognizable scheme. That the Superseding Indictment alleges that defendant's misrepresentations were directed at acquiring banks and others, but that the credit card holders were the intended victims of the scheme, is irrelevant. Accordingly, the court affirmed the judgment. View "United States v. Greenberg" on Justia Law

Defendant, a CPA, appealed his sentence and conviction for conspiracy and obstruction of justice following his involvement in earnings mismanagement and improper accounting transactions while acting as chief accounting officer of Beazer Homes. The court concluded that the district court did not err in excluding evidence surrounding the false email accusations. In any event, any error was harmless where defendant was not ultimately prejudiced. The court also concluded that the district court did not abuse its discretion in quashing defendant's Federal Rule of Criminal Procedure 17(c) subpoena to Beazer; in prohibiting defendant's accounting expert from testifying about work papers prepared by Beazer's independent auditors; and in allowing the government to have Beazer employees testify as lay witnesses about the propriety of complex accounting transactions without calling an accounting expert to testify. Finally, the court rejected all three of defendant's potential misconduct claims and concluded that any error was harmless. Accordingly, the court affirmed the judgment. View "United States v. Rand" on Justia Law

The Securities and Exchange Commission (SEC) brought an enforcement action against Defendant Charles Kokesh for misappropriating funds from four SEC-registered business development companies (BDCs) in violation of federal securities laws. After a jury returned a verdict in favor of the SEC, the district court entered a final judgment permanently enjoining Defendant from violating certain provisions of federal securities laws, ordering disgorgement of $34.9 million plus prejudgment interest of $18.1 million, and imposing a civil penalty of $2.4 million. Defendant appealed, arguing that the court’s imposition of the disgorgement and permanent injunction was barred by 28 U.S.C. 2462, which set a five-year limitations period for suits “for the enforcement of any civil fine, penalty, or forfeiture.” He also argued that the district court erred by precluding him from presenting evidence of attorney and accountant participation to show his lack of knowledge of the misconduct. After review, the Tenth Circuit held that both the permanent injunction and the disgorgement order were remedial and not subject to section 2462. The Court rejected the evidentiary claim. View "SEC v. Kokesh" on Justia Law

For six decades, the Fair family operated Fair Finance Company in Ohio. In 2002, Durham and Cochran purchased the Company in a leveraged buyout and transformed its factoring operation into a front for a Ponzi scheme, to fund their extravagant lifestyles and struggling business ventures. Textron allegedly assisted in the concealment and perpetuation of the Ponzi scheme. In 2009, the scheme collapsed. Durham, Cochran, and the Company’s CFO, were indicted for wire fraud, securities fraud, and conspiracy. The Company entered involuntary bankruptcy. The Chapter 7 Trustee brought adversary proceedings on behalf of the estate for the Ponzi scheme’s unwitting investors. The district court granted Textron’s motion to dismiss. The Sixth Circuit reversed with respect to a claimed actual fraudulent transfer, holding that the Trustee sufficiently alleged facts to demonstrate an ambiguity in a 2004 financing and funding contract between the Company and Textron. The court held that the Trustee was not required to plead facts in anticipation of Textron’s potential in pari delicto affirmative defense to survive a motion to dismiss a civil conspiracy claim. In light of the reinstatement of those claims, the court reversed the dismissal of equitable subordination and disallowance claims. The court affirmed the dismissal of the Trustee’s constructive fraudulent transfer claim as time barred. View "Bash v. Textron Fin. Corp." on Justia Law

Defendants Russell and Lange were found guilty of conspiracy to commit wire fraud and securities fraud (Count Two) and substantive securities fraud (Count Three). The jury also found Russell guilty of conspiracy to commit wire fraud in connection with a separate but related scheme (Count One). On appeal, the Government challenges the district court's order vacating Lange's conviction on Count Three. Both defendants challenged their convictions on several grounds. The court affirmed defendants' convictions and concluded, inter alia, that there was sufficient evidence to support the charges. The court reversed the district court's order acquitting Lange on Count Three because the district court erred by concluding that the Government was required to present evidence that Lange aided and abetted the specific acts carried out by other BSMI employees in the district of venue. The court remanded with instructions for the district court to reinstate Lange's conviction on Count Three and to resentence him accordingly. Defendants raised a number of additional arguments which the court considered and rejected. View "United States v. Lange" on Justia Law

Former FBI agent Robert Lustyik wanted to help his friend and business partner, Michael Taylor, in return for payment. Taylor owned American International Security Corporation (AISC), a company that offered security and defense contracting services. The Department of Defense awarded AISC a contract in 2007 to provide training and related services to Afghan Special Forces. In mid-2010, the United States began investigating AISC regarding fraud and money laundering in connection with the 2007 contract. In September 2011, the United States filed a civil forfeiture action against assets owned by Taylor and AISC, which resulted in the seizure of more than $5 million dollars from AISC’s bank account. Lustyik used his status as an FBI agent to impair the government’s investigation of Taylor, including attempting to establish Taylor as a confidential source. Lustyik was indicted on charges related to the obstruction of justice. Prior to trial, Lustyik pleaded guilty to all charges in the indictment without a plea agreement. After his plea, his lead counsel withdrew and Lustyik obtained new counsel. On the eve of sentencing, counsel sought an order allowing him to obtain security clearance to review classified material he believed might be relevant for sentencing. The district court, having previously reviewed the documents, deemed them irrelevant to the sentencing issues, denied the motion, and subsequently sentenced Lustyik to 120 months’ imprisonment. Lustyik argued on appeal that the district court’s order denying his counsel access to the classified materials violated his Sixth Amendment rights at sentencing. Finding that the district court’s decision was not presumptively prejudicial to Lustyik’s advocacy at sentencing, nor did the district court abuse its discretion in concluding the documents were not relevant for sentencing, the Tenth Circuit affirmed. View "United States v. Lustyik" on Justia Law

Defendant appealed his sentence after pleading guilty to four counts of wire fraud. The court concluded that, because the district court did not apply one of the two total offense levels specifically contemplated by the plea agreement, defendant's appeal waiver does not preclude this appeal. The court concluded that the district court did not clearly err in determining that defendant's post-plea conduct was inconsistent with a finding that he had accepted responsibility for his offenses. The court concluded, however, that it must reverse and remand so that the district court may determine in the first instance whether M.U. was a victim under the Guidelines and, if necessary, proceed to resentencing. The court further concluded that the district court did not plainly err when determining the amount of restitution owed to A.B. and R.W. Finally, the court declined to consider defendant's claim that he received ineffective assistance of counsel. Accordingly, the court otherwise affirmed the judgment. View "United States v. Binkholder" on Justia Law

Defendants Gladstone and Jacqueline Morrison appeal their convictions for conspiring to submit fraudulent tax returns, aiding and abetting the filing of numerous false returns, and wire fraud in connection with the attempted sales of the business. The court concluded that the evidence supports all of Gladstone's wire fraud convictions; the district court did not commit reversible error in limiting Jacqueline's testimony; the instances of bias alleged by Jacqueline, alone or taken together, do not rise to the level at which recusal is required; and the court rejected Gladstone's challenges regarding the conduct of the trial judge. Finally, the court rejected Jacqueline's additional claims of error. Accordingly, the court affirmed the judgment. View "United States v. Morrison" on Justia Law

With little formal education (a high school GED) Miller passed several securities industry examinations and “maintained a public persona of a very successful entrepreneur.” Miller sold investors over $41 million in phony “promissory notes,” which were securities under the Securities Act of 1933 and the Securities Exchange Act of 1934, 15 U.S.C. 77b(a)(1), 78c(a)(10), and not exempt from federal or state registration requirements. Miller did not register the notes; he squandered the money, operating a Ponzi scheme. Miller pled guilty to one count of securities fraud, 15 U.S.C. 78j(b), and one count of tax evasion, 26 U.S.C. 7201. He was sentenced to 120 months’ imprisonment. The Third Circuit affirmed, rejecting an argument that the court improperly applied the Sentencing Guidelines investment adviser enhancement, U.S.S.G. 2B1.1(b)(19)(A)(iii). The court interpreted the Investment Advisers Act of 1940, 15 U.S.C. 80b-2(a)(11) to apply broadly, with exceptions that do not apply to Miller. The court also rejected arguments that the government breached Miller’s plea agreement and that his sentence was substantively unreasonable. View "United States v. Miller" on Justia Law