Justia White Collar Crime Opinion Summaries

Defendants Binday, Kergil, and Resnick, insurance brokers, appealed their convictions stemming from their involvement in an insurance fraud scheme where they induced insurers to issue life insurance policies that defendants sold to third‐party investors, by submitting fraudulent applications indicating that the policies were for the applicants’ personal estate planning. The court concluded that there was sufficient evidence that defendants contemplated a cognizable harm under the mail and wire fraud statutes; the indictment was not constructively amended because the allegations in the indictment and the government’s proof at trial substantially correspond; and some aspects of the defendants’ challenge to the jury instruction are waived, while the remainder fail on the merits. The court rejected defendants' remaining challenges to their sentences and to the obstruction of justice convictions. The court affirmed the judgment. View "United States v. Binday" on Justia Law

From 2006 to 2008, Andrews asked friends and colleagues to loan him money, roughly two million dollars in total, explaining that he needed money to purchase property in Indianapolis or to improve property that he owned in the area. Andrews never owned, bought, or improved property in Indianapolis. Andrews mostly used the money to fund a day-trading account with TD Ameritrade. Most of the money vanished. Andrews’s victims lost over 1.4 million dollars. Andrews was convicted of wire fraud, 18 U.S.C. 1343, sentenced to 87 months in prison and ordered to repay the full amount his victims had lost. The Sixth Circuit affirmed, finding that all of the loans were part of a single “scheme . . . to defraud.” The court noted a common false statement of a need for funds, usually related to nonexistent Indianapolis property; a common group of victims, usually friends or colleagues, who loaned money to Andrews repeatedly; and a common purpose for the funds, usually the need to fund Andrews’s day-trading account. The final loan occurred on September 25, 2008, fewer than five years before the government indicted Andrews, so prosecution of the entire scheme was not time-barred. View "United States v. Andrews" on Justia Law

Faruki, a computer technology consultant, met Tishfield in 2006 while Tishfield was working as a portfolio manager at SAC Capital, a Connecticut-based hedge fund. In 2010, Faruki informed Tishfield that he had launched his own investment fund, Neural Markets, using mathematically-driven trading strategies. Faruki stated that he was currently investing his own money in the fund to establish a trading history he could pitch to prospective investors. He told Tishfield that in December 2009 his fund had achieved investment returns exceeding 12%, and that his investment return in January 2010 was 32%. Faruki made several other false statement about the fund and about his own credentials. In December 2010, Tishfield received his first account statement, which reported significant losses associated with his $1 million investment. Faruki was charged with seven counts of wire fraud, 18 U.S.C. 1343. The Seventh CIrcuit affirmed his conviction, rejecting challenges to the sufficiency of the evidence and to evidentiary rulings. View "United States v. Faruki" on Justia Law

In 1997, Player and his wife established EAR, purportedly to refurbish high-tech machinery . In 2005-2009, EAR defrauded creditors and the couple obtained $17 million in fraudulent transfers from EAR. Before the fraud was detected, they used funds for their personal benefit and spent large amounts at the Horseshoe Casino, Player was known to “walk with chips,” rather than cashing them in, and giving chips to a third party to cash in. Neither is illegal, but are potentially indicative of “structuring” transactions to avoid triggering the $10,000 reporting requirement, a federal crime, 31 U.S.C. 5324. When the fraud was discovered, EAR filed for Chapter 11 bankruptcy. The plan administrator sought to avoid transfers to Horseshoe, alleging that Horseshoe had reasons to believe that Player’s money came from EAR. Horseshoe objected to a motion to compel under 31 C.F.R. 1021.320(e), which governs Suspicious Activity Reports filed by financial institutions, including casinos, to detect money laundering and other violations of the Bank Secrecy Act. The district court ordered an ex parte filing by Horseshoe, which was inaccessible to EAR. The Seventh Circuit affirmed denial of the motion, finding that Horseshoe accepted the transfers without knowledge of the fraud at EAR and could not have uncovered the fraud if it had investigated. View "Brandt v. Horseshoe Hammond, LLC" on Justia Law

Defendant pled guilty to conspiracy to commit wire and bank fraud after he and his associates conspired to defraud lending institutions out of more than $7 million by submitting fraudulent loan applications. At issue was whether the district court exceeded its authority under Federal Rule of Criminal Procedure 35(b) and the Mandatory Victims Restitution Act (MVRA) of 1996, 18 U.S.C. 3663A-3664, by eliminating, sua sponte, defendant’s obligation to jointly and severally pay more than $4 million in mandated restitution based upon his substantial assistance. The court held that the district court did not have the legal authority to eliminate defendant’s restitution obligation based on a Rule 35(b) motion. The court concluded that the MVRA makes restitution mandatory for certain crimes, like the fraud offense to which defendant pled guilty, “[n]otwithstanding any other provision of law.” The court read this provision as a clear indication from Congress that the MVRA was intended to trump Rule 35. Because the district court was not free to reduce defendant's restitution as a reward for his substantial assistance, the court reversed and remanded with instructions to reinstate defendant's obligation to make restitution to the victims. View "United States v. Puentes" on Justia Law

Witasick was covered by a disability policy and a business overhead expense policy. His claims against both policies were honored. A dispute arose concerning coverage of some claimed business expenses. After years of negotiation, the parties settled: the insurer agreed to pay more than $4 million and Witasick agreed to release known, unknown, and future claims. The settlement contained a covenant not to sue, based on “any conduct prior to the date the Parties sign this document, or which is related to, or arises out of” the policies. During negotiations, the U.S. Government notified Witasick that he was the target of a grand jury investigation related to fraud and business expense claims on his income tax returns. Witasick was indicted in 2007. To support its charge of mail fraud, the government relied on information and documents Witasick had submitted to the insurer. An employee of the insurer testified before the Grand Jury and at Witasick’s trial. Witasick was convicted on most counts, but acquitted of mail fraud, and was sentenced to 15 months’ imprisonment. In 2011, Witasick sued the insurer based on the policies and cooperation with the prosecution. The Third Circuit affirmed dismissal, finding the claims prohibited by the settlement agreement. View "Witasick v. Minn. Mut. Life Ins, Co." on Justia Law

Defendants-appellants James Riley and Ryan Robinson appealed their convictions on three counts each of commercial bribery. The charges were based on the premise that Riley, who was the insurance broker for Pechanga Resort and Casino, paid bribes to Robinson, who was the chief financial officer of the casino, in order to permit Riley to charge excessive fees for insurance products he obtained for the casino. On appeal, defendants argued that there was insufficient evidence that they acted “corruptly” (i.e., with the specific intent to injure or defraud Robinson’s employer, as required by the statute). They also argued, in response to the Court of Appeal's request for supplemental briefing, that there was insufficient evidence to support their convictions on two of the counts against each of them because the evidence showed that as of the date of those charged offenses, Robinson was no longer employed by Pechanga Resort and Casino. The Court of Appeal concluded that the evidence that Robinson was not employed by Pechanaga Resort and Casino as of the dates alleged in counts 6 through 9 compelled reversal of the defendants’ convictions on those counts. However, the Court also concluded that there was substantial evidence to support their convictions on counts 4 and 5. View "California v. Riley" on Justia Law

Nagle and Fink were co-owners and executives of concrete manufacturing and construction businesses. The businesses entered into a relationship with a company owned by a person of Filipino descent. His company would bid for subcontracts on Pennsylvania transportation projects as a disadvantaged business enterprise. Federal regulations require states that receive federal transportation funds to set annual goals for participation in transportation construction projects by disadvantaged business enterprises, 49 C.F.R. 26.21. If his company won the bid for the subcontract, Nagle and Fink’s businesses would perform all of the work. Fink pled guilty to conspiracy to defraud the United States. A jury found Nagle guilty of multiple charges relating to the scheme. The Third Circuit affirmed Nagle’s conviction, upholding the admission of electronic evidence discovered during searches of the businesses’ offices, but vacated both sentences, based on loss calculation errors. View "United States v. Nagle" on Justia Law

Giorgio was the Chief Financial Officer of Suarez, a direct-marketing company. He and his boss asked employees to donate $5,000 each to political candidates, promising that the company would reimburse the donations. When the scheme was disclosed, Giorgio admitted to soliciting money from “straw campaign donors” in violation of campaign-finance laws that then banned all corporate donations to candidates, 2 U.S.C. 441b, and individual donations of more than $5,000 per candidate in an election cycle. Federal law also bans people from “mak[ing] a contribution in the name of another person,” 52 U.S.C. 30122. He signed a plea agreement. After a jury acquitted his co-conspirators, he tried twice to withdraw his plea. The district court declined and sentenced him at the bottom of the (much-lowered) guideline range—to 27 months in prison. The Sixth Circuit affirmed. Giorgio is a sophisticated and well-educated businessman, not apt to misunderstand what he was signing. Giorgio did not show that there is a reasonable probability that he would not have pleaded guilty even if he could show conflicted counsel based on the company’s paying for his defense. Giorgio admitted his guilt and insisted on sticking to his plea even when asked, after trial, if he wanted to withdraw it. View "United States v. Giorgio" on Justia Law

Defendant, Commissioner of the City of Margate, Florida, was acquitted of one count, and convicted of two counts, of bribery in programs receiving federal funds, in violation of 18 U.S.C. 666(a)(1)(B) and (2). The court rejected the government's argument that the district court erred in granting defendant's post-verdict motion for judgment of acquittal and concluded that there is much too large of an inference to conclude that 1) federal stimulus funds were used; 2) each bus shelter costs $40,000; 3) there were six shelters built; and 4) that at least $10,000 in federal funds must have been used. The court also concluded that the decision to classify assistance as a federal benefit was properly submitted to the jury. Finally, the district court was well within its discretion to consider the government's brief in order to make a fully informed decision on the merits of defendant’s sufficiency challenge. Accordingly, the court affirmed the district court's judgment. View "United States v. McLean" on Justia Law