Justia White Collar Crime Opinion Summaries

Hansen, a farmer, served as a bank trust officer. In 2003, he invested, through Johnson (a stock broker), in the Hudson Fund, a hedge fund Johnson ran with Onsa and Puma. Hansen continued investing with the three. In 2007 Hansen and Johnson formed RAHFCO limited partnership. Hansen served as general partner, but delegated responsibility for executing trades to the Hudson Fund. Hansen misrepresented RAHFCO to investors, directly and through a private placement memo. Hansen prepared and sent investors earnings statements that falsely inflated RAHFCO’s performance. Hansen later testified that he relied on Onsa and Johnson to provide the numbers and never confirmed them. Hansen hired an accounting firm for an audit, but the firm quit after Hansen refused to authorize it to obtain a brokerage statement confirming RAHFCO’s investments. RAHFCO’s law firm withdrew. Johnson was charged in 2007 with securities fraud concerning another company. Onsa was sued civilly for fraudulent securities trading in 2009. Hansen never informed investors of any of these events nor did he attempt to find another auditor. In 2011, RAHFCO collapsed. Convicted of mail fraud, wire fraud, and conspiracy to commit mail fraud and wire fraud, 18 U.S.C. 1341, 1343, 1349, Hansen was sentenced to 108 months imprisonment and ordered to pay $17 million restitution to 75 victims. The Eighth Circuit affirmed, upholding the use of a willful blindness instruction and an instruction on conspiracy. View "United States v. Hansen" on Justia Law

Kielar, a pharmacist, got many patients from Dr. Barros, whose office was in the same building, and began defrauding two insurance companies. Kielar forged prescriptions for Procrit under Barros’s name and submitted them for payment, knowing that Procrit had neither been prescribed, nor provided, to the individuals under whose policies he sought reimbursement. The insurers lost $1,678,549. Kielar was indicted for health care fraud, 18 U.S.C. 1347, with a forfeiture allegation, 18 U.S.C. 982(a)(7) that identified properties subject to forfeiture, including a Florida property. Kielar asserted that he needed the proceeds of its sale to pay legal fees. The court granted a motion to release lis pendens and ordered that the proceeds of the sale be placed in escrow with the U.S. Marshals Service. Kielar unsuccessfully requested that the court allow him to use the sale proceeds “for taxes, legal fees and other expenses.” He was convicted of six counts of health care fraud; three counts of aggravated identify theft, 18 U.S.C. 1028A(a)(1); and of using false records to impede a federal investigation, 18 U.S.C. 1519. The Seventh Circuit affirmed, rejecting arguments that the court erred in failing to hold a hearing on his request to release his escrowed funds, by limiting cross-examination of Barros, and by preventing Kielar from calling a former patient as a defense witness. View "United States v. Kielar" on Justia Law

Katherine Fleming was indicted on two counts of identity fraud and two counts of financial transaction fraud. She entered a negotiated guilty plea, which allowed for deferred sentencing and participation in a drug court program. Her plea agreement specified that she would be sentenced to eight years of probation if she completed the drug court program, but she would be sentenced to ten years, with the first four to be served in prison and the remaining six to be served on probation, including residential substance abuse treatment, if she failed to complete the program. The agreement also provided that she would make restitution payments under either scenario. After more than two years in the program, Fleming was terminated from the drug court program for failure to comply with its rules. Consistent with the plea agreement, the trial court then imposed a ten-year sentence, the first four to be served in prison and the remaining six to be served on probation, including residential substance abuse treatment. The Supreme Court granted certiorari to determine under what circumstances a defendant may receive sentence credit for participation in a drug court program established under OCGA 15-1-15. After that review, the Court held that no sentence credit for participation in a drug court program was warranted in this particular case. View "Fleming v. Georgia" on Justia Law

Rodd, an investment advisor who produced and was regularly featured on a Minnesota local radio show, “Safe Money Radio,” was convicted of wire fraud, 18 U.S.C. 1343 and mail fraud, 18 U.S.C. 1341, for swindling 23 investors out of $1.8 million. Rodd used the radio show to market low-risk investment products to gain customers’ trust and maintain a client base for soliciting participants in a fraudulent investment scheme. Rodd solicited money by promising liquidity, safety, and a 60% six-month return. Rodd instead used the money for personal and business expenses, hiding behind false assurances of security and payouts to his early investors. Finding an advisory guidelines range of 70 to 87 months, the district court sentenced Rodd to 87 months in prison, applying a two-level enhancement for abusing a position of trust, U.S.S.G. 3B1.3, The Eighth Circuit affirmed, upholding the finding that Rodd occupied a position of trust. As a self-employed investment advisor, Rodd was subject to no oversight except by his investors. The discretion and control he possessed over client funds adequately supported the finding. The court did not err in failing to apply a two-level acceptance-of-responsibility reduction. Rodd took his case to trial and denied his guilt to the end. View "United States v. Rodd" on Justia Law

Stonebridge, an engraver of promotional pocket knives, sued its former distributor Cutting-Edge and its members; competitor knife engraver TaylorMade and its sole member and manager Taylor, a former Stonebridge employee; and Massey, a TaylorMade employee and former Stonebridge employee, arising from Massey’s copying Stonebridge’s computer files and using those files to solicit business from Stonebridge customers. Stonebridge brought claims under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961-1968; the Arkansas Deceptive Trade Practices Act (ADTPA), Ark. Code 4-88-101; and Arkansas common law. The district court partially found for Stonebridge on its fraud and conversion claims, dismissed the remaining eight claims, and denied the parties’ motions for attorney fees. The Eighth Circuit upheld: the finding that defendants converted the copies of certain files created by Stonebridge; an award of damages for unjust enrichment; a finding Stonebridge did not establish the existence of a business expectancy under Arkansas law; a finding Cutting-Edge fraudulently induced Stonebridge to send sample knives while intending to employ TaylorMade as its engraver on the orders placed as a result of seeing the samples; and dismissal of the RICO and ADTPA claims. View "Stonebridge Collection, Inc. v. Carmichael" on Justia Law

Defendant, the former CEO and chairman of the board of directors at CUC and former chairman of CUC's successor, was convicted of one count of conspiracy to commit securities fraud and two counts of making false statements in SEC filings. On appeal, defendant challenged the denial of his motion for a new trial under Federal Rule of Criminal Procedure 33. Applying United States v. Owen, the court concluded that the former CUC chief financial officer's testimony did not constitute newly discovered evidence. Accordingly, the court affirmed the judgment. View "United States v. Forbes" on Justia Law

The Commodity Futures Trading Commission and the Securities and Exchange Commission concluded that Battoo committed fraud. Battoo and his companies, all located outside the United States, defaulted in the suits. The district judge froze all assets pending a final decision about ownership. The court appointed a Receiver to marshal the remaining assets and try to determine ownership. The Receiver has been recognized as the assets’ legitimate controller in several other nations, including China (Hong Kong), Guernsey, and the Bahamas. Battoo defied the injunction and transferred control of some investment vehicles, located in the British Virgin Islands, to court-appointed Liquidators, who asked the judge to modify the injunction and allow them to distribute assets located in the U.S. or England immediately. The Liquidators maintain that, because Battoo no longer has control, the justification for freezing the assets has lapsed. The court assumed that the Liquidators are now under judicial control, but declined to modify the injunction, ruling that the funds should remain available so that an eventual master plan of distribution can treat all investors equitably. The Seventh Circuit affirmed. It is not clear whether some investment interests can be disentangled reliably from those affected by Battoo’s frauds against U.S. investors; the Liquidators have not argued that any investor is suffering loss as a result of the Receiver’s investment decisions. View "Commodity Futures Trading Comm'n v. Battoo" on Justia Law

After a jury trial, Defendant was convicted of securities fraud, mail fraud, conspiracy to conceal assets and make fraudulent transfers, concealment of assets, fraudulent transfer, uttering coins, and money laundering. The offenses arose from Defendant’s fraudulent schemes used to cheat numerous victims out of more than a million dollars and to manipulate the U.S. Bankruptcy Code to shield his ill-gotten gains from creditors. The First Circuit affirmed Defendant’s conviction and sentence, holding (1) there was sufficient evidence to support the jury’s guilty verdict; and (2) the district court properly calculated the applicable Sentencing Guidelines range and imposed a procedurally and substantively reasonable sentence. View "United States v. Pacheco-Martinez" on Justia Law

Defendants appealed their convictions and sentences for charges related to their involvement in one of the most long-lasting mortgage fraud conspiracies in the history of central Florida. The court reversed defendant Streinz's conviction and remanded for a new trial because his Sixth Amendment rights were violated by the trial court's refusal to allow him to confer with counsel during the two overnight recesses while he was testifying. The court affirmed defendants Cavallo and Hornberger's convictions and sentences except that the court vacated and remanded that part of the judgment ordering restitution because the restitution amount does not take into account the value of the collateral properties to the victims and therefore does not represent the actual loss to the victims, but instead confers a windfall on them. View "United States v. Cavallo" on Justia Law

Defendant, a registered investment advisor and securities agent, appealed his conviction and sentence for wire fraud and money laundering. Defendant's conviction stemmed from his involvement in a scheme to defraud his clients. The court concluded that defendant's Sixth Amendment right to counsel was violated by the district court’s decision to proceed with victim allocution in the absence of trial counsel during a portion of defendant’s critical sentencing stage. The court concluded that the denial of counsel during a portion of the allocution phase of the sentencing proceeding was structural error, that the error was complete when the right to counsel was denied, and that no additional showing of prejudice was required. The court also concluded that the district court did not abuse its discretion in denying defendant’s motion to withdraw his guilty plea. Because the trial court committed structural error by proceeding with victim allocution while defense counsel was not present, and because the victim’s statements were highly significant in the judge’s sentencing consideration, reassignment to a different district judge is advisable to preserve the appearance of justice. Accordingly, the court affirmed the conviction, vacated the sentence, and remanded for resentencing. View "United States v. Yamashiro" on Justia Law