Justia White Collar Crime Opinion Summaries

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

Reed, a marketing guru who sold an “antioxidant rich whole food puree,” “ViaViente,”offered training on how to replicate his success as a “self-made millionaire.” When Reed’s relationship with ViaViente ended, he tried something new, telling potential investors that he had access to a secret site in the Philippines containing gold bars buried by the Japanese during World War II. Reed raised $1.3 million, but never excavated. He spent the money on houses, cars, and cosmetic surgery. He did buy a $30,000 a gold “scanner.” When Reed’s deception was exposed, he pled guilty to wire fraud; the prosecution agreed to make a recommendation that Reed receive a three-year sentence and not to oppose Reed’s request for credit for accepting responsibility. In its sentencing memorandum and at the hearing, the government stated that Reed should receive the credit, but did not mention an appropriate sentence. The court acknowledged that the “government has agreed pursuant to the plea agreement to recommend a three-year term of custody.” Reed objected that the prosecutor had “never once recommended the three-year sentence.” The court rejected that claim and ruled that Reed should not receive credit for accepting responsibility because he continued to promote the validity of his schemes. The court sentenced Reed to over seven years. The Sixth Circuit affirmed, finding that the government honored the plea agreement. View "United States v. Reed" on Justia Law

To fix a 2004 Teamsters election, Bania and the union president diverted ballots by changing members’ addresses in the database. They collected those ballots and cast falsified votes. After an investigation, they employed the same fraud during a second election. Bania was convicted of conspiracy to commit mail fraud and theft from a labor organization (18 U.S.C. 371), four counts of mail fraud (13 U.S.C. 1341 and 1346), and six counts of embezzling, stealing, and unlawfully and willfully abstracting and converting property and other assets of a labor organization (29 U.S.C. 501(c)). In 2009, the court sentenced Bania to concurrent 40-month terms, departing from the low-end of the guidelines, 97 months, and ordered Bania to pay $900,936 in restitution, reflecting salaries paid to co-defendants and expenses of the second election. The court later rejected Bania’s 28 U.S.C. 2255 motion, alleging ineffective assistance of counsel in disregarding Bania’s instruction to appeal. In 2012, Bania completed his prison term. In 2013, the district court denied Bania’s motion for early termination of supervised release because of his outstanding financial obligation. Bania did not challenge that rationale, but argued that the restitution calculation improperly totaled the loss he intended to cause, rather than the loss actually caused. The Seventh Circuit affirmed the decision not to terminate supervised release. Bania filed an unsuccessful “Motion to Terminate Order of Restitution and Order of Forfeiture.” The Seventh Circuit affirmed; the court lacked jurisdiction to hear Bania’s motion. The time to appeal his sentence has long passed. View "United States v. Bania" on Justia Law

Over four years, Dade, a former licensed real estate agent, with co-defendants, facilitated loans to purchase residential real estate by knowingly providing lenders with false statements and documents. Dade referred potential buyers to loan officers and provided false payroll stubs and W-2 forms from fake companies. Dade (with help) refinanced a mortgage on his own Chicago property, stating that he was paying monthly rent of $1,450 (he did not live in the house), and provided a rental verification from “Jireh,” which did not exist. Dade received a $156,000 loan. He was charged with bank fraud, 18 U.S.C. 1344, wire fraud, section 1343, and mail fraud, section 1341. He pleaded guilty to bank fraud, based on the fraudulent refinancing; the remaining charges were dismissed. The government sought a 2-level upward adjustment for his role as an organizer, leader, manager, or supervisor in the offense, U.S.S.G. 3B1.1(c). When preparing the presentence report, however, the probation officer concluded that a 4-level upward adjustment would be appropriate, stating that the scheme had involved five or more participants and Dade had organized the scheme. The government adopted that position, recounting the facts underlying the charges dismissed as part of Dade’s plea agreement. The Seventh Circuit affirmed his 20-month sentence, upholding the upward adjustment. View "United States v. Dade" on Justia Law

Clark’s trucking business was hired to perform hauling services on a state‐ and federally funded highway project in Missouri. Because federal funds were involved, Clark’s contract with the project’s general contractor required that he pay his truck drivers the federal prevailing wage pursuant to the Davis‐Bacon Act (then $35.45/hour). Clark did not do so, but individually contracted with his drivers for roughly $15/hour instead. Throughout the project, Clark submitted weekly payroll certifications in which he falsely attested to paying his workers $35.45/hour. After his work concluded, he submitted an affidavit to the Missouri Department of Transportation, certifying compliance with Missouri state law and its state wage order. Based on these attestations, the government charged Clark with 10 counts of making false statements,18 U.S.C. 1001. The Seventh Circuit affirmed his convictions on nine counts, rejecting An argument that there was insufficient evidence to conclude that his false statements were material to the federal government. The court agreed that the government failed to prove that his affidavit to MODOT had a natural capability of influencing the federal government and reversed conviction on Count 10. View "United States v. Clark" on Justia Law

Kolodesh owned a home-health services company. He approached his employee, Pugman, about starting a home-based hospice care company. Pugman's agreed. Kolodesh funded the new company, Home Care Hospice. Pugman managed the operations. Kolodesh’s wife and Pugman were listed as owning equal shares; Kolodesh was intimately involved in forming and overseeing its management. In 2000 or 2001, Kolodesh, Pugman, and Pugman's wife began giving gifts and cash “kickbacks” to doctors in exchange for patient referrals. At Kolodesh’s suggestion, Pugman placed doctors or their employees on the Hospice payroll with sham job titles and issued paychecks in exchange for patient referrals. About 90% of the revenue generated by Hospice came from Medicare reimbursements. Kolodesh and Pugman had contractors submit fake invoices Hospice would pay; the contractor would give most of the money to Kolodesh and Pugman, keeping a portion. The participants were charged with conspiracy to defraud a health care benefit program, 18 U.S.C. 1349, 21 counts of health-care fraud, 18 U.S.C. 1347, two counts of mail fraud, 18 U.S.C. 1341, and 11 counts of money laundering, 18 U.S.C. 1957. Pugman testified for the government after having pled guilty. The Third Circuit affirmed Kolodesh's sentence of 176 months’ imprisonment and a restitution order of $16.2 million. View "United States v. Kolodesh" on Justia Law

Zada sold fake investments in Saudi Arabian oil, raising about $60 million from investors in Michigan and Florida. Zada gave investors promissory notes that, on their face, say nothing about oil-investment. They say that Zada will pay a principal amount plus interest (at rates far lower than Zada had promised). Zada stated that the notes were necessary only to ensure that investors would be repaid by Zada’s family if something happened to him. Little of what Zada said was true. Zada paid actors to pose as a Saudi royalty. Zada never bought any oil; he used investors’ money to pay his personal expenses. When Zada paid investors anything, he used money raised from other victims. The SEC discovered Zada’s scheme and filed a civil enforcement action, alleging violation of the Securities Act of 1933 and the Securities Exchange Act of 1934, 15 U.S.C. 77. The district court granted the SEC summary judgment, ordering Zada to pay $56 million in damages and a civil penalty of $56 million more. The Sixth Circuit affirmed, rejecting arguments that the investments were not securities and that the civil penalty improperly punishes him for invoking his Fifth Amendment privilege against self-incrimination. View "Secs. & Exch. Comm'n v. Zada" on Justia Law