Justia White Collar Crime Opinion Summaries

Chicago’s Minority and Women-owned Procurement Program requires companies contracting with the city to hire or subcontract with minority-owned businesses (MBEs). An MBE must be at least 51 percent owned by members of a minority group, and its management and operations must be controlled by those members. RCN, a cable provider, participates in the MBE program. RCN seeks out MBE subcontractors using the city’s directory, where it found defendants in 2003. Defendants, white men, held out their cable installation business, ICS, as an MBE, but used false documentation and hired a black front-man to pose as ICS’s president. ICS fired defendant Giovenco before the fraud was discovered, but he continued to receive checks. In total, RCN paid ICS $8,303,562 before the city investigated. Its members dissolved ICS, trying to avoid detection. Convicted of mail fraud, 18 U.S.C. 1341, Potter was sentenced to 54 months’ imprisonment, and Giovenco was sentenced to 36 months. The Seventh Circuit affirmed, rejecting Giovenco’s claim that, because he no longer worked for ICS at the time of the mailings underlying the charges, he could not be held legally accountable for the scheme, and Potter’s challenge to his sentence, arguing that RCN did not actually suffer a loss. View "United States v. Potter" on Justia Law

In opening and closing arguments during his trial on three counts of tax evasion for failing to pay almost $239,400 in income tax between 2005 and 2007, 26 U.S.C. 7201, Stuart’s attorney argued that he believed he owed no taxes. Stuart thought that the United States had no authority to tax income. Stuart had adopted these views after reading a book called “Cracking the Code,” which urges people to resist paying income taxes, but his counsel told the jury that Stuart learned his ideas from his fellow church patrons. Counsel described Stuart as a curious, determined, and “kooky, not criminal” person. Only after he received no response to his inquiries from the IRS, the Secretary of the Treasury, or his accountants about his tax ideas, counsel stated, did Stuart begin to refrain from paying income tax. His attorney did not call any witnesses; Stuart did not testify and the jury found him guilty. The Seventh Circuit affirmed, rejecting an argument of ineffective assistance of counsel. View "United States v. Stuart" on Justia Law

Overstock.Com alleged that defendants intentionally depressed the price of Overstock stock by effecting “naked” short sales: sales of shares the brokerage houses and their clients never actually owned or borrowed to artificially increase the supply and short sales of the stock. The trial court dismissed claims under New Jersey Racketeer Influence and Corrupt Organizations (RICO) Act without leave to amend and rejected California market manipulation claims on summary judgment. The appeals court affirmed dismissal of the belatedly raised New Jersey RICO claim and summary judgment on the California claim as to three defendants, but reversed as to Merrill Lynch. The evidence, although slight, raised a triable issue this firm effected a series of transactions in California and did so for the purpose of inducing others to trade in the manipulated stock. The court concluded that Corporations Code section 25400, subdivision (b), reaches not only beneficial sellers and buyers of stock, but also can reach firms that execute, clear and settle trades; such firms face liability in a private action for damages only if they engage in conduct beyond aiding and abetting securities fraud, such that they are a primary actor in the manipulative trading. View "Overstock.com, Inc. v. Goldman Sachs Grp., Inc." on Justia Law

Indiana’s Bureau of Motor Vehicles will not register or transfer a vehicle title unless the buyer furnishes a Social Security number. For corporations and similar entities, it requires a federal employer identification number (EIN). It is possible to obtain an EIN without having a Social Security number. Aliens whose visas do not allow them to work in the U.S. and aliens who lack authority to be in the U.S. can get an EIN. Defendants established a business that obtained an EIN, registered a limited liability company, and submitted the required paperwork and fees, using clients’ real names and addresses. Clients paid $350, which included fees for the BMV. Defendants were convicted of conspiracy (8 U.S.C. 1324(a)(1)(A)(v)(I)), to violate 8 U.S.C. 1324(a)(1)(A)(iii) and (iv) by shielding unauthorized aliens from detection and encouraging them to reside in the U.S. and conspiracy to commit mail or wire fraud, 18 U.S.C. 1349. The Seventh Circuit reversed and vacated. The Count One convictions could be sustained only if provision of any service—food, medicine, transportation—to an unauthorized alien is a felony. To convict of mail or wire fraud, the false statements must have deprived a victim of “money or property.” There was no allegation that title papers and licenses are Indiana’s “property.” View "United States v.Reyes" on Justia Law

After a jury trial, Defendants, James Prange and John Jordan, were convicted of multiple fraud-related counts based on their participation in an FBI securities fraud sting. The district court sentenced both Defendants to concurrent terms of thirty months’ imprisonment for each count of conviction. The First Circuit affirmed Defendants’ convictions but remanded for resentencing, holding (1) the district court did not err when it permitted an undercover agent to interpret what he and Jordan meant by certain statements in their recorded face-to-face conversation; (2) Defendants failed to establish that the government entrapped them as a matter of law; (3) the district court did not abuse its discretion in submitted a superseding indictment to the jury; but (4) the district court procedurally erred when formulating Defendants’ guideline sentencing ranges. View "United States v. Prange" on Justia Law

After a seventeen-day jury trial, Appellants, a brother and sister, were found guilty of multiple bankruptcy-related crimes designed to conceal the brother’s assets and avoid his obligations to creditors. Appellants appealed, challenging both their convictions and sentences. The First Circuit affirmed Appellants’ convictions and sentences, holding (1) the evidence was sufficient to support Appellants’ convictions on all counts; (2) the district court did not err in imposing a sixteen-level increase to Appellants’ base offense levels under the sentencing guidelines; (3) the brother’s settlement of the adversary proceeding in his bankruptcy case did not provide a basis for a judgment of acquittal on the criminal charges subsequently filed against him; and (4) the district court did not err in allowing the jury to hear evidence relating to the sister’s bankruptcy proceedings in 2000. View "United States v. Colon-Ledee" on Justia Law

Waters, a former Michigan state legislator, became involved in a corruption probe involving her then-live-in companion, political consultant Riddle. With a negotiated plea agreement, Waters pleaded guilty to filing a fraudulent tax return (26 U.S.C. 7207). The district court sentenced her to a year’s probation on the misdemeanor charge. Eight days later, Waters moved pro se to withdraw her guilty plea. The district court denied that motion. The Sixth Circuit affirmed and later affirmed Waters’s conviction and sentence. More than three years later, Waters petitioned for a writ of error coram nobis, claiming that her attorney was constitutionally ineffective in promising that her misdemeanor conviction could “easily” be expunged and in failing to represent her vigorously at sentencing because he had a conflict of interest arising from his simultaneous representation of Riddle. The district court denied the petition. The Sixth Circuit affirmed. Waters did not establish an ongoing civil disability. At most she has alleged an injury to reputation, but this is not enough to warrant coram nobis. Although Waters claimed that her ability to travel outside the United States has been impaired, she did not show how this is the case. View "United States v. Waters" on Justia Law

After being caught in a 2011 ATF sting operation out of a Milwaukee warehouse, Wamiq was convicted of four counts of knowingly shipping, transporting, receiving, possessing, selling, distributing, or purchasing contraband under the Cigarette Trafficking Act (CCTA). The same jury convicted Khan, who acted independently of Wamiq, of three counts under the CCTA, 18 U.S.C. 2342(a). The Seventh Circuit affirmed the convictions, rejecting challenges to evidentiary rulings and the sufficiency of the evidence. The court also upheld the forfeiture orders and Wamiq’s sentence, rejecting Wamiq’s challenges to the court’s findings as to the loss amount caused by Wamiq’s unlawful conduct and Wamiq’s acceptance of responsibility. View "United States v. Wamiq" on Justia Law

Defendant was convicted of making false, fictitious, and fraudulent claims to the United States Treasury, assisting in the filing of false tax returns, criminal contempt, and mail fraud. On appeal, defendant challenged his convictions and the district court's supervised release conditions. The court concluded that the district court did not commit reversible error under the Sixth Amendment when it did not prompt defendant to present a closing argument to the jury and where defendant simply chose to remain silent; nothing in Herring v. New York or the court's precedents gives a self-represented defendant a right to be affirmatively and individually advised that he or she has a right to present a closing argument; Herring and the court's precedent held that a court may not prevent a litigant from making a closing argument; the government provided sufficient evidence to prove that defendant assisted another in the filing of fraudulent tax returns; but the district court did abuse its discretion by requiring defendant to abstain from alcohol and drug consumption and participate in treatment as conditions of his supervised release where the record contains no evidence showing that defendant abused alcohol or other substances and the district court made no relevant findings during the sentencing hearing. Accordingly, the court affirmed in part, vacated in part, and remanded. View "United States v. Bell" on Justia Law

Nayak owned outpatient surgery centers and made under-the-table payments to physicians that referred patients to his centers, including cash payments and payments to cover referring physicians’ advertising expenses. Nayak instructed some of his collaborators not to report these payments on their tax returns. Nayak was charged with honest-services mail fraud, 18 U.S.C. 1341 and 1346, and obstruction of the administration of the tax system, 26 U.S.C. 7212(a). Although the indictment a alleged that Nayak intended “to defraud and to deprive patients of their right to honest services of their physicians” through his scheme, there was no allegation that Nayak caused or intended to cause any sort of tangible harm to the patients in the form of higher costs or inferior care. After denial of his motion to dismiss, Nayak entered a conditional guilty plea, reserving his right to appeal denial of his motion to dismiss the mail fraud charge. On appeal he argued that tangible harm to a victim is a necessary element of honest-services mail fraud, at least in cases not involving fraud by a public official. The Seventh Circuit affirmed, holding that actual or intended tangible harm is not an element. View "United States v. Nayak" on Justia Law