Justia White Collar Crime Opinion Summaries

Defendant-Appellant Thomas Evans was a property manager and organizer of real estate investment funds, and was owner and president of Evans Real Estate Group, LLC. V R. 212. At first, Evans' business conduct was legitimate (if highly risky), but by April 2005, Evans experienced cash flow problems and was unable to make the high interest payments to investors. He pled guilty to one count of conspiracy to commit mail and wire fraud, and was sentenced to 168 months’ imprisonment and five years’ supervised release. He appealed the sentence. Because the district court erred in calculating loss and failing to award an offense level reduction for acceptance of responsibility, the Tenth Circuit remanded the case back to the district court to vacate the sentence and resentence. View "United States v. Evans" on Justia Law

Brothers Daniel and John owned four companies that offered remodeling services to homeowners. They provided honest work on construction jobs for cash customers, but duped numerous people into refinancing their homes and paying the loan proceeds directly to their companies, then left the jobs unfinished. They targeted neighborhoods on the South and West sides of Chicago, using telemarketers who looked for “elderly, ignorant homeowners,” and had customers sign blank contracts. They referred homeowners to specific loan officers and required the homeowners to sign letters of direction, so the title companies sent checks directly to the companies. From 2002 to 2006, the brothers collected about $1.2 million from more than 40 homeowner-victims. They were convicted of wire fraud, 18 U.S.C. 1343. The district court found that the loss calculation was more than $400,000 but less than $1,000,000 and accordingly increased the offense level, then applied enhancements because the conduct involved: vulnerable victims; violation of a prior court order; sophisticated means; mass-marketing; and leadership or organization of the scheme. The district court sentenced each brother to 168 months’ imprisonment. The Seventh Circuit affirmed. The district court reasonably estimated the amount of loss and properly enhanced the offense level further for the other five aggravating factors View "United States v. Sullivan" on Justia Law

Woodard was the director of a non‐profit grant organization, Gideon’s Gate, which provided educational and tutoring services to children. The Department of Education, not satisfied with Gideon’s performance, stopped providing funds. Woodard then enrolled Gideon as an Indiana Medicaid provider for outpatient mental health services, but continued to operate as an educational service provider. To fraudulently bill Medicaid, Woodard illegally obtained clients’ personal information from a welfare‐to‐work provider operated by a friend. Woodard submitted 2,437 false claims for $8.9 million worth of services to 378 patients. Woodard was charged with health care fraud, 18 U.S.C. 1347. Before trial Woodard filed several motions to change counsel. After appointing a third attorney, the court ordered a competency examination. A doctor concluded that Woodard was competent to stand trial. Two years later, after more delays and new attorneys, Woodard asked for another competency evaluation, which was denied. She pled guilty and was sentenced to 80 months in prison. The Seventh Circuit remanded for resentencing because the court applied the wrong version of the guidelines, but otherwise affirmed. The district court reached a reasonable conclusion after reviewing a previous psychological evaluation, considered advice from two mental health professionals, and considered Woodard’s interactions with her attorney. Although Woodard claimed that she did not knowingly and voluntarily plead guilty, the record shows that she did and that nothing would have alerted the court to the contrary. View "United States v. Woodard" on Justia Law

Defendant was convicted of five counts of bank fraud and two counts of mail fraud. The court held that mailings designed to avoid detection or responsibility for a fraudulent scheme fell within the mail fraud statute when they were sent before the scheme was completed. In order to determine when a scheme is completed, the court looks to the scope of the scheme as devised by the perpetrator. In this case, a reasonable jury could have found that defendant sent the September 16 letter prior to the scheme's completion. Accordingly, the court rejected defendant's argument that his conviction on count 2 must be reversed because the scheme was completed before the September 16 letter was mailed. The court also rejected defendant's alternative argument that the September 16 letter could not support a conviction for mail fraud because it was sent after the fraud was uncovered. Therefore, sufficient evidence supported defendant's mail fraud conviction on count 2 and the court affirmed the conviction. Further, the court affirmed the district court's application of a 2-level sentencing enhancement for making a misrepresentation during the course of a bankruptcy proceeding under U.S.S.G. 2B1.1(b)(9)(B) and application of a 2-level enhancement for using sophisticated means under U.S.S.G. 2B1.1(b)(10)(C). The court held, in accord with the government's concession, that the district court plainly erred by including $44,715.21 in restitution for fraudulent credit cards and $1,851.38 in restitution for wage overpayments that were not part of the offenses of conviction and by failing to note the waiver of interest on restitution on the judgment. View "United States v.Tanke" on Justia Law

In 2008-2009 Scalzo was a bank officer at two institutions. He originated and approved loans for unqualified borrowers without adequate financial information or collateral. He forged borrowers’ signatures, redirected funds from the loans to his own personal use without the knowledge of the borrowers, and took funds from some fraudulent loans to pay off balances on previous fraudulent loans, to conceal the original fraud. Scalzo pled guilty to one count of bank fraud, 18 U.S.C. 1344, and one count of money laundering, 18 U.S.C. 1956. The Information listed as part of the scheme six bank loans and three Credit Union loans. Scalzo objected to inclusion of two Credit Union loans in the restitution order. The sentencing range was the same with or without these loans, so the court deferred ruling on restitution and sentenced Scalzo to 35 months of imprisonment. The government filed its additional brief a week later. Having received no additional briefing from Scalzo for 82 days, the court relied on the PSR, the plea agreement and the government’s additional submissions; found that Scalzo arranged the Credit Union loans to conceal the bank fraud; noted that the Credit Union loans were listed as part of the fraudulent scheme detailed in the Information to which Scalzo pled guilty and that the Credit Union lost a substantial amount of money; and ordered him to pay restitution of $679,737.23. The Seventh Circuit affirmed. View "United States v. Scalzo" on Justia Law

Davis, a nurse and assistant professor of nursing at Chicago State University, ran several public health programs aimed at improving the health care of the African-American community. As program director for the Chicago Chapter of the National Black Nurses Association (CCBNA), Davis solicited and oversaw public and private grants, contracts, and funds awarded to CCBNA. Between December 2005 and March 2009, Davis solicited and obtained contracts and grants totaling approximately $1,062,000 from Illinois state agencies. Davis diverted approximately $377,000 by writing checks to herself, friends, and family members; concealing conflicts of interest; hiring unqualified family members and other acquaintances for positions in projects; forging co-signatures; and falsifying information. Davis pleaded guilty to mail fraud and money laundering. In the plea agreement, the parties concurred that based on the factors contained in 18 U.S.C. 3553, Davis could be sentenced to, and the government would recommend, no higher than a below-guidelines sentence of 41 months’ imprisonment. The advisory guidelines range was 57–71 months. Davis waived the right to appeal the reasonableness of the sentence but reserved the right to challenge any procedural error at sentencing. The Seventh Circuit affirmed, rejecting a claim that the district court erred procedurally by failing to adequately take into account her mental health in considering mitigating factors. View "United States v. Davis" on Justia Law

Reid was the Executive Director for State and Federal Programs for the River Rouge School District. One of the vendors who received contracts for the district was Flaggs, owned by Reid’s brother-in-law. In a scenario typical of their relationship, Reid made a false representation that the program was mandatory, parents enrolled their children, Flaggs received a total of $75,000 for a “Jump Start” program, and Flaggs returned $2,500 to Reid as an individual. Reid ultimately admitted that she had received $10,000 to $20,000 from Flaggs for providing preferential treatment to his company. The Sixth Circuit affirmed her convictions for bribery and mail fraud, rejecting, as having not been timely raised, claims that the prosecution committed a Batson violation when it struck jurors for cause after asking them whether they would be prejudiced against the government’s use of information from Reid’s prayer journal and that the government violated Miranda in questioning Reid without a Miranda warning. The court also rejected her claim that trial counsel was ineffective in failing to challenge the sentencing guidelines computation and in failing to timely raise objections to the other claims. View "United States v. Reid" on Justia Law

Castaldi, involved in fraudulent schemes since high school, operated a Ponzi scheme that collapsed in 2008. Net losses to investors and the IRS totaled about $40 million. When the scheme was near collapse, Castaldi turned himself in to the government. He eventually pled guilty to just one count of mail fraud, 18 U.S.C. 1341, and one count of corruptly impeding the IRS, 26 U.S.C. 7212(a). The district court imposed the longest prison sentence possible under the plea agreement: consecutive sentences of 20 years on the mail fraud charge and three years on the tax charge, about 50percent longer than the high end of the agreed Sentencing Guideline range. The Seventh Circuit affirmed the sentence, finding that the court adequately considered the fact that Castaldi told the government about his scheme and cooperated with its investigation, but also considered the devastating financial harm Castaldi inflicted on family members, friends, and neighbors of modest financial means.View "United States v. Castaldi" on Justia Law

When purchasing a house, the defendants submitted loan documents containing false incomes and bank statements, and failed to disclose that husband’s company was selling and his wife was buying. The company received $750,000 and rebated money paid above that amount to husband. The $1 million in loans they received resulted in $250,000 extra that was not disclosed as going to the couple. They were able to sell the house four months later for the same inflated amount, without raising any concerns. They failed to disclose on the HUD-1 forms in the second transaction that they would be giving the buyer kickbacks. The buyer received $1,090,573.06 in loans, but defaulted without making a payment. The lender eventually sold the house for $487,500. Defendants were convicted of three counts of wire fraud, 18 U.S.C. 1343 and aiding and abetting wire fraud, 18 U.S.C. 2. The Presentence Investigation Report determined that the lender’s loss was $603,073.06 and recommended a 14-point enhancement under USSG 2B1.1(b)(1)(H). The Seventh Circuit affirmed the convictions but remanded for explanation of why the loss was “reasonably foreseeable” and why the sentencing enhancement was proper. Involvement in a fraudulent scheme does not necessarily mean it was reasonably foreseeable that all the subsequent economic damages would occur; there was no evidence that defendants knew they were selling to what turned out to be a fictional buyer. View "United States v. Domnenko" on Justia Law

Illinois legalized riverboat casino gambling in 1990. Since then, the state’s once‐thriving horseracing industry has declined. In 2006 and 2008, former Governor Blagojevich signed into law two bills that imposed a tax on in‐state casinos of 3% of their revenue and placed the funds into a trust for the benefit of the horseracing industry. Casinos filed suit under the Racketeering Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1964, alleging that defendants, members of the horseracing industry, bribed the governor. On remand, the district court granted summary judgment for the racetracks, finding sufficient evidence from which a reasonable jury could find that there was a pattern of racketeering activity; that a jury could find the existence of an enterprise‐in‐fact, consisting of Blagojevich, his associates, and others; sufficient evidence that the defendants bribed Blagojevich to secure his signature on the 2008 Act; but that the casinos could not show that the alleged bribes proximately caused their injury. The Seventh Circuit reversed in part. Viewing the evidence in the light most favorable to the plaintiffs, there was enough to survive summary judgment on the claim that the governor agreed to sign the Act in exchange for a bribe. View "Empress Casino Joliet Corp. v. Johnston" on Justia Law