Justia White Collar Crime Opinion Summaries

Miner marketed two schemes that promised to avoid taxes. Miner’s first scheme, IRx Solutions, offered to assist clients in requesting alterations to their Individual Master Files (IMFs), which are internal IRS records pertaining to each taxpayer. Miner claimed that the IRS was engaged in widespread fraud by improperly coding individuals as businesses on their IMFs so that tax could be assessed against them. The second scheme, Blue Ridge Group, helped clients create common-law business trusts, into which he claimed that they could place any or all of their assets in order to avoid paying income tax. Affirming his conviction under 26 U.S.C. 7212(a) for corruptly endeavoring to obstruct the “due administration” of federal income tax laws, the Sixth Circuit rejected arguments that the district court reversibly erred in failing to instruct the jury that section 7212(a) required proof that he was aware of a pending IRS proceeding; that his conduct was constitutionally and statutorily protected; and that certain witness testimony was improperly introduced at trial because the witness opined about his state of mind. View "United States v. Miner" on Justia Law

Defendants appealed their convictions for securities fraud in violation of sections 10(b) and 32 of the Securities Exchange Act of 1934, 15 U.S.C. 78j(b), 78ff; Securities and Exchange Commission (SEC) Rules 10b-5 and 10b5-2, 17 C.F.R. 240.10b-5, 240.10b5-2, and 18 U.S.C. 2; and conspiracy to commit securities fraud in violation of 18 U.S.C. 371. The court concluded that, in order to sustain a conviction for insider trading, the Government must prove beyond a reasonable doubt that the tippee knew that an insider disclosed confidential information and that he did so in exchange for a personal benefit; the court held that the evidence was insufficient to sustain a guilty verdict against defendants because the Government's evidence of any personal benefit received by the alleged insiders was insufficient to establish the tipper liability from which defendants' purported tippee liability would derive, and even assuming that the scant evidence offered was sufficient, the Government presented no evidence that defendant knew that they were trading on information obtained from insiders in violation of those insiders' fiduciary duties; and, therefore, the court reversed and remanded with instructions to dismiss the indictment. View "United States v. Newman" on Justia Law

Rahbari was convicted of passing 26 checks with insufficient funds. He was sentenced, pursuant to Penal Code section 1170(h) to a term in county jail followed by mandatory supervision and was ordered to pay restitution to certain victims. The court of appeal reversed. Rahbari was sentenced to neither state prison nor probation. Victim restitution ordered as part of a sentence to county jail followed by mandatory supervision pursuant to section 1170(h) is an order pursuant to section 1202.4 and its scope is limited to those losses caused by the crime or crimes of which the defendant was convicted. Part of the restitution order covered losses that were not part of the conviction. View "People v. Rahbari" on Justia Law

In 2006, Boyd sent his income and expense information for 2004 to a tax specialist, who prepared a return showing a tax liability of over $27,000. Boyd did not file the return he received from the tax specialist. Instead, Boyd filed his tax returns for 2004, 2005, and 2006 in October 2007, having recently read a book called Cracking the Code, which espoused a theory that federal income tax obligations applied only to individuals who earned income working for the federal government. The three returns declared that in those years he had zero income and zero tax liability. During those three years, Boyd actually had continued the work he had done in prior years and had earned income totaling $795,000. Convicted under 26 U.S.C. 7206(1), Boyd argued that the government had not proven willfulness because it failed to show the absence of a good-faith belief that the he did not have to file returns or pay taxes. The Fifth Circuit affirmed, rejecting challenges to denial of funding for neuropsychologist testimony, admission of uncharged conduct, the prosecutor’s statements, the judge’s statements, the jury instructions, the response to a jury note, and the sufficiency of the evidence. View "United States v. Boyd" on Justia Law

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