Justia White Collar Crime Opinion Summaries

The Halims own named WR Property Management. The company’s predecessor had contracted to buy natural gas from CES for the Halims’s 41 Chicago-area rental properties. CES delivered, but the company stopped paying and owed about $1.2 million when CES cut off service and filed suit. An Illinois court awarded $1.7 million, including interest and attorney fees. The company did not pay; the Halims had transferred all of its assets to WR. CES filed a diversity suit under the Illinois Fraudulent Transfer Act. The district court granted CES summary judgment and entered a final judgment for $2.7 million on fraudulent‐conveyance and successor‐liability claims. The Seventh Circuit affirmed, stating: “If the Halims are wise, they will start heeding the adage: if you’re in a hole, stop digging.”View "Centerpoint Energy Servs., Inc. v. WR Prop. Mgmt., LLC" on Justia Law

Dachman was indicted on and pled guilty to 11 counts of wire fraud for stealing funds elderly individuals had invested in his sleep‐related illness‐treatment companies. By selling shares in those companies, he had raised more than $4 million from 51 people. Although Dachman had a history of seven bankruptcies, he represented that he was a successful businessman and researcher and that he had obtained a Ph.D. from Northwestern University. He actually used the money for personal expenses. At sentencing, the district court denied him credit for acceptance of responsibility and sentenced him to 120 months’ incarceration. The Seventh Circuit affirmed, rejecting challenges that the court erred in calculating the loss amount, by denying him credit for acceptance of responsibility, and by imposing an “objectively unreasonable” term of imprisonment in light of his severe infirmities. View "Unted States v. Dachman" on Justia Law

Defendant executed several illegal insider trades involving the stock of the supermarket chain Albertson's using material nonpublic information received from an employee of UBS. On appeal, defendant challenged the district court's judgment ordering him to disgorge profits from illegal insider trading, enjoining him from further violating the securities laws, and ordering him to pay prejudgment interest on the entire disgorgement amount. The court concluded that the district court did not abuse its discretion in ordering disgorgement because the court's cases have established that tippers can be required to disgorge profits realized by their tippees' illegal insider trading. This case was distinguishable only insofar as defendant himself executed the fraudulent trades rather than leave that task to a tippee. The court found no abuse of discretion in the district court's imposition of an injunction on defendant or in its order that he pay prejudgment interest. Accordingly, the court affirmed the judgment of the district court.View "SEC v. Contorinis" on Justia Law

Over 40 years, Rachuy accumulated almost 30 convictions, mostly for fraud. In a recent scheme, he “purchased” six vehicles by writing bad checks drawn on bank accounts that he knew were closed or had no funds. He was indicted for five counts of transporting stolen vehicles across state lines, 18 U.S.C. 2312, and pled guilty to one count in exchange for the government’s agreement to recommend that the court calculate loss amount based only on checks returned on four bank accounts involved in the purchase of the vehicles; recommend a five‐year prison sentence; and not oppose Rachuy’s request for the return of his property held by authorities. The district court rejected the parties’ recommendation, sentenced him to 90 months’ imprisonment based on its determination that he “is the epitome of a career offender.” The Seventh Circuit affirmed, rejecting arguments that the government breached the plea agreement: by referencing Rachuy’s lengthy criminal history, by failing to recommend that his loss amount be based solely on the checks used to purchase the vehicles charged in the superseding indictment; and by reminding the court that it did not have the power to command local and state authorities to release Rachuy’s property.View "United States v. Rachuy" on Justia Law

Defendants were convicted of one count of conspiracy to commit health care fraud and three counts of health care fraud. On appeal, defendants challenged their sentences. The court held that, in health care fraud cases, the amount billed to an insurer shall constitute prima facie evidence of intended loss for sentencing purposes. If not rebutted, this evidence shall constitute sufficient evidence to establish the intended loss by a preponderance of the evidence. However, the parties may introduce additional evidence to support arguments that the amount billed overestimated or understated the defendant's intent. In this instance, the court vacated defendants' sentences on the issue of intended loss because the record left the court uncertain as to what the district court understood the law to be with respect to calculating intended loss for sentencing purposes and there was evidence suggesting that defendants may have been aware that Medicare only payed a fixed amount. When viewed in conjunction with the evidence that defendants were the only two named physicians on the clinic's sign, the documents were sufficient to support the district court's finding that Defendant Popov's bills to Medicare were foreseeable to Defendant Prakash. The court vacated the sentences and remanded for resentencing.View "United States v. Popov" on Justia Law

During his time as an investor and owner of the MAAA Trust, which he established in 1992, Teo filed three false Schedule 13D disclosures and failed to file several required 13Ds. After they made a $154,932,011 gross profit on a stock sale, the SEC filed a civil enforcement action asserting violations of the Securities Exchange Act, 15 U.S.C. 78m (d) and 78j(b) and SEC rules and regulations. The district court granted summary judgment on several rule-violation claims that Teo did not challenge. A jury concluded that Teo violated Section 10(b) and Rule 10b-5, and that Teo and the Trust violated Section 13(d), Rule 12b-20, Rule 13d-1, and Rule 13d-2. The court held that the Trust violated Section 16(a) and Rule 16a-3. 7. The court ordered disgorgement of more than $17 million, plus prejudgment interest of more than $14 million. The Third Circuit affirmed, rejecting claims: of errors relating to admission of Teo’s guilty plea allocution and an exhibit; that there was insufficient evidence to prove a “plans and proposals” theory of liability; that the general verdict slip created ambiguity on the theory of liability grounding the jury’s verdict; and to the disgorgement order.View "Sec. & Exch. Comm'n v. Teo" on Justia Law

Defendants-Appellants David Banks, Kendrick Barnes, Demetrius Harper, Clinton Stewart, Gary Walker, and David Zirpolo were convicted following a jury trial on multiple counts of mail fraud and wire fraud, and conspiracy to commit mail fraud and wire fraud. Defendants contacted numerous staffing agencies to “assist in providing temporary services. Witnesses from multiple staffing companies testified that a Defendant (or someone acting as Defendants’ agent) approached them and expressed the desire for "payrolling" services. The staffing-company witnesses testified that they were induced into believing that Defendants’ companies were either doing business with major law-enforcement agencies or were on the verge of selling a specialized software to these agencies. These witnesses testified that Defendants (or Defendants’ agents) assured them that this alleged law-enforcement business would enable Defendants’ companies to pay the staffing companies’ invoices, and, critically, that they relied on these representations in choosing to do business with Defendants. Trial testimony from representatives of the law-enforcement agencies with whom Defendants claimed to be doing business revealed the falsity of Defendants’ representations to the staffing companies. When questioned about their failure to pay the staffing companies’ invoices, Defendants gave false assurances that payment would be forthcoming, and they continued to imply that they were doing business with large government law enforcement agencies. In the end, forty-two different staffing companies were left with outstanding invoices totaling in excess of $5,000,000, which could not be submitted to the government agencies, which had no business relationship with Defendants’ companies. Defendants were sentenced to terms of imprisonment ranging from 87 to 135 months. Defendants argued on appeal to the Tenth Circuit: (1) their right to a speedy trial was violated when the district court granted multiple continuances of the trial date (at Defendants’ request); (2) the district court compelled co-Defendant Barnes to testify in violation of his Fifth Amendment privilege against self-incrimination and failed to give a proper curative instruction; (3) the district court abused its discretion in excluding the testimony of two witnesses Defendants sought to call at trial; and (4) the cumulative effect of the district court’s otherwise harmless errors prejudiced them and required reversal. Finding no reversible error, the Tenth Circuit affirmed. View "United States v. Banks" on Justia Law

Williams pleaded guilty to misusing social security numbers, 42 U.S.C. 408(a)(7)(B), identity theft, 18 U.S.C. 1028(a)(7), making a false statement to an IRS agent, 18 U.S.C. 1001(a)(2), and aggravated identity theft, 18 U.S.C. 1028A(a)(1). The district court used the guidelines in effect at sentencing to calculate his imprisonment range, sentencing him to 56 months’ imprisonment, in addition to 24 months imposed for aggravated identity theft. Because of an upward adjustment for involving more than 10 victims, his guidelines range was higher than it would have been if calculated under the guidelines in effect when Williams committed his crimes. The defense did not raise the issue at sentencing. While his case was on appeal the Supreme Court held that applying the guidelines in effect at sentencing violates the ex post facto clause if it raises the defendant’s imprisonment range. Because the trial judge did not say that he would have given the same sentence if the range had been lower, the Seventh Circuit vacated and remanded for resentencing. View "United States v. Williams" on Justia Law

In 2008, Musgrave, a CPA, became involved in a tire recycling venture with Goldberg. Musgrave obtained a loan, guaranteed by the Small Business Administration (SBA), through Mutual Federal Savings Bank. The venture ultimately lost the $1.7 million loan and Musgrave lost his $300,000 investment. In 2011, the two were indicted. Goldberg pled guilty to one count of misprision of felony, and the recommended a sentence of three years of probation, restitution, and a special assessment. Musgrave was convicted of: conspiracy to commit wire and bank fraud and to make false statements to a financial institution, 18 U.S.C. 1349; wire fraud, 18 U.S.C. 1343; bank fraud, 18 U.S.C. 1344. The district court sentenced him to one day of imprisonment with credit for the day of processing, a variance from his Guidelines range of 57 to 71 months and below the government’s recommendation of 30 months. The Sixth Circuit vacated, noting that economic and fraud-based crimes are more rational, cool, and calculated than sudden crimes of passion or opportunity and are prime candidates for general deterrence. The district court relied on impermissible considerations and failed to address adequately how what amounted to a non-custodial sentence afforded adequate general deterrence in this context. . View "United States v. Musgrave" on Justia Law

After a jury trial, George Labadie and Susan Carcieri, the latter of whom was employed by a federal credit union, were convicted of violating Mass. Gen. Laws. ch. 266, 52 for embezzling a “bank.” At issue on appeal was whether an employee of a federal credit union may be found guilty under section 52 of embezzlement of the credit union’s funds. The Supreme Court reversed and vacated Defendants’ convictions, holding (1) because the Commonwealth must prove under section 52 that the victim was a “bank” and because a federal credit union is not a “bank” as defined in Mass. Gen. Laws ch. 167, 1, Defendants were entitled to judgments of acquittal on this charge; (2) larceny by embezzlement is a lesser included offense of embezzlement of a bank, and federal preemption doctrine does not bar state prosecution of a federal credit union employee for larceny by embezzlement; and (3) the jury’s verdicts demonstrated that the jurors found Defendants guilty of the required elements of the lesser included offense of larceny by embezzlement. Remanded for entry of convictions of larceny by embezzlement. View "Commonwealth v. Labadie" on Justia Law