Justia White Collar Crime Opinion Summaries

Defendant opened a number of fraudulent accounts in her daughter’s name beginning when her daughter was fourteen years old, resulting in her daughter’s credit rating being ruined. Defendant pled guilty to eight counts of identity theft, was sentenced to an effective five-year prison term, and was ordered to pay restitution to six financial institutions and to her daughter. The Supreme Court affirmed the circuit court’s sentencing order, holding that the circuit court did not err by (1) sentencing Defendant to prison instead of placing her on probation or home confinement; and (2) ordering her to pay $10,000 in restitution to her daughter. View "State v. Rebecca F." on Justia Law

Defendant pled guilty to three counts arising from his fraudulent activity in connection with a client's initial public offering. Defendant sought habeas relief, contending that, in light of the Supreme Court's intervening decision in Janus Capital Group, Inc. v. First Derivative Traders, the conduct for which he was convicted is no longer criminal. The court found Janus inapplicable outside the context of Section 10(b) of the Securities Exchange Act, 15 U.S.C. 78j(b), implied private right of action. Therefore, Janus does not affect defendant's criminal convictions. Because defendant's convictions are proper under current law, the court concluded that his section 2241 petition necessarily failed. Accordingly, the court affirmed the dismissal of his petition. View "Prousalis, Jr. v. Moore" on Justia Law

In the late 1990s, people who had taken the prescription diet-drug combination Fen-Phen began suing Wyeth, claiming that the drugs caused valvular heart disease. A 2000 settlement included creation of the Fen-Phen Settlement Trust to compensate class members who had sustained heart damage. Claims required medical evidence. Attorneys who represented certain claimants retained Tai, a board-certified Level 2-qualified cardiologist, to read tests and prepare reports. Tai read 12,000 tests and asserted that he was owed $2 million dollars for his services. Tai later acknowledged that in about 10% of the cases, he dictated reports consistent with the technicians’ reports despite knowing that the measurements were wrong, and that he had his technician and office manager review about 1,000 of the tests because he did not have enough time to do the work. A review of the forms Tai submitted found that, in a substantial number of cases, the measurements were clearly incorrect and were actually inconsistent with a human adult heart. Tai was convicted of mail and wire fraud, 18 U.S.C. 1341 and 1343, was sentenced to 72 months’ imprisonment, and was ordered to pay restitution of $4,579,663 and a fine of $15,000. The Third Circuit rejected arguments that the court erred by implicitly shifting the burden of proof in its “willful blindness” jury instruction and applying upward adjustments under the advisory Sentencing Guidelines for abuse of a position of trust and use of a special skill, but remanded for factual findings concerning whether Tai supervised a criminally culpable subordinate, as required for an aggravated role enhancement. View "United States v. Tai" on Justia Law

Haldar, an Indian citizen, came to the U.S. in 1999 and has been a permanent resident since 2006. He founded GVS-Milwaukee, a Hare Krishna religious society and, from 2004 to 2007, GVS sponsored 25 applicants for religious-worker “R-1 visas,” 8 C.F.R. 214.2(r)(1), 17 of which were approved. In 2007 the State Department advised the Department of Homeland Security (DHS) that GVS-Milwaukee might be involved in visa fraud. DHS also received a similar anonymous tip and began an investigation that included temple visits, surveillance, searches of Haldar’s luggage on international trips, and interviews with GVS-sponsored visa recipients. In 2010 Haldar was convicted of conspiracy to defraud the U.S. under 18 U.S.C. 371. The Seventh Circuit affirmed, rejecting arguments (not raised in the district court) that certain statements from the prosecutor and a government witness improperly called into question the validity of his temple and were unfairly prejudicial under Federal Rule of Evidence 403; the prosecutor misrepresented testimony during his closing argument and relied on facts outside the record; and the district court on its own initiative should have instructed the jury not to scrutinize the religious qualifications of the visa recipients. View "United States v. Haldar" on Justia Law

From 1998 to 2010, Dimora was one of three elected Cuyaho County commissioners. From 2005 to 2010, Gabor worked for the county weights-and-measures office, which inspects gas pumps, grocery store scanners, truck scales and the like for accuracy. In 2007, the FBI began investigating public corruption in Cuyahoga County and discovered that Dimora handed out public jobs, influenced Cleveland decision-makers and steered public contracts in return for about 100 bribes worth more than $250,000. Gabor bought his job for $5,000 and spent most of his time on errands for Dimora that were unrelated to the job, including acting as a go-between in arranging kickback schemes on county projects. When Gabor learned that the FBI was investigating him, he warned his co-conspirators about the investigation and tried to convince them to lie. After a 37-day trial, they were convicted of 39 violations of anti-corruption laws. The district court sentenced Dimora to 336 months in prison and Gabor to 121 months. The Sixth Circuit affirmed, rejecting challenges to a jury instruction for the RICO charge, 18 U.S.C. 1962(c), (d); to the sufficiency of the evidence; and to various evidentiary rulings. View "United States v. Dimora" on Justia Law

Patriot was authorized to issue title policies underwritten by First American in Michigan. In 2007, Patriot closed a transaction and provided title insurance and a closing protection letter (CPL) when which WaMu loaned $4,543,593.07 to Truong for the purchase of property in Grosse Ile. In the CPL, First American agreed to indemnify WaMu for actual losses arising from Patriot’s fraud or dishonesty in connection with the closing. In 2008, First American discovered that the Truong transaction was a sham, orchestrated by Patriot’s owner, and obtained title to the property. During negotiations concerning sale of the property, federal regulators closed WaMu. The FDIC became its receiver and sold most of WaMu’s assets to Chase, including the title insurance commitment issued in connection with the Truong transaction. Attempting to resolve the claim, First American tendered a quitclaim deed. Chase refused to accept that deed. First American sought a declaration that First American had fulfilled its obligations under the commitment by tendering a deed to the property. Chase sought a declaration that the deed was void and requested money damages. The FDIC intervened, alleging breach of contract against First American based on the CPL. After the property was sold, First American and Chase stipulated to dismissal of Chase’s claims against First American and First American’s claims against Chase. Chase and the FDIC entered into a stipulation that Chase did not acquire the CPL claim that the FDIC was pursuing. A jury awarded the FDIC $2,263,510.78. The Sixth Circuit affirmed.View "JP Morgan Chase Bank NA v. First Am. Title Ins. Corp." on Justia Law

Nancy and Lester's Kentucky pain-management clinic closed after the DEA confiscated the doctor’s license for overprescribing narcotics. They then opened two clinics in Ohio. Patients would arrive before they opened, filling the parking lot, where they used drugs and traded prescription forms. Patients often traveled long distances (in groups), although most lived closer to other clinics. After paying their $150 appointment fee (cash only), patients would meet an “assessor” who would review their “day sheet” and provide a completed prescription form for hydrocodone, oxycodone, or other pain medication. Staff completed day sheets and prescription forms in advance. Patients then met the doctor for a minute. About 100 people per day completed this “five minute” process. The clinics also treated phantom patients. Nancy supervised the updating of files for people who had never visited the clinics. The doctor would sign prescriptions for phantom patients, staff would fill the prescriptions, and the pain pills were sold on the street by a Sadler relative. The clinics ordered drugs directly from pharmaceutical companies, but never obtained a license to dispense controlled substances. The Sadlers were convicted of conspiring to distribute controlled substances illegally and maintaining a premises for distributing the substances; Nancy was also convicted of wire fraud and money laundering. The district court sentenced Lester to 151 months and Nancy to 210 months. The Sixth Circuit vacated the wire fraud conviction, but otherwise affirmed. Nancy may have had many bad motives in buying the pills, but unfairly depriving the distributors of their property was not among them; she ordered pills and paid the asking price. View "United States v. Sadler" on Justia Law

Bencivengo, former Mayor of Hamilton Township, New Jersey, was convicted of violating, the Hobbs Act, 18 U.S.C. 1951(a) and section 2, and the Travel Act, 18 U.S.C. 1952(a)(1) and (3) and section 2, premised on the New Jersey bribery statute, N.J.S.A. 2C:27-2.2, for accepting money from Ljuba in exchange for agreeing to influence members of the Hamilton Township School Board to refrain from putting the School District’s insurance contract up for competitive bidding. Ljuba, the district’s insurance broker and a friend of Bencivengo’s, personally earned between $600,000 and $700,000 in commissions from insurance contracts with the district in 2011 alone. Bencivengo, facing financial difficulties , persuaded Ljuba to have her husband write a check with a memo line that the check was for a “cherry bedroom set” and to give him money during a trip to Atlantic City so that it would appear that he won the money gambling. The Third Circuit affirmed, rejecting a claim of double jeopardy and a challenge to the conduct of the judge. View "United States v. Bencivengo" on Justia Law

Kumar was 19 years old and in his first year in the Aviation Technology Program at Bowling Green State University when he was assigned to fly alone from Wood County Airport near Bowling Green to Burke Lakefront Airport in Cleveland, and back, after 10:00 p.m. The flight plan required him to fly over part of Lake Erie. On the return trip, Kumar observed what he believed to be a flare rising from a boat. He reported this sighting to Cleveland Hopkins International Airport and was instructed to fly lower for a closer look. Kumar could not then see a boat. Fearful of hurting his chances of one day becoming a Coast Guard pilot, he reported that he saw additional flares and described a 25-foot fishing vessel with four people aboard wearing life jackets with strobe lights activated. Kumar’s report prompted a massive search and rescue mission by the U.S. Coast Guard, and the Canadian Armed Forces. A month later, Kumar admitted that his report had been false. He pleaded guilty to making a false distress call, a class D felony per 14 U.S.C. 88(c)(1), which imposes liability for all costs the Coast Guard incurs. He was sentenced to a prison term of three months and ordered to pay restitution of $277,257.70 to the Coast Guard, and $211,750.00 to the Canadian Armed Forces. The Sixth Circuit affirmed. View "United States v. Kumar" on Justia Law

The Smith brothers and others operated Target Oil, which conducted speculative resource drilling in Kentucky, Tennessee, Texas, and West Virginia. Wells they represented as sure-fire investments often produced virtually no oil and many wells were never completed. From 2003 to 2008, Target Oil received about $15,800,000 in investor funds but, according to the postal inspector, distributed only $460,000 in royalties. The brothers were arrested and accused of conspiring with others to defraud investors of millions of dollars. Michael was convicted of conspiracy to commit mail fraud, 18 U.S.C. 1349, and of 11 substantive counts of mail fraud, 18 U.S.C. 1341, and sentenced to 120 months in prison and ordered to pay $5,506,917 in restitution. Christopher was convicted by the same jury on seven counts of mail fraud and was sentenced to 60 months in prison and ordered to pay $1,652,075 in restitution. The Seventh Circuit affirmed, rejecting arguments that: the evidence was insufficient to support their convictions; the government offered evidence that constructively amended or varied the indictment; their sentences are procedurally and substantively unreasonable; one of the forfeiture judgments was excessive; the district court erred in excluding a defense expert witness; and items of evidence relating to the alleged fraud were erroneously admitted. View "United States v. Smith" on Justia Law