Justia White Collar Crime Opinion Summaries

Rymtech, a mortgage reduction program, purported to provide financial assistance to homeowners facing foreclosure. Daniel, its Vice President, recruited homeowners to place their properties in the program and instructed them to sign over title to straw purchasers called “A buyers.” Homeowners were told that title would be placed in trust, that A buyers would obtain financing to pay off the mortgage, and that they would regain clear title in five years. Daniel instructed loan officers to prepare fraudulent loan applications on behalf of A buyers. Even if Rymtech had invested all of the owners’ equity, implausibly high rates of return would have been required to make the mortgage payments. The equity was actually primarily used to operate Rymtech. When its finances started to disintegrate, Daniel continued to recruit homeowners. After the program failed Daniel was convicted of wire fraud, 18 U.S.C. 1343 and mail fraud, 18 U.S.C. 1341. The Seventh Circuit affirmed, rejecting a challenge to the sufficiency of the evidence and an argument that the court erred in rejecting his proposed instruction, requiring the jury to agree unanimously on a specific fraudulent representation, pretense, promise, or act. Unanimity is only required for the existence of the scheme itself and not in regard to a specific false representation. View "United States v. Daniel" on Justia Law

Apple introduced the iPad in 2010. To send and receive data over cellular networks (3G), customers had to purchase a data contract from AT&T and register on an AT&T website. AT&T prepopulated the user ID field on the login screen with customers’ email addresses by programming servers to search for the user’s Integrated Circuit Card Identifier to reduce the time to log into an account. Spitler discovered this “shortcut” and wrote a program, the “account slurper,” to repeatedly access the AT&T website, each time changing the ICC-ID by one digit. If an email address appeared in the login box, the program would save that address. Spitler shared this discovery with Auernheimer, who helped him to refine the account slurper, which collected 114,000 email addresses. Auernheimer emailed the media to publicize their exploits. AT&T fixed the breach. Auernheimer shared the list of email addresses with Tate, who published a story that mentioned some names of those whose email addresses were obtained, but published only redacted email addresses and ICC-IDs. Spitler was in California. Auernheimer was in Arkansas. The servers t were physically located in Texas and Georgia. Despite the absence of any connection to New Jersey, a Newark grand jury indicted Auernheimer for conspiracy to violate the Computer Fraud and Abuse Act, 18 U.S.C. 1030(a)(2)(C) and (c)(2)(B)(ii), and identity fraud under 18 U.S.C. 1028(a)(7). The Third Circuit vacated his conviction. Venue in criminal cases is more than a technicality; it involves “matters that touch closely the fair administration of criminal justice and public confidence in it.”View "United States v. Auernheimer" on Justia Law

In 2007 Donelli’s family rented a house from the elderly Viguses. Donelli falsely told the Viguses that her minor daughter would receive a $750,000 settlement because of a car accident with an oil company employee. She persuaded them to “lend” her money 500 times, signing promissory notes for $443,000. Most was spent on vacations. None was reported to the IRS as income. The Viguses never saw any repayment. Donelli pled guilty to tax evasion, 26 U.S.C. 7201, and wire fraud, 18 U.S.C. 1343. The presentence report said that Donelli sought treatment for drug abuse in 2012 from a psychiatrist, who diagnosed Donelli with “Type II Bipolar Disorder.” The report included no further information about the illness or its impact on Donelli. The court adopted the report, including an uncontested guideline range of 41 to 51 months. Donelli did not submit a sentencing memorandum or any evidence. Donelli orally attributed her crime to her addiction to prescription opioids. The district judge acknowledged the reference to Donelli’s diagnosis of bipolar disorder and imposed a sentence of 60 months, stating that the guidelines did not “capture the extent of the harm here.” Donelli’s lawyer repeated that the guidelines already accounted for the nature of the harm, but did not object to the sufficiency of the court’s explanation. The Seventh Circuit affirmed. Donelli failed to present her diagnosis as a principal argument in mitigation and waived her claim of a Cunningham procedural error by stating that she had no objection apart from the sentence being above the guideline range. View "United States v. Donelli" on Justia Law

During the 2000 presidential election, Dewald established and operated political action committees (PACs): “Friends for a Democratic White House” and “Swing States for a GOP White House.” He sent fundraising letters to political donors found on Federal Election Commission donor lists. The PACs collected about $750,000 in contributions, but Dewald remitted less than 20 percent of that amount to the political parties or to outside PACs. He funneled most the money to his for-profit corporation, which provided “consulting and administrative services” to the PACs. Dewald was convicted, under Michigan law, for obtaining money under false pretenses, common-law fraud, and larceny by conversion and ultimately sentenced to between 23 and 120 months. Rejecting Dewald’s preemption claim, the Michigan Court of Appeals reasoned that the Federal Election Campaign Act, 2 USC 453 has a narrow preemptive effect. Dewald unsuccessfully sought state post-conviction relief. Dewald later obtained federal habeas corpus relief 28 U.S.C. 2254, on grounds that FECA preempted state law and that the Michigan court’s determination was objectively unreasonable. The Sixth Circuit reversed. There is no clearly established federal law, as determined by the Supreme Court, holding that FECA precludes a state from prosecuting fraud in the context of a federal election. Even if federal preemption provides “clearly established federal law” in general, the state decision did not unreasonably apply those general principles to this case. View "Dewald v. Wriggelsworth" on Justia Law

Stephen Jenkins brought a tort action against Wells Fargo Bank, N.A. alleging that a Bank teller had improperly accessed Jenkins’s confidential information and given it to her husband, allowing the husband to steal Jenkins’s identity. Jenkins claimed the Bank negligently failed to protect the information, breached a duty of confidentiality, and invaded his privacy. The trial court granted the Bank’s motion for judgment on the pleadings. The Court of Appeals reversed as to Jenkins’s negligence claim after finding that the allegations of his complaint established the elements of negligence. The Supreme Court granted certiorari to consider whether the Court of Appeals erred in holding that a violation of an alleged duty imposed the Gramm–Leach–Bliley Act gave rise to a cause of action for negligence under Georgia law. The Supreme Court concluded that the holding was in error, and reversed that portion of the judgment of the Court of Appeals.View "Wells Fargo Bank, N.A. v. Jenkins" on Justia Law

Defendant was indicted for financial crimes. He applied for public defender representation and provided information about his financial status that was collected by court staff on a UDIR form. Defendant's application was granted. Because the State's investigation suggested that defendant owned substantial assets, it issued a trial subpoena to the Morris County Superior Court's custodian of records demanding the production of financial data provided to court staff, including defendant's UDIR form. Although it used a trial subpoena, the State represented that it did not intend to use defendant's UDIR form at his pending trial; instead, it would be used to determine whether the State should separately indict defendant for making intentional false statements to obtain free counsel and to determine whether to apply for the removal of defendant's appointed counsel. The trial court quashed the subpoena on its own motion pursuant to the attorney-client privilege. The trial court denied the State's motion for reconsideration, reaffirming its view that the attorney-client privilege protected disclosure of defendant's financial information. The Appellate Division affirmed, holding that the attorney-client privilege protected the information sought. Upon review of the matter, the Supreme Court concluded that the subpoena was properly quashed because defendant was "entitled to the benefit of the long-standing practice embodied in Directive 1-06 - that 'information on the intake form may not be used in grand jury proceedings or at trial.'"View "In re Subpoena Duces Tecum on Custodian of Records" on Justia Law

Plaintiffs here were Bryan Behrens, Bryan Behrens Co., Inc., National Investments, Inc., and Thomas Stalnaker. Defendants were Christian Blunk, Berkshire and Blunk, and Abrahams Kaslow & Cassman LLP. In 2008, the SEC filed a civil enforcement action against all plaintiffs except Stalnaker. In 2009, the federal government indicted Behrens on charges of securities fraud, mail fraud, wire fraud, and money laundering. Prior to the filing of the indictment, Plaintiffs filed their complaint alleging that Blunk had committed legal malpractice. Plaintiffs also sued Blunk's former partnership and the firm that later employed Blunk. Both civil and criminal cases were proceeding at roughly the same time. In 2010, Behrens pled guilty to securities fraud. Later that year, Plaintiffs filed an amended complaint against Defendants for legal malpractice. The district court found the action was barred by the applicable statute of limitations and by the doctrine of in pari delicto. The Supreme Court affirmed, holding that Plaintiffs' suit was barred by the two-year statute of limitations set forth in Neb. Rev. Stat. 25-222.View "Behrens v. Blunk" on Justia Law

Appellants Consipio Holding, BV; Ilan Bunimovitz; Tisbury Services, Inc.; and Claudio Gianascio (collectively, Consipio) are shareholders of Private Media Group, Inc. (PRVT). In August 2010, Consipio filed a complaint in the Nevada district court, seeking injunctive relief and the appointment of a receiver for PRVT. Consipio also asserted derivative claims on behalf of PRVT against PRVT's former CEO and president, Berth H. Milton, Jr., and against officer and director respondents Johan Carlberg (PRVT director), Peter Dixinger (PRVT director), Bo Rodebrant (PRVT director), Johan Gillborg (former PRVT CFO), and Philip Christmas (PRVT subsidiary CFO). The claims focused on respondents' alleged conduct in assisting Milton, Jr., to financially harm PRVT for their personal gain. The complaint alleged that respondents assisted Milton, Jr., in obtaining significant loans for himself and entities he controls. It further stated that respondents failed to demand repayment on these loans and that they helped Milton, Jr. by removing funds from PRVT and concealing the wrongdoing. Given these allegations, Consipio contended that respondents collectively were guilty of misfeasance, malfeasance, and breach of their fiduciary duties. The issue before the Supreme Court was whether Nevada courts could properly exercise personal jurisdiction over nonresident officers and directors who directly harm a Nevada corporation. The Court concluded that they can. In this case, the district court failed to conduct adequate factual analysis to determine whether it could properly exercise personal jurisdiction over the respondents before dismissing the complaint against them. Accordingly, the Supreme Court vacated the dismissal order and remanded this case to the district court for further proceedings.View "Consipio Holding, BV v. Carlberg" on Justia Law

Appellant Connie Powell worked as a bookkeeper for Rocky Mountain Pump Services (RMPS) from March 2005 to February 2007, when her employment was terminated. After terminating appellant's employment, RMPS contracted with Melanie Field to handle the company's books until another bookkeeper could be hired. Field immediately found the books to be incomplete, inaccurate, and in need of "rebuilding." Reconstruction of the books back to the time when Appellant was hired, revealed numerous discrepancies and missing records, with multiple paychecks to Appellant for the same pay period, copies of checks made payable to the appellant where the computer QuickBooks system showed those checks being paid to vendors, and a few checks made payable to Appellant where the issuing manager's signature appeared to be forged. The examination of the books was followed by a law enforcement investigation that included a review of Appellant's personal bank account records. Eventually, it was determined that 93 checks, totaling $78,200, and claimed to be "unauthorized" by RMPS, had been deposited into Appellant's personal account during her tenure as RMPS's bookkeeper. Appellant was arrested and charged with one count of felony larceny. A jury found her guilty. She appealed her conviction. Because there was insufficient evidence to prove beyond a reasonable doubt that Appellant committed larceny, the Supreme Court reversed her conviction.View "Powell v. Wyoming" on Justia Law

In 2000 Go-Best wired $5 million to an account entitled "Morris M. Goldings client account" at Citizens Bank, based on representations made by Morris M. Goldings, who was then a Massachusetts attorney. Goldings later admitted that the representations were false and that he had used the money to pay other debts. Go-Best filed suit against Citizens Bank, bringing claims of misrepresentation, conversion, aiding and abetting a fraud, aiding and abetting a breach of fiduciary duty, aiding and abetting a conversion, and negligence. Citizens Bank had no knowledge of Goldings's scheme to defraud Go-Best but failed to notify the Board of Bar Overseers of dishonored checks issued on the client account more than six months before Go-Best wired funds into that account. The trial court dismissed, but a divided Appeals Court reversed in part, vacating dismissal of claims of negligence and of aiding and abetting. The Massachusetts Supreme Court reinstated dismissal. Without actual knowledge, the bank's duty to notify the board of dishonored checks from trust accounts arose only from its contractual duty, not from any duty in tort, so the bank could not be liable to Go-Best for any negligence in fulfilling that duty.View "Go-Best Assets Ltd. v. Citizens Bank of MA" on Justia Law