Justia White Collar Crime Opinion Summaries

FutureSelect invested nearly $200 million in the Rye Funds, which pooled and fed money into Bernard Madoff's fraudulent securities investment scheme. The investments were lost when Madoff's fraud collapsed. FutureSelect sued Tremont Group Holdings (proponent of the Rye Funds), Oppenheimer Acquisition Corporation and Massachusetts Mutual Life Insurance Company (Tremont's parent companies) and Ernst & Young, LLP (Tremont's auditor) for their failure to conduct due diligence on Madoff's investments. The trial court dismissed on the pleadings, finding Washington's security law did not apply, and that Washington courts lacked jurisdiction over Oppenheimer. The Court of Appeals reversed, and the defendants sought to reinstate the trial court's findings. Finding no error with the Court of Appeals' decision, the Washington Supreme Court affirmed. View "Futureselect Portfolio Mgmt., Inc. v. Tremont Grp. Holdings, Inc." on Justia Law

Moeser was a commercial loan officer at a Milwaukee bank and, in 2004, prepared a presentation on behalf of co-conspirator Woyan for a $790,000 construction loan. Woyan operated PARC, which planned to build townhouses. Other conspirators included the project’s manager, architect, and real estate agent. Moeser told his superiors that the project’s land would serve as collateral and that PARC would provide the land up front. The bank approved the loan. Before closing, Moeser learned that Woyan did not own the land and did not have the funds to purchase it. Rather than informing his superiors, Moeser loaned Woyan $30,500 to purchase the land; Woyan paid Moeser back, plus $15,000 in interest, using funds from the loan’s initial disbursement of $111,299. Although Moeser learned that the project was not progressing and that disbursements were being used for other purposes, he continued to deceive his superiors. The project was never completed and PARC defaulted on its loan. Three contractors and a lumber supplier were never fully paid. The bank foreclosed. Moeser was charged with bank fraud, corrupt acceptance of money, fraud of a financial institution by an employee, and making false statements during an investigation. Moeser and his co-defendants pleaded guilty to conspiracy to commit bank fraud, 18 U.S.C. 1344. The district court gave Moeser a below-guidelines sentence of two years’ probation, which Moeser did not appeal, but found him jointly and severally liable for full restitution. The Seventh Circuit affirmed, rejecting an argument that he should be liable for a lesser share. View "United States v. Moeser" on Justia Law

George Schussel’s former company fraudulently transferred millions of dollars to him in order to avoid paying income taxes. The IRS, which is authorized by statute to collect a person’s tax debt by reclaiming assets the debtor has transferred to someone else, claimed that Schussel was liable as a transferee for the company’s tax deficiencies. The United States Tax Court held Schussel liable for the company’s back taxes of over $4.9 million plus interest of at least $8.7 million. Schussel appealed, disputing the amount he owed the IRS as a result of the fraudulent transfers. The First Circuit reversed in part and affirmed in part, holding (1) the tax court erred in calculating prejudgment interest on the fraudulently transferred funds under the federal tax interest statute rather than assessing the prejudgment interest at the Massachusetts rate; (2) the tax court did not err in accepting as a proper measure of the assets Schussel received the actual amount transferred from the company into Schussel-controlled accounts; and (3) Schussel’s loans to the company to pay Schussel’s litigation expenses did not reduce the net amount transferred to him. View "Schussel v. Werfel" on Justia Law

The Hallahans engaged in fraud, 1993-1999, relating to purported tanning businesses, that bilked investors out of more than $1,000,000. They pled guilty to conspiracy to commit mail and bank fraud, 18 U.S.C. 371, 1341, and 1344, and conspiracy to commit money laundering, 18 U.S.C. 1956(h). Rather than face sentencing for their crimes, they fled the district and remained on the run in Missouri and Arizona for 12 years. After they were arrested, both pled guilty without a plea agreement to the additional crime of failing to appear for sentencing. The district court imposed above-guideline sentences of 270 months on Nelson and 195 months on Janet Hallahan. They challenged their sentences despite having waived their rights to appeal in their original plea agreements. The Seventh Circuit initially affirmed. Denying a petition for rehearing, the Seventh Circuit rejected arguments based on use of a base offense level of seven, instead of six, for calculating the advisory sentencing guideline for the conspiracy counts, stating that the error does not change the result. View "United States v. Hallahan" on Justia Law

Bokhari is a dual citizen of the U.S. and Pakistan. While living in Wisconsin, Bokhari allegedly conducted a fraudulent scheme with his brothers, bilking a nonprofit entity that administered the E‐Rate Program, a federal project to improve internet and telecommunications services for disadvantaged schools, out of an estimated $1.2 million, by submitting false invoices. In 2001, while the alleged fraud was ongoing, Bokhari moved to Pakistan, where, according to the prosecution, he continued directing the illegal scheme. In 2004, a federal grand jury in Wisconsin indicted the brothers for mail fraud, money laundering, and related charges. The brothers pleaded guilty and were sentenced to more than five years in prison. The government submitted an extradition request to Pakistan in 2005. Bokhari contested the request in Pakistani court, and the Pakistani government sent an attorney to plead the case for extradition. In 2007, following a hearing, a Pakistani magistrate declined to authorize extradition. In 2009, the U.S. secured a “red notice” through Interpol, notifying member states to arrest Bokhari should he enter their jurisdiction. In the U.S., Bokhari’s attorneys moved to dismiss the indictment and quash the arrest warrant. The district court denied Bokhari’s motion pursuant to the fugitive disentitlement doctrine. The Seventh Circuit affirmed, characterizing the appeal as an improper attempt to seek interlocutory review of a non‐final pretrial order. View "United States v. Bokhari" on Justia Law

Chychula and her codefendants engaged in a fraudulent investment scheme, involving more than 60 investors who lost almost $4.5 million. The scheme lasted several years and took various forms, including investment in companies that Chychula and her codefendants incorporated; dissemination of false information to investors by electronic mail and facsimile; and receipt of wire transfers of funds from investors’ bank accounts. Convicted of nine counts of participating in a scheme to defraud by means of interstate wire communications, 18 U.S.C. 1343, Chychula was sentenced to 48 months in prison. The Seventh Circuit affirmed, rejecting an argument that the district court erred in applying a two‐level enhancement to her offense level for obstruction of justice because it failed to make the necessary findings. View "United States v. Chychula" on Justia Law

Defendants Ransom and Talbott appealed their sentences after pleading guilty to fraud charges in connection with the operation of their property management company. The court need not decide whether Ransom's appeal waiver should stand since the court determined that, even if Ransom had not waived his right to appeal, his arguments made on appeal were meritless. The court concluded that defendants' sentences were both procedurally and substantively reasonable. The district court did not only all that it was required to do in entering the upwardly variant sentences, but more than enough. Accordingly, the court affirmed the judgment of the district court. View "United States v. Ransom, Jr." on Justia Law

Beavers was a Chicago alderman from 1983-2006, when he began serving as a Cook County Commissioner. He was the chairman of each of his three campaign committees and the only authorized signor for each committee’s bank account. Beavers’ federal tax returns underreported his 2005 income, misstated expenditures in semi-annual disclosure reports (D-2s), did not disclose use of campaign funds to increase his pension annuity, misrepresented loans between the committees and Beavers, did not report monthly stipends that Beavers took as a Commissioner, and did not disclose that Beavers wrote himself checks totaling $226,300 from committee accounts to finance gambling trips, without documenting the purpose of the expenditures or any repayment. After federal agents approached Beavers in connection with a grand jury investigation, Beavers filed amended tax returns and attempted to repay the committees. Beavers was convicted of three counts of violating 26 U.S.C. 7206(1), which prohibits willfully making a material false statement on a tax return, and with one count of violating 26 U.S.C. 7212(a), which prohibits corruptly obstructing the IRS in its administration of the tax laws. Beavers was sentenced to six months’ imprisonment and was ordered to pay about $31,000 in restitution and a $10,000 fine. The Seventh Circuit affirmed. View "United States v. Beavers" on Justia Law

In 2006, then-policewoman Brown, entered the Chicago Patrolmen’s Federal Credit Union and presented a $1 million check made out to her and purportedly drawn by Six Flags Great America on a JP Morgan Chase bank account. She endorsed it in her own name. The check was counterfeit. Brow was charged with several offenses and testified that her mother had given her the check and had told her that it was the result of Brown’s sister’s settlement of a lawsuit. The sister already had a forgery conviction. Brown was convicted and given two years of probation and 50 hours of community service. The appellate court affirmed the convictions for attempted theft by delivering the counterfeit check and for forgery by making the check. The Illinois Supreme Court, reversed the forgery conviction, leaving the conviction for “delivery.” Brown did not “make” the check when all she did was endorse it in her own name; forgery by “making” was statutorily complete when the check was created, regardless of endorsement. There was no evidence that the defendant actually made the check.View "People v. Brown" on Justia Law

Stein ran legitimate companies for which he maintained bank accounts. In need of capital for construction projects, he approached his Wiley, a part-owner of currency exchanges, and proposed that Stein write checks from (underfunded) bank accounts to cash at the exchanges in order to have use of money for a few days to run his business. At the end of that period, if his business had turned the necessary profit, the checks would clear; if not, he could write more checks, cash them, deposit proceeds to cover the earlier checks, and have money to continue operations. Stein ran the check-kiting scheme for five months. To clear previous checks and obtain capital for the next period, he had to write larger (or more) checks each cycle. Each time a check was cashed, the exchange also charged a fee, so the balance was spiraling upward. Eventually Stein was injured and not physically able to continue the scheme. The Wiley exchanges lost $440,000 from checks that did not clear. Another exchange lost $250,000. Stein pleaded guilty to wire fraud, 18 U.S.C. 1343. After a remand, the district court revised the loss amount, and again gave a below-guidelines sentence of 21 months’ imprisonment, but still entered a restitution amount of over one million dollars. The Seventh Circuit affirmed, rejecting an argument that the loss to Wiley’s exchanges should not be incorporated into restitution because of Wiley’s complicity in the scheme. View "United States v. Stein" on Justia Law