Justia White Collar Crime Opinion Summaries

Draughon was admitted to the Florida Bar in 1987. In 1993, he formed NLMC to purchase property for $315,000, and lease it to a client. The seller, Onusic, received a $7,500 down payment and accepted a promissory note which required NLMC to make monthly payments. Onusic signed the deed with the understanding that Draughon would hold the deed in escrow and not record it until she received full payment. In 1997, Draughon recorded the deed. In 2001, Draughon transferred the property from NLMC to himself, took out a mortgage of $274,975, and used the money to pay personal tax liabilities; none of the funds were used to pay the $110,000 owed Onusic. In 2003 Onusic filed suit, but Draughon filed for bankruptcy. The bankruptcy court found actual intent to defraud. A referee recommended that Draughon be found guilty of violating Bar Rule 3-4.3: commission by a lawyer of any act that is unlawful or contrary to honesty and justice, whether committed in the course of the attorney’s relations as an attorney or otherwise. The referee recommended that Draughon be found not guilty of violating Rule 4-4.3(a) concerning dealings with persons not represented by counsel, and recommended public reprimand. The supreme court imposed a one-year suspension.View "FL Bar v. Draughon" on Justia Law

Defendant Paul Wentzlaff, an insurance agent, stole thousands of dollars from Harvey Severson, an elderly man who asked Defendant to help manage his financial affairs. Plaintiff Donald Hass, as personal representative for Severson’s estate, sued Defendant and two insurance companies who appointed Defendant as an agent, North American Company for Life and Health Insurance (North American) and Allianz Life Insurance of North America (Allianz). Hass and North American each moved for summary judgment and Allianz joined North American’s motion. After a hearing, the circuit court denied Plaintiff's motion and granted the insurance companies’ motion. Plaintiff appealed, arguing that the insurance companies were vicariously liable for Defendant's acts. Based on undisputed material facts on the record in this case, the Supreme Court found that Defendant Wentzlaff was not acting within the scope of his employment when he stole money from Severson, and thus, as a matter of law, North American and Allianz were not vicariously liable for his acts. The Court affirmed the circuit court's grant of summary judgment in favor of the insurance companies. View "Hass v. Wentzlaff" on Justia Law

A circuit court found Appellant David Cannon in contempt of court for violating (1) an order mandating that Appellant give up all authority and cease all activities relating to the James Brown estate, the Brown trusts, and all Brown entities (which he violated by filing amended tax returns without authority); and (2) an order requiring Cannon to pay back money he had misappropriated from Brown's estate. The circuit court ordered Appellant to be incarcerated for six months for contempt. However, the circuit court stated Appellant could purge himself of the contempt "by the payment of the aforementioned [money, with a portion] to be applied towards the payment of attorneys' fees incurred by the various parties, and the payment of a fine." The Court of Appeals affirmed in part, reversed in part, and remanded for further proceedings; upholding all of the circuit court's findings regarding the contempt except for the amount awarded towards attorneys' fees and the imposition of the fine. The Court of Appeals found the circuit court abused its discretion as to attorneys' fees because it did not make the necessary factual findings to support the amount awarded, so it "reverse[d] and remand[ed] the issue of attorneys' fees to the circuit court for findings of fact as to the proper amount. On remand, the circuit court held a hearing for the sole purpose of making findings of fact regarding the proper amount of attorneys' fees to be awarded for reimbursing the parties for attorneys' time related to the issue of Appellant's contemptuous conduct, and held that Appellant should pay. Appellant appealed this order, arguing payment of fees was mooted by his serving his jail sentence. The case was transferred from the Court of Appeals to the Supreme Court. Upon review, the Supreme Court affirmed the Court of Appeals, concluding the trial court did not abuse its discretion in ordering Appellant pay attorneys' fees. Further, the Court held that the issue of attorneys' fees was not mooted by Appellant serving his jail sentence.View "Ex parte: Cannon v. Estate of James Brown" on Justia Law

American Family Care, Inc. (AFC) petitioned the Supreme Court for a writ of mandamus to direct the Jefferson Circuit Court to vacate its order staying a civil action filed by AFC against Anita Salters. Salters was a former employee of AFC, acting as the director of the center from 2007 to June 2010 before her employment was terminated. As director, she was responsible for handling billing issues and claim audits performed by insurance companies and governmental agencies. In some instances, Salters had the only copies of communications related to billing inquiries and claim audits. In April 2011, the Federal Bureau of Investigation executed a search warrant at AFC's corporate office. The FBI removed mostly billing records. After the search warrant was executed, AFC determined that it was missing corporate records it would need to defend itself against any criminal charges that might be filed as a result of the FBI investigation. According to AFC, several of its employees reported that Salters had been seen removing files and records from the corporate offices shortly before she was fired. AFC made written demand upon Salters for the return of the records, but she did not respond. AFC then sued Salters seeking the return of any business records she might have. Salters answered the complaint, denying that she had removed any AFC records from its offices. The trial court, sua sponte, entered an order staying AFC's action "until further notice." The trial court expressed no reason for entering the indefinite stay. Upon review, the Supreme Court found that the indefinite stay ordered by the trial court, with no stated justification for it, was "immoderate" and beyond the scope of the trial court's discretion. For that reason, the Court granted AFC's petition and issued a writ of mandamus ordering the trial court to vacate its order staying AFC's action against Salters. View "American Family Care, Inc., v. Salters" on Justia Law

Appellant John Sterling, Jr. was charged with three criminal offenses: securities fraud, making false or misleading statements to the State Securities Commission, and criminal conspiracy. He was convicted of securities fraud, acquitted of making a false or misleading statement and conspiracy, and received a five-year sentence.  Appellant appealed to the Supreme Court, arguing the trial judge abused his discretion in permitting testimony from investors, in denying appellant's directed verdict motion, and that the trial court committed reversible error in charging the jury. Charges against Appellant stemmed from a business venture related to the retail mortgage lending industry. After a merger between two companies, Appellant ceased being an employee of one of the acquired companies, but remained on the Board of Directors of the newly formed entity. The new entity had financial trouble from the onset, and began moving debts and assets among the surviving entities to hide its financial difficulties. Appellant's defense was predicated in large part on the fact that the financial maneuvers that took place were approved by outside auditors. Upon review of the trial court record, the Supreme Court found no error and affirmed Appellant's conviction.View "South Carolina v. Sterling" on Justia Law

In 2001, Appellant Daniel Goodson was involved in a car accident. His insurance company paid $6,300 for the loss to the bank which still held title to the Appellant's car; Appellant received $135. Appellant, dissatisfied with his "meager" share of the insurance proceeds, presented a forged check for $6,300 to his bank with which to open a new account. The bank permitted Appellant to withdraw several thousand dollars before learning that the check was forged. The insurance company confirmed that it had not paid Appellant $6,300. Appellant paid back all the money he had withdrawn, but the State still pressed charges for forgery, insurance fraud and theft. Defendant challenged his sentence and conviction, arguing that he was not guilty of insurance fraud, and that his sentence was accordingly unreasonable. Finding that the trial court erred in convicting Appellant on insurance fraud charges, the Supreme Court remanded the case for resentencing based on forgery and theft. View "Pennsylvania v. Goodson" on Justia Law

Defendant was convicted for the state-jail felony of debit card abuse. At issue was whether the terms "use" and "present" in the debit-card-abuse statute were mutually exclusive so that there was no overlap in the meaning of the words. Based on the ordinary meaning of the words as used in the statute, the court concluded that the statutory terms "use" and "present" could overlap in meaning, that a transaction need not be consummated to support a jury finding that a defendant used a debit card, and that the court of appeals erred in determining that the evidence was insufficient to establish debt card abuse. Because the court reinstated the trial court's judgment, the court concluded that defendant's petition regarding the reformation of the judgment was improvidently granted.View "Clinton v. State" on Justia Law

In connection with operation of a medical transport company, defendant was convicted of theft (720 ILCS 5/16-1), vendor fraud (305 ILCS 5/8A-3), and money laundering (720 ILCS 5/29B-1), sentenced to 66 months' imprisonment, and ordered to pay$1.2 million in restitution. The appellate court upheld the theft and vendor fraud convictions, but reversed the money laundering conviction. The Illinois Supreme Court reversed with respect to the money laundering conviction. The trial court properly allowed the state establish guilt of money laundering with evidence of receipts rather than profits.View "People v. Gutman" on Justia Law

First National Keystone Bank retained an independent accounting firm to audit its records at a time that members of the bank's management were fraudulently concealing the bank's financial condition. The accounting firm issued a clean audit concerning the bank. It was later discovered that the bank had overstated its assets by over $500 million. Upon investigation, the FDIC concluded that the law firm that represented the bank had engaged in legal malpractice. The FDIC settled its claims against the law firm. The accounting firm was later found liable to the FDIC in federal district court for a negligent bank audit. The accounting firm subsequently sued the law firm, alleging fraud, negligent misrepresentation, and tortious interference with the accounting firm's contract to perform the audit. The circuit court granted summary judgment in favor of the law firm. The Supreme Court affirmed, holding that the claims of the accounting firm against the law firm were, in reality, contribution claims rather than direct or independent claims and were, therefore, barred by the settlement agreement between the law firm and the FDIC. View "Grant Thornton, LLP v. Kutak Rock, LLP" on Justia Law

Defendant Debbie Cruz was convicted of issuing payroll checks with insufficient funds to cover them.  Defendant was charged with four counts of issuing worthless checks, pursuant to the "Worthless Check Act."  Convicted on each count, Defendant argued on appeal, among other issues, the lack of sufficient evidence to prove that she had issued a check "in exchange for anything of value." Because the worthless checks were issued a week after the last day of the pay period, the Court of Appeals reversed the convictions, relying on previous opinions of the Supreme Court to conclude that the Act applied only to a "contemporaneous exchange" and not to pre-existing or antecedent debts.  Upon its review, the Supreme Court rejected that distinction as inconsistent with the clear legislative intent and purpose of the Act.  Accordingly, the Court reversed and remanded the case back to the Court of Appeals for further proceedings. View "New Mexico v. Cruz" on Justia Law