Justia White Collar Crime Opinion Summaries

Orillo, her husband (a doctor), and another owned Chalice, a home health care provider. Chalice was an enrolled provider with Medicare and could seek reimbursement of home health care through that program. Orillo falsified forms by altering the codes and information that had been completed by the Chalice nurses to make the patient’s condition appear worse and the health care needs greater than the actuality. Those alterations caused Medicare software to generate different reimbursement rates Orillo also aided her husband in paying kickbacks to a Chicago doctor in return for referrals of Medicare patients. Orillo pled guilty to healthcare fraud, 18 U.S.C. 1347 and paying kickbacks to physicians for patient referrals under a federal health care program, 42 U.S.C. 1320a-7b and 18 U.S.C. 2, and was sentenced to 20 months’ imprisonment. Orillo conceded that her scheme caused a loss, to Medicare, in excess of $400,000, and agreed to entry of a $500,000 forfeiture judgment.The district court determined that the loss amount for the healthcare fraud count was $744,481 and ordered her to pay that amount in restitution. The Seventh Circuit affirmed, rejecting Orillo’s argument that the loss and restitution amount should be limited to only those stemming from visible alterations. View "United States v. Orillo" on Justia Law

Philpot, former Clerk of Lake County, Indiana, took $25,000 in incentive payments from a federally funded child‐support fund (42 U.S.C. 658a(a)) without the required approval of the county fiscal body. The Indiana Department of Child Services disburses those federal funds to the counties, Ind. Code 31‐25‐4‐23(a), which have a relatively free hand in directing the money, although “amounts received as incentive payments may not, without the approval of the county fiscal body, be used to increase or supplement the salary of an elected official.” Philpot had used the funds to provide himself and staff members with bonuses. Convicted of mail fraud, 18 U.S.C. 1341, and theft from a federally funded program 18 U.S. 666(a)1A, he was sentenced to 18 months in prison. The Seventh Circuit affirmed, despite claims concerning whether Philpot “knowingly” violated the statute and the fact that Philpot had voluntarily returned the funds. View "United States v. Philpot" on Justia Law

The Berkowitz family has a history of IRS problems. Yair began participating in his father’s schemes in 1999, acquiring the information of dead people and federal prisoners to prepare fraudulent tax returns. Between 2003 and 2009, 58 individuals received refund checks in a conspiracy that involved more than 3,000 false state and federal tax returns. Yair received tax returns from Marvin in Israel, mailed the returns from various U.S. postal codes to avoid IRS suspicion, and controlled accounts where proceeds were deposited. When refund checks issued, Yair traveled to pick them up and made payments to co‐conspirators. In 2006, IRS agents told Yair that money he received from Marvin was obtained by fraud. Yair denied knowledge of the scheme. He began to reduce his direct involvement, but continued to receive money from the scheme and met with an undercover IRS agent about expanding the fraud. The scheme was uncovered. Yair, Marvin, and others were charged with conspiracy to defraud the IRS, wire fraud, and mail fraud. Yair pleaded guilty only to wire fraud based on a 2006 PayPal transfer of $250. At sentencing, the district court followed the Presentence Report’s recommendation and ordered Yair to pay more than $4 million in restitution along with his prison sentence; his liability was joint and several with his co‐defendants. The Seventh Circuit found the award appropriate and affirmed.View "Unted States v. Berkowitz" on Justia Law

The issue before the Tenth Circuit in this case stemmed from a civil-enforcement action brought by the Securities and Exchange Commission ("SEC") against Defendant-Appellant Ralph Thompson, Jr., in connection with an alleged Ponzi scheme Thompson ran through his company, Novus Technologies, L.L.C. ("Novus"). The district court granted summary judgment in favor of the SEC on several issues, including the issue of whether the instruments Novus sold investors were "securities." Thompson's single issue on appeal was that the district court ignored genuine disputes of material fact on the issue of whether the Novus instruments were securities, and that he was entitled to have a jury make that determination. After careful consideration, the Tenth Circuit concluded that under the test articulated by the U.S. Supreme Court in "Reves v. Ernst & Young" (494 U.S. 56 (1990)), the district court correctly found that the instruments Thompson sold were securities as a matter of law. View "SEC v. Thompson" on Justia Law

Investigation of Rabbi Fish began when Dwek, charged with bank fraud, informed law enforcement that several New York and New Jersey rabbis were laundering money through tax-exempt Jewish charities called gemachs. In a sting operation, Dwek approached Fish about laundering the claimed proceeds of fraudulent schemes. The “proceeds” were actually provided by the government. Fish participated in 12 money laundering transactions involving more than $900,000. Dwek would deliver bank checks made out to gemachs and rabbis and would receive cash in exchange, less a commission of about 10 percent. Fish gave Dwek SIM cards for his cell phone and warned Dwek to sweep his car and phones for detection devices and to use code when speaking to associates. In recordings made by Dwek, Fish stated that he had several money laundering connections, knew how much cash certain individuals had available at specified times, had met the “main guy” running the network, and that the cash came from the diamond and jewelry business. Fish pled guilty to conspiracy to commit money laundering, 18 U.S.C. 1956(h). The parties agreed that Fish’s total offense level would be at least 21; the government reserved the right to argue for a two-level enhancement under U.S.S.G. 2S1.1(b)(3) for sophisticated money laundering. The district court applied the enhancement and sentenced Fish to 46 months. The Third Circuit affirmed. View "United States v. Fish" on Justia Law

Jin, a naturalized American citizen of Chinese origin, with a bachelor’s degree in physics from a Chinese university and master’s degrees in physics and computer science from American universities, was employed as a Motorola software engineer, 1998-2007. Her duties involved a cellular telecommunications system: Integrated Digital Enhanced Network (IDEN). While on medical leave in China, 2006-2007, she sought a job with a Chinese company, Sun Kaisens, which develops telecommunications technology for the Chinese armed forces. She returned to the U.S., bought a one‐way ticket to China on a plane scheduled to leave Chicago days later, then downloaded thousands of internal Motorola documents, stamped proprietary, disclosing details of IDEN, which she was carrying with $31,000 when stopped by Customs agents. She stated she intended to live in China and work for Sun Kaisens. She was convicted of theft of trade secrets, but acquitted of economic espionage, under the Economic Espionage Act, 18 U.S.C. 1831, 1832, and sentenced to 48 months in prison. The Seventh Circuit affirmed, rejecting arguments that what she stole was not a trade secret and that she neither intended nor knew that the theft would harm Motorola. The court characterized the sentence as lenient, given Jin’s egregious conduct, which included repeatedly lying to federal agents.p View "United States v. Jin" on Justia Law

Satyam approached the Trust about forming a joint venture to provide engineering services to the automotive industry. Satyam represented that it was an IT-services provider with a base of automotive customers, that it was publicly-traded, audited, and financially stable. The Trust formed VGE, a separate legal entity; in 2000, VGE and Satyam formed SVES under the laws of India; VGE contributed $735,000. VGE and Satyam signed agreements calling for binding arbitration. In 2005, Satyam initiated arbitration. VGE counterclaimed that Satyam had breached its obligations. The arbitrator rejected VGE’s counterclaims, found that Satyam never competed with SVES, and found an event of default entitling Satyam to purchase VGE’s shares in the joint venture for book value. Satyam filed an enforcement action. The district court ordered VGE to comply with the award. The Sixth Circuit affirmed. Following a 2007 contempt proceeding, VGE complied. In 2010, VGE and the Trust sued, alleging that, starting before the joint venture, Satyam engaged in a massive fraud scheme about its financial stability, and claiming civil violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1961–1968. The district court dismissed, based on res judicata defense, and denied leave to amend. The Sixth Circuit reversed. The complaint adequately alleged that Satyam wrongfully concealed the factual predicate to claims, so the defense of claim preclusion does not apply. View "Venture Global Eng'g, LLC v. Satyam Computer Servs., Ltd." on Justia Law

Plaintiff-Appellee John Niemi and several investors intended to build a large luxury ski condominium complex. Niemi was unable to find traditional financing for the project, and turned to Florida businessman, Defendant Michael Burgess. Burgess claimed to represent a European investor, Defendant-Appellee Erwin Lasshofer. As part of the funding scheme, plaintiff had to pay certain fees and pledge a collateral deposit before $250 million dollars would be loaned to him (and his business partners/investors) for the condo project. For his part, Burgess was eventually convicted and sentenced to federal prison for fraud and money laundering. Plaintiffs sued seeking return of the money they pledged, alleging the lost loan irreparably damaged its business, caused millions in lost profits, and sent its other real properties into foreclosure. Burgess maintained he took direction from Lasshofer; Lasshofer claimed he unwittingly did business with a con man. The district court granted plaintiffs' motion for a preliminary injunction effectively freezing Lasshofer's worldwide assets pending final judgment. Lasshofer appealed the grant of the preliminary injunction. Upon careful review, the Tenth Circuit concluded that plaintiffs, Niemi and individual investors in his condo project, lacked standing to bring suit. Therefore the district court erred in granting the injunction. The injunction was vacated and the case remanded for further proceedings. View "Niemi, et al v. Burgess, et al" on Justia Law

Defendants Jeffrey W. Edwards and Frontier Holdings appealed the district court's order of restitution under the Mandatory Victims Restitution Act, 18 U.S.C. 3663A. Edwards' convictions stemmed from his involvement in a scheme to solicit funds from investors by promising astronomical returns and then using the funds for extravagant personal expenditures. The court concluded that the district court correctly ignored Edwards' finances when determining the amount of restitution; the district court did not clearly err by ordering restitution to Camencita Jocson for losses caused by a related scheme; the district court properly found that Edwards owed restitution to victims whose related counts were dismissed at trial; and there was insufficient evidence supporting the restitution order to Teana Reece's alleged victims. Accordingly, the court affirmed the convictions; affirmed the restitution order generally; vacated the restitution order in respect to Reece's alleged victims; and remanded for a hearing to determine whether they were entitled to restitution. View "United States v. Edwards, et al." on Justia Law

After the mutual funds, known as the Lancelot or Colossus group, folded in 2008, the trustee in bankruptcy filed independent suits or adversary actions seeking to recover from solvent third parties, including the Funds’ auditor, law firm, and some of the Funds’ investors, which the Trustee believes received preferential transfers or fraudulent conveyances. The Funds had invested in notes issued by Thousand Lakes, which was actually a Ponzi scheme, paying old investors with newly raised money. In these proceedings the trustee contends that investors who redeemed shares before the bankruptcy received preferential transfers, 11 U.S.C. 547, or fraudulent conveyances, 11 U.S.C. 548(a)(1)(B) and raised a claim under the Illinois fraudulent-conveyance statute, using the avoiding power of 11 U.S.C. 544. The bankruptcy court rejected the claims, citing the statutory exception: “the trustee may not avoid a settlement payment or transfer made to a financial participant in connection with a securities contract, except under section 548(a)(1)(A) of this title.” The Seventh Circuit affirmed. A transfer from the Funds to each redeeming investor occurred “in connection with” a securities contract. View "Peterson v. Somers Dublin, Ltd." on Justia Law