Justia White Collar Crime Opinion Summaries

Robers, convicted of submitting fraudulent mortgage loan applications to two banks, argued that the district court miscalculated his restitution obligation under the Mandatory Victims Restitution Act of 1996, 18 U.S.C. 3663A–3664, which requires property crime offenders to pay “an amount equal to ... the value of the property” less “the value (as of the date the property is returned) of any part of the property that is returned.” The court ordered Robers to pay the difference between the amount lent to him and the amount the banks received in selling houses that had served as collateral. Robers argued that the court should have reduced the restitution amount by the value of the houses on the date on which the banks took title to them since that was when “part of the property” was “returned.” The Seventh Circuit and a unanimous Supreme Court affirmed. “Any part of the property ... returned” refers to the property the banks lost: the money lent to Robers, not to the collateral the banks received. Because valuing money is easier than valuing other property, this “natural reading” facilitates the statute’s administration. For purposes of the statute’s proximate-cause requirement, normal market fluctuations do not break the causal chain between the fraud and losses incurred by the victim. Even assuming that the return of collateral compensates lenders for their losses under state mortgage law, the issue here is whether the statutory provision, which does not purport to track state mortgage law, requires that collateral received be valued at the time the victim received it. The rule of lenity does not apply here. View "Robers v. United States" on Justia Law

After a grand jury indicted the Kaleys for reselling stolen medical devices and laundering the proceeds, the government obtained a restraining order against their assets under 21 U.S.C. 853(e)(1), to “preserve the availability of [forfeitable] property” while criminal proceedings are pending. An order is available if probable cause exists to think that a defendant has committed an offense permitting forfeiture and the disputed assets are traceable or sufficiently related to the crime. The Kaleys moved to vacate the order, to use disputed assets for their legal fees. The district court allowed them to challenge traceability to the crimes but not the facts supporting the underlying indictment. The Eleventh Circuit and Supreme Court affirmed. In challenging a section 853(e)(1) pre-trial seizure, an indicted defendant is not entitled to contest the grand jury determination of probable cause to believe the defendant committed the crimes. A probable cause finding sufficient to initiate prosecution for a serious crime is conclusive and, generally, a challenge to the reliability or competence of evidence supporting that finding will not be heard. A grand jury’s probable cause finding may effect a pre-trial restraint on a person’s liberty or property. Because the government’s interest in freezing potentially forfeitable assets without an adversarial hearing about the probable cause underlying criminal charges and the Kaleys’ interest in retaining counsel of their own choosing are both substantial, the issue boils down to the “probable value, if any,” of a judicial hearing in uncovering mistaken grand jury probable cause findings. The legal standard is merely probable cause, however, and the grand jury has already made that finding; a full-dress hearing will provide little benefit. View "Kaley v. United States" on Justia Law

Defendant was convicted of conspiring to commit honest-services wire fraud and securities fraud, in violation of 18 U.S.C. 1343, 1346, 1348, and 1349, as well as making a false statement in violation of 18 U.S.C. 1001(a)(2). On appeal, defendant principally argued that the evidence presented at trial was insufficient to support his conviction of conspiracy to commit wire fraud in light of Skilling v. United States and that he was therefore entitled to a judgment of acquittal on the conspiracy count, or that he was entitled to a new trial on that count because the district court's instructions to the jury erroneously permitted conviction on an impermissible theory of honest-services fraud. The court concluded that the district court properly denied defendant's motion for judgment of acquittal where the evidence was sufficient to permit the jury to find that he conspired to commit honest-services wire fraud by means of having intermediary firms pay kickbacks to his father and brother in connection with Morgan Stanley's stock-loan transactions for which his father and brother performed little or no work. The district court's failure to anticipate the ruling in Skilling and instruct that the government was required to prove a scheme involving bribery or kickbacks was harmless beyond a reasonable doubt and did not affect the verdict. The court considered all of defendant's arguments on appeal and found them to be without merit. Accordingly, the court affirmed the judgment of the district court. View "United States v. DeMizio" on Justia Law

Defendant, convicted of making false statements regarding a credit application, appealed his sentence and order of restitution. Defendant forged the signatures of borrowers on an application for modification to a loan related to a certain property. Because the district court neither made factual findings concerning defendant's conduct nor explained which statutes defendant violated, the court was unable to determine whether defendant's dealings with the home buyers and sellers were criminal. The district court made no findings of fact as to whether defendant's dealings with the home buyers and sellers were part of the same common scheme or whether his criminal acts must have actually caused these losses. Further, the district court erred by awarding restitution based on relevant conduct that went beyond defendant's offense of conviction. An award of restitution based on losses not resulting from the offense of conviction is an error that is clear and obvious. In this instance, the error resulted in an award of more than half a million dollars against defendant. Accordingly, the court reversed defendant's sentence and restitution award and remanded to the district court for resentencing. View "United States v. Benns" on Justia Law

An asbestos survey showed that the Kankakee building contained 2,200 linear feet of asbestos‐containing insulation around pipes. The owner hired Origin Fire Protection, to modify its sprinkler system. O’Malley, who operated Origin, offered to properly remove the pipe insulation for a cash payment ($12,000) and dispose of it in a lawful landfill. O’Malley provided no written contract for the removal work, but provided a written contract for the sprinkler system. O’Malley and Origin were not licensed to remove asbestos. O’Malley hired untrained workers, who stripped dry asbestos insulation off the pipes using a circular saw and other equipment provided by O’Malley. The workers were given paint suits, simple dust masks, and respirators with missing filters. They stopped working after inhaling dust that made them sick. Asbestos insulation was packed into garbage bags and taken to abandoned properties and a store dumpster. The Illinois EPA discovered the dumping; Superfund contractors began cleanup. O’Malley attempted to mislead federal agents. O’Malley was convicted of removing, transporting, and dumping asbestos‐containing insulation. The Seventh Circuit affirmed, rejecting an argument that the government did not prove the appropriate mens rea for Clean Air Act violations. O’Malley argued that the government was required to prove that he knew that the asbestos in the building was a regulated type of asbestos. View "United States v. O'Malley" on Justia Law

After a jury trial, Defendants, Catherine Floyd and William Dion, were convicted of conspiracy to defraud the United States of payroll and income taxes and endeavoring to obstruct and impede the Internal Revenue Service (IRS). The First Circuit Court of Appeals affirmed, holding (1) there was sufficient evidence to support the convictions; (2) the district court did not err in failing to suppress certain evidence; (3) the district court did not err in denying Defendants’ motions for severance and in trying Defendants jointly with their coconspirator; (4) Defendants’ claim that the IRS’s failure to comply with the Federal Register Act engendered dismissal of some of the charges was without merit; and (5) the district court did not err in sentencing Dion. View "United States v. Dion" on Justia Law

Grimes, a former professor of engineering at Pennsylvania State University and the owner of three research companies, pled guilty to wire fraud, 18 U.S.C. 1343; false statements, 18 U.S.C. 1001; and money laundering, 18 U.S.C. 1957, based on his fraudulent conduct involving federal science grants. The plea agreement in indicated that his advisory sentencing range under the USSG would be 41 to 51 months and contained a waiver of Grimes’s direct and collateral appeal rights. Grimes and his attorney signed acknowledgements that they had read the agreement and that the plea was voluntary. During his plea colloquy, Grimes discussed the agreement with the judge and acknowledged that no one could guarantee how the court would sentence him. The district court sentenced Grimes to 41 months’ imprisonment, at the bottom of the Guidelines range of 41 to 51 months. The Third Circuit rejected Grimes’s argument that his appellate waiver was not knowing and voluntary because it contained a waiver of his right to collaterally challenge his guilty plea, conviction, or sentence that did not exempt Sixth Amendment ineffective assistance of counsel claims. Grimes claimed that he could not have knowingly and voluntarily agreed to waive his appellate rights because his trial counsel faced an inherent, actual conflict of interest in negotiating and advising him on the waiver. View "United States v. Grimes" on Justia Law

Ottaviano, believing himself not bound by U.S. tax law, marketed his views to others through his company, Mid-Atlantic, which offered financial products he claimed would help others avoid taxation and have the government pay their debts. Ottoviano made many representations about himself and the financial products. Customers paid Mid-Atlantic $3,500 each ($5,000 if purchased jointly) to participate. After a trial at which he represented himself, Ottaviano was convicted of conspiracy to defraud the U.S. under 18 U.S.C. 371, eight counts of mail and wire fraud under 18 U.S.C. 1341 and 1343, money laundering under 18 U.S.C. 1957, and two counts of tax evasion under 26 U.S.C. 51. The Third Circuit affirmed, noting overwhelming evidence of guilt and rejecting arguments that the district court denied him a fair trial in violation of his Fifth Amendment right to due process of law when it cross-examined him and violated his Sixth Amendment right to represent himself when it ordered him to leave the courtroom during a discussion about a letter he sent to the Treasury Secretary. View "United States v. Ottaviano" on Justia Law

The Fillers planned to demolish an unused Chattanooga factory. They knew the site contained asbestos, a hazardous pollutant under the Clean Air Act. Environmental Protection Agency regulations require removal of all asbestos before any demolition. Asbestos materials must be wetted, lowered to the ground, not dropped, labeled, and disposed of at an authorized site. Fillers hired AA, a certified asbestos surveying company, which estimated that it would cost $214,650 to remove the material safely. Fillers hired Mathis to demolish the factory in exchange for salvageable materials. Mathis was required to use a certified asbestos contractor. Mathis applied for an EPA demolition permit, showing an estimated amount of asbestos far less than in the AA survey. The agency’s asbestos coordinator contacted Fillers to verify the amount of asbestos. Fillers did not send the survey, but provided a revised estimate, far less than the survey’s estimate. After the permit issued, the asbestos contractor removed “[m]aybe, like, 1/100th” of the asbestos listed in the AA survey. Temporary laborers were hired, not equipped with protective gear or trained to remove asbestos. Fillers supervised. The work dispersed dust throughout the neighborhood. An employee of a daycare facility testified that the children were unable to play outside. Eventually, the EPA sent out an emergency response coordinator and declared the site an imminent threat. Mathis and Fillers were convicted of conspiracy, 18 U.S.C. 371, and violations of the Clean Air Act, 42 U.S.C. 7413(c). Fillers was also convicted of making a false statement, 18 U.S.C. 1001(a)(2), and obstruction of justice, 18 U.S.C.1519. The district court sentenced Mathis to 18 months’ imprisonment and Fillers to 44 months. The Seventh Circuit affirmed. View "United States v. Mathis" on Justia Law

Seidling admitted to knowingly mailing documents containing false information about service of process or publication of notice to small claims courts in Wisconsin and hiding the filings of the actions from named defendants. Seidling argued that the elements of the mail fraud statute could not be met because he never intended the false statements and misrepresentations to be communicated to the victims. The combined total intended loss amount was calculated as $370,220. None of the defendants suffered immediate pecuniary harm, but many experienced challenges in reopening the lawsuits, getting them dismissed, clearing their credit, and removing the fraudulent lawsuits from the system. The district court found him guilty of 50 counts of mail fraud in violation of 18 U.S.C. 1341. The Seventh Circuit affirmed, rejecting an argument that there was no convergence between the victims’ losses and the fraudulent statements. Although his false statements and misrepresentations were not made directly to the victims, they still satisfied the requisite materiality element of mail fraud. The court noted Seidling’s history of fraudulent behavior, his lack of remorse, and the extensive details of his scheme, and held that the district court did not err in denying a reduction in sentencing for acceptance of responsibility. View "United States v. Seidling" on Justia Law