Justia White Collar Crime Opinion Summaries

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Wilson Lucom was an American expatriate who wished to bequeath assets worth more than $200 million to a foundation established for impoverished children in Panama. Plaintiff, Lucom's attorney, filed suit against the Arias Group/Arias Family, Lucom's wife and step-children, under the Racketeering Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961-1968, alleging that the Arias Group participated in a criminal conspiracy to thwart plaintiff through acts of intimidation, extortion, corruption, theft, money laundering, and bribery of foreign officials, so that the Arias Group could steal the Estate assets for themselves. At issue on appeal was RICO's four-year statute of limitations on civil actions and the "separate accrual" rule. Under the rule, the commission of a separable, new predicate act within a 4-year limitations period permitted a plaintiff to recover for the additional damages caused by that act. The court concluded that none of the injuries in plaintiff's complaint were new and independent because all of his alleged injuries were continuations of injuries that have been accumulating since before September 2007. The court agreed with the district court that plaintiff had done little more than repackage his 2007 abuse of process complaint. Therefore, plaintiff's civil RICO complaint was untimely, and the district court did not err when it granted summary judgment in favor of the Arias Group. View "Lehman, et al. v. Lucom, et al." on Justia Law

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Iacona worked as a process server for D&L, an investigation service owned by Clymer and agreed to purchase the business. Clymer structured the arrangement so that she would retain ownership of the business while Iacona paid $2000 per month for two years toward a purchase price of $95,000, with a balloon payment of the remaining balance. The agreement contemplated a line of credit to pay a recurring monthly expense for an investigative research service. In reality, Iacona established several lines of credit in the name of D&L and in Clymer’s name. He misrepresented his position with the company and the company’s income. He had his sister represent herself as Clymer, used Clymer’s social security number and personal information, and incurred significant debt unrelated to the business. Iacona was convicted of fraud in connection with an access device and aggravated identity theft, 18 U.S.C. 1029(a)(2) and 1028A. The Seventh Circuit affirmed, rejecting a claim of prosecutorial misconduct. Where the evidence supports an inference that the defendant has lied, then a comment in closing argument as to his credibility, is a hard but fair blow, as long as the argument is based on the evidence and not a comment on the prosecutor’s personal opinion . View "United States v. Iacona" on Justia Law

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After losing his job as a stockbroker and financial advisor and his accompanying health insurance, Appellant applied for and received subsidized health insurance for several years. Russell represented on each application that he had no income to report and was unemployed, but Appellant was working under the table during those years. After a government investigation and an ensuing jury trial, Appellant was convicted of making false statements in connection with the payment of health care benefits. The First Circuit Court of Appeals affirmed, holding (1) the jury instruction on the definition of willfulness was not error; (2) the government presented sufficient evidence that Appellant's false statements were material to support the conviction; (3) the district court did not err in excluding certain testimony as state-of-mind hearsay; and (4) neither the prosecutor's statements during closing arguments nor his questions in eliciting testimony from a witness necessitated reversal. View "United States v. Russell" on Justia Law

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When a Cook County, Illinois property owner fails to timely pay property, the amount of tax past due becomes a lien on the property. The county sells tax liens at auctions, with bids stated as percentages of the taxes past due. The percentage bid, multiplied by the amount of past‐due taxes, plus any interest, is the “penalty” that the owner must pay to clear the lien. The lowest penalty wins the bid. When bids are identical, the auctioneer tries to award the lien to the bidder who raised his hand first. The rules permit only one agent of a potential buyer or related entities, to bid. Plaintiffs accused defendants of fraud for having multiple bidders representing a single potential buyer and sought damages under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1961 and for interference with a prospective business advantage under Illinois tort law. On remand, a jury found in favor of the plaintiffs and awarded damages of $7 million, to which the judge added $13 million in attorneys’ fees and expenses. The Seventh Circuit affirmed, describing the defendants as hyperaggressive adversaries who drove up the plaintiffs’ legal costs without justification. View "BCS Servs., Inc. v. BG Inv., Inc." on Justia Law

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Tragas bought information that is encoded in the magnetic strip on the back of credit and debit cards from overseas suppliers and re-sold the information to the Hunter brothers, who created “clone” gift and credit cards with which they purchased goods and bona fide gift cards. Tragas and the Hunters communicated online. Police discovered records of their conversations on the Hunters’ computer. Transcripts of the conversations were read at trial. Although the parties did not use names, a picture of Tragas appeared on the account and Tragas made purchases with card information exchanged during the conversations. Tragas purchased a house in Florida after a conversation about buying a house in Florida. As a result of the scheme, credit and debit card users and their financial institutions lost $2.18 million. Tragas was convicted of conspiracy to commit access device fraud offenses, 18 U.S.C. 1029(b); aiding and abetting unlawful activity under the Travel Act, 18 U.S.C. 1952(a); bank fraud, 18 U.S.C. § 1344; and wire fraud, 18 U.S.C. 1343, and sentenced to 300 months’ imprisonment. The Sixth Circuit affirmed the convictions, rejecting claims that the prosecutor improperly read evidence aloud, that the court should have given the jury a specific unanimity instruction, that the Travel Act convictions were not supported by sufficient evidence, and that her Vienna Convention rights were violated. The court remanded the sentence; the court used an incorrect version of the Guidelines. View "United States v. Tragas" on Justia Law

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After a jury trial, Defendants Salvatore DiMasi, the former Speaker of the Massachusetts House of Representatives, and Richard McDonough, a lobbyist, were convicted of several crimes, including honest-services fraud and conspiracy to commit honest-services fraud, resulting from a scheme to funnel money to DiMasi in exchange for political favors. The district court sentenced DiMasi to ninety-six months' imprisonment and McDonough to eight-four months' imprisonment. The First Circuit Court of Appeals affirmed the convictions and sentences, holding (1) the evidence was sufficient to support Defendants' convictions; (2) the trial court did not prejudicially err in instructing the jury; (3) the trial court did not err in its challenged evidentiary rulings; and (4) the trial court did not err in sentencing Defendants. View "United States v. McDonough" on Justia Law

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Stinson’s scheme began in 2006 when he founded a fund, Life’s Good, with an alleged purpose to originate mortgage loans. Stinson advertised a “risk free” 16 percent annual return to investors with individual retirement accounts. He hired telemarketers to “cold call” potential investors and later produced a fraudulent prospectus and worked through investment advisors. Stinson did not use investors’ money to make mortgage loans, but diverted it to various personal business ventures that employed his family and friends without requiring them to work. In 2010, the SEC initiated a civil enforcement action. Stinson was charged with wire fraud, 18 U.S.C. 1343; mail fraud, 18 U.S.C. 1341; money laundering, 18 U.S.C. 1957; bank fraud, 18 U.S.C. 1344; filing false tax returns, 26 U.S.C. 7206(1); obstruction of justice, 18 U.S.C. 1505; and making false statements, 18 U.S.C. 1001. The SEC’s analysis showed that Life’s Good solicited $17.6 million from at least 262 investors and returned approximately $1.9 million. Many individuals lost retirement savings. Stinson entered an open guilty plea. The district court sentenced him to 400 months and ordered restitution of $14,051,246. The Third Circuit vacated, finding that the court erroneously applied U.S.S.G. 2B1.1(b)(15)(A), which increases the offense level by two points when “the defendant derived more than $1,000,000 in gross receipts from one or more financial institutions.” The enhancement applies only when financial institutions are the source of a defendant’s gross receipts. View "United States v. Stinson" on Justia Law

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Greco worked at MetroHealth, a county-owned health-care provider in Cleveland, from 1997 until 2009, supervising independent contractors who worked on MetroHealth construction projects, selecting contractors for small-scale no-bid maintenance projects, and authorizing payment for their work. Greco used his authority to facilitate a bribery scheme set up by his boss and Patel, the vice-president of a construction company. The participants became nervous and Greco took action to hide his involvement in the scheme, but Patel contacted the government and confessed; in exchange for a reduced sentence, Patel provided detailed information about the scheme. Greco was convicted of bribery and conspiracy to commit bribery involving programs receiving federal funds (18 U.S.C. 666(a)(1)(B) and 371), violation of and conspiracy to violate the Hobbs Act (18 U.S.C. 1951), making false tax returns (26 U.S.C. 7206(1)), and conspiracy to commit mail fraud (18 U.S.C. 1349) and was sentenced to 112 months’ imprisonment and required to pay $994,734.84 in restitution to MetroHealth. The Sixth Circuit affirmed, rejecting arguments that the court improperly applied a 12-level enhancement based on an erroneous loss calculation; improperly applied a two-level enhancement for obstruction of justice; and imposed a substantively unreasonable sentence. View "United States v. Greco" on Justia Law

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Simon is a CPA, a professor of accounting, and an entrepreneur “whose business dealings require a flowchart to unravel” and included managing three foreign companies. For tax years 2003 through 2006, the Simon family received approximately $1.8 million from those companies and spent approximately $1.7 million. Simon paid just $328 in income taxes for 2005, and claimed refunds for the other years, while pleading poverty to financial aid programs in order to gain need‐based scholarships for his children at private schools. Charged with filing false tax returns, 26 U.S.C. 7206(1) and 18 U.S.C. 2; failing to file reports related to foreign bank accounts, 31 U.S.C. 5314, 5322 and 18 U.S.C. 2; mail fraud, 18 U.S.C. 1341; and financial aid fraud, 20 U.S.C. 1097 and 18 U.S.C. 2, Simon sought to demonstrate that money received from the entities was loaned to him and was not taxable or constituted partnership distributions, not taxable because they did not exceed his basis in the partnership. The Seventh Circuit affirmed Simon’s convictions, rejecting challenges to evidentiary rulings and jury instructions. View "United States v. Simon" on Justia Law

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Volpentesta owned and operated a construction business and used the company to defraud customers, investors, subcontractors, and the government. Charged with six counts of mail and wire fraud and 17 counts of federal tax violations, Volpentesta was represented by Federal Defender Gaziano. Due to the volume of discovery (about 11,000 pages of Bates-stamped discovery and 40 banker’s boxes of documents seized by the IRS), Gaziano ensured that Volpentesta could review the discovery electronically from the jail. When Volpentesta complained that the computer was too slow, Gaziano obtained an order for periodic transport to review the documents. Volpentesta eventually filed nine motions to substitute counsel, most related to the difficulty in reviewing discovery. The court ultimately allowed him to proceed pro se. Volpentesta was convicted, sentenced to a total of 133 months in prison, and ordered to pay more than one million dollars in restitution. The Seventh Circuit affirmed, rejecting arguments that he was deprived of his Sixth Amendment right to effective assistance of counsel; that his waiver of his right to counsel was not knowingly, voluntarily, and intelligently given; and that the district court erroneously denied his motions to continue the trial once he had decided to represent himself. View "United States v. Volpentesta" on Justia Law