Justia White Collar Crime Opinion Summaries

Plaintiff appealed from the district court's judgment dismissing her claims against her ex-husband and his brother for failure to state a claim and untimeliness. Plaintiff alleged that, in representing a certain investment as worthless and concealing the $5.5 million received on its account, defendants conspired in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1962(d), committed common law fraud, and breached fiduciary duties, and that her ex-husband was unjustly enriched. The court held that the district court's reasons for dismissing the fraud-based claims were erroneous and that the district court erred in ruling on the existing record that the RICO, common law fraud, and breach of fiduciary duty claims were time-barred. The court sustained the dismissal of the unjust enrichment claim as untimely. Accordingly, the court affirmed in part and vacated and remanded in part. View "Cohen v. Cohen" on Justia Law

In these two civil enforcement actions for securities fraud, various entities that were defrauded by defendants appealed from the district court's order approving initial pro rata distributions recovered from defendants and associated entities by the Receiver in accordance with the Plan proposed by the Receiver. Interested parties, 3M Group, contended principally that the district court should have rejected the proposed pro rata distributions because under the Plan, fraud victims who chose allegedly safer investments fare no better than victims whose investments were riskier. Interested party, KCERA, contended that the district court should have rejected the proposed Plan because it did not provide an adjustment for inflation to compensate for longer-term investors. The court considered all of the contentions of the 3M Group and KCERA in support of their respective appeals and found them to be without merit. Accordingly, the court affirmed the order. View "CFTC v. 3M Employee Welfare Benefit Assoc. Trust I, et al." on Justia Law

Defendant, the former national treasurer of the Phi Beta Sigma fraternity, pled guilty to a single count of bank fraud and received a sentence of the time he had already served on earlier convictions, plus five years of supervised release. Defendant had successfully appealed his convictions of multiple counts of bank fraud because the district court erred in admitting certain of his statements in evidence. On appeal, defendant contended that his term of supervised release should be calculated as having commenced when he was ordered released on his own recognizance pending his ultimately successful appeal. The court disagreed and concluded that defendant's term of supervised release did not commence until he was sentenced, on the charge to which he pled guilty, to time served plus five years of supervised release. Accordingly, the court affirmed the judgment. View "United States v. Davis" on Justia Law

Defendant was charged with fourteen counts of wire fraud in violation of 18 U.S.C. 1343 stemming from his scheme to defraud his employer. On appeal, defendant contended that the district court erred in denying his motions for judgment of acquittal, a new trial, and for an arrest of judgment. The court rejected defendant's argument that routine transmissions occurring during the interbank collection process were not made for the purpose of executing a scheme to defraud or in furtherance thereof; the district court erred in the jury instructions; there was insufficient evidence; and the wire fraud statute was unconstitutional. Accordingly, the court affirmed the conviction and sentence. View "United States v. Jinian" on Justia Law

Defendant, the former CFO of the National City Christian Church, was convicted of offenses related to his role in swindling the church out of more than $850,000, much of it through arranging an increase in the church's line of credit at Adams National Bank. On appeal, defendant contended that the government was required to prove that he stole certain individuals' identity information and that these individuals suffered individual harm beyond that suffered by the church. The court rejected defendant's argument that 18 U.S.C. 1028A required evidence that defendant stole the identity information at issue. The court also held that defendant's argument, that section 1028A applied only where the individuals whose means of identification were unlawfully used have suffered individual harm, lacked merit. Accordingly, the court affirmed the judgment. View "United States v. Reynolds" on Justia Law

Under the “Hyde Amendment,” a district court in criminal cases may award to a prevailing party a reasonable attorney’s fee and other litigation expenses, if the position of the United States was vexatious, frivolous, or in bad faith, unless the court finds special circumstances, 18 U.S.C. 3006A. The district court denied such an award in a case involving four counts of conspiring and attempting to commit extortion, 18 U.S.C. 951(a) & 2 (Hobbs Act), and two counts of traveling in interstate commerce to promote and facilitate bribery, 18 U.S.C. 1952(a)(3) & 2 (Travel Act). The government alleged that Manzo, a candidate for mayor of Jersey City, sought cash payments from Dwek, an informant posing as a developer, and that, in exchange, Manzo indicated he would help Dwek with matters involving Jersey City government. The district court dismissed each Hobbs Act count because Manzo was not a public official at the time of the conduct. The Third Circuit affirmed. The court later held that receipt of something of value by an unsuccessful candidate in exchange for a promise of future official conduct does not constitute bribery under the New Jersey bribery statute and dismissed all remaining charges. The Third Circuit affirmed the denial of fees. View "United States v. Manzo" on Justia Law

Anchor Mortgage Corporation and its CEO, Munson, were convicted under the False Claims Act, 31 U.S.C. 3729(a)(1), of making false statements when applying for federal guarantees of 11 loans. The district court imposed a penalty of $5,500 per loan, plus treble damages of about $2.7 million. The Seventh Circuit affirmed, rejecting an argument that defendants not have the necessary state of mind, either actual knowledge that material statements were false, or suspicion that they were false plus reckless disregard of their accuracy. The court noted that Anchor submitted bogus certificates that relatives had supplied the down payments that the borrowers purported to have made, when it knew that neither the borrowers nor any of their relatives had made down payments and represented that it had not paid anyone for referring clients to it, but in fact it paid at least one referrer. View "United States v. Munson" on Justia Law

Belmont did not pay subcontractors and suppliers on some projects. Gad, its CEO, disappeared. West Bend Mutual paid more than $2 million to satisfy Belmont’s obligations and has a judgment against Belmont, Gad, and Gizynski, who signed checks for more than $100,000 on Belmont’s account at U.S. Bank, payable to Banco Popular. Gizynski told Banco to apply the funds to his outstanding loan secured by commercial real estate. Banco had a mortgage and an assignment of rents and knew that Belmont was among Gizynski’s tenants; it did not become suspicious and did not ask Belmont how the funds were to be applied. Illinois law requires banks named as payees to ask the drawer how funds are to be applied. The district judge directed the parties to present evidence about how Belmont would have replied to a query from the Bank. Gizynski testified that Gad, as CEO, would have told the Bank to do whatever Gizynski wanted. The judge found Gizynski not credible, but that West Bend, as plaintiff, had the burden of production and the risk of non-persuasion. The Seventh Circuit affirmed, rejecting an argument based on fiduciary duty, but reversed an order requiring Banco to pay West Bend’s legal fees View "W. Bend Mut. Ins. Co v. Belmont St. Corp." on Justia Law

Defendant-Appellant George David Gordon was a former securities attorney convicted of multiple criminal charges relating to his alleged participation in a "pump-and-dump" scheme where he (along with others) violated the federal securities laws by artificially inflating the value of various stocks, then turning around and selling them for a substantial profit. The government restrained some of his property before the indictment was handed down and ultimately obtained criminal forfeiture of that property. On appeal, Defendant raised multiple issues relating to the validity of his conviction and sentence, and the propriety of the government’s conduct (both before and after trial) related to the forfeiture of his assets. In the end, the Tenth Circuit found no reversible error and affirmed Defendant's conviction and sentence, as well as the district court’s forfeiture orders. View "United States v. Gordon" on Justia Law

In 2003, Congress created Health Savings Accounts to help people with high-deductible health plans save for health care costs by providing tax-preferred treatment for money saved for future medical expenses, 26 U.S.C. 223. Banas and others started a company that created a suite of software products that allowed savers to manage their Health Savings Accounts online. By 2009, the company had more than 100 employees. Venture capital and private equity firms thought the company was a solid investment and bought stock, but the company had provided counterfeit financial documents and had even “faked” customer calls. The owners started raiding clients’ Health Savings Accounts. By the time Banas and Blackburn were stopped, they had misappropriated more than $18,000,000 in client funds. Banas admitted his guilt, accepted responsibility for his actions, and has worked to secure some degree of restitution. The district judge sentenced Banas to 160 months of imprisonment for wire fraud, 18 U.S.C. 1343, well below the Guidelines range. The Seventh Circuit affirmed, particularly noting the impact of the crime on victims. View "Unted States v. Banas" on Justia Law