Justia White Collar Crime Opinion Summaries

Three individuals (once known as the "Bad Boys' of Chicago Arbitrage") established "Loop" as a closely-held corporation for their real estate holdings in 1997. A family trust for Loop's corporate secretary (50% owner) owns Banco, which gave Loop a $9.9 million line of credit in 2000. On the same day, Loop subsidiaries entered into a participation agreement on the line of credit through which they advanced $3 million to Loop, giving the subsidiaries senior secured creditor status over Loop's assets. The now-creditor subsidiaries were also collateral for funds loaned Loop. In 2001 Loop received a margin call from Wachovia. The Banco-Loop line of credit matured and Loop defaulted. Banco extended and expanded the credit. Loop’s debt to Wachovia went unpaid. Loop invested $518,338 in an Internet golf reservation company; moved real estate assets to Loop Properties (essentially the same owners); and paid two owners $210,500 “compensation” but never issued W-2s. Wachovia obtained a $2,478,418 judgment. The district court pierced Loop’s corporate veil, found the owners personally liable, and voided as fraudulent Banco’s lien, the “compensation” payments, and payments to the golf company. The Seventh Circuit affirmed, except with respect to the golf company. View "Wachovia Secs., LLC v. Banco Panamericano, Inc." on Justia Law

Romasanta worked in Chicago as an expediter, helping developers obtain construction permits. In testifying against Curescu, a developer, she admitted bribing 25 to 30 city employees between 2004 and 2007. She paid an $8,000 bribe to a zoning inspector on behalf of Curescu. Convicted of bribery of an agency that receives federal assistance, 18 U.S.C. 666 and conspiracy, 18 U.S.C. 371, Curescu was sentenced to six months and the zoning inspector to 41 months in prison. The Seventh Circuit affirmed, rejecting various challenges to testimony and to the court's refusal to severe the cases. View "United States v. Olivella" on Justia Law

Sanchez rose through the ranks of Chicago politics and became Commissioner of Streets and Sanitation. He was a leader of the Hispanic Democratic Organization, and, acting as a city official and a political operative, participated in a scheme to award city jobs to campaign workers in violation of orders and consent decrees, known as the Shakman decrees, enjoining the city from patronage hiring for most positions. Del Valle managed campaigns staffed by Sanchez's branch of the HDO and had significant influence in choosing individuals for positions. On retrial, Sanchez was convicted of mail fraud, 18 U.S.C. 1341 and Del Valle of perjury, 18 U.S.C. 1623. The Seventh Circuit affirmed, rejecting arguments concerning the court's handling of testimony about driving while intoxicated and arguing with a police officer; denial of severance; and the government's failure to prove economic loss. City jobs are money or property for purposes of mail fraud and the indictment sufficiently alleged deprivation of money or property.View "United States v. Delvalle" on Justia Law

Defendant accepted $1,000 and Mets tickets for helping a consulting company obtain a contract with the county for temporary employment of individuals for clean-up after a 2006 flood. He pled guilty to violating 18 U.S.C. 666(a)(1)(B). The presentence report recommended a sentence of 15 to 21 months' imprisonment. USSG 2C1.2(a)(1) set the base offense level at 11; the report added two levels under 2C1.2(b)(1) because the offense involved more than one gratuity and four levels under 2C1.2(b)(3) because the offense involved a public official in a high-level decision-making or sensitive position. It subtracted three levels for acceptance of responsibility (3E1.1). The district court imposed a sentence of 15 months' imprisonment. The Third Circuit affirmed. Defendant could not hire or fire; could not bind the county; could not act officially on the county's behalf; had administrative, not policymaking, duties; and reported to superiors, who reported to County Commissioners. The high-level government official enhancement was not applied to his superior, also implicated in the bribery scheme. Defendant was, however, responsible for the human resource department. View "United States v. Richards" on Justia Law

In 2009, fire severely damaged the insureds' home. They submitted a claim to under their homeowners’ policy the next day. The insurer began requesting documents, authorizations, and interviews and learned that the insureds had at least two businesses, held numerous personal and business accounts, and were involved in several lawsuits. A fire investigator concluded that the fire was intentionally set. The insurer requested additional documents: detailed phone records, bank histories, tax returns, and mortgage information and reminded the insureds that proof of loss was due by May 2. The insurer granted extensions; on the day of the final deadline the insureds delivered almost 1,000 pages of documents. Several months later, the insurer had not received most of the requested documents or an explanation why they could not be produced. After initially acknowledging their failure to produce the documents, the insureds attempted to impose a deadline for settlement of the $2.6 million claim. The district court entered summary judgment for the insurer in the insureds' breach of contract suit. The Seventh Circuit affirmed. The insureds failed to perform the specific "duties after loss" listed in the policy.View "Foster v. State Farm Fire and Cas. Co." on Justia Law

In this case, an insurance agency had a contract with an insurance company that allowed the agency to commingle collected insurance premiums with its other funds in its general operating account. The government contended that the premiums collected by the agency were the property of the insurance company and held "in trust" by the agency; it alleged that when the funds were not remitted but used for other purposes, they were embezzled by the agency's treasurer, defendant. Defendant was charged with ten counts of embezzlement of insurance premiums in violation of 18 U.S.C. 1033(b)(1) and one count of conspiracy to commit embezzlement. The court held that under long-standing Arizona law, the contract between the agency and the company, which permitted agency commingling, required monthly agency payments whether premiums were collected or not, and created a right of interest on late payments, created a creditor-debtor relationship, not a trust. The agency had contractual and fiduciary duties to the company, but was not a trustee. Because the funds in question were not held "in trust" by the agency as a matter of law, an essential element of embezzlement was lacking. Therefore, the court reversed the denial of defendant's motion for judgment of acquittal. View "United States v. Lequire" on Justia Law

Following published stories about an investigation of their business practices, principals of a waste-management company improved their chances of winning a bid for a contract to refurbish garbage carts for the City of Chicago by slashing their bid. They encouraged other companies to bid in hopes of being hired as a subcontractor if another company won the bid. Each bidder had to certify that it had not entered into any agreement with any other bidder or prospective bidder relating to the price, nor any agreement restraining free competition among bidders. The company won the bid, and after a Justice Department investigation for antitrust violations, the principals were convicted of mail and wire fraud. The Seventh Circuit reversed, reasoning that the purpose of "colluding" with other potential bidders had not been to prevent them from underbidding but to provide insurance against the bid being rejected based on the earlier investigation. There was no harm as a result of the company encouraging additional bidders. View "United States v. Fenzl" on Justia Law

Hardesty, a resident of Utah, solicited Schneider, a physician and resident of Ohio, for an investment involving purchase of medical-malpractice insurance from Hardesty's foreign-based company. The investment was to provide federal-tax benefits and make him a partial owner of an insurance company. Hardesty's $500,000 was transferred and eventually frozen because of SEC proceedings against a Ponzi scheme involving more than $100,000,000. Hardesty hired Nelson, a Utah attorney, to recover the funds. Nelson corresponded with Schneider and the defendants, but did not recover the money. Schneider sued multiple defendants, including Hardesty and Nelson, alleging fraud and misrepresentation. Schneider alleged that letters written by Nelson contained false statements by which Nelson furthered the scheme to defraud Schneider. The district court dismissed for lack of jurisdiction. The Sixth Circuit reversed. The district court improperly applied the preponderance-of-the-evidence standard, as opposed to the prima facie standard, in determining whether Schneider pleaded facts sufficient to establish personal jurisdiction over Nelson, but the exercise of jurisdiction comports with due process and is proper under Ohio's long-arm statute even under the more demanding standard. View "Schneider v. Hardesty" on Justia Law

While working as office manager and executive assistant for three successive businesses, defendant embezzled more than $240,000 by making personal purchases on company credit cards, falsifying expense reimbursement claims, and depositing corporate checks in her personal account. She pleaded guilty to one count of wire fraud, 18 U.S.C. 1343, reserving the right to challenge a recommendation of a two-level sentencing increase for abuse of a position of trust, U.S.S.G. 3B1.3. The district court accepted the recommendation, which resulted in a guidelines range of 27 to 33 months, and imposed a sentence of 27 months. The Seventh Circuit affirmed, acknowledging that it was a "borderline" case for abuse-of-trust enhancement, and deferring to the trial court findings. View "United States v. Bradshaw" on Justia Law

Defendant pled guilty to several counts of mail and wire fraud, was convicted by a jury of violations of federal campaign finance law, and was sentenced to 292 months in prison. Defendant appealed the resulting judgment of conviction on various grounds, including that the loss calculated for purposes of the Sentencing Guidelines improperly included promised returns on defendant's victims' investments. The court affirmed the district court in all respects, and held that (1) defendant waived any statute of limitations challenge to the indictment by pleading guilty; (2) the district court's admission of the Ponzi scheme evidence was not plain error; (3) the district court did not err by calculating the intended loss amount under the Guidelines to include the loss of putative profits that victims reinvested in defendant's Ponzi scheme; (4) the district court did not abuse its discretion when weighing the factors relevant to defendant's sentence; and (5) under the circumstances of the case, the appointment of a new attorney for sentencing was not required. View "United States v. Hsu" on Justia Law