Justia White Collar Crime Opinion Summaries

Defendant appealed from a judgment in which the district court found him guilty of four counts of aiding in the preparation of false tax returns in violation of 26 U.S.C. 7206(2). At issue was whether the district court unlawfully based its verdict on the guilty pleas of co-defendants, which were not evidence in the case, thereby depriving defendant of his due process right to a fair trial; whether the district court improperly credited testimony by the government's key witness that defendant contended was false; and whether the evidence was insufficient to prove that defendant knew that the tax returns he prepared were fraudulent and that he willfully violated section 7206(2). The court held that the district court's erroneous references to the unadmitted guilty pleas of his co-defendants constituted harmless error where the evidence overwhelmingly supported the conclusion that defendant deliberately avoided learning of materially false representations on the tax returns at issue. The court also held that the district court did not err in its consideration of a key witness' testimony where the the testimony was the product of reliable principles and methods. The court further held that the evidence was sufficient to support defendant's conviction where a reasonable trier of fact could conclude the defendant purposefully "closed his eyes" to large accounting discrepancies, which strongly indicated that the tax forms he prepared during the years in question contained materially false financial information.

Defendants, Don Eugene Siegelman, the former Governor of Alabama and Richard Scrushy, the founder and former Chief Executive Officer of Health South Corporation ("HealthSouth"), were convicted of federal funds bribery and five counts of honest services mail fraud and conspiracy. Siegelman was also convicted of obstruction of justice. The Supreme Court of the United States remanded to the court for reconsideration in light of Skilling v. United States. Defendants raised numerous issues of error related to their convictions and sentences. The court affirmed Count 3 and 4 for Federal Funds Bribery and held that there was no reversible error in the bribery instructions given by the district court and that the evidence of a corrupt agreement between defendants was sufficient to permit a reasonable juror to find quid pro quo. The court affirmed Count 5, 6, and 7 for Honest Services Mail Fraud and Conspiracy and held that any error in the honest services instructions was harmless. The court reversed Count 8 and 9 for Self Dealing where there was lack of evidence from which the jury could infer that Siegelman knowingly agreed to or participated in a broader scheme that included Scrushy's alleged subsequent dealing and where, in light of Skilling, the evidence was insufficient to show self-dealing. The court affirmed Count 17 for Obstruction of Justice and held that the district court did not abuse its discretion in admitting evidence that a certain statement at issue met the United States v. Caraza standard. The court also held that the district court did not abuse its discretion in holding that there was no reasonable possibility of prejudice to defendants that arose out of the exposure of the jury to certain extrinsic evidence and denied the motion for new trial. The court held that exposure of the jurors to media reports about the trial was harmless in view of the limited and incidental nature of the exposure and the substantial evidence of defendants' guilt. The court also agreed with the district court that defendants were not entitled to a new trial where there was no possibility that defendants suffered prejudice from any premature deliberations, discussion of penalty, or deliberation with fewer than all the members of the jury present. The court further held that Scrushy's recusal motion was untimely and without merit; that defendants' claims regarding the Middle District of Alabama's jury selection procedures were without merit and did not entitle them to any relief; and that Siegelman's upward departure in sentencing was not an abuse of discretion.

This mandamus proceeding arose out of the public-corruption prosecution centering around former Dallas City Council Member Don Hill and various other members of Dallas city government who conspired to solicit and accept things of value in exchange for providing official assistance to Brian Potashnik in his pursuit of city approval and funding for various affordable-housing development projects. One of the things of value Mr. Hill and his coconspirators solicited was the award of construction subcontracts on Mr. Potashnik's developments to Ronald Slovacek. Petitioners, competitors of Mr. Potashnik who were seeking city approval of their own affordable-housing developments, sought restitution alleging that Mr. Slovacek and his coconspirators had rendered petitioners' $1.8 million investment worthless. At issue was whether the court should grant petitioners' writ of mandamus directing the district court to recognize that petitioners were crime victims within the meaning of the Crime Victims' Rights Act ("CVRA"), 18 U.S.C. 3771(d)(3), and the Mandatory Victims Restitution Act ("MVRA"), 18 U.S.C. 3663A. The court denied the petition and held that the district court was not clearly and indisputably wrong to find that petitioners failed to prove that they had been directly and proximately harmed by Mr. Slovacek's criminal conduct. The court also denied each of petitioners' pending motions.

The government filed a complaint for forfeiture of the money claimant consolidated into a single bank account at Bank of America pursuant to 31 U.S.C. 5317(2), 5324, after claimant made eight separate currency transactions at two banks and deposited a total of $79,650 in cash. At issue was whether the government was required to prove that claimant had actual knowledge of the banks' obligation to report currency transactions in excess of $10,000 to the government and whether the magistrate judge erred when it issued an order reducing the forfeiture amount on Eight Amendment grounds from $79,650 to $50,000. The court held that the totality of the circumstances, and in particular the compelling evidence of prior structuring activities, was more than sufficient to justify the court's findings in support of the section 5324 offenses. Therefore, the court rejected claimant's cross-appeal and affirmed the judgment that he committed the offense of currency structuring. The court vacated the order reducing the forfeiture judgment and remanded, holding that the magistrate judge's proportionality analysis was erroneously conducted where it predicated the proportionality analysis on an incorrect understanding that the authorized penalty was the advisory fine of $60,000 when the correct authorized penalty was the statutory maximum fine of $500,000.

The doctor was convicted of conspiring to defraud the government and Medicare fraud (42 U.S.C. 1320a) for accepting a salary from the hospital in return for referring patients and sentenced to 72 months imprisonment followed by two years of supervision and to payment of $497,204 in restitution. The Seventh Circuit affirmed. The court did not err in refusing to admit substantive reports from meetings or the minutes of the meetings, although it allowed the government to use the minutes to establish the doctor's non-attendance at meetings. The doctor was allowed to argue that certain reports concerning his services were made and tendered during the meetings. Upholding a jury instruction, the court stated that nothing in the Medicare fraud statute implies that only the primary motivation for remuneration is to be considered and that the conviction is valid even if the payments were, in part, compensation for services. Findings concerning the level of loss supported the sentence.

The defendant, convicted of financial crimes involving his operation of an insurance brokerage, was sentenced to serve 121 months, ordered to pay $841,527 in restitution, and (following a remand) ordered to forfeit $15 million plus his interest in the racketeering enterprise. In 2010 the Supreme Court decided Skilling v. United States, limiting the "honest services fraud" theory to apply only to a defendant involved in either bribery or a kickback scheme. The defendant appealed the inclusion of "honest services" fraud in jury instructions at his trial. The Seventh Circuit affirmed, holding that the jury would have convicted the defendant without the instruction, but remanded for consideration of whether an honest services conviction affected sentencing.

The defendant referred two investors to a friend who invested their money in a company of which the defendant and his friend were directors. They were defrauded of their entire $290,000 investment. The defendant received nearly $20,000 of the misappropriated funds. He was convicted on ten counts of wire fraud and the district court sentenced him to 37 monthsâ imprisonment. The First Circuit affirmed. A reasonable jury could conclude, beyond a reasonable doubt, that the defendant participated in his friend's wire fraud scheme with knowledge and intent to defraud the investors. The court properly imposed a two-level vulnerable victim sentence enhancement, noting that a victim was an elderly widow who died before the trial, and properly imposed a loss enhancement because the amount of the reasonably foreseeable pecuniary harm was between $200,000 and $400,000.

After pleading guilty to mail fraud, 18 U.S.C. 1341, the defendant challenged a two-level increase in his sentence, based on use of "sophisticated means" and theft of more than $1 million. The Seventh Circuit affirmed. Over the course of seven years, the defendant bilked at least 17, mostly elderly or financially distressed, victims out of more than $2 million; he posed as an attorney, a CPA, and a real estate agent and prepared "significantly more elaborate than usual" fraudulent instruments.

The owner of a mortgage company was sentenced to 96 months for fraud and money laundering. The Sixth Circuit affirmed, holding that the conviction was supported by substantial evidence. Evidence of a government witness's prior inconsistent statements that referred to a conviction more than 10 years prior was properly excluded; the trial judge gave the defense proper latitude to impeach the witness. The sentence was properly enhanced for attempting to obstruct the investigation, use of "sophisticated means," and acting as the organizer or leader.

AdSurfDaily, Inc., an internet marketing company incorporated and controlled by appellant, appealed a default judgment and final order of forfeiture after they withdrew their claims in this civil forfeiture action where federal agents seized $80 million of the company's bank account funds as part of an investigation of the company for wire fraud and money laundering. The government filed a complaint for forfeiture in rem against the funds and two pieces of real property that had been purchased with AdSurfDaily money. At issue was whether the district court violated appellants' due process rights when it failed to stay the forfeiture action pending the outcome of a parallel criminal proceeding and when the district court denied them an opportunity to challenge the forfeiture on the merits when it refused to reinstate their withdrawn claims. The court held that the district court did not violate appellants' due process rights when they never asked for a stay and where due process did not require the government to provide a person with the opportunity to challenge the seizure of property he had voluntarily forfeited. The court also held that the district court did not abuse its discretion in denying a motion to reinstate withdrawn claims when the withdrawal was the product of a free, deliberate choice.