Justia White Collar Crime Opinion Summaries

You, a U.S. citizen of Chinese origin, worked as a chemist, testing the chemical coatings used in Coca-Cola’s beverage cans. You was one of only a few Coca-Cola employees with access to secret BPA-free formulas. You secretly planned to start a company in China to manufacture the BPA-free chemical and received business grants from the Chinese government, claiming that she had developed the world’s “most advanced” BPA-free coating technology. On her last night as a Coca-Cola employee, You transferred the formula files to her Google Drive account and then to a USB drive. You certified that she had not kept any confidential information. You then joined Eastman, where she copied company files to the same account and USB drive. Eastman fired You and became aware of her actions. Eastman retrieved the USB drive and reported You to the FBI.You was convicted of conspiracy to commit theft of trade secrets, 18 U.S.C. 1832(a)(5), possessing stolen trade secrets, wire fraud, conspiracy to commit economic espionage, and economic espionage. The Sixth Circuit remanded for resentencing after rejecting You’s claims that the district court admitted racist testimony and gave jury instructions that mischaracterized the government’s burden of proof as to You’s knowledge of the trade secrets and their value to China. In calculating the intended loss, the court clearly erred by relying on market estimates that it deemed speculative and by confusing anticipated sales of You’s planned business with its anticipated profits. View "United States v. You" on Justia Law

Defendant-Appellant Derald Geddes was convicted by a jury of tax obstruction, tax evasion, and three counts of willfully filing false tax returns in the years 2011, 2012, and 2013. He was sentenced to five years in prison, three years of supervised release, and ordered to pay about $1.8 million in restitution. On appeal, he argued: (1) restitution was impermissibly ordered to begin during his imprisonment; (2) 16 conditions of supervised release not pronounced orally at sentencing improperly appeared in the written judgment; and (3) one of those 16 conditions, the risk notification to third parties condition, was invalid under United States v. Cabral, 926 F.3d 687 (10th Cir. 2019). After review, the Tenth Circuit Court of Appeals reversed the district court’s imposition of restitution to the extent it was ordered to be paid outside the term of supervised release and remanded for the court to modify the written judgment. The Court affirmed the district court’s imposition of the mandatory conditions of supervised release in the written judgment and reversed the imposition of the discretionary standard conditions of supervised release. The case was remanded for the district court to conform the written judgment to what was orally pronounced in a manner consistent with the Tenth Circuit's opinion. View "United States v. Geddes" on Justia Law

Hansen promised hundreds of noncitizens a path to U.S. citizenship through “adult adoption,” earning nearly $2 million from his fraudulent scheme. The government charged Hansen under 8 U.S.C. 1324(a)(1)(A)(iv), which forbids “encourag[ing] or induc[ing] an alien to come to, enter, or reside in the United States, knowing or in reckless disregard of the fact that such [activity] is or will be in violation of law.” The Ninth Circuit found Clause (iv) unconstitutionally overbroad, in violation of the First Amendment.The Supreme Court reversed. Because 1324(a)(1)(A)(iv) forbids only the purposeful solicitation and facilitation of specific acts known to violate federal law, the clause is not unconstitutionally overbroad. A statute is facially invalid under the overbreadth doctrine if it “prohibits a substantial amount of protected speech” relative to its “plainly legitimate sweep.” Here, Congress used “encourage” and “induce” as terms of art referring to criminal solicitation and facilitation (capturing only a narrow band of speech) not as those terms are used in ordinary conversation. Criminal solicitation is the intentional encouragement of an unlawful act, and facilitation—i.e., aiding and abetting—is the provision of assistance to a wrongdoer with the intent to further an offense’s commission. Neither requires lending physical aid; both require an intent to bring about a particular unlawful act. The context of these words and statutory history indicate that Congress intended to refer to their well-established legal meanings. Section 1324(a)(1)(A)(iv) reaches no further than the purposeful solicitation and facilitation of specific acts known to violate federal law and does not “prohibi[t] a substantial amount of protected speech” relative to its “plainly legitimate sweep.” View "United States v. Hansen" on Justia Law

Smagin won a multimillion-dollar arbitration award against Yegiazaryan stemming from the misappropriation of funds in Moscow. Because Yegiazaryan lives in California, Smagin, who lives in Russia, filed suit to enforce the award in California under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The district court froze Yegiazaryan’s California assets before entering judgment. While the action was ongoing, Yegiazaryan himself obtained an unrelated multimillion-dollar arbitration award and sought to avoid the asset freeze by concealing the funds.Smagin filed a civil suit under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1964(c), alleging Yegiazaryan and others worked together to frustrate Smagin’s collection on the judgment through a pattern of RICO predicate racketeering acts, including wire fraud, witness tampering, and obstruction of justice. The district court dismissed the complaint, finding that Smagin failed to plead a “domestic injury.”The Ninth Circuit and the Supreme Court disagreed. The “domestic-injury” requirement for private civil RICO suits is context-specific and turns largely on the facts alleged; it does not mean that foreign plaintiffs may not sue under RICO. The circumstances surrounding Smagin’s injury indicate that the injury arose in the United States. Smagin’s alleged injury is his inability to collect his judgment. Much of the alleged racketeering activity that caused that injury occurred in the United States. While some of Yegiazaryan’s actions to avoid collection occurred abroad, the scheme was directed toward frustrating the California judgment. The injurious effects of the racketeering activity largely manifested in California and undercut the orders of the California court. The Court rejected arguments that fraud is typically deemed felt at the plaintiff’s residence and that intangible property is generally located at the owner’s domicile as not necessarily supporting the presumption against extraterritoriality, with its distinctive concerns for comity and discerning congressional meaning. View "Yegiazaryan v. Smagin" on Justia Law

Susan Coons appealed a criminal judgment finding her guilty of forgery. During jury selection, the district court informed the jury panel that the potential jurors had the option to speak with the court “in private” in a separate room if they had information to share that might be embarrassing or intrusive. After general questioning of the panel, the court, Coons, the attorneys for both Coons and the State, and an officer met in a private room and conducted individual questioning of three prospective jurors on the record. Coons argued on appeal that this procedure for individual questioning constituted a trial closure and violated her right to public trial. The North Dakota Supreme Court concluded the district court’s findings were sufficient to show an overriding interest but that the court’s limited consideration of the scope of closure and failure to consider alternatives to closure were erroneous. "Although the court identified one interest that may support closure, it did not narrowly tailor to that interest." The Court concluded this error was obvious error and the judgment was reversed. View "North Dakota v. Coons" on Justia Law

Dubin was convicted of healthcare fraud, 18 U.S.C. 1347 after he overbilled Medicaid for psychological testing performed by his company. The prosecution argued that, in defrauding Medicaid, he also committed “[a]ggravated identity theft” under section 1028A(a)(1), which applies when a defendant, “during and in relation to any [predicate offense, such as healthcare fraud], knowingly transfers, possesses, or uses, without lawful authority, a means of identification of another person.” Dubin’s fraudulent Medicaid billing included the patient’s Medicaid reimbursement number. The Fifth Circuit affirmed Dubin’s aggravated identity theft conviction.The Supreme Court vacated. Under section 1028A(a)(1), a defendant “uses” another person’s means of identification “in relation to” a predicate offense when the use is at the crux of what makes the conduct criminal. Under the government’s view, section 1028A(a)(1) would apply automatically any time a name or other means of identification happens to be part of the payment or billing used in the commission of a long list of predicate offenses. The Court concluded that the use of a means of identification must entail using a means of identification specifically in a fraudulent or deceitful manner, not as a mere ancillary feature of a payment or billing method. The inclusion of “aggravated” in 1028A’s title suggests that Congress contemplated a particularly serious form of identity theft, not ordinary overbilling offenses. View "Dubin v. United States" on Justia Law

Appellant appealed his criminal convictions for forty-two counts of prescribing a controlled substance without a legitimate medical purpose under 21 U.S.C. Section 841(a) and two counts of money laundering under 18 U.S.C. Section 1957. Appellant argued that the evidence at trial was insufficient to convict him. He contends that each of his actual patients included in the indictment, despite the fact that they were ultimately pill-seekers addicted to oxycodone, had real ailments to which he properly responded in good faith, and the government did not prove otherwise. He also argues that the two undercover DEA agents presented real MRIs with real injuries, leading Appellant to believe he was treating them appropriately.   The DC Circuit reversed and remanded the district court’s judgment of conviction and sentencing. The court held that the evidence at trial was sufficient to convict Appellant, and the court affirmed the district court on its Napue and expert testimony rulings. However, the court reversed the district court on its Brady decision and remand this case for a new trial due to the government’s suppression of the favorable and material Pryor Reports and CCN Report. The court explained that although the Brady error is dispositive of this appeal, the remand will open the possibility of a new trial, and Appellant’s remaining arguments as to the evidentiary questions in the case are likely to arise again on retrial. View "USA v. Ivan Robinson" on Justia Law

Defendant, a physician assistant, evaluated patients and prescribed their physical therapy. The clinics where Defendant worked then billed the patients' health insurance both for the evaluations and for the subsequent physical therapy. The problem—for Defendant and for the health-insurance company—was that the “patients” didn’t really need the physical therapy and didn’t actually receive any treatment. When the health insurance company grew suspicious of the abnormally high rate of physical-therapy prescriptions from the clinics, it cooperated with an FBI investigation into the clinics. That investigation led a grand jury to indict Defendant on eight healthcare fraud-related charges. After a trial, a jury convicted Defendant on three counts. On appeal, Defendant raised several challenges to his conviction—sufficiency, evidentiary, and instructional—and to his sentence.   The Eleventh Circuit affirmed. The court held that sufficient evidence allowed the jury to find beyond a reasonable doubt that Defendant knew the bills were fraudulent. Moreover, the court wrote that the minimal leading questions Defendant points to here do not allow Defendant to overcome the overwhelming evidence of his guilt at trial. Moreover, the court reasoned that here, the district court sentenced Defendant to 48 months— below his Guidelines range of 51–63 months. Given that Defendant had previously participated in very similar schemes, been investigated by the Florida regulatory board for similar conduct, and had attempted to defraud the victim of millions of dollars, the court could not say that the 48-month sentence the district court imposed—slightly below the Guidelines range—was an abuse of discretion. View "USA v. Carlos Alfredo Verdeza" on Justia Law

The First Circuit affirmed the judgment of the district court convicting Defendant of conspiracy to commit wire fraud, wire fraud, and engaging in monetary transactions in property derived from specified unlawful activity and sentencing him to thirty years' imprisonment, holding that there was no error in the underlying sentence.Defendant pled guilty to participating in two fraud schemes - business email compromise and online romance. Defendant pled guilty to his convictions. The district court applied two enhancements to Defendant's sentence - one for the unauthorized use of a means of identification unlawfully to produce another means of identification and another for the substantial financial hardship caused to one victim. The First Circuit affirmed, holding that the district court did not clearly err or abuse its discretion in applying the sentencing enhancements. View "United States v. Iwuanyanwu" on Justia Law

After defendants Frayba and William Tipton pled guilty to committing insurance fraud, they were ordered to pay victim restitution to Nationwide Insurance Company of America (Nationwide). Later, Nationwide petitioned the trial court to convert the criminal restitution orders to civil judgments against both defendants. Defendants opposed. Relying on Penal Code1 section 1214, the trial court granted Nationwide’s petition and entered civil judgments against the defendants. On appeal, defendants argued the trial court erred because (1) Nationwide “failed to provide citation to any . . . authority supporting” conversion of the victim restitution orders to civil judgment; and (2) Nationwide’s petition lacked supporting evidence. The Court of Appeal found no reversible error and affirmed the trial court's judgment. View "Nationwide Ins. Co. of Am. v. Tipton" on Justia Law