Justia White Collar Crime Opinion Summaries

Several third-party payors who covered prescriptions for Avandia, a diabetes medication manufactured by GlaxoSmithKline LLC, brought a putative class action alleging that the company misrepresented Avandia’s cardiovascular risks and benefits. They claimed these misrepresentations led health care providers to prescribe Avandia more frequently than less expensive alternatives, causing the payors to reimburse for prescriptions that otherwise would not have been issued. The plaintiffs sought class certification on behalf of entities that paid for Avandia prescriptions during a specified period.The United States District Court for the Eastern District of Pennsylvania previously reviewed this case. It denied GlaxoSmithKline’s motion to dismiss the plaintiffs’ Racketeer Influenced and Corrupt Organizations Act (RICO) claim, and the Third Circuit affirmed that denial. Later, the District Court granted summary judgment to GlaxoSmithKline on certain claims, but the Third Circuit reversed in part and remanded for further proceedings. Most recently, the District Court granted class certification, finding the class ascertainable and concluding that common issues would predominate regarding causation. It relied on evidence of a common scheme to deceive and statistical analyses showing marketing campaigns increased prescriptions.The United States Court of Appeals for the Third Circuit reviewed the District Court’s class certification. The Third Circuit held that while the class is ascertainable, the record does not yet demonstrate that common questions predominate on causation. The court clarified that plaintiffs in pharmaceutical fraud RICO class actions may use statistical evidence to prove causation, but such evidence must establish causation, not merely correlation. Because the plaintiffs’ statistical evidence failed to satisfy this standard, the Third Circuit vacated the District Court’s class certification and remanded for further fact-finding on predominance under the clarified standard. View "In re Avandia Marketing" on Justia Law

Between December 2020 and April 2021, a licensed accountant from Mexico participated in a complex conspiracy to launder over $5.1 million in criminal proceeds. She acted as a broker, converting U.S. cash to Bitcoin for a fee, and coordinated with multiple coconspirators who picked up, deposited, and tracked cash, and purchased Bitcoin for clients. Her involvement was central to directing and managing the steps of the operation, including overseeing cash pickups, maintaining ledgers, directing the conversion of funds, and serving as the sole contact with clients for Bitcoin wallet information. The scheme came to light following an investigation into a theft from a Wisconsin business.After pleading guilty to conspiracy to commit money laundering, she entered a binding plea agreement in the United States District Court for the Western District of Wisconsin, limiting her sentence to between three and six and a half years. The initial presentence report did not recommend a sentencing enhancement for a managerial or supervisory role. However, after the government’s objection, the probation office revised the report to include a three-level enhancement under the United States Sentencing Guidelines. The district court adopted this enhancement, finding that she played a managerial role, and sentenced her to 60 months in prison, which was below the calculated guidelines range but within the plea agreement’s bounds.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed whether the district court erred in applying the managerial enhancement and in failing to address sentencing disparities among coconspirators. The appellate court held that the record supported the enhancement, as she exercised sufficient control and coordination over others. The court further found that the sentence was reasonable and not procedurally flawed, affirming the judgment. View "USA v. Mendoza-Rubio" on Justia Law

A police officer in Savanna, Oklahoma, was accused of sexual assault during a traffic stop. After pulling over a vehicle for speeding, the officer activated both his body and dash cameras, then manually deactivated them before ordering a nineteen-year-old passenger to sit in his patrol car, where he sexually assaulted her. The cameras’ deactivation resulted in incomplete or soundless recordings of the incident. Subsequent investigation confirmed the officer had intentionally turned off both cameras during the stop. The victim promptly reported the assault, and the officer’s conduct was corroborated through physical evidence and analysis of the camera devices.The United States District Court for the Eastern District of Oklahoma charged the officer with deprivation of rights under color of law and two counts of falsifying records. After granting two continuances and denying a third, the court held a jury trial. The officer was convicted on all counts and sentenced to concurrent terms of 480 months for deprivation of rights and 240 months for falsifying records. The presentence investigation established the advisory guidelines range, and the district court adopted its findings without objection.On appeal to the United States Court of Appeals for the Tenth Circuit, the officer argued the district court erred in denying his third continuance, that manually deactivating the cameras did not violate the falsification statute, and that his sentence was substantively unreasonable. The Tenth Circuit rejected each argument. The court held that the district court did not abuse its discretion in denying the continuance, found that intentionally deactivating the cameras to prevent the creation of a complete record constituted falsification under 18 U.S.C. § 1519, and ruled that the sentence imposed was within the range of rationally available choices. The conviction and sentence were affirmed. View "United States v. Smith" on Justia Law

Charles Littlejohn, seeking to influence the outcome of a presidential election and raise support for tax policy changes, obtained employment as a consultant with the Internal Revenue Service in 2017 for the purpose of unlawfully accessing and leaking confidential tax returns. He stole and leaked the tax returns of then-President Donald Trump, as well as the tax records of approximately 7,600 wealthy Americans and 600 entities. Littlejohn provided these records to media outlets, including the New York Times and ProPublica, resulting in substantial reputational, economic, and personal harm to numerous victims. He attempted to conceal his actions by destroying evidence and deleting files. The leaks caused ongoing distress, with unpublished data still held by ProPublica, leaving victims fearful of further exposure.The United States District Court for the District of Columbia accepted Littlejohn’s guilty plea to one count of unauthorized disclosure under 26 U.S.C. § 7213(a)(1). The court calculated a Sentencing Guidelines range of one to one-and-a-half years, after considering an upward departure due to the scope and harm of the offense. At sentencing, the court imposed the statutory maximum of five years in prison, three years of supervised release, and monetary penalties, citing the targeted nature of the offenses, elaborate planning, and continuing harm to victims.Reviewing the case, the United States Court of Appeals for the District of Columbia Circuit examined procedural and substantive challenges to the sentence. The court found no procedural error, determining the district court did not predetermine the sentence, rely on erroneous facts, improperly consider outside influence, or fail to explain its variance. Substantively, the appellate court concluded the sentence was reasonable given the gravity and scope of the offenses. The court affirmed the district court’s judgment, holding that both the procedural and substantive aspects of Littlejohn’s sentence satisfied legal standards. View "USA v. Littlejohn" on Justia Law

Two brothers residing in Massachusetts used fake passports to open numerous bank accounts between 2019 and 2020, including accounts in their own names, names of fabricated individuals, and a fictitious company. These accounts were used to deposit funds acquired from romance scams targeting vulnerable victims and unemployment scams involving stolen identities. The brothers exchanged account information with each other and with overseas collaborators, and withdrew funds using debit cards linked to the fraudulent accounts. The FBI investigated after being alerted by victims, ultimately searching the brothers’ residences and storage facilities, where they found fake identification documents and related materials.A grand jury indicted the brothers in 2021 on charges of bank fraud, conspiracy to commit bank fraud, and conspiracy to commit money laundering. After an eight-day jury trial in the United States District Court for the District of Massachusetts, both were convicted on all counts. The district court sentenced Henry to seventy-eight months and Osaretin to seventy-two months of imprisonment, both with two years of supervised release. Restitution was deferred pending a hearing, after which the district court ordered both defendants to pay $615,805.65 in restitution, jointly and severally. The brothers appealed both their convictions and the restitution order.The United States Court of Appeals for the First Circuit reviewed the consolidated appeals, addressing challenges to the sufficiency of the evidence, jury instructions, sentencing enhancements, and restitution orders. The court held that the evidence was sufficient to support the convictions for bank fraud and conspiracy, that the jury instructions were not plainly erroneous or misleading, and that the sentencing enhancement for possession or use of authentication features was appropriate. The court also concluded that the district court had jurisdiction to issue the restitution order and did not err in making the defendants jointly and severally liable. Accordingly, the First Circuit affirmed the convictions and restitution orders. View "US v. Omoruyi" on Justia Law

A company operating as a mortgage lender applied for and received a Paycheck Protection Program (PPP) loan during the COVID-19 pandemic. The company’s PPP loan was later forgiven. A private party, acting as a qui tam relator under the False Claims Act (FCA), alleged that the company and its chief executive officer made several false statements in their loan application and forgiveness process. The key allegations were that the company was ineligible for PPP funds as a financial business primarily engaged in lending, that it misrepresented its use and need for the loan, and that it falsified the number of employees to increase the loan amount. The relator argued that these misrepresentations led the government to approve and forgive the loan improperly.Previously, the United States District Court for the Southern District of California dismissed the relator’s amended complaint. The district court found that the FCA’s public disclosure bar applied, reasoning that the necessary information supporting the ineligibility allegation was already publicly available on a government website, specifically concerning the company’s business classification. The district court also concluded that the relator’s allegations regarding the inflated employee count were speculative. The relator was denied leave to further amend the complaint, on the basis that amendment would be futile.The United States Court of Appeals for the Ninth Circuit reviewed the case and held that the public disclosure bar did not apply because the information on the government website was not “substantially the same” as the relator’s allegations, and the company’s own website did not qualify as “news media” under the statute. The appellate court agreed that the relator’s claim regarding the number of employees was not sufficiently pleaded but found the district court abused its discretion by denying leave to amend. The Ninth Circuit reversed the dismissal and remanded for further proceedings. View "RELATOR, LLC V. ERSKINE" on Justia Law

Stephen Snyder, a veteran Maryland attorney, was charged with attempted extortion and Travel Act violations after threatening to launch a damaging media campaign against a hospital unless it paid him $25 million in a personal consultancy deal. Snyder had represented patients in medical malpractice cases against the hospital and, during negotiations, repeatedly demanded the payment, suggesting it would "bury" incriminating findings about the hospital’s transplant program. Despite declining health and cognitive concerns, Snyder insisted on representing himself at trial, supported by standby counsel.The United States District Court for the District of Maryland held two Faretta hearings, where Snyder’s competency and voluntary waiver of counsel were confirmed. Throughout pretrial and trial, Snyder’s health issues became evident, and the court repeatedly advised against self-representation, but Snyder persisted. During the nine-day trial, the court addressed issues including limiting testimony from a witness bound by a nondisclosure agreement, denying Snyder’s request for a reliance-on-counsel jury instruction, and refusing to voir dire the jury after Snyder’s contempt arrest. The jury convicted Snyder on all counts.The United States Court of Appeals for the Fourth Circuit reviewed the district court’s rulings. It held that Snyder’s concession of competence to stand trial precluded his argument for reversal based on self-representation, reaffirming that a defendant competent to stand trial is competent to waive counsel. The court found no abuse of discretion in the denial of the reliance-on-counsel instruction, the limitation of testimony due to the nondisclosure agreement, or the refusal to voir dire the jury regarding publicity about Snyder’s contempt. The Fourth Circuit affirmed the district court’s judgment in full. View "US v. Snyder" on Justia Law

The defendant was charged with several financial crimes, including identity theft, forgery, and grand theft, after opening bank accounts under false pretenses and misappropriating funds that belonged to a local American Legion post. Investigations revealed that he had intercepted a donation check intended for the organization, requested a replacement, and deposited it into an account under his control, among other acts involving fraudulent documents and unauthorized transfers of large sums. The defendant was not a member of the organization but had access to its mail and financial information through his business, which operated in the same building.The Superior Court of Los Angeles County reviewed the defendant’s motion for pretrial mental health diversion under Penal Code section 1001.36. He presented a psychologist’s report diagnosing him with persistent depressive disorder with anxious distress, arguing that his mental condition was a significant factor in the commission of the offenses. The People opposed the motion, contending that his mental disorder did not contribute to his crimes, citing the sophistication and planning involved. The trial court found that, although the defendant had a qualifying mental disorder and was not a public safety risk, the evidence rebutted the statutory presumption that the mental disorder was a significant factor in the offenses, primarily because the expert report did not explain how his symptoms contributed to the criminal conduct and the court found the crimes inconsistent with those symptoms. The trial court denied the motion, and the defendant subsequently pled no contest to grand theft.On appeal, the California Court of Appeal, Second Appellate District, Division Four, considered whether the trial court properly denied the motion for mental health diversion. The appellate court held that the trial court did not abuse its discretion, properly applied the statutory presumption, and its finding that the presumption was rebutted by clear and convincing evidence was supported by substantial evidence. The judgment was affirmed. View "People v. Sacco" on Justia Law

Two business owners in Washington, D.C. sought to reduce their businesses’ tax liabilities by hiring an intermediary who, in turn, paid cash bribes to a supervisor in the D.C. Office of Tax and Revenue. The supervisor used his access to the agency’s tax system to reduce the businesses’ tax obligations without legitimate justification, sometimes using colleagues’ credentials and creating false documents to conceal the scheme. The intermediary relayed proof of these illicit adjustments to his clients, who paid him and the supervisor a share of the savings. The scheme resulted in a loss of approximately $2.3 million to the District of Columbia.After an audit uncovered suspicious tax reductions without proper documentation, authorities traced the scheme to the supervisor, the intermediary, and the clients. Two of the intermediary’s clients pleaded guilty and cooperated with the government. The United States District Court for the District of Columbia tried the case against the intermediary and one client. The jury convicted both defendants of conspiracy, bribery, and wire fraud, while acquitting one defendant on some wire fraud counts. The district court imposed sentences of 110 months and 30 months, respectively.On appeal to the United States Court of Appeals for the District of Columbia Circuit, the defendants challenged the sufficiency of the evidence, the bribery jury instructions, one defendant’s claim of ineffective assistance of counsel regarding sentencing, and an alleged sentencing penalty for going to trial. The appellate court held that the evidence was sufficient to support the convictions, the error in the bribery jury instruction was harmless because the evidence demonstrated a quid pro quo for specific official acts, there was no prejudice from counsel’s failure to challenge sentencing policy, and there was no unconstitutional penalty for exercising the right to trial. The court affirmed the district court’s judgments. View "USA v. De Moya" on Justia Law

Federal authorities were investigating an individual suspected of orchestrating transnational cyber fraud and money laundering schemes originating in Nigeria and targeting U.S. nationals. Information from two sources, including a co-conspirator, implicated him as a leader of fraudulent operations. Investigators gathered corroborating evidence, such as suspicious messages, unusually high activity on messaging apps, and bank records showing millions in transactions with no apparent legitimate source. When authorities learned he would return to the U.S. from Nigeria, they requested a manual search of his electronic devices upon arrival at Atlanta’s international airport. Customs officers searched his phones, found evidence of criminal activity, and subsequently seized the devices for forensic imaging. Two days later, law enforcement obtained search warrants for the phones and their extracted data.The United States District Court for the Northern District of Illinois, Eastern Division, reviewed the defendant’s motion to suppress evidence from the warrantless border search of his cell phones, which he argued violated his Fourth Amendment rights. After an evidentiary hearing, the district court found law enforcement witnesses credible and denied the motion, concluding that the manual search at the border was justified under the border search doctrine. The defendant then entered a conditional guilty plea to wire fraud, preserving his right to appeal the suppression ruling.The United States Court of Appeals for the Seventh Circuit reviewed the district court’s denial de novo. The court reaffirmed that routine, manual searches of electronic devices at the border do not require a warrant or individualized suspicion under circuit precedent, specifically United States v. Mendez, and Supreme Court precedent. The court held that the search was routine, reasonable, and justified by the border search exception. Even if a Fourth Amendment violation occurred, the good-faith exception would preclude suppression. The judgment of the district court was affirmed. View "USA v Eta" on Justia Law