Justia White Collar Crime Opinion Summaries

James Weiss owned a company that manufactured sweepstakes machines, which in 2018 operated in a legal gray area under Illinois law. Seeking to secure favorable legislation, Weiss arranged for his company to make monthly payments to a lobbying firm owned by State Representative Luis Arroyo, who then became a vocal advocate for legalizing sweepstakes machines. After initial legislative efforts failed, Weiss and Arroyo sought to amend existing gaming legislation by enlisting the support of State Senator Terrance Link. Unbeknownst to them, Link was cooperating with federal authorities. During meetings, Arroyo assured Link he would be compensated for his support, and Weiss’s company provided checks intended for Link under a fictitious name created by the FBI. Weiss was later stopped by FBI agents, interviewed without Miranda warnings, and made false statements during the encounter.The United States District Court for the Northern District of Illinois, Eastern Division, denied Weiss’s pretrial motions to suppress his statements to the FBI and to exclude Arroyo’s recorded statements. At trial, the jury heard evidence of the bribery scheme, including testimony from Link and federal agents, and found Weiss guilty on all charges after deliberation. The district court sentenced Weiss to 66 months’ imprisonment, exceeding the calculated guidelines range, and declined to delay sentencing for anticipated changes to the Sentencing Guidelines.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed Weiss’s challenges to the admission of his statements, the admission of Arroyo’s statements as coconspirator statements, the jury instructions regarding “official acts,” and the sentence imposed. The Seventh Circuit held that Weiss was not in custody for Miranda purposes during the FBI interview, the district court did not err in admitting Arroyo’s statements, the jury instructions did not constitute plain error, and the sentence was both procedurally and substantively reasonable. The court affirmed the district court’s judgment in all respects. View "United States v. Weiss" on Justia Law

Earl Miller, who owned and operated several real estate investment companies under the 5 Star name, was responsible for soliciting funds from investors, primarily in the Amish community, with promises that their money would be used exclusively for real estate ventures. After becoming sole owner in 2014, Miller diverted substantial investor funds for personal use, unauthorized business ventures, and payments to friends’ companies, all in violation of the investment agreements. He also misled investors about the nature and use of their funds, including issuing false statements about new business activities. The scheme continued even as the business faltered, and Miller ultimately filed for bankruptcy.A federal grand jury in the Northern District of Indiana indicted Miller on multiple counts, including wire fraud and securities fraud. At trial, the government presented evidence, including testimony from an FBI forensic accountant, showing that Miller misappropriated approximately $4.5 million. The jury convicted Miller on one count of securities fraud and five counts of wire fraud, acquitting him on one wire fraud count and a bankruptcy-related charge. The United States District Court for the Northern District of Indiana sentenced Miller to 97 months’ imprisonment, applying an 18-level sentencing enhancement based on a $4.5 million intended loss, and ordered $2.3 million in restitution to victims.The United States Court of Appeals for the Seventh Circuit reviewed Miller’s appeal, in which he challenged the district court’s loss and restitution calculations. The Seventh Circuit held that the district court reasonably estimated the intended loss at $4.5 million, as this amount reflected the funds Miller placed at risk through his fraudulent scheme, regardless of when the investments were made. The court also upheld the restitution award, finding it properly included all victims harmed by the overall scheme. The Seventh Circuit affirmed the district court’s judgment. View "USA v Miller" on Justia Law

Two employees of a debt-collection firm, one of whom was out sick with COVID-19, collaborated to resolve an urgent licensing issue for their employer. The employee at home, unable to access her work computer, asked her colleague to log in using her credentials and retrieve a spreadsheet containing passwords for various company systems. The colleague, with express permission, accessed the computer and emailed the spreadsheet to the employee’s personal and work email accounts. Both actions violated the employer’s internal computer-use policies. Separately, the employee at home had, over several years, moved accounts into her workgroup to receive performance bonuses, believing she was eligible for them. Both employees also alleged persistent sexual harassment at work, which led to internal complaints, one employee’s resignation, and the other’s termination.After these events, the employer, National Recovery Agency (NRA), sued both employees in the United States District Court for the Middle District of Pennsylvania, alleging violations of the Computer Fraud and Abuse Act (CFAA), federal and state trade secrets laws, civil conspiracy, breach of fiduciary duty, and fraud. The employees counterclaimed for sexual harassment and related employment claims. On cross-motions for summary judgment, the District Court entered judgment for the employees on all claims brought by NRA, finding no violations of the CFAA or trade secrets laws, and stayed the employees’ harassment claims pending appeal.The United States Court of Appeals for the Third Circuit reviewed the case. It affirmed the District Court’s judgment in full. The Third Circuit held, first, that the CFAA does not criminalize violations of workplace computer-use policies by employees with authorized access, absent evidence of hacking or code-based circumvention. Second, it held that passwords protecting proprietary business information do not, by themselves, constitute trade secrets under federal or Pennsylvania law. The court also affirmed the dismissal of the state-law tort claims. View "NRA Group LLC v. Durenleau" on Justia Law

Three former members of a religious organization alleged that the organization intentionally misrepresented its history and the use of member tithing payments. They claimed that, had they known the true facts, they would not have joined or contributed financially. The plaintiffs asserted two main theories under the Racketeer Influenced and Corrupt Organizations Act (RICO): first, that the organization’s leaders made fraudulent statements about the group’s history and beliefs that they did not sincerely hold; and second, that the organization misrepresented how tithing funds would be used, including using them for commercial purposes contrary to representations.The United States District Court for the District of Utah initially dismissed the complaint, finding that the First Amendment’s Religion Clauses and the church autonomy doctrine barred adjudication of claims requiring inquiry into the truth or falsity of religious beliefs. After amendments to the complaint, the district court allowed a RICO claim based on the tithing theory to proceed, viewing it as a secular dispute. However, after further amendments and additional plaintiffs, the district court ultimately dismissed all claims, holding that the church autonomy doctrine barred claims based on religious misrepresentations and that the plaintiffs failed to adequately plead reliance or a pattern of predicate acts for the tithing-based RICO claim.The United States Court of Appeals for the Tenth Circuit affirmed. It held that the church autonomy doctrine bars civil RICO claims premised on alleged misrepresentations about religious history or doctrine, as such claims would require courts to adjudicate ecclesiastical questions. Regarding the tithing theory, the court held that the plaintiffs failed to plausibly allege a causal link between the organization’s statements about tithing and their own financial contributions, as required for a civil RICO claim. The court therefore affirmed the dismissal of all claims. View "Gaddy v. Corp. of the President of the Church of Jesus" on Justia Law

The case concerns a defendant who was convicted of bank fraud and bank robbery. The key facts involve two separate crimes: first, a violent home invasion in which the defendant’s father-in-law was severely beaten and forced to write a $23,000 check, which the defendant later cashed; and second, a bank robbery in which the defendant threatened a teller with death, claiming cartel affiliation, and used a handwritten note. Law enforcement found a note resembling the robbery note during a search of a car registered to the defendant’s wife, which became a central issue in the case.The United States District Court for the District of New Mexico heard the case. The defendant moved to suppress the evidence found in the car, arguing that his wife lacked authority to consent to the search. The district court found that the wife had actual authority over the car and denied the motion. After conviction, the district court imposed a 312-month sentence, a significant upward variance from the guideline range of 46 to 57 months, citing the brutality of the crimes and the defendant’s history of dishonesty. The defendant appealed, challenging both the search and the reasonableness of the sentence.The United States Court of Appeals for the Tenth Circuit reviewed the case. It held that the wife had actual authority to consent to the car search, making the search constitutional. The court also found that the district court had properly considered the statutory sentencing factors, including the avoidance of unwarranted disparities, and that the sentence was both procedurally and substantively reasonable. The Tenth Circuit affirmed the district court’s rulings and the sentence. View "United States v. Candelaria" on Justia Law

Two individuals operated a large-scale heroin trafficking operation, transporting significant quantities of heroin from New Jersey to Pennsylvania. Law enforcement, using information from an informant, initiated an investigation that included wiretaps on the suspects’ phones. The wiretap application was signed by the First Deputy Attorney General, acting on the authority of the Pennsylvania Attorney General, who was out of the country at the time. The investigation led to the arrest of both men, the seizure of heroin, cash, and firearms, and the discovery of their involvement in witness tampering, including the murder and attempted murder of two women connected to the case.The United States District Court for the Western District of Pennsylvania denied the defendants’ motion to suppress the wiretap evidence, finding that the First Deputy Attorney General was properly authorized under state law to submit the application. After a jury trial, both defendants were convicted of drug and firearm offenses, with one also convicted of witness tampering resulting in death and attempted murder. The court sentenced one defendant to 380 months in prison and the other to life imprisonment plus additional consecutive terms. Both appealed, raising issues regarding the wiretap’s legality, alleged constructive amendment of the indictment, jury instructions, sufficiency of the evidence, and sentencing errors.The United States Court of Appeals for the Third Circuit affirmed the convictions and sentences for one defendant in full. For the other, the court affirmed all convictions and sentences except for the consecutive 25-year sentence imposed for using a firearm to commit murder under 18 U.S.C. § 924(j). The court held that, in light of the Supreme Court’s decision in Lora v. United States, a consecutive sentence is not mandatory under § 924(j), and thus vacated and remanded for resentencing on that count. All other claims for relief were rejected. View "USA v. Perrin" on Justia Law

Amir Golestan, founder and CEO of Micfo, LLC, orchestrated a scheme to fraudulently obtain approximately 1.3 million valuable IPv4 Internet Protocol addresses from the American Registry for Internet Numbers (ARIN) by creating fictitious companies and individuals. He then resold some of these addresses for profit. The scheme was uncovered when ARIN blocked a large attempted sale. Golestan and Micfo were indicted by a federal grand jury on 20 counts of wire fraud.The United States District Court for the District of South Carolina denied Golestan and Micfo’s motion to dismiss the indictment, finding that IP addresses constituted “property” under the wire fraud statute. During a bench trial, after the government presented substantial evidence, Golestan and Micfo changed their pleas to guilty. The district court accepted the pleas without advising Golestan of possible immigration consequences. Sentencing was delayed for 17 months, during which Golestan moved to continue sentencing pending the Supreme Court’s decision in United States v. Ciminelli, and later sought to withdraw the guilty pleas, arguing that Ciminelli invalidated the prosecution’s theory and that he was not properly advised of immigration consequences. Micfo also argued Golestan lacked authority to plead on its behalf. The district court denied these motions and sentenced Golestan to 60 months’ incarceration and Micfo to probation.The United States Court of Appeals for the Fourth Circuit affirmed the district court’s judgments. The court held that the government’s theory of wire fraud did not rely on the “right-to-control” doctrine rejected in Ciminelli, but rather on deprivation of traditional property interests. The court found the district court’s failure to advise Golestan of immigration consequences was harmless error, as he was a naturalized citizen. The court also held that the record supported Golestan’s authority to plead for Micfo and declined to address ineffective assistance of counsel on direct appeal. View "US v. Golestan" on Justia Law

The case centers on allegations that Okaloosa County, the sponsor of Destin Executive Airport, and Jay Odom, a fixed-base operator, violated federal and Florida False Claims Acts. The dispute arose after Odom, who owned Destin Jet, allegedly acquired the only competing fixed-base operator, Miracle Strip Aviation (later Regal Air), resulting in a single entity controlling all aeronautical services at the airport. Despite this consolidation, the County continued to certify to the Federal Aviation Administration (FAA) that it was not granting any exclusive rights, a requirement for receiving federal funding. In 2019, Robert Smith, a pilot and relator, sought to establish a competing fixed-base operator but was denied by the County, prompting him to file suit alleging false certifications in grant applications.The United States District Court for the Northern District of Florida dismissed Smith’s amended complaint with prejudice. The court found that the False Claims Act’s public disclosure bar applied because the essential allegations had already been reported in two 2014 news articles, which described the consolidation and the resulting grant assurance violations. The district court also determined that Smith’s complaint failed to meet the heightened pleading standard for fraud and denied his request for leave to further amend the complaint.On appeal, the United States Court of Appeals for the Eleventh Circuit reviewed the dismissal de novo. The Eleventh Circuit held that Smith’s claims were barred by the False Claims Act’s public disclosure provision, as the news articles had already disclosed substantially the same allegations. The court further found that Smith was not an original source of the information, as his additional details did not materially add to the public disclosures. The Eleventh Circuit affirmed the district court’s dismissal and its denial of leave to amend, concluding that any amendment would be futile. View "Smith v. Odom" on Justia Law

A group of plaintiffs, including an individual, a retirement fund, and several investment funds, traded derivatives based on the Euro Interbank Offered Rate (Euribor). They alleged that a group of banks and brokers conspired to manipulate Euribor, which affected the pricing of various over-the-counter (OTC) derivatives, such as FX forwards, interest-rate swaps, and forward rate agreements. The alleged conduct included coordinated false submissions to set Euribor at artificial levels, collusion among banks and brokers, and structural changes within banks to facilitate manipulation. Plaintiffs claimed this manipulation harmed them by distorting the prices of their Euribor-based derivative transactions.The United States District Court for the Southern District of New York dismissed the plaintiffs’ claims under the Sherman Act, the Commodity Exchange Act (CEA), the Racketeer Influenced and Corrupt Organizations Act (RICO), and state common law, finding it lacked personal jurisdiction over all defendants. The district court also found that the RICO claims were based on extraterritorial conduct and did not meet the particularity requirements of Federal Rule of Civil Procedure 9(b). It declined to exercise pendent personal jurisdiction over state-law claims.The United States Court of Appeals for the Second Circuit reviewed the case. It agreed that conspiracy-based personal jurisdiction was not established but held that two plaintiffs—Frontpoint Australian Opportunities Trust and the California State Teachers’ Retirement System—had established specific personal jurisdiction over UBS AG and The Royal Bank of Scotland PLC for Sherman Act and RICO claims related to OTC Euribor derivative transactions in the United States. The court affirmed dismissal of the RICO claims for lack of particularity, but held that the Sherman Act claims were sufficiently pleaded. It vacated the district court’s refusal to exercise pendent personal jurisdiction over state-law claims and remanded for further proceedings. The judgment was affirmed in part, reversed in part, and vacated in part. View "Sullivan v. UBS AG" on Justia Law

A government agency responsible for marketing hydroelectric power operated a warehouse in Colorado, where an employee, Jared Newman, orchestrated a fraudulent procurement scheme from 2014 to 2017. Newman arranged for the agency to purchase supplies from vendors owned by friends and family, including the defendant, who owned two such companies. The vendors submitted invoices for goods that were never delivered, received payments from the agency, and then funneled most of the money back to Newman, keeping a portion as a commission. The defendant received nearly $180,000 through 59 fraudulent payments, writing checks back to Newman and taking steps to conceal the scheme.A grand jury indicted the defendant in the United States District Court for the District of Colorado on six counts of wire fraud, each corresponding to a specific transfer, and sought forfeiture of all proceeds. At trial, the government introduced evidence of a co-participant’s guilty plea and the district court instructed the jury that it could infer the defendant’s knowledge of the fraud if he was deliberately ignorant. The defendant was convicted on all counts. The district court limited forfeiture to the six charged transfers, totaling about $20,000, but ordered restitution for the full amount received, for which the defendant and Newman were jointly and severally liable.The United States Court of Appeals for the Tenth Circuit reviewed the case. It held that the district court did not abuse its discretion in admitting evidence of the co-participant’s guilty plea, as it was used to assess credibility and not as substantive evidence of guilt, and the jury was properly instructed on its limited use. The court also held that, because there was sufficient evidence of the defendant’s actual knowledge, any error in the deliberate ignorance instruction did not warrant reversal. On the government’s cross-appeal, the Tenth Circuit vacated the forfeiture order, holding that forfeiture should include all proceeds obtained through the fraudulent scheme, not just the charged transactions, and remanded for further proceedings. View "United States v. Cline" on Justia Law