Justia White Collar Crime Opinion Summaries

From 2011-2017, Care Specialists provided care to homebound Medicare beneficiaries. At least part of its operation was fraudulent. Care Specialists would submit Medicare claims for health services, including skilled nursing services, provided to many patients who did not qualify for Medicare reimbursement. Newton, a quality assurance specialist and the owner’s secretary, helped implement the scheme. A former Care Specialists employee, Bolender, filed a whistleblower letter describing the scheme and met with federal investigators, directly implicating Newton as a key figure in the conspiracy. The owners pleaded guilty. Newton was convicted of conspiracy to commit both health care fraud and wire fraud, following testimony from multiple Care Specialists employees. Bolender avoided testifying by invoking her rights against self-incrimination under the Fifth Amendment. Newton unsuccessfully argued that the court wrongly accepted the invocation and that the government’s refusal to grant Bolender immunity violated her due process rights.The Seventh Circuit affirmed Newton’s conviction. The government's actions did not distort the fact-finding process; Bolender’s testimony was just as likely, if not more likely, to inculpate Newton as it was to exculpate her. Bolender’s invocation of her rights under the Fifth Amendment had been proper because she potentially could have opened herself up to prosecution. The court vacated Newton’s sentence. The district court’s calculation of Medicare’s loss attributable to Newton was unreasonable. View "United States v. Newton" on Justia Law

Porat, the Dean of the Fox School of Business at Temple University, was “almost obsessed with rankings.” To manipulate Fox’s U.S. New and World Report rankings, he submitted false information about students taking the Graduate Management Admission Test (GMAT), offers of admission, student debt, and average undergraduate GPA. Partly because of these deceptions, With Porat’s knowledge and involvement, Fox aggressively marketed its false high rankings. At trial, former students testified that they chose Fox because of its rankings or that they believed employers hire students from schools with the best “brand” and that Fox’s high rankings would help them “compete in the marketplace.” The government estimated that Fox gained nearly $40 million in tuition from the additional students who enrolled during 2014–2018. In 2018, Porat’s scheme was exposed. Fox administrators disclosed the false GMAT data to U.S. News, which announced Fox’s “misreported data.” As Fox’s rankings fell, its enrollment fell.The Third Circuit affirmed Porat’s convictions for conspiracy to commit wire fraud, 18 U.S.C. 371, and wire fraud, section 1343. The government proved by sufficient evidence that he sought to deprive his victims of money, that he sought to personally obtain money, or that the party he deceived was the same party he defrauded of money (“convergence” View "United States v. Porat" on Justia Law

Defendant Jason O’Donnell was a candidate for mayor of Bayonne, New Jersey in 2018. During the campaign, he allegedly accepted $10,000 in cash in a paper Baskin- Robbins bag from an individual. The State argued that in exchange for the money, defendant promised to appoint the individual as tax counsel for the city. The State charged defendant under the bribery statute. Defendant did not win the election. He contended the applicable statute did not apply to him because it did not cover candidates who accepted improper payments but were not elected. The trial court dismissed the indictment, finding that N.J.S.A. 2C:27-2(d) did not apply to defendant. The Appellate Division reversed. The New Jersey Supreme Court affirmed: the bribery statute applied to any “person” who accepts an improper benefit -- incumbents, candidates who win, and candidates who lose. The statute also expressly states that it is no defense to a prosecution if a person “was not qualified to act.” View "New Jersey v. O’Donnell" on Justia Law

Arroyo served in the Illinois House of Representatives from 2006-2019, while also managing a lobbying firm. In 2018-2019, Arroyo’s firm received $32,500 in checks from Weiss’s sweepstakes-gaming company in exchange for his official support for the sweepstakes industry in the General Assembly. Despite never previously expressing a view on sweepstakes gaming, Arroyo began pushing for sweepstakes-friendly legislation and encouraging other legislators and executive-branch officials to support the same. Arroyo concealed his financial arrangement with Weiss.When the government uncovered the bribery scheme, Arroyo pleaded guilty to wire fraud, 18 U.S.C. 666(a)(2). The court sentenced him to 57 months’ imprisonment and ordered that he forfeit $32,500 in bribe money. The Seventh Circuit affirmed, rejecting Arroyo’s contention that the judge erred by finding his 57-month sentence necessary to deter public corruption. District judges need not marshal empirical data on deterrent effects before considering whether a sentence adequately deters criminal conduct. The judge presumed that public officials are rational actors who pay attention when one of their own is sentenced. That presumption that sentences influence behavior at the margins was reasonable. The court also rejected arguments that the judge erred by deeming several of his allocution statements aggravating and ordering him to forfeit too much money. View "United States v. Arroyo" on Justia Law

Plaintiff sued her brother, the executor of their father's estate, under the Racketeer Influenced and Corrupt Organizations Act. The district court held that Plaintiff's claims were barred by the Private Securities Litigation Reform Act of 1995 (“RICO Amendment”), which provides that “no person may rely upon any conduct that would have been actionable as fraud in the purchase or sale of securities to establish a violation of [RICO].” 18 U.S.C.1964(c).The Second Circuit reversed, holding that Plaintiff's claims were not barred by the RICO Amendment because the fraud she alleged was not related to the “purchase or sale of securities.” The alleged frauds committed by her brother "only incidentally involved securities, unlike a securities broker who sells client securities in breach of his duty to execute securities transactions in the best interests of the client." View "D'Addario v. D'Addario" on Justia Law

Vepuri is the de facto director of KVK-Tech, a generic drug manufacturer. He employed Panchal as its director of quality assurance. KVK-Tech manufactured and sold Hydroxyzine, a prescription generic drug used to treat anxiety and tension. The government alleges that Vepuri, Panchal, and KVK-Tech sourced active ingredient for the Hydroxyzine from a facility (DRL) that was not included in the approvals that they obtained from the FDA and that they misled the FDA about their practices.An indictment charged all three defendants with conspiracy to defraud and to commit offenses against the United States and charged KVK-Tech with an additional count of mail fraud. The district court dismissed the portion of the conspiracy charge that alleges that the three conspired to violate the Food, Drug, and Cosmetic Act (FDCA), which prohibits introducing a “new drug” into interstate commerce unless an FDA approval “is effective with respect to such drug,” 21 U.S.C. 355(a).The Third Circuit affirmed, rejecting an argument that a deviation from the approved drug application means that the approval is no longer effective. The approval ceases being effective only when it has been withdrawn or suspended. The indictment does not include any allegations that the KVK-Tech Hydroxyzine manufactured with active ingredients from DRL had a different composition or labeling than the KVK-Tech Hydroxyzine with the effective approval. View "United States v. Vepuri" on Justia Law

For 15 years, Charles ran 26 payday-lending companies, violating state criminal laws against usury, charging fees roughly equal to 780% interest per year. The companies grossed nearly half a billion dollars. Charles was convicted of 17 counts, including two for RICO conspiracy. He was sentenced to 14 years in prison, fined $2.5 million, and had to forfeit $64 million in illicit gains from the RICO conspiracy. Charles had already given some of the forfeited property to his daughter Linda. After the forfeiture orders, Linda filed ancillary claims to recover her interest in the assets.The Third Circuit affirmed the denial of her claims. For a RICO conviction, the defendant “shall forfeit” any interest in or proceeds from the conspiracy, 18 U.S.C. 1963(a). Third parties may neither intervene in that forfeiture proceeding nor bring separate suits to assert their interests. Any person, other than the defendant, asserting a legal interest in the forfeited property may bring an ancillary claim; the court can amend the forfeiture order if that party shows that she either was a bona fide purchaser for value or has an interest in the forfeited property that was vested or superior at the time of the crime. The third party cannot “relitigate” the underlying forfeiture order. View "United States v. Hallinan" on Justia Law

Jumper, a securities broker-dealer, arranged financing on behalf of private investors for the purchase of a Pennsylvania fire-brick manufacturer. Jumper fraudulently obtained authority to transfer the company’s pension plan assets by forging the majority stakeholder’s signature on several documents. Between 2007-2016, Jumper transferred $5.7 million from the pension plan to accounts he controlled.The SEC filed a civil complaint against Jumper for securities fraud in the Western District of Tennessee. The Department of Justice filed criminal charges against Jumper in the Middle District of Pennsylvania. The Tennessee court entered a default judgment for the SEC and ordered Jumper to disgorge $5.7 million and to pay prejudgment interest of $726,758.79. In Pennsylvania, Jumper pleaded guilty to wire fraud and agreed to make full restitution; the parties stipulated a loss of $1.5-$3.5 million.The district court considered Jumper’s request for a downward departure based on medical issues, discussed the relevant 18 U.S.C. 3553(a) factors, and denied Jumper’s requests, explaining, the Bureau of Prisons (BOP) is equipped to provide consistent, adequate medical care. The court sentenced Jumper to 78 months’ incarceration, at the bottom of the Guidelines range of 78–97 months, and ordered him to pay $2,426,550 in restitution. The Third Circuit affirmed, rejecting arguments that the sentence violated the Double Jeopardy Clause and principles of collateral estoppel and that the court improperly concluded that the BOP could treat his medical issues. View "United States v. Jumper" on Justia Law

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