Justia White Collar Crime Opinion Summaries

Defendant appealed his conviction for misappropriating over $5000 in federal grant funds that were distributed to the organization that he managed to subsidize an after-school program for children, in violation of 18 U.S.C. 666(a)(1)(A). The Eighth Circuit held that section 666(a)(1)(A) is not a continuing offense and a defendant may not be charged for a section 666(a)(1)(A) offense committed outside the five-year statute of limitations. However, like the defendant in this case, when a defendant has committed the offense both within and outside the limitations period, he may be charged with violations committed within the limitations period. The court held that any error in admitting evidence related to expenditures outside the limitations period did not seriously affect the fairness, integrity or public reputation of the judicial proceedings. Furthermore, there was no error in admitting a purported grant application into evidence; any error regarding the admission of hearsay at a pre-trial release proceeding was moot; and the evidence was sufficient to support the conviction. View "United States v. Askia" on Justia Law

The Eighth Circuit affirmed the district court's calculation of the loss amount in defendant's sentence after he was convicted of five counts of wire fraud. The court held that the district court properly determined that defendant's employer was a victim of the fraud scheme and that the company suffered actual and intended pecuniary losses, and the district court did not commit clear error in finding that certain uncharged conduct was part of defendant's common scheme or plan and including that conduct in the calculation of loss. The court vacated, however, the restitution award. The court held that the Mandatory Victim Restitution Act applied to the wire fraud conviction and the court reversed and remanded in light of Lagos v. United States, 138 S.Ct. 1684 (May 29, 2018). View "United States v. Cornelsen" on Justia Law

Moose solicited investors with a stock tip; instead of investing all the $680,000 he received from 16 investors, Moose invested only $200,000. The remaining $480,000 he took for himself. Without a plea agreement, Moose pleaded guilty to defrauding investors in violation of the federal wire fraud statute, 18 U.S.C. 1343. The district court gave him a below-guideline sentence of two years in prison plus two years of supervised release. The Seventh Circuit affirmed the prison sentence and the length of the supervised release term, but remanded for the limited purpose of considering several conditions of supervised release that had not been adequately explained. The court rejected Moose’s challenges to the loss amount the district court used in calculating his guideline sentencing range and the fraud guideline’s treatment of loss amounts more generally. Though Moose admitted that he pocketed the $480,000, he argued for a loss figure of just $70,000, claiming to qualify for the discount based on returning stolen property before the crime was detected. View "United States v. Moose" on Justia Law

This appeal arose out of Michael and Sue Clarke’s attempted recovery of earlier financial losses sustained due to the fraudulent investment practices of Zach Latimer. After obtaining a judgment against Latimer, the Clarkes filed a separate action against his wife, Holly Latimer, alleging that the Latimers engaged in transfers of funds that violated the Uniform Fraudulent Transfer Act. The district court found in favor of the Clarkes’ claim after a bench trial but ruled that there was no prevailing party and denied the Clarkes’ request for attorney’s fees and costs. The court also ordered the Clarkes to file a partial satisfaction of judgment in their separate action against Zach and denied their post-trial motion for prejudgment interest. The Clarkes challenged each of these determinations, and sought additional fees and costs for their appeal. After review, the Idaho Supreme Court determined the Clarkes should have been found to be the prevailing party, and the district court erred by ordering the Clarkes to file a partial satisfaction of their judgment in their case against Zach Latimer. The district court did not, however, abuse its discretion by denying the Clarkes' prejudgment interest or attorney's fees, however, they were entitled to costs. View "Clarke v. Latimer" on Justia Law

The Fifth Circuit affirmed defendant's convictions and sentences for charges related to his efforts in convincing about a hundred people to lend his companies millions of dollars. The court held that there was sufficient evidence to support the mail and wire fraud counts; there was sufficient evidence to support defendant's conviction for giving false testimony during a bankruptcy court proceeding; the district court's decision denying defendant's motion to suppress some prior statements under the Fifth Amendment was unreviewable because defendant neither testified nor proffered what he would have said; challenges to the admission of several summary charts denied; challenges to jury instructions as infirm were rejected; and there was no procedural error in defendant's sentence. View "United States v. Spalding" on Justia Law

Dr. Paulus, a cardiologist at Ashland, Kentucky’s KDMC, was first in the nation in billing Medicare for angiograms. His annual salary was around $2.5 million, under KDMC’s per-procedure compensation package. In 2008, HHS received an anonymous complaint that Paulus was defrauding Medicare and Medicaid by performing medically unnecessary procedures, 42 U.S.C. 1320c-5(a)(1), 1395y(a)(1), placing stents into arteries that were not blocked, with the encouragement of KDMC. An anti-fraud contractor selected 19 angiograms for an audit and concluded that in seven cases, the blockage was insufficient to warrant a stent. Medicare denied reimbursement for those procedures and continued investigating. A private insurer did its own review and concluded that at least half the stents ordered by Paulus were not medically necessary. The Kentucky Board of Medical Licensure subpoenaed records and concluded that Paulus had diagnosed patients with severe stenosis where none was apparent from the angiograms. Paulus had retired; he voluntarily surrendered his medical license. A jury convicted Paulus on 10 false-statement counts and on the healthcare fraud count. It acquitted him on five false-statement counts. The court set aside the guilty verdicts and granted Paulus a new trial. The Sixth Circuit reversed. The degree of stenosis is a fact capable of proof. A doctor who deliberately inflates the blockage he sees on an angiogram has told a lie; if he does so to bill a more expensive procedure, then he has also committed fraud. View "United States v. Paulus" on Justia Law

Brookdale employed Prather to review Medicare claims before their submission for payment. Many of these claims were missing required certifications from physicians attesting to the need for the medical services provided. Certifications must “be obtained at the time the plan of care is established or as soon thereafter as possible.” 42 C.F.R. 424.22(a)(2).Prather filed a complaint under the False Claims Act, 31 U.S.C. 3729, alleging an implied false certification theory. The district court dismissed her complaint. The Sixth Circuit reversed in part, holding that Prather had pleaded two claims with the required particularity and that the claims submitted were false. On remand, the district court dismissed Prather's Third Amended Complaint in light of the Supreme Court’s 2016 clarification of the materiality element of an FCA claim. The Sixth Circuit reversed. Prather sufficiently alleged the required materiality element; the timing requirement in section 424.22(a)(2) is an express condition of payment and Prather alleges that the government paid the claims submitted by the defendants without knowledge of the non-compliance, making those payments irrelevant to the question of materiality. Section 424.22(a)(2) is a mechanism of fraud prevention, which the government has consistently emphasized in guidance regarding physician certifications and Prather adequately alleged “reckless disregard” of compliance and whether this requirement was material. View "Prather v. Brookdale Senior Living Community" on Justia Law

Brookdale employed Prather to review Medicare claims before their submission for payment. Many of these claims were missing required certifications from physicians attesting to the need for the medical services provided. Certifications must “be obtained at the time the plan of care is established or as soon thereafter as possible.” 42 C.F.R. 424.22(a)(2).Prather filed a complaint under the False Claims Act, 31 U.S.C. 3729, alleging an implied false certification theory. The district court dismissed her complaint. The Sixth Circuit reversed in part, holding that Prather had pleaded two claims with the required particularity and that the claims submitted were false. On remand, the district court dismissed Prather's Third Amended Complaint in light of the Supreme Court’s 2016 clarification of the materiality element of an FCA claim. The Sixth Circuit reversed. Prather sufficiently alleged the required materiality element; the timing requirement in section 424.22(a)(2) is an express condition of payment and Prather alleges that the government paid the claims submitted by the defendants without knowledge of the non-compliance, making those payments irrelevant to the question of materiality. Section 424.22(a)(2) is a mechanism of fraud prevention, which the government has consistently emphasized in guidance regarding physician certifications and Prather adequately alleged “reckless disregard” of compliance and whether this requirement was material. View "Prather v. Brookdale Senior Living Community" on Justia Law

On the facts of the case, the constitutional speedy trial clock began to run from the date of the original indictment rather than from the date of an additional charge first brought in a superseding indictment.A federal grand jury indicted Defendant on twelve counts of wire fraud. Approximately six years later, the government filed a superseding indictment containing the same twelve wire-fraud counts as the original indictment and adding a new count for bank fraud. The district court granted Defendant’s motion to dismiss the original indictment and the added bank-fraud count on Sixth Amendment speedy trial grounds. The government appealed, arguing that, with respect to the bank-fraud charge, the district court should have measured the period of delay from the filing of the superseding indictment, not from the filing of the initial indictment. The First Circuit disagreed, holding that the bringing of an additional charge does not reset the Sixth Amendment speedy trial clock to the date of the superseding indictment where the additional charge and the charge for which the defendant was previously accused are based on the same act or transaction, or common scheme or plan, and where the government could have, with diligence, brought the additional charge at the time of the prior accusation. View "United States v. Handa" on Justia Law

In 2003, Williams, behind on paying SCCA condominium association fees, filed the first of five, Chapter 13 Bankruptcy petitions so that creditors were stayed from initiating collection. Her scheme was to not make payments required by her Chapter 13 plan so that the court would dismiss the case; SCCA would file eviction and collection suits; Williams would then file a new Chapter 13 petition. After voluntarily dismissing her second bankruptcy petition, Williams signed a deed transferring the condominium to Wilke. A deed recorded weeks later returned title to Williams. Wilke paid nothing and never occupied the condominium but obtained loans secured by the condominium. In her subsequent bankruptcy petitions, Williams failed to disclose the transfers but stated, falsely, that Wilke was a co‐debtor and would contribute toward the mortgage. After dismissing Williams’s fifth petition, the court barred Williams from filing a new petition for 180 days. She again deeded the condominium to Wilke, who filed a bankruptcy petition stating it was his property. The court dismissed the case. Both were charged with bankruptcy fraud, 18 U.S.C. 157. Wilke pled guilty and cooperated. The court limited the defense’s cross-examination of SCCA's board member and attorney about a class action lawsuit Williams had filed against SCCA and about SCCA’s treatment of Williams relative to other tenants, reasoning that the topics were an irrelevant attack on the underlying debt. Williams was convicted. With enhancements for causing a loss of $193, 291 and because the offense involved 10 or more victims, her Guidelines Range was 51–63 months’ imprisonment. The court sentenced her to 46 months. The Seventh Circuit affirmed, rejecting challenges to the court’s limitation on cross-examination and to the sentencing enhancements. View "United States v. Williams" on Justia Law