Justia White Collar Crime Opinion Summaries

The First Circuit affirmed Defendant’s convictions for federal program bribery, lying to a federal agent, and obstructing justice. The court held that, contrary to Defendant’s arguments on appeal, (1) the district court’s jury instructions did not effect a constructive amendment of the indictment on the bribery count; (2) the erroneous inclusion of a unanimity instruction in the jury charge on the particular benefits included within the “stream of benefits” alleged by the government on the bribery count did not prejudice Defendant; and (3) the court did not err in admitting evidence of prior bad acts and adequately instructed the jury about the testimony of immunized cooperating witnesses. View "United States v. Lopez-Cotto" on Justia Law

Westine completed a 235-month sentence for securities fraud, and, within months, began offering investments in oil wells. Prospective investors were promised their “[f]irst monthly check within 90 days.” Investors never received royalties; they complained to the Kentucky Department of Financial Institutions, which concluded that the companies were selling unlawful securities and obtained a restraining order. Westine and Ramer, his partner, began winding down the companies and transitioning to new companies that collected over $2 million from 138 investors, who never received checks. Ramer oversaw call centers, developed a promotional video that boasted a fictional production capacity of 75 barrels per day, and organized a trip, during which investors were introduced to another co-conspirator, Cornell, who provided a tour of his oil facility, to create an appearance of legitimacy. Defendants began to shift operations to a new company, and, in less than two months, collected $242,233 from 12 investors. Defendants were charged with 29 counts of mail fraud, 18 U.S.C. 1341; conspiracy to commit money laundering, 18 U.S.C. 1956(h); and securities fraud, 15 U.S.C. 78j(b). A jury found each Defendant guilty. The court sentenced Westine to 480 months’ and Ramer to 156 months’ imprisonment. The Seventh Circuit affirmed, upholding the admission of “prior acts” evidence and rejecting various hearsay challenges. Given the evidence against the Defendants, later-discovered evidence that Cornell was running a side deal is insufficient to warrant remand. View "United States v. Ramer" on Justia Law

Michael, a licensed pharmacist at Chapmanville's Aracoma Pharmacy, separately co-owns another West Virginia pharmacy and one in Pennsylvania. The government suspected that Michael used the pharmacies to distribute on-demand prescription drugs, worth more than $4 million, over the Internet. A grand jury returned a multi-count indictment. Count 7 charged Michael with fraudulently submitting a claim for payment to Humana for dispensing medication that was never dispensed (18 U.S.C. 1347). Count 8 charged him with committing aggravated identity theft by using the “identifying information” of a doctor and a patient “in relation to the [health care fraud] offense” (18 U.S.C. 1028A(a)(1), (c)(11)). Michael had submitted a claim to Humana indicating that A.S. (doctor) had prescribed Lovaza for P.R., including the doctor’s National Provider Identifier and the patient’s name and birth date. A.S. was not P.R.’s doctor and did not issue the prescription. Section 1028A requires a person to “assume the identity” of someone else; the district court held that the statute covered only “impersonation,” and dismissed Count 8. The Sixth Circuit reversed. To “use” a means of identification is to “convert to one’s service” or “employ” the means of identification. Michael used A.S. and P.R.’s identifying information to fashion a fraudulent submission, making the misuse of these means of identification “during and in relation to” healthcare fraud. View "United States v. Michael" on Justia Law

Michael, a licensed pharmacist at Chapmanville's Aracoma Pharmacy, separately co-owns another West Virginia pharmacy and one in Pennsylvania. The government suspected that Michael used the pharmacies to distribute on-demand prescription drugs, worth more than $4 million, over the Internet. A grand jury returned a multi-count indictment. Count 7 charged Michael with fraudulently submitting a claim for payment to Humana for dispensing medication that was never dispensed (18 U.S.C. 1347). Count 8 charged him with committing aggravated identity theft by using the “identifying information” of a doctor and a patient “in relation to the [health care fraud] offense” (18 U.S.C. 1028A(a)(1), (c)(11)). Michael had submitted a claim to Humana indicating that A.S. (doctor) had prescribed Lovaza for P.R., including the doctor’s National Provider Identifier and the patient’s name and birth date. A.S. was not P.R.’s doctor and did not issue the prescription. Section 1028A requires a person to “assume the identity” of someone else; the district court held that the statute covered only “impersonation,” and dismissed Count 8. The Sixth Circuit reversed. To “use” a means of identification is to “convert to one’s service” or “employ” the means of identification. Michael used A.S. and P.R.’s identifying information to fashion a fraudulent submission, making the misuse of these means of identification “during and in relation to” healthcare fraud. View "United States v. Michael" on Justia Law

The Fifth Circuit affirmed defendant's conviction for aiding and abetting aggravated theft, which carries a mandatory consecutive two-year prison term. The court held that the evidence was sufficient to convict defendant because the jury could reasonably infer that when defendant accessed his bank accounts online, the online descriptions of the deposits were the same as reflected on the paper bank statements admitted at trial. Furthermore, the jury could have reasonably inferred that prior to the filing of the April 2013 tax returns, defendant knew or was deliberately ignorant regarding the fact that the bank drops were IRS tax refunds. Therefore, defendant's argument that he did not have the necessary intent under Rosemond v. United States, was thus unavailing. View "United States v. Carbins, Jr." on Justia Law

Metro, a managing clerk at a New York City law firm, engaged in a five-year scheme in which he disclosed material nonpublic information concerning corporate transactions to his friend Tamayo. Tamayo told his stockbroker, Eydelman, who made trades for Tamayo, himself, his family, his friends, and other clients. Metro did not hold the involved stocks himself and did not collect proceeds but relied on Tamayo to reinvest the proceeds from their unlawful trades in future insider trading. During the government’s investigation, Tamayo promptly admitted his role in the scheme and cooperated with the government. The insider trading based on Metro’s tips resulted in illicit gains of $5,673,682. The court attributed that entire sum to Metro in determining his 46-month sentence after Metro pled guilty to conspiracy to violate securities laws, 18 U.S.C. 371, and insider trading, 15 U.S.C. 78j(b) and 78ff. Metro denies being aware of Eydelman’s existence until one year after he relayed his last tip to Tamayo, and contends that he never intended any of the tips to be passed to a broker or any other third party. The Third Circuit vacated the sentence. The district court failed to make sufficient factual findings to support the attribution of the full $5.6 million to Metro and gave too broad a meaning to the phrase “acting in concert.” View "United States v. Metro" on Justia Law

Harris, a registered stockbroker, and his co-conspirators, including government witness Durand, agreed to recommend shares of Zirk de Maison’s companies to clients in exchange for commissions. The Financial Industry Regulatory Authority began an investigation and questioned Harris and Durand on wire transfers from certain organizations controlled by de Maison. The two told investigators that the deposits resulted from selling expensive watches, and sent letters to FINRA summarizing this fictitious explanation. After Harris was arrested, he purportedly called and texted Durand on multiple occasions, instructing him to stick with their story. Durand later admitted that the watch story was entirely false. Harris was convicted of conspiracy to commit securities fraud or wire fraud, 18 U.S.C. 1343, 1348, 1349; obstruction of justice, 18 U.S.C. 1503, and three counts of wire fraud, 18 U.S.C. 1343. The district court sentenced Harris to 63 months’ imprisonment and $843,423.91 in restitution. The Sixth Circuit vacated. The district court abused its discretion by not allowing Harris to introduce a prior inconsistent statement for impeachment of a government witness. The court upheld the admission of government summary exhibits and a jury instruction relating to stockbroker’s fiduciary duties. Harris presented a colorable claim of extraneous influence on a juror, so the court abused its discretion by failing to hold a "Remmer" evidentiary hearing or by denying defense counsel’s request to question the juror and his friend. View "United States v. Harris" on Justia Law

Harris, a registered stockbroker, and his co-conspirators, including government witness Durand, agreed to recommend shares of Zirk de Maison’s companies to clients in exchange for commissions. The Financial Industry Regulatory Authority began an investigation and questioned Harris and Durand on wire transfers from certain organizations controlled by de Maison. The two told investigators that the deposits resulted from selling expensive watches, and sent letters to FINRA summarizing this fictitious explanation. After Harris was arrested, he purportedly called and texted Durand on multiple occasions, instructing him to stick with their story. Durand later admitted that the watch story was entirely false. Harris was convicted of conspiracy to commit securities fraud or wire fraud, 18 U.S.C. 1343, 1348, 1349; obstruction of justice, 18 U.S.C. 1503, and three counts of wire fraud, 18 U.S.C. 1343. The district court sentenced Harris to 63 months’ imprisonment and $843,423.91 in restitution. The Sixth Circuit vacated. The district court abused its discretion by not allowing Harris to introduce a prior inconsistent statement for impeachment of a government witness. The court upheld the admission of government summary exhibits and a jury instruction relating to stockbroker’s fiduciary duties. Harris presented a colorable claim of extraneous influence on a juror, so the court abused its discretion by failing to hold a "Remmer" evidentiary hearing or by denying defense counsel’s request to question the juror and his friend. View "United States v. Harris" on Justia Law

Mark and Ornella Hammerschmidt were convicted of charges related to their involvement in two schemes to obtain fraudulent tax refunds from the Treasury through the IRS. Mark was sentenced to 135 months in prison and Ornella was sentenced to 48 months in prison. The Eighth Circuit vacated defendant's sentence, holding that the district court did not make the findings required to increase Mark's offense level for being a manager or supervisor and it should not have assessed criminal history points for a 2008 purged disposition of civil contempt. The court affirmed Ornella's sentence, holding that the district court did not err in applying an enhancement for being in the business of preparing or assisting in the preparation of tax returns. Furthermore, the district court did not err in relying on victim impact statements and Ornella's criminal history. View "United States v. Hammerschmidt" on Justia Law

Defendants-Appellants Matthew and Brandi Channon s used fictitious names and addresses to open rewards accounts at OfficeMax, known as “MaxPerks” accounts. They used these accounts to fraudulently obtain more than $100,000 in OfficeMax products. The scheme came to light when Steven Gardner, an OfficeMax fraud investigator, noticed an unusually high number of online-adjustments across several different accounts. Gardner observed that most of the accounts were registered to one of three email addresses, differing only with interspersed periods between the characters of each address. OfficeMax recognized the variations as unique email addresses, but gmail did not. Defendants then used these fraudulent email addresses to claim purchases by other customers, thus generating rewards to which they were not entitled. They also used various accounts to sell more than 27,000 used ink cartridges, receiving $3 in rewards from OfficeMax for each after paying an average of $.32 per cartridge on eBay. In total, over the 21 months of their scheme, Defendants redeemed $105,191 in OfficeMax rewards. Defendants were ultimately were convicted by a jury of wire fraud and conspiracy to commit wire fraud relating to a scheme to defraud OfficeMax. They appealed, challenging the district court’s decision to: (1) admit exhibits derived from computer records and (2) enter a money judgment forfeiture. The Tenth Circuit Court of Appeal upheld the district court’s admission of the exhibits but remanded so the district court may conduct further proceedings on the money judgment of forfeiture. View "United States v. Channon (Matthew)" on Justia Law