Justia White Collar Crime Opinion Summaries

Susan and William Avignone defrauded five investors out of more than $700,000 in a real estate scheme. In exchange for dismissal of some of the charges, the Avignones pleaded guilty to three counts of fraud in connection with the offer, sale, and purchase of a security and two counts of grand theft of personal property with a value of more than $950. Susan admitted a Penal Code section 186.11 (a)(2) allegation attached to count 10, and a section 12022.6 (a)(1) allegation attached to count 5. William admitted a section 186.11 (a)(2) allegation attached to count 2, a section 12022.6 (a)(2) allegation attached to count 3, and a section 12022.6 (a)(1) allegation attached to count 5. At sentencing, the trial court struck the section 186.11 enhancements and denied probation. It sentenced the Avignones to an aggregate term of five years four months to be served in the custody of the sheriff. The court imposed a split sentence, ordering that one year four months of the imposed sentence would be served in the community under mandatory supervision. The Avignones separately appealed, contending the trial court abused its discretion in denying probation. William also contended: (1) an electronic search condition was unreasonable and unconstitutionally overbroad; and (2) the trial court improperly calculated a restitution order as to one of the victims. The State conceded the trial court improperly calculated the restitution for one of the victims, but asserted the Avignones' sentences were unauthorized because the trial court did not have discretion to sentence them to county jail, rather than prison. The Court of Appeal rejected the Avignones' argument that the trial court abused its discretion in denying probation, and agreed the trial court imposed an unauthorized sentence. This conclusion rendered William's argument regarding the electronic search condition moot. The Court reversed and remanded with directions to allow the Avignones an opportunity to withdraw their guilty pleas. View "California v. Avignone" on Justia Law

The Indianapolis Land Bank was created to return tax-delinquent and other troubled properties into productive use. But, in 2011, Walton, the Land Bank’s manager, and Johnson began orchestrating the sale and resale of the city’s properties through a nonprofit loophole and pocketing the profits. The total loss to the city was $282,782.38. Johnson and Walton were convicted of honest services wire fraud, wire fraud, and conspiracy to engage in money laundering. Walton was also convicted of receiving bribes. The Seventh Circuit affirmed. The government provided substantial evidence that the two had specific intent, including evidence of kickbacks and making false statements, and provided to substantial evidence to support the money laundering convictions. Rejecting Walton’s argument that the court’s instruction on 10 U.S.C. 666 permitted the jury to convict him of accepting a gratuity and not a bribe, the court stated that the instruction and evidence made clear that Walton was convicted of accepting bribes, not gratuities. The convictions required proof of their bad intent (specific intent to commit fraud), so a good faith jury instruction was unnecessary. Both were properly subject to sentencing enhancements because their offenses involved a public official in a high-level decision-making position and they victimized vulnerable families. View "United States v. Johnson" on Justia Law

Fadden earned over $100,000 per year but did not submit tax returns. After an audit, the IRS garnished his wages. Fadden filed for bankruptcy, triggering an automatic stay. Fadden claimed that he had no interest in any real property nor in any decedent’s life insurance policy or estate. Fadden actually knew that he would receive proceeds from the sale of his mother’s home (listed by the executor of her estate for $525,000) and would receive thousands of dollars as a beneficiary on his mother’s life insurance policies. A week later, Fadden mentioned his inheritance to a paralegal in the trustee’s office and asked to postpone his bankruptcy. When Fadden finally met with his bankruptcy trustee and an attorney, he confirmed that his schedules were accurate and denied receiving an inheritance. The Seventh Circuit affirmed his convictions under 18 U.S.C. 152(1) for concealing assets in bankruptcy; 18 U.S.C. 152(3) for making false declarations on his bankruptcy documents; and 18 U.S.C. 1001(a)(2) for making false statements during the investigation of his bankruptcy. Counts 1 and 2 required proof of intent to deceive. Fadden proposed a theory-of-defense instruction based on his assertion that his conduct was “sloppiness.” The Seventh Circuit upheld the use of pattern instructions, including that “knowingly means that the defendant realized what he was doing and was aware of the nature of his conduct and did not act through ignorance, mistake or accident.” View "United States v. Fadden" on Justia Law

In 2014, following investigations by the Indiana Attorney General and FBI, a grand jury indicted Shorter and her company, Empowerment, which provided transportation to Medicaid patients, for health care fraud, 18 U.S.C. 1347, and three counts of misusing a means of identification, 18 U.S.C. 1028A. The government submitted evidence of Shorter’s personal involvement in Empowerment’s billing practices; the results of an Indiana Attorney General Investigation into Empowerment’s billing practices; an FBI search of Empowerment’s records; and the experiences of Empowerment employees and of clients who used its services. The Seventh Circuit affirmed her convictions rejecting arguments challenging the indictment, the admission of certain evidence at trial and the sufficiency of the evidence as a whole. The court noted “powerful” circumstantial evidence that permitted the jury to convict her, especially because the jury could reasonably infer from the evidence that she “caused” the fraudulent billings. View "United States v. Shorter" on Justia Law

The Fourth Circuit affirmed defendants' conviction of health care fraud and conspiracy to engage in health care fraud. Assuming that the district court did err in failing to consider materiality expressly when assessing guilt, the court held that such error was harmless because the record conclusively established that insurers would not have paid for the second, more sophisticated tests had they known those tests were not medically necessary and no rational fact finder could conclude otherwise. Furthermore, Universal Health Services, Inc. v. United States ex rel. Escobar, — U.S. —, 136 S. Ct. 1989 (2016), did not compel a different conclusion. The court rejected defendants' remaining arguments, concluding that each lacked merit. View "United States v. Palin" on Justia Law

Defendant Kenneth Hardin was the senior manager of the Civil Rights Division for the Regional Transportation District in Colorado (RTD). Lucilious Ward was the owner–operator of a busing company that had been certified as a Disadvantaged Business Enterprise and Small Business Enterprise. Ward was also a manufacturing representative for a Chinese manufacturer of automobiles and rechargeable batteries. In 2008, Ward’s busing company contracted with RTD as a service provider for a program that provided local bus transportation in Denver for people with disabilities. From that point on, Ward paid Defendant monthly bribes in exchange for his help. When the "Access-a-Ride" contract expired in 2014 and Ward received his final check, Defendant called Ward to request an additional, final payment of $1,100. Unbeknownst to Defendant, Ward had pled guilty to tax evasion. Hoping to receive a reduced sentence in his tax case, Ward relayed Defendant’s request to the Federal Bureau of Investigation, which began using him as a confidential informant to investigate Defendant for bribery. Defendant was indicted on four counts relating to committing bribery involving a program that receives federal funds. The four counts correlated to four meetings he had with Ward about RTD’s request for proposal for a shuttle-bus contract. Count 1 charged Defendant with accepting a bribe of $1,100; he was acquitted on this count. However, the jury found Defendant guilty as to Counts 2–4, which were based on Ward’s bribes relating to the proposed shuttle-bus contract. After return of the guilty verdicts, Defendant moved for a judgment of acquittal, arguing that, because of his acquittal on Count 1, the government had not shown that the bribes he solicited met the $5,000 threshold set by statute. The district court denied Defendant’s motion, holding that the jury could reasonably have concluded that the bribes were intended to influence the selection of bids for the shuttle-bus contract and that the value of this contract exceeded $5,000. Defendant timely appealed. View "United States v. Hardin" on Justia Law

El-Bey, a "Moorish national," created an EIN for the Trust, naming himself as the trustee and fiduciary. El-Bey filed six tax returns for the Trust, each seeking a $300,000 refund, signing each return, identifying himself as the fiduciary, and listing his date of birth as the date of trust creation. The IRS flagged these returns as frivolous and notified El-Bey that he would be assessed a $5,000 penalty per return if he failed to file a corrected return. El-Bey returned the letters to the IRS, including vouchers and tax forms bearing no relation to the returns. Based on the fourth and fifth tax returns, the IRS mailed two $300,000 refund checks, which El-Bey deposited, using the funds to purchase vehicles and to buy a house. After the sixth return, El-Bey was indicted on two counts of mail fraud, 18 U.S.C. 1341, and six counts of making false claims to the IRS, 18 U.S.C. 287. The district court allowed El-Bey to proceed pro se and appointed standby counsel over El-Bey’s objection. El-Bey advanced irrelevant arguments, interrupted the judge, and made it challenging to manage the trial. The court expressed frustration, but later instructed the jurors, who indicated that they could continue to be impartial. The Seventh Circuit remanded for a new trial. Statements by the court in the presence of the jury conveyed that El-Bey was guilty or dishonest and impaired El-Bey’s credibility in the eyes of the jury. View "United States v. El-Bey" on Justia Law

El-Bey, a "Moorish national," created an EIN for the Trust, naming himself as the trustee and fiduciary. El-Bey filed six tax returns for the Trust, each seeking a $300,000 refund, signing each return, identifying himself as the fiduciary, and listing his date of birth as the date of trust creation. The IRS flagged these returns as frivolous and notified El-Bey that he would be assessed a $5,000 penalty per return if he failed to file a corrected return. El-Bey returned the letters to the IRS, including vouchers and tax forms bearing no relation to the returns. Based on the fourth and fifth tax returns, the IRS mailed two $300,000 refund checks, which El-Bey deposited, using the funds to purchase vehicles and to buy a house. After the sixth return, El-Bey was indicted on two counts of mail fraud, 18 U.S.C. 1341, and six counts of making false claims to the IRS, 18 U.S.C. 287. The district court allowed El-Bey to proceed pro se and appointed standby counsel over El-Bey’s objection. El-Bey advanced irrelevant arguments, interrupted the judge, and made it challenging to manage the trial. The court expressed frustration, but later instructed the jurors, who indicated that they could continue to be impartial. The Seventh Circuit remanded for a new trial. Statements by the court in the presence of the jury conveyed that El-Bey was guilty or dishonest and impaired El-Bey’s credibility in the eyes of the jury. View "United States v. El-Bey" on Justia Law

The First Circuit affirmed the judgment of the district court denying Appellant’s motion for a new trial in his criminal case pursuant to Fed. R. Crim. P. 33. Appellant was convicted of antitrust conspiracy. The First Circuit affirmed Appellant’s conviction and sentence. Appellant later moved for a new trial based on freshly discovered evidence, arguing that the government offended the due process guarantees memorialized in Brady v. Maryland, 373 U.S. 83 (1963). The district court denied the motion, reasoning that the earlier disclosure of the freshly discovered evidence would not have changed the outcome of the criminal case. The First Circuit affirmed, holding that the district court’s finding that Appellant suffered no cognizable prejudice from the delayed disclosure of the information at issue was not in error. View "United States v. Peake" on Justia Law

Defendant Kathleen Stegman was convicted by a jury of two counts of evading her personal taxes for the tax years 2007 and 2008. Stegman was sentenced to a term of imprisonment of 51 months, to be followed by a three-year term of supervised release. The district court also ordered Stegman to pay a $100,000 fine, plus restitution in the amount of $68,733. Stegman established several limited liability corporations pertaining to a “medical aesthetics” business she owned, using these corporations to effectively launder client payments. As part of this process, Stegman would use the corporations to purchase money orders, typically in denominations of $500 or less, that she in turn used to purchase items for personal use. In 2007, Stegman purchased 162 money orders totaling $77,181.92. In 2008, she purchased 252 money orders totaling $121,869.99. And in 2009, she purchased 157 money orders totaling $73,697.31. Notably, Stegman reported zero cash income on her federal income tax returns during each of these years. At the conclusion of the evidence, the jury convicted Stegman of evading her personal taxes for the tax years 2007 and 2008 (Counts 4 and 5), as well as evading corporate taxes for the tax years 2008 and 2009 (Counts 1 and 2). The jury acquitted Stegman of evading corporate taxes for the tax year 2010 (Count 3). The jury also acquitted Stegman and Smith of the conspiracy charge (Count 6). Stegman moved for judgment of acquittal or, in the alternative, a new trial. The district court granted the motion as to the two counts that related to the evasion of corporate taxes (Counts 1 and 2), but denied the remainder of the motion. In doing so, the district court chose to acquit Stegman of the corporate tax evasion counts not due to a lack of “proof beyond a reasonable doubt that this corporation evaded taxes,” but rather because “the indictment itself was flawed in attributing the loss as due and owing by Ms. Stegman, when actually it was due and owing by the corporation.” Stegman raised five issues on appeal, four of which pertain to her convictions and one of which pertained to her sentence. Although several of these issues require extensive discussion due to their fact-intensive nature, the Tenth Circuit concluded that all of these issues lacked merit. View "United States v. Stegman" on Justia Law