Justia White Collar Crime Opinion Summaries

Lagos was convicted of using a company he controlled to defraud a lender of millions of dollars. After Lagos’ company went bankrupt, the lender conducted a private investigation and participated as a party in the company’s bankruptcy proceedings, spending nearly $5 million in legal, accounting, and consulting fees. When Lagos pleaded guilty to federal wire fraud charges, the court ordered him to pay the lender restitution for those fees. The Fifth Circuit affirmed, citing the Mandatory Victims Restitution Act of 1996, which requires defendants convicted of certain federal offenses, including wire fraud, to “reimburse the victim for lost income and necessary child care, transportation, and other expenses incurred during participation in the investigation or prosecution of the offense or attendance at proceedings related to the offense,” 18 U.S.C. 3663A(b)(4). The Supreme Court, acting unanimously, reversed. The words “investigation” and “proceedings” are limited to government investigations and criminal proceedings and do not include private investigations and civil or bankruptcy proceedings. A broader reading would require courts to resolve difficult, fact-intensive disputes about whether particular expenses “incurred during” participation in a private investigation were actually “necessary,” and about whether proceedings such as a licensing proceeding or a Consumer Products Safety Commission hearing were sufficiently “related to the offense.” The Court acknowledged that its interpretation means that some victims will not receive restitution for all of their losses, but reasoned that is consistent with the Act’s enumeration of limited categories. View "Lagos v. United States" on Justia Law

As a school principal, Buendia took kickbacks from Shy. Detroit Public Schools (DPS) paid Shy for supplies he never delivered. Some of the money came from the federal government. The FBI searched Shy’s home and found a ledger of kickbacks Shy owed Buendia. Buendia was convicted of federal-programs bribery, 18 U.S.C. 666(a)(1)(B), and sentenced to 24 months’ imprisonment. The Sixth Circuit affirmed, rejecting her argument that the district court violated her constitutional right to present a complete defense when it excluded evidence of her kickback expenditures and the alleged receipts of expenditures for school purposes. The right to present a complete defense yields to reasonable evidentiary restrictions. The court correctly excluded as irrelevant evidence of how Buendia spent the kickback money and correctly excluded the receipts of school expenditures as hearsay. Regardless of how Buendia eventually spent the money, she “corruptly solicit[ed]” it because, by awarding contracts to Shy in exchange for kickbacks, she subverted the normal bidding process in a manner inconsistent with her duty to obtain goods and services for her school at the best value. Nor did the government open the door" by introducing testimony that Buendia bought massages using a gift card from Shy to show that she accepted kickbacks. View "United States v. Buendia" on Justia Law

As a school principal, Buendia took kickbacks from Shy. Detroit Public Schools (DPS) paid Shy for supplies he never delivered. Some of the money came from the federal government. The FBI searched Shy’s home and found a ledger of kickbacks Shy owed Buendia. Buendia was convicted of federal-programs bribery, 18 U.S.C. 666(a)(1)(B), and sentenced to 24 months’ imprisonment. The Sixth Circuit affirmed, rejecting her argument that the district court violated her constitutional right to present a complete defense when it excluded evidence of her kickback expenditures and the alleged receipts of expenditures for school purposes. The right to present a complete defense yields to reasonable evidentiary restrictions. The court correctly excluded as irrelevant evidence of how Buendia spent the kickback money and correctly excluded the receipts of school expenditures as hearsay. Regardless of how Buendia eventually spent the money, she “corruptly solicit[ed]” it because, by awarding contracts to Shy in exchange for kickbacks, she subverted the normal bidding process in a manner inconsistent with her duty to obtain goods and services for her school at the best value. Nor did the government open the door" by introducing testimony that Buendia bought massages using a gift card from Shy to show that she accepted kickbacks. View "United States v. Buendia" on Justia Law

The Eighth Circuit affirmed Defendants Benton, Tate, and Kesari's conviction of causing false records, causing false campaign expenditure reports, engaging in a false statements scheme; and conspiring to commit these offenses. Benton served as campaign chairman in Ron Paul's 2012 presidential campaign, Tate served as campaign manager, and Kesari served as deputy campaign manager. The court held that there was sufficient evidence to convict defendants; the jury was entitled to infer from the facts that Benton and Tate had knowingly and willfully caused Commission reports to be filed which falsely reported the payments to a senator for his endorsement as payments to ICT for audio/visual services; the court rejected defendants' arguments that the reporting requirements were so vague or confusing that the court should either apply the rule of lenity or determine that criminal enforcement was not appropriate in this case; Kesari's counts were not multiplicitious; the district court did not abuse its discretion in denying Tate's motion to sever his trial from his codefendants; and the court rejected challenges to the jury instructions, evidentiary challenges, and a Jencks Act claim. View "United States v. Benton" on Justia Law

The Second Circuit vacated defendant's conviction for securities fraud. The court held that although defendant's misstatements could be found by a jury to be material, the district court materially erred in admitting evidence that the counter-party representative in the sole transaction underlying the count of conviction mistakenly believed that defendant was his agent. Therefore, the evidence was prejudicial and the court could not conclude with fair assurance that the jury would have convicted defendant absent such evidence. Accordingly, the court remanded the judgment of conviction, ordering defendant be released on appropriate bond pending further proceedings. View "United States v. Litvak" on Justia Law

The Second Circuit held that the district court lawfully denied defendant's motion for attorney's fees and other litigation expenses under the Hyde Amendment of 1997. The court joined its sister circuits in holding that the standard of review applicable to the appeal of a district court's denial of a defendant's application for attorney's fees and other litigation expenses pursuant to the Hyde Amendment was abuse of discretion. The court adopted the reasoning by the Fifth Circuit in United States v. Truesdale, 211 F.3d 898, 905–06 (5th Cir. 2000). In this case, the district court did not abuse its discretion by denying defendant's application and concluding that the position of the United States was not vexatious, frivolous, or in bad faith, since no controlling precedent foreclosed the government's theory of prosecution and some language in the court's case law arguably supported it, and since defendant's other arguments against the government's case, including those not expressly addressed above were meritless. View "United States v. Larson" on Justia Law

Cohen, as the president and chairman of companies that sold insurance to those in the entertainment industry, was obliged to submit regular financial statements to insurance regulators. Beginning in 2008, Cohen engaged in a scheme to defraud policyholders and the public. Cohen created fraudulent financial documents and sent fraudulent representations to auditing firms and others, securing favorable opinions on the financial standing of his companies, which received more than $100,000,000 in premiums. Prosecutors secured a 31-count indictment, alleging that Cohen’s arrest upended his intentions to harm public officials. Cohen had purchased a long-range tactical rifle, plus ammunition and a night vision device and had researched homemade bombs, purchased ammonium nitrate and made recordings about plans to attack public officials. As his scheme unraveled, Cohen threatened witnesses. Cohen, who represented himself during most proceedings, eventually pleaded guilty to wire fraud, aggravated identity theft, making false statements to insurance regulators, and obstruction of justice. Cohen was sentenced to 444 months in prison. The Fourth Circuit upheld Cohen’s appeal waiver and dismissed certain claims. The court rejected, on the merits, claims that the district court erred in failing to conduct a Farmer hearing on his asset seizure allegations and that Cohen’s Sixth Amendment right to counsel was contravened by the magistrate’s denial of his request to revoke his pro se status and have a lawyer appointed for his final sentencing hearing. View "United States v. Cohen" on Justia Law

Larson was involved with—and later convicted of crimes related to—the organization of fraudulent tax shelters. The IRS then required organizers/promoters to register tax shelters not later than the day of the first offering for sale, 26 U.S.C. 6111(a). Organizers/promoters who failed to register were subject to a penalty of the greater of one percent of the aggregate amount invested in the tax shelter, or $500. Eight years after the IRS notified Larson that he was under investigation, it informed him that it considered him an organizer with a duty to register and was subject to penalties of $160,232,0261 for failure to do so. The IRS Office of Appeals reduced the penalties to $67,661,349, stating that Larson would need to pay the remaining penalty and file a Claim for Refund if he wanted to contest the assessment. Larson paid $1,432,735 and filed his Refund Claim. The IRS rejected Larson’s claim for failure to pay the entire amount. Larson filed suit. The government moved to dismiss, arguing that because Larson had not paid the assessed penalties in full, the court lacked jurisdiction. The court agreed, concluding that application of the full-payment rule did not violate Larson’s due process rights. The Second Circuit affirmed, holding that the full‐payment rule applies to Larson’s section 6707 penalties and that his tax refund, due process, Administrative Procedure Act, and Eighth Amendment claims were properly dismissed. View "Larson v. United States" on Justia Law

In 2015, former Virgin Islands Senator James was charged with wire fraud, 18 U.S.C. 1343, and federal programs embezzlement, 18 U.S.C. 666(a)(1)(A), stemming from his use of legislative funds to ostensibly obtain historical documents from Denmark related to the Fireburn, an 1878 St. Croix uprising. The indictment specified: obtaining cash advances from the Legislature but retaining a portion of those funds for his personal use; double-billing for expenses for which he had already received a cash advance; submitting invoices and receiving funds for translation work that was never done; and submitting invoices and receiving funds for translation work that was completed before his election to the Legislature. James, who argued that he was engaged in legislative fact-finding, moved to dismiss the indictment on legislative immunity grounds. The district court denied the motion, stating that James’ actions were not legislative acts worthy of statutory protection under the Organic Act of the Virgin Islands. The Third Circuit affirmed. Under 48 U.S.C. 1572(d) legislators are protected from being “held to answer before any tribunal other than the legislature for any speech or debate in the legislature." The conduct underlying the government’s allegations concerning James is clearly not legislative conduct protected by section 1572(d). View "United States v. James" on Justia Law

In 2015, former Virgin Islands Senator James was charged with wire fraud, 18 U.S.C. 1343, and federal programs embezzlement, 18 U.S.C. 666(a)(1)(A), stemming from his use of legislative funds to ostensibly obtain historical documents from Denmark related to the Fireburn, an 1878 St. Croix uprising. The indictment specified: obtaining cash advances from the Legislature but retaining a portion of those funds for his personal use; double-billing for expenses for which he had already received a cash advance; submitting invoices and receiving funds for translation work that was never done; and submitting invoices and receiving funds for translation work that was completed before his election to the Legislature. James, who argued that he was engaged in legislative fact-finding, moved to dismiss the indictment on legislative immunity grounds. The district court denied the motion, stating that James’ actions were not legislative acts worthy of statutory protection under the Organic Act of the Virgin Islands. The Third Circuit affirmed. Under 48 U.S.C. 1572(d) legislators are protected from being “held to answer before any tribunal other than the legislature for any speech or debate in the legislature." The conduct underlying the government’s allegations concerning James is clearly not legislative conduct protected by section 1572(d). View "United States v. James" on Justia Law