Justia White Collar Crime Opinion Summaries

Plaintiffs, Mexican nationals, filed suit against defendants, international air transportation companies that transport passengers to and from the United States and Mexico, under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961-68, alleging that defendants defrauded them by collecting a Mexican tourism tax in which they were exempt. Mexico imposed a tax on certain travelers who arrive in Mexico on flights that originated outside of Mexico, but exempted Mexican nationals and children under the age of two. The district court dismissed the case with prejudice. The court concluded that, although defendants' conduct regarding the tax was very troubling, plaintiffs failed to allege the existence of an express agreement, let alone an "enterprise" under section 1962. Accordingly, the court affirmed the judgment. View "Almanza v. United Airlines" on Justia Law

Minhas defrauded customers of his Chicago travel agencies and airlines through a scheme in which he collected payment for airline reservations that he canceled without his customers’ knowledge, by manipulating the two-tiered online ticket-reservation system. Minhas was convicted of wire and mail fraud, 18 U.S.C. 1341 and 1343 in two separate cases: one that proceeded to a bench trial and one in which Minhas pleaded guilty in 2015. At a consolidated sentencing hearing, the district court imposed two partially concurrent prison terms totaling 114 months. The Seventh Circuit affirmed, rejecting a challenge the district court’s application of the Sentencing Guidelines’ enhancement for causing “substantial financial hardship” to the two sets of victims (U.S.S.G. 2B1.1(b)(2)). The court acknowledged that it had “seen stronger evidence,” but was not convinced that the district court committed clear error in its assessment of the record. View "United States v. Minhas" on Justia Law

The Securities and Exchange Commission (SEC) filed suit against American Pension Services ("APS"), a third-party administrator of self-directed individual retirement and 401(k) accounts (collectively "IRA Accounts"), and its President and CEO, Curtis DeYoung. The SEC alleged that DeYoung misappropriated $24 million in APS customer funds that APS had commingled in a Master Trust Account at First Utah Bank, custodian of the funds. The district court appointed a Receiver, who ultimately entered into a Settlement Agreement with First Utah. The settlement included a Claims Bar Order, which barred all other claims against First Utah relating to any IRA Accounts established with APS. Three of the approximately 5,500 APS clients who had a financial stake in the receivership entity intervened and contended that the court could not bar them from filing their own claims against First Utah. The district court disagreed and approved the settlement. The intervenors appealed, but finding no reversible error, the Tenth Circuit affirmed. View "SEC v. American Pension Services" on Justia Law

Simmerman began working at Shoreline Federal Credit Union in 1987 and became manager in 2006. She began embezzling money, by complex manipulation of ledgers, in 1998 and was discovered in 2014. She pled guilty to embezzling $1,528,000, 18 U.S.C. 657, and to structuring the deposits of the money she stole to evade the reporting requirements of 31 U.S.C. 5313(a), in violation of 31 U.S.C. 5324(a)(3) and (d)(1). The district court assessed Simmerman’s total offense level at 28, based on a base offense level of seven, a 16-level increase for a loss amount between $1 million and $2.5 million, a two-level increase for sophisticated means, four-level increase for jeopardizing the soundness of a financial institution, a two-level increase for abuse of a position of trust, and a three-level reduction for acceptance of responsibility and a timely plea. With a criminal history category of I, Simmerman’s guideline range was 78-97 months and she was sentenced to 78 months on Count 1 and 60 months on Count 2, to be served concurrently. The Sixth Circuit affirmed, upholding the imposition of enhancements for sophisticated means (U.S.S.G. 2B1.1(10)(C)); jeopardizing the soundness of a financial institution (U.S.S.G. 2B1.1(b)(16)(B)(i)); and abuse of a position of trust (U.S.S.G. 3B1.3). View "United States v. Simmerman" on Justia Law

Between 2012 and 2014, three University of Michigan students (plaintiffs) rented rooms from Alawi, which collected $2550 in security deposits from the three. When they moved out, they received their security deposits back, minus small deductions for minor damages to the properties. Plaintiffs believed that Alawi had not complied with Michigan law, which requires landlords to deposit security deposits in a regulated financial institution and to provide the address of that institution to the tenant. The plaintiffs sued Alawi for $6.6 million on behalf of a putative class of six years’ worth of tenants, alleging violations of Racketeer Influenced and Corrupt Organizations Act (RICO) and Michigan law; alleging that Alawi was not entitled to hold security deposits at all (given these alleged breaches of Michigan law), and that knowingly taking security deposits anyway constituted a pattern of federal wire, mail, and bank fraud. The Sixth Circuit affirmed dismissal, finding that the plaintiffs lacked standing to bring the RICO claim. The complaint failed to articulate any concrete injury; its allegations were too vague to meet the particularity requirement of fraud allegations under Civil Rule 9(b). View "Wall v. Michigan Rental" on Justia Law

Defendant pleaded guilty to one count of aggravated identity theft and aiding and abetting, and one count of possessing a false identification document with the intent to defraud the United States. On appeal, defendant challenged the district court's forfeiture order in the amount of $4,128,554.00. The court held that when a conviction for aggravated identity theft is premised on a proven or admitted violation of a predicate offense that is enumerated in the civil forfeiture statute, then forfeiture is authorized. The court concluded that the district court had statutory authority to enter a criminal forfeiture order because of defendant's conviction of aggravated identity theft, with a bank fraud predicate offense; defendant waived his Eighth Amendment claim; defendant waived his right to appeal the forfeiture order on notice grounds; and defendant waived his claim that the district court erred by not requiring the government to prove the amount of proceeds. Accordingly, the court affirmed the judgment. View "United States v. Pollard" on Justia Law

Defendants Dey and Finazzo were involved in a conspiracy to use South Bay as a supplier of Aeropostale apparel in exchange for secret payments. Finazzo was a former merchandising executive for Aeropostale, and Dey controlled South Bay, a clothing vendor. Dey plead guilty to conspiracy, and a jury convicted Finazzo of one count of conspiracy to commit mail and wire fraud and to violate the Travel Act, 18 U.S.C. 371, fourteen counts of mail fraud, and one count of wire fraud. The court affirmed the district court's jury instructions regarding the "right to control" property under the mail and wire fraud statutes; concluded that there was sufficient evidence to support the challenged portions of the jury verdict; but, vacated and remanded the district court's restitution order as to Finazzo and Dey. In a simultaneously issued summary order, the court affirmed the remaining issues on appeal. View "United States v. Finazzo" on Justia Law

Petitioner Austin Veith pleaded guilty to theft and securities fraud. He asked the trial court to sentence him to probation instead of a term of incarceration. The trial court rejected his request for probation with no incarceration and sentenced Veith to ten years of incarceration on the theft count, and twenty-five years of probation on the securities fraud count. Veith did not object when the judge announced his sentence.  But, he did not sign the probation order acknowledging and accepting the terms and conditions of his sentence of probation. Instead, he filed a motion to correct his sentence pursuant to Crim. P. 35(a), arguing that the probationary portion of his sentence must be vacated because he did not consent to it. The trial court denied the motion, and Veith appealed.  The court of appeals affirmed in part and reversed in part, concluding that Veith had consented to the terms and conditions of the sentence of probation by requesting probation prior to the hearing, but that his consent did not include certain terms of probation added by the court. As a result, the court of appeals remanded the case to the trial court to remove the terms of probation from his sentence that Veith had not requested before sentencing.I t did not order any modification of the prison sentence. The Colorado Supreme Court granted certiorari to determine the legality of Veith’s sentence of probation, and reversed the appellate court's judgment. The Supreme Court held that a trial court cannot impose a sentence of probation without the defendant’s consent. In this case, Veith consented to probation in lieu of incarceration; therefore, the trial court exceeded the scope of Veith’s consent when it imposed a ten-year sentence of incarceration in addition to probation. The trial court lacked authority to impose the sentence of probation.  Accordingly, the Court vacated Veith’s sentence in its entirety, reversed the judgment of the court of appeals, and remanded the case to that court to return the case to the trial court for resentencing consistent with Veith’s plea agreement. View "Veith v. Colorado" on Justia Law

The Internal Revenue Service classified Ballard, a securities broker, as a non-filer in 2008 and investigated. Ballard lied about his income, hid money in family members’ bank accounts, and filed then dismissed several Chapter 13 bankruptcy petitions, attempting to avoid paying $848,798 in taxes arising from his income between 2000 and 2008. He eventually pled guilty to violating 26 U.S.C. 7212(a), which prohibits “corruptly . . . obstruct[ing] or imped[ing] . . . administration of [the tax laws].” Ballard urged the court to use the U.S.S.G. for obstruction of justice. The district court rejected Ballard’s argument that he never intended to evade paying his taxes but was merely delaying the payments and used the tax evasion guideline to calculate a higher offense level and an increase in the sentencing range from eight–14 months to 24–30 months. Ballard was sentenced to 18 months’ incarceration. The Sixth Circuit affirmed. What matters in the choice between guidelines sections is which section is more precisely tailored to reflect offense characteristics—like tax evasion and tax loss—and which section covers a more closely related group of crimes. What Ballard did, and what the government charged, was a lie to the tax collector about his earnings. View "United States v. Ballard" on Justia Law

The Mississippi Secretary of State found that David Watkins and Watkins Development, LLC, committed four securities-fraud violations in connection with revenue bonds sold to finance a renovation project at the Metrocenter mall in Jackson. Watkins appealed and the chancery court vacated one count but affirmed the other three. The Court of Appeals affirmed the Secretary on all four counts. The Mississippi Supreme Court granted certiorari and reversed the Court of Appeals in part because the Secretary failed to cross-appeal the chancellor’s decision to vacate Count I. That said, the Court affirmed the Secretary’s findings on the other three counts. View "Watkins Development, LLC v. Hosemann" on Justia Law