Justia White Collar Crime Opinion Summaries

Defendant, an attorney, appealed his conviction and sentence after being convicted of mail, wire, and securities fraud. The convictions were based on evidence that he fabricated press releases and purchase orders to inflate the stock price of his client Signalife, a publicly-traded manufacturer of medical devices. The court rejected defendant's Brady v. Maryland claim, finding that defendant identified only one potential Brady document, which contained no information favorable to him and was accessible through reasonable diligence before trial. Furthermore, defendant failed to identify any suppressed material or any materially false testimony on which the government relied, purportedly in violation of Giglio v. United States. In regard to defendant's sentence, the court concluded that the district court erred in calculating an actual loss figure based on the losses of all investors under the Mandatory Victims Restitution Act of 1996, 18 U.S.C. 3663A, and failed to determine whether intervening events caused the Signalife stock price to drop and, if so, whether these events were unforeseeable such that their effects should be subtracted from the actual loss figure. Accordingly, the court affirmed the conviction, vacated the sentence, and remanded with instructions. View "United States v. Stein" on Justia Law

The accreditation of White’s travel agency, CTC, was revoked in 2003 after audits conducted by United Airlines uncovered fraudulent ticketing schemes that cost the airline $100,000 in airfares. White continued working as a subcontractor for other travel agencies and continued to obtain fraudulent ticket fares by providing false information about her clients’ ages, possession of discount certificates, and military status. White charged service fees and airfare directly to her clients’ credit cards, sometimes for persons other than those clients, and sometimes without their permission. When travel agencies violate an airline’s fare policy and cause financial loss, the airline issues Agency Debit Memoranda (ADM), requiring payment. A travel agent testified that within two years, his agency received more than $100,000 in ADMs based on airfare that White booked. When White was asked for proof that her customers qualified for military discounts, she created false Armed Forces Identification cards using customers’ real names and dates of birth. The airlines determined that the cards were fraudulent and notified the Secret Service. White was charged with wire fraud and aggravated identity theft. The district court permitted White to examine witnesses about actual repayments that were made to victims; White was not permitted to disclose loss-recoupment negotiations that took place long after White was confronted by her victims. White was sentenced to a total of 94 months in prison. The Sixth Circuit affirmed, rejecting arguments the district court read an improper definition of the term “use” into the aggravated identity theft statute; erred in refusing to admit evidence of White’s intention to repay some of the losses; and erred in calculating victims’ losses. View "United States v. White" on Justia Law

Starski identified himself as a lawyer in a demand letter to a business, claiming that his “client” (Cornett, his mother’s husband) had been injured at the business. The manager was suspicious and contacted authorities, who subsequently staged a pretext call during which Starski identified himself as an attorney. Cornett subsequently stated that he had not been injured at the business, but changed his story again for trial. A search of Starski’s computer uncovered documents revealing that he had been involved in several similar schemes, representing himself as an attorney. He is not a licensed attorney, but described himself as a “freelance paralegal.” After his trial on felony charges of attempted grand theft and conspiracy and a misdemeanor charge of unlawful practice of law (Business and Professions Code section 6126), the judge instructed the jury that section 6126 requires more than simply holding oneself out as an attorney, that “practicing law” entails use of that purported status. Starski and Cornett were convicted. Each was given to probation. The court of appeal affirmed, rejecting arguments of insufficient evidence; that the instructions on section 6126 were “overbroad” because they allowed conviction for what a recent U.S. Supreme Court decision made protected free speech; and that the judge erred by refusing to give Starski’s special instruction on a “claim-of-right” defense to the charges of attempting and conspiring to commit grand theft. View "People v. Starski" on Justia Law

The Seventh Circuit affirmed Trudeau’s fraud conviction and his $38 million civil contempt judgment after he refused to surrender profits made from violating Federal Trade Commission orders. Trudeau claimed to be destitute. The FTC demanded that firms thought to be affiliated with Trudeau turn over business records. One such entity, Website Solutions, hired the Law Firms to represent it in connection with the demand. The district judge concluded that Website was under Trudeau’s control and appointed a receiver to marshal assets of Website and Trudeau’s other entities. The receiver collected approximately $8 million. The court approved the receiver’s plan, rejected the Firms’ request for compensation from funds in the receiver’s custody, approved the receiver’s compensation, accepted the final report, and authorized the receiver to send remaining funds to the FTC, closing the receivership. The Seventh Circuit affirmed, rejecting an argument that the Firms’ fees should be paid ahead of compensation for Trudeau’s victims. Before the Firms were hired by Website, a federal court had already directed Trudeau to turn over all proceeds of his improper commercial activities. That order created a lien on Website’s assets, senior to any claim created later. As a proxy for Trudeau, Website had no right to make commitments to pay third parties with funds belonging to Trudeau’s victims. View "Federal Trade Commission v. Trudeau" on Justia Law

In Wayne County, Michigan, Grundy was Assistant County Executive; Executive Director of HealthChoice, a municipal corporation chartered to promote the health and welfare of area residents; and Division Director of the County’s Patient Care Management System, which administered its programs through ProCare Plus. Grundy’s friend, Griffin, formed businesses to provide advertising and electronic medical records services to HealthChoice and ProCare Plus. Griffin would inflate the price and “kickback” the excess to Grundy. According to the government, the benefit to Grundy totaled $1,381,766. He pleaded guilty to honest services wire fraud arising from one of his three schemes, 18 U.S.C. 1343 & 1346, waiving the right to appeal if “the sentence imposed does not exceed the 210-month maximum allowed by” the agreement, which was the top end of the Guidelines range proposed by the government based on the loss associated with his conduct. Grundy proposed a range of 37-46 months, arguing that the loss amount associated with his offense of conviction was $400,000. The court imposed a 90-month term. The government obtained a restitution order for $1,380,767; Grundy argued that restitution should be capped at the $400,000 associated with the offense of conviction. The Sixth Circuit dismissed an appeal, holding that the waiver applied to the restitution order. View "United States v. Michael Grundy" on Justia Law

Blair Olsen served as sheriff of Jefferson County from January 1989 until May 2015, when he resigned due to his conviction in this case. While he was the sheriff, the county provided Olsen with two cell phones and paid the bills for those phones. It initially did so because of unreliable service in different sides of the county. He also carried a personal cell phone and paid the charges for that service plan from his own funds. Once county-wide coverage was available from one of the providers, he discontinued service with the other provider and had both of his county-provided cell phones with the same provider. One cell phone was to be his primary cell phone and the other was to be his backup cell phone. At the same time, he terminated his personal cell phone service, but had the telephone number of his personal cell phone transferred to the backup cell phone. At some point, he permitted his wife to carry the backup cell phone for her personal use. The issue of Olsen’s wife using the backup cell phone became an election issue. Olsen asked the county commissioners to refer the matter to the Attorney General in an attempt to clear his name. A deputy attorney general obtained an indictment against Olsen charging him with three felony counts of knowingly using public money to make purchases for personal purposes based upon his wife’s use of the backup cell phone. Prior to trial, Olsen moved to dismiss the indictment or merge the three counts into one on the ground that the prosecution for three counts violated his right against double jeopardy. The charges were tried to a jury, and Olsen was found guilty of all three counts. The district court withheld judgment and placed Olsen on three years’ probation, and he appealed. The district court ruled that "I think the statute gives the prosecutor very clearly a substantial amount of discretion that says that the incidents may be aggregated into one count, but it doesn’t say they have to be aggregated into one count." In so holding, Supreme Court found that the district court erred. The Supreme Court affirmed the conviction of one count of misuse of public funds and remanded this case to vacate two other counts and amend the order withholding judgment accordingly. View "Idaho v. Olsen" on Justia Law

Defendants, who previously served as high-ranking officials in the Massachusetts Office of the Commissioner of Probation (OCP), were convicted for Racketeer Influenced and Corrupt Organizations (RICO) violations, RICO conspiracy, and mail fraud based on their roles in a hiring scheme at the OCP. The First Circuit reversed the convictions and ordered the entry of judgments of acquittal, holding that the evidence was insufficient to support the convictions because the Government failed to demonstrate the the conduct of these Massachusetts state officials satisfied the appropriate criminal statutes. Specifically, the Government overstepped its authority in using federal criminal statutes to police the hiring practices of Defendants. View "United States v. Tavares" on Justia Law

Defendant was convicted of wire fraud and conspiracy to commit wire fraud. The district court sentenced defendant to 120 months in prison, entered an order of forfeiture in the amount of $2.4 million, and ordered restitution in the amount of $2.4 million. The court concluded that the district court erred in applying the two sentencing enhancements for receiving gross receipts in excess of $1 million from a financial institution pursuant to U.S.S.G. 2B1.1(b)(16)(A) and for abuse of a position of trust pursuant to U.S.S.G. 3B1.3. In a summary order published contemporaneously with this opinion, the court affirmed the district court’s judgments on the indictment and sentencing enhancement for a loss figure of $8.1 million, and declined to resolve defendant's ineffective assistance of counsel claim. View "United States v. Huggins" on Justia Law

From 2009-2012, the federal government appropriated $150 million annually to the government of the Virgin Islands; Willis was Executive Director of the Legislature for the Virgin Islands, with authority to administer contracts. During Willis’s tenure, the legislature’s main building underwent major renovations. Willis was substantially involved in securing contractors. Three contractors later testified that they gave cash or other items of value to Willis to secure more government work or to ensure payment of their invoices. In 2010, the U.S. Department of the Interior audited the legislature’s administrative section while the renovations were taking place and concluded that the legislature had mismanaged public funds. After an investigation, an indictment issued for Willis’s prosecution on extortion charges (18 U.S.C. 1951(a)) and bribery charges (18 U.S.C. 666(a)(1)). The Third Circuit affirmed his conviction and five-year prison term, upholding admission of evidence of Willis’s prior acceptance of bribes. The indictment adequately alleged all required elements of bribery: the parties, the relevant amounts of money exchanged, where the illegal transactions occurred, that Willis used his public position unlawfully, specific details of each transaction, and improper purposes under the federal statutes. The government proved a sufficient nexus between Willis’s conduct or his status as Executive Director and a corresponding effect on federal funds. View "United States v. Willis" on Justia Law

At USARMS, Burns provided estate-planning services and offered clients an investment in promissory notes that USARMS sold. The notes were allegedly backed by Turkish bonds. USARMS’s owners, Durmaz and Pribilski, claimed to have a connection in the Turkish government that allowed them to purchase the bonds at a below-market rate. USARMS guaranteed an 8.5 percent rate of return and told investors that returns could be as high as 14 percent. In reality, USARMS never purchased Turkish bonds. Durmaz and Pribilski used the investments for their personal use and to pay earlier investors “returns.” Burns was unaware of that deception. Before charges were filed, Durmaz fled the country and Pribilski died. Based on the government’s assertion that that Burns had induced victims to invest by falsely telling them that he had experience managing investments and that he and his family had invested in the bonds, a jury convicted Burns of wire fraud and mail fraud. The district court enhanced Burns’s sentence, ordered restitution, and ordered forfeiture based on the victims’ $3.3 million total loss in the Ponzi scheme. The Seventh Circuit affirmed the conviction, rejecting a claim of insufficient evidence of material misrepresentations. The court remanded the sentencing enhancement and the restitution order because the district court failed to address proximate cause. View "United States v. Burns" on Justia Law