Articles Posted in White Collar Crime

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In operating his companies, Rankin failed to remit to the IRS employees’ withholding taxes and inaccurately reported his own earnings as royalties (26 U.S.C. 7202, 7206, 7212). Rankin interfered with and delayed IRS investigations, filing amended returns containing false information and falsely claiming that fire had destroyed his records. Rankin bragged about his efforts to beat the IRS at its own game. He was convicted of 17 tax-related counts, sentenced to 60 months in prison, and required to pay restitution. The Sixth Circuit affirmed his conviction and sentence, modifying his judgment to reflect that he need not pay restitution until his term of supervised release commences. The court rejected a challenge to Count 17, which alleged that during the relevant time, Rankin had “willfully misl[ed] agents of the IRS by making false and misleading statements to those agents and by concealing information sought by those agents who he well knew were attempting to ascertain income, expenses and taxes for [Rankin] and his various business entities and interests.” The indictment contains the elements of the charged offense and does more than merely track the language of the statute. It alleges a nexus between Rankin’s misleading conduct and the agents’ attempts “to ascertain [his] income, expenses and taxes,” an investigation that went beyond the “routine, day-to-day work carried out in the ordinary course by the IRS.” The indictment reflects that the investigation was pending and that Rankin was aware of it. View "United States v. Rankin" on Justia Law

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Anthony, his brother Christopher, their sister Sharon, and Sharon’s husband, Durand, sought tax refunds for 21 separate fictitious trusts that they created. They were successful in obtaining refund checks based upon many of these returns, receiving over $360,000. They were convicted of mail fraud, conspiracy to commit mail fraud, aggravated identity theft, conspiracy to commit identity theft, and illegal monetary transactions. The Seventh Circuit affirmed, rejecting arguments that insufficient evidence supported Sharon’s convictions; that insufficient evidence supported the finding that Anthony and Sharon knew that they were using the names and personal identifying information of real people; that Anthony and Christopher were deprived of the effective assistance of counsel because their state-bar grievances against their attorneys created conflicts of interest; that the indictment was duplicitous regarding the aggravated-identify-theft charges and the district court failed to cure this defect by issuing a specific unanimity jury instruction; that the court’s aiding-and-abetting jury instruction was legally incorrect, and that insufficient evidence supported the court’s aiding-and-abetting jury instruction. View "United States v. Gandy" on Justia Law

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Medicare pays for doctors’ home visits if a patient is homebound. Mobile Doctors offered physician services to homebound Medicare beneficiaries, hiring doctors who assigned their Medicare billing rights to the company. Upon receipt of payment, Mobile would pay the physician-employee a percentage of what Mobile received from billing Medicare. Many of Mobile’s patients did not actually qualify as homebound. Some doctors signed certifications for additional unneeded treatment from companies that provided at-home nursing or physical therapy services—companies that had referred the patients to Mobile. Mobile submitted Medicare codes for more serious and more expensive diagnoses or procedures than the provider actually diagnosed or performed. Mobile instructed physicians to list at least three diagnoses in the patient file; if the doctors did not list enough, a staff member added more. Mobile only paid the physicians if they checked at least one of the top two billing codes. Doctors who billed for the higher of the top two codes were paid more. Mobile also paid for “standing orders” for testing, although Medicare prohibits testing done under standing orders. Daneshvar joined Mobile as a physician in 2012. After following Mobile’s policies Daneshvar was convicted of conspiracy to commit healthcare fraud but found not guilty of healthcare fraud; he was sentenced to 24 months' imprisonment. The Sixth Circuit affirmed. Daneshvar’s trial was fair; none of the district court’s rulings during that proceeding should be reversed. There was no reversible error with his sentencing. View "United States v. Daneshvar" on Justia Law

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Ace, a licensed physician, and Lesa Chaney owned and operated Ace Clinique in Hazard, Kentucky. An anonymous caller told the Kentucky Cabinet for Health and Family Services that Ace pre-signed prescriptions. An investigation revealed that Ace was absent on the day that several prescriptions signed by Ace and dated that day were filled. Clinique employees admitted to using and showed agents pre-signed prescription blanks. Agents obtained warrants to search Clinique and the Chaneys’ home and airplane hangar for evidence of violations of 21 U.S.C. 841(a)(1), knowing or intentional distribution of controlled substances, and 18 U.S.C. 1956(h), conspiracies to commit money laundering. Evidence seized from the hangar and evidence seized from Clinique that dated to before March 2006 were suppressed. The court rejected arguments that the warrants’ enumeration of “patient files” was overly broad and insufficiently particular. During trial, an alternate juror reported some “concerns about how serious[ly] the jury was taking their duty.” The court did not tell counsel about those concerns. After the verdict, the same alternate juror—who did not participate in deliberations—contacted defense counsel; the court conducted an in camera interview, then denied a motion for a new trial. To calculate the sentencing guidelines range, the PSR recommended that every drug Ace prescribed during the relevant time period and every Medicaid billing should be used to calculate drug quantity and loss amount. The court found that 60 percent of the drugs and billings were fraudulent, varied downward from the guidelines-recommended life sentences, and sentenced Ace to 180 months and Lesa to 80 months in custody. The Sixth Circuit affirmed, rejecting challenges to the constitutionality of the warrant that allowed the search of the clinic; the sufficiency of the evidence; and the calculation of the guidelines range and a claim of jury misconduct. View "United States v. Chaney" on Justia Law

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Lee was a member of the Summit County Council. The FBI obtained wiretaps and investigated the relationship between Lee and Abdelqader, a store owner, after complaints that Abdelqader “was insisting on monthly cash payments from other local businesses” that he would give to Lee in exchange for political favors. Abdelqader’s nephews were arrested for felonious assault. Abdelqader called Lee for help; they discussed Lee’s financial problems. Abdelqader promised that they would “work it out.” Lee placed calls to the juvenile court bailiff and the judicial assistant; Lee subsequently deposited 200 dollars in her bank account and placed calls to the judge who was handling the case. Lee also took payment for attempting to intervene in an IRS investigation. The Sixth Circuit affirmed Lee’s convictions on four counts of conspiracy to commit honest services mail and wire fraud, honest services mail fraud, Hobbs Act conspiracy, and Hobbs Act extortion, 18 U.S.C. 1341, 1343, 1346, 1349, and 1951 and two counts concerning obstruction of justice and false statements to law enforcement, 18 U.S.C. 1512(c)(2); 18 U.S.C. 1001 and her 60-month sentence. The court rejected challenges to the sufficiency of the evidence and to the sufficiency of her indictment in light of the Supreme Court’s 2016 “McDonnell” decision. At a minimum, the indictment supports an inference that Lee agreed to perform an official act or pressure or advise other officials to perform official acts in exchange for gifts or loans from Abdelqader. View "United States v. Lee" on Justia Law

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Bradley worked as the general contractor on Ingersoll’s project converting an old Michigan church into a charter school, Bay City Academy (BCA). Ingersoll had previously misappropriated state funding meant for a charter school he already ran, Grand Traverse Academy, and used the funding for the new charter school project to cover his tracks. At trial, Bradley was shown to have conducted fraudulent transfers of the newly misappropriated money, failed to report the resulting sizeable deposits into his accounts in his 2011 tax filing and underpaid his taxes, and failed to file W-2s reporting his BCA employees’ wages to the IRS and to provide them with 1099s. Bradley was convicted of conspiring to defraud the United States, 18 U.S.C. 371. The Sixth Circuit affirmed, rejecting Bradley’s arguments that testimony that he underpaid his 2011 taxes constituted a prejudicial constructive amendment or variance to the indictment; that the government made improper arguments during its opening statement and rebuttal, and that the court improperly refused to instruct the jury on a lesser-included offense. The evidence of his tax filing constituted a presentation of additional evidence to substantiate charged offenses, which did not include facts materially different from those charged. The prosecutor’s statements were improper but did not constitute flagrant prosecutorial misconduct. View "United States v. Bradley" on Justia Law

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The defendants took part in a decade-long scheme surreptitiously to sell tax-free cigarettes, thereby defrauding federal, state, and local governments of more than $45 million in tax revenue. The federal government eventually uncovered the scheme and charged them with 34 counts, including conspiracy to commit mail or wire fraud 18 U.S.C. 1349; conspiracy to launder money, 18 U.S.C. 1956(h); and conspiracy against the United States, 18 U.S.C. 371. Maddux pleaded guilty to 29 counts; Carman, Coscia, and Smith went to trial, where a jury convicted each of them on various counts. The Sixth Circuit affirmed their convictions and sentences--Maddux to 120 months’ imprisonment, Carman to 60 months, Smith to 42 months, and Coscia to 36 months. The scheme involved use of interstate wire communications and the United States mails; it was Congress’s prerogative to punish this combination of conduct more severely than a violation of the Jenkins Act, 15 U.S.C. 376(a), which requires cigarette sellers to file monthly reports. The court rejected an argument that the trial court should have specifically instructed the jury that defendants were not charged with a violation of either the Jenkins Act or the Cigarette Trafficking Act, 15 U.S.C. 377(a). The indictment sufficiently alleged a scheme to defraud. View "United States v. Smith" on Justia Law

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From 2007-2011, a group led by District employee Palazzo defrauded the Cuyahoga Heights School District. From 2009-2011, Defendant was part of this group. The scheme involved Palazzo submitting fake invoices to the District, purporting to be for IT-related goods and services. The vendors were actually shell corporations that never supplied goods or services of any kind to the District. The shell corporations were owned by Palazzo’s brother, Boyles, and Defendant. Five shell corporations defrauded the District of approximately $3.3 million. Defendant was aware, no later than 2009, that the scheme was a fraud. When the scheme was uncovered, Defendant sold his property, moved to Europe, and cut off communications with people in the U.S. He claims he was afraid of Palazzo, who had threatened his family. He was extradited and pled guilty under 18 U.S.C. 1341, 1349 (mail fraud), 18 U.S.C. 1956(h)(money laundering). The Sixth Circuit affirmed his a 70-month sentence, rejecting Defendant’s claims that he should have only received a 14-level offense level increase for the amount of loss that resulted from his offenses—$916,948.77, that he should have received a two-level decrease for playing only a minor role in the offenses, and that he should not have received a two-level increase for obstruction of justice. View "United States v. Donadeo" on Justia Law

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From 2008-2016, Brennan and Dyer (Defendants) operated Broad Street, to incorporate Tennessee corporations (Scenic City). They claimed that once Scenic City was appropriately capitalized, Defendants would register its common stock with the SEC using Form 10, would publicly trade Scenic City, and would acquire small businesses as a legal reverse merger. Investors sent money by mail and electronic wire from other states. Defendants moved the funds through Broad Street’s bank accounts, diverting significant funds to their personal bank accounts. They issued stock certificates and mailed them to investors, but never filed Form 10 nor completed any reverse mergers. Investors lost $4,942,070.18. Defendants reported the embezzled funds as long-term capital gains, substantially reducing their personal tax liability and treated payments to themselves from Broad Street as nontaxable distributions. For 2010-2014, Dyer owed an additional $312,799 in taxes; Brennan owed $164,542. The SEC began a civil enforcement suit under 15 U.S.C. 77(q)(a)(1), 77(q)(a)(2), 77(q)(a)(3), and 78j(b), and Rule 10b-5. Defendants pleaded guilty to conspiracy to commit mail and wire fraud, 18 U.S.C. 371, 1341 and tax evasion, 26 U.S.C 7201. The court sentenced them to prison, ordered restitution ($4,942,070.18), and ordered payments for their tax evasion. The SEC sought and the court entered a disgorgement order to be offset by the restitution ordered in the criminal case. The Sixth Circuit affirmed, rejecting an argument that the disgorgement violates the Double Jeopardy Clause under the Supreme Court’s 2017 “Kokesh” holding that disgorgement, in SEC enforcement proceedings, "operates as a penalty under [28 U.S.C.] 2462.” SEC civil disgorgement is not a criminal punishment. View "United States v. Dyer" on Justia Law

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McKnight, a bartender, became friends with Fewlas. McKnight rented an apartment in his duplex. For 17 years, McKnight lived in this upstairs apartment with her boyfriend, Kurt. Fewlas and McKnight did not always get along. Fewlas disliked Kurt. Fewlas died, having accumulated more than $2.2 million. McKnight went on a spending spree. She withdrew over $600,000 in 171 different transactions—all in amounts less than $10,000. This suspicious conduct got the IRS’s attention; the IRS suspected that Fewlas had not left his estate to McKnight. Kurt confessed that he had forged Fewlas’s signature on a fake will, prepared by attorney Pioch. His confession resulted in multiple convictions. The Sixth Circuit affirmed in part, rejecting a Confrontation Clause claim based on the admission of Kurt’s videotaped deposition testimony. Kurt was 76 years old, in poor health, and unable to travel at the time of trial. The court also upheld the admission of testimony concerning handwriting analysis. The court remanded for reconsideration of a motion for a new trial because the court conflated the rules, repeatedly characterizing its task as evaluating the sufficiency of the evidence, rather than weighing the evidence for itself. The court vacated the sentences: the court enhanced sentencing ranges after concluding that the defendants caused financial hardship to the putative beneficiary of Fewlas’s estate but the Guidelines did not contain that enhancement at the time of the misconduct. View "United States v. Pioch" on Justia Law