Justia U.S. 6th Circuit Court of Appeals Opinion Summaries

Articles Posted in White Collar Crime
by
A jury convicted Sandra, Calvin, and their son Bryan Bailey of conspiring to commit healthcare fraud and other related crimes (18 U.S.C. 371, 1343, 1347; 42 U.S.C. 1320a-7b). The three, working for medical equipment companies, used fraud, forgery, and bribery to sell power wheelchairs and other equipment that was not medically necessary. The district court sentenced Sandra to 120 months’, Calvin to 45 months, and Bryan to 84 months’ imprisonment.The Sixth Circuit affirmed the convictions and the sentence imposed on Bryan. The court rejected challenges to the sufficiency of the evidence and to various evidentiary rulings and upheld the admission of certain out of court statements made in furtherance of the conspiracy. The district court miscalculated Sandra’s Guidelines-range sentence when it erroneously imposed a two-level increase in her offense level for using “mass marketing” in her scheme and incorrectly calculated the loss amount for which Calvin was responsible—and by extension, his Guidelines-range sentence—by holding him responsible for losses beyond those he agreed to jointly undertake. View "United States v. Bailey" on Justia Law

by
In 1998-2010, Dimora served as one of three Cuyahoga County Commissioners. An FBI investigation revealed that Dimora had received over $250,000 in gifts from individuals with business before the County, including home renovations, trips to Las Vegas, and encounters with prostitutes. Dimora had used his position to help with the awarding of County contracts, hiring, the results of at least one County election, and civil litigation outcomes. Dimora’s “influence” ranged from casting formal votes as Commissioner to pressuring other officials.Dimora was charged with Hobbs Act offenses, bribery concerning programs receiving federal funds, making false statements on tax returns, conspiracy to commit mail fraud and honest services mail fraud, conspiracy to commit bribery concerning programs receiving federal funds, conspiracy to commit wire fraud and honest services wire fraud, RICO conspiracy, mail fraud, conspiracy to obstruct justice and obstructing a federal investigation. A jury convicted Dimora on 33 counts. The Sixth Circuit upheld the jury instructions defining “official acts” as having “fairly trace[d] the line between permissible gifts and impermissible bribes.” A ruling that state ethics reports were inadmissible hearsay was harmless in light of “overwhelming evidence.”In its 2016 “McDonnell” decision, the Supreme Court gave a narrow construction to a key element included within several of Dimora’s offenses. The term “official acts” does not include “setting up a meeting, calling another public official, or hosting an event.” Official acts are limited to “formal exercise[s] of governmental power.” Dimora petitioned to vacate his convictions under 28 U.S.C. 2255. The Sixth Circuit vacated a denial of relief. The court declined to decide whether the instructional error was harmless with respect to most of the counts or whether the “cumulative effect” of instructional and evidentiary errors entitles Dimora to relief. View "Dimora v. United States" on Justia Law

by
Kozerski owned two construction companies in Detroit. He formed the second one, CA, to bid on Veterans Administration contracts set aside for small businesses owned by service-disabled veterans. Kozerski does not have a service-related disability. He convinced J.R., a service-disabled veteran, to pretend to be the company’s owner. CA handled six contracts. Kozerski forged J.R.’s signature and sent the government emails supposedly from J.R.. For five contracts, Kozerski did not pay J.R. anything, lying to him that CA did not receive any contracts after the first one.The government eventually discovered the scheme and charged Kozerski with wire fraud, 18 U.S.C. 1343. Kozerski pleaded guilty. The PSR recommended a loss amount of $9.5 million to $25 million, calculated by adding the amounts the government paid CA on all six contracts without crediting the value of the work performed on the contracts: $11,891,243.45, resulting in a Guidelines range of 37-46 months. Kozerski argued the loss should be the amount of profit a qualifying veteran-owned business would receive from the contract, yielding a guidelines range of eight-14 months. The district court adopted Kozerski’s formula and sentenced him to a year and a day. The Sixth Circuit affirmed, upholding the district court’s calculation of the loss as the aggregate difference between Kozerski’s bids and the next-lowest bids, about $250,000. View "United States v. Kozerski" on Justia Law

by
Ashrafkhan came to the U.S. in 1991 after receiving a scholarship to study at Michigan State University. He earned a Ph.D. with a research focus on pathology and the genetics of cancer. In 2006, he founded Compassionate Doctors, a medical practice outside of Detroit, that was actually a “pill mill,” where unscrupulous doctors wrote fraudulent prescriptions for fake patients. Compassionate billed Medicare for the fake patient visits and collected millions of dollars in Medicare payments over the course of several years. The fraudulent prescriptions were filled by individuals recruited by Compassionate at pharmacies that paid Compassionate kickbacks. Those drugs were then sold on the street, resulting in hundreds of thousands of opioid-based drugs being distributed onto the illegal drug market. Ashrafkhan was convicted of conspiracy to distribute controlled substances, conspiracy to commit healthcare fraud, and money laundering and was sentenced to 23 years of imprisonment.The Sixth Circuit affirmed, rejecting a challenge to the jury instruction on “reasonable doubt.” The instruction stressed to the jury the need to base its decision on “the evidence or lack of evidence” and that a reasonable doubt was one that was “still standing” after all of the evidence had been considered. View "United States v. Ashrafkhan" on Justia Law

by
Igboba was convicted on 18 counts under 18 U.S.C. 286, 18 U.S.C. 1343, 18 U.S.C. 287, and 18 U.S.C. 1028A(a)(1), (b), and (c)(5), based on his participation in a conspiracy to defraud the government by preparing and filing false federal income tax returns using others’ identities. He was sentenced to 162 months’ imprisonment, followed by three years of supervised release, and required to pay restitution, special assessment, and forfeiture sums.The Sixth Circuit affirmed, rejecting arguments that when the district court increased his base offense level based on the total amount of loss his offense caused, U.S.S.G. 2B1.1(b)(1), it failed to distinguish between the loss caused by his individual conduct and that caused by the entire conspiracy and that the district court erred in applying a two-level sophisticated-means enhancement, section 2B1.1(b)(10). the district court could rightly attribute $4.1 million in losses to “acts and omissions committed, aided, abetted, counseled, commanded, induced, procured, or willfully caused by” Igboba. The court noted his “sophisticated” use of technology and multiple aliases. View "United States v. Igboba" on Justia Law

by
The Spriggs’ bank account was established to receive social security checks. The Spriggs’ great-grandson, Vance, filled out an application in Mr. Spriggs’s name for a debit card to draw on the checking account. Mr. Spriggs had never used a debit card. The Spriggses did not authorize Vance to do so. Bank cameras photographed Vance using the card to withdraw cash. Vance also used the card for personal expenses. At another bank, Vance used Mr. Spriggs’s social security number to establish an account and obtain a $15,000 cash advance. Vance made other, unsuccessful loan applications. Upon being notified by the banks about suspicious activities involving his identity, Mr. Spriggs filed a police report. The police arrested Vance. While searching Vance’s car, the police located a large stash of personal and financial documents belonging to the Spriggses, including bank statements, tax return forms, property-tax bills, and a car title.The Sixth Circuit affirmed Vance’s convictions for access-device fraud, 18 U.S.C. 1029(a)(5), and two counts of aggravated identity theft, 18 U.S.C. 1028A(a)(1), and his 65-month sentence. The court rejected arguments that the district court failed to make adequate findings of fact after the bench trial, improperly denied a motion for judgment of acquittal, and failed to correctly calculate the loss amount connected to Vance’s charges under Sentencing Guidelines 2B1.1. View "United States v. Vance" on Justia Law

by
Torres was a long-time employee at Vitale’s Italian Restaurants located throughout Western Michigan. Although Torres and other Vitale’s employees often worked more than 40 hours per week, they allege that they were not paid overtime rates for those hours. Vitale’s required the workers to keep two separate timecards, one reflecting the first 40 hours of work, and the other, reflecting overtime hours. The employees were paid via check for the first card and via cash for the second. The pay was at a straight time rate on the second card. Torres alleged that employees were deprived of overtime pay and that Vitale’s did not pay taxes on the cash payments.Torres sought damages under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961. The district court dismissed, holding that the remedial scheme of the Fair Labor Standards Act (FLSA), 29 U.S.C. 201, precluded the RICO claim. The Sixth Circuit reversed in part. The claims based on lost wages from the alleged “wage theft scheme” cannot proceed. However, the FLSA does not preclude RICO claims when a defendant commits a RICO-predicate offense giving rise to damages distinct from the lost wages available under the FLSA. The court remanded Torres’s claim that Vitale’s is liable under RICO for failure to withhold taxes. View "Torres v. Vitale" on Justia Law

by
Holland, a songwriter, sold his song-rights to music companies, in exchange for royalty payments. Holland failed fully to report his income. In 1986-1990, the IRS levied Holland’s royalty assets and recovered $1.5 million. In 1997, the IRS informed him that it intended again to levy those assets. Holland converted his interest in future royalty payments into a lump sum and created a partnership wholly owned by him, to which he transferred title to the royalty assets ($23.3 million). The partnership borrowed $15 million, for which the royalty assets served as collateral. Bankers Trust paid $8.4 million directly to Holland, $5 million in fees, and $1.7 million for Holland’s debts, including his taxes. The IRS did not assess any additional amounts against Holland until 2003. In 2005, the partnership refinanced the 1998 deal, using Royal Bank. In 2012, the IRS concluded that the partnership held the royalty assets as Holland’s alter ego or fraudulent transferee and recorded a $20 million lien against the partnership.In an enforcement suit, the partnership sold the royalty assets. The proceeds ($21 million) went into an interpleader fund, to be distributed to the partnership’s creditors in order of priority. The government’s lien ($20 million), if valid against the partnership, would take priority over Royal Bank’s security interest. The Sixth Circuit affirmed a judgment for Royal Bank. Transactions to monetize future revenue, using a partnership or corporate form, are common and facially legitimate. Holland received adequate consideration in 1998. The IRS’s delay in making additional assessments rather than the 1998 transfer caused the government’s collection difficulties. View "United States v. Holland" on Justia Law

by
Four men from Miami drove to Louisville to set up chiropractic clinics. Lezcano, the mastermind, decided to file false claims with the patients’ insurers and get paid for treatments that never happened. The others, Chavez, Betancourt, and Diaz joined in. The plan worked due to aggressive marketing. The conspirators recruited and paid patients both to come to the clinics and to recruit others. Many of the patients worked at the Jeffboat shipyard. Jeffboat (through its claim administrator, United Healthcare) paid the clinics more than $1 million for fake injections of a muscle relaxant. The government discovered the scheme and brought criminal charges. Chavez went to trial, claiming he had no idea that Lezcano was cooking the books. Convicted of healthcare fraud, conspiracy to commit healthcare fraud, aggravated identity theft, and conspiracy to commit money laundering for purposes of concealment. Chavez was sentenced to 74 months’ imprisonment. The Sixth Circuit affirmed, rejecting his challenges to the sufficiency of the evidence and a related challenge to the prosecutor’s closing argument; two hearsay arguments; three objections to the jury instructions; and a sentencing argument. View "United States v. Chavez" on Justia Law

by
Beane, formerly an Air Force electrical engineer, became involved in a conspiracy theory that the government creates for each citizen a "straw man" and that the Federal Reserve holds in trust that citizen’s inherent “unlimited value.” Proponents believe that by filing the correct paperwork, they can use those funds. Beane, deeply in debt, became involved with Tucci-Jarraf, a former attorney who ran a website, contributed to talk shows, and produced faux-legal documents that purported to allow individuals to access their secret accounts. Beane found a Facebook video that purported to teach viewers how to access their accounts; it actually taught them how to commit wire fraud by exploiting a deficiency in the “Automated Clearing House” bank network. With Tucci-Jarraf's support, Beane logged onto his bank’s website, followed those instructions, and made fraudulent payments on his debts and bought $31 million in certificates of deposit with Federal Reserve funds. He started cashing the certificates and spending money. A bank froze his account. Tucci-Jarraf advised Beane to place his new assets in trust; she prepared pseudo-legal documents and made calls. Agents arrested Beane as he was driving off the dealership lot in a new motor home. Officers arrested Tucci-Jarraf in Washington, D.C., where she was requesting a meeting with the President. Beane and Tucci-Jarraf filed multiple frivolous motions and asked to represent themselves. The judge concluded that they had knowingly and intelligently waived their right to counsel but appointed standby counsel. A jury convicted Beane of bank and wire fraud, 18 U.S.C. 1343, and both of conspiracy to commit money laundering, section 1956(h). The Sixth Circuit affirmed, rejecting arguments that the court should have forced them to accept counsel. They knowingly and intelligently made their choice; self-lawyering does not require the individual to subscribe to conventional legal strategies or orthodox behavior. View "United States v. Beane" on Justia Law