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

You, a U.S. citizen of Chinese origin, worked as a chemist, testing the chemical coatings used in Coca-Cola’s beverage cans. You was one of only a few Coca-Cola employees with access to secret BPA-free formulas. You secretly planned to start a company in China to manufacture the BPA-free chemical and received business grants from the Chinese government, claiming that she had developed the world’s “most advanced” BPA-free coating technology. On her last night as a Coca-Cola employee, You transferred the formula files to her Google Drive account and then to a USB drive. You certified that she had not kept any confidential information. You then joined Eastman, where she copied company files to the same account and USB drive. Eastman fired You and became aware of her actions. Eastman retrieved the USB drive and reported You to the FBI.You was convicted of conspiracy to commit theft of trade secrets, 18 U.S.C. 1832(a)(5), possessing stolen trade secrets, wire fraud, conspiracy to commit economic espionage, and economic espionage. The Sixth Circuit remanded for resentencing after rejecting You’s claims that the district court admitted racist testimony and gave jury instructions that mischaracterized the government’s burden of proof as to You’s knowledge of the trade secrets and their value to China. In calculating the intended loss, the court clearly erred by relying on market estimates that it deemed speculative and by confusing anticipated sales of You’s planned business with its anticipated profits. View "United States v. You" on Justia Law

The DEA received a tip from a local pharmacist that Dr. Anderson, an Ohio physician, was seeing patients who had been discharged by other physicians for non-compliance. The pharmacist was one of several who had grown concerned about Anderson’s prescribing practices relating to pain medications. The State Medical Board of Ohio expressed concern that Anderson was not prescribing in the usual course of practice or for a legitimate medical purpose. Separately, one of Anderson’s patients contacted the local sheriff’s office, voicing his concern that he sometimes would not get to see Anderson at his appointments and would occasionally retrieve his prescriptions from the receptionist rather than from Anderson himself. The DEA launched an investigation into Anderson, used a confidential informant, and then executed a search warrant to obtain evidence.Anderson was convicted of one count of conspiracy to distribute controlled substances, eight counts of unlawful distribution of controlled substances, and one count of healthcare fraud. The Sixth Circuit affirmed, rejecting challenges to the sufficiency of the evidence supporting his convictions, the district court’s refusal to give a good faith jury instruction, and the admission of the government’s expert testimony. View "United States v. Anderson" on Justia Law

Palma worked for FCA starting in 2013 and allegedly participated in a scheme that manipulated FCA's new diesel engine’s function during testing to produce artificially impressive results with respect to features that FCA was targeting to customers, including fuel economy greater than 30 mpg and a frequency of fluid changes similar to that of gasoline-powered cars. When the vehicles were tested for emissions, the program activated Exhaust Gas Recirculation, sacrificing fuel economy. When the vehicles were tested for fuel economy, Recirculation was lowered, increasing emissions. Palma knew that these results were critical to receiving the “best-in-class” fuel economy ratings and that the vehicles did not meet EPA requirements. A sticker affixed to the cars stated they complied with regulations and provided detailed emissions information, as influenced by Palma's scheme. FCA sold more than 100,000 of these vehicles. Customers who purchased the vehicles said that the misleading representations were material to their purchase decisions.Palma was charged with 13 counts, including conspiracy to commit wire fraud, 18 U.S.C. 1349. The district court held that there was an insufficient causal nexus between Palma’s conduct and customers being induced to purchase vehicles and that Palma’s conduct was less a deprivation of consumer property and more a deception of regulators. The Seventh Circuit reversed the dismissal of that count, reasoning that Palma was only charged with conspiracy, not wire fraud itself, and the indictment alleges adequate facts tying Palma to a fraudulent scheme. View "United States v. Palma" on Justia Law

Memphis attorney Skouteris practiced plaintiff-side, personal injury law. He routinely settled cases without permission, forged client signatures on settlement checks, and deposited those checks into his own account. Skouteris was arrested on state charges, was disbarred, and was indicted in federal court for bank fraud. At Skouteris’s federal trial, lay testimony suggested that Skouteris was not acting under any sort of diminished cognitive capacity. Two psychologists examined Skouteris. The defense expert maintained that Skouteris suffered from a “major depressive disorder,” “alcohol use disorder,” and “seizure disorder,” which began during Skouteris’s college football career, which, taken together, would have “significantly limited” Skouteris’s “ability to organize his mental efforts.” The government’s expert agreed that Skouteris suffered from depression and alcohol use disorder but concluded that Skouteris was “capable of having the mental ability to form and carry out complex thoughts, schemes, and plans.” Skouteris’s attorney unsuccessfully sought a jury instruction that evidence of “diminished mental capacity” could provide “reasonable doubt that” Skouteris had the “requisite culpable state of mind.”Convicted, Skouteris had a sentencing range of 46-57 months, with enhancements for “losses,” abusing a position of trust or using a special skill, and committing an offense that resulted in “substantial financial hardship” to at least one victim. The district court varied downward for a sentence of 30 months plus restitution of $147,406. The Sixth Circuit affirmed, rejecting challenges to the sufficiency of the evidence, the jury instructions, and the sentence. View "United States v. Skouteris" on Justia Law

Lightning, a Delaware start-up company that owns intellectual property protecting designs for a pallet used for transporting cold foods, sought $26 million in outside funding to retire debt, cover operational expenses, and purchase equipment to begin production. GrowMI, an entity created by the Michigan Economic Development Corporation, agreed to loan Lightning $5 million and used its relationship with Flagstar Bank to secure an additional $7 million loan. GrowMI and Flagstar conditioned their loans on Lightning’s securing the rest of the $26 million by selling equity and securing lines of credit from Lightning shareholders. Lightning’s creditor LT sent GrowMI a letter indicating that Lightning owed LT $3.3 million, secured by an interest in Lightning’s intellectual properties. GrowMI allowed Lightning to use a portion of GrowMI’s loan to repay LT, ensuring GrowMI’s first secured position on Lightning’s intellectual properties.GrowMI subsequently became aware of wrongdoing at Lightning, which defaulted on its debt to GrowMI. GrowMI sued LT and its principals, Lightning shareholders, Lightning employees, and a consulting company, alleging violation of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1962, by a pattern of racketeering activity that included bank fraud, transactions involving money derived from that bank fraud, trade secrets misappropriation, and wire fraud. The Sixth Circuit affirmed the dismissal of the suit. GrowMI’s claims rest on its status as Lightning’s creditor, making its injury derivative of the harm incurred by Lightning. GrowMI does not plausibly allege that it was directly injured by reason of the alleged racketeering activities. View "Grow Michigan, LLC v. LT Lender, LLC" on Justia Law

Several members of the Romania-based “Alexandria Online Auction Fraud Network,” including Nedelcu, were charged with conspiracy to violate RICO, 18 U.S.C 1962(d); conspiracy to commit wire fraud, 18 U.S.C. 1349; and conspiracy to commit money laundering, 18 U.S.C. 1956(h). Romania extradited Nedelcu to the U.S. He pleaded guilty to RICO conspiracy in exchange for the dismissal of his other charges and admitted that the government could prove certain facts beyond a reasonable doubt including that a Confidential Source would, in accordance with Nedelcu’s instructions, launder the proceeds of fraud by exchanging fraud proceeds into bitcoin to conceal the source, nature, ownership, and control of those proceeds. Nedelcu and the CS laundered approximately $5,600. The PSR concluded that two money-laundering provisions applied: U.S.S.G. 2S1.1(b)(2)(B) increases a defendant’s offense level by two “[i]f the defendant was convicted under 18 U.S.C. 1956” and section 2S1.1(b)(3), provides that, if 2S1.1(b)(2)(B) applies and the offense involved “sophisticated laundering” a further two-level increase is necessary.With a Guidelines Range of 78-97 months’ imprisonment, the court imposed a sentence of 82 months. The Sixth Circuit affirmed. Because the factual basis for Nedelcu’s plea agreement specifically established that he committed money laundering as a predicate for his RICO conviction, the Guidelines compelled the district court to sentence him “as if” he had been convicted of money laundering. View "United States v. Nedelcu" on Justia Law

A Romanian organization, the Alexandria Online Auction Fraud Network (AOAF), used fraudulent online advertisements on websites like eBay, Craigslist, and Amazon to convince unknowing U.S. purchasers to send payments for high-value items that did not actually exist. After receiving the payments through vehicles like gift cards and prepaid debit cards, AOAF money launderers in the U.S., including Brown, converted the payments into Bitcoin currency, which was then transferred back to Romania. Foreign Bitcoin exchange businesses including RG, Iossifov’s Bulgaria-based business, then transferred the Bitcoin balances to cash on behalf of AOAF fraudsters. About 900 victims never received the items for which they paid. The government learned about the scheme in 2014 when it discovered that an American citizen living in Kentucky was laundering funds on behalf of an online fraud organization; the individual became a confidential source.The Sixth Circuit affirmed Iossifov and Brown’s convictions and sentences under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1962(d), and Iossifov’s additional conviction for conspiring to launder money 18 U.S.C. 1956(h). The court rejected venue, jurisdiction, and Due Process claims, a contention that Bitcoin does not fall under the money laundering statute, and challenges to sentencing enhancements and evidentiary rulings. View "United States v. Iossifov" on Justia Law

The 2008 financial crisis caused GM and Chrysler into bankruptcy. In Europe, Fiat faced similar troubles. Fiat CEO Marchionne forged a relationship with the United Auto Workers (UAW). Fiat negotiated a partial purchase of Chrysler. Chrysler and the UAW agreed to Marchionne’s request to jettison certain traditional union protections. The companies emerged from bankruptcy with the UAW large percentages of their equity.GM alleges that Marchionne subsequently implemented a bribery scheme to revive Chrysler and harm GM. Fiat acquired the UAW’s stake in Chrysler. The new entity, “FCA,” allegedly “began a long-running intentional scheme of improper payments" to UAW officials … to influence the collective bargaining process, providing Chrysler with labor peace and competitive advantages. GM rejected Marchionne's proposal for a merger in 2015; although bribed UAW executives pressed GM to agree. During subsequent collective bargaining, the UAW and FCA allegedly conspired “to force enormous costs on GM.”In 2017, the Justice Department criminally charged numerous FCA executives and UAW officials. Several entered guilty pleas. FCA pleaded guilty and agreed to a $30 million fine. The UAW agreed to a consent decree, requiring federal monitoring.GM sued FCA, Fiat, and individuals, asserting RICO claims, 18 U.S.C. 1962(b), (c), and (d). The district court dismissed. Assuming that FCA committed RICO violations, they were either indirect or too remote to have proximately caused GM’s alleged injuries. The Sixth Circuit affirmed, first rejecting an argument that the NLRB had exclusive jurisdiction. The court noted the existence of a more “immediate victim,” the FCA workers, “better situated to sue.” GM has not alleged that it would have received the same benefits as FCA absent the corruption. View "General Motors, LLC v. FCA US, LLC" on Justia Law

Inman was part of the majority of the Michigan House of Representatives who, along with a majority of the Senate, voted to repeal the prevailing-wage law. Inman was charged with soliciting bribes for his prevailing-wage vote: attempted extortion under color of official right, 18 U.S.C. 1951; soliciting a bribe, 18 U.S.C. 666(a)(1)(B); and making a false statement to the FBI, 18 U.S.C. 1001(a)(2) (Count III). A jury acquitted Inman on Count III but hung on Counts I and II. The district court dismissed those counts, concluding that the acquittal precluded a retrial on the other counts.The Sixth Circuit reversed. The acquittal on the false-statement charge did not decide any fact that necessarily precludes a verdict against Inman on the extortion and bribery-solicitation charges, so issue preclusion does not apply. To show the underlying corrupt agreement, the prosecution did not need to produce evidence that Inman lied to the FBI. It needed to produce evidence that Inman extorted or attempted to solicit an agreement where Inman would vote on the prevailing-wage law in exchange for payment. At retrial, a jury must decide whether Inman actually extorted or attempted to solicit such an agreement—a question not answered by the acquittal on Count III. View "United States v. Larry Inman" on Justia Law

VanDemark owns the Used Car Supermarket, which sells cars from two lots in Amelia, Ohio. In 2013-2014, VanDemark funneled away his customers’ down payments and left them off his tax returns. He used this stashed-away cash to finance the mortgage on his mansion.The Sixth Circuit affirmed VanDemark’s convictions for helping prepare false tax returns, 26 U.S.C. 7206(2), structuring payments, 31 U.S.C. 5324(a)(3), and making false statements to federal agents, 18 U.S.C. 1001. The down payments were taxable upon receipt, not, as VanDemark argued, when customers purchased the cars after leasing them. With respect to his missing 2013 personal return, the court stated that a defendant is guilty even if he helps prepare, without presenting, the fraudulent return. View "United States v. VanDemark" on Justia Law