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

From 2006 to 2008, Andrews asked friends and colleagues to loan him money, roughly two million dollars in total, explaining that he needed money to purchase property in Indianapolis or to improve property that he owned in the area. Andrews never owned, bought, or improved property in Indianapolis. Andrews mostly used the money to fund a day-trading account with TD Ameritrade. Most of the money vanished. Andrews’s victims lost over 1.4 million dollars. Andrews was convicted of wire fraud, 18 U.S.C. 1343, sentenced to 87 months in prison and ordered to repay the full amount his victims had lost. The Sixth Circuit affirmed, finding that all of the loans were part of a single “scheme . . . to defraud.” The court noted a common false statement of a need for funds, usually related to nonexistent Indianapolis property; a common group of victims, usually friends or colleagues, who loaned money to Andrews repeatedly; and a common purpose for the funds, usually the need to fund Andrews’s day-trading account. The final loan occurred on September 25, 2008, fewer than five years before the government indicted Andrews, so prosecution of the entire scheme was not time-barred. View "United States v. Andrews" on Justia Law

Giorgio was the Chief Financial Officer of Suarez, a direct-marketing company. He and his boss asked employees to donate $5,000 each to political candidates, promising that the company would reimburse the donations. When the scheme was disclosed, Giorgio admitted to soliciting money from “straw campaign donors” in violation of campaign-finance laws that then banned all corporate donations to candidates, 2 U.S.C. 441b, and individual donations of more than $5,000 per candidate in an election cycle. Federal law also bans people from “mak[ing] a contribution in the name of another person,” 52 U.S.C. 30122. He signed a plea agreement. After a jury acquitted his co-conspirators, he tried twice to withdraw his plea. The district court declined and sentenced him at the bottom of the (much-lowered) guideline range—to 27 months in prison. The Sixth Circuit affirmed. Giorgio is a sophisticated and well-educated businessman, not apt to misunderstand what he was signing. Giorgio did not show that there is a reasonable probability that he would not have pleaded guilty even if he could show conflicted counsel based on the company’s paying for his defense. Giorgio admitted his guilt and insisted on sticking to his plea even when asked, after trial, if he wanted to withdraw it. View "United States v. Giorgio" on Justia Law

Olive founded National Foundation of America (NFOA) in 2006 and applied to the IRS for recognition of its Section 501(c)(3) status. That application was eventually denied He learned the “business model” as a development advisor and executive at National Community Foundation, which offered products similar to those later marketed by NFOA. The scheme involved highly-compensated insurance agents, who sold investment contracts that customers could purchase with cash or by transferring existing annuities, real estate, or securities to NFOA. Olive misrepresented NFOA’s age, assets, and IRS status, and misrepresented the financial consequences. Olive knew that NFOA paid its brokers commissions well above the industry rate, lost a significant portion of the obtained annuities’ value due to their early surrender, and diverted a portion of funds to Olive’s and others’ personal benefit.Olive was convicted of mail fraud under 18 U.S.C. 1341 and 1343 and of money laundering, 18 U.S.C. 1957; was sentenced to 372 months of incarceration; and was ordered to pay restitution of $5,992,181.24. The Sixth Circuit affirmed, rejecting challenges to the sufficiency of the indictment; evidentiary decisions, permitting the introduction of cease-and-desist orders issued by several states; and the sentencing calculation, with respect to Olive's role, vulnerable victims, and loss calculation. View "United States v. Olive" on Justia Law

Churn, the owner of a Tennessee construction company, was convicted of seven counts of bank fraud stemming from two schemes in which he received bank loans ostensibly to construct houses, but performed little to no work. The district court sentenced him to 33 months in prison and ordered restitution of $237,950.50. The Sixth Circuit affirmed, rejecting arguments that the district court made evidentiary errors concerning admission of an email statement, admission of testimony concerning a permit, and admission of evidence about another transaction, and that the amount of restitution exceeded a statutory maximum under the Victims Restitution Act, 18 U.S.C. 3663A. View "United States v. Churn" on Justia Law

Volkman, a University of Chicago M.D. and Ph.D. (pharmacology), board-certified in emergency medicine, was in financial distress after lawsuits. Hired by Tri-State, a cash-only clinic, he was paid $5,000 to $5,500 per week. Soon, pharmacies refused to fill his prescriptions, citing improper dosing. Volkman opened a dispensary in the clinic. The Ohio Board of Pharmacy issued a license, although a Glock was found in the drug safe. Follow-up inspections disclosed poorly maintained logs; that no licensed physician or pharmacist oversaw the actual dispensing process; and lax security of the drug safe. Patients returned unmarked and intermixed medication. The dispensary did a heavy business in oxycodone. A federal investigation revealed a chaotic, unclean environment. Tri-State fired Volkman, who opened his own shop; 12 patients died. Volkman and Tri-State’s owners were charged with conspiring to unlawfully distribute a controlled substance, 21 U.S.C. 841(a)(1); maintaining a drug-involved premises, 21 U.S.C. 856(a)(1); unlawful distribution of a controlled substance leading to death, 21 U.S.C. 841(a)(1) and 841(b)(1)(C), and possession of a firearm in furtherance of a drug-trafficking crime, 18 U.S.C. 24(c). The owners accepted plea agreements and testified against Volkman, The Sixth Circuit affirmed his conviction on most counts, and a sentence of four consecutive life terms. On remand from the Supreme Court, in light of Burrage v. United States (2014), the Sixth Circuit again found the evidence of but-for causation sufficient. View "United States v. Volkman" on Justia Law

The six-month trial of former Detroit mayor Kilpatrick and Detroit contractor Ferguson, included almost 100 government witnesses and over 700 exhibits. The government’s main theory was that Kilpatrick and Ferguson conspired to extort money from other Detroit-area contractors by pressuring them to include Ferguson’s companies in their city contracts—even when Ferguson’s companies were not the most qualified candidates and even when Ferguson’s companies did no work. Kilpatrick was convicted of 24 counts: RICO conspiracy, 18 U.S.C. 1962(d); four counts of extortion, 18 U.S.C. 1951; attempted extortion, 18 U.S.C. 1951; bribery, 18 U.S.C. 666(a); 11 counts of mail and wire fraud, 18 U.S.C. 1341, 1343; five counts of subscribing a false tax return, 26 U.S.C. 7206(a); and income tax evasion, 26 U.S.C. 7201. Ferguson was convicted of nine counts: RICO conspiracy, six counts of extortion, attempted extortion, and bribery. The Sixth Circuit affirmed the convictions but vacated a restitution order, rejecting arguments that Kilpatrick was denied conflict-free counsel because his lead attorneys had recently become “of counsel” to a firm that was suing Kilpatrick for alleged conduct related to his criminal charges; extensive testimony by two case agents violated the Rules of Evidence; and the court erred in allowing witnesses to report what other people had told them about Kilpatrick and Ferguson as evidence that witnesses feared the defendants. View "United States v. Ferguson" on Justia Law

Reed, a marketing guru who sold an “antioxidant rich whole food puree,” “ViaViente,”offered training on how to replicate his success as a “self-made millionaire.” When Reed’s relationship with ViaViente ended, he tried something new, telling potential investors that he had access to a secret site in the Philippines containing gold bars buried by the Japanese during World War II. Reed raised $1.3 million, but never excavated. He spent the money on houses, cars, and cosmetic surgery. He did buy a $30,000 a gold “scanner.” When Reed’s deception was exposed, he pled guilty to wire fraud; the prosecution agreed to make a recommendation that Reed receive a three-year sentence and not to oppose Reed’s request for credit for accepting responsibility. In its sentencing memorandum and at the hearing, the government stated that Reed should receive the credit, but did not mention an appropriate sentence. The court acknowledged that the “government has agreed pursuant to the plea agreement to recommend a three-year term of custody.” Reed objected that the prosecutor had “never once recommended the three-year sentence.” The court rejected that claim and ruled that Reed should not receive credit for accepting responsibility because he continued to promote the validity of his schemes. The court sentenced Reed to over seven years. The Sixth Circuit affirmed, finding that the government honored the plea agreement. View "United States v. Reed" on Justia Law

Zada sold fake investments in Saudi Arabian oil, raising about $60 million from investors in Michigan and Florida. Zada gave investors promissory notes that, on their face, say nothing about oil-investment. They say that Zada will pay a principal amount plus interest (at rates far lower than Zada had promised). Zada stated that the notes were necessary only to ensure that investors would be repaid by Zada’s family if something happened to him. Little of what Zada said was true. Zada paid actors to pose as a Saudi royalty. Zada never bought any oil; he used investors’ money to pay his personal expenses. When Zada paid investors anything, he used money raised from other victims. The SEC discovered Zada’s scheme and filed a civil enforcement action, alleging violation of the Securities Act of 1933 and the Securities Exchange Act of 1934, 15 U.S.C. 77. The district court granted the SEC summary judgment, ordering Zada to pay $56 million in damages and a civil penalty of $56 million more. The Sixth Circuit affirmed, rejecting arguments that the investments were not securities and that the civil penalty improperly punishes him for invoking his Fifth Amendment privilege against self-incrimination. View "Secs. & Exch. Comm'n v. Zada" on Justia Law

The Medocks’ company, MAS, transported patients to kidney dialysis for Medicare reimbursement. Reimbursement of non-emergency ambulance transport is allowed only if medically necessary for bedridden patients; both a driver and an EMT must accompany any such passenger. Certification of medical necessity (CMN) must be signed by a doctor. A “run sheet” is reviewed by a Medicare contractor other than the ambulance company, such as AdvanceMed, to reduce fraud. AdvanceMed identified MAS as a high biller in Tennessee for dialysis ambulance transport and audited MAS. MAS’s records were missing some CMNs. Covert surveillance resulted in videotapes of patients walking, riding in the front seat, being double-loaded, being driven by single-staffed ambulances, or being transported by wheelchair. MAS had billed the transports as single-passenger and “stretcher required.” Executing a search warrant at the Medlocks’ home, agents seized CMNs and run tickets; some had been altered or forged. The Sixth Circuit reversed a conviction for aggravated identity theft, 18 U.S.C. 1028A, agreeing that misrepresentations that certain beneficiaries were transported by stretcher did not constitute a “use” of identification, but affirmed health-care fraud convictions, rejecting arguments that the court should have instructed the jury that Medicare, not merely a prudent person, was the relevant decision-maker; that Medicare would have reimbursed MAS without their misrepresentations; and that refusal to sever a defendant was prejudicial. View "United States v. Medlock" on Justia Law

In 2005, Lee, a Sevierville contractor, owed a substantial debt to Whaley, for loans that financed houses being built by Lee. Whaley proposed to recruit straw buyers for sham purchases of the properties. Eight straw buyers were referred to Bevins, a mortgage broker with whom Whaley had previously dealt. Whaley prepared the contracts and set the prices. Bevins prepared loan applications that falsely inflated the buyers’ incomes and assets and stated that they would bring funds to closing. The closings were conducted by Kerley’s title company. Although none of the buyers brought funds to the closings, Kerley signed HUD-1 forms, indicating that they did. The properties later went into foreclosure. The lenders incurred substantial losses. Lee and Bevins pled guilty and agreed to cooperate. The judge denied Kerley’s motion to sever, concluding that proposed redactions to Whaley’s statement remedied potential violation of Kerley’s Confrontation Clause rights and held that Whaley was not entitled to introduce his own hearsay statements. Both were convicted of money laundering, conspiracy to commit wire fraud affecting a financial institution and bank fraud, wire fraud affecting a financial institution, bank fraud, and making a false statement to a financial institution. They were sentenced to 60 months and 48 months imprisonment, respectively, and ordered to pay $1,901,980.31 in restitution. The Sixth Circuit affirmed the convictions and Kerley’s sentence, rejecting challenges to the sufficiency of the evidence, evidentiary rulings, and the court’s refusal to sever. View "United States v. Whaley" on Justia Law