United States v. Potter

Chicago’s Minority and Women-owned Procurement Program requires companies contracting with the city to hire or subcontract with minority-owned businesses (MBEs). An MBE must be at least 51 percent owned by members of a minority group, and its management and operations must be controlled by those members. RCN, a cable provider, participates in the MBE program. RCN seeks out MBE subcontractors using the city’s directory, where it found defendants in 2003. Defendants, white men, held out their cable installation business, ICS, as an MBE, but used false documentation and hired a black front-man to pose as ICS’s president. ICS fired defendant Giovenco before the fraud was discovered, but he continued to receive checks. In total, RCN paid ICS $8,303,562 before the city investigated. Its members dissolved ICS, trying to avoid detection. Convicted of mail fraud, 18 U.S.C. 1341, Potter was sentenced to 54 months’ imprisonment, and Giovenco was sentenced to 36 months. The Seventh Circuit affirmed, rejecting Giovenco’s claim that, because he no longer worked for ICS at the time of the mailings underlying the charges, he could not be held legally accountable for the scheme, and Potter’s challenge to his sentence, arguing that RCN did not actually suffer a loss. View "United States v. Potter" on Justia Law