Justia U.S. 7th Circuit Court of Appeals Opinion Summaries

If a borrower defaults on a loan guaranteed by the Small Business Administration (SBA), the lender asks the SBA to purchase the outstanding balance of the defaulted loan. The SBA then decides whether to honor the guarantee after reviewing the paperwork to ensure that the loan complied with SBA requirements. A lender can retain a lending service provider (LSP) to package, originate, disburse, service, or liquidate SBA-guaranteed loans on the lender’s behalf. The five defendants worked at, or with, an LSP, and engaged in a scheme to obtain SBA guarantees for loans that did not meet the SBA’s guidelines and requirements. They made false statements on loan-guarantee applications and purchase requests sent to the SBA about matters such as borrowers’ eligibility to receive a loan and how loan proceeds would be disbursed.The Seventh Circuit affirmed the defendants’ convictions for conspiracy to commit wire fraud affecting a financial institution, 18 U.S.C. 1349, and wire fraud affecting a financial institution, section 1343) and their sentences. The court rejected arguments concerning a constructive amendment to the indictment, that the government did not prove that the wire fraud scheme deprived the SBA of a protectable money or property interest, jury instructions, the sufficiency of the evidence, and loss calculation. View "United States v. Griffin" on Justia Law

From 2011-2017, Care Specialists provided care to homebound Medicare beneficiaries. At least part of its operation was fraudulent. Care Specialists would submit Medicare claims for health services, including skilled nursing services, provided to many patients who did not qualify for Medicare reimbursement. Newton, a quality assurance specialist and the owner’s secretary, helped implement the scheme. A former Care Specialists employee, Bolender, filed a whistleblower letter describing the scheme and met with federal investigators, directly implicating Newton as a key figure in the conspiracy. The owners pleaded guilty. Newton was convicted of conspiracy to commit both health care fraud and wire fraud, following testimony from multiple Care Specialists employees. Bolender avoided testifying by invoking her rights against self-incrimination under the Fifth Amendment. Newton unsuccessfully argued that the court wrongly accepted the invocation and that the government’s refusal to grant Bolender immunity violated her due process rights.The Seventh Circuit affirmed Newton’s conviction. The government's actions did not distort the fact-finding process; Bolender’s testimony was just as likely, if not more likely, to inculpate Newton as it was to exculpate her. Bolender’s invocation of her rights under the Fifth Amendment had been proper because she potentially could have opened herself up to prosecution. The court vacated Newton’s sentence. The district court’s calculation of Medicare’s loss attributable to Newton was unreasonable. View "United States v. Newton" on Justia Law

Freyermuth and five others were indicted for their involvement in a conspiracy to distribute large quantities of methamphetamine. Freyermuth pleaded guilty to conspiring to both distribute over 50 grams of methamphetamine and launder money. The PSR reported that Freyermuth—at his brother’s direction—received drug shipments, leased a storage unit to store the drugs, delivered the drugs to the regional dealers, collected money from the dealers, and sent that money to his brother The PSR concluded that Freyermuth was “integral” to the conspiracy, and a minor-role reduction was not warranted. Freyermuth argued that he was “essentially [his brother’s] drug mule,” uninvolved in decision-making and poorly compensated. Without the reduction, Freyermuth’s sentencing range was 262-327 months. A minor-role reduction would have lowered Freyermuth’s range to 135-68 months.The district judge concluded that Freyermuth’s role was “multifaceted”: he stored the drugs “relatively independently,” maintained the inventory, delivered the drugs to the dealers and collected and laundered the conspiracy’s proceeds, which enhanced his knowledge of the conspiracy’s “scale.” The judge acknowledged that Freyermuth’s discretion was limited by his brother’s instructions but found that factor insufficient to justify a reduction. The Seventh Circuit affirmed his 102-month sentence. The judge adequately compared Freyermuth’s role to the average conspiracy member’s and applied the relevant guideline factors. View "United States v. Freyermuth" on Justia Law

In 2017, Elion pleaded guilty to three counts of distributing methamphetamine, 21 U.S.C. 841(a)(1) and (b)(1)(C). The Probation Office classified him as a career offender, U.S.S.G. 4B1.1(a), 4B1.2(b), yielding a heightened Guidelines range, 151–188 months, rather than 70-87 months. Elion’s attorney did not challenge the enhancement. Elion appealed his 167-month sentence, but his attorney moved to withdraw. Elion voluntarily dismissed his appeals. Months later, Elion filed a pro se motion to vacate, set aside, or correct his sentence, 28 U.S.C. 2255. Elion argued that had trial counsel objected to the career offender designation, he would have received a lower Guidelines range and a much-reduced sentence. Elion’s prior convictions were a 1999 Illinois conviction for unlawful delivery of a look-alike substance within 1,000 feet of public housing property, a 2000 Illinois conviction for unlawful delivery of a look-alike substance, and a 2006 federal conviction for distribution of a cocaine base.The Seventh Circuit reversed the denial of Elion’s motion. The Illinois look-alike statute punishes conduct more broadly than the Guidelines controlled substance offense, and it is indivisible. Elion should not have been sentenced as a career offender. The district court must examine whether his attorney’s performance was deficient under the Strickland standard. View "Elion v. United States" on Justia Law

Coney was convicted on multiple charges of sex-trafficking minors, based on “the compelling and memorable testimony of the six minor victims.” Coney did not deny his involvement with these girls, nor did he deny posting prostitution advertisements featuring them on Backpage.com. He argued that, although the evidence made it look as if he had run a prostitution ring, he actually committed only violent robberies, using the girls to lure men to hotel rooms.While the jury was deliberating, the parties and court realized that a computer containing the evidence for the jury to consider had too many files on it. The court ordered the computer removed from the jury room. Meanwhile, the jury reported that it had reached a verdict. That verdict was never examined by the court but was destroyed. After a weekend break for briefing the issue, a curative instruction, and more deliberation time, the jury returned its verdict of guilty on all counts. In rejecting Coney’s motion for a new trial, the district court carefully considered the inadvertently provided evidence and found no reasonable possibility that it affected the verdict. The Seventh Circuit affirmed, noting the overwhelming evidence of guilt, and the low likelihood that the jurors actually saw the challenged messages and photographs in the mass exhibits improperly provided to them for a few hours. View "United States v. Coney" on Justia Law

After downloading images of child pornography from an internet address associated with Donoho, officers executed a search warrant at his Wisconsin residence and recovered digital images of child pornography and evidence that he had produced child pornography. In closing arguments, Donoho insisted that the jury should consider whether the conduct depicted was sexually explicit under a “community standard,” The prosecution argued that the inquiry was whether the images were intended to arouse the viewer. The court explained that neither the Supreme Court nor the Seventh Circuit had determined which of the definitions controlled and urged the jury to “consider the aspects of the image itself, the setting, the pose assumed by the minor and any other persons depicted,” and the photographer’s state of mind; whether it was a sexually explicit image was left to it as “the lay conscience of society.” Donoho was convicted of possession of child pornography and production and attempted production of child pornography.The Seventh Circuit affirmed. The district court did not err in instructing the jury that it could consider Donoho’s intent in determining whether the images were lascivious and whether the images were intended to arouse sexual desire. Based on the content, setting, and framing of the images and the steps Donoho took to capture them, a reasonable jury could find that he used or attempted to use minors to create visual depictions of lascivious exhibitions of their genitals, anus, or pubic areas. View "United States v. Donoho" on Justia Law

A grand jury returned a 34-count indictment against 12 defendants involved in selling heroin. Page was charged in just two counts, and not with conspiracy. Based on wiretap investigations and a search of Page’s apartment, among other evidence, prosecutors alleged Hamlin purchased heroin from Harris and distributed those drugs to purported mid-level distributors like Page. Two years later, a superseding indictment charged Page, Harris, Hamlin, and others, with a drug-trafficking conspiracy involving over 100 grams of heroin. Page was charged with 12 counts of attempting to distribute and possession with intent to distribute heroin.Page was the only defendant who did not plead guilty. The jury instructions included Seventh Circuit pattern instruction on “Membership in Conspiracy." Page’s counsel did not propose a jury instruction that would have highlighted the difference between a drug conspiracy and a conventional buyer-seller relationship. Convicted on all counts, Page received a below-guidelines 90-month sentence. The Seventh Circuit reversed, rejecting a challenge to the sufficiency of the evidence but holding that the district court committed plain error by failing to instruct the jury on the difference between a buyer-seller relationship. Page characterizes his connection to the top drug dealer as a buyer-seller relationship, not a conspiracy, where two parties share some joint purpose in building a drug business together. View "United States v. Page" on Justia Law

The Bail Project, a nonprofit organization, advocates for the abolition of cash bail and pays cash bail for thousands of individuals across the country to show that conditioning a pretrial defendant’s release upon the payment of money is not necessary to secure appearances at future court dates. Indiana House Enrolled Act 1300 requires charitable bail organizations to register with the state and limits for whom such organizations can pay cash bail.The Project sought to enjoin Indiana’s Department of Insurance from enforcing the law, arguing that HEA 1300 (which had not yet gone into effect) would violate its First Amendment right to free speech and its Fourteenth Amendment right to equal protection. The district court held that The Project had not shown a likelihood of success on the merits. The Seventh Circuit affirmed. The payment of cash bail is not protected by the First Amendment. Although The Project pays bail with the intent to communicate its message and to further its advocacy, a reasonable observer would not understand the conduct itself as communicating any message without additional explanatory speech. HEA 1300 does not violate the Equal Protection Clause because it is rationally related to Indiana’s legitimate interest in regulating the pretrial detention of criminal defendants. View "The Bail Project, Inc. v. Commissioner, Indiana Department of Insurance" on Justia Law

G.G. ran away from home at age 13 and fell into the hands of a sex trafficker who used the now-defunct Backpage.com to advertise her. G.G. sued under the Trafficking Victims Protection Reauthorization Act, 18 U.S.C. 1595, which allows sex trafficking victims to recover damages from those who trafficked them and from anyone who “knowingly benefits … from participation in a venture which that person knew or should have known has engaged in” sex trafficking. She alleges that Salesforce should have known that Backpage.com was engaged in sex trafficking of minors. Salesforce had a close business relationship with Backpage—providing advice and custom-tailored software — and “knowingly benefited from its participation.”The Seventh Circuit reversed the dismissal of the case, rejecting arguments that a “venture” must be primarily a sex-trafficking venture; that a participant must have had constructive knowledge of the specific victim; that “participation in a venture” requires direct participation in a “common undertaking or enterprise involving risk and potential profit”; and that to knowingly benefit requires that the sex trafficker provide the participant with a benefit because of the participant’s facilitation of a sex-trafficking venture and that the participant must have known that this was the reason for the benefit. Those theories seek to impose restrictions on the civil remedy that are inconsistent with the statutory language. View "G.G. v. Salesforce.com, Inc." on Justia Law

Wilson was traveling at O’Hare airport with $33,783 in cash. The Drug Enforcement Administration seized the money, suspecting that the proceeds were from illegal drug activity. DEA notified Wilson that it would declare the seized cash as government property by administrative forfeiture. Under the Civil Asset Forfeiture Reform Act (CAFRA), 18 U.S.C. 983(a)(1)(A), Wilson had to file a “claim” with DEA by September 25, 2020. She received the required notice that failure to file a timely claim would waive her right to contest the forfeiture. On September 18, 2020, Wilson’s attorney mistakenly filed the wrong form, a “petition for remission,” which seeks to reduce the amount of seized money subject to forfeiture. Wilson’s attorney realized the mistake about five months later and sent a letter. DEA declined to correct the error.The Seventh Circuit affirmed the dismissal of Wilson’s Motion to Recover Seized Property under Federal Rule of Criminal Procedure 41(g), which “is properly invoked to request the return of seized property before forfeiture proceedings have been initiated.” CAFRA is “the exclusive remedy for seeking to set aside a declaration of forfeiture.” Wilson did not assert any challenge to the notice she received from the DEA; her argument amounted to a request for equitable relief. Apart from challenges based on notice, “Congress has authorized no other means for challenging a declaration of forfeiture” in federal court. View "Wilson v. United States" on Justia Law