Articles Posted in White Collar Crime

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An Indiana judge appointed Stochel as receiver for Tip Top Supermarkets, while its proprietors were embroiled in protracted litigation. Over several years Stochel stole more than $330,000 from the receivership. Stochel evaded detection by diverting funds from other sources to pay bills. As the litigation and receivership were winding down, the principals had suspicions and asked the court to appoint an independent auditor. The judge ordered Stochel to turn over the receivership’s files. To delay discovery, Stochel moved to vacate the order, falsely stating that the receivership had sufficient funds to pay the auditor and claiming that he needed more time to assemble the records. The judge removed Stochel as the receiver; the auditor uncovered the fraud. Stochel was charged with mail fraud, 18 U.S.C. 1341, based on Stochel’s motion, which he had mailed to the court; the indictment alleged that the motion perpetuated the fraudulent scheme by delaying the detection of Stochel’s embezzlement. The district judge imposed a sentence of 24 months in prison. The Seventh Circuit affirmed, rejecting challenges to the sufficiency of the evidence’ the denial of credit for acceptance of responsibility, U.S.S.G. 3E1.1(a); the loss-amount calculation, U.S.S.G. 2B1.1(b)(1)(G); and the application of a two-level enhancement for violating a judicial order, U.S.S.G. 2B1.1(b)(9)(C). View "United States v. Stochel" on Justia Law

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In 2009, Scott pleaded guilty to engaging in two schemes to defraud investors and potential investors, 18 U.S.C. 1341. One of the supervised release conditions the district court imposed at sentencing was that he could not incur new credit charges or open additional lines of credit without the approval of the probation officer. After his release, Scott violated his supervised release conditions several times. At the revocation hearing for one of these violations, the district court found Scott violated one of his probation conditions and sentenced him to an additional 36 months of supervised release. The district court declined to impose further custody due to Scott’s regular restitution payments. Defense counsel stated, “we have no objection to extending the period of mandatory supervised release.” The Seventh Circuit affirmed, rejecting Scott’s argument that the district court committed procedural errors at the revocation hearing in failing to calculate or discuss the advisory Sentencing Guidelines range and in failing to afford him an opportunity to allocute, finding that Scott waived both issues. View "United States v. Scott" on Justia Law

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George was charged with conspiracy, 18 U.S.C. 371, and a Medicare‐fraud kickback scheme, 42 U.S.C. 1320a-7b(b)(1) based a scheme whereby George received payments of $500 per person from Rosner Home Health Care, for each Medicare patient that she referred to it. Two owners and an employee of Rosner (Tolentino, Magsino, and Hernal) pled guilty before trial. The district court found George guilty and sentenced her to six months of imprisonment. The Seventh Circuit affirmed, rejecting George’s arguments that there was insufficient evidence to support the conviction and that the court erred in failing to limit the cross‐examination of George to matters within her knowledge as a layperson. Hernal had cooperated in the investigation, so the prosecution’s evidence included recordings of the two discussing the illegality of the scheme and establishing the referrals and payments, in cash or check, plus bank records of George’s deposits, and referral logs. The district court properly allowed cross‐examination as to the book that George raised in her direct examination and which she introduced into evidence and properly allowed questioning about her knowledge of the illegality of referral payments. A defendant can be asked about her knowledge or state of mind: a question which seeks factual information, not a conclusion as to its legal significance. View "United States v. George" on Justia Law

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For five years, DeHaan, a licensed family‐practice physician working in the Chicago and Rockford areas, was affiliated with agencies providing medical services to homebound patients, and served as medical director of several home health agencies, assisted living facilities, and hospices. DeHaan billed Medicare at the highest levels for services to homebound patients that were ostensibly time‐consuming or complex, when in fact he had either conducted a routine, non‐complex patient visit or had not seen the patient at all on the occasion for which he was billing. At the behest of home health agencies, DeHaan certified as homebound patients whom he either knew did not meet Medicare’s criteria (42 U.S.C. 1395n(a)(2)(A)) for home care or as to whom he lacked meaningful knowledge. DeHaan pled guilty to two counts of a 23‐count indictment, admitting to overbilling and fraudulent certifications. The district court took evidence and found that he was responsible for fraudulently certifying the eligibility of least 305 individuals for home health care services, resulting in wrongful billings to Medicare of nearly $2.8 million. The Seventh Circuit affirmed, finding no error in the district court’s “conservative loss‐estimation methodology,” and upheld a within‐Guidelines sentence of 108 months in prison with an order to pay restitution of $2,787,054.58. View "United States v. DeHaan" on Justia Law

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Moose solicited investors with a stock tip; instead of investing all the $680,000 he received from 16 investors, Moose invested only $200,000. The remaining $480,000 he took for himself. Without a plea agreement, Moose pleaded guilty to defrauding investors in violation of the federal wire fraud statute, 18 U.S.C. 1343. The district court gave him a below-guideline sentence of two years in prison plus two years of supervised release. The Seventh Circuit affirmed the prison sentence and the length of the supervised release term, but remanded for the limited purpose of considering several conditions of supervised release that had not been adequately explained. The court rejected Moose’s challenges to the loss amount the district court used in calculating his guideline sentencing range and the fraud guideline’s treatment of loss amounts more generally. Though Moose admitted that he pocketed the $480,000, he argued for a loss figure of just $70,000, claiming to qualify for the discount based on returning stolen property before the crime was detected. View "United States v. Moose" on Justia Law

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In 2003, Williams, behind on paying SCCA condominium association fees, filed the first of five, Chapter 13 Bankruptcy petitions so that creditors were stayed from initiating collection. Her scheme was to not make payments required by her Chapter 13 plan so that the court would dismiss the case; SCCA would file eviction and collection suits; Williams would then file a new Chapter 13 petition. After voluntarily dismissing her second bankruptcy petition, Williams signed a deed transferring the condominium to Wilke. A deed recorded weeks later returned title to Williams. Wilke paid nothing and never occupied the condominium but obtained loans secured by the condominium. In her subsequent bankruptcy petitions, Williams failed to disclose the transfers but stated, falsely, that Wilke was a co‐debtor and would contribute toward the mortgage. After dismissing Williams’s fifth petition, the court barred Williams from filing a new petition for 180 days. She again deeded the condominium to Wilke, who filed a bankruptcy petition stating it was his property. The court dismissed the case. Both were charged with bankruptcy fraud, 18 U.S.C. 157. Wilke pled guilty and cooperated. The court limited the defense’s cross-examination of SCCA's board member and attorney about a class action lawsuit Williams had filed against SCCA and about SCCA’s treatment of Williams relative to other tenants, reasoning that the topics were an irrelevant attack on the underlying debt. Williams was convicted. With enhancements for causing a loss of $193, 291 and because the offense involved 10 or more victims, her Guidelines Range was 51–63 months’ imprisonment. The court sentenced her to 46 months. The Seventh Circuit affirmed, rejecting challenges to the court’s limitation on cross-examination and to the sentencing enhancements. View "United States v. Williams" on Justia Law

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As CEO of the Chicago Public Schools, Byrd-Bennett worked behind the scenes to assure that companies headed by Solomon and Vranas received lucrative contracts. In exchange, Solomon and Vranas agreed that they would pay Byrd-Bennett a percentage of the revenue generated by those contracts when she came to work for them at the end of her tenure with CPS. After the fraudulent scheme was exposed, each participant pleaded guilty to committing wire fraud, 18 U.S.C. 1343 and 1346. Solomon was sentenced to 84 months’ imprisonment, 30 months more than Byrd-Bennett received. Solomon argued that the district court erred by incorporating the value of a contract unrelated to the criminal agreement into his advisory sentencing guidelines calculation, resulting in an offense score that was four levels higher than Solomon believes it should have been and claimed that the disparity between Byrd-Bennett’s sentence and his sentence is unwarranted, making his sentence substantively unreasonable. The Seventh Circuit affirmed. The record supports the court’s decision to include the contested contract in the offense level calculation, and dissimilar cooperation is a reasonable basis for a sentencing disparity. View "United States v. Solomon" on Justia Law

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Schock resigned from Congress in 2015, after disclosures about trips he took at public expense, the expense of his elaborate office furnishings, and how he had applied campaign funds. Schock was charged with mail and wire fraud, theft of government funds, making false statements to Congress and the Federal Elections Commission, and filing false tax returns. Schock moved to dismiss the indictment, arguing that the charges are inconsistent with the Constitution’s Speech or Debate Clause and with the House of Representatives’ constitutional authority to determine the rules of its proceedings. The Seventh Circuit affirmed the denial of the motion. The indictment arises out of applications for reimbursements, which are not speeches, debates, or any other part of the legislative process. Submitting a claim under established rules differs from the formulation of those rules. The foundation for Schock’s rule-making” argument—the proposition that if Body A has sole power to make a rule, then Body A has sole power to interpret that rule—does not represent established doctrine. “ Judges regularly interpret, apply, and occasionally nullify rules promulgated by the President or another part of the Executive Branch, as well as statutes enacted by the Legislative Branch; why would reimbursement rules be different?” View "United States v. Schock" on Justia Law

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Starting in 2008, Sunmola carried out an online romance scheme from South Africa, targeting middle-aged women in Georgia and Illinois. Sunmola often used pictures of men in U.S. military uniforms in his online profile to gain the victims' trust; they made electronic fund transfers after his false claims of financial distress. Sunmola secretly recorded some victims in sexually suggestive positions, then sent extortion demands. Authorities also discovered evidence of credit card fraud affecting businesses. He was charged with conspiracy, mail fraud, wire fraud, and interstate extortion. Authorities arrested Sunmola in London and transferred him to U.S. custody. Three days into his trial, Sunmola openly pleaded guilty to all counts, admitting to the essential elements of each offense. The judge accepted the pleas without a plea agreement. Applying several enhancements and considering other section 3553(a) factors, the district court sentenced Sunmola to 324 months in jail with an adjusted restitution payment of $1,669,050.98. The Seventh Circuit affirmed, rejecting challenges to a four-level “substantial financial hardship” sentencing enhancement, a two-level “vulnerable victim” adjustment, a two-level enhancement for acting on behalf of a government agency, and a four-level adjustment for acting as the organizer or leader. The court upheld the restitution calculation and application of general deterrence in his final sentencing. View "United States v. Sunmola" on Justia Law

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Baek purchased property through his LLC and obtained financing from Labe Bank; Frank was the loan officer. Frank later moved to NCB and asked Baek to move his business, representing that NCB would provide a larger construction loan at a lower rate. In 2006, Baek entered a construction loan with NCB for $11,750,000. Baek executed a loan agreement, mortgage, promissory note, and commercial guaranty. Baek’s wife did not sign the guaranty at closing. NCB maintains that, 18 months after closing, she signed a guaranty. One loan modification agreement bears her signature but Baek‐Lee contends that it was forged and that she was out of the country on the signing date. NCB repeatedly demanded additional collateral and refused to disburse funds to contractors. The Baeks claim that NCB frustrated Baek’s efforts to comply with its demands. In 2010, NCB filed state suits for foreclosure and on the guaranty. The Baeks filed affirmative defenses and a counterclaim, then filed a breach of contract and fraud suit against NCB. The Baeks later filed a federal Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1964(c), suit alleging fraud. The state court granted NCB summary judgment. The federal district court dismissed, citing res judicata. The Seventh Circuit affirmed. There has been a final judgment on the merits with the same parties, in state court, on claims arising from a single group of operative facts. View "Baek v. Clausen" on Justia Law