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

Pacilio and Bases were senior traders on the precious metals trading desk at Bank of America. While working together in 2010-2011, and at times separately before and after that period, they engaged in “spoofing” to manipulate the prices of precious metals using an electronic trading platform, that allows traders to place buy or sell orders on certain numbers of futures contracts at a set price. It is assumed that every order is bona fide and placed with “intent to transact.” Spoofing consists of placing a (typically) large order, on one side of the market with intent to trade, and placing a spoof order, fully visible but not intended to be traded, on the other side. The spoof order pushes the market price to benefit the other order, allowing the trader to get the desired price. The spoof order is canceled before it can be filled.Pacilio and Bases challenged the constitutionality of their convictions for wire fraud affecting a financial institution and related charges, the sufficiency of the evidence, and evidentiary rulings relating to testimony about the Exchange’s and bank prohibitions on spoofing to support the government’s implied misrepresentation theory. The Seventh Circuit affirmed. The defendants had sufficient notice that their spoofing scheme was prohibited by law. View "United States v. Bases" on Justia Law

Agbi, born and raised in Nigeria but a resident of the U.S. since 2016, acted as a middleman in a scheme to use fake online dating accounts to solicit hundreds of thousands of dollars from unwitting elderly people. Agbi collected cash at his Indianapolis apartment, took his “cut,” and transferred the rest to accounts in Nigeria. More than 30 months after his arrest, Agbi’s counsel notified the government that Agbi intended to pursue a duress defense, claiming, for the first time, that members of the conspiracy located in Nigeria had threatened Agbi’s family. The district court granted a motion to preclude the defense. At trial, two of the scheme’s victims testified that they were deceived into believing that they were in relationships and sent “hundreds of thousands of dollars.” Secret Service agents described the details of a controlled delivery and Agbi’s subsequent interview.Agbi was convicted of mail fraud, 18 U.S.C. 1341; use of a fictitious name in furtherance of mail fraud, section 1342; conspiracy to commit mail fraud, 1341, 1349; and conspiracy to commit money laundering, 1956(a)(1), 1956(h) and was sentenced to 57 months’ imprisonment. The Seventh Circuit affirmed. The evidence supporting each count was legally sufficient to support a conviction. The district court appropriately employed the obstruction of justice enhancement based on its finding that Agbi knowingly submitted a “fake” police report concerning threats against his family. View "United States v. Agbi" on Justia Law

Lee carried out a scheme to defraud the Chicago White Sox. With the help of two Sox employees, Lee obtained thousands of discounted and free game tickets and resold them online for a profit. He was eventually convicted of wire fraud, 18 U.S.C. 1343. The indictment expressly sought forfeiture of Lee’s ill-gotten gains and Lee did not object to that request. The parties disagreed on the amount. The court failed to enter a preliminary order of forfeiture specifying what would be due and what property was subject to forfeiture (Fed. R. Crim. P. 32.2(b)(2)) but did everything else necessary for forfeiture, including giving Lee notice and an opportunity to contest the amount the government was seeking and orally imposing forfeiture in the sentence, along with an 18-month prison term, restitution, and the required special assessment. The written judgment, however, omitted forfeiture. After some additional proceedings, the court concluded that it was too late to enter a proper forfeiture order, and refused to amend the written judgment to reflect its oral sentenceThe Seventh Circuit rejected Lee’s challenges to the indictment, the court’s denial of his motion for acquittal, and his sentence but reversed and remanded for the district court to amend the judgment under Federal Rule of Criminal Procedure 36 to include forfeiture in the amount the court found–$455,229.23. View "United States v. Lee" on Justia Law

Dr. Xiao taught mathematics for many years at Southern Illinois University. He also did academic work based in China, for which he received more than $100,000 in payments. An investigation of Xiao's grant applications led FBI agents to examine his finances. Xiao was charged with wire fraud, making a false statement, failing to disclose his foreign bank account on his income tax returns, and failing to file a required report with the Department of the Treasury. Xiao was acquitted of wire fraud and making a false statement, but convicted of filing false tax returns and failing to file a report of a foreign bank account, 31 U.S.C. 5314(a).The Seventh Circuit affirmed, rejecting arguments that the evidence was insufficient, primarily on the question of willfulness, that the tax return question was ambiguous, and that the foreign-account reporting regulation is invalid. The evidence permitted the jury to find beyond a reasonable doubt that Xiao acted willfully in choosing not to disclose his foreign bank account. The tax return form was not ambiguous as applied to Xiao’s situation. The government proved beyond a reasonable doubt that he engaged in reportable transactions. In 2019 he received deposits to the Chinese account and made withdrawals and investments using that account. View "United States v. Xiao" on Justia Law

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

Arroyo served in the Illinois House of Representatives from 2006-2019, while also managing a lobbying firm. In 2018-2019, Arroyo’s firm received $32,500 in checks from Weiss’s sweepstakes-gaming company in exchange for his official support for the sweepstakes industry in the General Assembly. Despite never previously expressing a view on sweepstakes gaming, Arroyo began pushing for sweepstakes-friendly legislation and encouraging other legislators and executive-branch officials to support the same. Arroyo concealed his financial arrangement with Weiss.When the government uncovered the bribery scheme, Arroyo pleaded guilty to wire fraud, 18 U.S.C. 666(a)(2). The court sentenced him to 57 months’ imprisonment and ordered that he forfeit $32,500 in bribe money. The Seventh Circuit affirmed, rejecting Arroyo’s contention that the judge erred by finding his 57-month sentence necessary to deter public corruption. District judges need not marshal empirical data on deterrent effects before considering whether a sentence adequately deters criminal conduct. The judge presumed that public officials are rational actors who pay attention when one of their own is sentenced. That presumption that sentences influence behavior at the margins was reasonable. The court also rejected arguments that the judge erred by deeming several of his allocution statements aggravating and ordering him to forfeit too much money. View "United States v. Arroyo" on Justia Law

Hise was charged with two counts of wire fraud, 18 U.S.C. 1343. Hise was employed by the victim's construction company as an office manager and bookkeeper for more than 12 years. An FBI investigation revealed that Hise had embezzled over $1.5 million from that company. Hise entered an open guilty plea to those charges. The district court sentenced her to 63 months’ imprisonment and ordered $200 in special assessments and $1,550,379.14 in restitution, subject to a set-off ($21,953.55), which reflected the proceeds of a Sheriff’s Sale.The Seventh Circuit affirmed, rejecting an argument that the district court violated Federal Rule of Criminal Procedure 32(i)(1)(A) and(C) in that it failed to ensure that Hise and her attorney had read and discussed the amended PSR and any addendum to it before imposing the sentence. Hise fails to identify any objection that could have been made to the revised PSR. She has not pointed to any aspect of the PSR that was incorrect or which could be subject to an objection. The court also rejected Hise’s argument that she was denied her right to be represented by counsel because her attorney failed to make any objection to the PSR and failed to appear at the final determination hearing regarding the imposition of the final restitution amount. View "United States v. Hise" on Justia Law

Klund purports to supply electrical parts. In 1991 and in 1993, he was convicted for fraudulent misrepresentations involving defense contracts. Disqualified from the award of government contracts, from 2011-2019, Klund bid on defense contracts using shell corporations, aliases, and the names of employees and relatives. He certified that one shell company was a woman-owned business, eligible for special consideration. Klund bid on 5,760 defense contracts and was awarded 1,928 contracts worth $7.4 million. Klund satisfactorily performed some of his contracts; the Department paid $2.9 million for these goods. But he knowingly shipped and requested payment for 2,816 nonconforming electrical parts and submitted invoices for parts that he never shipped.Klund pleaded guilty to wire fraud, aggravated identity theft, and money laundering. The PSR calculated the intended loss at $5.7 million and the actual loss at $2.9 million. Since Klund fraudulently obtained contracts intended for woman-owned businesses, the PSR did not apply an offset for the cost of goods actually delivered under those contracts. An 18-level increase in Klund’s offense level applied because the loss was more than $3,500,000 but not more than $9,500,000, U.S.S.G. 2B1.1(b)(1)(J). With an advisory range of 87-108 months, Klund was sentenced to 96 months’ imprisonment with a mandatory consecutive sentence of 24 months for aggravated identity theft. The Seventh Circuit affirmed, upholding the loss calculations. View "United States v. Klund" on Justia Law

Barsanti was delinquent on $1.1 million of senior secured debt it owed to BMO Harris Bank. Barsanti’s owner, Kelly, hired attorney Filer and Gereg, a financing consultant. After negotiations with BMO failed, Filer introduced Gereg to BMO as a person interested in purchasing Barsanti’s debt. Filer created a new company, BWC, to purchase the loans. BWC purchased the loans from BMO for $575,000, paid primarily with Barsanti’s accounts receivable. Barsanti also owed $370,000 in delinquent benefit payments to the Union Trust Fund. Filer, Kelly, and Gereg used BWC’s senior lien to obtain a state court judgment against Barsanti that allowed them to transfer Barsanti’s assets beyond the reach of the Union Fund, using backdated documents to put confession-of-judgment clauses into the loan documents and incorrectly claiming that Barsanti owed BWC $1.58 million. Filer then obtained a court order transferring Barsanti’s assets to BWC, which then transferred the assets to Millwork, another new entity, which continued Barsanti’s business after the Illinois Secretary of State dissolved Barsanti for unpaid taxes. Gereg was Millwork's nominal owner in filings with the Indiana Secretary of State. Barsanti filed for bankruptcy. Filer instructed others not to produce certain documents to the bankruptcy trustee.After a jury convicted Filer of wire fraud 18 U.S.C. 1343., the district court granted his motions for a judgment of acquittal. The Seventh Circuit reversed and remanded. The evidence was sufficient to support the jury’s verdicts. View "United States v. Filer" on Justia Law