Articles Posted in White Collar Crime

Tantchev, a native of Bulgaria, owned a trucking business that operated out of a warehouse in Chicago. Chogsom, a Mongolian immigrant, worked for Tantchev. Large deposits into Tantchev’s bank account prompted an investigation. After a six-day trial involving 29 witnesses, a federal jury convicted Tantchev of exporting and attempting to export stolen cars, submitting false documents to customs officials, and structuring financial transactions to avoid federal reporting requirements. That same jury acquitted Tantchev’s co-defendant, Chogsom, of charges related to the stolen cars and false documents, but convicted Chogsom of making a false statement to an IRS agent. The district court sentenced Tantchev to 40 months’ imprisonment and Chogsom to three years’ probation. The Seventh Circuit affirmed. The court rejected Tantchev’s argument that the district court should not have given a deliberate avoidance or “ostrich” instruction. The jury was entitled to conclude Tantchev purposely did not subject the shipping containers to the scrutiny he exercised in the other part of his business and draw a negative inference from that change in behavior. The court upheld the use of a jury instruction, “If you find that the defendant was in possession of property that recently had been stolen, you may infer that he knew it was stolen.” View "United States v. Chogsom" on Justia Law

From 2002-2008 Boliaux operated EMC, a used-car dealership. He borrowed money. Most loans were secured by the cars’ certificates of title. Because there should be only one title certificate per car, the dealer cannot transfer good title to a customer without paying the lender. In 2007 Boliaux persuaded state officials to issue duplicate certificates of title on the pretense that the originals had been lost. He obtained multiple loans against single vehicles, exceeding the cars’ market value and leaving the lenders under-secured. He sold cars without repaying the loans. After a lender detected this and impounded the collateral, Boliaux persuaded the custodian to release eight cars, which he sold for his own benefit. In 2008, Boliaux’s wife incorporated Joliet Motors, which Boliaux operated from the former EMC premises. Joliet Motors received installment payments from EMC customers but did not remit them to lenders. Boliaux began check kiting. He was convicted of four counts of wire fraud and six of bank fraud, 18 U.S.C. 1343, 1344, and sentenced to 48 months’ imprisonment. The Seventh Circuit affirmed, rejecting arguments that the evidence was insufficient on the wire fraud counts because he did not transmit anything by wire, and on the bank fraud counts because no one from the banks testified that the banks lost money. The district judge properly declined to instruct the jury that it had to agree, unanimously, how Boliaux carried out his scheme. View "United States v. Boliaux" on Justia Law

Neilitz purchased $125,000 worth of ECS stock; Rawah Partners invested $350,000. In 2008, Corrigan, ECS’s President and CEO, negotiated a sale of ECS. Because of the worldwide financial downturn, the sale fell through. Shortly thereafter, ECS's board authorized Corrigan to manage ECS as he saw fit. Corrigan was negotiating another sale when ECS began to suffer cash flow problems. ECS had difficulty paying expenses and officers’ compensation. It closed its Chase Bank account and opened a new LaSalle Bank account that excluded the Vice President from its signatories. ECS's employee healthcare policy was canceled in January 2009, for nonpayment. Corrigan began soliciting Neilitz and Rawah for additional investments announcing that ECS was close to closing a sale but needed funds for healthcare insurance premiums. Per Corrigan’s instructions Neilitz and Rawah each wired $50,000 to an account which, unbeknownst to them, was Corrigan’s personal account. Corrigan spent the funds for personal expenses. Corrigan was terminated from ECS in 2011. Corrigan contacted Neilitz and Rawah, attempting to buy back the fraudulently sold stock but reaffirmed his original lie. Corrigan was convicted on four counts of wire fraud, 18 U.S.C. 1343. The Seventh Circuit affirmed his conviction and an order of restitution in the full amount of the investments. The indictment adequately alleged a scheme to defraud; the evidence supported the conviction. View "United States v. Corrigan" on Justia Law

After pleading guilty to preparing false tax returns for her clients, 26 U.S.C. 7206(2), Johnson was sentenced to 18 months in prison plus $79,325 in restitution—the amount that Johnson’s clients unlawfully avoided paying (with respect to the counts of conviction) that had not been collected from the taxpayers before sentencing. The Seventh Circuit affirmed, rejecting Johnson’s argument that the prosecution should have told the judge how much more it might collect from her clients, which she characterized as exculpatory material that should have been revealed under "Brady." The collections were not concealed. The presentence report showed that the government already had collected substantial sums (the original loss exceeded $150,000) and was trying to obtain the balance from taxpayers. Johnson was free to ask how much more had been collected by the date of sentencing but did not. Brady does not apply when information is available for the asking. The restitution statute, not the Constitution, determines the prosecution’s duty—one of credit against the judgment, not of disclosure during the sentencing hearing. Johnson will receive credit against the restitution award for whatever the government collects from the taxpayers; it was unnecessary to disclose the details of collection activities before the judge determined the base restitution award. View "United States v. Johnson" on Justia Law

After Kuczora lost his finance job in 2007, he styled himself as the managing director of KCS Financial, a phony finance firm he ran from his Elgin, Illinois basement. Kuczora falsely represented to unwary investors that he could help them secure millions of dollars in financing; they paid him large sums of money to cover fees, which Kuczora pocketed for personal use before disappearing. He ultimately pleaded guilty to wire fraud. His Guidelines range was 33-41 months in prison. The district judge, citing the seriousness and sophistication of the offense, the devastation to the victims, and the need to deter similar crime, imposed a sentence of 70 months. Kuczora argued that the judge did not adequately explain the upward variance and failed to give him advance notice of the grounds supporting it. The Seventh Circuit affirmed. The district judge thoroughly explained his reasoning. The Seventh Circuit has never held that a judge must give advance warning of an upward variance. Every defendant is on notice that the court has the discretion to impose a sentence above, below, or within the Guidelines range based on the 18 U.S.C. 3553 factors. The 70-month sentence is not substantively unreasonable and the judge did not exceed his broad discretion in concluding that a heavier penalty was justified here. View "United States v. Kuczora" on Justia Law

In 2000 Balsiger took the helm of IOS, a large coupon processing companies. IOS contracted with large retail chains and small, independently owned stores to collect and sort coupons redeemed at their stores and to submit invoices for reimbursement either directly to the manufacturer or indirectly to the manufacturer’s agent. For his role in designing and implementing a scheme to defraud those manufacturers, Balsiger was charged with 25 counts of wire fraud and conspiracy both to commit wire fraud and obstruct justice. After a decade of litigation, Balsiger represented himself at a bench trial with the assistance of stand-by counsel. The district court convicted Balsiger on 12 counts and sentenced him to 120 months’ imprisonment. The Seventh Circuit affirmed, rejecting Balsiger’s argument that the court deprived him of his Sixth Amendment right to retain the counsel of his choice by failing to grant an 18-month continuance and by refusing to order the government to remove a lis pendens on his home—a notice to potential buyers that title to the property might be impaired by the outcome of his criminal prosecution. The court upheld the district court’s conclusion, following the death of Balsiger’s attorney, that Balsiger waived his right to counsel and its decision to require him, over his objection, to proceed pro se. View "United States v. Balsiger" on Justia Law

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

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

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

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