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

Trudeau “spent his career hawking miracle cures and self-improvement systems of dubious efficacy.” The FTC sued him under consumer-protection laws. Trudeau entered a consent decree, promising not to misrepresent his books in TV infomercials. Later, Trudeau published The Weight Loss Cure “They” Don’t Want You to Know About and promoted it in infomercials, as “simple” and “inexpensive,” able to be completed at home, and not requiring food restrictions or exercise. The book described a regimen mandating prescription hormone injections and severe dietary and lifestyle constraints. The court imposed a civil contempt sanction and issued an order to show cause why Trudeau should not face imprisonment of up to six months. At Trudeau’s request, the case was reassigned. The new judge issued a new show-cause order, removing the six-month cap. Trudeau was sentenced to 10 years in prison. The Seventh Circuit affirmed, rejecting an argument based on the Speedy Trial Act, 18 U.S.C. 3161. More than 70 nonexcludable days elapsed between the date the government agreed to prosecute the first show-cause order and the commencement of trial. The Act applies only to crimes punishable by more than six months’ imprisonment. Because the first show-cause order capped the potential penalty at six months, the Act did not apply. The second show-cause order removed the cap, starting the clock, but Trudeau’s trial began within 70 days from that date. The court also rejected challenges to jury instruction on “willfulness,” the sufficiency of the evidence, evidentiary rulings, and the reasonableness of his sentence. View "United States v. Trudeau" on Justia Law

Segal, a lawyer, CPA, and insurance broker, and his company, were indicted for racketeering, mail and wire fraud, making false statements, embezzlement, and conspiring to interfere with operations of the IRS. Convicted in 2004, Segal was sentenced to 121 months in prison. After further proceedings, in 2011, he was resentenced to time served and ordered to pay $842,000 in restitution and to forfeit to the government his interest in the company and $15 million. In 2013, the parties entered a binding settlement that specified the final disposition of Segal’s assets. After the district judge approved the settlement the parties disagreed and returned to court. The agreement gave Segal two of eight insurance policies on his life outright and an option to purchase the others, but required that he exercise the option within six months of approval of the settlement. He opted to purchase one policy before the deadline and asked for an extension, claiming that the government had not promptly released money owed to him and had delayed his efforts to obtain information from the insurance companies. The Seventh Circuit affirmed refusal to extend the deadline, but reversed with respect to claims relating to Segal’s right to repurchase his shares of the Chicago Bulls basketball team. View "United States v. Segal" on Justia Law

Ajayi, an electrical engineer, wanted to start a business selling MRI products in Africa. He incorporated GRI in Illinois and another company in Africa and sought investors. While traveling, he solicited a $45,000 investment from Brown. After returning home, Ajayi received a $344,657.84 check, payable to another company . He called Brown, who explained that the accounting department had made an error, told Ajayi to deposit the check, and stated that they would work out a way for Ajayi to refund the difference. Ajayi deposited the check through an ATM into his GRI account, which previously had a balance of $90.08, After the check cleared, Brown flew to Chicago and demanded repayment. Pursuant to Brown’s instructions, between December 9 and December 12, 2009, Ajayi wrote at least five checks to himself from the GRI account and cashed them. Ajayi was convicted of five counts of bank fraud, 18 U.S.C. 1344(1) and (2) and money laundering, 18 U.S.C. 1957(a) and was sentenced to 44 months’ imprisonment. The Seventh Circuit found that there was sufficient evidence that Ajayi knew that the check was altered and upheld the exclusion of the emails, but concluded that four bank fraud counts were multiplicitous. View "United States v. Ajayi" on Justia Law

Defendant pleaded guilty to fraud consisting of having abused her position as a Chicago public-school board member by accepting kickbacks of more than $500,000 from bus companies to which she steered transportation contracts worth $21 million. The parties stipulated that the value of the benefit received from the fraud was $7-$20 million, and so the guidelines range would have been 360 months to life. The guidelines in effect at the time required a 20-level enhancement for honest services fraud when “the value of the payment, the benefit received or to be received in return for the payment, the value of anything obtained or to be obtained by a public official or others acting with a public official, or the loss to the government from the offense, whichever is greatest,” was between $7 and $20 million, U.S.S.G. 2C1.1(b)(2), 2B1.1(b), but the statutory maximums for the two counts were 20 years and 3 years respectively, and that changed the range to 276 months. The judge imposed a below-guidelines sentence of 120 months, ordered the defendant to pay restitution of $7.2 million, and imposed a year of supervised release, which the judge may have thought mandatory. The Seventh Circuit reversed, finding the district court’s explanation inadequate. View "United States v. Harper" on Justia Law

A jury found Ferrell, a licensed psychologist, and Bryce, Ferrell’s employee, guilty of six counts of healthcare fraud, 18 U.S.C. 1347. Ferrell was sentenced to 88 months of imprisonment. The Seventh Circuit affirmed, upholding the district court’s refusal to admit two out-of-court statements made by Bryce’s brother (also Ferrell’s employee), and contained in a voicemail and an email. The district court held that these statements were hearsay and did not fall within Rule 804(b)(3)’s hearsay exception. The district court held that although the brother was unavailable to testify, the statements were not against his interest and the corroborating circumstances did not indicate that his statements were trustworthy. The court also upheld admission of testimony by another doctor concerning Ferrell’s conduct while in Texas. The court found that the testimony did not constitute impermissible character evidence under Fed. R. Evid. 404(b). View "United States v. Ferrell" on Justia Law

Faruki, a computer technology consultant, met Tishfield in 2006 while Tishfield was working as a portfolio manager at SAC Capital, a Connecticut-based hedge fund. In 2010, Faruki informed Tishfield that he had launched his own investment fund, Neural Markets, using mathematically-driven trading strategies. Faruki stated that he was currently investing his own money in the fund to establish a trading history he could pitch to prospective investors. He told Tishfield that in December 2009 his fund had achieved investment returns exceeding 12%, and that his investment return in January 2010 was 32%. Faruki made several other false statement about the fund and about his own credentials. In December 2010, Tishfield received his first account statement, which reported significant losses associated with his $1 million investment. Faruki was charged with seven counts of wire fraud, 18 U.S.C. 1343. The Seventh CIrcuit affirmed his conviction, rejecting challenges to the sufficiency of the evidence and to evidentiary rulings. View "United States v. Faruki" on Justia Law

In 1997, Player and his wife established EAR, purportedly to refurbish high-tech machinery . In 2005-2009, EAR defrauded creditors and the couple obtained $17 million in fraudulent transfers from EAR. Before the fraud was detected, they used funds for their personal benefit and spent large amounts at the Horseshoe Casino, Player was known to “walk with chips,” rather than cashing them in, and giving chips to a third party to cash in. Neither is illegal, but are potentially indicative of “structuring” transactions to avoid triggering the $10,000 reporting requirement, a federal crime, 31 U.S.C. 5324. When the fraud was discovered, EAR filed for Chapter 11 bankruptcy. The plan administrator sought to avoid transfers to Horseshoe, alleging that Horseshoe had reasons to believe that Player’s money came from EAR. Horseshoe objected to a motion to compel under 31 C.F.R. 1021.320(e), which governs Suspicious Activity Reports filed by financial institutions, including casinos, to detect money laundering and other violations of the Bank Secrecy Act. The district court ordered an ex parte filing by Horseshoe, which was inaccessible to EAR. The Seventh Circuit affirmed denial of the motion, finding that Horseshoe accepted the transfers without knowledge of the fraud at EAR and could not have uncovered the fraud if it had investigated. View "Brandt v. Horseshoe Hammond, LLC" on Justia Law

In 2009, Clarke submitted 2006-2008 tax returns for a trust, each claiming $900,000 in income and $900,000 in fiduciary fees; they did not identify the income’s source. Each reported $300,000 of tax paid to the IRS and requested $300,000 in refunds. Clarke identified the trust’s fiduciary as “Timothy F. Geither” (an apparent misspelling of the name of then-Treasury Secretary, Geithner), which raised a red flag. The IRS notified Clarke that the returns would not be processed. Clarke resubmitted, but did not name “Geither.” The IRS mailed Clarke three $300,000 checks. Clarke opened a bank account, deposited the checks, and, within months, spent all of the funds. In 2013 Clarke was indicted on seven counts of presenting false claims. The manager of the check cashing company where Clarke tried to cash his first check, testified that Clarke told him that he had the check because of “a trust fund because his dad had passed.” Clarke argued that the government had not proven that he knew the claim was false. The court did not include a good faith jury instruction requested by Clarke. Though barred from trial, a psychiatric report explained that Clarke believed that the U.S. is a business front designed to regulate commerce and has established bank accounts for its citizens. The Seventh Circuit affirmed Clarke’s conviction. View "United States v. Clarke" on Justia Law

Anzaldi, DeSalvo, and Latin concocted an $8 million fraudulent tax scheme based on a sovereign citizen-type theory that the U.S. government holds hidden bank accounts for its citizens that can be accessed through various legal maneuvers. By filing false tax returns, the three requested more than $8 million for themselves and others in tax refunds. The IRS accepted five of their returns, paying out more than $1 million in refunds before catching onto the scheme. A jury convicted all three of conspiracy to file false claims, 18 U.S.C. 286 and filing false claims upon an agency of the United States, 18 U.S.C. 287. Anzaldi and Latin appealed their convictions. The Seventh Circuit affirmed, rejecting Anzaldi’s claim that the court should have ordered a competency examination pursuant to 18 U.S.C. 4241(a) before allowing her to represent herself pro se; upholding admission of evidence of how Anzaldi structured her fees to be under $10,000; and rejecting a claim that the court erred by not instructing the jury that willfulness was required to convict, and instead instructing that the defendants had to have acted “knowingly.” View "United States v. Latin" on Justia Law

Beginning in 2008 Mullins served as Cook County’s Director of Public Affairs and Communications. At that time, contracts requiring the county to spend $25,000 or more had to be approved by its Board of Commissioners. Contracts that required the county to spend less than $25,000 only required the approval of the county’s purchasing agent. The government charged Mullins and co-defendants—vendors to whom the county awarded contracts—with manipulating the system. Mullins helped these vendors obtain payment under county service contracts, without the vendors having to complete any work, and in exchange they paid Mullins $34,748 in bribes. Jurors convicted him of four counts of wire fraud, 18 U.S.C. 1343, and four counts of bribery, section 666. The Seventh Circuit rejected Mullins’s challenge to the sufficiency of the evidence and claim of prosecutorial misconduct. View "United States v. Mullins" on Justia Law