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

Woodard was the director of a non‐profit grant organization, Gideon’s Gate, which provided educational and tutoring services to children. The Department of Education, not satisfied with Gideon’s performance, stopped providing funds. Woodard then enrolled Gideon as an Indiana Medicaid provider for outpatient mental health services, but continued to operate as an educational service provider. To fraudulently bill Medicaid, Woodard illegally obtained clients’ personal information from a welfare‐to‐work provider operated by a friend. Woodard submitted 2,437 false claims for $8.9 million worth of services to 378 patients. Woodard was charged with health care fraud, 18 U.S.C. 1347. Before trial Woodard filed several motions to change counsel. After appointing a third attorney, the court ordered a competency examination. A doctor concluded that Woodard was competent to stand trial. Two years later, after more delays and new attorneys, Woodard asked for another competency evaluation, which was denied. She pled guilty and was sentenced to 80 months in prison. The Seventh Circuit remanded for resentencing because the court applied the wrong version of the guidelines, but otherwise affirmed. The district court reached a reasonable conclusion after reviewing a previous psychological evaluation, considered advice from two mental health professionals, and considered Woodard’s interactions with her attorney. Although Woodard claimed that she did not knowingly and voluntarily plead guilty, the record shows that she did and that nothing would have alerted the court to the contrary. View "United States v. Woodard" on Justia Law

Castaldi, involved in fraudulent schemes since high school, operated a Ponzi scheme that collapsed in 2008. Net losses to investors and the IRS totaled about $40 million. When the scheme was near collapse, Castaldi turned himself in to the government. He eventually pled guilty to just one count of mail fraud, 18 U.S.C. 1341, and one count of corruptly impeding the IRS, 26 U.S.C. 7212(a). The district court imposed the longest prison sentence possible under the plea agreement: consecutive sentences of 20 years on the mail fraud charge and three years on the tax charge, about 50percent longer than the high end of the agreed Sentencing Guideline range. The Seventh Circuit affirmed the sentence, finding that the court adequately considered the fact that Castaldi told the government about his scheme and cooperated with its investigation, but also considered the devastating financial harm Castaldi inflicted on family members, friends, and neighbors of modest financial means. View "United States v. Castaldi" on Justia Law

The Halims own named WR Property Management. The company’s predecessor had contracted to buy natural gas from CES for the Halims’s 41 Chicago-area rental properties. CES delivered, but the company stopped paying and owed about $1.2 million when CES cut off service and filed suit. An Illinois court awarded $1.7 million, including interest and attorney fees. The company did not pay; the Halims had transferred all of its assets to WR. CES filed a diversity suit under the Illinois Fraudulent Transfer Act. The district court granted CES summary judgment and entered a final judgment for $2.7 million on fraudulent‐conveyance and successor‐liability claims. The Seventh Circuit affirmed, stating: “If the Halims are wise, they will start heeding the adage: if you’re in a hole, stop digging.” View "Centerpoint Energy Servs., Inc. v. WR Prop. Mgmt., LLC" on Justia Law

Dachman was indicted on and pled guilty to 11 counts of wire fraud for stealing funds elderly individuals had invested in his sleep‐related illness‐treatment companies. By selling shares in those companies, he had raised more than $4 million from 51 people. Although Dachman had a history of seven bankruptcies, he represented that he was a successful businessman and researcher and that he had obtained a Ph.D. from Northwestern University. He actually used the money for personal expenses. At sentencing, the district court denied him credit for acceptance of responsibility and sentenced him to 120 months’ incarceration. The Seventh Circuit affirmed, rejecting challenges that the court erred in calculating the loss amount, by denying him credit for acceptance of responsibility, and by imposing an “objectively unreasonable” term of imprisonment in light of his severe infirmities. View "Unted States v. Dachman" on Justia Law

Over 40 years, Rachuy accumulated almost 30 convictions, mostly for fraud. In a recent scheme, he “purchased” six vehicles by writing bad checks drawn on bank accounts that he knew were closed or had no funds. He was indicted for five counts of transporting stolen vehicles across state lines, 18 U.S.C. 2312, and pled guilty to one count in exchange for the government’s agreement to recommend that the court calculate loss amount based only on checks returned on four bank accounts involved in the purchase of the vehicles; recommend a five‐year prison sentence; and not oppose Rachuy’s request for the return of his property held by authorities. The district court rejected the parties’ recommendation, sentenced him to 90 months’ imprisonment based on its determination that he “is the epitome of a career offender.” The Seventh Circuit affirmed, rejecting arguments that the government breached the plea agreement: by referencing Rachuy’s lengthy criminal history, by failing to recommend that his loss amount be based solely on the checks used to purchase the vehicles charged in the superseding indictment; and by reminding the court that it did not have the power to command local and state authorities to release Rachuy’s property. View "United States v. Rachuy" on Justia Law

Williams pleaded guilty to misusing social security numbers, 42 U.S.C. 408(a)(7)(B), identity theft, 18 U.S.C. 1028(a)(7), making a false statement to an IRS agent, 18 U.S.C. 1001(a)(2), and aggravated identity theft, 18 U.S.C. 1028A(a)(1). The district court used the guidelines in effect at sentencing to calculate his imprisonment range, sentencing him to 56 months’ imprisonment, in addition to 24 months imposed for aggravated identity theft. Because of an upward adjustment for involving more than 10 victims, his guidelines range was higher than it would have been if calculated under the guidelines in effect when Williams committed his crimes. The defense did not raise the issue at sentencing. While his case was on appeal the Supreme Court held that applying the guidelines in effect at sentencing violates the ex post facto clause if it raises the defendant’s imprisonment range. Because the trial judge did not say that he would have given the same sentence if the range had been lower, the Seventh Circuit vacated and remanded for resentencing. View "United States v. Williams" on Justia Law

KBP is a Polish entity, formed to develop a business park near Krakow. Plaintiffs are KBP shareholders and defendants are either current or former shareholders. The plaintiffs alleged a fraudulent scheme to loot the company by payments for services never performed and sought relief under RICO, 18 U.S.C. 1962(a)–(d), with supplemental state claims for fraud, conversion, breach of fiduciary duty, tortious interference with prospective business advantage, civil conspiracy, violation of the Illinois Uniform Fraudulent Transfer Act, and for an accounting. The defendants allegedly invested some of their proceeds in a Chicago subdivision. Polish authorities charged the defendants for crimes related to KBP. In the RICO civil suit, the defendants’ abuse of the discovery process resulted in several sanctions rulings; when the plaintiffs objected to the magistrate’s relatively lenient decisions, the district judge found the sanctions too light and imposed more onerous ones, including contempt and an order barring the defendants from using certain evidence, and ultimately a $413,000,000 default judgment. The Seventh Circuit affirmed.View "Domanus v. Lewicki" on Justia Law

Chhibber, an internist, operated a walk‐in medical office on the south side of Chicago. For patients with insurance or Medicare coverage, Chhibber ordered an unusually high volume of diagnostic tests, including echocardiograms, electrocardiograms, pulmonary function tests, nerve conduction studies, carotid Doppler ultrasound scans and abdominal ultrasound scans. Chhibber owned the equipment and his staff performed the tests. He was charged with eight counts of making false statements relating to health care matters, 18 U.S.C. 1035, and eight counts of health care fraud, 18 U.S.C. 1347. The government presented witnesses who had worked for Chhibber, patients who saw him, and undercover agents who presented themselves to the Clinic as persons needing medical services. Chhibber’s former employees testified that he often ordered tests before he even arrived at the office, based on phone calls with staff. Employees performed the tests themselves with little training, and the results were not reviewed by specialists; normally, the tests were not reviewed at all. Chhibber was convicted of four counts of making false statements and five counts of health care fraud. The Seventh Circuit affirmed, rejecting challenges to evidentiary rulings. View "United States v. Chhibber" on Justia Law

An asbestos survey showed that the Kankakee building contained 2,200 linear feet of asbestos‐containing insulation around pipes. The owner hired Origin Fire Protection, to modify its sprinkler system. O’Malley, who operated Origin, offered to properly remove the pipe insulation for a cash payment ($12,000) and dispose of it in a lawful landfill. O’Malley provided no written contract for the removal work, but provided a written contract for the sprinkler system. O’Malley and Origin were not licensed to remove asbestos. O’Malley hired untrained workers, who stripped dry asbestos insulation off the pipes using a circular saw and other equipment provided by O’Malley. The workers were given paint suits, simple dust masks, and respirators with missing filters. They stopped working after inhaling dust that made them sick. Asbestos insulation was packed into garbage bags and taken to abandoned properties and a store dumpster. The Illinois EPA discovered the dumping; Superfund contractors began cleanup. O’Malley attempted to mislead federal agents. O’Malley was convicted of removing, transporting, and dumping asbestos‐containing insulation. The Seventh Circuit affirmed, rejecting an argument that the government did not prove the appropriate mens rea for Clean Air Act violations. O’Malley argued that the government was required to prove that he knew that the asbestos in the building was a regulated type of asbestos. View "United States v. O'Malley" on Justia Law

Seidling admitted to knowingly mailing documents containing false information about service of process or publication of notice to small claims courts in Wisconsin and hiding the filings of the actions from named defendants. Seidling argued that the elements of the mail fraud statute could not be met because he never intended the false statements and misrepresentations to be communicated to the victims. The combined total intended loss amount was calculated as $370,220. None of the defendants suffered immediate pecuniary harm, but many experienced challenges in reopening the lawsuits, getting them dismissed, clearing their credit, and removing the fraudulent lawsuits from the system. The district court found him guilty of 50 counts of mail fraud in violation of 18 U.S.C. 1341. The Seventh Circuit affirmed, rejecting an argument that there was no convergence between the victims’ losses and the fraudulent statements. Although his false statements and misrepresentations were not made directly to the victims, they still satisfied the requisite materiality element of mail fraud. The court noted Seidling’s history of fraudulent behavior, his lack of remorse, and the extensive details of his scheme, and held that the district court did not err in denying a reduction in sentencing for acceptance of responsibility. View "United States v. Seidling" on Justia Law