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

White, Ford, and Helton were involved in a mortgage fraud scheme through White’s company, EHNS. EHNS offered a “mortgage bailout” program, telling homeowners that they could avoid foreclosure by transferring their homes to EHNS for one year, that EHNS investors would pay the mortgage, that the owners could continue to live in their homes, and that they could reassume their mortgages at the program’s conclusion. EHNS investors actually took title outright. White would pressure appraisers to assess the properties at amounts higher than actual value. EHNS would strip actual and manufactured equity by transaction fees. Clients almost never were able to buy back their homes. Lenders foreclosed on many of the properties. Through fraudulent mortgage loan applications, White obtained financing for straw purchasers. Ford was the closing agent, supposed to act as the lender’s representative, but actually fabricating official documents. Helton was the attorney and “represented” homeowners at White’s behest, pocketing legal fees paid out of the equity proceeds and orchestrating a cover‐up by representing the homeowners in subsequent bankruptcy filings. All were convicted of multiple counts of wire fraud, 18 U.S.C. 1343; Helton was also convicted of bankruptcy fraud, 18 U.S.C. 157. The Seventh Circuit affirmed, rejecting claims concerning the sufficiency of the evidence, challenges to joinder of the defendants and to jury instructions, and a Brady claim. View "United States v. White" on Justia Law

Crundwell, Comptroller of Dixon, Illinois since 1983, pleaded guilty to embezzling about $53 million from the city between 1990 and 2012. She used the money to support more than 400 quarter horses and a lavish lifestyle, which she had previously claimed to be the fruit of the horses’ success. During the last six years of her scheme, the embezzlement averaged 28% of the city’s budget. In exchange for her plea, the prosecutor limited the charge to a single count of wire fraud, 18 U.S.C. 1343. The crime’s impact on the population of Dixon played a major role in the district court’s decision to sentence her to 235 months’ imprisonment, substantially above the Guideline range of 151 to 188 months. The Seventh Circuit affirmed. The district court pronounced a substantively reasonable sentence after giving Crundwell full opportunity to present evidence and arguments. The judge considered deterrence and addressed every one of her arguments. That he thought less of her cooperation than Crundwell herself did, and gave a lower weight to her age than she requested does not undermine the sentence’s validity. View "United States v. Crundwell" on Justia Law

Anobah was an Illinois-licensed loan officer, employed by AFFC, and acted as a loan officer for at least two fraudulent schemes. Developers Brown and Adams recruited Mason to act as a nominee buyer of a property and referred Mason to Anobah for preparation of a fraudulent loan application. The application contained numerous material falsehoods concerning Mason’s employment, assets, and income, and intent to occupy the property. Anobah, Brown, and others created fraudulent supporting documents. AFFC issued two loans in the amount of $760,000 for the property and ultimately lost about $290,000 on those loans. In the course of the scheme, AFFC wired funds from an account in Alabama to a bank in Chicago, providing the basis for a wire fraud charge. Anobah played a similar role in other loan applications for other properties and ultimately pled guilty to one count of wire fraud, 18 U.S.C. 1343. The district court sentenced him to 36 months of imprisonment, five months below the low end of the calculated guidelines range. The Seventh Circuit affirmed, upholding application of guidelines enhancements for abuse of a position of trust and for use of sophisticated means in committing the fraud. View "United States v. Anobah" on Justia Law

Through their companies, Pilon and her husband falsely represented that one investment program would generate significant returns that Pilon would use to pay off the investors’ mortgages within two years, and make a bonus cash payment to investors. Many investors refinanced mortgages to invest. With respect to another investment program, Pilon falsely represented that money would be invested in a high-yield fund and that investors would receive 100 percent on their investments within about 90 days. Pilon hinted at religious and humanitarian purposes. Pilon paid early investors’ mortgages with later investors’ money (a Ponzi scheme). About 40 people invested $4,000 to $110,000, losing a total of $967,702. The Illinois Department of Securities ordered Pilon to cease offering investments; she ignored the order. When the scheme unraveled and investors lost their homes, Pilon was indicted for wire fraud. Pilon, a member of a sovereign citizen movement, unsuccessfully moved to dismiss for lack of jurisdiction. Immediately before jury selection, Pilon stated her intent to plead guilty; when the government proffered the facts, Pilon denied everything. After testimony by eight government witnesses, Pilon admitted to the scheme and pleaded guilty. In calculating Pilon’s guideline range, the court applied an enhancement for abuse of a position of trust, declined to credit Pilon for acceptance of responsibility, and sentenced Pilon to 78 months’ incarceration, in the middle of the range, and imposed $967,702 in restitution. The Seventh Circuit affirmed. View "United States v. Pilon" on Justia Law

Orillo, her husband (a doctor), and another owned Chalice, a home health care provider. Chalice was an enrolled provider with Medicare and could seek reimbursement of home health care through that program. Orillo falsified forms by altering the codes and information that had been completed by the Chalice nurses to make the patient’s condition appear worse and the health care needs greater than the actuality. Those alterations caused Medicare software to generate different reimbursement rates Orillo also aided her husband in paying kickbacks to a Chicago doctor in return for referrals of Medicare patients. Orillo pled guilty to healthcare fraud, 18 U.S.C. 1347 and paying kickbacks to physicians for patient referrals under a federal health care program, 42 U.S.C. 1320a-7b and 18 U.S.C. 2, and was sentenced to 20 months’ imprisonment. Orillo conceded that her scheme caused a loss, to Medicare, in excess of $400,000, and agreed to entry of a $500,000 forfeiture judgment.The district court determined that the loss amount for the healthcare fraud count was $744,481 and ordered her to pay that amount in restitution. The Seventh Circuit affirmed, rejecting Orillo’s argument that the loss and restitution amount should be limited to only those stemming from visible alterations. View "United States v. Orillo" on Justia Law

Philpot, former Clerk of Lake County, Indiana, took $25,000 in incentive payments from a federally funded child‐support fund (42 U.S.C. 658a(a)) without the required approval of the county fiscal body. The Indiana Department of Child Services disburses those federal funds to the counties, Ind. Code 31‐25‐4‐23(a), which have a relatively free hand in directing the money, although “amounts received as incentive payments may not, without the approval of the county fiscal body, be used to increase or supplement the salary of an elected official.” Philpot had used the funds to provide himself and staff members with bonuses. Convicted of mail fraud, 18 U.S.C. 1341, and theft from a federally funded program 18 U.S. 666(a)1A, he was sentenced to 18 months in prison. The Seventh Circuit affirmed, despite claims concerning whether Philpot “knowingly” violated the statute and the fact that Philpot had voluntarily returned the funds. View "United States v. Philpot" on Justia Law

The Berkowitz family has a history of IRS problems. Yair began participating in his father’s schemes in 1999, acquiring the information of dead people and federal prisoners to prepare fraudulent tax returns. Between 2003 and 2009, 58 individuals received refund checks in a conspiracy that involved more than 3,000 false state and federal tax returns. Yair received tax returns from Marvin in Israel, mailed the returns from various U.S. postal codes to avoid IRS suspicion, and controlled accounts where proceeds were deposited. When refund checks issued, Yair traveled to pick them up and made payments to co‐conspirators. In 2006, IRS agents told Yair that money he received from Marvin was obtained by fraud. Yair denied knowledge of the scheme. He began to reduce his direct involvement, but continued to receive money from the scheme and met with an undercover IRS agent about expanding the fraud. The scheme was uncovered. Yair, Marvin, and others were charged with conspiracy to defraud the IRS, wire fraud, and mail fraud. Yair pleaded guilty only to wire fraud based on a 2006 PayPal transfer of $250. At sentencing, the district court followed the Presentence Report’s recommendation and ordered Yair to pay more than $4 million in restitution along with his prison sentence; his liability was joint and several with his co‐defendants. The Seventh Circuit found the award appropriate and affirmed.View "Unted States v. Berkowitz" on Justia Law

Jin, a naturalized American citizen of Chinese origin, with a bachelor’s degree in physics from a Chinese university and master’s degrees in physics and computer science from American universities, was employed as a Motorola software engineer, 1998-2007. Her duties involved a cellular telecommunications system: Integrated Digital Enhanced Network (IDEN). While on medical leave in China, 2006-2007, she sought a job with a Chinese company, Sun Kaisens, which develops telecommunications technology for the Chinese armed forces. She returned to the U.S., bought a one‐way ticket to China on a plane scheduled to leave Chicago days later, then downloaded thousands of internal Motorola documents, stamped proprietary, disclosing details of IDEN, which she was carrying with $31,000 when stopped by Customs agents. She stated she intended to live in China and work for Sun Kaisens. She was convicted of theft of trade secrets, but acquitted of economic espionage, under the Economic Espionage Act, 18 U.S.C. 1831, 1832, and sentenced to 48 months in prison. The Seventh Circuit affirmed, rejecting arguments that what she stole was not a trade secret and that she neither intended nor knew that the theft would harm Motorola. The court characterized the sentence as lenient, given Jin’s egregious conduct, which included repeatedly lying to federal agents.p View "United States v. Jin" on Justia Law

After the mutual funds, known as the Lancelot or Colossus group, folded in 2008, the trustee in bankruptcy filed independent suits or adversary actions seeking to recover from solvent third parties, including the Funds’ auditor, law firm, and some of the Funds’ investors, which the Trustee believes received preferential transfers or fraudulent conveyances. The Funds had invested in notes issued by Thousand Lakes, which was actually a Ponzi scheme, paying old investors with newly raised money. In these proceedings the trustee contends that investors who redeemed shares before the bankruptcy received preferential transfers, 11 U.S.C. 547, or fraudulent conveyances, 11 U.S.C. 548(a)(1)(B) and raised a claim under the Illinois fraudulent-conveyance statute, using the avoiding power of 11 U.S.C. 544. The bankruptcy court rejected the claims, citing the statutory exception: “the trustee may not avoid a settlement payment or transfer made to a financial participant in connection with a securities contract, except under section 548(a)(1)(A) of this title.” The Seventh Circuit affirmed. A transfer from the Funds to each redeeming investor occurred “in connection with” a securities contract. View "Peterson v. Somers Dublin, Ltd." on Justia Law

Gray’s friend Johnson offered to act as co‐borrower to help Gray buy a house, if Gray promised that she would only be on the loan as a co‐borrower for two years. In return, Johnson received a finder’s fee from the daughter of the builder-seller (Hinrichs). Mortgage broker Bowling sent their application to Fremont, a federally insured lender specializing in stated‐income loans, with which the lender typically did not verify financial information supplied by applicants. Bowling testified that he told both women that they would be listed as occupants, that their incomes would be inflated, and what the monthly payment would be. The closing proceeded; Gray and Johnson received a $273,700 mortgage from Fremont and, on paper, a $48,300 second mortgage from Hinrichs. Gray and Johnson acknowledge that the application that they signed contained several false statements. Bowling became the subject of a federal investigation. Sentenced to 51 months’ imprisonment, he agreed to testify against his clients. The Seventh Circuit affirmed the convictions of Gray and Johnson under 18 U.S.C. 1014, which prohibits “knowingly” making false statements to influence the action of a federally insured institution. Rejecting an argument that the district court erred by denying an opportunity to present testimony to show Bowling’s history of duping clients, the court stated that his prior wrongdoing was not very probative of Gray’s and Johnson’s guilt. View "United States v. Gray" on Justia Law