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

Owens, a Chicago zoning inspector, was convicted of two counts of federal program bribery, 18 U.S.C. 666(a)(1)(B), for accepting two $600 bribes in exchange for issuing certificates of occupancy for four newly constructed homes. The Seventh Circuit reversed, finding that there was insufficient evidence, to establish beyond a reasonable doubt, that the issuance of the certificates of occupancy had a value of $5,000 or more as required by the statute. View "United States v. Owen" on Justia Law

Four defendants were convicted of conspiring to defraud the U.S. by impeding the functions of the IRS and of related fraud and tax offenses in connection with abusive trusts promoted by two Illinois companies. Although the system of trusts was portrayed as a legitimate, sophisticated means of tax minimization grounded in the common law, the system was in essence a sham, designed solely to conceal a trust purchaser’s assets and income from the IRS. It was promoted through a network of corrupt promoters, managers, attorneys, and accountants, but prospective customers who sought independent advice were routinely warned of its flaws. Defendants were sentenced to prison terms of 120 to 223 months. The Seventh Circuit affirmed. View "United States v. Vallone" on Justia Law

The company, S.C. Johnson & Son, was injured by a bribery and kickback scheme involving a dishonest employee and transportation companies with which it had contracts and filed a tort lawsuit in Wisconsin state court. The company filed a second suit, against different transportation defendants, in federal court, based on diversity jurisdiction. The district court dismissed the suit, which raised state law claims of fraudulent misrepresentation by omission; criminal conspiracy to violate Wisconsin’s bribery statute, Wis. Stat. 134.05; conspiracy to commit fraud; violations of the Wisconsin Organized Crime Control Act, Wis. Stat. 946.80, through racketeering activity and mail and wire fraud; and aiding and abetting a breach of fiduciary duty by providing bribes and kickbacks. The court indicated that federal law preempted state tort claims because they could have “the force and effect of a law related to a price, route, or service of any motor carrier . . . with respect to the transportation of property.” 49 U.S.C. 14501(c)(1). The Seventh Circuit reversed. A claim for fraudulent misrepresentation was properly dismissed, but theories based on bribery and kickbacks fall outside the scope of the preemption provision. View "SC Johnson & Son Inc. v. Transp. Corp. of Am., Inc." on Justia Law

Robers pleaded guilty to conspiracy to commit wire fraud, 18 U.S.C. 371, based on his role in a mortgage fraud scheme; Robers signed mortgage documents seeking loans based on inflated income and assets and on his claim that he would reside in the houses and pay the mortgages. The loans went into default. The district court sentenced Robers to three years’ probation and ordered him to pay $218,952 in restitution to a lender and a mortgage insurance company. The Seventh Circuit affirmed the restitution order. The Mandatory Victims Restitution Act, 18 U.S.C. 3663A, requires restitution in the case of a crime resulting in damage to or loss or destruction of property. The court rejected Robers’s argument that the MVRA requires the court to determine the offset value based on the fair market value the collateral had on the date the lenders obtained title to the houses following foreclosure as the “date the property is returned.” Money was the property stolen and foreclosure is not a return of that property; only when the real estate is resold do the victims receive money. Victims are also entitled to expenses, other than attorney’s fees and unspecified fees, related to foreclosure and sale. View "United States v. Robers" on Justia Law

Turner was convicted on four counts of wire fraud and two counts of making false statements to the FBI stemming from a scheme to defraud the State of Illinois of salaries paid to but not earned by a team of janitors responsible for cleaning state office buildings. As was typical at the time in federal fraud prosecutions, the wire fraud counts were submitted to the jury on alternative theories that Turner aided and abetted a scheme to defraud the state of its money and also its right to honest services, 18 U.S.C. 1343, 1346. The Seventh Circuit affirmed in 2008. Two years later, the Supreme Court decided Skilling v. United States, 130 S. Ct. 2896 (2010), limiting the honest services fraud statute to schemes involving bribes or kickbacks. Turner moved to vacate the wire-fraud convictions based on Skilling error, and the court agreed. The Seventh Circuit reversed, reinstating the conviction. The Skilling error was harmless; the honest services alternative was unnecessary to Turner’s conviction. The evidence was coextensive on the two fraud theories; the jury could not have convicted Turner of honest-services fraud without also convicting him of pecuniary fraud. View "Turner v. United States" on Justia Law

Chapman was convicted of six counts of forging checks (18 U.S.C. 513(a)) that were made payable to the IRS and given to him by a client who had hired Chapman to resolve a tax dispute. The Seventh Circuit affirmed, rejecting challenges to the sufficiency of the evidence and to the district court’s admission of a previous forgery conviction. View "United States v. Chapman" on Justia Law

Javell, the owner of a mortgage brokerage, and Arroyo, Javell’s employee and loan processor, were convicted of two counts of mortgage-based wire fraud (18 U.S.C. 1343) based on their actions in procuring a fraudulent mortgage during an FBI sting operation. Javell was sentenced to 12 months and one day in prison. The Seventh Circuit affirmed. Javell argued the district court violated Bruton, and Javell’s Sixth Amendment rights by admitting the post-arrest statements made by Arroyo and by failing to properly instruct the jury about the rules of non-imputation. According to Javell, Arroyo’s post-arrest statements directly implicated Javell and had the jury not heard those statements, Javell would not have been convicted. Noting a “plethora” of other evidence, including recordings, the court rejected the argument. View "United States v. Javell" on Justia Law

The target witness learned in 2009 that the IRS had opened a file on him, and that an IRS special agent and DOJ tax division prosecutor were assigned to investigate whether he used secret offshore bank accounts to evade income taxes. Two years later, a grand jury issued a subpoena requiring that he produce all records required to be maintained pursuant to 31 C.F.R. 1010.420 relating to foreign financial accounts that he had a financial interest in, or signature authority over. The requested records are required under the Bank Secrecy Act of 1970. The Government argued that the Required Records Doctrine overrides the Fifth Amendment privilege. The district court quashed the subpoena, concluding that the required records doctrine did not apply because the act of producing the required records was testimonial and would compel the witness to incriminate himself. The Seventh Circuit reversed, finding the Doctrine applicable. View "In re: February 2011-1 Grand Jury Subpoena" on Justia Law

Sklena and Sarvey were floor traders in the Five-Year Treasury Note futures pit at the Chicago Board of Trade. Sklena was a “local,” authorized to trade only on his own behalf; Sarvey was a “broker” and could trade for himself and for his customers. On April 2, 2004, the price of the Five-Year Note futures fluctuated wildly. Sarvey and Sklena executed the series of transactions that resulted in criminal prosecution. According to the government, Sklena and Sarvey conspired to sell Sarvey’s customers’ contracts noncompetitively. The U.S. Commodity Futures Trading Commission filed a civil complaint alleging that the two “engaged in a series of non-competitive trades” that defrauded customers out of over $2 million. Sarvey died before trial on charges of wire and commodity fraud and noncompetitive futures contract trading. In Sklena’s trial, the district court excluded Sarvey’s deposition as inadmissible hearsay. Sklena was convicted. The Seventh Circuit reversed. There was sufficient evidence to support the conviction, but the court erred in excluding the deposition testimony.View "United States v. Sklena" on Justia Law

In 2005, attorneys White and Beaman, assisted securities broker-turned-real estate investor Seybold with a plan to buy, rehabilitate, and then sell, or refinance and rent, residential and commercial properties in Marion, Indiana. That plan involved the creation of two business entities, one partially owned by a group of private investors who contributed more than $1 million. When the plan failed, the investors sued. The district court entered summary judgment on all of the claims against the attorneys: state and federal RICO violations, conversion, federal and state securities fraud, common-law fraud (both actual and constructive), civil conspiracy, and legal malpractice. The Seventh Circuit affirmed. The plaintiffs failed to establish either that an attorney-client relationship existed or that the attorneys owed them some other legal duty for purposes of the malpractice, constructive fraud, and securities-fraud claims. Plaintiffs relied solely on representations that concerned only future conduct, or on representations of existing intent that were not yet executed, so claims of actual fraud failed, Plaintiffs failed to provide evidence that the lawyers acted in concert with Seybold to commit an unlawful act or to accomplish a lawful purpose through unlawful means. View "Rosenbaum v. White" on Justia Law