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

Defendant was convicted of tax evasion, a felony (26 U.S.C. 7201), and failure to file a tax return for the 2004 tax year, a misdemeanor (26 U.S.C. 7203). The Seventh Circuit affirmed in part. Defendant waived his claim under the Speedy Trial Act (18 U.S.C. 3162) by failing to move to dismiss the indictment prior to trial. Defendant presented no support for arguing a Sixth Amendment violation caused by the pretrial delay and waived a multiplicity challenge to his indictment. The convictions were supported by substantial evidence and the sentence was reasonable. The district court has authority to impose restitution as a condition of supervised release; the court vacated and remanded for a determination of whether it had done so.

Defendant was the pharmacy director of a medical center and had influence over decisions concerning which drugs to stock. Levato was the local business manager of a pharmaceutical company. Levato agreed to pay defendant $18,000 not to switch away from his company's drug, and made computer entries recording nine nonexistent speeches given by defendant for the pharmaceutical company; defendant later received another $14,000 for more fictitious speeches. After investigation by an FDA agent, Levato and defendant were indicted. Levato plead guilty and testified against defendant. Defendant was convicted of solicitation and receipt of kickbacks and sentenced to 22 months in prison. The Seventh Circuit affirmed. Memoranda prepared by the Department of Health and Human Services, discovered by the prosecution after trial, did not constitute exculpatory material withheld by the prosecution. The court noted that the documents would have strengthened the prosecution case.

The same day that debtor discharged his debts in a Chapter 7 bankruptcy, his mother, died, leaving debtor and his brother equal shares in an estate. Debtor signed a disclaimer of his interest, but never told the trustee about his inheritance. Following a series of transactions between the brothers and various accounts, the U.S. Attorney's office launched an investigation, and the brothers were charged with bankruptcy fraud (18 U.S.C. 157(3)). Debtor was also charged with impeding a bankruptcy trustee in the course of his duties (18 U.S.C. 152(1)) and fraudulently concealing assets. The Seventh Circuit affirmed. The circumstantial evidence was sufficient for a reasonable jury to find that the brothers engaged in a fraudulent scheme. The court also rejected a claim of ineffective assistance of counsel.

Defendant pled guilty, in 1997, to multiple counts of fraud, money laundering, and perjury and was sentenced to 78 months' imprisonment, five years of supervised release, and ordered to pay $1,587,321.50 in restitution and to forfeit $337,000. The government obtained a turnover order targeting payments defendant had received from three retirement savings plans provided through his employer under the Mandatory Victims Restitution Act, 18 U.S.C. 3613(a). The Seventh Circuit vacated. The targeted funds are a defined benefit plan, a 401(k) plan, and a "non-qualified" plan. The Consumer Credit Protection Act limits garnishment to 25% of the party's "aggregate disposable earnings of any individual workweek," 15 U.S.C. 1673(a), and applies to the periodic payments from a pension or retirement program.

Defendant did not inform the government when his mother died, but, for 12 years cashed checks for benefits she had earned under the Civil Service Retirement System, netting $158,000. He pleaded guilty to mail fraud. His Guidelines sentencing range was 21 to 27 months, but the judge sentenced him to 30 months, because she believed that he needed treatment for mental illness and alcoholism and that it would take more than 18 months. The Seventh Circuit vacated. While the appeal was pending, the Supreme Court held that a sentencing judge is to recognize that imprisonment is not an appropriate means of promoting correction and rehabilitation, 18 U.S.C. 3582(a), and may not increase the length of a prison term in order to facilitate rehabilitation or correction.

After a pyramid scheme that he had maintained for nearly a decade came to light, defendant pleaded guilty to one count of fraud, 18 U.S.C. 1341. The district court sentenced him well above the applicable guidelines range to 120 months. The Seventh Circuit affirmed, rejecting a claim that the court erroneously applied a 4-level adjustment under U.S.S.G. 2B1.1(b)(2)(B) for defrauding more than 50 victims and a claim that the sentence was substantively unreasonable.

Defendant, a participant in a major mortgage fraud scheme, pled guilty to committing wire fraud as part of that scam and was sentenced to 37 months in prison and ordered to pay $1,792,000 in restitution. His role was to act as a "straw," or fake, buyer of seven properties, and to cause $4,473,161.55 to be transferred from unwitting mortgage companies to their banking partners; he received $90,000 from his co-schemers. The Seventh Circuit affirmed in part, reversed in part, and remanded. The district court acted within its discretion in rejecting defendant's assertion that his sentence should be lower because he gave the government substantial assistance. The court should have explained its rationale in attributing a "reasonably foreseeable" loss amount to defendant. The court also erred in interpreting the minor role sentencing adjustment guideline when it stated that an act otherwise deemed minor could, if repeated, necessarily preclude the adjustment, and that a person playing a necessary role cannot play a minor role. The court should evaluate his role in context of other participants in the scheme, keeping in mind that a minor player is substantially less culpable than the average participant, not the leaders.

In 2004, defendant spent approximately $38,000 on home repairs for a Chicago alderman, a crucial player in defendant's attempt to have industrial property rezoned for commercial and residential development. Defendant also convinced business associates to donate, at his expense, to the alderman's aunt's congressional campaign. During an investigation, defendant fabricated an invoice for the home repairs, purportedly sent from his general contractor to defendant. The Seventh Circuit affirmed convictions for bribing a local official (18 U.S.C. § 666(a)(2)); exceeding federal campaign contribution limits through straw-man donations (Federal Election Campaign Act, 2 U.S.C. 441a(a)(1),441f & 437g(d)(1)(A)(ii)); and endeavoring to obstruct justice (18 U.S.C. 1503(a)). The government was not required to establish a specific quid pro quo of money in exchange for a legislative act. The district court acted within its discretion in holding an adversarial in camera hearing to determine the existence of the crime-fraud exception. Section 441f unambiguously proscribes straw man, as well as false name, contributions.

Companies filed suit, alleging that an employee engaged in a collusive trading scheme in violation of the Securities Exchange Act of 1934. Under section 9(a) of the Act, a private plaintiff must plead that: a series of transactions in a security created actual or apparent trading in that security or raised or depressed its market price; scienter; the purpose of the transactions was to induce the security's sale or purchase by others; plaintiffs relied on the transactions; and the transactions affected plaintiff's purchase or selling price. The district court dismissed for failure to state a claim. The Seventh Circuit reversed and remanded. The complaint adequately stated with particularity the circumstances constituting the securities fraud, and the economic loss impact on the plaintiffs as a result of the fraud and satisfied the pleading requirements of FRCP 9(b).

Defendants were convicted of mail fraud and wire fraud (18 U.S.C. 1341, 1346) for participating in a fraudulent scheme to obtain mortgage loans. The scheme involved: recruiters, who enlisted buyers to buy properties with fraudulently obtained funds; financiers, who provided funds to buyers to facilitate the transactions; administrators, who bought fake documents to enable buyers to obtain mortgages; loan officers, who prepared fraudulent applications and sent them to lenders. Between 2003 and 2005, the group acquired more than 70 properties for which lenders provided $7.2 million in loans. Most of the properties went into foreclosure, resulting in losses to the lenders of $2.2 million. The Seventh Circuit affirmed the convictions and sentences. The use of the term "straw buyer" in the confession of a nontestifying co-defendant did not obviously refer to the defendant and violate his Sixth Amendment right of confrontation under the "Bruton" doctrine. The court properly applied a "sophisticated means" sentence enhancement and gave an "ostrich" instruction concerning defendant's knowledge.