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

Dr. Xiao taught mathematics for many years at Southern Illinois University. He also did academic work based in China, for which he received more than $100,000 in payments. An investigation of Xiao's grant applications led FBI agents to examine his finances. Xiao was charged with wire fraud, making a false statement, failing to disclose his foreign bank account on his income tax returns, and failing to file a required report with the Department of the Treasury. Xiao was acquitted of wire fraud and making a false statement, but convicted of filing false tax returns and failing to file a report of a foreign bank account, 31 U.S.C. 5314(a).The Seventh Circuit affirmed, rejecting arguments that the evidence was insufficient, primarily on the question of willfulness, that the tax return question was ambiguous, and that the foreign-account reporting regulation is invalid. The evidence permitted the jury to find beyond a reasonable doubt that Xiao acted willfully in choosing not to disclose his foreign bank account. The tax return form was not ambiguous as applied to Xiao’s situation. The government proved beyond a reasonable doubt that he engaged in reportable transactions. In 2019 he received deposits to the Chinese account and made withdrawals and investments using that account. View "United States v. Xiao" on Justia Law

In March 2020, Sherwood and Doyle lost their jobs because of the COVID-19 pandemic and applied for unemployment benefits. They never received those benefits, however, and still have not received notice of the denial of their claims or an opportunity for a hearing. Sherwood and Doyle filed a putative class action lawsuit against the Director of the Illinois Department of Employment Security (IDES), asserting equal protection and procedural due process claims.The Seventh Circuit affirmed the dismissal of the suit. Under the “Young doctrine,” which provides an exception to Eleventh Amendment immunity, private parties may sue individual state officials for prospective relief to enjoin ongoing violations of federal law. Even if these plaintiffs had standing to bring the equal protection claims, sovereign immunity bars them; the Young exception does not apply when federal law has been violated only at one time or over a period of time in the past. The plaintiffs alleged a sufficient injury to pursue their procedural due process claims and can invoke the Young exception to sovereign immunity but mandamus provides an adequate state-law remedy in this case. View "Sherwood v. Marchiori" on Justia Law

Whitfield was scheduled for discharge from Menard Correctional Center in January 2010, to begin a term of mandatory supervised release. On that day, prison officials handed Whitfield only the signature page of a document called the “Electronic Detention Program Agreement.” That page stated that “the following conditions of the Program apply only to sex offender cases.” Whitfield was not a sex offender and objected to signing the Agreement without an explanation from a prison official clarifying why he, a non-sex offender, had to sign a form designed exclusively for sex offenders. Whitfield’s objections were rejected. Four times, clinical services supervisor Spiller directed Whitfield to sign the form. After his continued refusal, she issued a disciplinary ticket for failure to follow a direct order. Whitfield was transferred to disciplinary segregation; the Illinois Prisoner Review Board held a hearing and found he had violated the terms of his supervised release. His eligibility for supervised release was revoked. Whitfield remained in custody for another 18 months.Whitfield sued Spiller, other Menard officials, and Board members, alleging constitutional violations under 42 U.S.C. 1983. The case has narrowed to Whitfield’s claims against Spiller and then-warden Gaetz for First and Eighth Amendment violations. The Seventh Circuit held that the district court correctly granted the defendants summary judgment on some claims, but that Whitfield has sufficient evidence that Spiller’s conduct violated his First Amendment rights. View "Whitfield v. Cowan" on Justia Law

Simmons used another person’s Social Security number and falsified employment information to open a savings account and apply for multiple loans and credit cards at a credit union. Convicted of bank fraud, 18 U.S.C. 1344, and aggravated identity theft, section 1028A, Simmons argued that the government had not proved that he knew the Social Security number belonged to another person and, at sentencing, objected to the PSR’s calculation of the intended loss amount. The PSR calculated Simmons’s total intended loss amount at $176,326. That included a cashier’s check Simmons had cashed plus each loan and credit card amount for which he had applied—some of which had been denied. Simmons argued that he only intended to obtain one credit card and one auto loan and that if he had succeeded in obtaining a credit card and car loan on January 23, he would have stopped. Excluding two additional applications would have brought the loss amount under $150,000, resulting in an enhancement of only eight levels instead of ten.The district court adopted the PSR’s loss amount, and, with a Guidelines range of 30-37 months, sentenced Simmons to 46 months on the bank fraud counts, followed by a mandatory consecutive sentence of 24 months on the aggravated identity theft count. The Seventh Circuit affirmed. Sufficient evidence supported Simmons’s aggravated identity theft conviction, and the loss amount finding was not clearly erroneous. View "United States v. Simmons" on Justia Law

If a borrower defaults on a loan guaranteed by the Small Business Administration (SBA), the lender asks the SBA to purchase the outstanding balance of the defaulted loan. The SBA then decides whether to honor the guarantee after reviewing the paperwork to ensure that the loan complied with SBA requirements. A lender can retain a lending service provider (LSP) to package, originate, disburse, service, or liquidate SBA-guaranteed loans on the lender’s behalf. The five defendants worked at, or with, an LSP, and engaged in a scheme to obtain SBA guarantees for loans that did not meet the SBA’s guidelines and requirements. They made false statements on loan-guarantee applications and purchase requests sent to the SBA about matters such as borrowers’ eligibility to receive a loan and how loan proceeds would be disbursed.The Seventh Circuit affirmed the defendants’ convictions for conspiracy to commit wire fraud affecting a financial institution, 18 U.S.C. 1349, and wire fraud affecting a financial institution, section 1343) and their sentences. The court rejected arguments concerning a constructive amendment to the indictment, that the government did not prove that the wire fraud scheme deprived the SBA of a protectable money or property interest, jury instructions, the sufficiency of the evidence, and loss calculation. View "United States v. Griffin" on Justia Law

Menasha licensed Nulogy’s software, Nulogy Solution. Years later, Deloitte reviewed Menasha’s systems in hopes of better integrating Nulogy Solution into Menasha’s other software. Deloitte and Menasha asked Nulogy to share proprietary information. Nulogy alleges that the two used this information to reverse engineer an alternative to Nulogy Solution. In 2020, Nulogy filed suit in Ontario’s Superior Court of Justice, alleging breach of contract by Menasha and violations of trade secrets by Menasha and Deloitte. Deloitte objected to jurisdiction in Canada.Nulogy voluntarily dismissed its trade secret claims against both companies and refiled those claims in the Northern District of Illinois under the Defend Trade Secrets Act, 18 U.S.C. 1836(b). The breach of contract claims against Menasha remained pending in Canada. Menasha moved to dismiss the U.S. trade secrets litigation. Menasha’s contract with Nulogy contained a forum selection clause, identifying Ontario, Canada. Deloitte did not join that motion but filed its own motion to dismiss arguing failure to state a claim. The district court dismissed the claims against Menasha but reasoned that the forum non-conveniens doctrine required the dismissal of the entire complaint, including the claims against Deloitte.The Seventh Circuit affirmed the dismissal of Nulogy’s claims against Menasha but reversed the Deloitte dismissal. Deloitte has no contractual agreement with Nulogy identifying Canada as the proper forum and continues to insist that Canadian courts do not have jurisdiction. View "Nulogy Corp. v. Menasha Packaging Co., LLC" on Justia Law

Prude, serving an 80-year sentence, helped a friend and fellow inmate file a successful civil rights lawsuit against their Wisconsin prison. According to Prude, his friend, grateful for the help, sent him $10,000 of his $40,000 damages award to help Prude retain an attorney for his own appeal. The prison’s Security Director, Meli, characterized the check as the product of an illegal business arrangement, seized the funds as contraband, and launched an investigation, after which he charged Prude with violations of the Wisconsin Administrative Code, including lying, unauthorized use of the mail, threats, and enterprises and fraud. Prude had a disciplinary hearing and was found guilty; the $10,000 was permanently seized. Although Meli was an investigating officer who should have recused himself from the hearing process, Prude claims he controlled the hearing and directed the actions of the hearing officer, Westra, to ensure a finding of guilt and to prevent Prude from ever getting his money.“Despite statements from Meli and Westra before and during the hearing suggesting a predetermined outcome,” the district court dismissed Prude's claims against Westra at the screening stage and later granted Meli summary judgment on all remaining claims. The Seventh Circuit reversed; the evidence in the record plausibly supports a due process violation. View "Prude v. Meli" on Justia Law

From 2011-2017, Care Specialists provided care to homebound Medicare beneficiaries. At least part of its operation was fraudulent. Care Specialists would submit Medicare claims for health services, including skilled nursing services, provided to many patients who did not qualify for Medicare reimbursement. Newton, a quality assurance specialist and the owner’s secretary, helped implement the scheme. A former Care Specialists employee, Bolender, filed a whistleblower letter describing the scheme and met with federal investigators, directly implicating Newton as a key figure in the conspiracy. The owners pleaded guilty. Newton was convicted of conspiracy to commit both health care fraud and wire fraud, following testimony from multiple Care Specialists employees. Bolender avoided testifying by invoking her rights against self-incrimination under the Fifth Amendment. Newton unsuccessfully argued that the court wrongly accepted the invocation and that the government’s refusal to grant Bolender immunity violated her due process rights.The Seventh Circuit affirmed Newton’s conviction. The government's actions did not distort the fact-finding process; Bolender’s testimony was just as likely, if not more likely, to inculpate Newton as it was to exculpate her. Bolender’s invocation of her rights under the Fifth Amendment had been proper because she potentially could have opened herself up to prosecution. The court vacated Newton’s sentence. The district court’s calculation of Medicare’s loss attributable to Newton was unreasonable. View "United States v. Newton" on Justia Law

Service hired Forwarders as its agent in 2010. The Agreement had a three-year term, a continuous one-year renewal option, and a mutual nonrenewal provision. A 2013 amendment stated that the Agreement would renew perpetually for consecutive one-year terms, unless Service, in its sole discretion, notifies Forwarders of its intention to terminate the Agreement 30 days before the annual expiration date. The amendment, however, left undisturbed the Agreement’s provision that Service shall not be deemed to be in default unless Forwarders has provided written notice of an alleged material breach and has given Service an opportunity to cure, after which Forwarders may terminate. “[T]ermination of this Agreement by [Forwarders] for any other reason shall be deemed a termination without cause.”Forwarders sought a declaratory judgment that the amended Agreement was terminable at will. Service conceded that the amended Agreement was of indefinite duration and that Illinois law presumes that such contracts are terminable at will but argued the presumption was rebutted because the Agreement provided that Forwarders could end the Agreement only if Service failed to timely cure a material breach after notification. The court granted judgment on the pleadings that the termination was lawful. The Seventh Circuit affirmed. The amended Agreement lacks a clear statement that the contract can only be terminated based upon the occurrence of certain conditions or events. Service has not rebutted the Illinois law presumption that this contract of indefinite duration is terminable at will. View "Beach Forwarders, Inc. v. Service By Air, Inc." on Justia Law

Freyermuth and five others were indicted for their involvement in a conspiracy to distribute large quantities of methamphetamine. Freyermuth pleaded guilty to conspiring to both distribute over 50 grams of methamphetamine and launder money. The PSR reported that Freyermuth—at his brother’s direction—received drug shipments, leased a storage unit to store the drugs, delivered the drugs to the regional dealers, collected money from the dealers, and sent that money to his brother The PSR concluded that Freyermuth was “integral” to the conspiracy, and a minor-role reduction was not warranted. Freyermuth argued that he was “essentially [his brother’s] drug mule,” uninvolved in decision-making and poorly compensated. Without the reduction, Freyermuth’s sentencing range was 262-327 months. A minor-role reduction would have lowered Freyermuth’s range to 135-68 months.The district judge concluded that Freyermuth’s role was “multifaceted”: he stored the drugs “relatively independently,” maintained the inventory, delivered the drugs to the dealers and collected and laundered the conspiracy’s proceeds, which enhanced his knowledge of the conspiracy’s “scale.” The judge acknowledged that Freyermuth’s discretion was limited by his brother’s instructions but found that factor insufficient to justify a reduction. The Seventh Circuit affirmed his 102-month sentence. The judge adequately compared Freyermuth’s role to the average conspiracy member’s and applied the relevant guideline factors. View "United States v. Freyermuth" on Justia Law