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Friday, April 16th, 2021

Second Circuit examines the elements of aggravated identity theft – was this case overcharged?

In US v. Dumitru, decided March 22, 2021, an immigration attorney was convicted after trial of asylum fraud, making false statements, and aggravated identity theft. She was sentenced to 60 months. The attorney’s alleged conduct was that she falsely filled out asylum applications on behalf of her clients and also signed and notarized those applications with her clients’ names without showing them the applications or obtaining consent.

The principal issue on appeal was whether the evidence was sufficient to prove identity theft, i.e., did the defendant use a means of identification (here a signature) without lawful authority to aid in the commission of the fraud offense. The Circuit held that the evidence was sufficient.

Signing her clients’ names without permission, and using those forged signatures to represent to the immigration authorities that her clients were requesting government action based on the false information in the applications, sufficed to prove …

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Monday, May 11th, 2020

Unanimous Supreme Court Tosses Bridgegate Conviction

Kelly v. United States concerns New Jersey’s well-known Bridgegate scandal, where officials with ties to Gov. Chris Christie decided to punish the residents of Ft. Lee because their mayor would not endorse Christie for reelection in 2013.  So, beginning on the first day of school, and under the guise of a traffic study, the defendants arranged for the three toll lanes of the George Washington Bridge usually reserved for Ft. Lee traffic to be reduced to one.  This created a traffic armageddon in Ft. Lee, jeopardizing community safety.

The defendants were fired, federally indicted, and convicted of crimes involving wire fraud and federal program fraud.  The convictions were affirmed by the Third Circuit.

On May 8, the Supreme Court unanimously reversed the convictions in an opinion by Justice Kagan.  The Court agreed that corruption and abuse of power occurred in this case, but “not every corrupt act by state or …

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Categories: fraud, wire fraud

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Monday, October 7th, 2019

Second Circuit reverses district court’s grant of a new trial in securities fraud case: United States v. Gramins, No. 18-2007-cr, __ F. 3d__, 2019 WL 4554521 (Sept. 20, 2019).

This was a government appeal from the district court’s grant of a new trial motion, under Fed.R.Crim.P. 33, on a count of conspiracy to commit security fraud,  in violation of 18 U.S.C. § 371. See 15 U.S.C. § 78j(b) (securities fraud).  The Circuit, however, reversed the district court and remanded “with instructions to reinstate the conviction and proceed to sentencing.” 2019 WL 4554521 at *1.

The case concerned the distinctive market of Residential Mortgage Backed Securities (“RMBS”). The district court granted the defendant’s Rule 33 motion on the only count on which the jury convicted (out of 9 total counts), on evidentiary grounds relying on  United States v. Litvak, 889 F.3d 56 (2d Cir. 2018) (“Litvak II”), which concerned the same RMBS market. The district court found that —  similar to what occurred in Litvak II  — a government witness misstated relevant agency law in a way …

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Categories: fraud, Rule 403, securities law

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Friday, February 16th, 2018

Second Circuit Holds that A Criminally Culpable Corporation Is Not Entitled to Restitution for Its Employees’ Criminal Conduct

The Second Circuit issued two opinions this week on third parties’ claims for restitution and shares of criminally forfeited property from defendants. See Federal Insurance Co. v. United States & United States v. Mazer (related cases), Nos. 16-2967 & 16-3402 (2d Cir. 2017) (Parker, Lynch, Carney) (appeal from Daniels, J., SDNY), opinion available here; United States v. Ohle, No. 16-601 (2d Cir. 2017) (Leval, Calabresi, Cabranes) (appeal from Rakoff, J., SDNY), opinion available here.

The lengthier of these opinions, in Federal Insurance, brings welcome news (or at least a sigh of relief) to the sort of low-level employees to whom corporate defendants are incentivized to shift blame in white collar prosecutions. Federal Insurance concerns a corporation’s entitlement to restitution and forfeiture payments from employees who were convicted for participating in a fraud for which the corporation is criminally culpable. In part, the opinion affirms …

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Categories: CVRA, forfeiture, fraud, MVRA, restitution, victims

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Thursday, December 14th, 2017

Second Circuit on the Exclusion Non-Hearsay Evidence Concerning the Advice of Counsel Defense

Yesterday, in a published opinion, the Second Circuit reversed the convictions in an off-label drug importing case because the district court erroneously excluded evidence concerning the advice of counsel defense. The opinion in United States v. Scully, No. 16-3073 (Pooler, Lynch, Cogan (by designation) (appeal from Spatt, J., EDNY) is available here. The opinion touches on hearsay issues that arise beyond the fraud context.

The defendants in Scully were charged with fraud, conspiracy, and drug importation counts resulting from a “parallel importing” scheme: that is, the defendants’ company would import foreign versions of FDA-approved drugs and sell them at a reduced rate. One of the defendants cooperated and, at trial, the other defendant (Scully) advanced an advice-of-counsel defense. The defense sought to introduce evidence of an attorney’s legal advice through Scully’s own testimony, and elicited the following exchange during its direct examination of Scully:

Q. Did Mr.

…
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Categories: evidence, fraud, hearsay, jury instructions, Uncategorized

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Wednesday, September 21st, 2016

Tax Attorney’s Conviction Affirmed

The single opinion the Circuit issued today is United States v. Daugerdas, No. 14-2437-cr  (Circuit Judges: Kearse, Walker, and Cabranes).

The defendant was a Certified Public Accountant and tax attorney. He and others designed tax shelters (for wealthy clients) in which the transactions underlying the shelters focused on the transactions tax consequences, not on their profitability. And the tax shelters “generally did not generate meaningful returns.” The defendant was convicted by a jury of seven counts related to the tax shelters (i.e., 1 count of conspiracy to defraud the IRS [§371] ; 4 counts of client tax evasion [26 U.S.C. § 7201]; 1 count of IRS obstruction [id. 7212(a)]; and 1 count of mail fraud [18 U.S.C. § 1341] ).

Interesting though, the jury acquitted Mr. Daugerdas of the 3 counts that charged him with personal tax evasion based on his use of  the tax shelters …

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Categories: fraud, hearsay, tax evasion

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Categories: fraud, hearsay, tax evasion

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Friday, June 17th, 2016

Second Circuit Updates – June 17, 2016

One major decision out of the Second Circuit today, United States v. Rowland (Docket 15-985). It’s a good read for those interested in statutory construction and interpretation. A brief overview of the facts: The defendant, John Rowland was once governor of Connecticut. After being released from federal custody following a 2004 conviction for corruption and a kickback scandal, Rowland attempted to get back in the political game by offering his consulting services to Connecticut politicians running for federal office. When the politicians, wanting his advice, but not an association with him, raised their concerns about the optics, Rowland suggested that their respective companies and non-profits hire him as a consultant. As the government alleged, though, in reality he would offer advice to their campaigns.

One politician declined his offered, going so far as to rip up the proposed contract Rowland provided that would have him work for the politician’s non-profit. …

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Categories: fraud, statutory construction, statutory interpretation

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Wednesday, May 4th, 2016

Second Circuit: Conviction for Investment Adviser Fraud Requires Only Intent To Deceive, Not Intent To Harm

In United States v. Tagliaferri, No. 15–536, the Second Circuit held that a conviction for investment adviser fraud, under section 206 of the Investment Advisers Act of 1940, 15 U.S.C. § 80b–6 and 80b–17, requires only intent to deceive one’s clients, not intent to harm them as well.

Tagliaferri ran a boutique investment advisory firm where, the government alleged, he engaged in various deceptive practices, including taking kickbacks for investing client funds with particular entities, cross-trading between client accounts, and falsely characterizing investments as loans. The government charged Tagliaferri with, among other offenses, investment adviser fraud under section 206. At trial, Tagliaferri’s defense was that, despite his deceptive practices, he “always believed that he would be able to work things out so that his clients would not be harmed.” Accordingly, he sought a jury instruction that investment adviser fraud requires not only intent to deceive one’s clients, but …

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Wednesday, November 21st, 2007

Joint Pain

United States v. Shellef, No. 06-1495-cr (2d Cir. November 8, 2007) (Pooler, Sack, Wesley, CJJ)

In this decision applying Fed.R.Cr.P 8, the court held that counts were improperly joined against two separate defendants, and that the misjoinders were not harmless. The decision also has an interesting discussion of some unusual wire fraud theories.

Defendants Shellef and Rubenstein were tried together on tax and wire fraud charges. At the same trial, Shellef alone was tried on tax evasion charges relating to some of his personal and business dealings. Both were convicted of all counts.

The tax and mail fraud charges arose from the defendants’ efforts to purchase and resell CFC-113, a highly regulated, ozone-depleting industrial solvent upon which, Congress, in an effort to phase out its use, imposed an excise tax. However, the tax does not apply to CFC-113 reclaimed as part of a recycling process, or CFC-113 that is sold …

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Categories: fraud, joinder, Rule 8, severance, Uncategorized

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Control Freak

United States v. Carlo, No. 06-2420-cr (2d Cir. November 19, 2007) (Kearse, Katzmann, CJJ, Rakoff, DJ)

This short per curiam opinion discusses the sufficiency of the evidence in a wire fraud prosecution, where the prosecution proceeded on an unusual theory. The defendant Carlo and others defrauded real estate developers by making misrepresentations about Carlo’s efforts to obtain funding for the developers’ projects. In response to the developers’ requests, Carlo falsely assured them that loans were imminent, when in fact they were not. Here, the government did not allege that Carlo defrauded the developers out of any specific money or property, but rather out of their right to control their own assets, which the court held was a permissible theory of fraud. Carlo’s deception harmed the developers by depriving them of material information necessary to determine whether to proceed with their development projects, and this continued or increased the risk that …

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Categories: fraud, property, Uncategorized

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