Justia Banking Opinion Summaries

In 2008, defendant was in the U.S. illegally and, at the direction of another, purchased a house for the purpose of obtaining multiple home equity lines of credit. He submitted loan applications that contained false statements about citizenship, employment, and intent to reside in the house, and concealed other loan applications He pled guilty to engaging in a scheme to defraud financial institutions and to obtain monies and funds owned by and under the custody and control of the financial institutions by means of materially false and fraudulent pretenses, representations, promises, and omission, 18 U.S.C. 1344. He was sentenced to 51 months and ordered to pay $337,250 in restitution. The Seventh Circuit affirmed the restitution order, rejecting an argument that he could not be ordered to pay restitution for conduct to which he did not plead guilty. The transactions to which he pled guilty resulted in no actual loss because he was arrested before the loans were funded. The court noted that his plea declaration described the scheme as a whole and the ultimate loss to the lender. View "United States v. Dong" on Justia Law

Defendant, a businessman, was convicted on 10 counts of bank fraud (18 U.S.C. 1344) involving creation of 10 fraudulent entries on the books of a small bank in Benton, Tennessee. At trial, the government offered the theory that defendant and the bank's president jointly created the phony entries in an effort to disguise earlier, troubled loans to defendant's business. The Sixth Circuit reversed, finding that the evidence was insufficient to prove guilt beyond a reasonable doubt. The court improperly excluded evidence that the bank president had, unassisted, previously engaged in a large number of identical frauds. The prosecutor suggested to the jury that acquittal would deliver a financial windfall to defendant. The government offered no direct evidence and insufficient circumstantial evidence to show that defendant knew about or participated in the bank president's fraud, a fraud that the bank president had independent reasons for creating.

Defendant, an immigrant, cleaned houses. She formed a cleaning service in 1992. Defendant would deposit customers' checks in the business checking account, keep some money as a fee, and withdraw the remaining amount to pay individual cleaners. The bank informed her of the requirement (31 C.F.R. 103.22(b)(1)) that it document and report transactions involving withdrawals of cash greater than $10,000. After being informed of the requirement, defendant would often withdraw more than $10,000 over the course of two days, but less than 24 hours; she withdrew amounts over $9,000 and less than $10,000 on 244 occasions in about six years. She was convicted of 23 counts of structuring transactions to avoid bank reporting, 31 U.S.C. 5324(a)(3). The court gave an "ostrich" instruction, concerning defendant's knowledge. The jury returned a special verdict subjecting $279,500 to forfeiture; the court imposed a sentence of three years of probation as well as an additional judgment of $4,800. The Seventh Circuit affirmed, finding no constitutional violation in weighing the forfeiture against the severity of the crime. Any error in giving the ostrich instruction was harmless.

The United States appealed the district court's dismissal of a superseding indictment because it did not state a crime against defendant for knowingly and willfully making false statements to a financial institution insured by the FDIC and knowingly making false statements for the purpose of influencing the action of a bank insured by the FDIC. Defendant made the allegedly false statements on loan applications to refinance his residence where he failed to list an illegal campaign loan under "outstanding debts." The court agreed with the district court's conclusion that defendant's statements were literally true because the illegal loan was an absolute nullity and consequently was not a debt that ever existed.

When Rita Fix's son and daughter-in-law, Jeff and Marie, secured a loan from the First State Bank of Roscoe by obtaining a warranty deed for the property, the Bank assured Fix she could retain possession of the house. After Jeff and Marie conveyed the house and property to the Bank, the Bank sold the property and sought to remove Fix from the house. Fix sued the Bank for, inter alia, intentional infliction of emotional distress (IIED). Meanwhile, Fix, Jeff, and Marie were indicted on multiple criminal counts. The State attorney who brought the charges and who represented the Bank civilly offered to dismiss the criminal charges against Fix if she would deed the house back to the Bank. Fix then amended her complaint to include a claim of abuse of process against the Bank. The trial court granted summary judgment against Fix on her IIED claim. A jury then returned a verdict finding the Bank liable for abuse of process but awarded no damages to Fix. The Supreme Court reversed on the abuse of process claim, holding that the trial court provided the jury with the incorrect legal standard for the recovery of emotional damages. Remanded for a new trial.

Husband and wife operated a mortgage fraud scheme that bought residential properties and sold those properties to nominee buyers at inflated prices. They provided lenders with false information about buyers' finances, sources of down payments, and intentions to occupy the residences. The scheme involved 37 separate transactions and resulted in net loss of more than $700,000 to various lenders. After the scheme collapsed, they went bankrupt but were not immediately prosecuted. Wife worked as a nurse in a pediatric intensive care unit. Husband worked as a installer and technician. They raised their three children and became fully engaged in their community. On the day before the ten-year statute of limitations would have expired, the government charged them with wire fraud, 18 U.S.C. 1343, and two counts of bank fraud, 18 U.S.C. 1344. They pled guilty to a single count of wire fraud, and were sentenced based on the 2010 USGS, wife to 41 months in prison, and husband to 63 months, and ordered to pay more than $700,000 in restitution. The Seventh Circuit remanded, stating that the sentencing judge failed to consider adequately unusually strong evidence of self-motivated rehabilitation. For this reason, we vacate their sentences

Defendant appealed from a judgment convicting him of (1) conspiracy to violate the Iranian Transaction Regulations (ITR) and operate an unlicensed money-transmitting business; (2) violating the ITR; (3) operating an unlicensed money-transmitting business; and (4) two counts of making false statements in response to government subpoenas. On appeal, defendant argued that the district court erred in several respects when instructing the jury on the conspiracy, ITR, and money-transmitting counts; defendant was entitled to a new trial on the false statement counts because the government constructively amended the indictment; the government committed misconduct in its rebuttal summation, which he claimed necessitated a new trial on all counts; and defendant should be resentenced because the district court miscalculated the applicable offense level. The court reversed Count One to the extent it alleged a violation of the ITR as an overt act and vacated and remanded to the extent it was based on the money-transmission violation as an overt act; reversed Count Two; vacated and remanded Count Three; and affirmed Counts Four and Five.

Defendant Peter Bernegger and his co-defendant were charged in a six-count indictment with various counts of mail fraud, wire fraud, bank fraud, and conspiracy for inducing investors to invest money in two start-up companies based on several misrepresentations. Bernegger was convicted of mail and bank fraud and was sentenced to seventy months in prison and ordered to pay restitution of approximately $2 million. The Fifth Circuit affirmed as modified, holding (1) the district court did not err in refusing to sever the bank fraud count from the mail and wire fraud counts; (2) the district court did not violate the Sixth Amendment or abuse its discretion in denying Bernegger the opportunity to cross-examine a witness about an alleged discrepancy in Bernegger's testimony; (3) the district court did not plainly err by not declaring a mistrial sua sponte based on the format of the indictment; (4) there was sufficient evidence to support the jury's verdict finding Berneggar guilty of mail fraud; and (5) because the district court clearly erred in calculating the total loss amount, the restitution amount was incorrect and was therefore modified to reflect the correct total loss amount of $1,725,000.

Defendant was prohibited from possessing a computer or accessing the internet while on home confinement, after being released from prison following a 2005 plea of guilty to wire, mail, and bank fraud. He nonetheless used the internet for a check-kiting scheme and, in 2010, was charged under 18 U.S.C. 1344 (bank fraud), 18 U.S.C. 1341 (mail fraud) and with escape. He was found guilty and sentenced to concurrent terms of 80 months, followed by supervised release with limits on internet and computer use. The First Circuit affirmed, first holding that a jury could reasonably infer that the banks were FDIC-insured at the time of the offenses and that defendant used the mail as part of his schemes. The special conditions imposed on release are reasonably related to the goals of supervised release. The calculation of loss, including a fraudulent $1.4 million check that did not result in any actual loss, was not clear error.

Defendant-Appellant Alan Tukes appealed his federal conviction for bank robbery, arguing that the government’s evidence was insufficient to prove that the bank was insured by the Federal Deposit Insurance Corporation (“FDIC”) at the time of the crime. At trial, a prosecutor asked the bank’s branch manager: “Now, the Compass Bank, is that a bank that is federally insured by the [FDIC]?” She responded: “Yes, it is.” When asked whether the bank “has” any documentation proving its insured status, she replied: “Yes. We have a certificate.” When asked whether the certificate “hangs” in the branch, the manager replied in the affirmative. The district court admitted the certificate, dated November 8, 1993, into evidence. The government offered no additional evidence of the bank’s insured status. At summation, Defendant argued that the government had not proven that the bank was FDIC insured at the time of the robbery. The jury returned a guilty verdict. Viewing the evidence in the light most favorable to the government, the Tenth Circuit concluded "it is clear that a rational juror could have concluded beyond a reasonable doubt that the bank was insured at the time of the robbery." The Court affirmed Defendant's conviction.