Justia Banking Opinion Summaries

Ajayi, an electrical engineer, wanted to start a business selling MRI products in Africa. He incorporated GRI in Illinois and another company in Africa and sought investors. While traveling, he solicited a $45,000 investment from Brown. After returning home, Ajayi received a $344,657.84 check, payable to another company . He called Brown, who explained that the accounting department had made an error, told Ajayi to deposit the check, and stated that they would work out a way for Ajayi to refund the difference. Ajayi deposited the check through an ATM into his GRI account, which previously had a balance of $90.08, After the check cleared, Brown flew to Chicago and demanded repayment. Pursuant to Brown’s instructions, between December 9 and December 12, 2009, Ajayi wrote at least five checks to himself from the GRI account and cashed them. Ajayi was convicted of five counts of bank fraud, 18 U.S.C. 1344(1) and (2) and money laundering, 18 U.S.C. 1957(a) and was sentenced to 44 months’ imprisonment. The Seventh Circuit found that there was sufficient evidence that Ajayi knew that the check was altered and upheld the exclusion of the emails, but concluded that four bank fraud counts were multiplicitous. View "United States v. Ajayi" on Justia Law

Churn, the owner of a Tennessee construction company, was convicted of seven counts of bank fraud stemming from two schemes in which he received bank loans ostensibly to construct houses, but performed little to no work. The district court sentenced him to 33 months in prison and ordered restitution of $237,950.50. The Sixth Circuit affirmed, rejecting arguments that the district court made evidentiary errors concerning admission of an email statement, admission of testimony concerning a permit, and admission of evidence about another transaction, and that the amount of restitution exceeded a statutory maximum under the Victims Restitution Act, 18 U.S.C. 3663A. View "United States v. Churn" on Justia Law

In 2007 fraudulent checks in the amount of $181,577 were cashed against the accounts of seven Citizens Bank customers in New York, Pennsylvania, and Delaware. Fraud investigator Swoyer discovered that Tolliver’s employee number was the only one used to access all of the accounts; only Tolliver and one assistant manager worked on all of the days on which the accounts were accessed.. Swoyer, Postal Inspector Busch, and a Secret Service agent interviewed Tolliver. At trial, Swoyer testified that he reviewed Tolliver’s entire logbook with her and that Tolliver told him that she had not given her password to anyone and that she always logged off her computer when she walked away from a terminal. Seven of Tolliver’s former co-workers testified they never knew Tolliver’s password or saw it written down. A jury convicted Tolliver of bank fraud, 18 U.S.C. 1344, aggravated identity theft, 18 U.S.C. 1028A(a), and unauthorized use of a computer, 18 U.S.C. 1030. The court imposed a below-Guidelines sentence of 30 months’ imprisonment and restitution. The Third Circuit affirmed. Tolliver, represented by newly appointed counsel, filed a 28 U.S.C. 2255 motion, claiming that her trial counsel was ineffective by failure to investigate. The district court granted her motion without holding an evidentiary hearing. The Third Circuit vacated. View "United States v. Tolliver" on Justia Law

Over four years, Dade, a former licensed real estate agent, with co-defendants, facilitated loans to purchase residential real estate by knowingly providing lenders with false statements and documents. Dade referred potential buyers to loan officers and provided false payroll stubs and W-2 forms from fake companies. Dade (with help) refinanced a mortgage on his own Chicago property, stating that he was paying monthly rent of $1,450 (he did not live in the house), and provided a rental verification from “Jireh,” which did not exist. Dade received a $156,000 loan. He was charged with bank fraud, 18 U.S.C. 1344, wire fraud, section 1343, and mail fraud, section 1341. He pleaded guilty to bank fraud, based on the fraudulent refinancing; the remaining charges were dismissed. The government sought a 2-level upward adjustment for his role as an organizer, leader, manager, or supervisor in the offense, U.S.S.G. 3B1.1(c). When preparing the presentence report, however, the probation officer concluded that a 4-level upward adjustment would be appropriate, stating that the scheme had involved five or more participants and Dade had organized the scheme. The government adopted that position, recounting the facts underlying the charges dismissed as part of Dade’s plea agreement. The Seventh Circuit affirmed his 20-month sentence, upholding the upward adjustment. View "United States v. Dade" on Justia Law

Brown defrauded Chicago-area mortgage lenders in 2004-2008, arranging with home builders and other sellers of new houses to receive fees for locating buyers to purchase their properties at inflated prices. Using his businesses, including Chicago Global, Brown located nominee buyers. To obtain financing, the nominees were referred to loan officers, including Spencer, who fraudulently qualified them for loans through false statements and documentation. Once a purchase was finalized, Brown and his coconspirators kept the surplus amount above what the seller was seeking. As co-owner of Chicago Global, Jackson recruited nominee buyers and provided, or caused to be provided, funds for the purchases and falsely represented the nominees as the source of those funds. Jackson’s participation in the scheme resulted in $8,515,570 losses to lenders. Spencer’s participation as a loan officer, assisting nominee buyers in 12 different fraudulent real estate transactions, resulted in $3,091,050 losses to lenders. Jackson was charged with wire fraud, 18 U.S.C. 1343, and mail fraud, 18 U.S.C. 1341. The Seventh Circuit affirmed Spencer’s conviction for bank fraud, 18 U.S.C. 1344, and mail fraud and her 36-month sentence and affirmed Jackson’s conviction, but vacated her 112-month sentence, finding that an obstruction of justice enhancement was improperly applied. View "United States v. Spencer" on Justia Law

In 2007, Suarez, a 75-year-old widower from Mexico, opened a checking account at an Illinois Chase Bank. DeMarco, the branch manager, assisted him. The two became friends. Suarez was trying to sell his three acre property, listed for $1.8 million. DeMarco convinced Suarez to break his listing contract, indicating that he had a buyer. DeMarco told Suarez that he needed a home equity line of credit (HELOC) to complete the sale. DeMarco obtained a $250,000 HELOC, under Suarez’s name, secured by Suarez’s property. DeMarco caused the lender to transfer the proceeds into a joint checking account, which he opened in his and Suarez’s name. After the transfer, DeMarco withdrew $245,000 and deposited the funds into his personal account. After Chase terminated his employment, DeMarco transferred the funds into new accounts and spent most of the proceeds to pay off his credit card debt, improve his home and on cars and vacations. He used a small fraction of the money to pay off Suarez’s debts. Suarez later noted irregularities in his bank statement and contacted the FBI. DeMarco was convicted of wire fraud, 18 U.S.C. 1343 and sentenced to 48 months in prison. The Seventh Circuit affirmed, rejecting challenges to evidentiary rulings and to the sentence, claiming that the court erred by applying a two-level increase to his base offense level for abuse of a position of trust, U.S.S.G. 3B1.3, and the use of sophisticated means, U.S.S.G. 2B1.1(b)(1). View "United States v. DeMarco" on Justia Law

In 2005, Lee, a Sevierville contractor, owed a substantial debt to Whaley, for loans that financed houses being built by Lee. Whaley proposed to recruit straw buyers for sham purchases of the properties. Eight straw buyers were referred to Bevins, a mortgage broker with whom Whaley had previously dealt. Whaley prepared the contracts and set the prices. Bevins prepared loan applications that falsely inflated the buyers’ incomes and assets and stated that they would bring funds to closing. The closings were conducted by Kerley’s title company. Although none of the buyers brought funds to the closings, Kerley signed HUD-1 forms, indicating that they did. The properties later went into foreclosure. The lenders incurred substantial losses. Lee and Bevins pled guilty and agreed to cooperate. The judge denied Kerley’s motion to sever, concluding that proposed redactions to Whaley’s statement remedied potential violation of Kerley’s Confrontation Clause rights and held that Whaley was not entitled to introduce his own hearsay statements. Both were convicted of money laundering, conspiracy to commit wire fraud affecting a financial institution and bank fraud, wire fraud affecting a financial institution, bank fraud, and making a false statement to a financial institution. They were sentenced to 60 months and 48 months imprisonment, respectively, and ordered to pay $1,901,980.31 in restitution. The Sixth Circuit affirmed the convictions and Kerley’s sentence, rejecting challenges to the sufficiency of the evidence, evidentiary rulings, and the court’s refusal to sever. View "United States v. Whaley" on Justia Law

For about three years ending in 2009, five schemers bilked unsuspecting investors of an estimated $190 million in a Minnesota Ponzi scheme. They took more than $79 million of the investors’ funds with the help of Associated Bank. After the scheme was exposed, the district judge in a related case appointed a receiver to take custody of funds owned by the schemers’ estates and by organizations under their control (receiver entities). The receiver filed suit on behalf of the receiver entities, alleging Associated Bank aided and abetted the scheme. The district court granted Associated Bank’s motion to dismiss. The Eighth Circuit reversed and remanded, stating that, while it could not predict whether a jury will find Associated Bank either had actual knowledge of or substantially assisted in the asserted torts, the facts alleged in the complaint give the receiver’s claims “facial plausibility.” The receiver pled “factual content that allows the court [and a jury] to draw the reasonable inference that the defendant is liable for the misconduct alleged.” View "Zayed v. Associated Bank, N.A." on Justia Law

Markert, President of Pinehurst Bank, approved nominee loans to friends and family of bank customer Wintz. The loan proceeds were used to cover Wintz’s $1.9 million overdraft at the Bank. A jury convicted Markert of willful misapplication of bank funds by a bank officer, 18 U.S.C. 656. At sentencing, applying U.S.S.G. 2B1.1(b)(1), the district court found that Markert’s offense caused an actual loss equal to the amount of the loans, resulting in a 16-level enhancement and a guidelines range of 87 to 108 months in prison. The court sentenced Markert to 42 months. The Eighth Circuit remanded for resentencing. After considering arguments, but without an evidentiary hearing, the court reduced its prior finding by $60,000, to reflect repayments prior to detection and re-imposed the same 42-month term. The Eighth Circuit again remanded, holding that the government failed to sustain its burden to prove actual loss. While “the loss here cannot be zero,” the court declined to give the government a third chance to present evidence and ordered that, on remand, actual loss for sentencing purposes is zero, reducing the guidelines range to 12-18 months. Markert has already served more than 18 months; the court directed that he be immediately released. View "United States v. Markert" on Justia Law

Thomas and Chapman were part of a scheme to fleece real estate lenders by concocting multiple false sales of the same homes and using the loan proceeds from the later transactions to pay off the earlier lenders. They were convicted of multiple counts of wire fraud. Thomas was also convicted of aggravated identity theft for using an investor’s identity without permission to craft a phony sale of a home that the victim never owned. The Seventh Circuit affirmed, rejecting: challenges to the sufficiency of the evidence; a claim by Thomas that there was no proof that he created or used the falsified documents at issue; Chapman’s claim that there was no evidence that he was the Lamar Chapman identified by the evidence, because no courtroom witness testified to that effect; Chapman’s claim that his due process rights were violated when the government dropped a co-defendant from the indictment; and a claim that the government failed to turn over unspecified exculpatory evidence. The court noted testimony from several victims, an FBI investigator, an auditor, and an indicted co-defendant who had already pleaded guilty. View "United States v. Chapman" on Justia Law