Idaho Criminal Defense Blog : Idaho Criminal Lawyer & Attorney : Chuck Peterson Law Firm : Civil Rights, Trial, Felonies, Assaut, DUI : Boise, Idaho Falls, Pocatello, Idaho

 In another one of those confusing 9th Circuit fraud decisions - the Court of Appeals has upheld the convictions and sentences of three men who summoned the likes of Charles Ponzi and swindled 1700 investors out of $40 million. In US v. Treadwell the Court upheld an instruction  that “intent to defraud is an intent to deceive or cheat,” and that “a defendant’s belief that the victims of the fraud will be paid in the future or will sustain no economic loss is no defense to the crime.”

The Court goes on to draw an analogy to embezzlement. It is not a defense to embezzling money from your employer that you intended on returning the money to him someday - even if you honestly believed you could, with interest! That makes sense to me because fraud is simply theft - if you get the money by lying it is not a defense that you may someday give the money back, or the investor may someday get the investment back. Bernie Madoff's investors got money back, from other investor money!

And if someone was to sweet talk my wife into "giving" them my MacBook Air on the premise that we would get two new ones back in a few months, I wouldn't care whether he or she had the good faith belief that they could get me a 100% return on my bride's "investment." My computer would be gone - just like the investor's $40 million. 

Look at the following language - it pulls together the key stuff here:

"According to the federal wire fraud statute, 18 U.S.C. § 1343, any person who “having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be trans- mitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice,” is guilty of wire fraud. Conviction under § 1343 means a defendant must have intended “to defraud” his victim. See United States v. Oren, 893 F.2d 1057, 1061 (9th Cir. 1990). “To defraud” under § 1343 encompasses “any scheme to deprive another of money or property by means of false or fraudulent pretenses, representations, or promises.” Carpenter v. United States, 484 U.S. 19, 27 (1987); see also United States v. Ciccone, 219 F.3d 1078, 1082 (9th Cir. 2000) (“[T]he offense’s specific intent element . . . require[s] proof of intent to deprive the victim of money or property.”). It means to “wrong[ ] one in his property rights by dishonest methods or schemes, and usually signif[ies] the deprivation of something of value by trick, deceit, chicane or overreaching.” Carpenter, 484 U.S. at 27 (internal quotation marks omitted)"

It's the scheme that is the key - if you get the money by lying and scheming the law will be at your door. Or maybe - it will be some lawyer in a nice suit looking to collect back that "investor" money from you in a civil suit. Either way, this case is fair warning that the scheme imposes liability - both civil and criminal. 

Have a question about an investment "opportunity" that seems too good to be true? Get some advice before you give away the farm.

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If you think that white colar crime results in a slap on the wrist, consider the recent sentencing decision in a case of mortgage fraud, in Georgia.  The Georgia United States Attorney reports that last week Adriene Newby-Allen was sentenced to 135 months imprisonment and ordered to pay $5,278,703 in restitution. Newby-Allen pled guilty in July to charges arising from a multi-million dollar mortgage fraud scheme. She was alleged to have conducted a mortgage fraud scheme from which she and others fraudulently obtained millions from mortgage companies through inflated mortgage loans obtained by straw purchasers, including her husband and another co-defendant. Newby-Allen herself received approximately $1 million in loan proceeds. She allegedly inflated the sales price of real estate and caused the submission of false loan applications and other documents. At the closings on the properties, Newby-Allen and her co-conspirators caused lenders through false representations to disburse millions to a shell company she created.

The use of "straw purchasers" is neither new nor unique to Georgia. In Idaho we have seen similar allegations in real estate and mortgage fraud cases in federal and state court. I represented clients this past year in a case that alleges the defendants used "straw purchasers" to obtain favorable loans from a local bank, hoping to quickly flip the properties and then pay off the loans from the profits.  Trouble (in the form of civil lawsuits and criminal charges) usually follows such schemes.  The declining real estate market left the "straw purchasers" holding the debts, even though they never intended to own the properties.  My clients were not indicted but were actually victims of that scheme.

Consider the penalty imposed by the federal district judge in Georgia - time and money. Lots of time and lots of money, the latter of which the defendant likely does not have. The federal sentencing guidelines continue to guide the courts as they consider an appropriate sentence in any federal case.  The amount of the loss is one of the factors used by the guidelines in calculating an appropriate sentencing range.  What struck me about this case was the amount of time - 135 months. That is hardly a slap on the wrist. Eleven years sitting in a federal prison should give Adriene Newby-Allen ample opportunity to mull over the choices she made. Just so you know - she will likely serve ten years or more before any release - and that early out will only occur if Adriene Newby-Allen demonstrates good behavior. Look for similar fraud cases to come throughout the United States as the nation demands an accounting for white collar crime. 

It goes without saying that if you are contacted by authorities wanting to know about any role you may have had with respect to a mortgage loan or banking transaction - get a lawyer immediately. There is no substitue for good counsel in such circumstances.

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I was at the beach - Mission Beach to be precise - and relaxing with my bride over the weekend. The sun was shining and the sea air cooling, but like all good things - that too came to an end on Monday.  I am now in Nevada, taking depositions in a crop insurance fraud case.  There is lots of sand, but no beach.  Lots of hot air (in the depositions), and no ocean.  With no surf and no run on the beach, today I am thinking about last week's sentencing before US District Judge Winmill, in a case involving trafficking in counterfeit goods.  My client went to trial last spring on one count of conspiracy to traffick in counterfeit goods (t-shirts bearing unlicensed marks, like Polo, Gap etc...) and six counts of trafficking.  At issue - a couple thousand t-shirts that he purchased from Main Sportswear in Los Angeles. Client gave the Feds the address and phone number for Main Sportswear, and we sent an investigator to buy some more before trial.  When the trial ended, my client's wife was acquitted of all charges (he had consistently taken the blame), and he was not guilty of conspiracy.  He was, however, guilty of trafficking.  And that meant a chance to re-visit the federal sentencing guidelines. Now the law has changed markedly over the past few years, and perhaps the nail in the coffin of those dreaded, formerly mandatory guidelines, is the Supreme Court's analysis in Gall v. United States, 128 S.Ct. 586 (2007).  Gall had been a middleman in a drug trafficking conspiracy, and even with his plea of guilty, acceptance of responsibility, and substantial assistance, his guideline range was 30 - 37 months of incarceration.  The district judge looked at the changes in Gall's life - he was in college, had started a successful business, and had otherwise turned it completely around - and placed him on probation.  As you may imagine, the US was not happy.  They believed a sentence that imposed no incarceration and 36 months of PROBATION was an unacceptable departure. Justice Stephen's majority decision adopts an abuse of discretion standard for appellate review. End result - we have a new methodology for district courts applying the guidelines in every case. We still start with the guidelines, taking into account specific offense characteristics and bases for departures, but then we look at the sentencing factors under 18 U.S.C. Section 3553(a).  So judges may be judges again.  They are instructed under the law to consider the person they are sentencing as well as the crime, the deterrent effect on the defendant and the community, and the circumstances surrounding the crime.  Then, even without a departure, the court must fashion a sentence that is just - necessary, but not excessive.  And this allows the court to make the punishment fit the crime and the defendant.

And that is what happened with my client.  The Court did not bind itself to the guidelines, but rather took into account the specific conduct, its impact on the trademark owners, and my client's otherwise law-abiding conduct.  The US wanted 27 months of imprisonment for my client. That incarceration would have meant his certain deportation.  The Court's sentence included 9 months of home arrest and 1 month of actual incarceration.  He will pay restitution and a fine, and hopefully, he will not be deported.  You see his wife (acquitted) is a US Citizen, but he is not.  While on home arrest, he can continue to do what he has for over twenty years -  run his little alterations shop, pay his taxes, and continue to be part of the community.  He may still face deportation, but those formerly mandatory guidelines did not result in the certainty of incarceration and deportation.  His crime and his life are now placed in context - that is to say considered with the other factors surrounding the case.  My hope is that the immigration consequences may also consider those factors.  If you have a federal case and are facing the potential of federal sentencing under the existing law - there is good news in the Gall case and its progeny.  Your life may mean something  in determining your ultimate fate if you are convicted.  Maybe you will see the beach again - and not just the sand.

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