Justia Government & Administrative Law Opinion Summaries

Articles Posted in White Collar Crime
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Nine Illinois energy consumers sued their electricity provider, ComEd, and its parent, Exelon, on behalf of themselves and those similarly situated for damages under the Racketeer Influenced and Corrupt Organizations Act (RICO) alleging injury from increased electricity rates. These rates increased, they allege, because ComEd bribed former Illinois Speaker of the House Michael Madigan to shepherd three bills through the state’s legislature: the Energy Infrastructure and Modernization Act of 2011 (EIMA); 2013 amendments to that legislation; and the Future Energy Jobs Act of 2016. Although Illinois law still required public utilities to file rates with the Illinois Commerce Commission (ICC), EIMA implemented statutorily prescribed, performance-based rate increases that limited ICC discretion in reviewing rates and authorized at least $2.6 billion in ComEd spending on smart meters and smart grid infrastructure, costs that were required to be passed on to customers. In 2016, FEJA provided $2.35 billion in funding for nuclear power plants operated, paid for through a new fee for utility customers, and allowed ComEd to charge ratepayers for all energy efficiency programs and for some expenses relating to employee incentive compensation, pensions, and other post-employment benefits.The Seventh Circuit affirmed the dismissal of the suit. Paying a state’s required filed utility rate is not a cognizable injury for a RICO damages claim. View "Brooks v. Commonwealth Edison Co." on Justia Law

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Allinson was convicted of federal programs bribery, 18 U.S.C. 666(a)(2), and conspiracy, 18 U.S.C. 371, in connection with a pay-to-play scheme involving Pawlowski, the former Mayor of Allentown, Pennsylvania.The Third Circuit affirmed. Sufficient evidence showed the parties’ plan to steer a Parking Authority contract to Allinson’s law firm in exchange for campaign contributions to support Allinson’s bribery conviction; it is an “official act” for a public official to use his power to influence the awarding of government contracts, even if the official lacks final decision-making power. The court rejected Allinson’s argument that the indictment, which alleged a single conspiracy among Allinson and others, impermissibly varied from the evidence at trial that, he claimed, proved only multiple, unrelated conspiracies. The charged conspiracy included over 10 alleged co-conspirators and seven distinct sub-schemes, only one of which involved Allinson but the government’s efforts at trial were reasonably calculated to prevent guilt transference. No constructive amendment of the indictment occurred. The prosecution’s statement in closing arguments that “Bribery happens with a wink and a nod and sometimes a few words, an understanding between two people,” was not improper. Allinson failed to show “clear and substantial prejudice” resulting from the joint trial. View "United States v. Allinson" on Justia Law

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Pawlowski, the former mayor of Allentown, Pennsylvania, was convicted of federal programs bribery, 18 U.S.C. 666; Travel Act bribery, 18 U.S.C. 1952; attempted Hobbs Act extortion, 18 U.S.C. 1001; wire and mail fraud, honest services fraud, making false statements to the FBI, and conspiracy. The charges stemmed from a scheme in which Pawlowski steered city contracts and provided other favors in exchange for campaign contributions. The district court imposed a 180-month sentence.The Third Circuit affirmed. There was sufficient evidence for a reasonable jury to find “quid pro quo” to support the bribery convictions. Any error caused by Pawlowski's inability to recross-examine a government witness was harmless beyond a reasonable doubt. Pawlowski’s sentence is procedurally and substantively reasonable. The case against Pawlowski was strong. The evidence showed a man eager to influence and be influenced if it would help him fund his political campaigns. View "United States v. Pawlowski" on Justia Law

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Dawson, the City Manager of Del Rey Oaks, purchased the Portola lot, “the last vacant lot” in the City. It had a water meter but no water credits and could not be built upon without water credits. The prior owner had never been able to obtain water rights or water credits. The City lacked any water credits and had no surplus water. In 2015, the City leased the Rosita property, part of Work Memorial Park, to Mori for a garden center. Dawson contracted on behalf of the City for a new well on the Rosita property and arranged for the water credit from the Rosita property to be transferred to Dawson’s Portola lot. Dawson never reported his ownership of the Portola lot on his Form 700 disclosure.Dawson was convicted of a felony count of violating Government Code section 10901 (conflict of interest as to a contract entered into in his official capacity) and a misdemeanor count of violating section 91000 (failing to report an interest in real property under the Political Reform Act). The court granted him probation. The court of appeal affirmed. The prosecution was not required to prove the inapplicability of an exception to section 1090 “for remote or minimal interests” because it was an affirmative defense; Dawson bore the burden of raising a reasonable doubt. View "People v. Dawson" on Justia Law

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Percoco, a longtime friend and top aide to former Governor Andrew Cuomo, accepted payment in exchange for promising to use his position to perform official actions. For one scheme, Percoco promised to further the interests of an energy company, CPV; for another, Percoco agreed with Aiello to advance the interests of Aiello’s real estate development company. Aiello was convicted of conspiracy to commit honest services wire fraud, 18 U.S.C. 1349. Percoco was convicted of both conspiracy to commit honest-services wire fraud and solicitation of bribes or gratuities, 18 U.S.C. 666(a)(1)(B). The court had instructed the jury that the quid-pro-quo element of the offenses would be satisfied if Percoco wrongfully “obtained . . . property . . . in exchange [for] official acts as the opportunities arose.”The Second Circuit affirmed. Although the as-opportunities-arise instruction fell short of a recently clarified standard, which requires that the honest-services fraud involve a commitment to take official action on a particular matter or question, that error was harmless. A person who is not technically employed by the government may nevertheless owe a fiduciary duty to the public if he dominates and controls governmental business, and is actually relied on by people in the government because of some special relationship. View "United States v. Percoco" on Justia Law

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Wilmington Trust financed construction projects. Extensions were commonplace. Wilmington’s loan documents reserved its right to “renew or extend (repeatedly and for any length of time) this loan . . . without the consent of or notice to anyone.” Wilmington’s internal policy did not classify all mature loans with unpaid principals as past due if the loans were in the process of renewal and interest payments were current, Following the 2008 "Great Recession," Wilmington excluded some of the loans from those it reported as “past due” to the Securities and Exchange Commission and the Federal Reserve. Wilmington’s executives maintained that, under a reasonable interpretation of the reporting requirements, the exclusion of the loans from the “past due” classification was proper. The district court denied their requests to introduce evidence concerning or instruct the jury about that alternative interpretation. The jury found the reporting constituted “false statements” under 18 U.S.C. 1001 and 15 U.S.C. 78m, and convicted the executives.The Third Circuit reversed in part. To prove falsity beyond a reasonable doubt in this situation, the government must prove either that its interpretation of the reporting requirement is the only objectively reasonable interpretation or that the defendant’s statement was also false under the alternative, objectively reasonable interpretation. The court vacated and remanded the conspiracy and securities fraud convictions, which were charged in the alternative on an independent theory of liability, View "United States v. Harra" on Justia Law

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A felony complaint alleged that on seven different dates in 2014, Martinez committed a felony under Insurance Code section 1814 by entering into an agreement and having an understanding with a person incarcerated in jail, to inform and notify Martinez, a bail licensee, of the fact of an arrest in violation of California Code of Regulations, title 10, section 2076. Martinez was associated with Luna Bail Bonds.The court of appeal reversed her subsequent conviction, finding the regulation facially invalid. Section 2076 prohibits bail licensees from entering, indirectly or directly, any arrangement or understanding with specified types of people— including a “person incarcerated in a jail”—“or with any other persons” to inform or notify any bail licensee, directly or indirectly, of information pertaining to (1) an existing criminal complaint, (2) a prior, impending, or contemplated arrest, or (3) the persons involved therein, which impliedly includes arrestees and named criminals. The section is not unconstitutionally vague but is a content-based regulation, which unduly suppresses protected speech and fails to survive even intermediate judicial scrutiny. While section 2076 might indirectly deter unlawful solicitation of arrestees, an indirect effect is not enough to survive intermediate scrutiny. View "People v. Martinez" on Justia Law

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The Idaho Department of Finance ("Department") filed a civil enforcement action against appellant appellant, Sean Zarinegar, Performance Realty Management LLC ("PRM") and other nominal defendants, alleging Zarinegar and PRM committed securities fraud. The Department moved for summary judgment; Zarinegar and PRM responded with their own motion for partial summary judgment and a motion to strike several documents submitted by the Department in support of its motion for summary judgment. A few days before the district court was set to hear arguments on the motions, counsel for Zarinegar and PRM moved the district court for leave to withdraw as counsel of record. At the hearing, the district court preliminary denied the motion to withdraw, entertained the parties’ arguments, and took all matters under advisement. The district court later issued a memorandum decision and order denying, in part, Zarinegar’s, and PRM’s motions to strike. The district court also denied Zarinegar’s and PRM’s motion for partial summary judgment. The district court granted summary judgment for the Department after finding Zarinegar and PRM had misrepresented and omitted material facts in violation of Idaho Code section 30-14-501(2) and fraudulently diverted investor funds for personal use in violation of section 30-14-501(4). The district court then granted the motion to withdraw. The district court entered its final judgment against Zarinegar and PRM September 30, 2019. Zarinegar, representing himself pro se, appealed the judgment, arguing: (1) the district court lacked jurisdiction to enter judgment against him; (2) the district court violated his constitutional right to a jury trial and right to proceed pro se; (3) the district court’s denial of Zarinegar’s motions to strike as to certain documents was an abuse of discretion; and (4) the district court erroneously granted summary judgment for the Department. Finding no reversible error, the Idaho Supreme Court affirmed the district court's judgment. View "Idaho v. Zarinegar" on Justia Law

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In 1998-2010, Dimora served as one of three Cuyahoga County Commissioners. An FBI investigation revealed that Dimora had received over $250,000 in gifts from individuals with business before the County, including home renovations, trips to Las Vegas, and encounters with prostitutes. Dimora had used his position to help with the awarding of County contracts, hiring, the results of at least one County election, and civil litigation outcomes. Dimora’s “influence” ranged from casting formal votes as Commissioner to pressuring other officials.Dimora was charged with Hobbs Act offenses, bribery concerning programs receiving federal funds, making false statements on tax returns, conspiracy to commit mail fraud and honest services mail fraud, conspiracy to commit bribery concerning programs receiving federal funds, conspiracy to commit wire fraud and honest services wire fraud, RICO conspiracy, mail fraud, conspiracy to obstruct justice and obstructing a federal investigation. A jury convicted Dimora on 33 counts. The Sixth Circuit upheld the jury instructions defining “official acts” as having “fairly trace[d] the line between permissible gifts and impermissible bribes.” A ruling that state ethics reports were inadmissible hearsay was harmless in light of “overwhelming evidence.”In its 2016 “McDonnell” decision, the Supreme Court gave a narrow construction to a key element included within several of Dimora’s offenses. The term “official acts” does not include “setting up a meeting, calling another public official, or hosting an event.” Official acts are limited to “formal exercise[s] of governmental power.” Dimora petitioned to vacate his convictions under 28 U.S.C. 2255. The Sixth Circuit vacated a denial of relief. The court declined to decide whether the instructional error was harmless with respect to most of the counts or whether the “cumulative effect” of instructional and evidentiary errors entitles Dimora to relief. View "Dimora v. United States" on Justia Law

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In 1998, Pennsylvania and 45 other states entered into a settlement agreement with certain cigarette manufacturers, who agreed to disburse funding to the states to cover tobacco-related healthcare costs. Pennsylvania’s 2001 Tobacco Settlement Act established the "EE Program" to reimburse participating hospitals for “extraordinary expenses” incurred for treating uninsured patients according to a formula. The Department of Human Services (DHS) determines the eligibility of each hospital for EE Program payments. The Pennsylvania Auditor General reported that for Fiscal Years 2008-2012, some participating hospitals received disbursements for unqualified claims, and recommended that DHS claw back funds from overpaid hospitals and redistribute the money to hospitals that had been underpaid. DHS followed that recommendation for fiscal years prior to 2010 but discovered methodological discrepancies and discontinued the process for Fiscal Years 2010-2012.Plaintiffs, on behalf of all “underpaid” hospitals, sued an allegedly overpaid hospital, alleging conspiracy to defraud the EE Program in violation of RICO, 18 U.S.C. 1961–1964. The plaintiffs alleged that the defendants submitted fraudulent claims for reimbursement, in violation of the wire fraud statute, 18 U.S.C. 1343 (a RICO predicate offense). The Third Circuit reversed the dismissal of the claims, finding that the theory of liability adequately alleges proximate causation. No independent factors that accounted for the plaintiffs’ injury and no more immediate victim was better situated to sue. View "St. Lukes Health Network, Inc. v. Lancaster General Hospital" on Justia Law