Justia U.S. 2nd Circuit Court of Appeals Opinion Summaries

The defendant engaged in a scheme from 2017 through 2020 in which he impersonated an attorney to obtain personally identifiable information from prisoners. Using this information, he filed unauthorized tax returns in the names of at least nine prisoners, receiving $136,672 in fraudulent refunds from the Internal Revenue Service. At the time of his arrest, the defendant was already under community supervision for a similar offense and had a significant criminal history, including prior convictions for fraud-related and other offenses.A grand jury in the United States District Court for the Southern District of New York indicted the defendant on multiple fraud and theft charges. He pleaded guilty to fourteen counts of making false claims and one count of theft of government funds. The district court sentenced him to forty-six months in prison, three years of supervised release, and ordered forfeiture and restitution. The supervised release included standard and special conditions, one of which allowed for electronic monitoring of all devices capable of accessing the internet, unannounced examinations of such devices, and monitoring of any work-related devices as permitted by his employer. The defendant did not object to these conditions at sentencing but challenged them on appeal.The United States Court of Appeals for the Second Circuit reviewed the case. It held that the district court did not err in imposing the special condition of electronic monitoring. The appellate court found the condition was reasonable in light of the nature of the offenses and the defendant’s history, was not overbroad, and did not amount to an impermissible occupational restriction under the Sentencing Guidelines. The court concluded that the monitoring requirements did not prohibit the defendant from pursuing any occupation and were necessary to protect the public. The judgment of the district court was affirmed. View "United States v. Brown" on Justia Law

The defendant operated a business exchanging bitcoin for cash, advertising his services online and charging commission fees. Over several months, undercover DEA agents arranged multiple transactions with the defendant, exchanging large amounts of bitcoin for cash. During these exchanges, the agent initially claimed the bitcoin came from an online business but later said it was from drug sales. Despite this disclosure, the defendant continued the exchanges. Ultimately, he was arrested after arranging another large transaction.The United States District Court for the Eastern District of New York indicted the defendant on charges of money laundering and operating an unlicensed money transmitting business. During jury selection, the defense objected to the seating of a juror who expressed positive views toward law enforcement and negative views about financial crimes. The court denied the challenge for cause, empaneling the juror. The jury convicted the defendant on both counts. At sentencing, the court included all transactions with the undercover agent in calculating the offense level and imposed a term of imprisonment and supervised release.On appeal, the United States Court of Appeals for the Second Circuit addressed several issues. It held that the district court did not abuse its discretion by empaneling the challenged juror, given the juror’s assurances of impartiality. The court further held that exchanging bitcoin for cash constitutes “money transmitting” under 18 U.S.C. § 1960 and its implementing regulations, and that the evidence was sufficient to sustain the conviction. Additionally, the court found no error in the district court’s supplemental jury instruction clarifying that such exchanges qualify as transfers of funds. Finally, the court dismissed the defendant’s sentencing challenges as moot because he had completed his prison term and raised no issues regarding supervised release. The judgment of the district court was otherwise affirmed. View "United States v. Goklu" on Justia Law

GEICO and its subsidiaries brought a lawsuit in the United States District Court for the Eastern District of New York against Dr. Bhargav Patel and his medical practice, alleging that the defendants engaged in a scheme to defraud GEICO by manipulating New York’s no-fault automobile insurance system. GEICO claimed that from 2019 to 2023, defendants submitted approximately $3.4 million in reimbursement claims for treatments that were unnecessary, experimental, excessive, illusory, or not provided at all. These claims allegedly resulted from a fraudulent scheme involving kickbacks for patient referrals and the provision of services by unlicensed individuals or contractors.After GEICO initiated its federal action, the defendants responded by filing over 600 collection actions in New York state courts and arbitration tribunals, seeking recovery for disputed or denied claims totaling more than $2 million. GEICO, facing the prospect of fragmented litigation and the risk of inconsistent judgments, sought a preliminary injunction from the district court to stay all pending state and arbitration proceedings and to prevent the defendants from filing new collection actions until the federal court resolved the RICO claims. The district court granted the injunction, finding that GEICO had demonstrated irreparable harm, serious questions going to the merits, and a balance of hardships tipping in GEICO’s favor. The court also determined it had authority under the “in aid of jurisdiction” exception to the Anti-Injunction Act to enjoin the parallel proceedings.On appeal, the United States Court of Appeals for the Second Circuit reviewed the district court’s decision for abuse of discretion and found none. The appellate court held that the preliminary injunction was justified by the real risk of irreparable harm to GEICO posed by inconsistent judgments and the inability to fully adjudicate the alleged fraudulent scheme in piecemeal state actions. The Second Circuit further held, consistent with its recent precedent in State Farm Mutual Automobile Insurance Company v. Tri-Borough NY Medical Practice, P.C., that the injunction did not violate the Anti-Injunction Act because it was expressly authorized under RICO. The court affirmed the district court’s order. View "GEICO v. Patel" on Justia Law

A businessman from Kazakhstan alleged that he was wrongfully detained and psychologically coerced by the country’s National Security Committee into signing unfavorable business agreements, including waivers of legal claims and a forced transfer of valuable company shares. The business at issue, CAPEC, operated in Kazakhstan’s energy sector and held significant assets, some of which were allegedly misappropriated by fellow shareholders and transferred through U.S. financial institutions. The plaintiff claimed these actions harmed him economically, including the loss of potential U.S.-based legal claims.Following unsuccessful litigation in Kazakhstan, the plaintiff initiated suit in the United States District Court for the Eastern District of New York, seeking to invalidate the coerced agreements and recover damages under the Racketeer Influenced and Corrupt Organizations Act (RICO), the Alien Tort Statute, and other state and federal laws. The district court dismissed the complaint for lack of subject-matter jurisdiction, finding that the plaintiff, as a permanent resident alien, could not establish diversity jurisdiction against foreign defendants, that the alleged torts occurred outside the U.S., and that the plaintiff failed to allege a domestic injury required for civil RICO claims. The court denied leave to amend, determining that any amendment would be futile.The United States Court of Appeals for the Second Circuit reviewed the matter de novo, affirming the district court’s judgment. The Second Circuit held that claims against the National Security Committee were barred by the Foreign Sovereign Immunities Act, as its conduct was sovereign rather than commercial. For the individual defendants, the court found that the plaintiff failed to allege a domestic injury under RICO, as the harm and racketeering activity occurred primarily in Kazakhstan. The court further concluded that amendment of the complaint would have been futile. The judgment was affirmed. View "Yerkyn v. Yakovlevich" on Justia Law

A Malaysian national who worked as a managing director for Goldman Sachs in Malaysia was prosecuted for his role in a large-scale financial scheme involving 1Malaysia Development Berhad (1MDB), a Malaysian state-owned investment fund. The government presented evidence showing that, along with other conspirators, he participated in three major bond offerings raising $6.5 billion, from which more than $2.5 billion was diverted for bribes and kickbacks to officials and participants, including himself. The funds were laundered through shell companies, and the defendant received $35.1 million that was deposited in an account controlled by his family members. The defendant’s wife asserted at trial that these funds were legitimate investment returns, not criminal proceeds.Prior to this appeal, the United States District Court for the Eastern District of New York denied several motions by the defendant. The court rejected his arguments that the indictment should be dismissed for lack of venue, concluding that acts in furtherance of the conspiracy passed through the Eastern District of New York. The court also found that the government did not breach an agreement regarding his extradition from Malaysia, since the superseding indictments did not charge new offenses. The district court excluded a video recording offered by the defense as inadmissible hearsay, and ultimately, a jury found him guilty on all counts. He was sentenced to 120 months’ imprisonment and ordered to forfeit $35.1 million.On appeal to the United States Court of Appeals for the Second Circuit, the defendant argued improper venue, breach of extradition agreement, erroneous exclusion of evidence, and that the forfeiture was an excessive fine under the Eighth Amendment. The Second Circuit held that the district court had not erred in any respect. Venue was proper, the extradition agreement was not breached, the evidentiary ruling was not an abuse of discretion, and the forfeiture was not grossly disproportionate to the offense. Accordingly, the judgment of conviction and forfeiture order were affirmed. View "USA v. NG CHONG HWA" on Justia Law

In October 2021, a Florida attorney, Ross, held a trust account at Regions Bank that received a $29.6 million wire transfer, the result of a business email compromise fraud perpetrated on a company called Phoenix. Most of the funds were rapidly transferred out of the account, with some recalled by the bank. Federal authorities seized approximately $4.9 million remaining or recovered from the account and initiated a civil forfeiture action, alleging the funds were proceeds of fraud or involved in money laundering.The United States District Court for the Northern District of New York oversaw the initial proceedings. Ross filed a verified claim to $1.21 million of the seized funds, asserting they were legitimate client funds or proceeds from his home sale, but made no claim to the remaining $3.69 million. Another claimant, Phoenix, also asserted interest in the $1.21 million. The district court entered default judgment forfeiting the unclaimed $3.69 million to the government, dismissed without prejudice the forfeiture proceedings as to the $1.21 million, and issued a certificate of reasonable cause for the seizure. It denied Ross’s subsequent motion for attorney fees, costs, and interest under CAFRA, finding he did not “substantially prevail,” and denied reconsideration.On appeal, the United States Court of Appeals for the Second Circuit held that Ross lacked standing to contest the forfeiture of the $3.69 million because he had not filed a claim as to those funds. The court rejected Ross’s due process challenge to the stay of proceedings, finding the delay reasonable, and upheld the denial of attorney fees, costs, and interest, concluding that dismissal without prejudice did not make Ross a prevailing party under CAFRA. The court also found no abuse of discretion in dismissing the forfeiture action without prejudice. However, the Second Circuit vacated the issuance of a certificate of reasonable cause, as no judgment for Ross had been entered. All other aspects of the district court’s judgments were affirmed. View "United States v. Ross" on Justia Law

A licensed veterinarian developed and manufactured undetectable performance enhancing drugs (PEDs) for use in professional horse racing, selling them to trainers who administered them to horses to gain a competitive edge. His salesperson assisted in these activities, operating a company that distributed the drugs without prescriptions or FDA approval. The drugs were misbranded or adulterated, and the operation involved deceptive practices such as misleading labeling and falsified customs forms. The PEDs were credited by trainers for their horses’ successes, and evidence showed the drugs could be harmful if misused.The United States District Court for the Southern District of New York presided over two separate trials, resulting in convictions for both the veterinarian and his salesperson for conspiracy to manufacture and distribute misbranded or adulterated drugs with intent to defraud or mislead, in violation of the Food, Drug, and Cosmetic Act. The district court denied motions to dismiss the indictment, admitted evidence from a prior state investigation, and imposed sentences including imprisonment, restitution, and forfeiture. The court calculated loss for sentencing based on the veterinarian’s gains and ordered restitution to racetracks based on winnings by a coconspirator’s doped horses.On appeal, the United States Court of Appeals for the Second Circuit held that the statute’s “intent to defraud or mislead” element is not limited to particular categories of victims; it is sufficient if the intent relates to the underlying violation. The court found no error in the admission of evidence from the 2011 investigation or in the use of gain as a proxy for loss in sentencing. However, it vacated the restitution order to racetracks, finding no evidence they suffered pecuniary loss, and vacated the forfeiture order, holding that the relevant statute is not a civil forfeiture statute subject to criminal forfeiture procedures. The convictions and sentence were otherwise affirmed. View "United States v. Fishman" on Justia Law

A U.K. citizen and former hedge fund manager predicted that the South African rand would strengthen against the U.S. dollar following a South African election. Acting on this belief, he purchased a one-touch barrier option for his hedge fund, which would pay $20 million if the rand-to-dollar exchange rate dropped below 12.50 before the option’s expiration. As the expiration approached and the rate hovered just above the threshold, he instructed a banker in Singapore to sell large amounts of dollars for rand to push the exchange rate below 12.50, thereby triggering the option and securing the payout for his fund. The trades were executed while he was in South Africa, and the payout obligations ultimately fell on U.S.-based financial institutions.A grand jury in the United States District Court for the Southern District of New York indicted him for commodities fraud and conspiracy to commit commodities fraud under the Commodity Exchange Act (CEA). At trial, the government presented evidence of his intent to manipulate the market to trigger the option. The jury convicted him of commodities fraud but acquitted him of conspiracy. The district court denied his post-trial motions for acquittal or a new trial, finding sufficient evidence of a direct and significant connection to U.S. commerce, adequate jury instructions, and no due process violation.On appeal, the United States Court of Appeals for the Second Circuit affirmed the conviction. The court held that the CEA’s extraterritoriality provision applied because the conduct had a direct and significant connection to U.S. commerce, given that U.S. financial institutions bore the payout risk. The court also found the jury instructions on intent and materiality were proper, that proof of an artificial price was not required under the charged anti-fraud provision, and that the defendant had fair notice his conduct was unlawful. The district court’s judgment was affirmed. View "United States v. Phillips" on Justia Law

Mathew James, a former nurse and owner of a medical billing business, was convicted after a jury trial for health care fraud, conspiracy to commit health care fraud, wire fraud, and aggravated identity theft. The charges arose from a scheme in which James and his employees falsified insurance claims by “upcoding” and “unbundling” medical procedures, directed patients to emergency rooms for pre-planned surgeries, and impersonated patients in communications with insurance companies. The fraudulent activity spanned several years, involved nearly 150 physicians, and resulted in tens of thousands of claims. While some of James’s business was legitimate, the government’s evidence focused on the fraudulent aspects of his operations.The United States District Court for the Eastern District of New York (Judge Seybert) presided over the trial and sentencing. The jury convicted James on most counts but acquitted him of money laundering conspiracy. During trial, jurors were inadvertently given access to transcripts of two recorded calls not admitted into evidence, but the district court declined to conduct an inquiry into the exposure, instead instructing the jury to disregard any material not in evidence. At sentencing, the court imposed a 144-month prison term, a forfeiture order of over $63 million, and restitution of nearly $337 million. The court applied sentencing enhancements for James’s leadership role and abuse of trust, and increased the sentence after considering James’s potential eligibility for earned time credits and rehabilitation programs.The United States Court of Appeals for the Second Circuit affirmed James’s conviction, finding any jury exposure to extra-record material harmless. However, the court vacated the sentence, including the forfeiture and restitution orders, holding that the district court erred by enhancing the sentence based on potential earned time credits and rehabilitation program eligibility, misapplied sentencing enhancements without adequate findings, and failed to properly calculate forfeiture and restitution by including legitimate business revenue. The case was remanded for resentencing. View "United States v. James" on Justia Law

A group of plaintiffs, including an individual, a retirement fund, and several investment funds, traded derivatives based on the Euro Interbank Offered Rate (Euribor). They alleged that a group of banks and brokers conspired to manipulate Euribor, which affected the pricing of various over-the-counter (OTC) derivatives, such as FX forwards, interest-rate swaps, and forward rate agreements. The alleged conduct included coordinated false submissions to set Euribor at artificial levels, collusion among banks and brokers, and structural changes within banks to facilitate manipulation. Plaintiffs claimed this manipulation harmed them by distorting the prices of their Euribor-based derivative transactions.The United States District Court for the Southern District of New York dismissed the plaintiffs’ claims under the Sherman Act, the Commodity Exchange Act (CEA), the Racketeer Influenced and Corrupt Organizations Act (RICO), and state common law, finding it lacked personal jurisdiction over all defendants. The district court also found that the RICO claims were based on extraterritorial conduct and did not meet the particularity requirements of Federal Rule of Civil Procedure 9(b). It declined to exercise pendent personal jurisdiction over state-law claims.The United States Court of Appeals for the Second Circuit reviewed the case. It agreed that conspiracy-based personal jurisdiction was not established but held that two plaintiffs—Frontpoint Australian Opportunities Trust and the California State Teachers’ Retirement System—had established specific personal jurisdiction over UBS AG and The Royal Bank of Scotland PLC for Sherman Act and RICO claims related to OTC Euribor derivative transactions in the United States. The court affirmed dismissal of the RICO claims for lack of particularity, but held that the Sherman Act claims were sufficiently pleaded. It vacated the district court’s refusal to exercise pendent personal jurisdiction over state-law claims and remanded for further proceedings. The judgment was affirmed in part, reversed in part, and vacated in part. View "Sullivan v. UBS AG" on Justia Law