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

Two defendants were charged and convicted for their roles in a large-scale ATM skimming operation that spanned the United States, Europe, and Mexico, resulting in millions of dollars in losses to financial institutions and individual account holders. The scheme involved installing skimming devices and hidden cameras on ATMs to steal debit card numbers and PINs, creating counterfeit cards, withdrawing cash from victims’ accounts, and laundering the proceeds overseas. One defendant was primarily involved in sending and receiving skimming devices and laundering money, while the other built and distributed skimming devices, supervised cash-outs, and was found with skimming equipment and counterfeit cards in his garage.The United States District Court for the Southern District of New York presided over the trial. One defendant was convicted by a jury on all counts, while the other pled guilty to most charges and was convicted by a jury of aggravated identity theft. Both received below-Guidelines sentences (92 and 120 months) and were ordered to pay restitution in installments, with the option to use the Bureau of Prisons’ Inmate Financial Responsibility Plan (IFRP). The defendants appealed, jointly challenging their aggravated identity theft convictions, and individually raising issues regarding the suppression of evidence, sentencing enhancements, and the restitution payment schedule.The United States Court of Appeals for the Second Circuit affirmed the convictions and sentences, holding that debit card numbers and PINs are “means of identification” under 18 U.S.C. § 1028A, thus supporting the aggravated identity theft convictions. The court also upheld the denial of the suppression motion, finding the search of the garage lawful as a protective sweep incident to arrest. The court found no procedural or substantive error in the sentences. However, it vacated the restitution order for one defendant and remanded for clarification of the installment payment schedule during incarceration. All other aspects of the convictions and sentences were affirmed. View "United States of America v. Constantinescu" on Justia Law

Two fiduciaries, who managed retirement and welfare funds for a New York City law enforcement union, were found to have improperly withdrawn over $500,000 from the union’s annuity fund. The withdrawals, which occurred over several years, were facilitated by one defendant preparing false authorization forms and the other signing and submitting them to the fund’s custodian. The funds were then transferred to the union’s operating account and used for unauthorized purposes, including personal enrichment and unrelated union expenses. The defendants misrepresented the nature of these withdrawals to both the fund’s custodian and union members, and they continued the scheme even after being warned by auditors that their actions were improper.The United States District Court for the Southern District of New York presided over a joint jury trial, where both defendants were convicted of wire fraud and conspiracy to commit wire fraud. One defendant was also convicted of conspiracy to defraud the United States and multiple counts of tax evasion. The district court denied motions to sever the trials, found the evidence sufficient to support the convictions, and imposed restitution and forfeiture orders. The court also addressed government discovery errors by granting a continuance and requiring early disclosure of materials, but declined to impose harsher sanctions.On appeal, the United States Court of Appeals for the Second Circuit reviewed claims of improper joinder, insufficient evidence, prosecutorial misconduct, ineffective assistance of counsel, and errors in restitution calculation. The court held that joinder was proper because the indictment sufficiently linked the fraud and tax offenses, the evidence was sufficient to support the convictions, and the attorney’s illness did not constitute per se ineffective assistance. The court also found no abuse of discretion in the district court’s handling of discovery issues or restitution calculation, and no reversible prosecutorial misconduct. The Second Circuit affirmed the district court’s judgment. View "United States v. Wynder" on Justia Law

Nathaniel Chastain was convicted of wire fraud and money laundering based on trades he made while employed at OpenSea, an online NFT marketplace. As head of product, Chastain selected NFTs to feature on the website, which increased their value. He purchased NFTs before they were featured and sold them afterward for a profit, making about $57,000. Chastain argued that the district court erred in instructing the jury that it could find him guilty of defrauding OpenSea of its property if he misappropriated an intangible interest unconnected to traditional property rights.The United States District Court for the Southern District of New York denied Chastain's motion to dismiss the indictment and excluded certain evidence he sought to introduce at trial. The jury found Chastain guilty on both counts, and he was sentenced to three months of imprisonment and three years of supervised release.The United States Court of Appeals for the Second Circuit reviewed the case and agreed with Chastain that confidential business information must have commercial value to qualify as property under the wire fraud statute. The court found that the district court erred by instructing the jury that it could find Chastain guilty even if the information lacked commercial value to OpenSea. The court also found that the district court erred by instructing the jury that it could find Chastain guilty if he conducted himself in a manner that departed from traditional notions of fundamental honesty and fair play.The Second Circuit concluded that these errors were not harmless, as the jury could have convicted Chastain based on unethical behavior rather than the misappropriation of a traditional property interest. The court vacated the judgment of conviction for wire fraud and money laundering and remanded the case for further proceedings. The court did not find any abuse of discretion in the district court's evidentiary rulings. View "United States v. Chastain" on Justia Law

Michael Hild, the Defendant-Appellant, was convicted by a jury in 2021 of securities fraud, wire fraud, bank fraud, and conspiracy. Hild, as the CEO of Live Well Financial, Inc., engaged in a scheme to inflate the value of a bond portfolio used as collateral for loans. This scheme allowed Live Well to grow its bond portfolio significantly from 2014 to 2016. Hild appealed his conviction, arguing that the evidence was insufficient and that a new trial was warranted due to a Supreme Court decision invalidating one of the fraud theories used in his jury instructions.The United States District Court for the Southern District of New York denied Hild's post-trial motions for acquittal and a new trial. Hild then appealed to the United States Court of Appeals for the Second Circuit, challenging the sufficiency of the evidence and the jury instructions.The Second Circuit reviewed the case and found that sufficient evidence supported Hild's conviction. The court noted that Hild misrepresented the value of the bonds to secure loans and acted with fraudulent intent. The court also addressed Hild's argument regarding the jury instructions, acknowledging that the instructions included an invalid right-to-control theory of fraud as per the Supreme Court's decision in Ciminelli v. United States. However, the court concluded that this error did not affect Hild's substantial rights because the jury would have convicted him based on a valid theory of fraud.Ultimately, the Second Circuit affirmed the judgment of the district court, upholding Hild's conviction on all counts. View "United States v. Hild" on Justia Law

Plaintiffs, American service members and civilians injured or killed in terrorist attacks in Afghanistan, along with their family members, sued Deutsche Bank, Standard Chartered Bank (SCB), and Danske Bank under the Anti-Terrorism Act (ATA) as amended by the Justice Against Sponsors of Terrorism Act (JASTA). They alleged that the banks aided and abetted terrorist organizations by providing banking services to customers involved in tax fraud and money laundering schemes, with proceeds allegedly funding terrorist activities. Plaintiffs also claimed SCB aided the attacks by providing banking services to fertilizer companies whose products were used to make bombs.The United States District Court for the Eastern District of New York dismissed the plaintiffs' amended complaint in its entirety for failure to state a claim. The court found that the plaintiffs did not establish a sufficient nexus between the banks' actions and the terrorist acts that caused their injuries. The court dismissed the complaint with prejudice, concluding that further amendment would be futile.The United States Court of Appeals for the Second Circuit reviewed the case and affirmed the district court's dismissal. The appellate court applied the Supreme Court's decision in Twitter, Inc. v. Taamneh, which clarified the pleading standard for aiding-and-abetting claims under JASTA. The court held that the plaintiffs did not plausibly allege that the banks were generally aware of their role in the terrorist activities or that they provided knowing and substantial assistance to the terrorist organizations. The court emphasized that the plaintiffs' allegations were too attenuated and speculative to support a claim of aiding-and-abetting liability under JASTA. View "Wildman v. Deutsche Bank" on Justia Law

Mark Johnson was convicted of wire fraud and conspiracy to commit wire fraud in 2017. The charges stemmed from a 2011 transaction where HSBC, under Johnson's leadership, converted U.S. dollars into British pounds for Cairn Energy. The government presented two theories of fraud to the jury: the now-invalid right-to-control theory and the misappropriation theory. Johnson filed a Petition for a writ of coram nobis after the Supreme Court's decision in Ciminelli v. United States invalidated the right-to-control theory.The United States District Court for the Eastern District of New York dismissed Johnson's Petition, concluding that the jury would have convicted him under the valid misappropriation theory, rendering the inclusion of the invalid right-to-control theory harmless. Johnson appealed this decision.The United States Court of Appeals for the Second Circuit reviewed the case. The court found that the government's case under the misappropriation theory was weak and expressed grave doubt that the presentation of the right-to-control theory was harmless. The court noted that the misappropriation theory required proving a fiduciary relationship between Johnson and Cairn, which was not clearly established, and that Johnson misused confidential information, which was also not convincingly demonstrated.The Second Circuit held that the inclusion of the invalid right-to-control theory was not harmless and that the jury was likely influenced by it. Consequently, the court reversed the district court's judgment and remanded the case for entry of an order granting Johnson's Petition for a writ of coram nobis. View "Johnson v. United States" on Justia Law

From the 1990s through the 2010s, Patrice Runner operated a mass-mailing enterprise that used false and misleading advertising to sell purportedly supernatural objects and psychic services. Customers paid for rare gems and personalized psychic services, but received junk items and generic responses. A jury convicted Runner of mail and wire fraud, among other crimes.Runner appealed, arguing that the Government’s theory of fraud was legally defective, which he claimed affected his indictment, the sufficiency of the evidence, and the jury instructions. The United States District Court for the Eastern District of New York had denied Runner’s motion to dismiss the indictment and rejected his post-trial motions for acquittal or a new trial. The court also sentenced Runner to ten years’ imprisonment, despite a Guidelines recommendation of life imprisonment, based on a loss calculation of over $150,000,000.The United States Court of Appeals for the Second Circuit reviewed the case. The court rejected Runner’s arguments, citing the Supreme Court’s decision in Kousisis v. United States, which supported the Government’s fraudulent-inducement theory. The court found that the indictment sufficiently alleged that Runner used material misstatements to induce customers to pay money. The evidence presented at trial was deemed sufficient to support the jury’s finding of fraudulent intent, as Runner’s promotions contained intentional lies about the origin and nature of the goods and services sold. The jury instructions were also found to be adequate in conveying the intent-to-harm requirement.The Second Circuit affirmed the district court’s judgment, holding that any error in the loss calculation at sentencing was harmless, as the district court would have imposed the same sentence regardless. View "United States v. Runner" on Justia Law

Two defendants, Hernán Lopez, a top executive at Twenty-First Century Fox, and Full Play Group, S.A., a South American sports marketing company, were convicted of conspiracy to commit honest services wire fraud related to a FIFA corruption scandal. They were involved in bribery schemes to secure media rights for various soccer tournaments, including the Copa Libertadores, Copa América, and World Cup qualifiers. The government presented evidence that Full Play bribed officials from several South American soccer federations, while Lopez was implicated in a scheme involving T&T Sports Marketing, a joint venture of Fox and Torneos y Competencias, to secure undervalued media rights contracts through bribery.The United States District Court for the Eastern District of New York initially denied pre-trial motions to dismiss the indictment but later granted post-trial motions for acquittal under Rule 29(c). The district court reasoned that, following the Supreme Court’s decisions in Percoco v. United States and Ciminelli v. United States, the conduct did not fall within the scope of honest services wire fraud under 18 U.S.C. § 1346, and the evidence was insufficient to sustain the convictions.The United States Court of Appeals for the Second Circuit reviewed the case and held that the district court erred in its conclusion. The appellate court determined that the conduct of Lopez and Full Play did fall within the ambit of § 1346, as it involved bribery, which is a core application of the honest services fraud statute. The court noted that the fiduciary duties breached by the bribed officials were established by their relationships with FIFA and CONMEBOL, and these duties were informed by the organizations' codes of ethics. Consequently, the Second Circuit vacated the district court’s judgments of acquittal and remanded the case for further proceedings consistent with its opinion. View "United States v. Lopez" on Justia Law

George Guldi, a former Suffolk County legislator and disbarred real estate attorney, conspired with his former girlfriend, Victoria Davidson, to deceive a mortgage servicer, Ditech Financial LLC, into wiring them $253,236. The funds did not belong to either of them. A jury convicted Guldi of wire fraud, bank fraud, and conspiracy to commit wire fraud and bank fraud. He was sentenced to 36 months of imprisonment followed by three years of supervised release.The United States District Court for the Southern District of New York oversaw the trial. The jury found sufficient evidence to support the existence of a conspiracy, fraudulent intent, and aiding and abetting. The district court also found no reversible error in its jury instructions on conspiracy, wire fraud, and fraudulent intent. Additionally, the court properly considered Guldi’s medical needs during sentencing.The United States Court of Appeals for the Second Circuit reviewed the case. The court affirmed Guldi’s convictions, finding that sufficient evidence supported the jury’s findings and that the district court did not err in its jury instructions. However, the appellate court concluded that the district court erred in applying a two-offense-level enhancement under the U.S. Sentencing Guidelines for using “sophisticated means” to commit or conceal the offense. The appellate court determined that this procedural error rendered Guldi’s sentence procedurally unreasonable.As a result, the Second Circuit affirmed the judgment of conviction but vacated and remanded Guldi’s sentence for resentencing consistent with its opinion. View "United States v. Guldi" on Justia Law

Lawrence Ray was convicted in the United States District Court for the Southern District of New York for multiple crimes, including racketeering conspiracy, extortion, sex trafficking, forced labor, money laundering, tax evasion, and committing a violent crime in aid of a racketeering enterprise. These convictions stemmed from Ray's operation of a criminal enterprise that targeted young adults, primarily his daughter's college roommates, for indoctrination and exploitation, including sex trafficking and forced labor in Pinehurst, North Carolina.The district court sentenced Ray to 720 months of imprisonment, followed by a lifetime term of supervised release. Ray appealed his conviction, arguing insufficient evidence to support his convictions, the unconstitutionality of the racketeering statutes, improper admission of expert testimony, and the substantive unreasonableness of his sentence.The United States Court of Appeals for the Second Circuit reviewed Ray's appeal. The court found sufficient evidence to support Ray's convictions, including the existence of an enterprise, the commission of violent crimes to maintain or increase his position in the enterprise, and the coercion of victims into sex trafficking and forced labor. The court also rejected Ray's constitutional challenge to the racketeering statutes, noting that such challenges have been consistently rejected in the past.Regarding the expert testimony, the court held that the district court did not abuse its discretion in admitting the testimony of Dr. Hughes, a clinical and forensic psychologist, who provided general background on coercive control tactics without directly linking her testimony to Ray or his victims. The court also found that the district court properly balanced the probative value of the testimony against its potential prejudicial effect.Finally, the court concluded that Ray's 720-month sentence was substantively reasonable, given the gravity of his crimes and the need for deterrence, incapacitation, and just punishment. The court affirmed the judgment of the district court. View "United States v. Ray" on Justia Law