Jacksonville Criminal Lawyer Blog

The law firm of Shorstein & Lasnetski, LLC in Jacksonville, Florida handles all variations of white collar crimes. One of the cases for which our clients often request representation is the crime of mortgage fraud. As a result of handling a large number of mortgage fraud criminal cases, we have noticed that the police often charge defendants for negligent, and often common, mistakes made during the mortgage application process that do not rise to the level of criminal conduct. Other times, the state may prosecute a mortgage fraud case when a person does make an incorrect statement, but the false statement has no effect on the approval for the mortgage loan.

For instance, in a recent case south of Jacksonville, Florida, the defendant obtained a mortgage to build a home on a vacant lot. He found a mortgage broker and completed the loan application. In each of the documents during the application process and at the closing, the defendant stated his gross monthly income as $9,800 per month. According to the state, the defendant's gross monthly income shown on his tax returns was less than $9,800 per month. The state then jumped to the conclusion that the defendant gave false information on his mortgage application and therefore committed mortgage fraud by inflating his income to get a higher loan amount.

Under Florida law, a person can be convicted of obtaining a mortgage by false representation, aka mortgage fraud, where a person makes a false statement in order to obtain a mortgage and the victim relies upon the defendant's false statement.

In this case, the state did prove that the defendant inflated his monthly income. However, there was no evidence that the bank relied on that information to approve the mortgage for the amount requested. In other words, there was no evidence that the bank would have denied the mortgage loan, or reduced the loan amount, if the defendant had disclosed his lower gross monthly income. Because an entire element of the mortgage fraud crime was missing in the state's case, the mortgage fraud charge was dismissed.

The state also could not prove that the defendant committed theft. The defendant may have given a false statement as to his monthly income, but it was done to obtain the mortgage. In order to prove the crime of theft, the state would have to prove that the defendant intended to deprive the victim of property. In this case, it was apparent that the defendant only intended to obtain a mortgage, and there was no evidence that he did not intend to pay the money back. As a result, the grand theft charge was dismissed as well.

Over the last several years with the ever-increasing deficit becoming more and more of a issue in the media, the federal and state governments have focused more on crimes that involve fraud, including fraud that involves government benefits. There may be no bigger crime involving fraud and government benefits at any time in our history than Medicare fraud.

Medicare is a government funded insurance program that assists approximately 46 million of the elderly and disabled with health care. One report estimated the total amount of Medicare fraud at $60 billion as of 2009. We have seen many cases where state and/or federal law enforcement officials have investigated and arrested doctors, medical center owners, executives and employees and patients for allegedly committing various versions of Medicare fraud. One of the most common methods of committing Medicare fraud occurs when a doctor or other employee sends a Medicare reimbursement form to the government for medical services or equipment that were unnecessary or never provided.

Recently the federal government announced that 91 people in eight different cities were charged with committing Medicare fraud in an amount totaling approximately $300 million. Among those charged were many doctors accused of seeking reimbursement for medical services that were never provided. As an example, one doctor is accused of billing Medicare for medical services allegedly provided to dead people.

The Attorney General's office has indicated that Medicare fraud investigations are a critical part of President Obama's healthcare reform. As the government spends money and tries to deal with the runaway deficit problem, attacking the billions of dollars lost through Medicare fraud appears to be an area ripe for attention from state and federal law enforcement officials.

We have discussed how the various law enforcement agencies seem to follow the issues of the day when making priorities out of certain crimes. While violent crimes are normally always priorities, when it comes to theft or white collar crimes, different crimes seem to grab the attention of the police at different times. When there is a huge story about securities fraud in the news, then those cases seem to pop up more often. When the housing bubble collapses and issues relating to mortgages make the news, mortgage fraud seems to be the most important crime to law enforcement officials. Today, high unemployment numbers are frequently discussed in the news. Predictably, we recently saw a story indicating the police have started cracking down on unemployment compensation fraud cases.

We have handled many unemployment compensation fraud cases in the Jacksonville, Florida area. Basically, in those cases the police allege that someone obtained unemployment compensation benefits when they were not entitled to them or for a time period longer than the entitlement. Often, the police claim that the suspect kept receiving unemployment benefits after returning to the workforce. Based on our experience, evidence supporting these criminal allegations is often shaky.

However, the reason the police are making these crimes a priority is obvious. According to the article, losses from unemployment compensation fraud across the country amounted to $1.7 billion in 2010, and approximately 30% of the improper unemployment fraud payments were made to people that had returned to work. Additionally, the unemployment rate figures to remain in the news as it is sure to be a major topic of discussion during the upcoming presidential campaigns.

If you have been accused of or arrested for unemployment compensation fraud in the Jacksonville, Florida area, feel free to contact us for a free consultation at Shorstein & Lasnetski for legal advice on the best way to respond and defend against those charges.

With computer crimes becoming more prevalent as more people obtain computers and similar networking devices, state and federal governments are enacting new laws to respond to the increasing number of crimes. The Obama administration recently announced a new proposed law dealing with various cyber security issues. The new law would address several areas. It would establish a national, standardized data breach reporting system for businesses to notify customers when they have had a breach of their security systems where financial or identification information may have been lost. Currently, various states have different laws that may or may not require a company to notify a customer when there has been a breach in their security and potential loss of people's financial and identification information.

The law would also set minimum sentences for people convicted of computer crimes related to hacking into networks and stealing information.

Finally, as we have seen in other contexts, the lines of communication among the various governmental departments that deal with cyber crimes are not exactly open, and it can be unclear which government agency is responsible for investigating the matter. When one government department will not share information with another, complicated cyber crimes often go unsolved. The new law will attempt to rectify that problem so the government can be more efficient in dealing with cyber crime. We'll see how that goes.

Police arrested eleven people alleging they were involved in mortgage fraud in various counties in North and Central Florida, including Flagler and Volusia Counties. The police are alleging that the individuals devised a scheme that involved straw buyers, realtors, appraisers and mortgage brokers. The group is alleged to have artificially inflated prices of homes with false appraisals and increased the amount of the loan by requesting additional funds for renovations that were never intended or executed. The excess money would be paid to the straw buyers and split among the people involved in the scheme. According to police, the buyers in these schemes never intend to live in or renovate the houses and the property is normally foreclosed upon not long after the closing. This particular mortgage fraud scheme reportedly involved 23 homes and $9 million.

Mortgage fraud cases have increased dramatically over the last few years after the housing crisis hit. During the housing bubble, banks were loaning large sums of money to anyone and everyone who filled out a mortgage application. Once housing values quit going up, banks realized they had a lot of bad loans on their books, and the mortgage crisis began to snowball. This is the exact kind of environment that prompts the government to go into reactive mode and initiate investigations into possible mortgage fraud. When everyone was making money (the banks were closing loans and the builders were selling houses), everyone was was happy, and mortgage fraud did not seem to be a problem. When everyone started losing money (loans were not getting paid and foreclosures skyrocketed), no one was happy, and the mortgage fraud investigations began in force. In the current environment, the various law enforcement agencies are focusing on any sort of irregularities in the mortgage loan process.

We have clearly seen a shift in focus towards Medicaid fraud and other healthcare fraud cases by the state and federal law enforcement agencies over the last year or so. As news stories focus on the tremendous debts facing our states and country and the huge amounts of money involved in Medicaid fraud and healthcare fraud, the various law enforcement agencies follow suit with their investigations and prosecutions of healthcare fraud cases.

A recent press release from Eric Holder, the United States Attorney General, confirmed the government's commitment towards making more cases against people suspected of Medicaid fraud and healthcare fraud. Mr. Holder noted that the government has collected more than $2.5 billion under the False Claims Act relating to health care fraud over the past fiscal year, which was a 50% increase over the prior year and the largest figure for any year. The government also initiated more than 2,000 criminal and civil healthcare fraud investigations and charged a record number of people with Medicaid fraud and healthcare fraud related crimes.

This press release confirms the trend we have seen for some time. The government, on a local, state and federal level, is really focusing on all aspects of healthcare fraud and making a record number of arrests. These arrests have involved anyone from the lower level employees to doctors, pharmacists and owners of the various medical facilities. If you have been contacted by anyone relating to a Medicaid fraud or healthcare fraud investigation and would like to speak with an attorney familiar with these matters, feel free to contact us for a free consultation.

Most people even marginally familiar with criminal law and evidentiary issues understand that there is a special relationship and privilege between a lawyer and his/her client and that a defendant's lawyer would never be able to testify against the client in a criminal trial. However, that seemingly obvious conclusion may not always be so clear. It is fundamental that the prosecutor is not allowed to have a defendant's lawyer testify against the client in a criminal case. However, whether the lawyer is actually that defendant's lawyer leaves room for interpretation.

This ambiguity most often comes up in a case where a company and an employee(s) of the company are being investigated. A question may arise as to whether the defense lawyer represents the company or the employee. For the employee, it may be difficult to tell. The employee may believe the lawyer is his/her lawyer, but that lawyer may actually represent the company instead. In many cases, their company's and the employee's interests are the same making it difficult to distinguish the actual client. If that is the case, the communications between the employee and the company lawyer may not be privileged and confidential and may be accessible by the prosecutor.

In a pending criminal case out of Philadelphia, a CEO of a company was convicted of obstruction of justice and sentenced to 18 months in federal prison. During the trial, the prosecutor was allowed to call the CEO's former lawyer to testify as to certain communications between the two that the CEO thought were privileged and confidential at the time. According to the CEO, he felt that he engaged the defense lawyer to be his individual lawyer, in which case all communications between the two should be privileged and confidential. However, the government alleged that the lawyer represented the company and was not the CEO's individual lawyer in which case the lawyer-client privilege should not apply. The defense countered that the CEO reasonably believed that the lawyer was his individual attorney and the client's/defendant's belief controls whether the attorney-client privilege is in effect.

This case and the decision to allow the lawyer to testify against the defendant is currently under appeal. For company executives and other employees who are being investigated or have been charged with a crime, this issue has serious implications in circumstances where there is an attorney involved but it is not perfectly clear whether the attorney represents the company or the person individually.

As we have discussed several times on this blog, the federal government, and to a lesser extent the state government, focuses on different types of crimes depending on the prevailing attitudes and issues of the moment. We have seen the government shift its focus from terrorism to mortgage fraud to securities fraud to pain clinics to Medicare fraud. Currently, with the economy and the debt being such major issues, different types of fraud become primary issues for law enforcement. Medicare fraud is a perfect target because it is huge, it involves fraud and it involves stealing from the federal government.

Medicare fraud can take several different forms. One primary way to commit Medicare fraud is to submit Medicare reimbursement forms for medical equipment or medical services that were either never provided or were provided but were unnecessary. The government has no way to track the amount of Medicare fraud with any specificity. However, the government has estimated that the total amount of Medicare fraud in 2010 was close to $50 billion, although it is unclear how many of the cases that comprise that estimate turned out to be valid Medicare reimbursement requests.

The United States Department of Justice (DOJ) recently announced the arrest of 111 suspects for Medicare fraud related conduct. In the press release, the government indicated the arrests included doctors, nurses, health care executives and others in nine cities for Medicare fraud totaling approximately $225 million. The arrests were made by the DOJ's Medicare Fraud Strike Force which includes hundreds of federal, state and local law enforcement personnel. Confirming the increased focus on Medicare fraud, the DOJ indicated the number of law enforcement officials devoted to making Medicare fraud arrests has quadrupled over the last two years. They claim the various Medicare Fraud Strike Force teams made hundreds of arrests and recovered $4 billion in taxpayer money in 2010.

Of the 111 recent Medicare fraud arrests, 32 of them were in Florida. In Miami, Florida, the police broke up an alleged Medicare fraud scheme that involved $55 million worth of false billings for home health care, medical equipment and prescription drugs.

A federal grand jury recently indicted a group of people based on prosecutors' allegations that they participated in a scheme to defraud mortgage brokers out of $1.8 million in thirteen different real estate transactions. The charges allegedly involve Access E-Mortgage, Inc., a company out of St. Augustine, Florida. Based on a recent article, the prosecutors are using the federal mail and wire fraud statutes to charge the individuals. The indictment charges a total of sixteen individuals allegedly involved in the scheme. According to the indictment, the scheme involved recruiting straw buyers who would give false information to the mortgage brokers to obtain loans. The loaned funds would then allegedly be stolen by the people involved in the scheme.

We have handled several recent cases involving alleged mortgage fraud over the last several months. As we discussed on our website before, the federal government has taken a greater interest in these cases and attributed more time, manpower and other resources to make mortgage fraud cases. This appears to be a reaction to the publicity the failing housing market and numerous foreclosures have had over the last couple of years. With the federal government, and the state and local government to a lesser degree, it seems like prosecutions in a particular area often follow the news of the day. As the housing market and foreclosures have become more of an issue in the media, the number of mortgage fraud cases have increased. Sometimes, this reaction to newsworthy issues can result in people being arrested and charged with crimes who have little to no involvement in the criminal activity. When the government casts a wide net, some innocent people often get caught.

Federal authorities arrested a Gainesville, Florida man for allegedly creating a Ponzi scheme and stealing approximately $30 million from people who thought they were investing their money with the suspect in foreign exchange markets, according to an article on News4Jax.com. According to the article, the suspect solicited funds from people in Florida that he would purportedly use to invest in foreign currency markets and return up to 10% per month to the investors. He is charged with taking the money and spending the majority of it rather than investing it for the investors. The suspect is expected to be charged with wire fraud in federal court.

The term "Ponzi scheme" has become more mainstream ever since the highly publicized Berni Madoff case, and the federal government is usually very interested in these Ponzi schemes as a result. It generally refers to a scheme where someone or a group of people will pretend to have the ability, and intention, to invest large amounts of money in a great investment that will produce incredible returns. Ten percent per month would certainly qualify as incredible returns.

However, in a true Ponzi scheme, the person does not invest the money or only invests a portion of it. On the contrary, when the so-called investors are expecting returns on their investments or principal payments, the suspect will use the money from new investors to pay what appears to be profits and/or principal back to the old investors. This does two things to further the scheme. It satisfies the investors who are seeing what they believe is proof of their great investment. It also creates good publicity for the suspect which attracts new investors whose money can be used to pay the old investors. One problem with the Ponzi scheme is that it constantly requires new investors to pay off old investors. People want to see their profits, they want advances, they need their money back to pay for an emergency, and the suspect needs to come up with that money from some source. And the bigger the scheme gets, the harder it is to manage. In any case, when someone gets charged with being involved in a Ponzi scheme, it is often a federal case and very serious, particularly when the suspect does not have a lot of the money left to return to the victims.

Harry Shorstein, recently the five term State Attorney for the Jacksonville, Florida area (encompassing Duval County, Clay County and Nassau County) and General Counsel for the City of Jacksonville, has been in private practice now for almost two years with Shorstein & Lasnetski. He has handled a wide variety of criminal defense matters but with a concentration on white collar crime cases and pain clinic cases in state and federal courts.

Shorstein & Lasnetski is excited to announce that Harry Shorstein was recently named by the U.S. News & World Report Best/Best Lawyers as their White Collar Criminal Defense Lawyer of the year for 2011 for Jacksonville, Florida. U.S. News & World Report/Best Lawyers chooses only one lawyer per specialty area per major city. U.S. News & World Report/Best Lawyers conducts many surveys from other attorneys in the area to determine who wins the Best Lawyers honor for the community. This award signifies the respect and admiration Harry Shorstein has received from his peers in this area for his work in white collar crime criminal defense in the Jacksonville, Florida area.

Federal prosecutors recently charged 73 people, from Georgia to California, for allegedly defrauding Medicare out of $163 million, according to an article on Foxnews.com. The people arrested were apparently setting up fake doctor-patient relationships and billing Medicare for medical services that were never performed. More traditional Medicare fraud involves doctors or other medical professionals billing Medicare for medical services that are not necessary or never performed and medical devices that are not needed or used by the patient. However, in this case, the suspects apparently made up the whole thing. They are reported to have used stolen social security numbers and identification information to create patient accounts. They also allegedly used stolen identification information from doctors to make it seem like the facilities had actual doctors ordering the medical services and devices. Phantom medical facilities were also created where the fictitious patient visits were supposed to take place.

The authorities were alerted to this scheme when they matched up a large number of the social security numbers on the Medicare reimbursement forms with the social security numbers of Medicare patients who reported having their identification information stolen. In addition to that evidence, the Medicare reimbursement forms also showed that some of the medical treatment for which reimbursement under Medicare was requested, was ordered by the wrong kind of doctor. As an example, the article notes that the suspects asked Medicare for reimbursement for a pregnancy ultrasound performed by an ear, nose and throat doctor.

As criminal defense lawyers in Jacksonville, Florida, we handle all varieties of criminal cases. Every now and then, the police will set up a sting or establish a particular focus on a particular crime. This often results in the arrest of people who actually commit that crime as well as people who did nothing wrong but get caught up in the enthusiasm of the Jacksonville police. One common example is the Jacksonville police's focus on pulling people over for driving under the influence of alcohol or drugs (i.e. DUI) around holiday weekends like July 4th, New Year's and Labor Day.

Lately, we have heard from clients about the police going after contractors for allegedly offering to do work they are not licensed to perform. And what we have seen is these cases appear to be very problematic. Many of these individuals who are arrested have occupational licenses that allow them to do a variety of maintenance and repair work on a person's home. In order to do certain jobs, like plumbing and electrical, they need a more specialized license. In these cases, the police have someone posing as a homeowner who lures the contractors over by asking them over the phone to do work they are legally licensed to do, such as installing cabinets. When the contractor gets to the home, the police agent then does not want to discuss the cabinets but tries to get the person to agree to do other work, or atl east offer a price for the other work, such as the electrical or plumbing work. Even where the contractor refuses to do the work but throws out an estimate as to what it might cost, the police rush in and make the arrest.

Contractors in Jacksonville, particularly those who advertise on Craigslist, need to be careful what they say to prospective customers during that initial meeting regarding the work to be performed. If the police have set up a sting to arrest contractors, even licensed contractors as the police are apparently not making the distinction, anything a contractor says, even a general reference to a price, will likely result in an arrest. Of course, these charges can be defended in court, but the charge of offering to perform contracting services without a license is a serious charge with potentially very serious penalties, particularly for honest contractors who cannot afford to have such an arrest and/or conviction on his/her record.

In a Florida mortgage fraud case, the police obtained an arrest warrant for a person they claimed had obtained fraudulent mortgage loans by using straw buyers and falsifying salary and employment information on loan documents. The police located the suspect driving near her home, stopped her vehicle and arrested her. When she was arrested in her vehicle, the police saw a bag in the backseat containing various documents. The police seized the bag of documents when they arrested her.

The suspect was ultimately convicted after her trial for mortgage fraud, grand theft and racketeering. Her criminal defense lawyer tried to have the documents found in the bag thrown out claiming the police illegally seized those documents. The criminal defense attorney claimed that the police did not have a search warrant for the bag of documents and had no reason to believe the bag contained evidence related to the case at the time the bag was seized. The criminal defense lawyer argued that unlike drugs or guns, nothing about a bag of papers suggests that it is evidence of criminal activity, and therefore the police do not have a right to take it without a search warrant.

However, the judge disagreed and allowed the state to use the documents as incriminating evidence to convict the defendant of the mortgage fraud and the related criminal charges. Under Florida law, when the police arrest a person in his/her vehicle, the police are permitted to search the vehicle if the suspect is within arm's reach of items in the passenger compartment of the vehicle at the time of arrest or there is reason to believe the vehicle has evidence related to the crime(s) for which the suspect is being arrested. In this case, the judge found that latter standard to have a very low threshold. Basically, the judge found that since mortgage fraud is the kind of crime where one would expect there to be physical evidence, perhaps in a vehicle, the police were authorized to assume the bag they seized might have contained evidence of the related crimes. As a result, the police were justified in seizing the bag.

This was a crucial decision in this case. We have handled many mortgage fraud cases, and the documents are critical to the state's ability to prove their case. Whether such documents are permitted as evidence in a mortgage fraud trial can be the difference between a conviction and a not guilty verdict. This kind of decision allowing the police to search a vehicle on an assumption can obviously have serious ramifications in gun and drug cases as well.

In federal criminal cases charging a defendant with fraud relating to the operation of a business, a common defense is asserted that the defendant relied upon the advice of a professional or other advisor, such as an accountant, and had the right to assume his/her conduct was legal. In a federal criminal trial where the defendant is charged with fraud or a related crime and the defense is a good faith reliance upon such advice, the judge should normally allow the defendant to assert such defense and should normally instruct the jury that such good faith reliance upon an advisor is a valid defense if supported by the facts.

In criminal fraud cases in federal court, the government normally must prove that the defendant intended to defraud the victim. In other words, the government must prove beyond a reasonable doubt that the defendant's purpose in performing the acts that constitute the fraud crime was to defraud another person out of services, money and/or other property. As a result, a logical defense to criminal fraud would be that the defendant had no ill-intent, but rather thought he/she was acting lawfully based upon the advice of an advisor. This is why good faith reliance upon the advice of a professional can be a valid defense in federal criminal fraud cases. Of course, whether the defendant acted with intent to defraud someone or was honestly and innocently relying upon an advisor is a matter for the jury to decide.

However, in order for the jury to properly understand and evaluate this defense when deliberating, the judge in the case must instruct the jury about this good faith reliance defense. If the judge rejects the federal criminal defense lawyer's request to instruct the jury about the defendant's good faith reliance upon an advisor defense, the jury cannot consider it when deciding the case. Under federal law, the judge does not have the authority to decide what the defendant's defense is and instruct the jury accordingly. Likewise, the federal judge in a criminal case does not have the authority to decide that the defendant's defense of good faith reliance upon an advisor is weak or lacking in credibility and therefore refuse to instruct the jury about the defense.

The threshold to allow a jury to consider that defense is low. If there is any foundation in the evidence for the defense that the defendant relied upon the advice of an advisor, then the judge must instruct the jury to consider that defense. If the jury finds that the defendant did rely in good faith upon the advice of such a professional, it should be a complete defense to a fraud charge in federal criminal court and result in a not guilty verdict.

The U.S. Department of Justice recently announced criminal charges against 94 people relating to Medicare and Medicaid fraud which is reportedly the largest health care fraud sting in U.S. history, according to an article on SFgate.com. The officials said the investigation and charges span seven states and involve more than $251 million in false Medicare and Medicaid claims.

Medicare or Medicaid fraud typically involves a doctor or other health care provider seeking reimbursement through the government program for medical supplies or medical treatment that was either unnecessary or never provided to a patient. In these recent cases, the subjects of the investigation are suspected of submitting false claims for physical and occupational therapy, home health care and other treatments. The federal government has recently discussed an increased focus on these cases and created a task force to investigate Medicare/Medicaid fraud in various states. Florida is reported to be one of the prime focuses of the task force. The government claims that health care fraud costs the country billions of dollars each year.

A recent report by the U.S. Department of Justice, Bureau of Justice Statistics, shows that identity theft, also referred to as financial theft, crimes increased as of 2007 when the most recent statistics were compiled. According to the report, 7.9 million households, or 6.6%, report that at least one member was a victim of some type of identity theft in 2007. That was a major increase over the previous two years.

The Bureau defined identity theft as the unauthorized use or attempted unauthorized use of a credit card or other financial account or misuse of personal information. The most common type of identity theft is the unauthorized use or attempted unauthorized use of one's credit card. The average loss incurred by victims of identity theft was $1,830 in 2007 according to the report.

In a recent asset forfeiture case involving a client of the criminal defense and litigation law firm of Shorstein & Lasnetski, LLC, the state attorney's office in South Florida agreed to return approximately $2.5 million of forfeited funds to the client, which constitute approximately 90% of the funds originally seized by the state.

In this case, Shorstein & Lasnetski's client was a legitimate business in South Florida. The company was operating normally when the president learned that its main operating account had been frozen by law enforcement officials. The company was constantly ordering merchandise and paying vendors so that operating account was crucial for the normal operation of its business on a daily basis. However, with no notice of any kind, the state severely handicapped the business by seizing, and freezing, that account. The terms of the seizure allowed funds to be deposited into the bank account, but no money could be taken from that account. As a result, the company was at risk of bouncing checks to customers and vendors and was unable to make the regular payments required to make payroll and run the business.

After the initial sabotage of the company's bank account, we learned that the state was accusing the company and its president of money laundering and money structuring. Money laundering occurs when a person or company obtains money that comes from an illegitimate source (such as drug money) and runs that dirty money through a business and mixes it with the business's legitimate stream of income in a bank account in order to hide the source of the money, or clean it. Money structuring occurs when a person or company receives cash in excess of $10,000 and breaks that cash into lesser amounts to avoid the financial reporting requirement. When a business receives cash in an amount greater than $10,000, that business is required to prepare and file a form 8300 which provides identification information about the person providing the cash. The purpose of this requirement is to provide information to the government about people dealing in large amounts of cash so they can investigate the source of the cash. If a company receives $12,000 in cash from a customer and deposits $7,000 one day at one bank branch and $5,000 another day at a different branch, that is money structuring if it is done to avoid the financial reporting requirement.

In any case, the Shorstein & Lasnetski, LLC client was a business that sold its merchandise internationally. It sold tens of millions of dollars worth of products yearly to customers all over the world. The state was tipped off by the customer's bank that the client was receiving cash in varying amounts under $10,000 at bank branches in different locations. Based on this evidence, the state decided to seize the client's entire bank account without regard for how much money was in the account and what that might do to the business.

After a long course of litigation, it was determined that the state had very little to support the seizure and attempted forfeiture of the client's bank account. The state made blanket allegations of money laundering but could not provide any evidence that the seized funds came from any illegitimate or illegal source or that anyone in the company was aware of any drug or other illegal activity by any customers. This, however, is a requirement if the state seeks to prove that the company was laundering money. The state also made blanket allegations of money structuring based solely on the denominations of the money deposited in the company's bank account without any evidence of who deposited the money and whether the various deposits came from separate customers and transactions which would be a defense to structuring. Additionally, the state did not consider that the company had met the majority of its reporting requirements with regard to the seized funds.

For a majority of the $3 million dollars seized by the state, it was shown that the state could not prove it had any connection to drug money, money laundering or money structuring. For the small remainder of the funds seized, there was evidence of deposits into the company's bank account that were just under $10,000 but no evidence that the deposits were broken down from amounts greater than $10,000 with the intent to avoid the reporting requirements. It was clear that the state intended to strong-arm the company into a quick settlement by seizing and attempting to forfeit as much money as possible thereby crippling the company and scaring it into thinking the state had a valid money laundering and money structuring case. This appears to happen often in South Florida. However, fortunately, the company was run well enough that it was able to survive the temporary seizure of its operating account and the longer but still temporary seizure of the almost $3 million in that operating account. Once the company decided to put up a fight and shine a light on the state's (lack of) evidence, it was determined that the state had significant holes in its case and theory. The case was ultimately resolved favorably with the large majority of its money was returned.

However, at the end of the day, it was very troubling to see a state law enforcement agency go after a legitimate business in such a way with so little evidence of any wrongdoing. We imagine this probably happens often, and when it happens on a smaller scale with less money involved, the companies probably settle the forfeiture action quickly as it may be easier and more cost effective than fighting the forfeiture for a year or two. In other words, the government is probably often successful in squeezing money out of legitimate companies who settle on unfavorable terms because they are too worried about the potential consequences, need to settle to keep their business running or decide not to incur the expense of litigation for a year or two to fight the government.

The federal government recently announced the results of a concentrated effort to arrest, prosecute and seek financial penalties from people across the country for financial crimes, including a specific emphasis on mortgage fraud cases. As we have stated several times on our criminal defense lawyer blog, the federal government (and the local state attorney's office to a lesser extent) has significantly increased its focus on mortgage fraud and other financial crimes cases in light of the drastic decline in the value of real estate and the bailouts of financial companies. According to the government's press release, the government's Financial Fraud Enforcement Task Force (which is responsible for criminal investigations and civil enforcement of mortgage fraud and other financial crimes cases) has made 485 arrests over the last few months that relate to more than $2.85 billion in losses.

Based on comments by the Obama administration and the fact that mortgage fraud, real estate issues and bank problems continue to be hot topics in the news, we can expect the government to continue to focus its efforts and resources on mortgage fraud and other financial crime cases.

Several Employees of United Directories, a company located in Jacksonville Beach, Florida, were indicted in federal court for allegedly defrauding businesses out of more than $400 million by allegedly sending fraudulent bills for Yellow Pages advertisements. Federal law enforcement officials said United Directories and its employees sent the false Yellow Pages advertisement bills of several hundred dollars each to more than 100,000 companies across the country over a four year period.

Two of the charges include mail fraud and money laundering. The federal government will charge someone with mail fraud any time a person is alleged to have used the mail to commit or facilitate fraud. Using the mail as part of a scheme to defraud confers jurisdiction upon the federal government in a criminal case. Money laundering involves taking money that is known to come from illegal activity or an illegal source and mixing it with legitimate money in an attempt to conceal the source of the money, or clean it. When this kind of money is involved in an alleged fraudulent scheme, the potential penalties can be quite severe.