Articles Posted in White Collar Crime

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In Florida, a person commits the crime of money laundering when he/she conceals the nature, source or location of proceeds of specified unlawful activity. Money laundering in Florida only applies to money or other property that comes from “specified unlawful activity”, but that term is defined very broadly and certainly includes just about any form of theft. “Conceals” is given its ordinary definition and includes any action done to try and avoid disclosure or detection.

When most people think of money laundering cases, they think of some elaborate scheme where a suspect moves money around through different banks and countries or moves the money through a legitimate business to make it difficult for the police to discover where the money went and where it came from. However, much less movement is needed to meet the concealment element of a money laundering crime. In fact, we have seen a money laundering charge where a suspect has merely moved money from one account to another in the same name at the same bank.

In a recent case near Jacksonville, Florida, a church maintained four separate bank accounts, and donations were deposited into those accounts depending on the particular charitable intentions of the members. The pastor had exclusive control over the benevolent account which was supposed to be for donations benefiting needy people in the community. The other three accounts were for other, specific charitable purposes. Over a couple of years, the pastor transferred money from the other three accounts into the benevolent account and then used money from that account for personal expenses. The pastor was ultimately charged with theft for stealing money that was meant for charity and money laundering for moving money from the other accounts into the benevolent account which he controlled on his own.

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We have written at length about various search and seizure issues including whether the police need a search warrant to conduct certain searches. As many people know, the Fourth Amendment protects people from unreasonable searches and seizures conducted by the government. However, in order to be afforded such protection, a defendant in a criminal case must establish that he/she had a reasonable expectation of privacy in whatever was searched. For instance, a person clearly has a reasonable expectation of privacy in his/her home so the police cannot just come in to search it without consent or a search warrant in most cases. As for a vehicle, a person normally has a reasonable expectation of privacy in his/her vehicle, however if he/she leaves what is clearly identified as marijuana on the seat where a police officer walking by can see it through the window, that might be a different story.

We recently discussed how a recent United States Supreme Court ruling requires the police to get a search warrant before searching a person’s cell phone or similar mobile device. However, people may not know that the Court does not believe a person has a similar reasonable expectation of privacy in his/her bank records. A person who deposits money into a bank and uses a bank credit card does not have a reasonable expectation of privacy in those bank records. This allows the government to obtain those bank records with only a subpoena (a document the government signs without a judge’s approval and without the suspect knowing about it) sent to the bank rather than a search warrant that requires probable cause and a judge’s approval.

Bank records are critical in a lot of criminal cases brought by the government. They can establish that a suspect deposited money in amounts and at times consistent with theft or fraud allegations. They can show wire transfers among co-conspirators. They can show credit card or withdrawal transactions that can put a person at a given location at a certain time. Bank records can establish a lot of critical points the government needs to make in order to prove a criminal case. Based on the current state of the law, the government can obtain those records without a search warrant in many cases.

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When a person applies for most types of jobs in this country, he/she is normally required to provide information indicating he/she is either a United States citizen or otherwise legally authorized to work here. Of course, we all know that employers do not always check that information for various reasons. One of the items a prospective employee would normally have to present to an employer is a valid social security number. If the employer requests the applicant’s social security number and the applicant provides a false social security number, the applicant can be arrested on a felony fraud charge in Florida.

In Florida, it is illegal to knowingly present any false or misleading oral or written information as evidence of identity for the purpose of obtaining employment. The same law makes it illegal to present false identification information to obtain workers’ compensation benefits.

In a recent case near Jacksonville, Florida, the Florida Department of Revenue learned that the defendant gave a false social security number to obtain a job at a waste management company, and he was arrested for fraud. The criminal defense lawyer argued that the defendant was not guilty because the company knew the defendant’s social security number was false. In that case, since no one was mistaken as to the defendant’s identity and legal status, there was no fraud. Fraud normally requires an intent to deceive someone to get some sort of benefit.

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White collar crimes are not formally defined, but they generally refer to crimes involving fraud, money, technology and/or a large number of documents. If a person steals enough money and happens to work on Wall Street, he/she has a good chance of walking away with a fine and a stern warning. But for the less wealthy and less connected, these crimes can result in serious prison time depending on the circumstances of the case, the number of victims and the amount of money involved.

Many federal white collar crime prosecutions are initiated by FBI investigations. The FBI keeps statistics regarding how many cases they are investigating and what types of cases. According to recent reports, the FBI is recommending fewer white collar crime prosecutions to the various United States Attorneys’ offices. The FBI is on pace to have 7% fewer white collar crime cases in 2013 than in the prior year. The number of white collar crime cases proceeding to prosecution in 2013 would be almost 50% fewer than ten years ago. However, with the advances in technology, it is hard to imagine that fewer white collar crimes are being committed.

In relation to Jacksonville, Florida, two of the districts with the highest percentages of white collar crime prosecutions from the FBI are nearby. The Southern District of Georgia ranks second in number of white collar crime prosecutions per capita from the FBI, and the Southern District of Florida ranks fourth.

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As tax season approaches at the beginning of each year, we normally see quite a few tax return fraud cases, both in the news and as new criminal defense cases in the Jacksonville, Florida area. Most of these cases involve someone obtaining social security numbers and other identification information for people and then filing false returns for tax refunds in their names. Other cases might involve allegations of suspects counterfeiting tax return checks and then getting other people to deposit or cash them without proper authorization.

According to the government, tax return fraud has gone up significantly over the last several years. According to the IRS, the state with the most tax return fraud is Florida. One suspected reason is that Florida has a higher population of elderly people who may be more vulnerable fraud victims. Overall, the government reports that there were 1.2 million cases of tax fraud in the United States in 2012, which is a huge increase from the approximately 48,000 cases in 2008. Of course, these are only the reported numbers. No one knows the actual number of tax return fraud cases out there each year.

The IRS is responding by allocating agents and money towards tax return fraud. However, they are only catching a fraction of the people involved in tax return fraud. The IRS has acknowledged that the better way to approach this issue is to make it more difficult to commit tax return fraud. Apparently, as it stands now, if someone has your name and social security number, it is fairly easy to file for a tax refund and redirect the funds to another account or address.

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In a case south of Jacksonville, Florida, a sheriff’s office deputy allegedly manipulated the sheriff’s overtime assignment computer program to give her more overtime hours as a security officer at a local hospital than the sheriff’s policy would normally allow. The defendant worked those overtime hours, and she was paid extra for those overtime hours. As a result, the defendant was able to work more and get paid more at the expense of other sheriff’s employees who were assigned fewer overtime hours than normal.

This was clearly a violation of the sheriff’s overtime policies and resulted in more money for the defendant at the expense of her co-workers, but was it a crime? In this case, sheriff’s deputies would sign up each week through a computer system to request overtime hours at the hospital where people who have been arrested and jail inmates sometimes go for treatment and need to be guarded. A sheriff’s deputy is only allowed to sign up for a hospital overtime shift once every three days. The defendant was able to manipulate the computer system to work many more overtime hours than other sheriff’s deputies. The defendant was arrested and convicted on fraud charges on the theory that the defendant’s fraud deprived other sheriff’s deputies of overtime hours and pay.

The criminal defense lawyer appealed the conviction and argued that the defendant could not be convicted of fraud because the criminal statute requires that the victim is deprived of property. Property is normally defined as something that can be transferred and is exclusive. The appellate court held that the missed opportunity to work overtime hours does not fit the definition of property. As a result, the defendant did not deprive anyone of property, as that term is defined in the Florida criminal statutes, so she could not legally be convicted of schemes to defraud for essentially stealing overtime hours.

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Here is an interesting article about how law enforcement officials have changed their tactics to catch Wall Street executives who are involved with insider trading. While wiretaps are traditionally thought of as tools to catch drug dealers, investigators decided to resort to using wiretaps in insider trading cases. Because insider trading is often done among, well, insiders, it was difficult for investigators to get inside tight groups of financial executives to see who was doing what. To circumvent this problem, investigators used whatever traditional methods they could to get an idea who was involved with insider trading and then closed the gaps through the use of wiretaps. When you have people on tape talking about using non-public information to make trades, it is a lot easier to get them to cooperate which, of course, leads to other suspects, more wiretaps, more cooperation and so on.

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According to an article at News4Jax.com, police arrested nineteen people they say were involved in a large car insurance scheme in the Jacksonville, Florida area and other parts of Florida. When a person purchases an automobile in Florida, he/she is required to also purchase insurance for the vehicle. While the insurance laws change frequently, as of last year, vehicle owners were required to have Personal Injury Protection insurance, or PIP insurance, which was basically like no fault insurance. If a person with PIP insurance was involved in an accident, the PIP insurance would cover his/her medical bills for injuries sustained in the accident up to a certain amount, often $10,000, regardless of who was at fault for the accident.

According to Florida state investigators, certain people were committing fraud related to PIP insurance by staging accidents and getting the people involved in the alleged accidents to fake injuries and pretend to get treatment at a medical facility that presumably offers medical treatment. That facility then bills the insurance company for PIP insurance benefits for treatment that was never provided. According to the state investigators, about eighty alleged fake accident victims were involved in this scheme and an estimated $228,000 in fraudulent PIP insurance claims were made. As a result, the state investigators arrested people who allegedly were involved in the staged accidents, people who allegedly recruited the people to participate in the staged accidents and people allegedly involved with the clinics who made the claims for PIP benefits to the insurance companies. The state investigators apparently have more warrants outstanding for additional people they allege were involved in the car insurance fraud scheme.

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According to recent announcements by the FBI, mortgage fraud is at unprecedented levels. This is somewhat of a surprise as mortgage fraud seemed to peak during the housing boom when home prices were skyrocketing and every bank was giving out mortgages to anyone regardless of their ability to pay. However, according to the FBI, there were 530 people charged with federal mortgage fraud related crimes over the past year, and more than 73,000 people were victimized by mortgage fraud for a total of approximately $1 billion.

In the time period after the housing bubble, mortgage fraud is apparently taking on a different form. These days, people are defrauding homeowners by promising them that they can avoid foreclosure by paying a fee and having their mortgage transferred to a different entity. Once the fee is paid, the people committing the fraud disappear, and the homeowner is left with the same mortgage and foreclosure risk plus the loss of the fraudulent fee that was paid.

To address this problem, the FBI is issuing public service announcements to warn people of loan modification advertisements and shady offers to avoid foreclosure. Of course, along with the public service announcements, we expect that the FBI and other law enforcement agencies will continue to make a significant number of arrests for mortgage fraud since it is a highly publicized issue these days. When the government makes an effort to focus on a specific crime, particularly when there may be a fine line between legitimate business practices and criminal activity, the government may include innocent people in the wide net they cast to attack the problem.

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After President Obama was elected, he promised to make Medicare fraud a priority with the Department of Justice. It has been well publicized that the government suspected there was a tremendous amount of fraud with the Medicare process. The government alleged that medical providers all over the country were committing Medicare fraud by requesting reimbursements for services and/or medical equipment that were never provided to patients or were unnecessary and by other methods. Since the Medicare Strike Force was created to address this issue, the government has charged almost 1500 people involved in Medicare fraud in an amount close to $4.8 billion, according to the government.

More recently, the government announced the arrests of 91 people in seven different cities for Medicare fraud. Like many of these large Medicare fraud cases, the people arrested included doctors, nurses, owners of medical practices and other medical personnel. In this recent case, the government alleged that approximately $430 million in Medicare reimbursements were fraudulently billed to the government.

The cost of Medicare and Medicare reform are two issues that are constantly in the news these days. When that is the case, you can expect law enforcement officials to shift their focus to crimes involving those issues. In this case, the United States government is clearly continuing to focus on situations where they believe Medicare fraud is taking place.