trial, Verdeza was convicted on three counts.The Eleventh Circuit’s Ruling on Verdeza’s AppealOn appeal, Verdeza primarily argued that the evidence at the trial was insufficient to support the convictions. However, the Eleventh Circuit ultimately affirmed the conviction rejecting the following arguments:Lack of Evidence He Participated in Fraud: Verdeza maintained that he did not participate in the fraud that occurred, which he argued only consisted of filling out and submitting fraudulent bills after the fact. The Court did not accept this argument for various reasons, including that Verdeza actually performed the brief examinations of the participants and prescribed the false treatment plans.Lack of Evidence He Aided and Abetted the Scheme; Verdeza also argued that if his actions in backdating the patient charts were to be considered fraud, these actions made him liable as an accessory-after-the-fact, not an active participant. In denying this characterization, the court pointed to 18 U.S.C. § 2, which defines aider or abettor as one who “aids, abets, counsels, commands, induces or procures [a crime’s] commission” or “[w]hoever willfully causes an act to be done.” The court distinguished an aider and abettor with an accessory-after-the-fact, which is one who “receives, relieves, comforts or assists the offender [to a criminal offense] in order to hinder or prevent his apprehension, trial or punishment.” The court held that there was ample evidence to characterize Verdeza as an aider and abettor for several reasons, including that Verdeza continued the falsification by signing documents which alleged that the participants had returned to seek further care and that another staff member at the clinic would meet with Verdeza to ensure that the forms were filled out correctly before sending the forms to BCBS.Lack of Knowledge and Intent: Verdeza argued that he did not act “knowingly and willfully as 18 U.S.C. § 2 requires.” However, the court ruled against Verdeza on this element

If not, mark holders may be barred from recovering lost profits or other damages under 15 U.S.C. § 1111, even though the licensee may still be liable under 18 U.S.C. § 2320.VI. Other Charges to ConsiderIn the alternative, prosecutors may also consider the following charges as well:Conspiracy and aiding-and-abetting under 18 U.S.C. §§ 2, 371;Mail and wire fraud under 18 U.S.C. §§ 1341, 1343;Copyright infringement under 17 U.S.C. § 506 and 18 U.S.C. § 2319;Trafficking in counterfeit labels, illicit labels, or counterfeit documentation or packaging under 18 U.S.C. § 2318;Trafficking in misbranded food, drugs, and cosmetics under 21 U.S.C. §§ 331(a), 333, 343, 352, 362, and 841(a)(2); andTampering with consumer products under 18 U.S.C. § 1365.Theft of Commercial Trade SecretsI. GenerallyThe Economic Espionage Act (EEA), codified in 18 U.S.C. § 1831-1839, makes the theft or trafficking in trade secrets for foreign governments, instrumentalities, or agents a criminal act.

Conspiring to violate the CSA as well as aiding and abetting violations of the CSA are also crimes. See 18 U.S.C. § 1956(h) (conspiracy); see also 18 U.S.C. § 2 (aiding and abetting). Although the risk of enforcement appears low, by providing products or services to US marijuana-related businesses—even businesses operating pursuant to state law—financial institutions could be viewed as conspiring to violate or aiding and abetting a violation of the CSA because such services promote or facilitate the underlying marijuana business.

Conspiring to violate the CSA as well as aiding and abetting violations of the CSA are also crimes. See 18 U.S.C.§ 1956(h) (conspiracy); see also 18 U.S.C. § 2 (aiding and abetting). Although the risk of enforcement appears low, by providing products or services to US marijuana-related businesses—even businesses operating pursuant to state law—financial institutions could be viewed as conspiring to violate or aiding and abetting a violation of the CSA because such services promote or facilitate the underlying marijuana business.

The indictment reads like a typical U.S. securities fraud case except for one thing: It does not expressly charge any violations of U.S. securities laws, including failure to report related-party transactions or insider trading. Rather, the indictment charges these individuals with mail fraud, in violation of 18 U.S.C. §§ 2 and 1341, and false statements, in violation of 18 U.S.C. §§ 2 and 1001 – a choice of charges that was undoubtedly driven by the foreign status of the company in question. In considering motions to dismiss the false statement counts of the indictment, Chief Judge Royce Lamberth observed that the false statement statute encompasses two kinds of misconduct – affirmative misstatements and concealment.

Edwards Company again complied. Odom was found guilty under 18 U.S.C. Section 2 of inducing Edwards Company to violate Section 1027 (Section 2 uses the same term “whoever” as found in Section 1027). Odom appealed his conviction on the basis that Section 1027 applies to employers but not to employees.

f deception.”8 Moreover, the court suggested that a “scheme to defraud” requires depriving another of money or property and bringing about some financial gain to the defendant.9Applying Ciminelli and Greenlaw to Our Social Media InfluencersBack to Constantinescu, SDTX applied Ciminelli and Greenlaw to find that the DOJ had failed to plead that the influencers had engaged in a “scheme to defraud.” While the court found that the allegations sufficiently asserted that obtaining financial gain was the object of the influencers scheme, the DOJ’s complaint failed to explain how the influencers harmed the victim’s traditional property rights.10 Specifically, the court found that the property right of the investors, harmed by the influencers, was their right to control their assets, or stated another way, was their right to make an informed discretionary decision.11 Thus, the court held that even taking all of the allegations as true, the DOJ failed to state a crime under 18 U.S.C. § 1348 and 2, and 18 U.S.C. § 1349 as interpreted by Ciminelli.12 The final result of the Constantinescu case remains to be seen, as the court granted the influencers’ motion to dismiss without prejudice, leaving room for the DOJ to replead.13 However, given the court’s interpretation and application of Ciminelli and Greenlaw, it may be difficult for the DOJ to plead their case.TakeawaysInsider trading remains a clear focus of both the SEC and DOJ. In Constantinescu, the SDTX court found that the government must meet a higher standard when pleading fraud, including wire fraud which is often used by the DOJ in cases of securities fraud. It will be interesting to see if other courts follow suit. Moreover, in light of the dismissal, and the potential increased difficulty in pleading criminal securities fraud for the DOJ, the SEC may be less likely to stay its investigations while the DOJ proceeds. As always, we recommend that in-house counsel and compliance professionals consult with attorneys to sta

, and two related corporate NPAs, involving the gaming industry. In our final post, we will discuss the prosecution and sentencing of a lawyer who allegedly became part of the fraud and money laundering scheme perpetrated by his crypto client.In this second post, we will discuss two unusual prosecutions involving, respectively, an individual executive of a bank and an alleged AML specialist working with small financial institutions. As we previously noted, all of these cases, although all unique, are also united in certain ways – particularly in regards to the need for institutions and professionals to perform sufficient due diligence regarding the conduct and source of funds of high-risk clients and customers.McVeyOn January 17, the U.S. Attorney’s Office for the Western District of Missouri announced that Peter McVey, the former Vice President and Director of Treasury Services at a bank in Missouri, pled guilty to violations of 31 U.S.C. §§ 5318(h) and 5322(b) and (e) of the BSA and 18 U.S.C. § 2 for aiding and abetting the willful failure to implement and maintain an appropriate AML program.McVey admitted that he was recruited by two bank officials to manage the bank’s automated clearing house processing systems for certain high-risk customers. The bank officials told him that the bank wanted to be a “billion dollar asset bank” as quickly as possible, and to achieve that goal, the bank planned to onboard and provide financial services to high-risk customers that had been pushed out of the system by other banks. This stated goal reflects the market pressures on smaller banks and how they can attempt to enlist the business of customers that have been de-risked by larger banks – a business plan that can increase profits, but which also increases compliance risks. It also reflects the related pressures which an institution’s upper management can place on employees to generate business.The bank entered into a Memorandum of Understanding (“MOU”) with the FDIC concerning the bank’s

s fraud. 18 U.S.C. § 3663A. 18 U.S.C. § 3663(c)(1)(A)(i)-(B).United States v. Razzouk, 984 F.3d 181, 188–89 (2d Cir. 2020); compare United States v. Collins, 854 F.3d 1324, 1335 (11th Cir. 2017).United States v. Martin, 803 F.3d 581, 593 (11th Cir. 2015). 18 U.S.C. § 3664(e). 18 U.S.C. § 3663A(2).United States v. Goodrich, 12 F.4th 219, 228–29 (2d Cir. 2021); compare United States v. Stein, 846 F.3d 1135, 1152 (11th Cir. 2017).Goodrich, 12 F.4th at 229. 18 U.S.C. § 3663A(2). 446 F.3d 65, 135 (2d Cir. 2006).United States v. Agate, 613 F. Supp. 2d 315, 321 (E.D.N.Y. 2009).SeeUnited States v. Quatrella, 722 F. App’x 64, 69 (2d Cir. 2018); Unites States v. Benton, 765 F. App’x 477, 482 (2d Cir. 2019); Fed. Ins. Co. v. United States, 882 F.3d 348, 366 (2d Cir. 2018).In re Wellcare Health Plans, Inc., 754 F.3d 1234, 1239 (11th Cir. 2014).United States v. Cavallo, 790 F.3d 1202, 1239 (11th Cir. 2015).See United States v. Ojeikere, 545 F.3d 220, 223 (2d Cir. 2008).Reifler, 446 F.3d at 120–28. 18 U.S.C. § 2(a). 15 U.S.C. § 78t(e).United States v. Afriyie, 27 F.4th 161, 166 n.1 (2d Cir. 2022).

the decision does not come as a surprise, it does have potentially far-reaching ramifications for the government’s ability to make use of Title 18 to prosecute fraud and theft charges.Factual and Procedural BackgroundThe Blaszczak prosecution involved allegations that a political intelligence consultant received nonpublic information from the Centers for Medicare & Medicaid Services (“CMS”), a government agency, concerning planned changes to Medicare reimbursement rates for particular drugs. The consultant then shared that information with two clients, who allegedly traded in securities of companies that would be affected by CMS’s forthcoming changes.In an eighteen-count indictment, the government charged the defendants with securities fraud under Section 15 U.S.C. § 78j(b) & 78ff (the “Title 15” counts); a seldom-used theory of securities fraud under 18 U.S.C. § 1348; wire fraud under 18 U.S.C. § 1343 (the “Title 18” counts); conversion of government property under 18 U.S.C. §§ 641 & 2; and several conspiracy charges. At trial, the jury acquitted the defendants of all of the Title 15 counts, but convicted them of some of the Title 18 counts.The defendants appealed, and the Second Circuit initially affirmed the convictions in Blaszczak I, becoming one of the first appellate courts to address the scope of Title 18 insider trading liability. In doing so, it held that: (i) confidential information taken from CMS is the government’s “property” for purposes of the Title 18 statutes at issue; and (ii) unlike Title 15 jurisprudence, which requires the government to prove that the person providing the confidential information received a personal benefit, Title 18 jurisprudence does not currently impose a personal benefit requirement.Upon further appeal, the U.S. Supreme Court remanded the case for reconsideration in light of Kelly v. United States, which it had recently decided. Kellyinvolved charges against former New Jersey officials for closing highway toll plaza lanes as