Justia Securities Law Opinion Summaries

Doolittle was a registered securities broker/dealer, and a registered investment advisor. He or his corporations held licenses, permits, or certificates to engage in real estate and insurance brokerage and tax preparation. Around 1990 his primary business became “trust deeds investments,” in which he “would arrange groups of investors together to buy those loans or to fund those transactions for different types of individuals and institutional borrowers.” After investors lost money, Doolittle was convicted and sentenced to 13 years in prison for three counts of theft by false pretenses; six counts of theft from an elder or dependent adult; nine counts of false statements or omissions in the sale of securities; selling unregistered securities; and sale of a security by willful and fraudulent use of a device, scheme, or artifice to defraud The appeals court reversed in part, holding that Doolittle’s challenge that the trial court’s implied finding of timely prosecution was not supported by substantial evidence required remand with respect to two of the charges. A further hearing may be necessary with respect to applicability of a sentence enhancement for aggregate losses over $500,000. Doolittle’s conviction for sale of unregistered securities and sale of securities by means of a fraudulent device did not rest on the same conduct as his convictions for fraud against specific victims; his sentence on the former counts therefore does not offend the proscription against duplicative punishment. View "People v. Doolittle" on Justia Law

Defendant challenged his conviction and sentence for conspiracy to commit securities fraud in violation of 18 U.S.C. 371. This case arose out of a complex scheme designed to defraud investors through a group of hedge funds called the Lancer Fund. The court affirmed defendant's conviction; affirmed the denial of defendant's motion for a new trial; but vacated defendant's sentence because the district court erred when it enhanced defendant's sentence and ordered restitution based on the losses from Morgan Stanley's investment. The court remanded for resentencing. View "United States v. Isaacson" on Justia Law

After a jury trial, Defendant was convicted of theft by misapplication of property and securities fraud. Defendant appealed, contending that the court's jury instructions impermissibly shifted the burden of proof onto him to prove his innocence. The Supreme Court affirmed, holding that the burden of proof was not improperly shifted onto Defendant to prove his innocence where (1) there was no obvious error in the instructions the trial court gave because, as a whole, the instructions correctly stated the law; and (2) the court correctly stated the State's burden of proof and Defendant's presumption of innocence several times during the jury selection, at the beginning of the trial, in its final instructions, and in its written instructions sent to the jury room. View "State v. Philbrook" on Justia Law

Plaintiffs filed a complaint against their bank and others, asserting a cause of action under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), among other claims, asserting that Defendants engaged in an unlawful scheme to lend Plaintiffs money in violation of federal margin requirements limiting the extent to which securities can be used as collateral for funds loaned to purchase the securities. The district court (1) dismissed the complaint as to two defendants for failure of service, and (2) dismissed the remainder of the suit for failure to state a claim upon which relief could be granted, finding that the alleged misconduct was not actionable under RICO, which does not encompass private claims that would have been actionable as securities fraud. The First Circuit Court of Appeals affirmed, holding that the district court (1) correctly concluded that Plaintiffs failed to state a claim for relief under RICO; and (2) did not abuse its discretion in dismissing the complaint as to two defendants for failure of service. View "Calderon-Serra v. Banco Santander P.R." on Justia Law

Defendant challenged the restitution order entered against him under the Mandatory Victims Restitution Act of 1996, 18 U.S.C. 3663A. The order awarded over $17 million to victims for losses stemming from defendant's role in the manipulation of the price of a publicly traded security. The court concluded that the district court was authorized to enter the restitution order despite section 3664(d)(4)'s ninety-day requirement; the district court did not abuse its discretion in awarding restitution despite the complexity and duration of the restitution proceedings; the district court's decision that it was not required to expand the evidentiary hearings to include the live testimony and cross-examinations of affiants was within its discretion and did not violate defendant's Fifth Amendment right to due process; the district court carried its burden under the Act where it credited the government's expert's well-supported proffer of a widely accepted methodology, trained towards a logical measure of loss, and tailored to the particular circumstances of this case; and the court rejected defendant's remaining grounds for appeal which all focused on the accuracy of the amount of the district court's restitution award. Accordingly, the court affirmed the judgment of the district court.View "United States v. Gushlak" on Justia Law

Stinson’s scheme began in 2006 when he founded a fund, Life’s Good, with an alleged purpose to originate mortgage loans. Stinson advertised a “risk free” 16 percent annual return to investors with individual retirement accounts. He hired telemarketers to “cold call” potential investors and later produced a fraudulent prospectus and worked through investment advisors. Stinson did not use investors’ money to make mortgage loans, but diverted it to various personal business ventures that employed his family and friends without requiring them to work. In 2010, the SEC initiated a civil enforcement action. Stinson was charged with wire fraud, 18 U.S.C. 1343; mail fraud, 18 U.S.C. 1341; money laundering, 18 U.S.C. 1957; bank fraud, 18 U.S.C. 1344; filing false tax returns, 26 U.S.C. 7206(1); obstruction of justice, 18 U.S.C. 1505; and making false statements, 18 U.S.C. 1001. The SEC’s analysis showed that Life’s Good solicited $17.6 million from at least 262 investors and returned approximately $1.9 million. Many individuals lost retirement savings. Stinson entered an open guilty plea. The district court sentenced him to 400 months and ordered restitution of $14,051,246. The Third Circuit vacated, finding that the court erroneously applied U.S.S.G. 2B1.1(b)(15)(A), which increases the offense level by two points when “the defendant derived more than $1,000,000 in gross receipts from one or more financial institutions.” The enhancement applies only when financial institutions are the source of a defendant’s gross receipts. View "United States v. Stinson" on Justia Law

Defendant-Appellant Brian McKye was charged with eight counts of securities fraud and one count of conspiracy to commit money laundering. The district court refused to give the jury his tendered instruction that would have permitted the jury to decide whether the investment notes at issue were securities under federal securities law. He was convicted and received a 262-month sentence. Upon review, the Tenth Circuit concluded the district court erred by not giving the tendered instruction, and reversed the convictions.View "United States v. McKye" on Justia Law

Defendant executed several illegal insider trades involving the stock of the supermarket chain Albertson's using material nonpublic information received from an employee of UBS. On appeal, defendant challenged the district court's judgment ordering him to disgorge profits from illegal insider trading, enjoining him from further violating the securities laws, and ordering him to pay prejudgment interest on the entire disgorgement amount. The court concluded that the district court did not abuse its discretion in ordering disgorgement because the court's cases have established that tippers can be required to disgorge profits realized by their tippees' illegal insider trading. This case was distinguishable only insofar as defendant himself executed the fraudulent trades rather than leave that task to a tippee. The court found no abuse of discretion in the district court's imposition of an injunction on defendant or in its order that he pay prejudgment interest. Accordingly, the court affirmed the judgment of the district court. View "SEC v. Contorinis" on Justia Law

Through their companies, Pilon and her husband falsely represented that one investment program would generate significant returns that Pilon would use to pay off the investors’ mortgages within two years, and make a bonus cash payment to investors. Many investors refinanced mortgages to invest. With respect to another investment program, Pilon falsely represented that money would be invested in a high-yield fund and that investors would receive 100 percent on their investments within about 90 days. Pilon hinted at religious and humanitarian purposes. Pilon paid early investors’ mortgages with later investors’ money (a Ponzi scheme). About 40 people invested $4,000 to $110,000, losing a total of $967,702. The Illinois Department of Securities ordered Pilon to cease offering investments; she ignored the order. When the scheme unraveled and investors lost their homes, Pilon was indicted for wire fraud. Pilon, a member of a sovereign citizen movement, unsuccessfully moved to dismiss for lack of jurisdiction. Immediately before jury selection, Pilon stated her intent to plead guilty; when the government proffered the facts, Pilon denied everything. After testimony by eight government witnesses, Pilon admitted to the scheme and pleaded guilty. In calculating Pilon’s guideline range, the court applied an enhancement for abuse of a position of trust, declined to credit Pilon for acceptance of responsibility, and sentenced Pilon to 78 months’ incarceration, in the middle of the range, and imposed $967,702 in restitution. The Seventh Circuit affirmed. View "United States v. Pilon" on Justia Law

Petitioners, corporate entities and an individual that serviced and brokered loans for the acquisition and development of real property, faced a civil suit and a criminal investigation in connection with an alleged Ponzi scheme. Petitioners filed a motion with the district court in their civil case to stay any depositions and written discovery that would require their employees and officers to make testimonial statements, asserting that the evidence could be used by the FBI in their criminal investigation. The district court summarily denied the motion without prejudice. Petitioners subsequently petitioned the Supreme Court for a writ of mandamus or prohibition directing the district court to grant their motion to stay. The Supreme Court denied the requested relief, holding that the district court did not abuse its discretion in determining that, on balance, the interests of Petitioners in a stay did not outweigh the countervailing interests involved and in therefore denying the motion to stay. View "Aspen Fin. Servs. v. Dist. Court" on Justia Law