Justia U.S. 9th Circuit Court of Appeals Opinion Summaries

A group of former students who attended ITT Technical Institute, a for-profit college, brought suit against companies and individuals involved in servicing and collecting on certain private student loans known as the PEAKS loans. After the 2008 financial crisis, ITT, needing to comply with federal regulations limiting reliance on federal funds, established the PEAKS loan program with the backing of Deutsche Bank to generate non-federal revenue. The loans were internally backed by guarantees from ITT, and as default rates rose, ITT concealed the program’s financial troubles from investors and regulators. The PEAKS loans continued to be serviced by Vervent, Inc. and its affiliates, even after ITT’s collapse and bankruptcy in 2016. Students alleged that they were not aware that their loan payments were induced by fraud until after ITT’s public downfall.In the United States District Court for the Southern District of California, the plaintiffs, as a putative class, alleged violations of the Racketeer Influenced and Corrupt Organizations Act (RICO) and various state-law claims. The defendants argued that the RICO claims were untimely, asserting that the statute of limitations began when the students received or began paying the loans, and also challenged proximate causation. The district court denied summary judgment on both grounds, finding fact issues precluded judgment as a matter of law. A jury found in favor of the plaintiffs, awarding damages that were trebled under RICO. The district court denied defendants’ post-trial motion for judgment as a matter of law.The United States Court of Appeals for the Ninth Circuit affirmed. It held there was sufficient evidence for the jury to find that the students neither knew nor reasonably should have known of their fraud-based injuries more than four years before suit was filed, so the claims were timely under RICO’s four-year statute of limitations. The court also concluded that defendants did not preserve their proximate cause argument for appeal because they did not properly raise it after trial. The judgment was affirmed. View "TURREY V. VERVENT, INC." on Justia Law

A company operating as a mortgage lender applied for and received a Paycheck Protection Program (PPP) loan during the COVID-19 pandemic. The company’s PPP loan was later forgiven. A private party, acting as a qui tam relator under the False Claims Act (FCA), alleged that the company and its chief executive officer made several false statements in their loan application and forgiveness process. The key allegations were that the company was ineligible for PPP funds as a financial business primarily engaged in lending, that it misrepresented its use and need for the loan, and that it falsified the number of employees to increase the loan amount. The relator argued that these misrepresentations led the government to approve and forgive the loan improperly.Previously, the United States District Court for the Southern District of California dismissed the relator’s amended complaint. The district court found that the FCA’s public disclosure bar applied, reasoning that the necessary information supporting the ineligibility allegation was already publicly available on a government website, specifically concerning the company’s business classification. The district court also concluded that the relator’s allegations regarding the inflated employee count were speculative. The relator was denied leave to further amend the complaint, on the basis that amendment would be futile.The United States Court of Appeals for the Ninth Circuit reviewed the case and held that the public disclosure bar did not apply because the information on the government website was not “substantially the same” as the relator’s allegations, and the company’s own website did not qualify as “news media” under the statute. The appellate court agreed that the relator’s claim regarding the number of employees was not sufficiently pleaded but found the district court abused its discretion by denying leave to amend. The Ninth Circuit reversed the dismissal and remanded for further proceedings. View "RELATOR, LLC V. ERSKINE" on Justia Law

Three individuals participated over the course of a year in a complex money laundering operation involving Target gift cards. These cards were obtained through telephone scams, with victims deceived into purchasing the cards and providing the card numbers and access codes to overseas scammers. The defendants received these codes through encrypted messaging, then employed “runners” to quickly use the cards at Target stores—often buying high-value electronics or transferring balances to new gift cards. The merchandise was resold, and most of the proceeds were sent back to the scam’s organizers in China after taking a cut for themselves. One defendant continued to participate in the conspiracy even after being arrested and released on bond.The United States District Court for the Central District of California presided over their trial. A jury convicted all three of conspiracy to commit money laundering, with one also convicted for continuing the conspiracy while on pretrial release. At sentencing, the district court adopted the presentence reports, calculated the offense levels based on the scope and nature of their conduct, and applied several enhancements, including those for the amount laundered, sophisticated laundering, aggravated roles, and for being in the business of laundering funds. The court sentenced the defendants to terms below the calculated Guidelines range, but above the mandatory minimums.The United States Court of Appeals for the Ninth Circuit reviewed the case. The court affirmed the district court’s calculation of the loss amount and its application of aggravated and minor role adjustments. However, the appellate court held that the district court erred in applying a two-level enhancement for sophisticated laundering; under the Sentencing Guidelines, this enhancement can only be imposed if a different, specific enhancement was also applied, which did not occur here. The sentences were therefore vacated in part and remanded for limited resentencing to correct the guideline computation. View "USA v. SHI" on Justia Law

A healthcare provider operating as a covered entity under the federal Section 340B Drug Pricing Program purchased pharmaceuticals from several drug manufacturers. The provider alleged that these manufacturers engaged in a fraudulent scheme by knowingly charging prices for drugs that exceeded the statutory ceiling, resulting in inflated reimbursement claims submitted to Medicaid, Medicare, and other government-funded programs. The provider did not seek compensation for its own overcharges, but instead brought a qui tam action under the False Claims Act (FCA), seeking to recover losses on behalf of the federal and state governments.The United States District Court for the Central District of California dismissed the complaint with prejudice. It reasoned that, under the Supreme Court’s holding in Astra USA, Inc. v. Santa Clara County, Section 340B does not confer a private right of action for covered entities to sue drug manufacturers over pricing disputes; such claims must instead be pursued through the Section 340B Administrative Dispute Resolution process. The district court concluded that the provider’s FCA claims were essentially attempts to enforce Section 340B and should therefore be barred.On appeal, the United States Court of Appeals for the Ninth Circuit reversed the district court’s dismissal. The appellate court held that the provider’s FCA claims were not barred by the absence of a private right of action under Section 340B or by the Astra decision, because the action was brought to remediate fraud against the government and not to recover personal losses or enforce Section 340B directly. The court further found that the provider had plausibly pleaded falsity under the FCA. The Ninth Circuit remanded the case for further proceedings. View "ADVENTIST HEALTH SYSTEM OF WEST V. ABBVIE INC." on Justia Law

The defendant operated two companies that provided durable medical equipment, both of which were enrolled as Medicare providers under the names of her mother and nephew. The defendant orchestrated a scheme where patient information was used to submit fraudulent claims for unnecessary medical equipment and repairs, with the assistance of other employees and marketers. Over a ten-year period, the companies submitted more than $24 million in claims, of which Medicare paid approximately $13 million.The United States District Court for the Central District of California presided over the case. The defendant was indicted and, after a second trial, convicted by a jury of conspiracy to launder monetary instruments, healthcare fraud, and aggravated identity theft under 18 U.S.C. § 1028A(a)(1), based on the use of her relatives’ names during the commission of health care fraud. The district court sentenced her to a total of 180 months in custody, including a mandatory consecutive two-year term for aggravated identity theft. The defendant appealed her convictions for aggravated identity theft.The United States Court of Appeals for the Ninth Circuit reviewed the case. The main issue on appeal was whether the use of her relatives’ names constituted aggravated identity theft under the standard clarified in Dubin v. United States, 599 U.S. 110 (2023). The Ninth Circuit held that the government failed to show that the use of the relatives’ names was “at the crux” of the fraud—meaning that the use itself was fraudulent or deceitful and critical to the scheme’s success, as required by Dubin. The court vacated the defendant’s sentence for aggravated identity theft and remanded the case to the district court for resentencing. The healthcare fraud and other convictions were not in dispute. View "USA V. MOTLEY" on Justia Law

Elizabeth Holmes and Ramesh “Sunny” Balwani founded Theranos, a company that claimed its technology could run fast, accurate, and affordable blood tests using just a drop of blood. Holmes served as CEO, and Balwani as President and COO. They raised significant investments by making representations about the capabilities of Theranos’s proprietary devices, financial health, and business relationships. However, investigations revealed that the technology was unreliable, Theranos often relied on third-party devices, and its partnerships and finances were misrepresented to investors. Both Holmes and Balwani were indicted for conspiracy and wire fraud relating to investors and patients; they were tried separately, and each was convicted of multiple counts of fraud.Proceedings were held before the United States District Court for the Northern District of California. Holmes was convicted on four investor-related counts, while Balwani was convicted on all counts, including those related to patients and investors. At sentencing, both were found responsible for losses to multiple victims and given lengthy prison terms. The district court also ordered them to pay $452 million in restitution to fourteen victims, finding that the money invested constituted the lost property.On appeal, the United States Court of Appeals for the Ninth Circuit reviewed and affirmed the convictions, sentences, and restitution order. The panel held that while some testimony by former Theranos employees should have been treated as expert opinion under Rule 702, any error was harmless. The court found no abuse of discretion in admitting a regulatory report, limiting cross-examination, or excluding certain hearsay statements. It rejected arguments of constructive amendment and Napue violations. The panel clarified restitution calculations under the MVRA, holding that the victims’ actual losses equaled their total investments, affirming the district court’s order. View "United States v. Holmes" on Justia Law

Two members of the Gypsy Joker Motorcycle Club were prosecuted for their roles in the kidnapping and murder of a former club member. The victim had previously been expelled from the club for theft, severely beaten, and later participated in a robbery at one defendant’s home. In retaliation, the defendants and other associates tracked down the victim, forcibly abducted him, and transported him to a remote location where he was tortured and killed. His body was subsequently found in a field. Both defendants held significant roles in the club, with one serving as chapter president and the other as a full member.Following initial arrests on state charges, federal prosecutors obtained an indictment in the United States District Court for the District of Oregon. The indictment charged both men with murder and kidnapping offenses under the Violent Crimes in Aid of Racketeering (VICAR) statute, kidnapping resulting in death, conspiracy to commit kidnapping resulting in death, and for one defendant, racketeering conspiracy under RICO. Some co-defendants pleaded guilty, but the two appellants proceeded to trial. A jury convicted both on all counts except the racketeering conspiracy charge for one defendant. The district court sentenced each to concurrent life sentences.On appeal, the United States Court of Appeals for the Ninth Circuit affirmed the convictions and sentences. The court held that a VICAR indictment is sufficient if it tracks the statutory language, even without enumerating elements of the predicate state offense. The panel found no error in various evidentiary rulings, including exclusions of certain character evidence and expert testimony, as well as the admission of evidence regarding the club’s nature and culture. The court also upheld the jury instructions on VICAR purpose and consideration of punishment, and rejected an Eighth Amendment challenge to mandatory life sentences, citing binding precedent. View "USA V. DENCKLAU" on Justia Law

A group of former executives from an investment management company were prosecuted after the company collapsed and was placed in receivership. The company, which raised hundreds of millions of dollars from private investors, primarily through promissory notes and other investment vehicles, experienced severe financial distress following the default of a major asset. Despite this, the executives continued to solicit investments, representing to investors that their funds would be used to purchase secure receivables and that the company was financially healthy. In reality, most new investor funds were used to pay prior investors and cover operating expenses. The executives were accused of making material misrepresentations and misleading half-truths about the use of investor funds, the security of investments, and the company’s financial health.The United States District Court for the District of Oregon presided over the trial. The jury found all three defendants guilty of conspiracy to commit mail and wire fraud and multiple counts of wire fraud; one defendant was also convicted of making a false statement on a loan application. The defendants argued that they were improperly convicted on an omissions theory of fraud and that they were prevented from presenting a complete defense based on disclosures in offering documents and financial statements. They also challenged the sufficiency of the evidence and the materiality of their statements.The United States Court of Appeals for the Ninth Circuit reviewed the case. The court held that the government’s theory at trial was based on affirmative misrepresentations and misleading half-truths, not mere omissions, and that the jury instructions fairly stated the law. The court found that evidence of what was not disclosed was relevant to materiality, and that disclaimers in offering documents did not render other representations immaterial in a criminal fraud prosecution. The convictions were affirmed. View "USA V. JESENIK" on Justia Law

Raul Perez Cruz, a native and citizen of Mexico, pled guilty to money laundering in 2021 and was sentenced to 144 months in prison. The Department of Homeland Security initiated removal proceedings against him. He conceded removability but sought asylum, withholding of removal, and protection under the Convention Against Torture (CAT) based on past experiences with cartels and fear of retaliation due to his purported cooperation with the U.S. government.An Immigration Judge (IJ) denied his applications for asylum and withholding of removal due to his conviction of a particularly serious crime. The IJ also denied his CAT claim, finding that he did not show it was more likely than not he would be tortured upon return to Mexico, nor that he could not safely relocate within Mexico. The Board of Immigration Appeals (BIA) affirmed the IJ’s decision, agreeing that his fear of future torture was speculative and that there was no due process violation despite technical difficulties during the hearing.The United States Court of Appeals for the Ninth Circuit reviewed the case. The court held that substantial evidence supported the agency’s determination that Perez Cruz did not meet his burden to show he would more likely than not be tortured if returned to Mexico. The court also found that Perez Cruz did not overcome the presumption that the agency reviewed all evidence before it. Additionally, the court was not persuaded by his contention that audio issues during his hearing denied him due process, as there was no demonstration that the IJ prejudicially missed or misunderstood anything said during the hearing. The petition for review was denied. View "Perez Cruz v. Bondi" on Justia Law

Federal agents conducted a sting operation in which Rami Ghanem attempted to export military equipment from the United States to Libya. Ghanem pleaded guilty to six counts, including violations of the Arms Export Control Act, unlawful smuggling, and money laundering. He proceeded to trial on a charge of conspiring to acquire, transport, and use surface-to-air missiles, for which he was found guilty and initially sentenced to 360 months in prison.The United States Court of Appeals for the Ninth Circuit vacated Ghanem’s conviction on the missile conspiracy charge due to improper jury instructions on venue and remanded the case for resentencing. On remand, the district court recalculated the guidelines range as 78-97 months but imposed the same 360-month sentence, considering the same relevant conduct as before.The Ninth Circuit reviewed Ghanem’s appeal, rejecting his arguments that the district court committed procedural errors at resentencing. The court held that the district court applied the correct legal standards in declining to reduce Ghanem’s offense level for acceptance of responsibility and did not clearly err in finding that Ghanem’s failure to accept responsibility outweighed his guilty plea and truthful admissions. The court also found that the district court adequately explained its sentencing decision, addressed Ghanem’s argument about sentencing disparities, and correctly considered conduct underlying the dismissed charge.The Ninth Circuit affirmed the 360-month sentence, concluding that the district court did not abuse its discretion in determining that the sentence was warranted under the 18 U.S.C. § 3553(a) factors. The court also rejected Ghanem’s constitutional arguments under Apprendi v. New Jersey, holding that the district court’s reliance on conduct underlying the dismissed charge did not violate the Fifth or Sixth Amendments. View "United States v. Ghanem" on Justia Law