United States v. Morales, No. 13-1103 (7th Cir. 2014)
Annotate this CaseMorales operated IPS to defraud small businesses. His sales agents contacted business owners and offered to collect on bad checks for a small commission. The agents would tell the owners that they worked for another business, not IPS, and asked them for personal information and a voided check, ostensibly for wiring funds. With that data, IPS made unauthorized withdrawals from bank accounts through financial intermediaries, stating that the withdrawals covered payments for credit card processing equipment. IPS neither collected bad checks nor leased credit‐card processing equipment. IPS fraudulently withdrew $645,000. In 2004, a team led by Secret Service Agent Kane executed a search warrant on IPS’s office and found extensive evidence. Morales was indicted for mail fraud, 18 U.S.C. 1341. At trial, the government presented witnesses including 10 victims, forensic analysts, the IPS receptionist, and Agent Kane. Convicted, Morales was sentenced to nine years in prison. Three weeks after the trial, an assistant U.S. attorney sent Morales’s lawyer two emails from Agent Kane to government attorneys that had not previously been disclosed. One attached a screenshot from the laptop as it appeared when discovered in Morales’s office; the other responded concerning picking up a grand jury subpoena for Paulina Morales. The email included a threat to "taze" Morales’s pet, although that never happened. The court denied a motion for a new trial. The Seventh Circuit affirmed, finding any Brady violation harmless because evidence implicating Morales was overwhelming.
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