USA v. Cammarata

Court: U.S. Court of Appeals for the Third Circuit

Docket: 23-2110

Opinion Date: February 24, 2025

Judge: David Brooks Smith

Areas of Law: Business Law, Criminal Law, Securities Law, White Collar Crime

Joseph Cammarata and his associates, Eric Cohen and David Punturieri, created Alpha Plus Recovery, LLC, a claims aggregator that submitted fraudulent claims to securities class action settlement funds. They falsely represented that three entities, Nimello, Quartis, and Invergasa, had traded in securities involved in class action settlements, obtaining over $40 million. The fraudulent claims included falsified trade data and fabricated reports. The scheme unraveled when a claims administrator, KCC, discovered the fraud, leading to the rejection of the claims and subsequent legal action.

The United States District Court for the Eastern District of Pennsylvania charged the defendants with conspiracy to commit mail and wire fraud, wire fraud, conspiracy to commit money laundering, and money laundering. Cohen and Punturieri pled guilty, while Cammarata proceeded to trial and was found guilty on all counts. The District Court sentenced Cammarata to 120 months in prison, ordered restitution, and forfeiture of certain property.

The United States Court of Appeals for the Third Circuit reviewed the case. The court upheld most of the District Court's rulings but found issues with the restitution order and the forfeiture of Cammarata's vacation home. The court held that the restitution order did not fully compensate the victims, as required by the Mandatory Victims Restitution Act (MVRA), and remanded for reconsideration. The court also found procedural error in the forfeiture process, as Cammarata was deprived of his right to a jury determination on the forfeitability of his property. The court vacated the forfeiture order in part and remanded for the Government to amend the order to reflect that the property is forfeitable as a substitute asset under 21 U.S.C. § 853(p).

MSP Recovery Claims, Series LLC v. Lundbeck LLC

Court: U.S. Court of Appeals for the Fourth Circuit

Docket: 24-1043

Opinion Date: February 26, 2025

Judge: James Wynn

Areas of Law: Class Action, Consumer Law, Criminal Law, White Collar Crime

Plaintiffs, business entities owning recovery rights assigned by health insurers and other third-party Medicare payors, alleged that Defendants, including a drug manufacturer, a specialty pharmacy, and healthcare nonprofits, colluded to inflate the price and quantity of the drug Xenazine. This alleged scheme purportedly violated the Racketeer Influenced and Corrupt Organizations Act (RICO) and various state laws, causing the Assignors to reimburse inflated Xenazine prescriptions at supra-competitive prices.

The United States District Court for the Eastern District of Virginia dismissed the class-action complaint with prejudice, concluding that Plaintiffs failed to adequately allege that Defendants’ conduct proximately caused their injuries. The court emphasized that RICO’s proximate-causation requirement focuses on the directness of the harm, not its foreseeability. The court found the alleged causal chain too attenuated, involving numerous independent actors like physicians and pharmacists, and dismissed the state-law claims for similar reasons.

The United States Court of Appeals for the Fourth Circuit affirmed the district court’s dismissal of the federal RICO claims, agreeing that Plaintiffs failed to establish proximate causation. The court noted that the alleged scheme had more direct victims, such as distributors and wholesalers, and that the volume of Xenazine prescriptions depended on the independent decisions of doctors. The court also affirmed the dismissal of the state-law consumer-protection and unjust-enrichment claims, finding them insufficiently pleaded.

The Fourth Circuit reversed the district court’s conclusion that Plaintiffs had standing to bring claims on behalf of unidentified assignors, remanding those claims for dismissal without prejudice. The court upheld the district court’s denial of post-judgment relief and leave to amend the complaint, concluding that further amendment would be futile.

United States v. Pliego-Pineda

Court: U.S. Court of Appeals for the Fourth Circuit

Docket: 23-4286

Opinion Date: February 24, 2025

Judge: Mary Geiger Lewis

Areas of Law: Criminal Law, White Collar Crime

In 2019, the FBI and DEA, along with local law enforcement, investigated a Mexican drug trafficking organization operating in Mexico, California, Georgia, and North Carolina. Oscar Pliego-Pineda, based in Atlanta, Georgia, was identified as a key figure in coordinating methamphetamine deliveries and managing drug proceeds. He arranged multiple drug transactions and coordinated logistics for methamphetamine shipments, including converting liquid methamphetamine to crystal form.

The United States District Court for the Middle District of North Carolina sentenced Pliego-Pineda to 120 months in prison after he pled guilty to conspiracy to distribute methamphetamine and conspiracy to commit money laundering. The court applied a three-level managerial role enhancement under the United States Sentencing Guidelines, which Pliego-Pineda contested, arguing that the district court erred in applying the enhancement and that his sentence was substantively unreasonable.

The United States Court of Appeals for the Fourth Circuit reviewed the case. The court upheld the district court's application of the managerial role enhancement, finding that Pliego-Pineda exercised significant decision-making authority, participated extensively in the conspiracy, and managed the logistics of drug transactions. The court noted that the conspiracy involved at least ten individuals and large quantities of methamphetamine. Despite an error in considering Pliego-Pineda's supervision of an undercover officer, the court found sufficient evidence to support the enhancement.

The Fourth Circuit also found Pliego-Pineda's sentence substantively reasonable, affirming the district court's decision. The court emphasized that the sentence was within the properly calculated Guidelines range and thus presumptively reasonable. The court concluded that the district court did not abuse its discretion in sentencing Pliego-Pineda.

USA V. HOLMES

Court: U.S. Court of Appeals for the Ninth Circuit

Docket: 22-10312

Opinion Date: February 24, 2025

Judge: Jacqueline Nguyen

Areas of Law: Criminal Law, Health Law, White Collar Crime

Elizabeth Holmes and Ramesh "Sunny" Balwani, founders of Theranos, were convicted of defrauding investors about the capabilities of their company's blood-testing technology. Theranos claimed it could run accurate tests with just a drop of blood, attracting significant investments. However, the technology was unreliable, and the company misled investors about its financial health, partnerships, and the validation of its technology by pharmaceutical companies.

The United States District Court for the Northern District of California severed their trials due to Holmes's allegations of abuse by Balwani. Holmes was convicted on four counts related to investor fraud, while Balwani was convicted on all counts, including conspiracy to commit wire fraud against investors and patients. Holmes was sentenced to 135 months, and Balwani to 155 months in prison. The district court also ordered them to pay $452 million in restitution.

The United States Court of Appeals for the Ninth Circuit reviewed the case. The court affirmed the convictions, sentences, and restitution order. It held that the district court did not abuse its discretion in admitting testimony from former Theranos employees, even if some of it veered into expert territory. The court found any errors in admitting this testimony to be harmless due to the weight of other evidence against the defendants.

The Ninth Circuit also upheld the district court's decision to admit a report from the Center for Medicare and Medicaid Services, finding it relevant to Holmes's knowledge and intent. The court rejected Holmes's argument that the district court violated her Confrontation Clause rights by limiting cross-examination of a former Theranos lab director. Additionally, the court found no merit in Balwani's claims of constructive amendment of the indictment and Napue violations. The court concluded that the district court's factual findings on loss causation and the number of victims were not clearly erroneous and affirmed the restitution order.