California man gets 17+ years, $500K fine in bankruptcy fraud case

From Westlaw Journal White-Collar Crime: A California businessman who was convicted by a jury on 15 counts of bankruptcy fraud and related charges has been sentenced to 17 years and eight months in prison ordered to pay a $500,000 fine.

Steven K. Zinnel, who hid his roles in various companies from a bankruptcy court during a contentious divorce, will also forfeit $2.8 million in corporate interests and real estate under the sentence imposed by U.S. District Judge Troy L. Nunley of the U.S. District Court for the Eastern District of California.

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Justice Department says no to ‘strip down’ of tax lien in Chapter 13

A Chapter 13 debtor should not be allowed to void, or “strip down,” the unsecured portion of his six-figure tax debt, the Justice Department is arguing before the U.S. Supreme Court.

The federal government’s Feb. 12 brief opposing certiorari defends a ruling by the 7th U.S. Circuit Court of Appeals, which held last July that Dewsnup v. Timm, 502 U.S. 410 (1992), bars debtors such as petitioner Patrick J. Ryan from stripping down their unsecured tax bills.  Ryan v. United States (In re Ryan), 725 F.3d 623 (7th Cir. July 8, 2013).

Ryan, who owes the government more than $136,000 in back taxes, only has about $1,600 of personal property securing the tax lien that the Internal Revenue Service lodged against him in January 2011, according to the government’s Oct. 4 certiorari petition.

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Former BofA exec faces 40 years, $1 million fine over muni bond scheme

Bank of America’s former managing director of municipal derivatives products has pleaded guilty to conspiracy and wire fraud charges for his hand in a municipal bond manipulation scheme.

Phillip D. Murphy is the 17th person to have pleaded guilty in the U.S. District Court for the Western District of North Carolina or been convicted for their roles in the scheme, according to a Feb. 10 Justice Department release.

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JPMorgan pays $1.7 billion to resolve charges over role in Madoff scheme

JPMorgan Chase Bank has agreed to forfeit $1.7 billion for distribution to victims of Bernard Madoff’s infamous Ponzi scheme as part of a deferred prosecution agreement with the Justice Department.

Preet Bharara, U.S. attorney for the Southern District of New York, said in a Jan. 7 statement that the payment is the largest ever penalty recovered by the Justice Department for a violation of the Bank Secrecy Act.

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California appeals panel recognizes ‘narrow’ assignment of legal malpractice claim

A three-judge appeals panel in California has ruled for the first time that a legal malpractice action may be assigned when it is a small, incidental part of a larger commercial transfer of assets and liabilities between insurance companies.

The decision represents a “narrow exception” to the state’s general public policy ban against assigning legal malpractice claims, the appeals court said in an opinion reversing a trial judge’s finding that an insurance company lacked standing to pursue the assigned claim.

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Supreme Court will hear restitution setoff case

A homebuyer convicted of taking part in a mortgage fraud has convinced the nation’s highest court to decide whether his restitution should be based on the value of the properties at the time of foreclosure or later when lenders sold the houses.

The U.S. Supreme Court granted certiorari on a restitution issue with wide implications for defendants in mortgage fraud cases.

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SIPC tells Supreme Court Madoff trustee can sue on its behalf

The Securities Investor Protection Corp. has joined in a request by Irving Picard, the trustee seeking to recover money for victims of Bernie Madoff, that the U.S. Supreme Court examine a federal appellate panel’s ruling that he lacks standing to pursue claims against the investment banks allegedly used to back Madoff’s Ponzi scheme.

The SIPC, which reportedly has paid out more than $800 million to compensate former Madoff customers, says the 2nd U.S. Circuit Court of Appeals’ decision barring Picard’s suit has eviscerated its statutory subrogation right to recover those sums.

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Fraud defendant wins sentence reduction; federal court error cited

The former owner of a vending machine business who was convicted by a Miami federal court jury of defrauding investors has won his appeal of a sentence the 11th U.S. Circuit Court of Appeals agrees was improperly imposed.

The appellate court, however, denied the defendant’s appeal as it applied to overturning his conviction.

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Trustee says Chinese companies put solar panel maker out of business

The liquidating trustee for what was once one of the nation’s largest solar panel providers has filed a $950 million antitrust lawsuit against three China-based companies for allegedly conspiring to drive U.S. panel makers out of business.

The suit, filed in the U.S. District Court for the Eastern District of Michigan, says Energy Conversion Devices consistently held a competitive advantage in the commercial and industrial rooftop solar market until the foreign companies and their U.S. affiliates ran it out of business.

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Severance payment tax treatment to get Supreme Court review

The U.S. Supreme Court has agreed to hear the government’s argument that severance payments made to employees when their bankrupt employer shut down are taxable under the Federal Insurance Contributions Act.

The case presents an apparent split between two federal courts of appeals, with the 6th Circuit ruling last year that severance payments to involuntarily terminated employees are not wages for FICA purposes.  In re Quality Stores Inc. et al., 693 F.3d 605 (6th Cir. 2012).

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