Sunday, December 28, 2008

Fifth Circuit Affirms All But Forfeiture in Fen Phen Related Case

The fifth circuit affirmed the conviction of a lawyer in a Fen Phen related case. (Opinion) The "jury convicted Arledge of conspiracy and fraud for his involvement in filing fraudulent claims to recover from the Diet Drug Qualified Settlement Funds I and II (collectively the "Settlement Fund"), funds set up to compensate victims of the diet drug Fen Phen." The defendant was convicted of a "count of conspiracy in violation of 18 U.S.C. § 371 (count 1), four counts of mail fraud in violation of 18 U.S.C. § 1341 (counts 2–5), and two counts of wire fraud in violation of 18 U.S.C. § 1343 (counts 6–7). Arledge was found not guilty of one count of wire fraud and sixteen counts of money laundering." The court stated that the accused:

"was sentenced to sixty months’ imprisonment for each of counts 1 through 3, to run concurrently, and eighteen months’ imprisonment for each of counts 4 through 7, to run concurrently with each other and consecutively with his sentence for counts 1 through 3. This resulted in a total sentence of seventy-eight months’ imprisonment. In addition, he was sentenced to three years of supervised release on each of the counts of conviction, to run concurrently, and ordered to pay a $700.00 special assessment. In an Amended Judgment, he was ordered to pay restitution in the amount of $5,829,344.90 and a forfeiture of $375,000.00."

On appeal the defendant:

"challenges his conviction for lack of sufficient evidence, alleges that the district court’s failure to admit key pieces of evidence deprived him of the ability to present a defense, disputes the admission of evidence related to charges of which he was later acquitted, and maintains that the use of the 2006 Sentencing Guidelines violated the Ex Post Facto Clause of the Constitution. He also challenges the district court’s restitution order by asserting that the record did not support the district court’s calculation of the amount of "loss," argues that the restitution order violated the Eighth Amendment, maintains that the district court did not take into account requisite statutory factors, and asserts that the restitution order sets forth an unclear payment schedule."

The court affirmed the conviction and sentence, but vacated the restitution order and remanded the case for further proceedings consistent with its opinion. The court found that three of the claims lacked evidence of the claims being fraudulent. In response to a government argument that these three claims should be included, the court held that restitution is not subject to harmless error. The court stated, "[w]ithout evidence that the claims were fraudulent, it is unclear that the Settlement Fund suffered any loss by paying these claims. The district court’s decision to include these three claims, totaling $54,000, without any evidence of fraud was an abuse of discretion."

(esp)

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