| Docket: 13-2498 | Opinion Date: March 19, 2014 |
| Judge: Hamilton |
| Areas of Law: Banking, Criminal Law, White Collar Crime |
Abair emigrated from Russia in 2005 and married an American citizen. Abair owned an apartment in Moscow. After her divorce, Abair sold the apartment and deposited the proceeds with Citibank Moscow. She signed a contract to buy an Indiana home for cash. Citibank refused to transfer funds because her local account was in her married name and the Moscow account used her birth name. Over two weeks Abair withdrew the daily maximum ($6400) from Citibank ATMs and deposited $6400 to $9800 at her local bank. A deposit on Tuesday, May 31followed the Memorial Day weekend and was posted with one made on Saturday, pushing her “daily” deposit over the $10,000 trigger for reporting, 31 U.S.C. 5313(a). Abair was charged with structuring financial transactions to evade reporting. IRS agents testified that during her unrecorded interview, Abair, who is not fluent in English, revealed knowledge of the reporting rules. Abair testified that she was aware of the limit when she spoke with the agents, but had learned about it after making the deposits, when she asked why identification was required. She said her deposit amounts were based on how much cash would fit in her purse. Abair was convicted and agreed to forfeit the entire proceeds. The Seventh Circuit remanded, finding that the government lacked a good faith basis for believing that Abair lied on tax and financial aid forms and that the court erred (Rule 608(b)) by allowing the prosecutor to ask accusatory, prejudicial questions about them. On the record, Abair is at most a first offender, according to the court, which expressed “serious doubts” that forfeiture of $67,000 comports with the “principle of proportionality” under the Excessive Fines Clause.
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| Docket: 13-2706 | Opinion Date: March 19, 2014 |
| Judge: Flaum |
| Areas of Law: Banking, Class Action, Consumer Law |
Target Guest Cards only permit purchases only at Target. Target Visa Cards are all-purpose credit cards that can be used anywhere. Target used different underwriting criteria and agreements for the cards. Between 2000 and 2006, Target sent unsolicited Visas to 10,000,000 current and former Guest Card holders, with agreements and marketing materials to entice activation of the new card. If a customer activated a new Visa, its terms became effective and the Guest Card balance was transferred to the Visa. If the customer did not activate the Visa, Target closed the account. The materials did not suggest that keeping the Guest Card was an option, but customers could opt out. A Guest Card holder could call Target to reject the Visa but ask to keep the Guest Card. If a holder attempted to use the Guest Card after the Visa was mailed, she was informed that the account had been closed but that she could reopen it. The credit limits on the Autosubbed Visas were between $1,000 and $10,000, and Target could change the credit limit. New customers had to open a Target Visa through a standard application, and cards could have credit limits as low as $500. The Autosub materials did not indicate that credit limits were subject to change; customers often had their credit limits reduced after activation. The district court rejected a putative class action under the Truth in Lending Act, 15 U.S.C. 1642, which prohibits mailing unsolicited credit cards and requires credit card mailings to contain certain disclosures in a “tabular format.” The Seventh Circuit affirmed.
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| Docket: 13-2141 | Opinion Date: March 19, 2014 |
| Judge: Easterbrook |
| Areas of Law: Immigration Law |
While R. was an investigator for Mexico’s Federal Agency of Investigation, he arrested hundreds of suspects and repeatedly testified against drug traffickers. Drug organizations tried to kill him. The Agency repeatedly transferred him, but threats soon resumed. He was wounded twice while on duty and eluded capture several times. Assassins shot at him, missed, and wounded his father. He quit the Agency, opened an office-supply business, and tried to conceal his former job. Strangers continued looking for him. He sought asylum in the U.S., contending that he had been persecuted as a member of the social group of honest police officers. The IJ denied the application. The Board of Immigration Appeals agreed, distinguishing between honest police and effective honest police, reasoning that only if criminal organizations target all honest officers would R. be entitled to asylum, 8 U.S.C. 1101(a)(42)(A). The Seventh Circuit vacated. The law calls for assessments of causation and risk. That R. is at more risk than that most “honest police” is a poor reason to disqualify him. The Board did not consider whether Mexico’s more-than-400,000 officers are willing and able to protect former colleagues. Nothing R. can do will erase his employment history. The court questioned why DHS wants to remove R. He appears to have led an exemplary life in the U.S. since entering (lawfully) and applying for asylum.
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| Docket: 13-2732 | Opinion Date: March 19, 2014 |
| Judge: Kanne |
| Areas of Law: Criminal Law |
In 2011, Johnson pled guilty to possessing crack cocaine with intent to distribute and possessing a gun in furtherance of a drug crime and was sentenced to 60 months’ imprisonment, departing from the 120-month mandatory minimum for repeat drug offenses (21 U.S.C. 841(b)(1)(B)) because Johnson cooperated with the government,18 U.S.C. 3553(e). Johnson later sought a sentence reduction under 18 U.S.C. 3582(c)(2), citing changes to the crack cocaine guidelines. The district court denied a reduction, noting that Johnson’s motion was an impermissible second or successive motion for reduction of sentence and that Johnson did not qualify for a reduction on the merits. The Seventh Circuit affirmed, reasoning that the sentence cannot be reduced under section 3582(c)(2) because the original sentence was based on a statutory minimum, not the subsequently-amended Sentencing Guideline.
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| Docket: 13-1278 | Opinion Date: March 19, 2014 |
| Judge: Hamilton |
| Areas of Law: Banking, Bankruptcy, Securities Law, White Collar Crime |
Sentinel specialized in short-term cash management, promising to invest customers’ cash in safe securities for good returns with high liquidity. Customers did not acquire rights to specific securities, but received a pro rata share of the value of securities in an investment pool (Segment) based on the type of customer and regulations that applied to that customer. Segment 1 was protected by the Commodity Exchange Act; Segment 3 customers by the Investment Advisors Act and SEC regulations. Despite those laws, Sentinel lumped cash together, used it to purchase risky securities, and issued misleading statements. Some securities were collateral for a loan (BONY). In 2007 customers began demanding cash and BONY pressured Sentinel for payment. Sentinel moved $166 million in corporate securities out of a Segment 1 trust to a lienable account as collateral for BONY and sold Segment 1 and 3 securities to pay BONY. Sentinel filed for bankruptcy after returning $264 million to Segment 1 from a lienable account and moving $290 million from the Segment 3 trust to the lienable account. After informing customers that it would not honor redemption requests, Sentinel distributed the full cash value of their accounts to some Segment 1 groups. After filing for bankruptcy Sentinel obtained bankruptcy court permission to have BONY distribute $300 million from Sentinel accounts to favored customers. The trustee obtained district court approval to avoid the transfers, 11 U.S.C. 547; 11 U.S.C. 549. The Seventh Circuit, noting the unique conflict between the rights of two groups of wronged customers, reversed. Sentinel’s pre-petition transfer fell within the securities exception in 11 U.S.C. 546(e); the post-petition transfer was authorized by the bankruptcy court, 11 U.S.C. 549. Neither can be avoided.
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