Articles Tagged with Appellate Court

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Chicago – In United States v. Pu, 2016 U.S. App. LEXIS 3224 (7th Circuit February 24, 2016), the court addressed the district court’s loss calculation and restitution order.  Pu who worked for two companies, one of which was the Citadel in Chicago, a hedge fund, was indicted for and pleaded guilty to unlawful possession of a trade secret from Company A and unlawful transmission of a trade secret that belonged to the Citadel.  The district court found that Pu intended to cause a loss of approximately $12 million, and was ordered to pay restitution of $750,000.  He was sentenced to 36 months in prison. The $12 million intended loss calculation increased his sentencing guidelines calculation by a whopping twenty-level increase, even though there was no actual loss.  While the restitution order was based on a letter supplied to the court by the Citadel that included costs associated with an internal forensic analysis and an internal investigation.

The information that Pu was accused of stealing was used to conduct stock trades.  However, Pu use of the data resulted in him losing about $40,000.

For purposes of the sentencing guidelines, the loss is the monetary harm that was intended from the offense, or if the court cannot determine the amount of loss it may use the gain that resulted from the offense.  In the case of a trade secret, like in this case, the loss amount could be the cost of developing the information or the reduced value of the information as a result of the offense. However, the sentencing guidelines do not require any loss calculation greater than zero and the court called a loss amount “bonus punishment points.”

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The Supreme Court agreed to hear a case involving Universal Health Services who is accused of violating the False Claims Act.  The Court agreed to decide whether an implied certification theory is viable cause of action under the FCA. The Seventh Circuit Court of Appeal, which reviews district court cases including those out of the Northern District of Illinois, which includes Chicago, has found that a theory of implied certification is not a viable theory under the False Claims Act, even though other circuits such as the First Circuit have permitted such theories.  The Supreme Court also agreed to decide, if an implied certification theory is viable, if claim can be false if the defendant failed to comply with a rule or regulation even if that rule or regulation does not state that compliance with it is a condition of payment.

The Seventh Circuit in United States v. Sanford-Brown found that an implied certification theory cannot be pursued under the False Claims Act since those types of claims are best left up to the agency to enforce.  While the First Circuit, which heard the case against Universal Health Services, United States, ex rel. Escobar et al. v. Universal Health Services, Inc.,  permits cases based on an implied certification theory to proceed.

According to Universal Health Services’ Petition of Writ of Certiorari to the Supreme Court, the jurisdictions that have recognized the theory of implied certification differ on whether compliance with the rule has to be a condition of payment of whether the rule can be a condition of payment even it does not expressly state that payment will not be made unless there is compliance with the rule.

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Many of the State’s Attorneys have been adding burglary charges a Class 2 felony, punishable by 3-7 years, to every misdemeanor retail theft by charging that these shoplifters were entering or remaining in the store to commit a theft and were thus committing a burglary. Fortunately, the Appellate Court applies some common sense which will hopefully curtail this practice.

In the case of People v. McDaniel, 2012 IL. App (5th) 100575, Court agreed with the Defendant that the legislature should decide how crimes are to be punished and every retail theft should not become a burglary.

Prosecutors should charge offense fairly and not with an intent to overly punish those who commit misdemeanor offense


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