Third Circuit Rules on White-Collar Crime Fraud Case

On February 24, 2025, the United States Court of Appeals for the Third Circuit decided United States v. Joseph Cammarata, a significant white-collar crime case involving fraudulent claims submitted to class action settlement funds. The appellate court upheld most of the district court’s rulings but remanded the case for reconsideration of the restitution and forfeiture orders.

Facts and Procedural History of the White-Collar Crime Case

This case stemmed from a sophisticated fraud scheme involving class action settlements. Joseph Cammarata, along with co-defendants Eric Cohen and David Punturieri, operated Alpha Plus Recovery, LLC, a company that falsely claimed to help individuals recover class action settlement funds. Instead, the defendants submitted fraudulent claims fraudulent claims, on behalf of defunct foreign shell companies—Nimello Holding LLC, Quartis Trade and Investment LLC, and Inversiones Invergasa SAS—misrepresenting them as hedge funds entitled to settlement money. From 2014 to 2021, Alpha Plus submitted hundreds of fraudulent claims to administrators of securities class action settlement funds who were overseeing nearly 400 securities class action settlements, ultimately yielding over $40 million.

When claims administrators began investigating, they found inconsistencies in trade records. One administrator, working with government investigators, discovered that the fraudulent entities never actually traded securities. Despite attempts by the defendants to deceive investigators, including fabricating brokerage documents and attempting to bribe an official, the scheme was uncovered.

Cammarata was indicted in 2021 and charged with multiple white-collar crime offenses, including conspiracy to commit mail and wire fraud, wire fraud, and money laundering. His co-defendants pleaded guilty and testified against him. Cammarata went to trial and was found guilty by a jury of all charges.

Court Rejects Claims of Constructive Amendment in White-Collar Crime Conviction

One of Cammarata’s main arguments on appeal was that the trial evidence and the government’s closing arguments constructively amended the indictment. He claimed that the government broadened the basis of his fraud conviction beyond what was stated in the indictment. The Third Circuit rejected that argument, ruling that the government’s arguments and evidence were consistent with the charges and did not alter the legal theory of the case.

The court emphasized that rebutting a weak defense argument does not amount to a constructive amendment. Instead, it reaffirmed that the evidence clearly established that Cammarata and his co-conspirators knowingly submitted fraudulent claims to administrators of class action settlements, impacting legitimate claimants.

White-Collar Crime Sentencing and Restitution Challenges

Cammarata also challenged his sentencing, particularly the district court’s loss calculation under the Federal Sentencing Guidelines. The district court determined that the fraudulent claims caused an actual loss to class members of $40,862,748.30, as the money paid out to fraudulent entities reduced the available settlement funds for legitimate claimants.

On appeal, Cammarata argued that the government failed to prove actual harm to any specific class member. However, the Third Circuit upheld the loss calculation, affirming that fraudulent claims inherently diminish the settlement pool, impacting all legitimate claimants.

The Third Circuit also addressed the District Court’s restitution order. The District Court ordered restitution of $31,275,832.92 to class action settlement funds. The Third Circuit concluded that the District Court abused its discretion by ordering restitution in an amount that does not appear to fully compensate each victim’s actual loss (or $40 million), and thus vacated the restitution order and remanded for further proceedings consistent with the opinion.

Asset Forfeiture and Evidentiary Issues on the Appeal

Another key issue on appeal was whether the forfeiture of Cammarata’s assets, including a vacation home in the Poconos, violated Federal Rule of Criminal Procedure 32.2. Months after trial and a week before Cammarata’s sentencing was to occur, the Government filed a motion for forfeiture, seeking both a money judgment and forfeiture of the Poconos property. At sentencing Cammarata objected to forfeiture of the Poconos property, arguing that the Government failed to provide him with sufficient notice. On appeal Cammarata also argued that the forfeiture order exceeded the scope of the criminal conduct. The Third Circuit vacated the District Court’s forfeiture order as to the Poconos property, and remanded for the limited purpose of allowing the Government to move to amend the forfeiture order to reflect that the Poconos property is forfeitable as a substitute asset.

Additionally, Cammarata challenged the introduction of financial evidence, including his purchase of a private island and his tax returns, under Federal Rules of Evidence 403 and 404(b). He argued that the evidence unfairly portrayed him as a “hugely wealthy cheat[,]” and improperly suggested the commission of tax fraud, an uncharged crime. The Third Circuit ruled that no prejudice could reasonably have resulted from admission of the private island evidence, and that the tax return evidence was admissible because it was relevant to demonstrating financial motive and attempts to conceal fraud proceeds, which are common elements in white-collar crime cases.

Key Takeaways from the Third Circuit’s White-Collar Crime Decision

This decision highlights several critical legal principles in white-collar crime cases:

  • Fraudulent claims to class action settlements constitute wire fraud when knowingly submitted with false information.
  • Loss calculations in fraud cases can be based on the total fraudulent gain when it directly affects the amount available to legitimate victims.
  • Restitution orders must fully account for victims’ losses, and courts must ensure proper distribution to those impacted by fraud.
  • Asset forfeiture must align with criminal proceeds, and courts may allow adjustments to ensure forfeited assets reflect actual fraud gains.

This case reinforces the serious consequences of white-collar crime, particularly fraud involving financial institutions, and clarifies how courts handle fraud restitution and forfeiture in complex financial schemes.

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