Second Circuit — Securities Fraud: USA v. DeMizio

U.S. Court of Appeals for the Second Circuit

Securities Fraud

Kickback Schemes

USA v. DeMizio
12-1293
Judges Newman, Kearse and Livingston

Background: The defendant appealed from a conviction of conspiracy to commit honest-services wire fraud and securities fraud and making materially false statement. It was alleged that he conducted stock-loan transactions through intermediary firms that caused large sums of money paid to the defendant’s brother and father for little or no work. He was sentenced to 38 months’ imprisonment, followed by a three-year term of supervised release. He was ordered to pay $1.2 million in restitution.

Ruling: The Second Circuit affirmed. The court held that payments made to entities other than the employee who steers his employer’s business to a third party in exchange for those payments is a kickback. Further, a kickback scheme does include those schemes were an inordinate amount of money for doing minimal work.

Winston M. Paes, assistant United States attorney, for the appellee; David Spears for the defendant-appellant