Appellant Bah owned a licensed money transmitting business in New Jersey. He also owned a separate business in New York. Bah was prosecuted for transmitting money out of New York without a New York license. New York Banking Law Section 650 requires licensing for “[i] engag[ing] in the business of receiving money for transmission or [ii] transmitting the same.” Bah contended at trial that while he received money for transfer in New York, he only transferred it out of New Jersey, where he was licensed. Bah asked for the following jury instruction: “1960 does not make it unlawful to receive money for transmission without a license.”

The Government objected to the proposed jury charge and the trial court refused to include it. The trial court reasoned that if Bah violated New York law by engaging in the business of “receiving money for transmission” without a license, he had, by virtue of that fact alone, violated 18 U.S.C. Section 1960.

The Second Circuit disagreed, in an opinion by Chief Judge Dennis Jacobs, holding that the New York law could not broaden federal criminal law.  Section 1960 only prohibits engaging in the business of transmitting money without an appropriate state license, and does not mention or cover the mere receipt of money for such transmission. Under the trial court’s instructions, the jury may have convicted Bah even if they believed his story that he received the money for transmission in New York, but transferred it out of New Jersey. Since such a defense would have been entirely valid, the judgment of conviction had to be vacated and remanded.

The case, decided Wednesday, is United States v. Bah.

When Pearson was investigated during the diploma mill probe, authorities found over 11,000 child porn images on his computer. He claimed he had downloaded the porn images at Dixie Randock’s request so she could start a porn website, but she was never charged with porn possession. In any event, he immediately became a cooperating witness and provided critical information on the St. Regis operation, which resulted in prosecutors recommending a lesser sentence on the porn charge than called for by guidelines (Spokesman-Review).

Gallion and Cunningham admitted in their disbarment orders that they failed to inform their clients in writing about fee arrangements in the fen-phen settlement; failed to tell clients that they were seeking fees greater than contingency fee agreements provided; failed to advise clients about the total amount of the settlement; and failed to get clients’ consent to place $20 million in settlement money in a charitable fund that the lawyers controlled.

The third defendant, Melbourne Mills Jr., has also been under suspension, but the jury acquitted him. His status is still pending. Gallion and Cunningham will be retried in February (earlier coverage).

Nathanson’s sentencing is scheduled for February 9, 2009; he faces a statutory maximum of 120 years in prison (DOJ).

Johnston and Jones allegedly grossly overstated revenue from the beginning in order to attract about $50 million in private investment funds, including $19 million from Ignition Partners, a Bellevue,Washington venture capital firm. Late last month a human resources VP discovered the alleged fraud, which led to a quick resignation by Johnston and Jones. An attorney for the company reported it to the FBI (PC World, DOJ).

On Wednesday, US District Judge Amy St. Eve froze $105,000 of Rezko’s $380,000 in bond money, an indication that she plans to grant the prosecution’s request to order asset forfeiture (Chicago Trib/AP).