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Texas Man Accused of Falsely Billing Medicare and Medicaid is Arrested
Lawrence T. Taylor, the Defendant, has been indicted on charges of health care fraud and conspiracy to commit health care fraud. The indictment, returned on Wednesday December 12, 2012 in the Southern District of Texas, formally charged the Defendant with the following nine counts:
Count (1) – 18 U.S.C. 371 – Conspiracy to commit health care fraud in violation of 18 U.S.C. 1347; and Conspiracy to violate the Anti-Kickback statute in violation of 42 U.S.C. 1320a-7b(b)(2)(A); and
Counts (2)-(9) – 18 U.S.C. 1347 – Health care fraud.
Like in most federal indictments, the Defendant is charged with a combination of substantive offenses (8 counts of actual health care fraud) and the inchoate offense of conspiracy (for entering into an agreement to commit health care fraud and violate the Anti-Kickback statute).
By charging the Defendant with conspiracy the Government is able to thoroughly describe the background story leading up to the substantive fraud offenses. This is because the “overt acts” of a conspiracy can be as benign as incorporating a business or leasing office space, if those acts were indeed undertaken to further the criminal goal of the conspiracy. In this case the Government lists the Defendant’s formation of 1866ICPAYDAY.COM LLC, his leasing of office space, and his registration of a d/b/a all as overt acts in furtherance of the conspiracy, effectively casting the Defendant’s otherwise normal business activities as criminal acts.
Additionally, by charging the defendant with conspiracy, the Government can also significantly increase the loss amount of the alleged fraud. Unlike specific instances of fraud, a conspiracy can last for many years and encompass all of the acts of a defendant, criminal or otherwise. In essence, it gives the Government broad discretion to use as many of the Defendant’s own actions against him. As such, the Government is able to increase the loss amount to $1,238,823.85 when the 8 specific counts of fraud in the indictment only add up to $24,065.60.
If the Defendant is eventually convicted of an offense, defense counsel should argue for a lesser loss amount at sentencing, especially if some of the Defendant’s claims to Medicare and Medicaid were in fact legitimate. Pushing back against the Government’s asserted loss amount is critically important at sentencing because an increased loss amount correlates directly with an increased sentence according to the U.S. Sentencing Commission’s Guidelines Manual.
Depending on how much of the Defendant’s business activities are eventually proven to be fraudulent, defense counsel may also have the opportunity to argue against the “willfulness” element of the fraud counts. Isolated instances of medically unnecessary claims to Medicare or Medicaid can be cast as legitimate mistakes, instead of criminal acts. To determine whether the Government’s allegations are broader than what is reflected in reality requires defense counsel to thoroughly review the Defendant’s business and patient records. Upon this review, defense counsel will be able to effectively compare the Defendant’s version of the facts against the Government’s allegations.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrariassociatespc.com.
Grand Jury Returns Indictment Against Virginian for Conspiracy and Tax-Related Offenses
On July 10, 2011 the U.S. Attorney’s Office for the Eastern District of Virginia announced that a federal grand jury has indicted Jeffrey Charles, of Mathews County, Va., for conspiring with his daughter and son-in-law to defraud the United States. The docket also indicates that a warrant has been issued in this matter.
According to the indictment, Charles conspired with his daughter and son-in-law to impair and impede the IRS in ascertaining, computing, assessing and collecting federal income taxes. The government charged this count under the general conspiracy statute, 18 U.S.C. 371. General conspiracy makes it a crime for two or more persons to agree to work together to commit any federal crime, so long as the participants in the conspiracy undertake any act, commonly referred to as an overt act, to further the underlying criminal activity. This overt act itself does not have to be a criminal act or illegal. Accordingly, in its indictment, the government alleges no less than 21 overt acts in furtherance of the alleged conspiracy to defraud the United States of tax revenue.
The indictment also alleges that Charles aided and assisted in the preparation of three false tax returns in his daughter’s name for tax years 2000, 2001, and 2005, and attached false documents to each tax return. The statute, 26 U.S.C. 7206(2), makes it a criminal offense for anyone to assist in the filing of a false return. The statute specifically disregards whether or not the fraudulent information or falsity was included with the knowledge or consent of the person authorized or required to present the documents to the IRS. Therefore, tax preparers can be liable for this offense even if the taxpayer himself intentionally produced false or fraudulent information. In such a scenario the tax preparer would have to demonstrate that they could not have reasonably known the information presented to them was false.
As alleged in the indictment, Charles also filed a false tax return in his own name for tax year 2006 in which he allegedly falsely reported earning $0.00 income. Since this count is with regards to Charles’ own tax return, the count is charged as 26 U.S.C. 7206(1), which targets the actual taxpayer or the person obligated to file, not the preparer.
An interesting note about this case is that according to the indictment Charles was affiliated with an organization known as the American Rights Litigators (ARL) (a.k.a. the Guiding Light of God Ministries). The organization is a tax protest group located in Lake County, Florida. As alleged in the indictment, Charles utilized materials provided by this organization to fulfill his alleged criminal endeavors.
However, it may be constitutionally improper for the government to use Charles’ affiliation with this group against him at trial. Using someone’s political affiliations against them in the court of law gets dangerously close to offending the First Amendment. Therefore, defense counsel in this matter should probably attempt to limit its usage in court and look into whether the investigation into Charles was originally initiated due to his association with this protest group.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
The Arms Export Control Act Withstands Constitutionality Challenge in Ninth Circuit Part II
This blog posting is part II of our analysis of U.S. v. Chi Mak. Part I can be read here.
The Ninth Circuit also disposed of Mak’s claims about jury instructions and deliberation on willfulness, the requisite intent that must be proven beyond a reasonable doubt in criminal prosecutions of the Arms Export Control Act (AECA). The relevant case law in the matter presumably favors the defense.
Accordingly, every criminal defendant has a constitutional right to a “meaningful opportunity to present a complete defense.” California v. Trombetta, 467 U.S. 479, 485 (1984); see also United States v. Stever, 603 F.3d 747, 755 (9th Cir.2010) (grounding right to a meaningful defense in the Fifth and Sixth Amendments). An accused can defend against a charge that requires the Government to prove willfulness by presenting evidence that he did not voluntarily or intentionally violate a known legal duty. Cheek v. United States, 498 U.S. 192, 202–03 (1991).
Also favoring the defense is the fact that circumstantial evidence can be probative of the lack of criminal intent. See United States v. Salameh, 152, F.3d 88, 143 (2d Cir. 1998). Moreover, many of the Circuit Courts of Appeals have held that a criminal defendant has the right to introduce evidence that is not directly relevant to an element of the offense where that evidence might tend to negate the existence of an element of the offense, such as intent or willfulness. United States v. Hurn 368 F.3d 1359, 1364-65 (11th Cir. 2004).
Thus, Mak’s contention that he was unaware of the fact that the “technical data” he was sharing with others was not in the “public domain” would seem to be a constitutionally protected defense. Such a defense would clearly demonstrate that he did not intentionally violate a known legal duty. In fact, Mak introduced legally acceptable circumstantial evidence in the form of expert witnesses demonstrating that he did not know the information was “technical data” and not in the “public domain.” Unfortunately, the court’s jury instructions completely stripped this defense of its persuasiveness. So instead of having the jury deliberate the matter, the court determined the issue for them.
In its jury instructions the court stated the following in number 16:
“You are instructed that the information in the Solid State document and the Q.E.D. document is required for the design, development, production, manufacture, assembly, operation, testing, or modification of defense articles. You must accept this fact as true, regardless of whether you heard any witness testify to the contrary.”
And the following from instructions 20 and 23:
That the government was not required to prove that “the defendant had read, was aware of, or had consulted the specific regulations governing his activities,” and that in “making a determination of whether the defendant had the requisite intent, [the jury] should consider the totality of all relevant circumstances.”
The contention on appeal is that the trial court wrongfully rejected Mak’s recommended jury instruction on willfulness, an instruction that would have given the jury a realistic opportunity to deliberate willfulness with respect to the “public domain” determination it was asked to consider:
“Information which is in the public domain does not constitute technical data and therefore is not subject to the export controls of the United States Munitions List. Even if you determine that any of the items at issue in Counts two, three or four were not in the Public Domain, you the jury must consider whether Mr. Chi Mak believed the items were in the Public Domain in order to determine whether he willfully and knowingly exported defense articles.”
With instruction 16 the trial court shifted the entire debate away from the content of the “technical data” because the court judicially recognized that fact in favor of the Government. The instruction caused even more harm to the defense because it told the jury to totally disregard Mak’s expert witnesses on the issue of technical data and only focus on the whether the information was in the public domain. The cumulative impact of the court’s instructions effectively counseled the jury to disbelieve Mak’s lack of intent, at least on the premise that he did not know the information was “technical data.”
Due to the court’s instructions, the only factual issue left for the jury to deliberate upon was whether the information was in the “public domain.” Although the court’s instructions specifically counsel the jury to disregard a significant part of Mak’s constitutionally recognized willfulness defense, there is no accompanying instruction highlighting for the jury that it could still apply the willfulness defense to the issue of whether the information was in the “public domain.” This harm could have easily been remedied by including Mak’s recommended instructions.
Alas, the only instruction the Ninth Circuit relied upon to dispose of Mak’s claim was the broad catch-all instruction that the jury “should consider the totality of all relevant circumstances.” This, in the Ninth Circuit’s opinion, was enough to undo the severely limiting instructions that harmed the defense in the first place. Sadly, the court seems comfortable with the fact that the jury may have never even fathomed to deliberate upon Mak’s willfulness defense in the context of the “public domain” issue, a limitation of Mak’s constitutionally recognized defense created by the court itself.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
The Arms Export Control Act Withstands Constitutionality Challenge in Ninth Circuit Part 1
On June 21, 2012 a three judge panel of the Ninth Circuit upheld the constitutionality of the Arms Export Control Act (AECA) in United States v. Chi Mak. Mak was ultimately convicted of one count of conspiracy to violate the AECA, two counts of attempting to violate the AECA, and one count of lying to a federal agent.
Mak appealed his conviction, claiming violations of his rights under the First, Fifth, and Sixth Amendments, and the Ex Post Facto Clause. Mak lost on each claim he made, demonstrating the difficulties of calling into question the constitutionality of a statute that pertains to the national security and foreign interests of the United States.
The AECA regulates the export and import of “defense articles” and “defense services” out of and into the United States. 22 U.S.C. § 2778. Section 2778(a) of the AECA authorizes the President: (1) to designate those defense articles and services to be included on the U.S. Munitions List (USML); (2) to require licenses for the export of items on the USML; and (3) to promulgate regulations for the import and export of such items on the USML. Id.
The Directorate of Defense Trade Controls (DDTC), within the United States Department of State, promulgates regulations under the AECA, known as ITAR. 22 C.F.R. § 120–30. ITAR defines the USML, which consists of twenty-one categories of designated defense articles and services that are subject to licensing controls under the AECA. Id. at § 121.1. Unless an exception applies, ITAR requires a license for the export of USML articles and related technical data. 22 C.F.R. §§ 123–125.
Technical data is defined as information which is required for the design, development, production, manufacture, assembly, operation, repair, testing, maintenance or modification of defense articles. 22 C.F.R. § 120.10(a)(1). This definition excludes any information in the “public domain.”
Mak asserted a First Amendment “vagueness” claim. The basis of Mak’s claim was that the technical information he attempted to export to China was protected speech. Although the AECA is not intended to control the content of “speech,” it does so incidentally. The court disposed of Mak’s First Amendment “vagueness” claim by stating that the restrictions on “technical data” are “content neutral.” Content neutral regulation of speech is permitted under the First Amendment so long as it advances important governmental interests.
In this case, such important interests include the national security and foreign interests of the United States. A munitions list that does not prohibit the export of technical data would be useless because the defense articles could merely be produced overseas.
Of particular concern for defense counsel in Mak’s appeal is his second claim about the jury instructions on “technical data” on the ground that they relieved the Government of its burden of proving that the documents did not fall within the “public domain.” The instructions seem to favor the Government because they are misleading to the jury. The instructions say:
“All technical data is subject to export control. Technical data is information required for the design, development, production, manufacture, assembly, operation, testing, or modification of defense articles. Technical data does not include information in the public domain.” This instruction continues with:
“You are instructed that the information in the Solid State document and the Q.E.D. document is required for the design, development, production, manufacture, assembly, operation, testing, or modification of defense articles. You must accept this fact as true, regardless of whether you heard any witness testify to the contrary.”
Upon reading this instruction it becomes clear that the issue of whether the information was “technical data” was already decided by the court. What’s even more disturbing is the statement that “you must accept this fact as true, regardless of whether you heard any witness testify to the contrary.”
The court disposes of Mak’s claim by relying on another instruction which explains to the jury that if the information was available in the “public domain” that they must acquit Mak on the AECA offenses. Why the court did not require the jury to determine if the information amounted to regulated “technical data” puzzles me. Apparently the Government can simply assert that something is “technical data” and only need to prove that the information was not in the public domain in order to sustain a conviction under the AECA.
Is it so totally inconceivable that something not available in the “public domain” is also not “technical data” that the government need not be required to prove beyond a reasonable doubt that the infomormation actually amounts to “technical data?” It seems unlikely that any corrected instructions would have remedied the situation to such a degree that Mak’s conviction should have been overturned, but the Government should nonetheless be put to the burden of whether the information is in fact “technical data” and not just that it wasn’t in the “public domain.” We will address the additional claims in part II of this post.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
Check Cashers in Brooklyn, Philadelphia, and Los Angeles Charged for Allegedly Evading Anti-Money Laundering Laws
On June 14, 2012 seven individuals and four check cashing businesses were charged in the Eastern District of New York and the Central District of California for their alleged roles in separate schemes to violate the Bank Secrecy Act (“BSA”). The defendants allegedly failed to follow reporting and anti-money laundering requirements for transactions totalling more than $50 million. A total of four indictments were filed.
Two of the indictments were returned in Los Angeles and named three individuals and two check cashing businesses. The other two indictments were returned in Brooklyn and named four individuals and two check cashing businesses. All seven individual defendants were arrested or surrendered to authorities. Those named in the indictments include Belair Payroll Services, Bargain Island, G&A Check Cashing, and AAA Cash Advance, all check cashing businesses. The individuals names in the indictments include Craig Panzera, Lasha Goletiani, Zhan Petrosyants, George Gonchar, Karen Gasparian, Humberto Sanchez, and Diana Brigitt.
The four indictments charge the defendants with failure to file currency transaction reports (“CTRs”) or falsely filing CTRs, as well as failure to have an effective anti-money laundering program, all violations under the BSA.
The BSA is a set of laws and regulations enacted by Congress to address an increase in criminal money laundering through financial institutions, which include check cashing businesses. Check cashers enable people to cash checks without having to go to a bank account or maintain a bank account. A check casher will typically charge a fee for this service.
Under the BSA, financial institutions, including check cashers, are required to file a CTR with the Department of Treasury for any transaction involving more than $10,000 in currency. As part of the CTR, the check casher is required to verify and accurately record the name and address of the individual who conducted the currency transaction, the individual on whose behalf the transaction was conducted, as well as the amount and date of the transaction. CTRs are important law enforcement tools for uncovering criminal activity.
The BSA also requires financial institutions, including check cashing businesses, to maintain an effective anti-money laundering (AML) program. The purpose of an AML program is to effectively detect and prevent attempts to facilitate money laundering. Check-cashing businesses are therefore required to have written policies and procedures regarding CTR filings, records maintenance and responses to law enforcement.
According to the indictments, despite these regulations, check-cashing businesses are a common venue for individuals who want to anonymously cash large numbers of checks to facilitate fraud and money laundering schemes. According to the indictments, the use of check cashers to launder money is particularly prevalent in the area of health care fraud, where fraudulent health care businesses commonly convert the proceeds of their fraud into cash by presenting checks to check cashers who they know will not ask for proof of the payee’s identity and will either not file CTRs or file false CTRs.
The BSA is intended to assist both the private sector and the government in its detection and prevention of criminal money laundering. By implementing these regulations, financial institutions provide law enforcement agencies from around the world with valuable insight into the banking and financial activities of people from all walks of life. Although the specific conduct of those named in the indictments may not in any way be connected to the criminal activity they’re designed to detect, the allegations of noncompliance with CTRs and anti-money laundering programs are in and of themselves considered criminal conduct.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
Accused Member of Foreign Terrorist Organization Extradited to United States on Hostage Taking Charges
The Department of Justice announced on March 12, 2012 that Alexander Beltran Herrera, a/k/a Jhon Beltrain Herrera, a/k/a Rodrigo Pirinolo, an accused member of the Revolutionary Armed Forces of Colombia (“FARC”), has been extradited from Colombia to face hostage taking and terrorism charges in the United States.
The indictment alleges that the FARC is an armed and violent organization in the Republic of Colombia. The indictment further alleges that the FARC is a “highly structured criminal organization” divided into seven geographic “blocks” — the Caribbean block, the Northwestern block, the Middle Magdalena block, the Central block, the Eastern block, the Western block, and the Southern block — which are each further subdivided into a number of Fronts and named Mobile Columns. The indictment specifically alleges that Mr. Herrera was a member of the 27th Front in the FARC’s Southern block and committed various crimes against the United States as a member of FARC.
For example, according to the indictment, in 2004 the 27th Front allegedly held three Americans for nearly two years. The indictment also alleges that Mr. Herrera was one of the FARC “jailers” who used “choke harnesses, chains, padlocks, and wires to bind the necks and wrists” of American hostages. In addition to these alleged acts, Mr. Herrera was charged with the following specific offenses: 18 U.S.C. 1203(a) (Conspiracy to Commit Hostage Taking); 18 U.S.C. 1203(a),(2) (Hostage Taking; Aiding and Abetting and Causing an Act to be Done); 18 U.S.C. 924(c),(2) (Using and Carrying a Firearm During a Crime of Violence; Aiding and Abetting and Causing an Act to be Done); 18 U.S.C. 2339A (Conspiracy to Provide Material Support to Terrorists); 18 U.S.C. 2339B (Conspiracy to Provide Material Support or Resources to a Designated Foreign Terrorist Organization).
When an individual located in a foreign country has been indicted by a federal grand jury the United States will attempt to compel the government of that country to turn that individual over into the custody of the United States. This request will usually be pursuant to an extradition treaty between the United States and that foreign country. The extradition request is formally made with the foreign government’s embassy in the United States. Additionally, this formal request is made by the U.S. Department of State, not Justice. The U.S. will likely accompany this formal request with a copy of the indictment, arrest warrant, relevant statutes, a photograph of the accused, and the affidavit of an investigating officer on the case.
When this request is made, the terms of the treaty dictate whether the foreign government will agree to turn over the individual into the custody of the United States. Accordingly, most extradition treaties must satisfy a legal concept known as dual criminality. Dual criminality means that the offenses being charged by the requesting country must also be considered punishable offenses in the other country. This very requirement exists in Article 2(1)(a) of the extradition treaty between the United States and Colombia.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
Humboldt County Marijuana Grower Indicted for Murder by Feds
It was announced on March 1, 2012 that a federal grand jury in San Francisco indicted Mikal Xylon Wilde, of Humboldt County, with murder during a narcotics offense, conspiracy to manufacture and distribute 1000 or more marijuana plants, use of a firearm during and in relation to a drug trafficking offense and crime of violence, use of a firearm causing death in the form of a murder, and possession of ammunition by a convicted felon.
These federal offenses are being charged separately and in addition to California’s own charges against Wilde. As such, the defendant is currently in custody in Humbodlt County on state murder charges arising from the incident. An unfortunate, yet common, trend in drug related offenses are concurrent state and federal investigations and prosecutions for the exact same conduct. In essence, the defendant can lawfully be tried twice for the same conduct. The doctrine of double jeopardy does not apply in instances of concurrent federal and state prosecutions because both the federal government and state government are distinct sovereigns. This concept, known as dual sovereignty, permits any number of sovereign entities to separately prosecute a person if the person’s action violates the laws of each sovereign entity.
Wilde pleaded not guilty to state charges back in September 2011 and his case is ongoing. However, in line with the concept of dual sovereignty, Wilde was indicted for federal offenses in March 2012. Murder is generally considered an offense best handled by state governments. But since Wilde’s offense involves large scale narcotics trafficking, the federal government probably thought it would be prudent to pursue the case as well. The defendant will make his initial appearance in federal court in Eureka before U.S. Magistrate Judge Nandor J. Vadas.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
Former Executive at Gourmet Foods Company Sentenced to 30 Months in Prison for Embezzling Over $1 million from Her Employer
In the Central District of California, a woman was sentenced on February 13, 2012 for embezzling more than $1 million from her employer, a Santa Barbara-based gourmet food company. Lisa Sackie, 48, was sentenced by United States District Judge George H. Wu, who also ordered the defendant to pay $1.1 million in restitution to Future Food Brands, the parent company of Santa Barbara Bay Foods.
Sackie pleaded guilty to two counts of mail fraud in August of 2011, admitting that she wrote company checks to herself and to pay for personal expenses. Sackie pleaded to an information, and subsequently waived her right to a grand jury indictment. Sackie’s decision to plead to an information and waive her right to an indictment likely benefited her in sentencing because she admitted guilt early in the process and saved government resources. In fact, according to her sentencing memorandum and the sentencing guidelines, Sackie was facing a sentencing range of 33 to 41 months. Accordingly, Sackie was sentenced to 33 months in prison, the very bottom of her recommended sentencing range. Although her attorneys’ request for a variance of 33 months of probation was denied, Sackie benefited from cooperating, as reflected in the judge’s determination to sentence her at the bottom of the applicable range.
According to the plea agreement the government agreed to bring no additional charges against the defendant based upon her scheme to defraud her employer. Thus, instead of facing a multitude of fraud counts, Sackie only faced the maximum penalty of two fraud counts. Had Sackie not agreed to a plea agreement early on, the government would have likely convened a grand jury and charged her with a multitude of fraud counts dating as far back as 2004, which is when the government alleges Sackie’s scheme to defraud had begun. Depending on the full extent of the circumstances a defendant faces, it may be prudent to plea early, much like Sackie, and not put the government to its constitutional burden of proving a case.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
Switzerland’s Oldest Bank Indicted on U.S. Tax Charges
The US Attorney’s Office for the Southern District of New York recently announced the first ever indictment of a Swiss bank. The indictment, returned by the grand jury and unsealed on February 2, 2012, alleges that Wegelin & Co. conspired with US taxpayers and others to hide from the Internal Revenue Service (IRS) more than $1.2 billion in secret assets and the income these accounts generated.
Concurrent with this indictment, the US government seized more than $16 million from Wegelin’s correspondent bank account in the United States, in accordance with a civil forfeiture complaint and seizure warrant. Wegelin is charged in a superseding indictment with Michael Berlinka, Urs Frei and Roger Keller, three client advisers at the bank who were previously charged with the same conspiracy.
The government alleges that the defendant’s conspiracy in this case corresponds with Swiss banking giant UBS’ announcement on or about July 17, 2008 that it was closing its US cross-border banking business. UBS thereafter began notifying clients that they could continue to maintain undeclared accounts at Wegelin and certain other Swiss private banks. It was at this time that Wegelin’s executive committee, including its managing partners affirmatively decided to capture the illegal US cross-border banking business lost by UBS by opening new undeclared accounts for US taxpayer clients fleeing UBS.
The defendants in this case are currently only charged with conspiracy. However, their alleged conduct in the indictment could open them up to various other offenses. For example, the indictment alleges the transmission of a long list of checks and wire transfers from Wegelin to US taxpayers for the purpose of repatriating funds from these undeclared accounts. This list of transactions shows that most of the amounts transferred were under the $10,000 reporting requirement and sent to the same recipient over relatively short periods of time. Such behavior, if proven to have been undertaken to evade reporting requirements, is known as structuring, or “smurfing,” and is prohibited under the anti-structuring statute. The indictment also alleges that Wegelin instructed clients to carry cash and to avoid taking more than $10,000 with them on international flights, all to allegedly avoid reporting requirements. According to the statute, each such transaction can be charged as a separate and distinct offense. Therefore, defense counsel will have to take into consideration the possibility of a multi-count superseding indictment against the defendants when negotiating with prosecutors.
Another interesting observation for defense counsel to consider is the fact that the US taxpayer clients are identified as co-conspirators but have not yet been named as defendants themselves. These unindicted co-conspirators might have provided the US government with information about Wegelin’s alleged wrongdoing in exchange for proffer letters or non-prosecution agreements. Alternatively, the government may have merely agreed to delay the return of any such indictments to see how cooperative or useful these co-conspirators prove to be against Wegelin. When weighing the multitude of factors impacting the defendants’ decisions to accept plea agreements, defense counsel should recognize that all such witnesses will be particularly susceptible to cross-examination should this case go to trial.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
Patient Recruiter Pleads Guilty in Louisiana Health Care Fraud Scheme
On July 15, 2010 a federal grand jury in the Middle District of Louisiana named Fred Belcher, among others, in a five-count indictment. The indictment specifically charged Mr. Belcher with (1) Conspiracy to Commit Health Care Fraud and (2) Conspiracy to Defraud the United States and to Receive and Pay Health Care Kickbacks. On January 31, 2012 Mr. Belcher pled guilty to one count of Conspiracy to Commit Health Care Fraud, effectively dropping one of the conspiracy charges against him in return for his plea.
Mr. Belcher’s plea admitted to the court that he worked as a recruiter for Healthcare 1 LLC, Medical 1 Patient Services LLC, and Lifeline Healthcare Services Inc., Louisiana-based companies that fraudulently billed durable medical equipment (DME) to the Medicare program from 2004 to 2009. He and other recruiters were hired to obtain prescriptions for DME such as leg braces, arm braces, power wheel chairs, and wheel chair accessories. Specifically, Belcher recruited Medicare beneficiaries to attend “health fairs” that he organized at churches and other locations in the beneficiaries’ communities. At these fairs, he obtained information from the beneficiaries and paid a doctor to prescribe medically unnecessary DME for the beneficiaries. Belcher then sold these prescriptions to the three Louisiana companies listed above to bill Medicare.
Unlike traditional criminal cases, defendants involved in criminal activity related to government health care programs (i.e. Medicare, Medicaid, etc.) must be conscious of potential enforcement actions by the Office of Inspector General (OIG) of the U.S. Department of Health & Human Services (HHS) in addition to any criminal consequences. OIG’s mission is to protect the integrity of HHS programs as well as health and welfare beneficiaries. The OIG accomplishes this primarily by conducting audits, investigations, and evaluations. Perhaps most importantly, OIG has the power to exclude persons from participating in or providing services for or on behalf of HHS programs such as Medicare and Medicaid. In essence, to be excluded by the OIG means being black-listed from the medical industry.
Exclusions are a serious and potentially devestating consequence of pleading guilty to criminal activity involving HHS programs. A quick search of OIG’s database on January 31, 2012 shows that Mr. Belcher has yet to be excluded from the Medicare program. This however, does not mean that he won’t eventually be excluded. OIG exclusions tend to happen subsequent to a guilty plea or criminal investigation and in addition to any imprisonment, forfeiture, or fines levied in the criminal case. In many ways, exclusion by the OIG can be worse for the defendant than many criminal consequences because it denies the defendant the ability to earn a livelihood in the only industry the defendant is familiar with.
Therefore, defense counsel should immediately engage in a dialogue with OIG on behalf of a client facing health care fraud charges to dicuss whether a potential exclusion is being considered. Exclusions are regularly for a term of years, thus there would seem to be room to negotiate more favorable terms for one’s client if an exclusion is inevitable. Moreover, defense counsel should be conscious of an individual client’s exposure to exclusion whenever a corporate entity in the medical field is being investigated or enters into a non-prosecution agreement. Even in instances where a particular client is not charged with criminal conduct, OIG may unilaterally move to have that person excluded from the Medicare program depending on the scope of the entity’s admissions about the client. Nonetheless, defendants in such cases must be made aware of the potential for exclusion so that they can make an informed decision about accepting a plea agreement or going to trial.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
