TJOFLAT, Circuit Judge:
This case involves multiple schemes to defraud the Florida and California Medicaid
Although these recycled blood-derivatives accounted for less than two and a half percent of Bio-Med's overall sales, they accounted for a much larger portion of Bio-Med's profits, yielding in excess of $39 million over a five-year span from 1998 through 2002.
The Government chose to prosecute the Bradleys' schemes under the anti-racketeering, conspiracy, mail fraud, wire fraud, and money laundering statutes, 18 U.S.C. §§ 1962, 371, 1341, 1343, and 1956, respectively, and the statutes criminalizing the failure to disclose an interest in a financial account in a foreign country while engaging in a pattern of illegal activity, i.e., mail fraud, wire fraud, or money laundering, 31 U.S.C. §§ 5314 and 5322(b). The grand jury indicted eight individuals, Bio-Med, and Interland Associates, Inc.
The district court sentenced the Bradleys and Tellechea to terms of imprisonment, imposed fines, and ordered them to make restitution. Bio-Med was placed on probation, fined, and also ordered to make restitution. As part of the Bradleys' sentences the district court ordered forfeiture to the United States of the Bradleys' interests in Bio-Med. The court also ordered the Bradleys and Bio-Med to pay to the United States jointly and severally, as forfeiture, the sum of $39.5 million. All four defendants appealed their convictions and sentences.
Twenty-three days after the imposition of the four defendants' sentences, and while their convictions and sentences were on appeal, the district court, to aid the Government in realizing the above forfeiture and the fines and special assessments imposed on the defendants, entered an order appointing a receiver and instructed her to marshal the defendants' assets. The Bradleys, Bradley, Jr.'s wife, Norma Bradley, and Tellechea appealed that order,
The Bradleys, Bio-Med, and Tellechea seek the reversal of their convictions and
We begin our consideration of these appeals by setting out, in part I, the facts the Government established in its case in chief.
The schemes to defraud the Florida and California Medicaid programs were of varying levels of complexity. All involved the "recycling"
The Florida Medicaid Scheme was executed in this way. Physicians who were working at AIDS clinics in the Miami area and prescribing intravenous immune globulin ("IVIG")
About twice a month, Tellechea or Trespalacios, or both, came to the clinics, picked up the unused IVIG, and took it to Michael Bossey, who owned MedPoint, Inc. ("MedPoint"), a closed door pharmacy operating in the Miami area. Bossey, in turn, delivered the IVIG to Bio-Med's warehouse in Miami.
Bossey provided Tellechea with the money to pay the physicians who sold the IVIG.
Bio-Med subsequently sold the unused IVIG to pharmacies, both those owned by the Bradleys and unsuspecting third party pharmacies, which used the medications to fill prescriptions for other patients.
Over time, the Florida Medicaid Scheme grew to involve a second prescription drug wholesaler owned by the Bradleys, Intermed Pharmaceutical, Inc., d/b/a Intermed Marketing of Savannah ("Intermed").
The amount of recycled IVIG Florida Medicaid paid for varied based on the number of patients who had prescriptions for IVIG, but failed to appear for their infusions. According to an assistant of Dr. Arocha,
Another Bio-Med source of IVIG was Elizabeth ("Liz") Pascual, who owned the closed door pharmacy, IV Solutions, Inc ("IV Solutions"),
The Bradleys profited heavily from the IVIG Bio-Med obtained from Pascual. Pascual purchased the IVIG for approximately $42 per gram and invoiced it to Intermed at $54 per gram. Intermed invoiced it to Bio-Med at $58 per gram, approximately the manufacturers' price for IVIG during that period, so that the transfer would look legitimate. Florida Medicaid reimbursed the Bradleys' pharmacies, Infustat and Seratech, for the same IVIG at $72.89 per gram.
The Bradleys and Bio-Med began running the Medi-Cal/GHPP Scheme in 1998. Prior to that time, Actsys Medical, Inc. ("Actsys"), a prescription drug wholesale business, supplied Recombinate,
In 1998, Tamiyasu approached Bradley III with an opportunity to purchase this unused Recombinate at discounted rate, and Bradley III agreed. Thereafter, once Williams obtained the Recombinate from his network of patients, Smith would remove all identifying papers from the vials and ship the vials (off the books) to Bio-Med in Miami. Bio-Med kept the majority of the recycled Recombinate for its own stock and sold the remainder back to Apex, which, to accommodate its arrangement with Bio-Med, had commenced operating as a wholesaler as well as a closed door pharmacy. Eventually the Apex Partners stopped shipping the unused Recombinate they intended to repurchase from Bio-Med to Miami and instead held that Recombinate in California pending the outcome of the transaction; that Recombinate was bought and sold, then, solely on paper. This had the effect of washing the Recombinate clean of any taint—to an outside observer, the Recombinate appeared to have been purchased legitimately by Apex from Bio-Med and shipped to California from Miami even though it had never once left the Apex Partners' possession.
Both Bio-Med and Apex distributed the Recombinate to pharmacies, which, unaware of how the Recombinate had been acquired, dispensed it to patients. Apex also distributed the unused Recombinate to its patients. Medi-Cal and GHPP reimbursed the pharmacies, including Apex, for the Recombinate at $1.28 per unit (the rate for unused Recombinate).
Bio-Med paid the Apex Partners nearly $2.3 million for the Recombinate. The payments were made in cash or by check written on a Bio-Med bank account. After
The Bradleys and their associates attempted to camouflage the profits they realized from the schemes. In February 1998, the Bradleys incorporated Intermed Pharmaceutical Supply, Corp. ("IPS")
Funds were paid out of the Barclays accounts to several individuals and entities involved in the schemes. The payment methods were not consistent; the Bradleys altered their methods after realizing that certain transactions were more easily tracked by law enforcement. The Bradleys first transferred funds out of the IPS accounts to a Barclays account in the name of Global Biologics, a corporation the Apex Partners created.
Neither Bradley disclosed the existence of the Barclays accounts to the Internal Revenue Service ("IRS") in 1999 or 2000, both failing to check the appropriate box on Form 1040's Schedule B acknowledging "an interest in or a signature authority or other authority over a financial account in a foreign country." The Bradleys also failed to file the corresponding Treasury Department Form 90-22.1, which is used to report income from a foreign bank account.
The Bradleys and Bio-Med argue that the facts as depicted above were insufficient to establish that they committed the crimes alleged in the indictment—specifically, violations of the RICO, mail fraud, wire fraud, and money laundering statutes. The Bradleys also contend that the Government failed to make out a case under the statute requiring the reporting of foreign financial transactions. Tellechea argues that the Government failed to prove that he conspired to defraud Florida Medicaid or to pay physicians kickbacks for having blood-derivative prescriptions filled at the Bradleys' closed-door pharmacies.
We turn first, in subpart A, to the Bradleys' and Bio-Med's arguments, then, in subpart B, to Tellechea's. Finally, in subpart C, we consider Bradley III and Tellechea's argument that the district court erred in denying their motions for judgment of acquittal on venue grounds.
In assessing the Bradleys' and Bio-Med's challenges to the sufficiency of the evidence, we focus on the arguments they have not advanced in their briefs in addition to those they have made. For example, they do not dispute that Bio-Med was recycling blood-derivatives as the Government contended. Rather, they argue that their recycling scheme did not operate to defraud Florida Medicaid, Medi-Cal, or GHPP—that is, neither those programs nor the patients to whom the recycled medications were administered were the victims of a fraud they perpetrated. If they are correct, none of their convictions can stand, as each is predicated on the alleged fraud perpetrated against Florida Medicaid and Medi-Cal or GHPP.
Bradley III was convicted on Counts 1 through 54 and 83 through 284, Bradley, Jr., on Counts 1, 54, 285 and 286, Bio-Med on Counts 1 through 53.
Count 1 was brought under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c).
Bradley III and Bio-Med make the same argument with respect to their convictions on Counts 2 through 53. Count 2 alleged a RICO conspiracy, 18 U.S.C. § 1962(d), to commit the Count 1 offense. Count 3 alleged that Bradley III and Bio-Med conspired to defraud Florida Medicaid by wire. Counts 4 through 32 alleged that they defrauded Florida Medicaid by wire. Count 33 alleged that they conspired to defraud Medi-Cal and GHPP by wire. Counts 34 through 53 alleged that they defrauded Medi-Cal and GHPP by wire.
The Bradleys again make the same argument with respect to the remaining counts of conviction. They were convicted on Count 54, which alleged that they conspired to launder money obtained by mail fraud and/or wire fraud. Bradley III was convicted on Counts 83 through 283 for laundering money obtained by mail fraud and/or wire fraud. Bradley III was convicted on Count 284 and Bradley, Jr., was convicted on Counts 285 and 286 for failing to disclose an interest in a financial account in a foreign country while engaging in a pattern of illegal conduct, i.e., mail fraud, wire fraud, and money laundering.
Because the outcome of the Bradleys' and Bio-Med's sufficiency-of-the-evidence arguments turn on the absence of fraud, we start with what constitutes mail fraud and wire fraud, and how those offenses serve as elements of money laundering, transportation of stolen goods, and failure to disclose foreign financial transactions.
Mail
The second element is self-explanatory.
Ward, 486 F.3d at 1222 (quoting Pereira v. United States, 347 U.S. 1, 8-9, 74 S.Ct. 358, 363, 98 L.Ed. 435 (1954)) (alteration in original).
Proof of intent to defraud is necessary to support convictions for mail and wire fraud. United States v. Jennings, 599 F.3d 1241, 1250 (11th Cir. 2010).
Significantly, the mail and wire fraud statutes "punish unexecuted as well as executed schemes." Pelletier v. Zweifel, 921 F.2d 1465, 1498 (11th Cir.1991). It is therefore unnecessary that the victim actually relies on the misrepresentation or omission; proof of intent to defraud is sufficient. See id. All that is necessary is that the scheme be reasonably calculated to deceive; the intent element of the crime is shown by the existence of the scheme. United States v. Bruce, 488 F.2d 1224, 1229 (5th Cir.1973).
The mail and wire fraud statutes, 18 U.S.C. §§ 1341, 1343, do not define what constitutes a scheme to defraud. In the absence of a statutory definition, the courts have provided a judicial framework for conceptualizing a fraudulent scheme. See United States v. Pendergraft, 297 F.3d 1198, 1208 (11th Cir.2002) ("[T]he meaning of `scheme to defraud' has been judicially
That framework defies measure by a technical standard, Bruce, 488 F.2d at 1229, but gives us a handy measure to articulate what constitutes a "scheme to defraud," Pendergraft, 297 F.3d at 1208. Pursuant to the judicial definition, a "scheme to defraud" is broader than the common law conception of fraud. Id. (citing Hammerschmidt v. United States, 265 U.S. 182, 188, 44 S.Ct. 511, 512, 68 L.Ed. 968 (1924)). Our definition "is a reflection of moral uprightness, of fundamental honesty, fair play and right dealing in the general and business life of members of society." Gregory v. United States, 253 F.2d 104, 109 (5th Cir.1958). But despite its breadth, the judicial definition does not lack teeth; "the word still signifies `the deprivation of something of value by trick, deceit, chicane, or overreaching.'" Pendergraft, 297 F.3d at 1208-09 (quoting Hammerschmidt, 265 U.S. at 188, 44 S.Ct. at 512). To gauge a defendant's intent to commit a fraudulent scheme, then, we must determine whether the defendant attempted to obtain, by deceptive means, something to which he was not entitled.
In the present case, proof of an intent to engage in mail and wire fraud was necessary for the Government to obtain convictions on the counts alleging transportation of stolen goods in interstate commerce, 18 U.S.C. § 2314,
As charged, proof of mail or wire fraud was likewise necessary to sustain the convictions for failure to disclose a foreign financial interest, 31 U.S.C. §§ 5314, 5322(b). Section 5314 charges the United States Secretary of the Treasury with requiring United States taxpayers to keep records pertaining to financial transactions with foreign agencies, 31 U.S.C. § 5314(a), and with prescribing regulations pertaining to the keeping of those records, 31 U.S.C. § 5314(b), and their disclosure, 31 U.S.C. § 5314(c). Section 5322(b) imposes criminal penalties on any individual who willfully violates the Secretary's regulations "while [also] violating another law of the United States or as part of a pattern of illegal activity involving more than $100,000 in a 12-month period." At trial, the Government argued that the Bradleys had failed to disclose their interests in a foreign financial institution in violation of regulations prescribed pursuant to § 5314 while also committing mail and wire fraud and as a part of a pattern of illegal, racketeering activity, which, as stated supra, consisted solely of mail and wire fraud and other acts predicated on a scheme to defraud. Without proof of mail or wire fraud, then, the Government could not prove its case, as alleged in the indictment, under § 5322(b).
The evidence against the Bradleys and Bio-Med was sufficient to prove that they engaged in a scheme to defraud Florida Medicaid, Medi-Cal, and GHPP. As such, we affirm the jury's verdicts and the district court's denial of the defendants' motions for judgments of acquittal on both schemes.
In sum, we hold that a reasonable jury could have found the following. Florida Medicaid, Medi-Cal, and GHPP never intended to reimburse for recycled blood-derivatives that had been previously dispensed. For that reason, the programs had policies that indicated as much to any reasonable observer.
The Bradleys and Bio-Med knew of these policies. Despite knowing that the programs would not knowingly pay for recycled blood-derivatives—and that Medicaid
The evidence presented at trial is far too expansive to catalogue in any detail, so the following is but a brief and incomplete summary of the relevant testimony. We begin with the evidence concerning the Florida Medicaid Scheme and the evidence regarding Medi-Cal and GHPP. We then confront the defendants' legal arguments as to the sufficiency of that evidence.
Jerry Wells, the Bureau Chief of Pharmacy Services for Florida Medicaid, testified that the program's "policies"
What we take, and what the jury presumably took, from Wells's testimony is that once a medication is marked as dispensed and reimbursement is paid for it, Medicaid considers the medication administered to the patient for whom it was dispensed and would not reimburse for it a second time. It was therefore reasonable for the jury to draw from Wells's testimony that Florida Medicaid intended to pay for blood-derivatives once, and only once, and that causing Florida Medicaid to reimburse twice for medications that had been
It was also reasonable for the jury to find, based on the testimony of several witnesses, that the Bradleys, Bio-Med employees, and related associates for whom the Bradleys and Bio-Med were responsible knew Florida Medicaid would not, absent misdirection, reimburse a second time for a blood-derivative that had not actually been administered to the patient the first time around. Several of the participants in the Florida Medicaid scheme, namely Dr. Cadigan and his nurse, testified that they were told by Tellechea that he would purchase IVIG from them if they stockpiled the medication whenever a patient did not appear. Most, but not all, of those patients, Tellechea knew, were covered by Florida Medicaid. As a prerequisite to stockpiling those blood-derivatives, Dr. Cadigan and his nurse forged patient signatures on documents provided to them by Tellechea, and which Tellechea required them to have completed. From that testimony, the jury could have inferred that Tellechea knew Florida Medicaid intended that all dispensed medication be used by patients and not recycled for resale; otherwise, why would Florida Medicaid require patient signatures, and why would Tellechea have Dr. Cadigan's associate forge those signatures?
Once it found that Tellechea knew that Florida Medicaid would not reimburse a second time for blood-derivatives the program considered used by patients, a reasonable jury could have taken the next step and inferred that the Bradleys, and thus Bio-Med, knew as well. First, the evidence established that Bio-Med was a leader in the prescription pharmaceutical industry. Bradley III, as CEO of Bio-Med, consequently had reason to know how Medicaid reimbursed the pharmacies he supplied. Moreover, Bradley III and Tellechea were business partners, and Tellechea sold Bio-Med the IVIG he collected from Dr. Cadigan. It seems reasonable to believe that, even if he did not know of the Medicaid policy on his own, Bradley III would have learned of it through Tellechea.
The defendants' attempts to forge and obscure the drugs' pedigree provides additional circumstantial evidence that Bradley III and Bio-Med knew that Florida Medicaid would not pay for recycled drugs. Witness testimony established that Bradley III and his associates worked out a means of obscuring the pedigree associated with the IVIG they obtained from Dr. Cadigan and others. For example, Bossey testified that he received IVIG from Tellechea and others that was supposed to be "administered to patients but . . . never received [by] them. They were [instead] given to me."
Bossey also testified to Bradley III's desire to directly mislead Florida pharmaceutical inspectors. According to Bossey, Bradley III asked him to halve the amount of IVIG listed on the invoices and double the price; this, said Bossey, made the transaction look legitimate, as the abnormally low price might have drawn the inspector's "attention." Moreover, Bossey testified that Bradley III told him to be on the lookout for control numbers written with invisible ink that would allow inspectors to trace IVIG originating at Bio-Med back to Bio-Med.
Bossey's testimony was largely corroborated by Castro
Moreover, the Government presented evidence from which a reasonable jury could have inferred that Bradley, Jr., was aware that some portion of Bio-Med products was obtained by, in his words, "fraud." Smith, one of the Apex Partners, testified that, at a meeting in California between the Apex Partners and the Bradleys to discuss payment methods—the Apex Partners had trouble cashing "that many checks"—Bradley, Jr., "kind of yelled out, you guys are talking about insurance fraud, you're all going to end up in the big house and this has to stop right now." The jury could have inferred from this statement that Bradley, Jr., understood
Finally, the evidence was sufficient to show that the Bradleys, Bio-Med, and their associates knew the IVIG they had received, or a portion of that IVIG, would again be distributed to Medicaid patients and billed to the state program. Bio-Med sold IVIG to its related pharmacies, Infustat and Seratech, both of which Bio-Med knew primarily catered to Florida Medicaid patients. And, even when Bio-Med sold to outside pharmacies, the nature of the blood-derivative business made it inevitable that Bio-Med's recycled IVIG would be dispensed to patients covered by the program.
From all this, a reasonable jury could have understood the evidence to prove that the Bradleys and Bio-Med knew Florida Medicaid would not have reimbursed for IVIG sold by Bio-Med had it known where Bio-Med had obtained the medication. Thus, it was reasonable to believe that, by failing to inform the program of the IVIG's source and/or by concealing that source, these defendants knowingly caused Florida Medicaid to reimburse for medication the program did not intend to cover.
The evidence was likewise sufficient as to Medi-Cal and GHPP. Douglas Hillbloom, a former employee in the Department of Health Services, testified that "[t]he [California] Board of Pharmacy would not allow medication once [it] had been dispensed to a patient to be returned." This was, he said, because "[o]nce it leaves the control of the pharmacy, it was not under the control of the pharmacy or a Board of Pharmacy regulation regarding storage." Thus, at that time in California, once blood-derivatives such as Recombinate had been dispensed to a patient, Medi-Cal and GHPP assumed they would be used—if unused, the medication was to be thrown out or disposed of, but "technically" should be destroyed.
Following Hilbloom was Harry Fry, an employee with GHPP, who testified that, much like Medi-Cal, GHPP would not "allow payment of drugs for use by anyone else but the person to whom it was dispensed." In other words, just like Medi-Cal, once blood-derivatives like Recombinate had been dispensed to a patient, GHPP assumed they had either been used or destroyed by that patient.
Knowledge of Medi-Cal's and GHPP's policies was widespread. Other industry representatives testified that it was well
From this testimony, a reasonable jury could have found that Medi-Cal and GHPP had policies against reimbursing for recycled medication. Furthermore, the evidence showed that Bio-Med, through Bradley III, knew of that policy and ignored it. Bradley III was an experienced professional in the prescription pharmaceutical business and presumably had the same information about Medi-Cal and GHPP's policies as the industry insiders who testified at trial. Intermed's invoices also suggested this knowledge; a sentence on the invoices stated that all sales were final—that is, that blood-derivatives could not be returned. Furthermore, Tamiyasu and Williams, two of the Apex partners, both of whom were involved in the California Medicaid Scheme, each testified that Bradley III was aware that Medi-Cal and GHPP would not allow recycled Recombinate to be resold if the programs ever became aware that the medication had already been dispensed to a patient.
A reasonable jury could also have found that Medi-Cal and GHPP actually paid a second time for medications Bio-Med purchased from patients. First, there was testimony that, on at least one occasion, a vial of Recombinate was repurchased from a patient and eventually dispensed a second time with the original patient's label still attached.
The Bradleys and Bio-Med advance two arguments against this conclusion. First, as discussed supra, they contend that the programs had no policies against reimbursing for recycled drugs, or, alternatively, that they were unaware of those policies. The defendants claim that the trial testimony provided by Florida Medicaid, Medi-Cal, and GHPP representatives, and the testimony of industry experts, was merely a post-hoc attempt imply that such policies had existed. In the absence of an applicable policy, the defendants conclude they could not have defrauded the programs because the programs would have paid for the drugs even if they knew the drugs were recycled.
This argument has two flaws, one factual and one theoretical. Factually, the trial testimony established that such policies did exist and that the defendants knew of them. Indeed, if the defendants thought that the programs would pay for recycled drugs, why did they go to such great lengths to conceal the fact that the medications had been recycled?
Theoretically, even if the policies had not existed, the defendants still committed fraud; the defendants' belief that the programs would not pay for recycled drugs—as evidenced by their pains to conceal their nature—is sufficient under the mail and wire fraud statutes. These statutes "punish unexecuted, as well as executed, schemes." Pelletier, 921 F.2d at 1498. Here, the evidence supports the jury's finding that the defendants intended to take part in a scheme that had, as its purpose, the goal of causing Medicaid programs, by way of misinformation, to reimburse for medications for which they believed the programs did not intend to reimburse. For our purposes, that is enough. See, e.g., Kemp v. Am. Tel. & Tel. Co., 393 F.3d 1354, 1359-60 (11th Cir. 2004) (recognizing a duty to inform customers of certain information where failure to do so would cause the customer to be misled) (citing, inter alia, United States v. Townley, 665 F.2d 579, 585 (5th Cir.1982) (noting that "under the mail fraud statute, it is just as unlawful to speak `half truths' or to omit to state facts necessary to make the statements made, in light of the circumstances under
As for their second argument, the Bradleys and Bio-Med argue that, even assuming that their conduct was fraudulent, United States v. Medina, 485 F.3d 1291 (11th Cir.2007), required the Government to precisely trace the recycled prescriptions to show that Florida Medicaid, Medi-Cal, and GHPP paid twice for at least one specific dose of recycled drugs. This argument fails as well.
In Medina, we reversed one defendant's conviction under the health care fraud statute, 18 U.S.C. § 1347,
The Bradleys and Bio-Med stretch Medina's holding one step further. Combining Medina's holding with case law interpreting a qui tam provision in the False Claims Act (the "FCA"), 31 U.S.C. § 3729,
In making this second argument, the defendants go too far. Medina merely requires the Government to present some evidence of a fraudulent scheme; it holds that conclusory statements regarding "general practices"—as opposed to evidence that the defendants conducted transactions that involved recycled medications—do not suffice. As summarized above, the Government's evidence in this case went far beyond conclusory statements; the Government presented evidence to the jury that the Bradleys and Bio-Med made payments for unused drugs, laundered those drugs to make it appear as if they were new, and then resold those drugs in a manner that made it certain that the programs would pay for recycled drugs.
To summarize, a reasonable jury could find beyond a reasonable doubt that the recycling schemes in which the Bradleys and Bio-Med engaged were fraudulent. Having reached that finding, the jury had an evidentiary basis for the verdicts it
Bradley III, Bio-Med, and Tellechea were convicted on Count 3 of a duel-object conspiracy, in violation of 18 U.S.C. § 371. The conspiracy's first object was the scheme to defraud Florida Medicaid by wire, by causing the program to pay more than once for a vial of recycled, unused IVIG, in violation of 18 U.S.C. § 1343. The second object was to pay illegal kickbacks to physicians for sending their IVIG prescriptions to Bradley-owned closed-door pharmacies, in violation of 42 U.S.C. § 1320a-7b(b)(2)(B).
After the jury returned its verdicts, Bradley III moved the district court for a judgment of acquittal on Count 284, and Tellechea moved the court for a judgment of acquittal on Count 3. Both motions argued that venue had been improperly laid in the Southern District of Georgia. The district court disagreed and denied their motions. Bradley III and Tellechea now challenge the court's rulings.
Count 284 alleged that Bradley III failed to disclose an interest in a foreign financial account while committing mail fraud, wire fraud, and money laundering, in violation of 31 U.S.C. §§ 5314 and 5322(b). Section 5314 authorizes the Secretary of the Treasury to require a taxpayer to keep records and file reports "when th[at] resident, citizen, or person makes a transaction or maintains a relation for any person with a foreign financial institution." 31 U.S.C. § 5314(a). The Secretary has exercised that authority by requiring all persons subject to the jurisdiction of the United States to disclose whether they have "an interest in, or a signature or other authority over, a bank, securities or other financial account in a foreign country." 31 C.F.R. § 103.24(a). If a person owns such an account, he is obligated by 31 C.F.R. § 103.24 to file Form 90-22.1 with "the Commission of the Internal Revenue." That form instructs the person that the filing may be accomplished "by mailing this report to the Department of the Treasury . . . or by hand-carrying it to any local office of the Internal Revenue Service for forwarding to the Department of the Treasury" in Detroit, Michigan.
Section 5322(b) prescribes criminal penalties for any person who "willfully" violates § 5314 by failing to disclose a financial interest in a foreign financial institution while also "violating another law of the United States or as part of a pattern of any illegal activity involving more than $100,000 in a 12-month period." 31 U.S.C. § 5322(b). Count 284 alleged that, during calendar year 1999, Bradley III had such a financial interest in a bank account that had an aggregate value of over $2,000,000 and that he willfully failed to report this while committing mail fraud, wire fraud, and money laundering as part of a pattern of illegal activity.
Venue, in a criminal case, is constitutionally proper only in the district where the crime was committed. U.S. Const. art. III, § 2, cl. 3; U.S. Const. amend VI. The Federal Rules of Criminal Procedure echo that sentiment: "Unless a statute or these rules permit otherwise, the government must prosecute an offense in a district where the offense was committed." Fed.R.Crim.P. 18. In the venue context, the failure to perform a legally required act occurs where the act is supposed to be performed. United States v.
Because there is no dispute that Bradley III had a qualifying interest in a foreign financial institution under 31 U.S.C. § 5314, he was required under the applicable regulation to disclose that interest on his tax return and file a form with the IRS. The form in question, Form 90-22.1, could be filed either by mailing it to the IRS in Detroit, Michigan, or by hand-delivering it to any local IRS office. Bradley III claims that, because he never delivered the form as required, venue was properly laid only in Detroit (the Eastern District of Michigan) or his district of residence (the Southern District of Florida). Relying upon the Fourth Circuit's reasoning in Clines, the Government answers that the option of filing Form 90-22.1 in "any local office" was sufficient to establish venue in the Southern District of Georgia.
The Government's reliance on Clines is not misplaced. There, facing seemingly identical circumstances, the Fourth Circuit determined that venue was properly laid in the district where Clines's tax returns were prepared. Clines, 958 F.2d at 583. The court's opinion was, as here, based on the "any local office" provision of Form 90-22.1. Id. at 584. Dismissing Clines's worries that its ruling would create unlimited venue possibilities, the court noted that it saw "no evidence that the Government engaged in forum shopping," id. at 583 n. 3, and reasoned that its "conclusion is consistent with the principal concern the courts have advanced as underlying the constitutional venue provisions," id. at 583. As such, the Fourth Circuit came to the conclusion that "venue in [the District of Maryland] did not impermissibly offend Clines's rights guaranteed by the Sixth Amendment." Id. at 584.
Likewise, the possibility that Bradley III would have filed the form in the Southern District of Georgia, the district where his returns were prepared and home to a local IRS office,
Here, the district court determined that the district was not inconvenient to Bradley III. We agree and further find that the Southern District of Georgia did not create a constitutional hardship. As such, we hold that venue was properly laid in the Southern District of Georgia and that the district court did not err in denying Bradley III's motion for a judgment of acquittal.
Finally, as a conceptual matter, Bradley III's interpretation is far too restrictive. He would have this court decide that, as a constitutional matter, a defendant could dictate venue by failing to file the very form he was required to submit. The implication of Bradley III's position is that he could defeat jurisdiction in any district other than the two he has previously named by proclaiming he never would have submitted the form there. That simply cannot be the case.
Tellechea argues that venue for Count 3 was improperly laid in the Southern District of Georgia. Count 3 listed two sets of overt acts the conspirators allegedly committed in furtherance of the two objects of the conspiracy: (1) the execution of a scheme to defraud Florida Medicaid; and (2) the payment of illegal kickbacks to Florida physicians for having their prescriptions for IVIG filled at Bradley-owned closed-door pharmacies. The first set of overt acts involved twenty-nine wire transfers from Intermed in Savannah to Med-Point in Miami. The second set included a number of cash payments Tellechea and other conspirators made to physicians in Miami in exchange for prescription referrals. While Tellechea concedes that venue in the Southern District of Georgia was likely appropriate as to the first object of the conspiracy, he contends it was not as to the second object. And since he construes the jury's verdict on Count 3 to rest on the latter object, which was to be accomplished in Miami, he believes the verdict cannot stand.
As we stated above, venue is constitutionally and statutorily proper only in the district where the offense has been committed. U.S. Const. art. III, § 2, cl. 3; U.S. Const. amend VI; Fed.R.Crim.P. 18. But in an action involving a conspiracy, as with all continuing offenses under 18 U.S.C. § 3237(a),
Tellechea's venue challenge is twofold. First, he argues that, because the jury was instructed that it could find a defendant guilty of the Count 3 conspiracy if it found that he had conspired to commit either of the conspiracy's two objects,
Extrapolating from the jury's verdicts on those related counts, Tellechea postulates that the jury could not have convicted him on Count 3 for conspiring to commit wire fraud;
Even assuming that Tellechea is correct that the Government was required to establish venue for both objects of the conspiracy and that the jury found him guilty only of conspiring to pay illegal kickbacks, the district court properly denied Tellechea's motion for a judgment of acquittal. Tellechea was convicted for his involvement as a conspirator in the recycling scheme. He was therefore vicariously responsible for the acts of any co-conspirator taken in furtherance of that scheme. And in this instance, one of Tellechea's co-conspirators, Bradley III, used Intermed, a corporation headquartered in the Southern District of Georgia, and Intermed's bank accounts, also located in that district, as the source of funds necessary to complete the kickback object. Bradley III's fraudulent use of Intermed's bank accounts to transfer funds to Tellechea for eventual payment as kickbacks to the Miami doctors—acts for which Bradley III was convicted at trial—thus constituted twenty-nine overt acts in furtherance of the conspiracy.
Because those acts took place, in relevant part, in the Southern District of Georgia, the district court had venue over both objects of Count 3. We therefore uphold the district court's denial of Tellechea's motion for a judgment of acquittal.
The defendants ask that we reverse their convictions and remand the case for a new trial due to errors the district court purportedly made in rulings pretrial and at trial. In subpart A, we consider the pretrial rulings, in subpart B, those made during the trial.
The most crucial ruling the district court made pretrial was the denial of the defendants' motions to suppress evidence seized by federal agents from Bio-Med's headquarters and server farm, Tellelchea's private office, and Bradley, Jr.'s residence. Evidence seized during these searches played a significant role in the Government's case in chief; without it, the Government may have been unable to prove many of the allegations of the superceding indictment, especially the money laundering counts and corresponding acts of racketeering. With the exception of Bio-Med's computer servers, the searches were conducted pursuant to search warrants issued by federal magistrate judges. We address the merits of the district court's ruling after recounting the events that led to the issuance of the search warrants and how they were executed.
The investigation of the Bradleys' recycling scheme began in 2001 after agents of the IRS, the Food and Drug Administration ("FDA"), and the Immigration and Customs Enforcement ("ICE") obtained evidence implicating Larry Pinkoff and the Golden Isles Pharmacy ("Golden Isles") in a recycling scheme similar to the Bradleys'. In exchange for leniency, Pinkoff agreed to cooperate in an ever-widening drug probe of the recycling and diversion of pharmaceuticals, including blood-derivatives. He told investigators that he had sold Bradley III "street" pharmaceuticals in 1996, and that, when Bradley III was unable to pay for them, Bradley, Jr., intervened to pay Bradley III's debt. Pinkoff then allowed the agents to record three telephone conversations with the Bradleys in which the men discussed the particulars of the Bradleys' business.
Based on Pinkoff's representations and Bradley III's recorded statements, the agents asked Pinkoff to arrange a meeting with the Bradleys (the agents would be operating undercover) to discuss the potential sale of a pharmacy the Bradleys' owned in Puerto Rico.
After obtaining additional information about the Bradleys' recycling scheme, the agents applied for warrants to search eight locations. On December 11, 2002, they swore out the necessary affidavits before magistrate judges in four federal districts. The applications were substantially identical,
The next day, federal agents simultaneously executed the search warrants in a coordinated effort. Agents raided all eight locations, including Bio-Med's official headquarters and warehouse in Miami, the offices of Infustat and Seratech, Intermed's headquarters in Savannah, Dena's office in San Juan, and the residencies of both Bradleys. At Bio-Med's headquarters, 6855 Southwest 81st Street, the agents seized all business records pertaining to "the purchase or sale of prescription pharmaceuticals" between 1997 and 2002 involving the Bradleys and known or unknown corporations, records of "any financial/business transactions," and "all receipts and invoices for expenditures made" between the named individuals and entities during that time period. These seizures amounted to virtually all of Bio-Med's records over that time. Agents also seized computer hard drives at the headquarters location.
When the agents inquired about computer servers they expected to find at 6855 Southwest 81st Street, a Bio-Med employee directed them across the street to 6860 Southwest 81st Street; the servers had recently been moved off-site. The agents went to the off-site location and entered the premises through an unlocked door. Recognizing they lacked a warrant for the computer servers at that location, and fearing that data contained on the servers might be purposefully or inadvertently destroyed before a warrant could be obtained, one agent asked the Bio-Med employee running the facility to shut down the computers. That employee complied. Agents then obtained a warrant for the servers. They imaged the servers that night, either removing entire hard drives or copying individual files from the computers.
Simultaneous searches took place at the offices of Infustat and Seratech at 6356 Manor Lane in Miami, and at Bradley, Jr.'s residence at 616 Herb River Drive in Savannah. At Bradley, Jr.'s residence, agents seized blank checks on the IPS bank account at Barclays Bank in Nassau, Bahama, a hand-written list of assets relating to a "Nassau Trust,"
At 6356 Manor Lane,
The Bradleys and Bio-Med both moved the district court to suppress the search of Bio-Med's headquarters on the ground that the search was conducted pursuant to a warrant that was overbroad and lacking in particularity, in that it allowed the agents to seize, effectively, all personal and business files relating to Bio-Med's wholesale business from 1997 through 2002. The district court denied their motions under the "pervasive fraud doctrine," see, e.g., United States v. Martinelli, 454 F.3d 1300, 1307-08 (11th Cir.2006) (permitting government seizure of "all of the business records of an enterprise engaged in a `pervasive scheme to defraud'" (quoting United States v. Sawyer, 799 F.2d 1494, 1508 (11th Cir.1986))), holding that the pervasiveness of the defendants' fraudulent schemes justified a warrant as broad as the one the magistrate judge issued. We
The Fourth Amendment requires that all warrants "particularly describ[e] the place to be searched, and the. . . things to be seized." U.S. Const. amend IV. The particularity requirement prevents "general, exploratory rummaging in a person's belongings," Coolidge v. New Hampshire, 403 U.S. 443, 467, 91 S.Ct. 2022, 2038, 29 L.Ed.2d 564 (1971), but "elaborate specificity is unnecessary," United States v. Betancourt, 734 F.2d 750, 754 (11th Cir.1984). "The description is considered sufficiently particular when it enables the searcher to reasonably ascertain and identify the things authorized to be seized." Id. at 754-55 (citation and internal quotation marks omitted). This requirement does not necessitate technical perfection; instead, it is applied with "a practical margin of flexibility." United States v. Wuagneux, 683 F.2d 1343, 1349 (11th Cir.1982).
We have long recognized that a criminal investigation requires investigators to piece together evidence, often circumstantial and from multiple sources, to prove a defendant's guilt. Sawyer, 799 F.2d at 1508. The need for evidence is greater in complex fraud cases and justifies a more flexible reading of the particularity requirement. Travers, 233 F.3d at 1330. Thus, in Sawyer, we upheld a warrant authorizing a seizure of all of the business records of an enterprise where evidence of fraudulent conduct obtained from twenty-five of the enterprise's customers "made it probable that [the company] used identical deceptive and misleading sales techniques with other investors." 799 F.2d at 1508. This "pervasive fraud" doctrine, as it has come to be known, accordingly demands that we uphold an "all records" search warrant where the affidavit supporting it demonstrates a "pattern of illegal conduct" that is likely to extend beyond the conduct already in evidence and infect the rest of the company's business. See, e.g., id. at 1508-09.
The Bradleys' and Bio-Med's position is that the "pervasive fraud" doctrine is inapplicable unless the Government alleges that the business in question is engaged almost exclusively in fraudulent business practices. As there is no dispute that the fraud complained of here represented only a small fraction of Bio-Med's legitimate business, the Bradleys and Bio-Med claim that the district court erroneously denied their motion to suppress and allowed the seized evidence to be introduced in evidence at trial.
But this is too narrow a reading of the "pervasive fraud" doctrine. The district court correctly read Sawyer and Martinelli to hold that "pervasive fraud" does not refer to the percentage of a defendant's business that is fraudulent. In other words, the doctrine is not concerned with how deeply the fraud runs. Rather, the "pervasive fraud" doctrine addresses the extent to which fraud has permeated the scope of the defendant's business. That is, the doctrine is concerned with the breadth of the alleged fraud—whether evidence of fraud is likely to be found in records related to a wide range of company business.
Here, that standard is easily met, as the alleged fraud supposedly infected Bio-Med, its principals and officers, its suppliers, and numerous other individuals and businesses with whom it did or had done business. As such, even though the fraud amounted to a small percentage of Bio-Med's overall business, traces of that fraud were likely to be found spread out
This holding is entirely consistent with our precedent. Although the defendant in Sawyer was, as we described, a "boiler room" operation engaged in fraud that "affected all [its] customers, not just the twenty-five specifically described [in the affidavits]," 799 F.2d at 1508, the operative fact was that the entire breadth of the operation was implicated in the fraud. Thus, the search warrant gave investigators the ability to search all of the operation's records, as evidence of that fraud was likely to be found in every place searched. The same was true in Martinelli; although the defendant was engaged in a single fraudulent scheme, we held that the information in the affidavit accompanying the application for the search warrant sufficed to show that the fraud likely played a role in a wide range of the company's business transactions. 454 F.3d at 1307-08.
Other circuits have similarly concluded that the Government need not show that a company is engaged solely in fraud to justify such a wide-ranging search. See, e.g., United States v. Humphrey, 104 F.3d 65, 69 (5th Cir.1997) (finding an "all records" search of a business proper "[w]here probable cause exist[ed] to believe . . . that all the records of a business are likely to constitute evidence" (emphasis added and internal quotation omitted)); see also United States v. Falon, 959 F.2d 1143, 1147-48 (1st Cir.1992) (collecting cases and determining that it is unnecessary to show that the defendant's business is entirely fraudulent if one office was shown to have been engaged in widespread fraud). While not directly on point, these cases inform our decision and convince us that the "pervasive fraud" doctrine applies when evidence of fraud is likely to be found in a broad spectrum of the defendant company's business records.
This is not to say that the "pervasive fraud" doctrine permits the seizure of all corporate documents without a substantial evidentiary showing.
The Bradleys and Bio-Med both moved the district court to suppress the evidence, consisting of data, obtained from the warrantless seizure of Bio-Med's computer servers. The district court upheld the seizure on the ground that an exigency existed, reasoning that the agent directing the search acted properly in preserving the data until a warrant could be obtained for its seizure. The Bradleys and Bio-Med argue that the district court erred in finding that an exigency existed; thus, the seizure was unnecessary and the evidence should have been suppressed.
The district court's denial of the motion to suppress is reviewed as a mixed question of law and fact. United States v. Alexander, 835 F.2d 1406, 1408 (11th Cir. 1988) (citation omitted). We accept the facts the district court found in resolving the exigent circumstance issue unless the findings are clearly erroneous, United States v. Morales, 868 F.2d 1562, 1575 (11th Cir.1989). We determine de novo whether the court erred in applying the law to those facts. United States v. Holloway, 290 F.3d 1331, 1334 (11th Cir.2002).
As recounted previously, the facts are these. The agents knew that Bio-Med had computer servers, but believed they were housed in Bio-Med's headquarters at 6855 Southwest 81st Street. When they arrived at the headquarters location, the agents learned that the servers were not in that building, but located across the street. The agents also observed that several desktop computers in the headquarters were connected to the servers through a network. The agents then crossed the street to the building at 6860 Southwest 81st Street. Upon entering that building, the agents were approached by a Bio-Med employee. One agent asked the employee for the password to access the servers. After that employee called his supervisor (and was told to cooperate with the agents), the employee complied. Worried that the data stored on the hard drives might be corrupted or erased before he could copy them, and knowing that the servers were connected to at least one external network, the agent had the employee shut down the servers. After a period of time, a warrant to search the servers was obtained. The agents executed that warrant and either seized or imaged the servers' hard drives.
The Bradleys' and Bio-Med's claim is that, under these facts, the search violated the Fourth Amendment. Specifically, they argue that the agent's mere suspicion that data might be lost was insufficient, as a matter of law, to establish an exigency without some showing that the agent was aware that Bio-Med employees were both capable of deleting and intended to delete data from the servers without leaving a trace. Suppression, therefore, was the proper remedy. The Government answers that the circumstance confronted by agents meets the definition of unforeseen exigency and that the agents acted reasonably in seizing the servers until a warrant could be obtained.
There is no dispute that the agent's decision to shut down the servers temporarily was a seizure, e.g., United States v. Jacobsen, 466 U.S. 109, 113, 104 S.Ct. 1652,
Exigent circumstances exist "when there is danger that [ ] evidence will be destroyed or removed." United States v. Tobin, 923 F.2d 1506, 1510 (11th Cir. 1991) (en banc) (citations omitted). We have applied the exigent circumstances exception in situations where resorting to a magistrate would be impracticable or hazardous, holding that an exigency exists when officers can articulate a reason, grounded in the facts of the specific case, to fear that evidence may be destroyed or lost or that someone may be in danger. See, e.g., United States v. Burgos, 720 F.2d 1520, 1525-26 (11th Cir.1983) (collecting cases).
An objective test applies to the exigency determination. An exigency exists if "the facts ... would lead a reasonable, experienced agent to believe that evidence might be destroyed before a warrant could be secured." Tobin, 923 F.2d at 1510 (emphasis added) (citations and internal quotation marks omitted). But a mere suspicion that an exigency may exist is not enough to justify a warrantless search and seizure; the court must be able to identify specific facts that constitute an exigency. United States v. Rodgers, 924 F.2d 219, 223 (11th Cir.1991) (reviewing the facts known to the police at the time of a warrantless search and seizure).
In this case, the district court found specific facts which led it to declare an exigency. In particular, the court stated that the agent
That call, the district court stated, was in response to a real possibility that evidence would be destroyed:
These findings are not clearly erroneous. See United States v. Villarreal, 613 F.3d 1344, 1349 (11th Cir.2010) ("A factual finding is clearly erroneous only if, after we review the evidence, we are left with the definite and firm conviction that a mistake has been committed." (citation and internal quotation marks omitted)).
Moreover, the factual circumstance found by the district court meets our definition of exigency. Contrary to what the Bradleys and Bio-Med claim, the agent did have specific reason to fear that data might be lost if he did not intervene; Bio-Med employees had the ability and
And finally, we agree with the district court that the agent's conduct was reasonable in light of the exigent circumstance. The agent only took those steps necessary to ensure that data were not destroyed while he sought a warrant; he did no more than was reasonably required to maintain the evidence. For these reasons, we uphold the denial of the motions to suppress the evidence seized from Bio-Med's servers.
Bradley, Jr., contends that the district court erred in denying his motion to suppress evidence found in his Savannah residence, claiming that the affidavit presented with the application for the search warrant did not provide probable cause that evidence of a crime would be found there. He does not claim that the Government improperly seized any particular record from his office; instead, Bradley, Jr., contends that the magistrate judge should never have issued the warrant in the first place and that the Government's reliance upon it was not in good faith. In particular, Bradley, Jr., submits that the affidavit contained only unsupported conjecture, not facts, that his home office would contain records of "illegal diversion and distribution of prescription drugs." The district court disagreed, finding a sufficient nexus between the illegal conduct alleged and Bradley, Jr.'s residence. The district court based its decision on certain statements contained the affidavit, most notably information provided to the agents by Pinkoff about the interior of Bradley, Jr.'s residence—Pinkoff had toured the home and was shown a typical home office, which included a computer. The court also relied upon the statement of an agent, who explained that, in his experience, individuals were likely to keep records of personal credit cards and other financial transactions in their home, especially when mail from financial institutions is delivered there.
"The task of the issuing magistrate [in determining whether to issue a warrant] is simply to make a practical, common-sense decision whether, given all the circumstances set forth in the affidavit... there is a fair probability that contraband or evidence of a crime will be found in a particular place." Illinois v. Gates, 462 U.S. 213, 238, 103 S.Ct. 2317, 2332, 76 L.Ed.2d 527 (1983) (applying a totality of the circumstances test). We review the issuing magistrate judge's decision de novo, "tak[ing] care both to review findings of historical fact only for clear error and to give due weight to inferences drawn from those facts by resident judges and local law enforcement officers." Ornelas v. United States, 517 U.S. 690, 699, 116 S.Ct. 1657, 1663, 134 L.Ed.2d 911 (1996); see also id. at 697, 116 S.Ct. at 1662 (refusing to apply a "policy of sweeping deference" to trial courts). "We give great deference to a lower court's determination of probable cause." United States v. Brundidge, 170 F.3d 1350, 1352 (11th Cir. 1999) (citation, internal quotation marks, and alteration omitted).
Probable cause to search a residence requires some nexus between the premises and the alleged crime. See United States v. Jenkins, 901 F.2d 1075, 1080-81 (11th Cir.1990). "The nexus between the objects to be seized and the premises searched can be established from the particular circumstances involved and need not rest on direct observation." Id. (citation and alteration omitted). We have previously found that a police officer's expectation, based on prior experience and the
As described below, the affidavit relied upon by the magistrate judge who issued the warrant contained the following information regarding Bradley, Jr.: (1) Bradley, Jr., and co-conspirators had engaged in fraudulent conduct "over many years that generated enormous profits"; (2) they had taken "elaborate measures to conceal their fraud, including the use of offshore bank accounts, foreign trusts, deceptive accounting practices, and various other methods to launder their illgotten profits"; (3) Bradley, Jr., had used profits gained from the conduct to purchase his residence, and he kept a personal office at that location, which contained a desk and computer; and (4) postal records "demonstrated that [Bradley, Jr.,] regularly received mail at his home of a financial nature, including records from banks, investment firms, and insurance and credit card companies." In addition to those facts, the affidavit further stated that, in the experience of the investigating agent, suspects commonly retained evidence of money laundering, tax evasion, and other financially-driven crimes in their homes, and that those records are "extremely useful" in such investigations.
Based on that information, and giving due deference to the issuing magistrate judge, one could have reasonably concluded that Bradley, Jr., was likely to keep evidence of financial crimes in his home. See Gates, 462 U.S. at 238-39, 103 S.Ct. at 2332. It is not necessary, as Bradley, Jr., would have us find, that the residence be the locus of the crime, or for agents to have procured specific evidence that relevant records would certainly be found there.
Tellechea moved the district court to suppress evidence seized from his locked office inside the suite dedicated to Intermed P.R. at 6356 Manor Lane in Miami. Responding to his motion to suppress, the Government argued that the warrant the agents obtained permitted them to search the entire premises, including the area controlled by Intermed P.R., and that probable cause justified the intrusion into Tellechea's office. The district court, accepting the Government's response, denied Tellechea's motion to suppress, and the Government later introduced the evidence
Both Tellechea and the Government renew the arguments they presented to the district court.
The facts, as related above, are as follows. The agents procured a warrant permitting them to search the "premises" located at 6356 Manor Lane in Miami and seize "all records" at that location relating to financial transactions between a number of individuals and corporate entities including Seratech and Intermed. The affidavit accompanying the warrant application indicated that Seratech and Intermed P.R. had offices in the building (suite B-101) and shared corporate directors—Tellechea was named as one of Intermed P.R.'s four officers—but that only Seratech's name was on the building. The affidavit also indicated that both entities were suspected in a diversion scheme. Statements from cooperating witnesses indicated that Seratech "controlled the entire building."
When the agents served the warrant, they found that the building housed four entities: Seratech occupied half the building (two of four suites), Intermed P.R. had one of the remaining two suites, and the final suite was shared by Infustat and Red-X. After protesting that the warrant did not cover the other entities, a Seratech employee explained the building's layout to the agents and provided them a schematic of the offices. Agents searched the entire premises, save the area dedicated to Red-X, and found information indicating that Intermed P.R. was handling the billing for all the companies. Aware that Tellechea was involved with both Infustat and Intermed P.R., and that both companies were likely involved in the diversion scheme, the agents then asked the operations manager to provide them access to Tellechea's office. After he stated that the office was locked and that only Tellechea was in possession of the keys, agents summoned a locksmith to open the door. The agents seized a removable hard drive from the office that contained a spreadsheet file later introduced at trial as evidence that Tellechea was a member of the Count 3 conspiracy for which he was convicted.
We first discuss the scope of the warrant.
The Government asserts, as the district court found, that the agents were entitled to believe, based on prior representations, that the entire building was covered by the warrant regardless of the signage on the doors and the protestations of the office manager. If true, the agents could not have run afoul of Garrison's command so long as they limited their search to areas that might contain records identified in Attachment B (to the warrant) and which the warrant permitted them to seize.
We agree. The warrant authorized the agents to search
Search Warrant Attach. A. Contrary to Tellechea's belief, the warrant's invocation of Seratech merely described the building to be searched. It did not restrict the agents' search to the premises known as or controlled by Seratech. Instead, the warrant permitted the search of the entire building so long as the agents reasonably believed they would find "Items to be seized" in the location of their search.
We find nothing in the record that would lead us to conclude that these agents did not act reasonably. The warrant instructed them to seize business records involving both Seratech and a number of Intermed entities, including Intermed P.R. Pursuant to the affidavit filed with the warrant application, the agents were also aware that Infustat and Tellechea were at least tangentially involved in the schemes. Although Tellechea's name was not mentioned directly in the warrant or Attachment B, and only rarely included in the affidavit, the agents were aware that Tellechea was an important figure in two of the companies that were directly implicated in the fraudulent schemes. As such, they could have reasonably inferred that Tellechea's office was likely to contain evidence.
In fine, based on the information before them, the agents acted reasonably in entering both the suite dedicated to Intermed P.R. and Tellechea's private office. The district court, therefore, did not err in denying Tellechea's motion to suppress.
We turn now to the district court's rejection of Bradley, Jr.'s claim of incompetency to stand trial. After Bradley, Jr., was arraigned and while extensive pretrial proceedings were underway, he moved the district court to sever his case from those of the other defendants; he represented that his health was failing and supported his motion with the affidavit and report of a medical expert suggesting that he was suffering from "progressive dementia."
The Government and Bradley, Jr., thereafter entered into a stipulation allowing the magistrate judge to determine Bradley, Jr.'s competency to stand trial based solely on the Butner Report and the reports of Bradley, Jr.'s experts. The magistrate judge did so and issued a Report and Recommendation ("R&R") finding Bradley, Jr., competent to stand trial; the R&R credited the Butner Report and recommended that the district court adjudicate Bradley, Jr., competent. Bradley, Jr., objected to the findings of the R&R, but the district court overruled his objections, adopted the R&R's recommendation, and found Bradley, Jr., fit to stand trial.
Bradley, Jr., appeals the district court's decision, claiming that the court erred in finding him competent. While conceding that he understood the nature of the criminal proceedings against him, he argues, as he did before the district court, that he lacked sufficient ability to consult with his attorney and was therefore unfit to stand trial. He thus presents this court with a substantive as opposed to procedural competency claim. Medina v. Singletary, 59 F.3d 1095, 1106 (11th Cir.1995) (distinguishing a defendant's procedural right to a competency hearing from a substantive claim of incompetency at the time of trial).
We review a district court's finding on a defendant's competency to stand trial for clear error. United States v. Izquierdo, 448 F.3d 1269, 1276 (11th Cir.2006) (per curiam) (citation omitted). Our review of the finding is deferential. Id. at 1271; see also Medina, 59 F.3d at 1111 ("The trial court's finding that [the defendant] was competent to stand trial is presumed to be correct and may not be overturned if it is fairly supported by the record.").
A defendant is not fit to stand trial if he is "suffering from a mental disease or defect rendering him mentally incompetent to the extent that he is unable to understand the nature and consequences of the proceedings against him or to assist properly in his defense." 18
Bradley, Jr., points to six errors he claims the district court committed in adopting the magistrate judge's competency finding. The first two errors relate to the relative qualifications of the various experts who assessed his mental state.
We disagree. "[F]aced with diametrically opposite expert testimony, a district court does not clearly err simply by crediting one opinion over another where other record evidence exists to support the conclusion." Battle v. United States, 419 F.3d 1292, 1299 (11th Cir.2005) (citations and internal quotation marks omitted). For example, in Medina, we found on habeas review that a district court was justified in denying the defendant a pre-trial competency hearing even though defense psychologists later argued he was incompetent. Medina, 59 F.3d at 1112. Absent a showing that the evaluation conducted by court appointed experts was "professionally inadequate" in any way, we held that the district court did not clearly err by relying on their report. Id. at 1111.
After reviewing the record here, we conclude that the district court did not clearly err in crediting the FMC Butner evaluators over Bradley, Jr.'s. Although their results differed from the results obtained by his experts, there is no evidence to show that the procedures undertaken at FMC Butner were professionally inadequate. See id. at 1111-12. If anything, as mentioned in the Butner Report, the tests the examiners administered were slightly newer than those conducted by the defense experts.
And although it is arguable that the defense experts were more qualified to diagnose Bradley, Jr., that possibility alone does not make the FMC Butner evaluators unqualified or their opinion suspect. The defense team did submit impressive curriculum vitae of each of their three experts. But the Butner Report also indicated that Bradley, Jr., was examined by qualified personnel at that facility, including: (1) Edward E. Landis, Ph.D.,
So while Bradley, Jr., correctly points out that the "record is silent as whether or not the Butner staff were licensed, whether or not they have any specialized expertise, whether or not they hold board certifications, and what if any experience each has had in practice," he cannot seriously argue that their report was inadmissible under Daubert, which instructed trial judges to determine whether "[an] expert is proposing to testify to (1) scientific knowledge that (2) will assist the trier of fact to understand or determine a fact in issue." 509 U.S. at 592-95, 113 S.Ct. at 2796-98 (footnote omitted). Having found the Butner Report acceptable under Daubert, the district court was free—based on its assessment of respective strengths and weaknesses—to accept the Butner Report over the defense experts. That is exactly what happened here; the district court preferred the FMC Butner experts to the defense's. We will not disturb that decision.
Bradley, Jr.'s second argument is that the district court should have relied upon his expert's report because only his doctor, Dr. Resnick, was able to see him interact with his attorneys. By Bradley, Jr.'s reasoning, because of his unique vantage point, only Dr. Resnick was able to form a valid opinion as to whether Bradley, Jr., could or could not aid in his defense. Because Dr. Resnick noted that Bradley, Jr., often frustrated his lawyers and failed to follow their commands, Bradley, Jr., assumes that the only logical inference one could have drawn about his mental state was that he was incompetent.
This argument fails for two reasons. First, the experts at FMC Butner did determine whether Bradley, Jr., was capable of competently conferring with others—that is, whether he was able to assist in his own defense. The Butner Report included excerpts from conversations between FMC Butner staff and Bradley, Jr., all of which indicate that he was able to cogently and intelligently discuss the parties in the case and the illegal conduct alleged in the indictment. Drawing inferences from those conversations, the FMC Butner evaluators ultimately concluded, as they stated in their report, that Bradley, Jr., was "better suited to confront the challenges of trial than the majority of criminal defendants." Thus, just as before, we have two competing opinions about Bradley, Jr.'s ability to assist his lawyers, and the district court did not clearly err in preferring one over the other. See id.
Second, even if we were to place special emphasis on Dr. Resnick's report, the district court did not err in finding Bradley, Jr., competent. We have previously held that the fact that a defendant "at times exhibited an antagonistic relationship with his lawyers over their representation of him is no indicator of incompetency." Battle, 419 F.3d at 1299. In doing so, we credited the court's determination that the defendant "had the ability to, and did indeed, assist his counsel in
The fourth, fifth, and sixth errors Bradley, Jr., cites deal with findings he deems ill-advised or otherwise unsupported by the evidence. He posits that the court erroneously adopted the R&R's conclusion that the experts at FMC Butner spent more time with him than did his own experts. He also finds error in the R&R's implication that withdrawal from psychoactive prescription drugs might have contributed to his memory-loss symptoms. And he says that the court placed too much emphasis on inconclusive tests that may or may not have caught him exaggerating his memory deficits. We find nothing in the record that would rise to the level of a "definite and firm conviction" that the district court made a mistake in these findings. See Hogan, 986 F.2d at 1372. Accordingly, we uphold the district court's competency determination.
The defendants argue that several of the district court's rulings at trial constituted an abuse of discretion, therefore warranting the vacation of their convictions. We consider the evidentiary rulings in section 1, and the other rulings in section 2.
We review the district court's evidentiary rulings for an abuse of discretion. United States v. Fortenberry, 971 F.2d 717, 721 (11th Cir.1992). Even if a ruling constitutes an abuse of discretion, it will "result in reversal only if the ... error was not harmless." United States v. Hands, 184 F.3d 1322, 1329 (11th Cir.1999) (citations omitted). An error is harmless unless "there is a reasonable likelihood that [it] affected the defendant's substantial rights." Id. (quoting United States v. Hawkins, 905 F.2d 1489, 1493 (11th Cir. 1990) (alteration in original)); see also Fed.R.Crim.P. 52(a). Stated another way, "nonconstitutional error will be harmless unless the court concludes from the record as a whole that the error may have had a "substantial influence" on the outcome of the proceeding." United States v. Montalvo-Murillo, 495 U.S. 711, 722, 110 S.Ct. 2072, 2080, 109 L.Ed.2d 720 (1990). With these principles in mind, we address the defendants' claims of evidentiary error.
On the last day of the Government's case in chief, the Assistant U.S. Attorney ("AUSA") prosecuting the case informed the court, at a side bar, that "at this point in the trial we are putting—beginning our `wealth evidence,'" meaning evidence of the defendants' (primarily, the Bradleys') financial success. Citing Federal Rule of Evidence 403, defense counsel objected on the ground that the probative value of such evidence would be outweighed by the danger of the unfair prejudice it would create. The district court overruled their objections, and the Government proceed with its presentation.
The Government called several federal agents to discuss what their investigation of the Bradleys had uncovered and introduced photographs of, and other documents describing, the Bradleys' assets, including real estate, vehicles, watercraft, aircraft, financial accounts, and other personal property.
The Bradleys argue that the district court abused its discretion in allowing the Government to present this "wealth evidence"
Use of a defendant's wealth to appeal to class bias can be "highly improper" and can deprive that defendant of a fair trial. United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 239, 60 S.Ct. 811, 852, 84 L.Ed. 1129 (1940). But evidence of wealth or extravagant spending may be admissible when relevant to issues in the case and where other evidence supports a finding of guilt. See, e.g., United States v. White, 589 F.2d 1283, 1286 n. 7 (5th Cir. 1979) ("Where there is other evidence of the guilt of the accused and the crime is of such a nature that the acquisition of money may be regarded as a natural or ordinary result of its perpetration, evidence is admissible of the sudden acquisition of money by the defendant ... at or subsequent to the time the offense was committed, although the source of the money is not definitely traced or identified by the prosecution.") (citations and internal quotation marks omitted).
Determining whether "wealth evidence" is intended to provoke class bias or to establish a fact in issue is often difficult.
United States v. Jackson-Randolph, 282 F.3d 369, 377-78 (6th Cir.2002) (quoting United States v. Derman, 211 F.3d 175, 179 (1st Cir.2000) (alterations in original)). Indeed, because financial gain is the motive for committing almost all financial crimes, we must be careful not to ignore the "real possibility that the extreme or extravagant wealth or spending was [merely] made possible by legitimate means." Id. at 378. Otherwise, we run the risk of permitting the introduction of evidence that is probative of nothing more than the defendant's financial success. Id. Accordingly, the Supreme Court has held that our determination of whether the evidence is relevant under Federal Rule of Evidence 401, or more prejudicial than probative under Rule 403, must turn on the facts of each specific case. Socony-Vacuum Oil Co., 310 U.S. at 240, 60 S.Ct. at 852.
In this case, the Government sought to prove that the defendants— namely, the Bradleys—had engaged in the
To prove that the defendants had the requisite motive, the Government first established that Bio-Med made a substantial profit on every unit of blood-derivatives recycled. The Government then attempted to demonstrate how the Bradleys enjoyed that profit. The district court found this evidence relevant and admitted it.
The district court had broad discretion to admit the Government's "wealth evidence" so long as it aided in proving or disproving a fact in issue. United States v. Terzado-Madruga, 897 F.2d 1099, 1117 (11th Cir.1990). "Conversely, the court's discretion to exclude evidence under Rule 403 is limited. Evidence may be excluded only when `its probative value is substantially outweighed by the danger of unfair prejudice.'" Id. (quoting Fed.R.Evid. 403). Because exclusion under Rule 403 is so drastic a remedy, we have cautioned that the balance "should be struck in favor of admissibility." Id. (citing United States v. Finestone, 816 F.2d 583, 585 (11th Cir. 1987)).
We are of the view that this evidence was probative of the defendants' motive, even if only slightly so. See Jackson-Randolph, 282 F.3d at 377-80 (weighing the probative value of such evidence against its prejudicial value). Similarly, the "wealth evidence" was only slightly prejudicial to the defendants. The jury was exposed to a substantial amount of evidence throughout the trial—much of it presented by the defense—regarding the defendants' legitimate business successes and Bio-Med's impressive profits. The jurors were just as likely to be prejudiced by that evidence, if they were to be prejudiced at all, as by the Government's "wealth evidence"; indeed, a reasonable jury would have suspected long before the "wealth evidence" was presented that the Bradleys were financially well-off. Because the evidence was relevant and the prejudice slight, we find no abuse of discretion in the court's admission of the "wealth evidence." Fed.R.Evid. 403.
Bradley, Jr., contends that the district court also abused its discretion in allowing the Government to play audio tapes of conversations he had with Larry Pinkoff and undercover agents. He submits that the tapes prejudiced the jury against him due to his boastful tone (about his business success and the resulting wealth) and his use of profanity. We find no abuse of discretion in the district court's admission of the audio recordings. The recordings were highly probative of the Bradleys' knowledge that they may be violating the law and were not so prejudicial that they substantially outweighed that probative value. See Fed. R. Evid 403.
Bradley III argues that the district court should have barred the Government from impeaching him with extrinsic act evidence that it did not disclose prior to trial as required by Federal Rule of Evidence 404(b). While testifying in his own defense, Bradley III attempted to explain why he had Bio-Med purchase unused IVIG and Recombinate through Intermed instead of directly from Bossey and the Apex Partners, who had obtained it for
On cross-examination, the AUSA showed Bradley III a purchase order Intermed had issued to Excim Trading Corp. ("Excim") and asked him about certain IVIG Intermed had purchased from Excim at a discounted price. Bradley III admitted that Excim was holding the IVIG for shipment to Nigeria for use in combating the AIDS epidemic there, which explained the discounted price, and that Bio-Med sold the IVIG bought from Excim to pharmacies in the United States at the going market price. The AUSA then asked, "You make money off of people suffering; do you not?" At this point, Bradley III objected to the this line of questioning—on the ground that it constituted Rule 404(b) evidence and the Government had not notified him of it as required by the rule—and moved the court to strike it from the record. The court overruled his objection, stating that Rule 404(b) did not pertain to impeachment evidence.
Rule 404(b) states:
Fed.R.Evid. 404(b). As is evident from the language of Rule 404(b), the admission of extrinsic act evidence under the rule requires "the prosecution to provide notice [of its intended use to the defense], regardless of how it intends to use the extrinsic act evidence at trial, i.e., during its case-in-chief, for impeachment, or for possible rebuttal." Fed.R.Evid. 404(b) advisory committee's note to the 1991 amendments. We have seized upon that language and held that, contrary to the district court's ruling, Rule 404(b) does, in fact, apply to impeachment evidence. United States v. Carrasco, 381 F.3d 1237, 1240 (11th Cir.2004) (per curiam).
The evidence presented here was clearly extrinsic. The Government offered evidence of the Intermed-Excim transaction to demonstrate that Bradley III's characterization of Intermed's role in the schemes was inaccurate, not to demonstrate that Bradley III had actually engaged in the alleged fraud. The evidence was also covered by Rule 404(b); the advisory notes to the rule contemplate the use of extrinsic acts as impeachment evidence. And there is no dispute that, even after Bradley III requested that it disclose all Rule 404(b) evidence, the Government failed to notify Bradley III it would rely upon the purchase order at trial. The district court therefore abused its discretion in admitting the evidence over Bradley III's objection. We must now determine whether the error was harmless. See id. at 1241.
"The policy behind 404(b) is to reduce surprise and promote early resolution on the issue of admissibility." United States v. Perez-Tosta, 36 F.3d 1552, 1561 (11th Cir.1994) (citation and internal quotation marks omitted). Admission of unnoticed Rule 404(b) evidence prejudices a defendant where the evidence had a substantial influence on the outcome of the
Bradley III has raised additional concerns regarding the district court's handling of his testimony. In particular, he sought to testify on direct examination about conversations he previously had with several prosecution witnesses and other individuals related to the criminal investigation. During that testimony, the court repeatedly sustained the Government's objections on hearsay grounds. The court did so even after Bradley III's attorney asserted that the testimony was necessary to answer certain allegations made by Government witnesses about Bradley III's and Bio-Med's business practices.
The district court also interrupted Bradley III on its own initiative, at one point instructing him not to "go into any conversations of what they said" and, at another time, informing his attorney that he "is giving all of the hearsay[,] ... quoting people who are not here, and relating information that I think is totally hearsay." The court further instructed Bradley III's attorney to refrain from asking for narrative answers and interrupted Bradley III when he failed to directly respond to his attorney's questions. At that time, the court chastised Bradley III's attorney, stating, "If you want to argue, then we'll quit asking questions. We will let him narrate."
On cross-examination, Bradley III continued to provide narrative responses to the AUSA's questions. The court instructed him "not to make a talk," but to answer "yes" or "no." It informed Bradley III that he had previously "explained [himself] in paragraphs and chapters,"
Bradley III asserts that the district court's conduct as set out above deprived him of a fair trial by interfering with his fundamental right to testify in his own defense. His defense, Bradley III argues, turned primarily upon the jury's assessment of his knowledge and intent. Therefore, he believes the court should have admitted his testimony regarding these conversations as either non-hearsay—because his interlocutor's statements, regardless of their truth, impacted his decision-making—or, alternatively, under the "state of mind" exception to the hearsay rule—to show how his own statements in the relayed conversation reflected his state of mind. Fed.R.Evid. 801, 803(3). According to Bradley III, the court abused its discretion in refusing to allow his testimony.
Pursuant to Federal Rule of Evidence 801, all hearsay is inadmissible unless it falls within an applicable exception. Hearsay is axiomatically defined as an out-of-court statement repeated to prove the truth of the matter asserted. See Fed. R.Evid. 801. Bradley III testified repeatedly as to what other individuals told him they knew or believed or had done. Although he argues on appeal that these conversations were meant to show how the interlocutor's statements impacted his state of mind, Bradley III's trial testimony demonstrates that he instead hoped the jury would believe the truth of the interlocutor's statements. We therefore agree with the district court that these statements were hearsay. As such, they were inadmissible unless they fall within a hearsay exception.
Rule 803(3), the "state of mind" exception to the hearsay rule, allows a witness to repeat a declarant's statement to shed light on the declarant's state of mind. See, e.g., United States v. Arbolaez, 450 F.3d 1283, 1290 n. 6 (11th Cir.2006). Bradley III's testimony relayed statements from two sets of declarants: (1) Bradley III; and (2) his interlocutors. Bradley III argues that every one of these out-of-court statements shed light on his state of mind, not that of the interlocutor.
Moreover, the court did not abuse its discretion in sustaining the Government's repeated objections to Bradley III's responses. Although the court was required to respect Bradley III's right to testify, that right is not without limits. A defendant's right to testify is circumscribed by both the rules of evidence and the court's inherent authority to ensure compliance with those rules. United States v. Anderson, 872 F.2d 1508, 1519 n. 16 (11th Cir.1989). The court properly applied the rules of evidence when ruling on the Government's objections and was not required to permit Bradley III to abuse them.
Neither did the court abuse its discretion by sua sponte instructing Bradley III to refrain from discussing conversations he had with other witnesses and to stay on point. Fearing that his testimony would overwhelm the trial, the court took the initiative to remind Bradley III—gently at first, and later with more force—to hew closely to the issue at hand and to keep his answers from stumbling into inadmissible
In addition to the Bradleys' and Bio-Med's claims of trial error, all of the defendants claim that the district court abused its discretion (1) in failing to investigate the potential of juror misconduct when it was brought to the court's attention that at least two jurors had engaged in premature deliberations, and (2) by dismissing juror Smith—the juror who brought the premature deliberations to light—for medical reasons. We first discuss the court's duty to investigate and then its dismissal of juror Smith.
Every defendant has the right in a criminal prosecution to trial by an impartial jury. U.S. Const. amend. VI. Juror impartiality is endangered when jurors engage in deliberations before they have heard both sides' evidence and the judge's instructions on the law of the case. See, e.g., United States v. Yonn, 702 F.2d 1341, 1345 n. 1 (11th Cir.1983). It is for this reason that district courts instruct jurors at the outset of a criminal trial to refrain from expressing their opinions as to a defendant's guilt or innocence before the court submits the case to the jury for deliberation. Logically, should evidence come to the court's attention that jurors might have disobeyed the instruction, district courts have the power to investigate the possibility of premature deliberation. Id. at 1345. Because of their familiarity with the jurors and the time and place of the conduct in question, trial courts are vested with broad discretion in determining how best to address potential juror misconduct. Id.
We have long recognized a distinction between the dangers of improper communication amongst jurors and communications between jurors and outsiders to the litigation. United States v. Dominguez, 226 F.3d 1235, 1248 (11th Cir.2000) ("[W]hen there are premature deliberations among jurors with no allegations of external influence on the jury, the proper process for jury decisionmaking has been violated, but there is no reason to doubt
The district court's discretion, however, is at its zenith when the alleged misconduct relates to "statements made by the jurors themselves, and not from media publicity or other outside influences." Grooms v. Wainwright, 610 F.2d 344, 347 (5th Cir.1980); see also Dominguez, 226 F.3d at 1246; United States v. Cuthel, 903 F.2d 1381, 1382 (11th Cir.1990); United States v. Williams, 716 F.2d 864, 865 (11th Cir.1983) (per curiam); Yonn, 702 F.2d at 1344-45. This discretion extends to the initial decision whether to interrogate the juror(s) accused of improper communication. Cuthel, 903 F.2d at 1382-83. Still, the court's discretion is not boundless. As we explained in United States v. Caldwell, 776 F.2d 989 (11th Cir.1985), "[t]he more serious the potential jury contamination,... the heavier the burden to investigate." Id. at 998.
Our review of the district court's treatment of the allegation of premature deliberations in this case is necessarily colored by prior decisions of this court. In Grooms, we held on habeas review that a trial judge acted within his discretion when he denied the defendant's motion for a new trial without investigating one juror's comment to another that "[from] what I heard already he's guilty." 610 F.2d at 347-48. As the comment was made at the close of the prosecution's case, we found that it did not "reflect serious prejudice, but only an objective evaluation of the evidence presented to date in the trial." Id. at 348.
We similarly held in Yonn, a direct appeal from a federal criminal conviction, that the district court did not abuse its discretion when, after learning that one juror had "improperly expressed her opinion on the weight of the evidence," the court interviewed each of the jurors outside the presence of counsel, but with a court reporter transcribing the exchanges. 702 F.2d at 1344. After discussing the matter with counsel from both sides, the court eventually dismissed both the juror guilty of the impropriety and the juror who reported the comment. Id. We held that it would have been better practice for the court to have interviewed the jurors in the presence of the counsel for all concerned parties, but held that any error—if there was error—was harmless due to the court's demeanor during the interviews (as reflected by the court's and the jurors' statements), decision to transcribe the interviews, and subsequent instructions to the jury. Id. at 1345-46.
And in Dominguez, we held that a district court did not abuse its discretion when it interviewed a juror who wrote a note to the court asking to be excused, revealing that she anticipated trouble between herself and other jurors who were more likely to convict. 226 F.3d at 1243-47. The juror indicated that she believed that "a fairly general consensus is already there," but that she did not think the jury had "jumped the gun and begun deciding the case" before the close of evidence. Id. at 1247. Although "we conceivably might have followed a different course and even arrived at a different result than the district court did [had we] been presiding over the trial of th[at] case," we found no
Perhaps the most accurate comparator to the situation here, however, is United States v. Harris, 908 F.2d 728 (11th Cir. 1990), where we concluded that the district court did not abuse its discretion in refusing to interview one juror who commented to another during a lunch break on the second day of trial that "these guys sitting across from us think they're going to get off on this." Id. at 732-33. After learning of the comment, the court asked the jurors as a group whether "any juror has made any kind of decision up to this point that he or she could not keep a completely open mind until all of the evidence is in, and until the case has been explained to you." Id. at 733. When no juror responded, the court continued the trial. Id.
We ultimately held that the comment in Harris, although likely demonstrating some bias against the defense, was ambiguous and "d[id] not suggest serious jury contamination." Id. at 734. We therefore approved of the district court's handling of the matter, explaining that any serious investigation into the matter might have unduly emphasized the remark and that the court "cured any possible taint by questioning the jurors on their ability to remain impartial and giving them an admonition to keep an open mind." Id.
Here, the district court took basic remedial action after receiving a note from juror Smith
Afterward, as the trial advanced, the court periodically reminded the jurors of their duty not to deliberate. The district judge did so on at least eleven occasions. And on the last day of evidence, immediately before dismissing the jury for deliberations, the court once again polled each juror to ensure that the panel "had complied with all of the Court's instructions." After each juror answered affirmatively, the court gave its charge.
We believe this case presents something of a middle ground between the misconduct alleged in Dominguez and that addressed in Harris. We find the jurors' comments less ambiguous and more troubling
While the virtue of hindsight gives us pause, in light of Grooms, Yonn, and, most of all, Harris, we cannot say that the court abused its discretion in declining to question the involved jurors or to allow defense counsel to do so. See United States v. Klee, 494 F.2d 394, 395-96 (9th Cir.1974) (approving a district court's decision to forego further investigation where the court was convinced that the jury could keep an open mind during deliberations); cf. Resko, 3 F.3d at 690-95 (concluding that a district court erred in declining to engage in further inquiry where every juror admitted to taking part in premature discussions).
We are encouraged in our decision by a number of factors. First, that the comment was made so early in the trial indicates to us that the jurors had merely been influenced, as was intended, by the Government's evidence to that date. Although not the "objective evaluation" we considered in Grooms, we recognize that jurors are likely to react—and perhaps overreact—after hearing evidence from one party, but not the other. See 610 F.2d at 348. That reaction does not present a problem unless it results in serious prejudice. See id. And while we cannot rule out the potential for such prejudice in this case, we also find no reason to disturb the district court's implicit determination, after obtaining assurances from the jurors themselves, that the jury could remain objective. See Dominguez, 226 F.3d at 1247-48 (noting that the court's decision to allow the jury to continue to serve evinced a conclusion that the jury "was capable of correcting any misbehavior, of following the court's instructions [to not discuss the case] from that point on, and of properly evaluating the evidence").
Second, the court eventually did have an opportunity to assess the impact of the juror misconduct. After the court received a note from the jury just prior to deliberations requesting the removal of juror Smith, the court engaged in a personal colloquy with Smith. That colloquy, in part, touched on the subject of juror impartiality. Although Smith agreed that the other jurors had strong opinions, when pressed, he refused to state that the any members of the jury panel had violated the court's instructions. See Yonn, 702 F.2d at 1345-46. From its colloquy with Smith, the court was thus able to gauge whether its remedial measures had been effective. By dismissing Smith without a more searching investigation, the court effectively made a judgment call that the jury could impartially decide the case.
And finally, that the jury fully acquitted some of the defendants and partially acquitted others provides circumstantial evidence that the jury did indeed "consider[] the charges individually and assess[] the strength of the evidence as to each
In sum, even though we might have preferred a different course of action, we find that the district court did not err when it forewent a full investigation into juror impartiality in favor of a less intrusive remedy. See Harris, 908 F.2d at 734. "The whole point of discretion is that there is [a] range of options open, which means that more than one choice is permissible. The broader the discretion, the greater the range of choice and the less room for reversal." Dominguez, 226 F.3d at 1247.
Immediately before deliberating, the court removed juror Smith. Smith had suffered throughout the trial from severe back pain. The court was aware of his physical discomfort, and had witnessed its effects on him on several occasions; he often had to stand during testimony and had once cried out in pain during the trial. The court also was aware that Smith was taking Oxycontin, a pain reliever, having sent a note to his doctor requesting a renewal prescription.
While the jurors were away, the district judge indicated to the AUSA and defense counsel that he believed the note would pertain to juror Smith. The judge summarized the severity of Smith's physical problems and stated, "[I]f a message comes back, I am going to relieve Mr. Smith for the reasons I've stated [i.e., because of his physical discomfort], and there would possibly be others [i.e., because of the juror misconduct controversy]."
Eleven members of the jury eventually submitted a note to the court indicating that they believed that Smith had not been "fully" there during the trial. Those jurors requested that the court remove him. The court then announced its intention to remove him, making good on its earlier statement to counsel, and replace him with an alternate juror. In relevant part, the judge stated, "This is only confirmation of what I had already observed. I should have done it earlier."
Defense counsel immediately objected and requested that the court interview Smith. The court then brought Smith into chambers and engaged him, with counsel present, in the colloquy described supra. The court asked Smith whether he was in too much pain to continue and whether he wished to be removed. He indicated that he could possibly continue—he had taken an extensive amount of notes and felt capable of deliberating—but admitted he had "st[u]ck with it" through "some pretty rough days." Eventually, he conceded that it would be "better" if he were removed.
The court thereafter removed Smith from the jury panel. Defense counsel again objected, claiming that Smith never stated he was too injured to continue. Instead, defense counsel conjectured that he was unwilling to work with the other eleven jurors, or that the other eleven were unwilling to work with him. The implicit suggestion was that the other eleven jurors had already made up their minds to
The court disagreed. Noting and overruling those objections, the court stated, "The man is a sick man. He is in awful pain. And the Judge has to make certain decision[s]. This is the best place to substitute a juror, not halfway through the deliberations."
On appeal, the defendants raise the same arguments then made to the district court. We, like the district court, reject them.
Pursuant to Federal Rule of Criminal Procedure 24(c), a district court has the discretionary authority to remove a juror and replace him with an alternate if the judge finds the juror is "unable to perform or ... disqualified from perform[ ][his] duties."
United States v. Rodriguez, 573 F.2d 330, 332 (5th Cir.1978) (citations and internal quotation marks omitted). After further review of the record as it relates to juror Smith, we find no abuse of discretion in the district court's decision to dismiss him for medical reasons.
The court dismissed Smith based solely on his deteriorating physical condition—a back injury—and his inability to remain alert, which the court had observed, during portions of the trial. The court's own observation of Smith provides the "sound" basis upon which it exercised its discretion. See id. And the court did not abuse its discretion in deciding that removal was the best course of action; we have no doubt that an injury so distressing as to cause Smith to audibly cry out in pain during testimony and to rely on sleep-inducing painkillers would severely impair a juror's ability to perform his duty. The district court therefore did not commit error in removing juror Smith, even if Smith did not, as the defendants emphasize, explicitly state that he was incapable of continuing or that he wished to be removed.
Conjecture about the impact the replacement of a juror had on the jury's verdicts is, nonetheless, insufficient evidence of prejudice. As we stated in Rodriguez,
573 F.2d at 332-33. Here, the court reasonably believed that the eleven members of the jury were capable of rendering a fair and impartial verdict, but that replacement of one of their number was necessary. We will not disturb the district court's "sound discretion."
As noted earlier, the jury convicted Bradley III on Counts 1 through 54 and 83 through 284, Bradley, Jr., on Counts 1, 54, 285, and 286, Tellechea on Count 3, and Bio-Med on Counts 1 through 53.
The Bradleys and Tellechea contend that the district court misapplied the Sentencing Guidelines in determining the total offense levels underpinning their prison sentences. Bio-Med challenges the loss calculation the court used in determining the fine it imposed. In determining whether the district court misapplied the Guidelines, we review those factual findings that guide the court's application of the Guidelines for clear error. United States v. Arguedas, 86 F.3d 1054, 1059 (11th Cir.1996). Where, as here, the "defendant challenges one of the factual bases of his sentence as set forth in the [Presentence Investigation Report], the Government has the burden of establishing the disputed fact by a preponderance of the evidence." United States v. Lawrence, 47 F.3d 1559, 1566 (11th Cir.1995). We review de novo the district court's application of the Guidelines to the established facts. Arguedas, 86 F.3d at 1059.
We entertain the defendants' challenges to their sentences in subparts A through D below.
Bradley III appeals the district court's application of the Sentencing Guidelines to his Count 1 RICO conviction under 18 U.S.C. § 1962(c). He claims the district court erred in determining his Guidelines sentencing range and in failing to make findings of fact sufficient to facilitate appellate review. He further challenges his sentences on the multiple-object conspiracies charged in Counts 3 and 54 on the ground that the district court failed to properly identify the offense(s) he conspired to violate.
In determining the total offense level
The district court calculated the offense level for the first set at 36 by adding to the base offense level of 6, U.S.S.G. § 2B1.1(a), those enhancements prescribed for the following Specific Offense Characteristics:
The district court then arrived at the total offense level for the first set, 46, by adding the following Adjustments to the prior offense level:
The court calculated the total offense level for the second set of racketeering acts at 30, and at 36 for the third set.
Bradley III argues that the district court erred by including in the total offense level three Specific Offense Characteristics and one victim-related Adjustment. In regard to the Specific Offense Characteristics, he contends that the court (1) improperly relied on speculative figures and overestimated the amount of loss attributable to his multiple schemes under § 2B1.1(b)(1), (2) erroneously applied § 2B1.1(b)(2)(B) because his conduct did not involve fifty or more victims, and (3) erroneously applied § 2B1.1(b)(4) because he was not in the business of selling and receiving stolen property. As for the § 3A1.1(b)(1) victim-related Adjustment, Bradley III claims that vulnerable victims were not targeted.
We first hold that the court erroneously applied the §§ 2B1.1(b)(2)(B) and 2B1.1(b)(4) enhancements when calculating Bradley III's Guidelines sentence. We then find no error in the court's application of the § 3A1.1(b)(1) Adjustment. Finally, we determine that, because the court's amount of loss calculation resulted in the correct § 2B1.1(b)(1) Special Offense Characteristic enhancement, the court's prior errors were harmless. In other words, even after reducing Bradley III's total offense level by six, his Guidelines sentencing range still exceeds the statutory maximum, and the court did not commit reversible error by sentencing him to the maximum sentence permitted by law.
Section 2B1.1(b)(2)(B) provides for a four-level increase if an offense "involved 50 or more victims." Under that provision, a "victim" is defined as "(I) any person who sustained any part of the actual loss determined under subsection (b)(1); or (II) any individual who sustained bodily injury as a result of the offense." U.S.S.G. § 2B1.1, comment. (n.3(A)(ii)). A "person" is defined as including "individuals, corporations, companies, associations, firms, partnerships, societies, and joint stock companies." Id. "[A]ctual loss" is "the reasonably foreseeable pecuniary harm" attributed to the offense. U.S.S.G. § 2B1.1, comment. (n.2(A)(i)).
At sentencing, the district court credited the findings presented by the Presentence Investigation Report ("PSI") and applied
In its defense of the district court's application of § 2B1.1(b)(2)(B), the Government concedes it cannot establish that anyone suffered bodily harm as a result of the schemes. Instead, it claims that, in addition to the eighteen government and private entities identified by the probation officer as suffering monetary loss, an untold number of AIDs and hemophiliac patients—those who ultimately received recycled blood-derivatives—also suffered an actual loss. The Government theorizes that the recipients of these medications were injured because they were not given the "benefit of their bargain"—although they sought to purchase, and believed they were purchasing, pharmaceuticals stored, shipped, and delivered in compliance with applicable safety regulations, patients received drugs of uncertain quality that had either been improperly stored or otherwise tampered with to evade regulatory oversight.
To buttress its theory, the Government points to two cases cited with approval by this court in which a sister circuit has remarked that a loss is suffered whenever a defendant's actions create the possibility that prescription drugs have been made unsafe. See United States v. Munoz, 430 F.3d 1357, 1371-73 (11th Cir.2005) (citing with approval both United States v. Bhutani, 266 F.3d 661, 670 (7th Cir.2001), and United States v. Marcus, 82 F.3d 606, 610 (4th Cir.1996)).
Even were we to accept the Government's theory, Bhutani and Marcus are inapposite. By the plain language of application note 3 to § 2B1.1, a person cannot be counted toward the fifty-victim threshold unless that person suffered bodily injury or a discrete portion of the loss both imputed to the scheme and used to calculate the offense level increase pursuant to § 2B1.1(b)(1). In Bhutani and Marcus, the Government was implicitly seeking to prove that patients had suffered the same loss used to determine the § 2B1.1(b)(1) enhancement.
In Bradley III's case, however, the Government has pointed to nothing in the record to show that any part of the loss used to calculate the § 2B1.1(b)(1) enhancement was suffered by patients. Instead, the Government's calculations only included the loss suffered by Medicaid programs, manufacturers, and distributors. Failure to demonstrate any nexus between
Without further evidence of additional victims, none of which was forthcoming, we must conclude that the Government failed to carry its burden and that the district court erred in enhancing the offense level pursuant to § 2B1.1(b)(2)(B). Without that enhancement, the total offense level for the Count 1 offense would have been 42.
The Guidelines also authorize a two-level enhancement if "the offense involved receiving stolen property, and the defendant was a person in the business of receiving and selling stolen property." U.S.S.G. § 2B1.1(b)(4). As we have interpreted a substantively similar provision, this Specific Offense Characteristic was meant to apply only to those defendants who sell goods stolen by others, meaning those who act as a "fence," and not to the actual thieves. See, e.g., United States v. Saunders, 318 F.3d 1257, 1267 (11th Cir. 2003) (collecting cases for a parallel provision, U.S.S.G. § 2B6.1(b)(2), and stating that "the Commission must have intended that only fences, who by definition are not thieves themselves, receive the enhancement"); United States v. Maung, 267 F.3d 1113, 1118 (11th Cir.2001) (same).
The question before us, then, is whether Bradley III was, by the fraud he perpetrated at Bio-Med, the actual thief of recycled medications, or a fence who received and sold drugs stolen by others. We previously answered a similar question in Saunders, finding that the defendant had "received" vehicles stolen by her husband when she titled them in her name. 318 F.3d at 1271-72. We declared it immaterial that she might also have been charged with theft as her husband's accomplice. Id. at 1272 (noting the lack of directly applicable precedent, but nevertheless deciding that "[t]he fact that Sharon ... accepted the vehicles from her own husband-thief is therefore inconsequential").
We find the present case distinguishable from Saunders insofar as Bradley III was the operative actor in the recycling of the blood-derivatives at the core of the indictment. He initiated the frauds, paying others to obtain drugs that he would later resell. He could therefore be charged with the theft of most, if not all, of the prescription pharmaceuticals obtained by others at his behest.
The § 3A1.1(b) Adjustment provides for a two-level increase of the offense level if the defendant "knew or should have known that a victim of the offense was a vulnerable victim." A "vulnerable victim" is "a person (A) who is a victim of the offense of conviction and any conduct for which the defendant is accountable under § 1B1.3 (Relevant Conduct); and (B) who is unusually
We have held that both circumstances and immutable characteristics can render a victim vulnerable for the purposes of § 3A1.1(b). United States v. Davis, 967 F.2d 516, 523 (11th Cir.1992). "The adjustment would apply, for example, in a fraud case in which the defendant marketed an ineffective cancer cure or in a robbery in which the defendant selected a handicapped individual." U.S.S.G. § 3A1.1, comment. (n.2). It would not apply, though, where "the defendant sold fraudulent securities by mail to the general public and one of the victims happened to be senile," or where the defendant targeted a bank teller because of her position. Id.
In the present case, there are two distinct groups of victims. The first includes government programs as well as pharmaceutical manufacturers and distributors. As no one contends that these victims are unusually vulnerable, they cannot sustain the enhancement.
The second group consists of patients whose prescriptions were filled using recycled blood-derivatives. As for this group, Bradley III does not dispute that they are vulnerable, but instead argues that they are not victims. Relying on application note 3 to § 2B1.1, Bradley III contends that a person must suffer "bodily injury" to qualify as a victim. He also insists that the Government could not rely on a hypothetical class of victims, but rather had to present evidence of actual physical harm done to the patients.
Bradley III's reliance on the aforementioned application note is misplaced. The "vulnerable victims" enhancement is found in § 3A1.1, and the commentary to that section does not require a person to endure "bodily injury" to qualify as a victim. U.S.S.G. § 3A1.1, comment. (n.2).
Other courts have previously determined that recipients of recycled blood-derivatives are "vulnerable victims" for purposes of the Adjustment.
And in United States v. Milstein, the Second Circuit held that a defendant's knowledge that diverted pharmaceuticals would eventually be distributed to patients was sufficient to satisfy the requirement that he targeted those victims because of their condition:
401 F.3d 53, 74 (2d Cir.2005); see also United States v. Echevarria, 33 F.3d 175, 180 (2d Cir.1994) ("[E]ven though there is a scam, ... the economic impact of which is on the government, an enhancement for vulnerable victims is appropriate where the exploitation of patients is part of the scam." (citation and internal quotation marks omitted)).
As Bradley III has conceded, users of IVIG and Recombinate were vulnerable due to their medical condition—AIDS and hemophilia, respectively. They were victims because Bradley III caused their physicians to provide them with recycled blood-derivatives. And Bradley III's schemes targeted them, exploiting their need for medication so he could make a profit. The district court did not err in applying the § 3A1.1(b) Adjustment.
Finally, § 2B1.1(b)(1) provides for a series of enhancements based on the amount of loss attributable to a defendant's fraud. The Guidelines Commentary defines loss as "the greater of actual loss or intended loss," with "actual loss" being "the reasonably foreseeable pecuniary loss that resulted from the offense" and "intended loss" being "the pecuniary harm that was intended to result from the offense" even if "impossible or unlikely to occur." U.S.S.G. § 2B1.1, comment. (n.2(A)(i) and (ii)). Alternatively, the Guidelines permit the use of the defendant's gain as a substitute figure, but "only if there is a loss but it reasonably cannot be determined." U.S.S.G. § 2B1.1, comment. (n.2(B)).
As such, while conceding that a district court may calculate loss by several means, we have explicitly recognized only two: (1) the "loss to the losing victims" method; and (2) the defendant's gain or "net gain" method. United States v. Munoz, 430 F.3d 1357, 1370 (11th Cir.2005). And much like the Guidelines, we have cautioned against "abandon[ing] a loss calculation in favor of a gain calculation where a reasonable estimate of the victims' loss based on existing information is feasible." United States v. Bracciale, 374 F.3d 998, 1004 (11th Cir.2004) (citing United States v. Snyder, 291 F.3d 1291, 1296 (11th Cir. 2002)). We advised caution because the "substitution of defendant's gain ... ordinarily underestimates the loss." Snyder, 291 F.3d at 1295 (emphasis added). "When precise figures are not available, the `loss to the losing victims' method generally prefers `to calculate the victims' loss
Indeed, neither this court nor the Guidelines insist that district courts calculate the amount of loss with utmost precision; the Guidelines merely require the district court to reach a reasonable estimate of the loss amount. U.S.S.G. § 2B1.1, comment. (n.2(C)). This is so because the amount of loss is often "difficult to determine accurately." United States v. Medina, 485 F.3d 1291, 1304 (11th Cir.2007) (citation and internal quotation marks omitted).
And because the district court is in a unique position to assess the evidence, its loss determination is "entitled to appropriate deference." U.S.S.G. § 2B1.1, comment. (n.2(C)). The district court is permitted to base its loss determination on factual findings derived from, "among other things, evidence heard during trial, undisputed statements in the PSI, or evidence presented during the sentencing hearing." United States v. Polar, 369 F.3d 1248, 1255 (11th Cir.2004). The district court may "consider [all] relevant information without regard to its admissibility... at trial, provided that the information has sufficient indicia of reliability to support its probable accuracy." U.S.S.G. § 6A1.3(a); see also United States v. Baker, 432 F.3d 1189, 1254 n. 68 (11th Cir.2005). And it is not required that the district court constrain itself to absolute figures; instead, the court may rely on "specific circumstantial evidence" to estimate the amount of loss. United States v. Willis, 560 F.3d 1246, 1251 (11th Cir.2009).
Still, "[w]hile estimates are permissible, courts must not speculate concerning the existence of a fact which would permit a more severe sentence under the guidelines." United States v. Sepulveda, 115 F.3d 882, 890 (11th Cir.1997) (citing United States v. Wilson, 993 F.2d 214, 218 (11th Cir.1993)). Rather, as stated above, the Government must establish those facts by a preponderance of the evidence. Lawrence, 47 F.3d at 1566. Where the amount of loss the defendant purportedly caused is at issue, the Government must "support[ ] its loss calculation with reliable and specific evidence." United States v. Liss, 265 F.3d 1220, 1230 (11th Cir.2001) (internal citations omitted).
In the present case, the probation officer grounded his loss calculations (as reflected in his initial version of the PSI) in circumstantial evidence, extrapolating figures from witness testimony and exhibits to determine the "actual" pecuniary loss traceable to each of Bradley III's schemes. He did this using both the "loss to the losing victims" and "net gain" methods. Before sentencing, the Government provided the officer with revised loss calculations using updated figures in response to objections to the PSI raised by various defendants. The probation officer accepted the Government's revised numbers and amended the PSI accordingly. The district court thereafter expressly "adopt[ed]" the new loss calculations. Bradley III now challenges those loss figures, claiming the district court failed to make reasonable estimates of loss based on reliable and specific evidence, or, in the alternative, erred in failing to make findings specific enough to enable this court to determine the factual basis for its Guidelines applications.
In the interest of brevity, we only summarize the methods by which the Government calculated the loss for each of Bradley III's schemes. For two of the Florida Medicaid Schemes—the Infustat & Seratech Scheme and the Sentry/Castro Scheme—the Government premised its
As to the Sentry/Castro Scheme, the Government introduced invoices sent from MedPoint, the pharmacy owned by Bossey, to Intermed totaling $2,222,277.90. Adopting the testimony of Tellechea, who claimed that a third of the drugs listed on those invoices could only have come from Sentry, the Government divided that total by three. It thus credited $740,759.30 worth of IVIG obtained by Bio-Med to Sentry. The Government then compared the invoice price per unit of IVIG to the price at which Florida Medicaid reimbursed Bio-Med and determined that, for Venoglobulin, the reimbursement price averaged 162.8% of the invoiced price, and that, for Panglobulin, the number was 150.7%.
For the related Liz Pascual/IV Solutions Scheme, the Government introduced twenty-seven invoices from IV Solutions to Intermed totaling $1,736,060 at $54 per gram of IVIG. At that time, Florida Medicaid was reimbursing for IVIG at $72.89 per gram, a 135% increase over the invoice price. Multiplying $1,736,060 by 135%, the Government determined that Florida Medicaid lost approximately $2,343,681 as a result of the scheme.
For the last of the Florida schemes, the Pinkoff Scheme,
Turning to the Medi-Cal/GHPP Scheme, the Government took a slightly different route. It first calculated the amount Bio-Med and its intermediary, Intermed, paid out to those engaged in the collection of
Next, using witness testimony about how much Recombinate was involved in each purchase, the Government deduced the range of per unit prices for the recycled Recombinate, settling on an estimate of $.425 per unit.
After extensive review, we cannot say that the district court clearly erred in accepting the Government's "loss to the losing victims" calculations for the Florida Medicaid and Medi-Cal/GHPP Schemes. See United States v. Gupta, 463 F.3d 1182, 1200 (11th Cir.2006) ("The amount the Government paid in response to false claims is an appropriate measure of damages."). To begin, the district court was entitled to rely on the sort of "specific circumstantial evidence" that drove the Government's calculations in this case. See Willis, 560 F.3d 1246, 1251. Though not all of the information used to calculate that loss was introduced into evidence at trial, there is no indication that it was unreliable. See Liss, 265 F.3d at 1230. As described above, the numbers and the calculations themselves were sufficiently specific. See id. Moreover, other than protesting the lack of certainty inherent in the Government's tally, Bradley III has submitted no proof that the Government's averages, estimates, or results are so wildly inaccurate as to be unreasonable. See Medina, 485 F.3d at 1304. The district court, therefore, did not engage in the kind of speculation forbidden by the Sentencing Guidelines. See Sepulveda, 115 F.3d at 890.
Accordingly, at least $28,115,372.36 of the loss attributed to Bradley III was properly considered. Because that amount exceeded $20 million, it results in the same twenty-two level § 2B1.1(b)(1) increase that was applied by the district court. U.S.S.G. § 2B1.1(b)(1)(L). For that reason, any additional error in calculating loss, if there was error, was harmless, and we conclude our review without addressing Bradley III's claims as they relate to the diversion schemes alleged in the indictment. See supra note 15. Moreover, because Bradley III's final Guidelines sentencing range—applying a total offense level of 40 to a Category I offender—of 292 to 365 months on Count 1 still exceeds the statutory maximum of 240 months, the court's erroneous application of the §§ 2B1.1(b)(2)(B) and 2B1.1(b)(4) enhancements was also harmless.
For the first time on appeal, Bradley III contests the district court's failure to identify the evidence upon which it relied to support its loss findings. Accordingly, we review for plain error. United States v. Neely, 979 F.2d 1522, 1523 (11th Cir.1992). To find plain error, Bradley III must convince us that the district court erred, that the error was plain, and that it prejudicially affected his substantial rights. United States v. Stevenson, 68 F.3d 1292, 1294 (11th Cir.1995). Even if he makes the required showing, however, he will still not be entitled to relief unless we conclude that the error seriously affected the fairness, integrity, or public reputation of his sentencing proceeding. United States v. Olano, 507 U.S. 725, 736, 113 S.Ct. 1770, 1779, 123 L.Ed.2d 508 (1993). With that standard in mind, we turn to the question of the district court's findings.
We recognize that, to facilitate appellate review, a district court should make explicit factual findings that underpin its sentencing decision. United States v. Wise, 881 F.2d 970, 972-73 (11th Cir.1989). But we also note that failure to make specific findings does not preclude appellate review where the court's decisions are based on clearly identifiable evidence.
We find no error, much less plain error, in the district court's failure to make specific factual findings because it is clear from the record what evidence the court credited in making its loss determination. See Villarino, 930 F.2d at 1528-29. At sentencing, the court reviewed the arguments of all the defendants as to the amount of loss, but choose instead to adopt the probation officer's PSI and Addendum in their entirety. In adopting the PSI, the court made it clear that it was resolving all questions of fact in favor of the Government.
Bradley III challenges his sentences on Counts 3 and 54, both of which charged that he conspired to commit multiple offenses, at least one of which carried a lesser base offense level or total offense level than the other(s).
Applying the concurrent sentence doctrine, however, we decline to review this matter. "The concurrent sentence doctrine provides that, if a defendant is given concurrent sentences on several counts and the conviction on one count is found to be valid, an appellate court need not consider the validity of the convictions on the other counts." United States v. Fuentes-Jimenez, 750 F.2d 1495, 1497 (11th Cir.1985). Only when the defendant would suffer "adverse collateral consequences from the unreviewed conviction" does the doctrine not apply. Id.
Bradley III was sentenced to 240 months on Count 54 and 60 months on Count 3. Each sentence was to run concurrently with the other and with the 240 months imposed on Count 1. We have
In appealing his sentences, Bradley, Jr., argues that the district court: (1) miscalculated the Guidelines sentencing range for Count 1 by basing the total offense level on acts of racketeering that the jury, in its special verdict, did not find that he committed; (2) erred in failing to determine beyond a reasonable doubt which of the five money-laundering offenses alleged in Count 54 he conspired to commit; (3) erred in holding him accountable for racketeering acts alleged in Count 1 contrary to the jury's special verdict findings that he did not commit such acts; (4) enhanced his Count 1 offense level with Special Offense Characteristics the Government failed to prove by a preponderance of the evidence; and (5) ordered him to make restitution for acts of racketeering for which the jury acquitted him.
The indictment charged Bradley, Jr., with two RICO offenses, violations of 18 U.S.C. §§ 1962(c) and (d), respectively, plus one count of conspiracy to commit wire fraud or to pay illegal kickbacks, in violation of 18 U.S.C. § 371, another count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 371, forty-nine counts of wire fraud, in violation of 18 U.S.C. § 1343, one count of conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h), 201 counts of substantive money laundering, in violation of 18 U.S.C. §§ 1956(a)(1)(A)(i) and (a)(1)(B)(i), and two counts of failing to disclose a foreign financial interest, in violation of 31 U.S.C. §§ 5314 and 5322(b). The Count 1 RICO charge further alleged 256 underlying racketeering acts, subdivided into ten separate schemes, covering wire fraud, interstate transportation of stolen property, mail fraud, failing to disclose a foreign financial interest, illegal structuring, and money laundering.
In finding Bradley, Jr., guilty on Count 1, the jury, by a special verdict, found beyond a reasonable doubt that he had committed twenty-three acts of racketeering related to the "Intermed Pharmaceutical Supply Money Laundering Scheme" and two of failing to disclose his investment in a foreign financial interest.
Bradley, Jr., claims that the district court denied him due process of law and the estoppel protection afforded him by the jury's verdicts when it sentenced him on Count 1 based on racketeering acts and correlated schemes for which the jury did not find him responsible beyond a reasonable doubt. Stated another way, Bradley,
Failing that, Bradley, Jr., objects to the district court's attribution of such offenses to him—as Count 1 racketeering activity— under the Guidelines' provision on "Relevant Conduct," U.S.S.G. § 1B1.3. Relevant conduct is limited to criminal activity jointly undertaken, and, he submits, the jury's verdicts established that he did not aid and abet or otherwise criminally participate in the commission of such offenses. Accordingly, Bradley, Jr., contends that the district court erred in calculating his Count 1 total offense level based on racketeering acts it considered pursuant to § 1B1.3.
A conviction for violating RICO carries with it a statutory maximum sentence of 240 months. 18 U.S.C. § 1963(a). A guilty verdict, then, regardless of its form, subjects the defendant to a sentence at or below the maximum. It is up to the district court to determine the appropriate sentence. To do so, it must engage in two intertwined analyses. First, it must determine the Guidelines sentencing range. United States v. Booker, 543 U.S. 220, 259-60, 125 S.Ct. 738, 764-65, 160 L.Ed.2d 621 (2005). Next, the court must consider the sentencing factors, or objectives, found in 18 U.S.C. § 3553(a).
Understood in this way, the Sentencing Guidelines represent but one means of settling on a substantively reasonable sentence commensurate with the seriousness of the crime. For that reason, we have repeatedly held that, after identifying the guideline that applies to the offense of conviction and the base offense level, the district court may find all other facts relevant to Specific Offense Characteristics and Adjustments by a preponderance of the evidence. United States v. Hamaker, 455 F.3d 1316, 1336 (11th Cir.2006). And in this case, that is exactly what the district court did.
As we have indicated, § 2E1.1, the RICO guideline, provided the appropriate structure for determining the base offense level of Bradley, Jr.'s Count 1 sentence. That section instructs the district court to apply a base offense level of 19 or the offense level applicable to the underlying racketeering activity, whichever is greater. U.S.S.G. § 2E1.1.
Meanwhile, § 1B1.3 tells the district courts to consider all relevant conduct when determining the defendant's total offense level.
Id. Accordingly, under § 1B1.3(a), when a defendant is acting in concert with others, the appropriate conduct to consider for sentencing purposes is far broader than the conduct that drove the original conviction.
By definition, the RICO violation charged in Count 1 is a criminal enterprise undertaken by a defendant in concert with others. 18 U.S.C. § 1962(c). And the jury's guilty verdict on Count 1 confirms that Bradley, Jr., was part of just such an enterprise. Therefore, in this case, the relevant conduct rules for "jointly undertaken criminal activity" must apply. See, e.g., United States v. Carrozza, 4 F.3d 70, 74-75 (1st Cir.1993) (remanding for the district court to consider as underlying racketeering activity certain acts not charged in the indictment).
Because the relevant conduct rules apply, the district court was required to decide, by a preponderance of the evidence, the exact "scope" of the RICO enterprise Bradley, Jr., joined. Namely, the court had to determine whether Bradley, Jr., agreed to take part in a criminal organization engaged in wire fraud, interstate trafficking, and mail fraud. Adopting the PSI, it found that he had done so. Accordingly, it correctly treated those acts as relevant conduct racketeering offenses under § 1B1.3.
Since, as we have explained, the district court found by a preponderance of the evidence that Bradley, Jr., had acted in concert with others in relation to the fraud schemes, we find his argument that being acquitted of the wire fraud counts (and racketeering acts) related to those schemes means those acts were not "jointly undertaken criminal activity" fanciful on its face. We believe, however, that Bradley, Jr., might also be making a second, slightly different argument. Viewed in another
Bradley, Jr., relies on Callanan v. United States, 881 F.2d 229 (6th Cir.1989), in support of this position. His quotation from that case, however, is incomplete, and he misconstrues its holding. The full quotation reads,
Id. at 234 (emphasis added). That logic seems right—if, at the conclusion of the trial, the jury finds beyond a reasonable doubt that a defendant committed a substantive offense, that finding will satisfy the preponderance of the evidence standard used to determine relevant conduct at sentencing. See, e.g., United States v. Tocco, 306 F.3d 279, 290 (6th Cir.2002) (deciding that the defendant's conviction on a Hobbs Act conspiracy count served the function of a special verdict on the Hobbs Act conspiracy alleged as an act of racketeering and holding that the district court should have included the Hobbs Act conspiracy as relevant conduct in calculating the defendant's base offense level under U.S.S.G. § 2E1.1(a)(2)).
Callanan does not prove Bradley, Jr.'s point. There is nothing inconsistent with a jury verdict to the effect that the Government had not proven certain acts beyond a reasonable doubt and a judicial finding that the Government had proven those acts by a preponderance of the evidence.
The district court did not infringe Bradley, Jr.'s constitutional rights in considering conduct for which the jury acquitted him. It did not err in calculating Bradley, Jr.'s Count 1 base offense level based on relevant conduct that amounted to underlying racketeering activity. And for the same reasons, it did not err in ordering restitution based on such activity.
Much as it did with Bradley III, the district court calculated Bradley, Jr.'s sentence on Count 1 by determining which group of predicate acts resulted in the greatest base offense level. U.S.S.G § 2E1.1(a)(2). And as in Bradley III's case, the greatest base offense level corresponded to the offense levels for mail and wire fraud and interstate transportation of stolen property. The result was a total offense level of 40.
Bradley, Jr., takes issue with this sentencing range, contending that the court erred in calculating the amount of loss pursuant to § 2B1.1(b)(1) and applying the fifty-victim enhancement under § 2B1.1(b)(2)(B). Bradley, Jr., likewise challenges the court's application of the vulnerable victim Adjustment prescribed by § 3A1.1(b)(1). He also challenges, more generally, the application of any Special Offense Characteristics or Adjustments based on conduct not attributed to him by the jury. Were it not for these errors, Bradley, Jr., argues, his total offense level would have been 30 and his sentencing range 97 to 121 months.
Having already disposed of the latter challenge based upon our discussion of relevant conduct, see supra subpart B.1, we address Bradley, Jr.'s other objections. We previously upheld the district court's application of the § 3A1.1(b)(1) Adjustment, see supra subpart A.1.c, finding the Government had succeeded in proving by a preponderance of the evidence that Bradley III had targeted vulnerable victims. We adhere to that decision with respect to Bradley, Jr., and we extend our reasoning to cover the § 3A1.1(b)(2) Adjustment for numerous vulnerable victims. We have also addressed the controversy surrounding the § 2B1.1(b) loss finding, agreeing that at least $20 million of the district court's total was properly attributed to Bradley III. See supra subpart A.1.d. We see nothing in the record to change our analysis in regard to Bradley, Jr.
The district court did, however, improperly apply the four-level § 2B1.1(b)(2)(B) enhancement for fifty or more victims. See supra subpart A.1.a. That error, unless harmless, would require us to vacate Bradley, Jr.'s Count 1 sentence. See United States v. Crawford, 407 F.3d 1174, 1178-79 (11th Cir.2005) ("Booker did not affect 18 U.S.C. section 3742(f), which mandates remand of any case in which the sentence was imposed as a result of an incorrect application of the sentencing guidelines.").
It is not harmless. See United States v. Foley, 508 F.3d 627, 634 (11th Cir.2007). A four-level reduction of Bradley, Jr.'s total offense level, from 40 to 36, would reduce the Guidelines sentencing range from one well above the 225-month sentence actually imposed, at 292 to 365 months, to one subsuming it, at 188 to 235
As it may be that Bradley, Jr., would have received a lesser sentence, we vacate his Count 1 sentence and remand that count for resentencing. On remand, the district court will recalculate Bradley, Jr.'s Guidelines sentencing range and reweigh the 18 U.S.C. § 3553(a) factors to determine whether Bradley, Jr.'s original sentence is still reasonable in light of this decision.
Bradley, Jr., also challenges his sentence on the money laundering conspiracy, Count 54, brought under 18 U.S.C. § 1956(h). Count 54 alleged that the Bradleys had conspired to commit five money laundering objects, in violation of 18 U.S.C. §§ 1956(a)(1)(A)(i), 1956(a)(1)(A)(ii), 1956(a)(1)(B)(i), 1956(a)(1)(B)(ii), and 1957. Despite being instructed that it could not convict either Bradley without determining that he had conspired to commit one of those acts,
Pursuant to Sentencing Guidelines § 1B1.2(d), when a defendant is convicted of a conspiracy to commit multiple object offenses, he shall be sentenced as if he had been convicted on a separate count of conspiracy for each. Commentary to the guideline explains:
U.S.S.G. § 1B1.2(d), comment. (n.4). We have held that these instructions require
Bradley, Jr., contests the district court's offense level calculation on the ground that the district court failed to find beyond a reasonable doubt which offense(s) he conspired to commit. The Government answers that, because all of the object offenses listed in Count 54 are grouped together under § 3D1.2(d),
The district court erred in failing to make the necessary finding. See, e.g., United States v. Venske, 296 F.3d 1284, 1292, 1294 (11th Cir.2002) (vacating defendants' sentences and remanding where the sentencing court did not determine beyond a reasonable doubt whether defendants conspired to commit a violation of 18 U.S.C. § 1956(a)(1)(A)(i) or 18 U.S.C. § 1956(a)(1)(B)(i)). Though § 3D1.2(d) does allow all of the object offenses in Count 54 to be grouped together as § 1B1.3 relevant conduct for purposes of calculating the total offense level, that provision does not obviate the district court's core responsibility to identify beyond a reasonable doubt the object offense that drove the conviction.
Since we vacate this sentence, we need not address Bradley, Jr.'s argument that the district court improperly enhanced his offense level by four levels under § 3B1.1(a) for being an organizer or leader of criminal activity involving five or more participants. The district court may reconsider that enhancement when resentencing Bradley, Jr., in light of our discussion on relevant conduct. See supra subpart B.1.
As to his sole conviction on the Count 3 dual-object conspiracy, Tellechea appeals both the application of several enhancements as well as the district court's failure to make a specific determination of which object was proven beyond a reasonable doubt.
As discussed supra, when confronted with a multi-object conspiracy in conjunction with a general jury verdict, a district court is required to make a finding as to which object offense drove the conviction. See, e.g., Venske, 296 F.3d at 1293. The district court failed to do so in this case. Accordingly, we vacate Tellechea's sentence and remand his case for resentencing.
Bio-Med also asks us to vacate its sentence and remand for further proceedings in the district court. It initially contends that the district court erred in calculating the amount of loss attributed to its fraud under § 2B1.1(b)(1). Bio-Med also challenges the court's application of both the § 2B1.1(b)(4) enhancement for a defendant in the business of receiving and selling stolen property and the § 2B1.1(b)(2) enhancement for an offense involving fifty or more victims. Finally, Bio-Med argues that the district court abused its discretion in failing to impose a lower fine under U.S.S.G. § 8C3.3(b) based on its demonstrated inability to pay.
Adopting the PSI's sentencing factual findings and its grouping of Bio-Med's convictions on Counts 1 through 53, the district court calculated Bio-Med's offense level by applying the highest offense level resulting from any of those offenses. United States Sentencing Commission, Guidelines Manual, §§ 3D1.2(d), 3D1.3(b) (Nov. 1, 2006).
As with the Bradleys, the greatest offense level was based on the racketeering acts of wire fraud, mail fraud, and interstate transportation of stolen property. The court determined that offense level by adding to the base offense level of six prescribed by § 2B1.1(a)(2), the levels prescribed for the following Specific Offense Characteristics:
The total offense level thus became 36. Because it was the largest of the available offense levels, the district court used 36 to fashion Bio-Med's sentences. See U.S.S.G. § 2E1.1(a).
A score of 10 corresponds to a minimum multiplier of 2.00 and a maximum of 4.00. A total offense level of 36 corresponds to a fine amount of $45.5 million, § 8C2.4(d), which far exceeds the pecuniary gain/loss amount identified in the PSI, $33,713,200.68. Accordingly, the Guidelines fine range for Bio-Med came to between $91 million and $182 million. The district court instead imposed the statutory maximum fine of $26.5 million.
As for the fine imposed, based on a minimum multiplier of 2.00, for an error by the district court to be anything other than harmless the base fine total under § 8C2.4 must be less than half the statutory maximum fine of $26.5 million, or $13.25 million.
We have already determined that enhancements based on §§ 2B1.1(b)(2) and 2B1.1(b)(4) were not supported by the evidence presented at trial. See supra subpart A.1.a-b. A six-level reduction in the overall offense level would drop the corresponding offense level fine amount to $10.5 million, below the $33,713,200.68 pecuniary gain/loss total. See U.S.S.G. § 8C2.4. Because § 8C2.4 requires that we use the greater of gain/loss and that offense level fine, we would have to use the gain/loss amount to determine the appropriate fine range. And we have previously sustained more than $28 million of that total loss, see supra subpart A.1.d, meaning the minimum Guidelines fine would be at least $56 million, see U.S.S.G. § 8C2.4(d). Since this is far more than the $26.5 million fine imposed, the claimed error is harmless. See United States v. Foley, 508 F.3d 627, 634 (11th Cir.2007).
Under the abuse of discretion standard, we review a district court's choice of sentence, including the decision to not impose a fine lower than that recommended by the Sentencing Guidelines, for procedural and substantive unreasonableness. Gall v. United States, 552 U.S. 38, 51, 128 S.Ct. 586, 597, 169 L.Ed.2d 445 (2007); United States v. Suarez, 601 F.3d 1202, 1223 (11th Cir.2010).
To ensure that a sentence is not procedurally unreasonable, we determine whether the district court committed a significant error "such as failing to calculate (or improperly calculating) the Guidelines
When reviewing the district court's decision for substantive reasonableness, we determine the range of reasonable sentences dictated by the facts of the case, taking into account the totality of the circumstances and giving deference to the district court. See id. "The fact that the appellate court might reasonably have concluded that a different sentence was appropriate is insufficient to justify reversal of the district court." Gall, 552 U.S. at 51, 128 S.Ct. at 597, "The burden of establishing unreasonableness belongs to the party challenging the sentence." Suarez, 601 F.3d at 1223.
Bio-Med's fine is procedurally reasonable. The district court said that it "considered the factors set forth in federal law that deal with sentencing, specifically 18 U.S.C. [§ ] 3553(a)" and sentenced Bio-Med "pursuant to the Sentencing Reform Act of 1984." Any errors in calculating the Guidelines sentencing range were harmless, and the court imposed the correct statutory maximum fine.
The fine is also substantively reasonable. In contending that it is not, Bio-Med relies on both Sentencing Guidelines § 8C3.3(b), which allows the court to "impose a fine below that otherwise required by § 8C2.7 ("Guideline Fine Range—Organizations") if the court finds that the organization is not able and, even with the use of a reasonable installment schedule, is not likely to become able to pay the minimum fine required by § 8C2.7 (Guideline Fine Range—Organizations)," and 18 U.S.C. § 3572(a)(1), which requires a sentencing court to consider, before imposing a fine or setting a payment schedule, "the defendant's income, earning capacity, and financial resources." Bio-Med argues that, according to the receiver appointed to marshal and distribute its assets, it is unable to pay the $26.5 million fine; the receiver testified that, after paying the $39.5 million forfeiture judgment as well as the fines imposed on the Bradleys and Tellechea, Bio-Med would only have financial resources "somewhere between 12 and 15 Million Dollars." The court's unwillingness to impose a lower fine, Bio-Med posits, was therefore an abuse of discretion.
Yet, as Bio-Med concedes, this permissive reduction only becomes mandatory if the fine imposed would impair its ability to make restitution. U.S.S.G. § 8C3.3(a); see also 18 U.S.C. § 3572(b). A defendant's financial hardship does not make a fine substantively unreasonable even if the defendant cannot pay the entire fine or if the fine would drive the defendant into bankruptcy. See United States v. Eureka Lab., 103 F.3d 908, 912, 914 (9th Cir.1996). And the receiver's testimony notwithstanding, Bio-Med has offered nothing to demonstrate that it lacks sufficient assets to pay the fine it owes, much less that it would be unable to pay restitution to its victims.
The indictment contained a forfeiture count in which the Government sought the following:
The jury returned its verdicts on March 29, 2006. The Bradleys, Bio-Med, and Tellechea were found guilty of offenses that triggered one or more provisions of the forfeiture count. Because the forfeiture provisions were triggered, both the Government and the defendants were entitled to jury findings as to "whether the government ha[d] established the requisite nexus between the property [sought to be forfeited] and the offense committed by the defendant." See Fed.R.Crim.P. 32.2(b)(4).
Neither side requested a jury determination; rather, the Bradleys and Bio-Med
The district court entered the Preliminary Forfeiture Order on April 3, 2006, five days after the jury returned its verdicts.
Order Appointing Receiver and Monitor at 14 (April 3, 2006). The court labeled this particular injunction, "REPATRIATION ORDER."
The district court scheduled the defendants' sentencing hearings for September 6, 2006. The day before the hearing, the Government moved the court
On September 6, after the court announced the sentences it planned to impose, Bradley, Jr.'s lawyer indicated that the defendants would object to the Government's motion. The court indicated that it would grant the motion, but deferred its ruling. It would grant the motion on October 4, as indicated below.
On September 11, the court sentenced the defendants as indicated in part IV, supra, making the forfeiture provisions of the Preliminary Forfeiture Order part of the Bradleys' and Bio-Med's sentences.
On September 26, the Government supplemented its September 6 motion by attaching a proposed order. On October 4, the district court, drawing on the authority provided by the FDCPA, the All-Writs Act, 28 U.S.C. § 1651, and the court's inherent power, overruled the Bradleys' and Bio-Med's previous objections, granted the Government's motion, and entered the proposed order. The receiver then set about the task of finding assets the Bradleys' owned, liquidating them, and depositing the proceeds into the registry of the district court. The receiver also undertook to aid the court in enforcing the injunctions, including the REPATRIATION ORDER, which the October 4 order lifted in substance from its April 3 order.
As provided in the October 4 order, the United States was entitled to receive the funds the receiver collected, and deposited, up to the $39.5 million judgment amount plus the total amount of the fines and special assessments imposed as part of the respective defendants' sentences, $33,146,400,
On October 19, Tellechea moved the district court to reconsider its October 4 ruling. Reiterating the objections the Bradleys (and their spouses) had made on September 19 and 20, Tellechea added that the court should reconsider its ruling because he was not a party to the Consent Preliminary Order of Forfeiture and had not been given fair notice of the Government's September 5 and 26 filings. The court denied his motion on December 4, 2006.
Meanwhile, Bradley, Jr., Norma Bradley, Bradley III, Maria Bradley, and Tellechea (collectively "appellants") separately appealed the October 4 order.
The defendants' sentences contained money judgments in favor of the United States and in personam orders to pay restitution to the victims of the defendants' fraudulent schemes. We first explain why the appointment of a receiver to obtain satisfaction of the money judgments was an abuse of discretion, and we then explain why the appointment of the receiver to effectuate the defendants' payment of restitution to the victims was likewise inappropriate.
The FDCPA provides "the exclusive civil procedures for the United States" to obtain satisfaction of a judgment in a criminal proceeding that imposes a "fine, assessment, penalty, [or] restitution" in favor of the United States. 28 U.S.C. §§ 3001(a)(1), 3002, (3)(B),(8). Although the procedures prescribed are "exclusive," the Act does not "curtail or limit the right of the United States under any other Federal law or any State law ... to collect any fine, penalty, assessment, restitution, or forfeiture arising in a criminal case." 28 U.S.C. § 3003(b)(2). Thus, the provisions of the Federal Rules of Civil Procedure relating to the satisfaction of civil judgments, e.g., Rule 66 ("Receivers") and 69 ("Execution"), apply.
In this case, the judgments at issue imposed in favor of the United States fines
The FDCPA provided the Government with all the tools necessary to obtain payment of the fines, special assessments, and the $39.5 million.
A district court's appointment of a receiver, by way of contrast, is "an extraordinary equitable remedy." 13 Moore's Federal Practice, § 66.04[2][a] (3d ed.2010). And equity intervenes only when there is no remedy at law or the remedy is inadequate. Here, the Government has not, and we believe could not, explain why the FDCPA's procedures, or those provided by the Federal Rules of Civil Procedure, are inadequate. At bottom, they are more adequate than the self-help devices, whatever they might be, that a receiver would have to use. It is for this reason that the court's appointment of a receiver to collect the defendants' fines and special assessments was inappropriate.
We assume that what the Government had in mind for this case was something like the following. The receiver identifies a piece of property, real or tangible, which, she has reason to believe, is owned by one of the Bradleys or Tellechea. She asks the owner to turn the property over to her, but he refuses. So, she has the United States Attorney, or a private attorney hired with the district court's permission, move the district court to order the owner to turn over the property or face a civil contempt sanction. The court grants the motion, and the owner complies; if not, the owner is held in contempt and sanctioned.
The problem with this approach, which is an implicit consequence of what the district court provided in its October 4 order, is that it runs afoul of Eleventh Circuit precedent, Combs v. Ryan's Coal Co., 785 F.2d 970, 980 (11th Cir.), cert. denied sub nom, Simmons v. Combs, 479 U.S. 853, 107 S.Ct. 187, 93 L.Ed.2d 120 (1986).
A receiver was likewise not needed to enforce the payment of restitution to the victims of the defendants' fraudulent schemes. Bio-Med owed the full amount of the restitution, $27,804,995. The United States owns Bio-Med; therefore, if Bio-Med is liquidated, as provided in the October 4 order, for $27,804,995 (or more), the United States will have paid the victims all they are to receive under the defendants' judgments. To the extent that the proceeds of Bio-Med's liquidation are less than $27,804,995, and the defendants do not voluntarily make up the difference, the court can enforce payment to the victims via its contempt power or the revocation or modification of the defendants' terms of supervised release. In light of this, the appointment of a receiver to oversee and ensure the payment of restitution constituted an abuse of discretion.
We AFFIRM the Bradleys', Bio-Med's, and Tellechea's convictions, and Bradley III's and Bio-Med's sentences. We VACATE Bradley, Jr.'s sentences on Counts 1 and 54 and Tellechea's sentence on Count 3, and REMAND those counts for resentencing. Finally, we REVERSE the district court's October 4, 2006 order appointing the receiver and monitor, and its supplemental receivership order of May 17, 2007. As soon as circumstances allow, the receivership should be brought to an immediate close.
SO ORDERED.
In addition to the foregoing, the indictment sought the forfeiture of: (1) interests any defendant "acquired or maintained" in violation of 18 U.S.C. §§ 1962(c) and (d) (anti-racketeering); (2) interests a defendant obtained in any "property involved in" the violation of 18 U.S.C. §§ 1956 or 1957 (money laundering) and any "property traceable to such property"; and (3) interests in "any property constituting, or derived from proceeds [a defendant] obtained . . ., as the result of" the violation of 18 U.S.C. § 1343 (wire fraud).
Upon leaving Infustat, Castro took with him a large quantity of IVIG from Infustat's inventory. Castro then resold that IVIG to Bradley III; the purchase price was included in the price Bradley III paid for Castro's interest in Infustat. Bradley III and Bio-Med continued doing business with Castro after he purchased Sentry.
18 U.S.C. § 1962(c).
An "enterprise includes any individual, partnership, corporation, association, or other legal entity, and any . . . group of individuals associated in fact although not a legal entity." 18 U.S.C. § 1961.
"Racketeering activity" includes "any act which is indictable under . . . [18 U.S.C. §§] 1341 (relating to mail fraud), . . . 1343 (relating to wire fraud), . . . 1956 (relating to the laundering of monetary instruments), 2314 and 2315 (relating to interstate transportation of stolen property, . . . [or] any act which is indictable under the Currency and Foreign Transactions Reporting Act, [31 U.S.C. §§ 5311-30 and 31 C.F.R. Part 301]." 18 U.S.C. § 1961(1).
United States v. Browne, 505 F.3d 1229, 1257-58 (11th Cir.2007) (internal quotation and citation omitted). Regarding
Id. at 1258 (internal quotations omitted) (emphasis in original); see also H.J., Inc. v. Nw. Bell Tele. Co., 492 U.S. 229, 241, 109 S.Ct. 2893, 2902, 106 L.Ed.2d 195 (1989) ("What a. . . prosecutor must prove is continuity of racketeering activity, or its threat, simpliciter." (emphasis in original)). The pattern component, requiring that the predicate acts relate to each other and have continuity, may be established by demonstrating a series of related predicate acts committed over a specific period of time, i.e., a "closed-ended theory," or by demonstrating that certain related predicate acts are either likely to be repeated in the future or are part of an entity's regular way of doing business, i.e., an "open-ended theory." Browne, 505 F.3d at 1259-60.
"[B]ecause any combination of two factually sufficient predicate acts can support a finding of continuity, that finding—and thus the substantive RICO conviction—may stand `if the evidence is sufficient with respect to any [two] of the acts charged.'" Id. at 1261 (quoting Griffin v. United States, 502 U.S. 46, 56-57, 112 S.Ct. 466, 473, 116 L.Ed.2d 371 (1991)).
Id. at 1499 (internal quotation marks, citations, and alterations omitted) (emphasis in original).
It is for this reason that we disagree with Bio-Med's contention that it was permitted to resell recycled blood-derivatives in the absence of an express written regulation forbidding it. If Bio-Med knew that its conduct would cause the Medicaid programs to reimburse for medication they did not intend to cover, that was enough.
Even though Williams could not positively state that the Recombinate was purchased by Bio-Med, given his testimony it would have been reasonable for the jury to find that Bio-Med had caused Medi-Cal or GHPP, or both, to reimburse twice for the same medication at some time or another.
The FCA provision they cite, 31 U.S.C. § 3729, creates a civil cause of action for any individual who can show that another presented, or caused to be presented, a false claim to the United States. We have held that the purpose of that provision is "to encourage private individuals who are aware of fraud being perpetrated against the government to bring such information forward." Ragsdale v. Rubbermaid, Inc., 193 F.3d 1235, 1236 n. 1 (11th Cir.1999). For example, in United States ex rel. Clausen v. Lab. Corp. of America, Inc., 290 F.3d 1301 (11th Cir.2002), we interpreted the FCA to require a private plaintiff to allege that at least one specific claim presented to the government for payment was either fraudulent or relied on a fraudulent record or statement:
290 F.3d at 1311 (citations omitted) (emphasis in original). Because the relator failed to allege with specificity which claims were fraudulent, we affirmed the dismissal of the FCA action. Id. at 1311-12. Put another way, we held in Clausen that the making of a claim for reimbursement is the operative act which violates the FCA, and that, in order to survive a motion to dismiss, a complaint must provide more than conclusory allegations that a false claim—one based on a false representation—was made. See id. at 1311.
Construing Clausen, as well as persuasive authority from our sister circuits, the Bradleys and Bio-Med correctly note that successful prosecution of an FCA claim requires proof that an individual claim was false when filed. And the Bradleys and Bio-Med are correct that the FCA is an anti-fraud statute. However, they go too far when, comparing this case to those construing the FCA, they claim that the Government is bound to present evidence that individual medications were recycled.
While the FCA is an anti-fraud statute, its focus is, as the title suggests, on the actual submission of a claim. The mail and wire fraud statutes, on the other hand, focus their attention on the use of a misrepresentation to obtain money that is not owed. It is for that reason that when we interpret the FCA, evidence of a false representation is not sufficient; the plaintiff must produce evidence that the false representation was included as part of a specific claim and thus evidence of the claim itself. See, e.g., Clausen, 290 F.3d at 1311-12. In a fraud case, proof of intent to defraud will suffice. The FCA cases, therefore, are simply not on point.
Likewise, we find sufficient evidence to sustain Bradley, Jr.'s Count 1 conviction on all the acts found by the jury, his Count 54 conviction, and his Counts 285 and 286 convictions.
We further find sufficient evidence to sustain Bio-Med's Count 1 conviction on racketeering acts 1 through 87 and 185 through 202. We also uphold Bio-Med's convictions on Counts 2 through 53.
42 U.S.C. § 1320a-7b(b)(2)(B).
Moreover, in its order denying the defendants' pretrial joint motion to transfer venue to the Southern District of Florida, the district court analyzed the factors set out in Platt v. Minnesota Mining Co., 376 U.S. 240, 84 S.Ct. 769, 11 L.Ed.2d 674 (1964), and held that "[b]oth judicial and litigant economies" favored "venue here in the Southern District of Georgia." As for Bradley III, the court noted that he had "significant family ties to Savannah" and that he could easily operate his business there. The court tempered those findings with the realization that Bradley III lived and worked in Miami and that his wife had recently been diagnosed with breast cancer. Nevertheless, the court satisfied itself that the Government's witnesses and the defendants' lawyer could easily reach the city, that all of the Government's documentary evidence was stored nearby, and that the court's docket was sufficiently clear to handle such a "mega-trial."
Tellechea reasons that, because the jury instruction treats the two listed objects as "substantive offenses," the Constitution demands that venue be established as to both.
Search Warrant Attach. B, at a, d, g, i, 1-n.
The Bradleys and Bio-Med claim that resulting searches of Bio-Med servers for data were unconstitutional because they occurred almost three years after the servers were originally seized. We find nothing in the record that would lead us to believe that the search procedure was unreasonably delayed, for any reason. See, e.g., United States v. Gerber, 994 F.2d 1556, 1558-59 (11th Cir.1993) (approving a delayed search, even after expiration of the search warrant, because officers acted reasonably). We find no error in the district court's rejection of this claim.
Furthermore, we reject outright the Bradleys' and Bio-Med's claim that the searches were unconstitutional because the agents failed to obtain pre-approval from the district court of a search protocol before conducting the searches. Cf. United States v. Khanani, 502 F.3d 1281, 1290-91 (11th Cir.2007) (finding a wide-sweeping, keyword-based computer search reasonable where the defendants failed to "cite any binding case law that would lead us to conclude the procedures used in this case infringed defendants' Fourth Amendment rights").
Report and Recommendation 34, Dec. 7, 2005 (emphasis added). We agree with the court's conclusions.
Bradley, Jr.'s Supp. to Am. Mot. to Sever Ex. 3, at 25.
Instead, it will suffice to say that the defendants' argument—that is, that the court violated the ADA by failing to make reasonable accommodations to allow juror Smith to serve—is factually and legally incorrect. The court did not dismiss juror Smith because of his disability. It did so because his disability had, by that time, already impaired his ability fulfill his function as a juror. No accommodation, however reasonable, would have removed that impairment. Moreover, the district court did, in fact, make accommodations to aid juror Smith. The court permitted him to stand and move about the jury box during testimony. It also arranged to renew his prescription for pain medication. It was only after these accommodations failed to allow Smith to continue that the district court considered dismissal.
The court sentenced Bradley III to 240 months for thee wire fraud offenses committed after July 30, 2002 and to 60 months for those wire fraud offenses committed before that date. This is because, on July 30, 2002, the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley"), Pub.L. 107-204, 116 Stat. 745 (2002), became law. One of the key provisions in Sarbanes-Oxley was an increase in the maximum allowable sentence for wire fraud from 60 to 240 months. See Pub.L. 107-204, § 903, 116 Stat. 745, 805 (codified at 18 U.S.C. § 1343).
The "offense level" is the sum of the base offense level and the Special Offense Characteristics, if any.
In this case, the district court applied the 2002 version of the Sentencing Guidelines in fashioning the Bradleys' and Tellechea's sentences. It did so to avoid ex post facto issues, as the 2006 version potentially provided for a "harsher penalty." See id. The court applied the 2006 version of the Guidelines when fashioning Bio-Med's sentence.
18 U.S.C. § 3553(a).
U.S.S.G. § 1B1.3(a)(1)-(3).
Bio-Med's attorney also indicated that the true value of Bio-Med was, as the time of sentencing, still indeterminate:
In the end, the district court apparently felt comfortable with the $26.5 million fine, stating, "This is a sentence that the Court felt that it could perform itself, without the government's pleading and all. I have been privy to as many facts as I needed."
Presumably, the "above stated properties" included Bio-Med and certain properties sufficient to satisfy the total amount of the $39.5 million judgment. We cannot be sure, however, because the order did not indicate what those properties were.
The Preliminary Forfeiture Order additionally permitted the United States, pursuant to 18 U.S.C. §§ 982 and 1963, and Rule 32.2(b)(3) of the Federal Rules of Criminal Procedure, to undertake "whatever discovery is necessary to identify, locate, or dispose of [the] property subject to forfeiture, or substitute assets for such property, and to conduct any discovery necessary to determine the validity of any ancillary claims which may be filed." Moreover, the court would continue to have jurisdiction over the implementation of the Preliminary Forfeiture Order, and "[a]ny unresolved disputes [would] be resolved by the Court."
The $39.5 million figure was based, in part, on "the present value of accounts receivable for Bio-Med Plus," estimated to be $8,500,000, and "the present value [of the product inventory]," estimated at $5,000,000. To the extent that the liquidation of Bio-Med's accounts receivable and product inventory returned more than the estimated sum, the Preliminary Forfeiture Order instructed that the parties would divide the proceeds "at 2/3 to the United States in additional forfeiture and 1/3 to Maria and Norma Bradley." Once Bio-Med was liquidated, the Bradleys would forfeit additional property until the entire judgment was satisfied.
If, however, the Bradleys and Bio-Med interfered with the receiver's duty to marshal enough assets to satisfy the $39.5 million judgment contemplated by the Preliminary Forfeiture Order—that is, to the extent the liquidation of Bio-Med and the unidentified and undescribed "above stated properties" returned less than $39.5 million—the order permitted the Government to seek forfeiture of substitute property. The relevant provision of the order, paraphrasing 18 U.S.C. § 1963(m), which applies to RICO forfeiture but not money laundering or wire fraud forfeiture, explained,
Finally, as explained supra, any sums the Government collected in satisfaction of the $39.5 million judgment would be used to satisfy any restitution the court might order the defendants to pay as part of their sentences; the order stated, "It is understood ... that any amount tendered and forfeited shall be credited to the defendants as restitution."
The Government has not contested the facts underlying appellants' argument. Assuming, then, that the receiver has marshaled more than $39.5 million in forfeiture and sold Bio-Med, our holding would dictate that the receivership be terminated. To the extent, however, that the forfeiture judgment cannot be satisfied out of the assets marshaled by the receiver, or to the extent that Bio-Med has yet to be sold, the receivership will continue until the receiver's duties under the Preliminary Forfeiture Order are discharged.
