United States v. Yelaun , 541 F.3d 415 ( 2008 )

United States Court of Appeals
For the First Circuit
No. 07-1651
UNITED STATES OF AMERICA,
Appellee,
v.
SEVERIN YELAUN,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Nathaniel M Gorton, U.S. District Judge]
Before
Torruella and Boudin, and Dyk,*
Circuit Judges.
Dana A. Curhan for appellant.
Mark T. Quinlivan, Assistant United States Attorney, with
whom Michael J. Sullivan, United States Attorney, was on brief
for appellee.
August 27, 2008
*
Of the Federal Circuit, sitting by designation.
BOUDIN, Circuit Judge. Severin Yelaun appeals from his
conviction in the federal district court for various federal fraud
related offenses committed during a scheme to collect insurance
payments for medical tests. He also contests his sentence. The
events that gave rise to the charges, drawing the facts primarily
from the government's evidence at Yelaun's trial, are as follows.
In 1998 Yelaun and Igor Moyseyev started a clinic in
Massachusetts -- Broadway Physical Therapy and Rehabilitation, Inc.
("Broadway") -- to provide physical therapy and diagnostic services
primarily to auto accident victims. Moyseyev provided the funding,
while Yelaun recruited physicians and supervised most of the day-
to-day operations including billing matters; an affiliate, Global
Tech Diagnostics ("Global Tech"), was incorporated to handle
administrative matters including billing insurers for Broadway's
services.
Two of the tests used by Broadway are important to this
case. One, the electromyogram ("EMG"), measures nerve and muscle
function and, as it involves insertion of needles into the patient
and real time interpretation, requires that a physician be present.
The second, called a nerve conduction velocity test ("NCV"), also
measures nerve and muscle function but employs electrodes rather
than needles. For insurance purposes it requires a prescription or
request from a doctor, as does an EMG, but unlike the EMG does not
require the doctor's presence at the test.
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Although Broadway did some legitimate testing, it also
billed auto insurers for numerous EMG and NCV tests that were not
in fact performed. The EMG tests were commonly painful; the NCV
tests involved shocks that could be painful. At Yelaun's trial a
number of the patients for whom insurance reimbursement had been
sought by Global Tech for such tests testified that they had gone
to Broadway for therapy but had no recollection of the needle
insertion or electric shocks that were the respective hallmarks of
the two tests.
A doctor affiliated with Broadway, Dr. Ranendra
Chatterjee, testified that his signature stamp had been used
without authorization to stamp prescriptions for the tests and test
reports; he said that he had never used the stamp for tests he had
conducted or reviewed. Dr. David Tamaren, who worked part-time at
Broadway, did not testify but prescriptions he wrote for EMG and
NCV tests were introduced. The government argued from internal
evidence that the prescriptions were written after the fact or were
otherwise fraudulent.
In mid-1999, Dr. Chatterjee discovered the misuse of his
stamp and confronted Yelaun, who (Dr. Chatterjee said) admitted
that the stamp had been used "quite a few times" without the
doctor's authorization. Dr. Chatterjee complained to Moyseyev and
soon thereafter Moyseyev severed his ties with Yelaun. In November
1999, Yelaun with a new partner formed a new pair of companies --
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Orthopedic Physical Therapy & Rehabilitation Center as the provider
and Lynn Diagnostics Management for billing -- at a new location.
Dr. John Montoni, a chiropractor who had worked at Broadway and
followed Yelaun to the Lynn clinic, testified at trial that he had
written prescriptions for EMG and NCV tests that had never been
performed. The same pattern of billing insurers for tests never
performed was thus repeated at least until some time in 2001 or
2002.
In January 2005, Yelaun, Moyseyev, Dr. Montoni, and Dr.
Tamaren were indicted on numerous counts including mail fraud, 18
U.S.C. § 1341 (2000), wire fraud, id. § 1343, health care fraud,
id. § 1347, conspiracy to commit an offense against or defraud the
United States, id. § 371, money laundering, id. § 1956(a)(1)(A)(i)
and money laundering conspiracy, id. § 1956(h). Yelaun's co-
defendants accepted plea bargains but Yelaun went to trial and was
convicted on twenty-six counts of mail fraud and one count each of
health care fraud, conspiracy to commit an offense against the
United States, and money laundering conspiracy.
Following his sentencing -- which yielded a sentence of
fifty-one months in prison, a term of supervised release, and
restitution of $88,800.84 -- Yelaun filed the present appeal. He
does not contest the sufficiency of the evidence but challenges the
admission of evidence against him, asserts a fatal variance as to
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one count of the indictment and contests his sentence. The
standard of review for his claims varies with the issue.
Yelaun first says that certain trial testimony by Dr.
Montoni was admitted in error. Dr. Montoni testified that on a
specific occasion Yelaun approached him with a box of patient
charts and asked him to sign prescriptions for EMG and NCV tests
for those patients. The tests had already been performed, and Dr.
Montoni therefore signed the forms without assessing whether the
patients needed the tests or not. Yelaun objects only to the
doctor's further testimony that he signed the prescriptions as
Yelaun requested because he felt intimidated by Yelaun.
Specifically, over objection Dr. Montoni was allowed to
explain that his reason for signing the prescriptions for tests
that he had not authorized was that Yelaun frightened him because,
on a prior occasion, Yelaun had showed anger when Dr. Montoni had
resisted doing what Yelaun wanted. Yelaun says that the testimony
was irrelevant except for the forbidden inference of bad character,
see Fed. R. Evid. 404(a), and was in any case highly prejudicial
and therefore inadmissible, Fed. R. Evid. 403. We will assume
arguendo that the objections were all properly preserved.
With limited exceptions, evidence to show the defendant's
bad character is normally inadmissible in a criminal trial; but the
very same facts illustrating bad character can be admitted, with a
limiting instruction if sought, to show something else that is
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relevant to the case. Fed. R. Evid. 404(b). In this instance, the
government had ample legitimate reason to explain why at Yelaun's
behest Dr. Montoni signed prescriptions for tests that he had not
determined to be medically necessary.
Absent some explanation as to why Dr. Montoni willingly
participated in a fraud at Yelaun's request, a jury might well
infer that Dr. Montoni was not credible but had made up the story
to secure his plea bargain. Inevitably, defense counsel was going
to seek to impeach the doctor based on his own plea bargain with
the government -- and also with Dr. Montoni's initial statements to
police that he could not remember signing the EMG and NCV
prescriptions. Both the admitted fraud and the initial denials
underscored doubts about his credibility.
The explanation given by Dr. Montoni -- that he was
afraid of Yelaun based on Yelaun's prior exhibitions of temper --
tended to make Dr. Montoni's main testimony about Yelaun's demand
more plausible, countering any inference that Dr. Montoni's
signatures had been supplied on his own and without Yelaun's
involvement. The context also tended to counter any potential
inference that Dr. Montoni -- who had in some instances properly
prescribed such tests for patients -- was simply confused or
mistaken about the episode in question.
Case law supports the relevance and admissibility of such
contextual testimony. United States v. Bartelho, 129 F.3d 663, 676
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(1st Cir. 1997), cert. denied, 525 U.S. 905 (1998) (allowing
defendant's girlfriend to testify that she was intimidated by him
to explain why she initially lied to the police and committed
perjury); cf. United States v. Balsam, 203 F.3d 72, 85 (1st Cir.),
cert. denied, 531 U.S. 852 (2000) (defendant's former girlfriend
allowed to testify that she feared him to explain her reluctance to
testify). In any event, the evidence was logically relevant for a
reason other than bad character, which is Rule 404(b)'s ultimate
test.
Of course, relevant evidence can be excluded under Rule
403 if it is substantially more prejudicial than "probative" (i.e.,
tending to prove a fact in issue), but this is a fact-specific
balancing judgment by the trial judge reviewed only for abuse of
discretion. United States v. Rodriguez-Estrada, 877 F.2d 153, 155-
56 (1st Cir. 1989). In this case, the fact that Yelaun had a bad
temper and that Dr. Montoni feared him was relevant and at best
minimally prejudicial: the crime charged, after all, was fraud, not
assault, and bad temper does not normally suggest a propensity to
commit fraud.
Yelaun's more interesting claim of error is that there
was a variance between the indictment's count 43, which charged him
with conspiracy to commit money laundering, and the proof at trial.
Count 43, on which Yelaun was convicted, charged that from in or
about January 1999 through in or after 2002, Yelaun and Moyseyev:
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did knowingly and unlawfully conspire with
each other and with others known and unknown
to the Grand Jury, knowingly to conduct and
attempt to conduct financial transactions
affecting interstate and foreign commerce,
that is, to engage in financial transactions
involving United States currency and bank
checks, which in fact involved the proceeds of
specified unlawful activity, that is, Mail
Fraud in violation of Title 18, United States
Code, Section[] 1341, Wire Fraud in violation
of Title 18, United States Code, Section 1343,
and Health Care Fraud in violation of Title
18, United States Code, Section 1347, with
intent to promote the carrying on of said
specified unlawful activity, and knowing that
the transactions were designed in whole and in
part to conceal and disguise the nature,
location, source, ownership, and control of
the proceeds of that specified unlawful
activity, and knowing, while conducting and
attempting to conduct such financial
transactions, that the property involved in
the financial transactions represented the
proceeds of some form of unlawful activity, in
violation of 18 U.S.C. §1956(a)(1)(A)(i) and
(B)(i).
The substantive money laundering counts (counts 44 to 58)
identified checks that Global Tech gave Symco Medical Billing, an
outside collection agency hired by Global Tech and Lynn to handle
some billing and collections, and two checks to Global Tech's
accountant. At trial, the government dismissed the substantive
money laundering counts. To prove count 43, the government
introduced Global Tech checks given to Broadway employees and to
Yelaun for legitimate purposes (e.g., as salary checks).
Yelaun's objection, at trial and on appeal, is that the
use of the employee checks was a "variance" from the indictment
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because count 43 had (although not expressly so) relied only upon
the checks paid to Symco and the Global Tech accountant identified
in withdrawn counts 43-58, which charged specific acts of money
laundering. Yelaun does not dispute that the employee checks were
a rational means of showing both the laundering of the funds and
their use to promote the enterprise, just as charged in the
indictment. The objection is to the alleged variance.
A variance occurs when the crime charged remains
unaltered, but the evidence adduced at trial proves different facts
than those alleged in the indictment. United States v. Mueffelman,
470 F.3d 33, 38 (1st Cir. 2006). A variance does not warrant
reversal unless it is prejudicial, e.g., by undermining the
defendant's right "to 'have sufficient knowledge of the charge
against him . . . to prepare an effective defense and avoid
surprise at trial, and to prevent a second prosecution for the same
offense.'" United States v. DeCicco, 439 F.3d 36, 47 n.4 (1st Cir.
2006) (quoting United States v. Tormos-Vega, 959 F.2d 1103, 1115
(1st Cir.), cert. denied, 506 U.S. 866 (1992)).
Here, there was no variance at all, prejudicial or
otherwise. Count 43 did not identify any checks or other
transactions as the basis for that count. The defense could have
sought a bill of particulars to identify specific transactions,
United States v. Barbato, 471 F.2d 918, 921 (1st Cir. 1973), but it
did not. At best, the defense could merely have assumed -- wrongly
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as it turned out -- that the government would rely on transactions
mentioned in the substantive money laundering counts to prove the
conspiracy. Using different transactions did not "vary" any proof
promised by count 43 because the count identified no specific
transactions.
Relatedly, Yelaun says that he was unfairly surprised by
the use of the employee checks because the government misled him by
telling him it was going to rely on the checks listed in the
substantive money laundering counts to prove count 43. No support
for this claim is supplied; in fact, the government produced the
checks to employees in pretrial discovery, listed them as exhibits
to be introduced, and argued in its opening that it would be
relying on the checks to employees to prove count 43.
Further, when Yelaun objected to the offer of the
employee checks, government counsel at sidebar said that the
prosecution had explicitly told Yelaun's counsel that the
government intended to rely on the employee checks to prove count
43; nothing indicates that defense counsel disputed this assertion.
If the defense wanted a formal inquiry into the matter of
representations, or a delay in the trial to counter the supposed
surprise evidence, the time to ask was at the trial. United States
v. Wright, 573 F.2d 681, 685 (1st Cir.), cert. denied, 436 U.S. 949(1978); United States v. Antonelli, 439 F.2d 1068, 1070 (1st Cir.
1971). No such request was made.
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Finally, Yelaun challenges two sentencing enhancements
adopted by the trial judge in calculating the guideline range for
Yelaun's sentence. Using the 2002 version of the guidelines, the
judge adopted an adjusted offense level of twenty-four which, with
Yelaun's criminal history level I, yielded a guideline range of
fifty-one to sixty-three months. Yelaun's fifty-one month sentence
was at the bottom of the range. A mistake in calculating the range
could conceivably have affected the sentence, but there was no
mistake.
In finding an offense level of level twenty-four, the
district judge identified a base offense level of six for fraud,
U.S.S.G. § 2B1.1(a), and then added a ten level enhancement for
causing an amount of loss between $120,000 and $200,000, U.S.S.G.
§ 2B1.1(b)(1)(F), a two level enhancement for a scheme involving
more than ten but less than fifty victims, U.S.S.G. §
2B1.1(b)(2)(A)(i), a four level enhancement based on Yelaun's role
as an organizer or leader of a criminal activity that involved five
or more participants or was otherwise extensive, U.S.S.G. §
3B1.1(a), and a two level enhancement for obstruction of justice,
see U.S.S.G. § 3C1.1.
Yelaun first challenges the amount-of-loss calculation on
two different grounds -- one legal and one factual. His legal
objection, which we review de novo, is that the judge rather than
a jury found the facts establishing the amount of loss under the
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guidelines and that this violates the Sixth Amendment. But United
States v. Booker, 543 U.S. 220 (2005), resolved this concern by
making the guidelines advisory. See United States v. Ziskind, 491
F.3d 10, 17 (1st Cir. 2007), cert. denied, 128 S. Ct. 1305 (2008).
It is only where the findings at issue (here, the loss findings)
raise the statutory maximum sentence or constitute an element of
the crime that a jury finding is necessary. Booker, 543 U.S. at
230-37, 244; United States v. Bermudez, 407 F.3d 536, 545 (1st
Cir.), cert. denied, 546 U.S. 921 (2005). Neither is true in this
instance.
Yelaun's factual challenge to the computation is that the
evidence failed to show a loss of at least $120,000. The district
judge calculated the loss as $179,534.74, which reflected all EMG
and NCV tests billed by Global Tech or Lynn Diagnostics with test
reports were signed by Dr. Montoni or stamped with Dr. Chatterjee's
signature stamp. Conceding that the EMG losses were proven, Yelaun
says that there was insufficient evidence that the NCV tests were
not performed. Review is for clear error. United States v.
Phaneuf, 91 F.3d 255, 261 (1st Cir. 1996).
Dr. Chatterjee testified that he never authorized the use
of, nor in fact used, his signature stamp to sign any NCV reports,
so any NCV reports bearing his signature stamp were based on
fraudulent documents. Dr. Montoni was not authorized to perform
NCV tests and testified that he had never performed any such tests,
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and that he did not know whether the tests in the reports he signed
had been performed. Thus, insurance claims based on test reports
bearing his signature were supported by fraudulent documents. This
would be enough standing alone to support the loss finding, but
there is more.
Dr. Montoni testified that several of the tests bearing
his signature were identical for different patients, a virtual
impossibility if the tests were legitimate. Dr. Chatterjee
similarly testified that some patients' reports bearing his
signature stamps were identical and that Global Tech had billed for
up to fifteen tests signed by him in a day, which he testified he
had not performed. All this, with the patient testimony as well,
provided more than enough evidence to support the loss calculation
adopted by the district judge.
Yelaun also disputes the four level enhancement for being
a leader or organizer of a conspiracy that involved five or more
participants or was otherwise extensive. U.S.S.G. § 3B1.1. He
contests both prongs of the enhancement, arguing that he was not an
organizer or leader of the conspiracy and that the conspiracy did
not involve five or more participants and was not otherwise
extensive. As to the second prong, a finding that the conspiracy
was otherwise extensive was sufficient with or without five
participants.
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Yelaun's argument as to his role as an organizer or
leader is, in essence, that he was a subordinate of Moyseyev, who
controlled Broadway and who ultimately fired Yelaun. In fact, the
testimony at trial showed that Yelaun played a major role at
Broadway in its day-to-day operations. He had greater knowledge of
the business than Moyseyev and was in charge of finding doctors,
scheduling, running the billing and training the administrative
staff. See U.S.S.G. § 3B1.1, cmt. 4 (setting forth criteria for
leader or organizer; more than one individual can so qualify).
As to Lynn Diagnostics, it appears that Yelaun's control
was at least as great as at Broadway. He recruited Drs. Tamaren
and Montoni for the new enterprise, ran the billing and seems to
have generally been running the day-to-day operations. The outside
billing company he worked with believed he owned Lynn. Even with
fewer specifics, it would be a fair inference that his importance
and role were at least as significant in the new and smaller
company as in its predecessor.
Yelaun says that in determining that the conspiracy was
extensive, the judge conflated the two different enterprises
successively operated by Yelaun; but each involved the services of
numerous employees and a fairly complex scheme, involving
falsifying medical reports and prescriptions and follow up billings
based on that false documentation. Cf. United States v. Twitty, 72
F.3d 228, 234 (1st Cir. 1995). Either scheme could be considered
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"otherwise extensive" in its own right. So the enhancement was
proper regardless of the number of employees.
Affirmed.
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