United States v. Frankie Sanders ( 2020 )

Case: 17-20492 Document: 00515327502 Page: 1 Date Filed: 03/02/2020
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 17-20492 March 2, 2020
Lyle W. Cayce
Clerk
UNITED STATES OF AMERICA,
Plaintiff–Appellee,
versus
FRANKIE LEE SANDERS;
PAMELA ANNETTE ROSE, also known as Pamela Annette Archbald,
Defendants–Appellants.
Appeal from the United States District Court
for the Southern District of Texas
Before DAVIS, SMITH, and STEWART, Circuit Judges.
JERRY E. SMITH, Circuit Judge:
Pamela Rose (“Rose” or “Mrs. Rose”) and Frankie Sanders (“Sanders”)
were executives at a company that provided rehabilitative services to injured
federal employees. A jury convicted Rose and Sanders of conspiracy and fraud
for participating in a plot to defraud the federal workers’ compensation fund.
Both challenge the sufficiency of the evidence and the district court’s handling
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of a recalcitrant witness. Rose also protests the criminal forfeiture of several
properties. We affirm.
I. INTRODUCTION
A.
Federal Work Ready (“FWR” 1) was a health care business based in Hous-
ton. FWR marketed itself to federal patients whose physical therapy (“PT”)
was reimbursable under the Federal Employees’ Compensation Act (“FECA”),
5 U.S.C. § 8101 et seq. FWR served hundreds of federal workers and received
millions of dollars in reimbursements from the federal government. It had PT
clinics in several states, including Texas and Louisiana.
Mrs. Rose and Sanders co-owned FWR along with Jeffrey Rose (“Mr.
Rose”), the defendant Rose’s husband. Mrs. Rose served as chief financial offi-
cer (“CFO”). Sanders was Vice President of Clinical Operations. Mr. Rose was
the chief executive officer (“CEO”). Other key personnel included John Cruise,
the former chief operating officer (“COO”), and Dr. Hugo Jaime, a licensed
chiropractor who oversaw PT and the medical professionals at FWR.
B.
Health care providers such as FWR can receive payments for treating
federal employees. See id. §§ 10.800–10.826. The overwhelming majority of
FWR’s revenues came from reimbursements under FECA’s workers’ compen-
sation program. FECA benefits for injured workers include pay for up to forty-
five days and, relevant to this case, certain medical expenses and rehabilitation
services. See 5 U.S.C. §§ 8103–04, 8118(b)(2); 20 C.F.R. § 10.0(b). Those
1 The company originally went as “Team Work Ready” (“TWR”) but then became
known as Federal Work Ready. We’ll refer to the overall company, and the main clinic in
south Houston, as “FWR.”
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benefits are administered by the Department of Labor’s (“DOL’s”) Office of
Workers’ Compensation Programs (“OWCP”). 20 C.F.R. § 10.1.
An intricate web of rules governs the submission of FECA claims. Pro-
viders such as FWR must itemize the claims using, inter alia, the Physician’s
Current Procedural Terminology codes, see id. § 10.801(b), a system created to
provide a uniform and accurate description of health care services. Medical
evidence must support every claim. Id. § 10.801(a). And when a provider sub-
mits one, it certifies “that the service . . . was performed as described, neces-
sary, appropriate and properly billed in accordance with accepted industry
standards.” Id. § 10.801(d).
Prohibitions abound. Providers understandably cannot “upcod[e] billed
services for extended medical appointments when the employee actually had a
brief routine appointment.” Id. Nor can they “charg[e] for the services of a
professional when a paraprofessional or aide performed the service.” Id. And,
since FECA claims must be submitted “in accordance with accepted industry
standards,” id., claims filed under codes for one-on-one treatment must have
been performed one-on-one.
C.
By 2013, FWR’s business was cooking. But the government smelled
something foul. It started an investigation of impressive scope, involving
undercover agents, confidential informants, audio and video surveillance, sub-
poenaed bank and business records, and more than two hundred interviews.
What investigators uncovered was a scheme to defraud DOL of FECA funds.
Evidence at trial suggested that the following practices regularly occurred at
FWR’s various clinics. Sanders and Rose largely do not contest that these prac-
tices existed.
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First, despite regulations restricting aides from providing the reim-
bursed care, see 20 C.F.R. §§ 10.5(o), 10.801(d), unlicensed and untrained tech-
nicians supervised PT. Several employees testified that they never saw a
licensed professional provide treatment.
Second, activities were regularly billed using one-on-one codes, but
employees never saw patients receive individual attention. Indeed, FWR did
not employ enough staff to provide the billed PT, even if the staff had possessed
the required medical credentials.
Third, patients often did no therapy at all, even though FWR was billing
their time. Instead, patients sat around, text messaged, played video games,
watched TV, and self-performed unnecessary exercises.
Fourth, treatment plans were based not on individual patient needs, but
instead on a “cheat sheet” that management created. The sheet categorized
what would maximize OWCP billings by exercise type and time allotted.
Patients were thus alternated among different codes based on what was most
profitable. Often, medical documents were mere copies of old ones reused on
new patients. One doctor testified that, as a result, patients’ health routinely
deteriorated.
Finally, technicians were ordered to falsify treatment records so as to
increase revenue. Sometimes, records were changed to reflect that a patient
received therapy for longer than actually occurred. Other times, forms were
altered to make it appear that FWR was complying with federal regulations.
D.
There was extensive trial testimony about Sanders and Rose’s alleged
involvement in the fraudulent scheme. We explain in detail.
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1. Mrs. Rose
Mrs. Rose, as CFO, was number three in rank and oversaw FWR’s finan-
cial affairs. Mr. Rose was the CEO and main protagonist 2 of the deceitful busi-
ness practices.
Mrs. Rose “was very involved” in discussions about how much money
was being collected at FWR clinics. She attended the weekly executive-team
meeting along with Mr. Rose, Sanders, and others. The participants regularly
discussed how to inflate billings on existing clients, and Mr. Rose would often
become very upset when he learned that a clinic wasn’t hitting its numbers.
Despite Mrs. Rose’s steep involvement with the finances, she didn’t
interact much with FWR’s clinical side, and she didn’t submit the OWCP bills
for reimbursement. When Mrs. Rose gave one of FWR’s doctors, Andrea Smith,
an oral evaluation, Rose told Smith that one of “her objectives must be tied to
profit” and that, going forward, she would be evaluated on how much billing
revenue she brought in. Mrs. Rose informed Smith that Smith would still get
a raise, but that, in the future, her salary would be tied to her clinic’s numbers.
Rose acknowledged that Sanders had already spoken with Smith about in-
creasing billings. Rose also signed the written evaluation that admonished
Smith for “not maximiz[ing] patient treatments.”
On July 11, 2013, the government served search warrants at some of the
clinics. Immediately, Rose called Cruise (the COO at the time) at his home
and ordered him to go to the office. Once he arrived, investigators questioned
him. Cruise called Mrs. Rose after leaving the office and filled her in. Wasting
2 Trial witnesses suggested that Mr. Rose ring-led the fraudulent scheme at FWR.
Among many other things, he pressured employees to maximize billing and browbeat them
into falsifying documents. And he fed the company’s culture of excessive focus on billing and
of falsifying OWCP claims.
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no time, Mrs. Rose told Cruise to meet her and Mr. Rose at the bank where
they stashed FWR’s money in various accounts. Mrs. Rose wanted the team
“to pull all the money out . . . and put those funds in another account” so as “to
hide the money from the federal government so it wouldn’t be seized.” Twelve
transfers later, and the Roses had moved $700,000 from the FWR accounts into
a brand new Chase account, held in the name of Pure Vanity Boutique, Inc.
(“Pure Vanity”), a corporation newly created by the Roses. 3 That same night,
the Roses, Sanders, and others met at a restaurant to discuss the warrants.
The Roses didn’t mention the money transfers.
A formal executive meeting was also called following the warrants, and
Mrs. Rose attended. The meeting was secretly recorded. Mr. Rose had in-
structed Cruise to find a company to sweep the executive office for listening
devices, and, at the meeting, Cruise reported that no bugs had been found. In
unison, Mrs. Rose and her husband exclaimed, “praise the Lord.”
2. Sanders
Sanders, as the VP of Clinical Operations, was intimately involved with
FWR’s clinical matters. He worked closely with the staff and doctors, helped
open OWCP claims, and was the company’s expert on compliance with the fed-
eral rules governing FECA.
Sanders was also occupied with OWCP billings. He went to the billing
department with Mr. Rose several times a day, and billing information was
daily sent to him. He also attended the weekly meetings where the executives
discussed how to maximize billings.
Sanders had a sharp focus on boosting revenue per patient. He repeat-
edly told doctors at FWR that maximizing billing was of paramount
3 A few days later, some of the money was transferred back.
6
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importance. When one doctor, Melissa Hoffman, objected to the quantity of PT
ordered for some patients, Sanders told her to order it anyway. He gave a
doctor a flowchart describing how to perform intake of a new patient, and the
form stressed the importance of focusing on “compensable area[s]” of treat-
ment. Sanders submitted agenda items for meetings about “maximizing treat-
ment for patients.” He fired one employee because she refused to “follow
directions” by lying about patients’ exam results.
Sanders’s comments during Dr. Smith’s oral evaluation were particu-
larly revealing. He told her that “[w]e literally have to maximize whatever is
available to the patient” and admonished that Smith needed to do better on
that front. Apparently aware that his comments pushed boundaries, Sanders
clarified that he didn’t want Smith to do something “unethical or immoral.”
When Smith replied by suggesting that FWR was providing unnecessary
therapy, Sanders argued with her, asking why the patients couldn’t do more
exercises. Smith responded, “why are you pushing it?”, and Sanders replied,
“because we get paid for it if we push it.” He continued, “if it’s not going to be
negatively detrimental to them, why wouldn’t I give them eight more minutes
and . . . bill for the eight more minutes?” If doing extra time “would yield an
increase to” the clinic’s finances “and not yield a negative impact to the patient,
then I don’t understand why that would be problematic.” He then repeatedly
asked Smith whether it would be unethical to order more. Sanders also signed
Smith’s written evaluation, which, as seen above, criticized her for “not maxi-
miz[ing] patient treatments.”
On the day of the search warrants, Sanders was present at the restau-
rant where the team, including the Roses, debriefed. He also attended the later
executive meeting. There, he and Mr. Rose spoke about issues with a local
clinic. They discussed how one of FWR’s doctors, Dr. Key, needed to visit the
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clinic more often so that Key could provide the necessary signatures for OWCP
billings, since no government-licensed doctor was currently onsite. Sanders
stressed that Key needed to visit so that DOL couldn’t “say that he wasn’t
there.”
E.
The government charged Mrs. Rose, Sanders, Mr. Rose, and Dr. Jaime
with an array of federal crimes. In Count 1 of a second superseding indictment,
all four defendants were charged with conspiracy to commit health care fraud
and wire fraud. In Counts 2–18, the same crew was accused of committing
health care fraud and aiding and abetting. Counts 19–23 charged the same
defendants with wire fraud and aiding and abetting. And Counts 24–25 ac-
cused the Roses only of conspiring to engage in a monetary transaction in
criminally derived property (“money laundering”) and aiding and abetting.
A lengthy trial ensued with over three dozen witnesses. They included
patients, former employees and doctors, experts, undercover agents, Cruise,
and Dr. Jaime, who was the only defendant to take the stand during the guilt
phase. After the government rested, Sanders and the Roses moved for a
judgment of acquittal, see FED. R. CRIM. P. 29, which the court reserved for
later resolution.
Dr. Jaime was acquitted, but Mrs. Rose, Sanders, and Mr. Rose were
convicted as charged. All three moved again for acquittal, and, this time, the
court denied relief. The same jury was then retained for a forfeiture trial and
rendered a special verdict finding six of the Roses’ properties to be criminally
forfeitable. 4 Only Mrs. Rose and Sanders appeal.
4 Sanders was eventually sentenced, among other things, to 300 months. Mrs. Rose
got 120 months.
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II. SUFFICIENCY OF THE EVIDENCE
Defendants contend that there wasn’t enough evidence to convict them
on any count. When a defendant timely moves for a judgment of acquittal, as
Rose and Sanders did, “we review challenges to the sufficiency of evidence de
novo, but view the evidence in the light most favorable to the verdict.” United
States v. Gonzalez, 907 F.3d 869, 873 (5th Cir. 2018) (per curiam) (cleaned up).
“[A] defendant seeking reversal on the basis of insufficient evidence
swims upstream.” United States v. Mulderig, 120 F.3d 534, 546 (5th Cir. 1997).
We must affirm if a “rational jury, viewing the evidence in the light most
favorable to the prosecution, could have found the essential elements of the
offense to be satisfied beyond a reasonable doubt.” United States v. Bowen, 818
F.3d 179, 186 (5th Cir. 2016) (per curiam) (emphasis added). One definition of
“rational” is that which is “not absurd, preposterous, foolish, or fanciful.”
Rational, BLACK’S LAW DICTIONARY (11th ed. 2019).
In so doing, we ask whether the verdict was reasonable, not whether it
was correct. United States v. Alaniz, 726 F.3d 586, 601 (5th Cir. 2013). We
accept any reasonable inferences that support the verdict and resolve any con-
flict in the evidence in favor of it. 5 The jury can “choose among reasonable
constructions of the evidence.” United States v. Lugo-Lopez, 833 F.3d 453, 457
(5th Cir. 2016) (per curiam). Nonetheless, “a verdict may not rest on mere
suspicion, speculation, or conjecture, or on an overly attenuated piling of infer-
ence on inference.” United States v. Pettigrew, 77 F.3d 1500, 1521 (5th Cir.
1996).
5United States v. Velasquez, 881 F.3d 314, 328–29 (5th Cir.) (per curiam), cert. denied,
139 S. Ct. 138 (2018).
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A.
Defendants first challenge their Count 1 conviction of conspiracy to com-
mit health care and wire fraud in violation of 18 U.S.C. § 1349.
1.
To prove a conspiracy to commit health care fraud, the government must
show “beyond a reasonable doubt that: (1) two or more persons made an
agreement to commit health care fraud[ 6]; (2) that the defendant knew the
unlawful purpose of the agreement; and (3) that the defendant joined in the
agreement with the intent to further the unlawful purpose.” United States v.
Ganji, 880 F.3d 760, 767 (5th Cir. 2018) (cleaned up); see 18 U.S.C. § 1349. The
same elements apply to a conspiracy to commit wire fraud, except that the
participants must agree to execute wire fraud. See United States v. Kuhrt,
788 F.3d 403, 414 (5th Cir. 2015).
Criminal conspiracies can be established on circumstantial evidence
alone. United States v. Sutherland, 656 F.2d 1181, 1188 (5th Cir. Unit A Sept.
1981). Indeed, a jury can infer from the surrounding circumstances whether a
defendant participated in and knew of the conspiracy. See United States v.
Eghobor, 812 F.3d 352, 362 (5th Cir. 2015). “What people do is . . . evidence of
what lies in their mind.” Ganji, 880 F.3d at 768.
The central feature of a conspiracy is the agreement, 7 but it doesn’t need
to be formal or even spoken. See id. at 767. It can “be inferred from concert of
action.” United States v. Frydenlund, 990 F.2d 822, 825 (5th Cir. 1993). Even
so, the agreement “cannot be lightly inferred.” Ganji, 880 F.3d at 768. “Mere
6The crime of health care fraud generally applies to a defendant who schemes to
defraud a health care benefit program. See 18 U.S.C. § 1347.
7 See United States v. Alvarez, 610 F.2d 1250, 1255 (5th Cir.), on reh’g, 625 F.2d 1196(5th Cir. 1980) (en banc).
10
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similarity of conduct among various persons and the fact that they have asso-
ciated with or are related to each other is insufficient,” standing alone, “to
prove an agreement.” Id. at 767–68 (quotation marks removed).
2.
Enough evidence supported Rose’s and Sanders’s Count 1 convictions.
i. Sanders
Start with Sanders. The government was permitted to establish the
conspiracy on circumstantial evidence alone. See Sutherland, 656 F.2d
at 1188. It did. First, there’s enough evidence that Sanders was party to an
agreement to commit health care and wire fraud. An agreement can “be
inferred from concert of action,” Frydenlund, 990 F.2d at 825, and repeatedly
Sanders was shown teaming up with others as he participated in the company’s
culture of fraudulent billing, see United States v. Anderson, 558 F. App’x 454,
459 (5th Cir. 2014) (per curiam) (noting that the conspirators “worked in
tandem”).
Take several examples. Sanders attended both of the anguished post-
search-warrant meetings with his fellow executives, in which the team de-
briefed the startling events and rejoiced upon learning that listening devices
hadn’t been found in the executive office. At the later meeting, he strategized
with Mr. Rose about how to get the clinic that wasn’t following federal regula-
tions into compliance. He went with Mr. Rose several times a day to the billing
department, and he participated in the weekly meetings that saw frequent dis-
cussion of how to increase billings. And his evaluation of Dr. Smith, which
emphasized that she needed to order more therapy for patients, was done with
Mr. and Mrs. Rose in tow. A rational juror could have inferred that Sanders
acted in concert with others only because he’d agreed to do so. Cf. Frydenlund,
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990 F.2d at 825.
There’s also enough evidence that Sanders knew the unlawful purpose
of the agreement and wanted to further it. The fraudulent scheme at FWR
involved, among other things, overbilling and misrepresenting what services
were performed, charging for unnecessary care, and delegating PT to un-
trained technicians. And “the government produced evidence that [Sanders
was] not only aware of the fraud, but actually helped perpetrate [it].” Kuhrt,
788 F.3d at 416.
Indeed, Sanders was excessively focused on maximizing billings. He
fired one employee for refusing to lie on documents. He admonished Dr. Smith
for failing to bill extra time for patients who Smith said didn’t need it. He
overruled another doctor’s objection to how much therapy was being ordered.
At the post-warrant executive meeting, he spearheaded the effort to get Dr.
Key to the noncomplying clinic so that DOL couldn’t “say that he wasn’t there.”
He was very involved in the clinical side of the business, and he was the com-
pany’s expert on DOL and the FECA rules. And, of course, he was in executive
leadership. All of that evidence shows his knowledge and intent.
ii. Rose
There’s also enough evidence that Rose was part of a conspiracy to com-
mit health care and wire fraud. She too participated in the company’s culture
of questionable billing practices. “She was very involved” in discussions about
billings. During Dr. Smith’s evaluation, she told Smith that Smith needed to
bring in more money and that her salary would be tied to profits. She signed
the written evaluation that criticized Smith for failing to pad billings. 8 And
8Rose points out that focusing on profit isn’t illegal. But the fraudulent scheme at
FWR was predicated on overbilling and billing for services that weren’t compliant or neces-
sary. So, the jury could have interpreted Rose’s focus on maximizing billing as evidence she
12
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she attended the weekly meetings where maximizing billings was regularly
discussed and where her husband frequently became upset about their paucity.
Then, of course, there is her revealing behavior after the search warrants
were served. Instead of asking why agents were snooping around, Rose ran to
the bank and shifted money between accounts, all in the name of “hid[ing it]
from the federal government.” At the executive meeting that followed, she
thanked the powers above when Cruise reported that no listening devices had
been found in the office. That is not behavior we’d expect of an executive who
was unaware of and didn’t participate in the fraud. Rose’s “efforts to assist in
the concealment of a conspiracy may help support an inference that [she] had
joined [it].” 9
The same evidence also supports that Mrs. Rose was a party to an agree-
ment. She acted with others in hiding funds from the government, attending
the post-warrant meetings, and admonishing employees for failing to maxi-
mize billings, among other events. See Frydenlund, 990 F.2d at 825 (recog-
nizing that agreements can be inferred from concerted action). All of that evi-
dence, combined with her marriage to Mr. Rose, the ringleader, and her num-
ber three position in a company permeated with fraud, 10 is enough to sustain
the conviction.
participated in the scheme. See Lugo-Lopez, 833 F.3d at 457 (stating that the jury can pick
among reasonable constructions of the evidence).
9United States v. Robertson, 659 F.2d 652, 657 (5th Cir. Unit A Oct. 1981); see also
United States v. Martinez, 921 F.3d 452, 470 (5th Cir.) (“[Defendant] also closed the bank
account he had opened two days after a search warrant was executed . . . . [T]he jury could
have viewed this as evidence of knowledge.”), cert. denied, 140 S. Ct. 571 (2019).
10See United States v. Willett, 751 F.3d 335, 340 (5th Cir. 2014) (characterizing as
circumstantial evidence the existence of a family relationship and the defendant’s position of
authority within the organization).
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3.
To the extent any objections remain to Sanders’s and Rose’s Count 1
convictions, they lack merit. Defendants posit that we should set aside their
convictions because no witness directly implicated them in the conspiracy. Yet
the government was permitted to (and did) establish the conspiracy on circum-
stantial evidence alone. See Sutherland, 656 F.2d at 1188. “[T]he defendants
cannot obtain an acquittal simply by ignoring inferences that can logically be
drawn from the totality of the evidence.” Martinez, 921 F.3d at 466.
Rose and Sanders proffer some indicia of innocence and conclude that
reversal should follow. 11 But we must “view the evidence in the light most
favorable to the verdict,” 12 and “[t]he evidence need not exclude every reasona-
ble hypothesis of innocence,” Lugo-Lopez, 833 F.3d at 457. In light of the evi-
dence reviewed above, defendants’ apparent exculpating evidence could have
failed to create doubt in the mind of a rational juror.
Defendants suggest that Ganji, 880 F.3d at 773, requires reversal. It
does not. In that case, we vacated the convictions of two defendants for con-
spiracy to commit health care fraud. Id. at 778. For one defendant, Davis, all
the government could muster was evidence that Davis “should have known”
that her employees were executing a fraudulent scheme—not that she did
know. Id. at 776 (emphasis removed). And, for the other defendant, Ganji,
there was no evidence whatsoever that she had participated in any unlawful
agreement. Id. at 773. The confessed ringleaders of the scheme testified that
11 Sanders notes testimony that he told employees not to do anything unlawful. He
points out that Dr. Jaime testified that Sanders never ordered him to falsify medical records,
billing hours, or DTNs. Rose urges that she wasn’t involved with clinical matters and fre-
quently was at work for only a few hours and that Jaime testified he didn’t see her do any-
thing fraudulent.
12 Gonzalez, 907 F.3d at 873 (quotation marks removed).
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they didn’t know Ganji and hadn’t worked with her. Id. at 770.
Ganji involved quite a different story. There’s evidence of Rose’s and
Sanders’s participation that goes far beyond a theory that they should’ve
known what was going on. They knew. Key players, such as Cruise, provided
testimony showing both of them working in concert with others to accomplish
the illicit goals. Ganji is inapt.
Sanders contends that Dr. Jaime’s acquittal was inconsistent with San-
ders’s conviction. But even if that questionable premise were true, it wouldn’t
require reversal. “[I]nconsistent verdicts are not a bar to conviction so long as
there is sufficient evidence to support the jury’s determination of guilt,” United
States v. Gieger, 190 F.3d 661, 664 (5th Cir. 1999), 13 and there was “ample”
evidence of Sanders’s guilt, as the district court correctly observed.
Relying on United States v. White, 569 F.2d 263, 268 (5th Cir. 1978), Rose
conte4nds that her conviction cannot stand merely because she was married to
the chief miscreant. But the evidence of Mrs. Rose’s conspiratorial activity
goes much further than the fact of her marriage to Mr. Rose. And regardless,
the jury was permitted to consider the marriage as circumstantial evidence of
knowledge. See Willett, 751 F.3d at 340. The convictions of conspiracy to com-
mit health care and wire fraud were adequately supported.
B.
Mrs. Rose and Sanders maintain that there was insufficient evidence
supporting their convictions for health care fraud and aiding and abetting
(Counts 2–18) in violation of 18 U.S.C. §§ 1347 and 2, and wire fraud and
aiding and abetting (Counts 19–23) in violation of 18 U.S.C. §§ 1343 and 2.
The health care fraud counts referenced individual OWCP billings that were
13 To his credit, Sanders conceded this point.
15
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allegedly inaccurate. 14 The wire fraud counts were tied to payments from DOL
Treasury to a bank account held in FWR’s name. As above, there was sufficient
evidence.
1.
To prove health care fraud, the government had to show that the
defendants either (1) “knowingly and willfully execute[d], or attempt[ed] to
execute, a scheme or artifice . . . to defraud any health care benefit program;”
or (2) “knowingly and willfully execute[d], or attempt[ed] to execute, a scheme
or artifice . . . to obtain, by means of false or fraudulent pretenses, representa-
tions, or promises, any of the money or property owned by, or under the custody
or control of, any health care benefit program . . . .” 18 U.S.C. § 1347(a); see
also United States v. Mahmood, 820 F.3d 177, 185–86 (5th Cir. 2016). “[T]he
government must show [that the defendant] participated in the scheme to
defraud, not that he took part in every aspect of that scheme.” United States
v. Tencer, 107 F.3d 1120, 1127 (5th Cir. 1997) (mail fraud case).
Next, “[i]n a wire fraud prosecution, the government must prove that
(1) a scheme to defraud exists, (2) the defendant used wire communications in
interstate or foreign commerce to further that scheme, and (3) the defendant
had specific intent to defraud.” 15 “[O]nce membership in a scheme to defraud
is established, a knowing participant is liable for any wire communication
which subsequently takes place or which previously took place in connection
with the scheme.” United States v. Stalnaker, 571 F.3d 428, 436 (5th Cir. 2009)
(brackets removed).
14As one example, Count 2 charged that a bill had been submitted for services ren-
dered to patient “Bryan B.” that were “not provided as billed.”
15United States v. del Carpio Frescas, 932 F.3d 324, 329 (5th Cir.) (per curiam), cert.
denied, 140 S. Ct. 620 (2019).
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Finally, consider aiding and abetting. It “is not a separate offense, but
it is an alternative charge in every indictment, whether explicit or implicit.”
United States v. Neal, 951 F.2d 630, 633 (5th Cir. 1992). To prove it, the gov-
ernment needed to show, in the context of this case, that (1) health care and
wire fraud were “committed by someone,” 16 and “(2) the defendant associated
with the criminal activity, participated in it, and acted to help it succeed.” 17
“It is not necessary . . . that one charged as an aider or abettor commit
the overt acts that . . . accomplish the offense or that he have knowledge of the
particular means his principals . . . employ to carry out the criminal activity.”
United States v. Austin, 585 F.2d 1271, 1277 (5th Cir. 1978). Similarly, there
needn’t be proof “that the defendant was present when the crime was com-
mitted or that he actively participated therein.” United States v. James,
528 F.2d 999, 1015 (5th Cir. 1976). Instead, liability under 18 U.S.C. § 2“results from the existence of a community of unlawful intent between the
aider or abettor and the principal.” Austin, 585 F.2d at 1277 (cleaned up).
Neither Sanders nor Rose contests the first element of aiding and
abetting—namely, that, someone committed health care or wire fraud with
respect to each count. 18 Instead, they plead that they didn’t know about or
help the fraud. We follow their lead and evaluate whether the evidence was
sufficient to show that they associated with, participated in, and acted to help
16 United States v. Collins, 774 F.3d 256, 263 (5th Cir. 2014).
17 United States v. Barnes, 803 F.3d 209, 216 (5th Cir. 2015).
18 See Collins, 774 F.3d at 263. Rose concedes that “the evidence in this case might
allow a juror to infer that there were some violations of FECA rules.” Sanders spends one
page in his seventy-page brief contending that FWR’s practices were generally lawful. But
he fails to cite any authority or even the record, and he neglects to examine the evidence
underlying each individual count. His contention is therefore waived as inadequately briefed.
E.g., United States v. Ballard, 779 F.2d 287, 295 (5th Cir. 1986).
17
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No. 17-20492
the health care and wire fraud succeed. 19
2.
“Typically, the same evidence will support both a conspiracy and an
aiding and abetting conviction. This is such a case.” United States v. Scott,
892 F.3d 791, 799 (5th Cir. 2018) (footnote and quotation marks removed).
Reviewing what is now familiar, Sanders, among other acts, pressured employ-
ees to maximize billings even when treatment was unnecessary. He fired an
employee for refusing to lie on documents. He schemed with Mr. Rose to put
Dr. Key at a noncomplying clinic to ensure that DOL would send payments.
Those actions, among many others, show that there was “a community of
unlawful intent between [Sanders] and the principal[s]” of the fraud. Austin,
585 F.2d at 1277 (brackets removed).
Sanders’s main response is to point to evidence that he told employees
not to do anything illegal. But that doesn’t prove that the jury acted irration-
ally in convicting. Cf. Bowen, 818 F.3d at 186. For one, the evidence needn’t
“exclude every reasonable hypothesis of innocence.” Lugo-Lopez, 833 F.3d
at 457. And a jury could have inferred that Sanders knew he was crossing
lines, because he felt a need to tell employees not to break the law.
Sanders also contends that the wire-fraud convictions should be set aside
because there was “no evidence indicating Sanders played any role whatsoever
in the actual process of submitting bills for payment.” But, as an aider and
abettor, there was no requirement that Sanders himself submit the fraudulent
claims sent by wire. See United States v. Rivera, 295 F.3d 461, 466 (5th Cir.
19 See Barnes, 803 F.3d at 216; see, e.g., United States v. Ismoila, 100 F.3d 380, 387
(5th Cir. 1996) (assuming substantive prong of fraud count was satisfied because defendant
conceded as much). Defendants in other health care fraud cases have proven capable of
examining the evidence of substantive fraud underlying each count. See, e.g., Martinez,
921 F.3d at 472–73.
18
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No. 17-20492
2002). Instead, the government needed only to show that he “assisted the
actual perpetrator of the wire fraud crimes while sharing the requisite criminal
intent.” Id. For reasons already described, the government met that burden.
The evidence is also sufficient as to Mrs. Rose. As seen above, she was
very involved in company discussions about maximizing billings. And she
played a role in that company culture: She informed Dr. Smith that Smith
needed to do more to increase revenues and informed her that her pay would
be tied to her clinic’s numbers. Mrs. Rose also helped to conceal the fraud by
transferring FWR’s money around various bank accounts once she’d learned
that search warrants had been served. She was relieved to hear that listening
devices hadn’t been discovered in the executive office. All of that evidence sup-
ports that she knew about, participated in, and wanted to see the health care
and wire fraud succeed. Accordingly, there is sufficient evidence supporting
Rose’s and Sanders’s Counts 2–23 convictions for health care and wire fraud
and aiding and abetting.
C.
Mrs. Rose challenges the sufficiency of the evidence for her Count 24
conviction of conspiracy to launder money in violation of 18 U.S.C. § 1956(h).
We affirm.
1.
Mrs. Rose’s efforts to hide money from the government not only proved
unsuccessful. They also put her in further legal trouble: namely, a charge of
conspiracy to launder money. Count 24 accused Rose, along with her husband,
of conspiring to “conduct financial transactions . . . with the proceeds of
specified unlawful activity”—namely, the health care and wire fraud discussed
above. The Roses’ alleged objective was to conceal and disguise the nature,
19
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No. 17-20492
location, and ownership of the criminal proceeds.
The indictment alleged that, soon after the search warrants were exe-
cuted, the Roses transferred at least $190,000 in DOL payments out of various
FWR bank accounts. The same day (July 11, 2013), they deposited that sum
into a bank account held by “Reaching Out 2 Youth Corporation” (“RO2Y”), an
account the Roses controlled. The Roses then met at a bank in Houston and
withdrew the $190,000 from the RO2Y account via a cashier’s check for
$700,000. Mrs. Rose signed the withdrawal slip. The payee was Pure Vanity,
and the remitter was “Glamor by Design, Inc.” Mrs. Rose owned both of those
corporations.
The next day, July 12, the Roses allegedly opened a new bank account in
Pure Vanity’s name and deposited the $700,000 check into it. Finally, three
days later, the Roses transferred at least $130,000 out of the Pure Vanity
account back into various FWR accounts. John Cruise testified that Mrs. Rose
told him that she moved the funds around to hide them from the government.
2.
To prove an 18 U.S.C. § 1956(h) conspiracy to launder money, the gov-
ernment must show that (1) “there was an agreement between two or more
persons to commit money laundering[,]” 20 and (2) “that the defendant joined
the agreement knowing its purpose and with the intent to further the illegal
purpose.” Alaniz, 726 F.3d at 601. Rose stresses that there was no evidence
that she had the intent to further the unlawful purpose of any agreement. But
she does not contest the evidence that the money transfers described above
occurred. Nor does she contest that the money was proceeds of unlawful
20 Money laundering generally requires that the defendant have engaged in a trans-
action with property he knew was derived from illegal proceeds. See 18 U.S.C. § 1957(a).
20
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activity. And she acknowledges Cruise’s testimony that her goal was to hide
the money from the government. Yet that testimony is powerful indication
that she knew about, and intended to further, an agreement to launder crim-
inally derived property.
Rose also urges that there was no evidence that she was party to an illicit
agreement with her husband to launder money. But again, plenty of evidence
suggests otherwise. The grand jury alleged that Mrs. and Mr. Rose acted
together in transferring the funds around, and John Cruise testified to the
same. “[Mrs. Rose] told me to meet them, her and [Mr.] Rose, at the . . . bank
where we did our business,” he stated, and “I was told that they were going to
pull the money out of the business banking accounts.” That testimony was
more than enough to establish that Mr. and Mrs. Rose had agreed with each
other to launder money. See Frydenlund, 990 F.2d at 825 (noting that
agreements may be inferred from concert of action).
D.
Mrs. Rose’s final sufficiency challenge is to her Count 25 conviction of
substantive money laundering and aiding and abetting in violation of 18 U.S.C.
§§ 1957(a) and 2. We affirm.
Mrs. Rose’s money-laundering troubles followed her even after the initial
bank transfers. The grand jury alleged that almost a year later, the Roses
withdrew about $27,000 from the Pure Vanity account to buy a cashier’s check
payable to Fort Bend Title. The Pure Vanity account, of course, had been
opened around the time of the Roses’ post-warrant flurry of money transfers.
The cashier’s check was then used to purchase a plot of land in Texas. The
check’s acquisition was the basis for the Count 25 money-laundering charge.
To convict of money laundering under 18 U.S.C. § 1957(a), the
21
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No. 17-20492
government must prove that “(1) property valued at more than $10,000 that
was derived from a specified unlawful activity, (2) the defendant’s engagement
in a financial transaction with the property, and (3) the defendant’s knowledge
that the property was derived from unlawful activity.” Martinez, 921 F.3d at
476. Rose challenges only the third element, maintaining that she didn’t know
the funds used to buy the cashier’s check were criminally derived. She relies
on United States v. French, 748 F.3d 922 (9th Cir. 2014).
The conviction was sound. There is more than enough evidence that Mrs.
Rose knew the funds were derived from unlawful activity. She opened the Pure
Vanity account around the time of the search warrants and deposited the
$700,000 in laundered funds into it, all as part of her scheme to “hide” the
money from the government. The withdrawal described in this count came
from that tainted Pure Vanity account.
French is unavailing. There, the Ninth Circuit reversed the defendant’s
two-count conviction of money laundering. See French, 748 F.3d at 936–37.
The first count was reversed because there was no evidence that the defendant
had purchased the relevant vehicle—instead, the defendant’s husband had
done so without her knowledge. Id. at 936. The second count met a similar
fate, because the illicit money had been transferred into a bank account over
which the defendant had no control, and there was no evidence that the defen-
dant knew of the transfer. Id. at 936–37. Unlike the situation in French, how-
ever, there is plenty of evidence that Mrs. Rose knew the money used to
purchase the check was derived from unlawful activity, and she controlled all
the accounts involved in this scheme.
III. MOTION FOR MISTRIAL
Defendants urge that the district court should’ve declared a mistrial.
They take issue with an unusual string of events that led Judge Werlein to
22
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No. 17-20492
invite a recalcitrant witness to his chambers for a meeting. We affirm.
A.
’Twas the middle of trial testimony on Thursday, September 22, 2016.
The government wanted to call Blanca Ramirez, a former FWR technician. But
before Ramirez testified, Judge Werlein had the attorneys approach the bench.
The judge informed the defense that “[l]ast evening after recess, the govern-
ment” had notified the court’s case manager that it had a witness—Ramirez—
who “sounded like becoming defiant.” Ramirez had complained that “she had
been here all day yesterday to testify” and had threatened not “to come back
on her subpoena.” “Rather than come into court to make a big deal over it,”
Judge Werlein invited Ramirez to his chambers. The prosecutors were present
at the meeting but did not say anything. The judge discussed Ramirez’s obliga-
tion to testify, given that she was under subpoena. “She was tearful at first”
and “was frustrated,” Judge Werlein explained. He reminded her that “[i]t
would be ugly if” she didn’t testify and was instead subjected to a bench war-
rant. Finally, Ramirez quit her resistance. After being notified, defense coun-
sel did not object. Ramirez proceeded to testify for the rest of the day.
Trial resumed the following Monday, four days later. But before
Ramirez retook the stand, Mr. Rose’s counsel approached the bench and
objected “to improper ex parte communication” under Federal Rule of Criminal
Procedure 43. On that basis, he moved for a mistrial or to strike Ramirez’s
testimony. Multiple times he clarified that he had no quarrel with how Judge
Werlein had handled the situation. Instead, he contested the government’s
failure to loop in defense counsel when the bench warrant was requested.
The prosecutor explained in response that the government had sought
an after-hours bench warrant when it learned that Ramirez wanted to go on
vacation to Florida instead of testifying. Judge Werlein confirmed the
23
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No. 17-20492
prosecutor’s account, explaining that Ramirez was only tired of waiting to
testify. Judge Werlein thought that, before initiating the messy process of
issuing and enforcing a bench warrant, it would’ve been easier to speak with
Ramirez in hopes she’d have a change of heart.
Judge Werlein carried the mistrial motion, and Ramirez resumed her
testimony. Later in the day, all four defendants moved in writing for a mis-
trial. They contended only that the government’s ex parte communications
“relative to [its] witness” violated Rule 43. Without citation, they asserted that
the district court’s local rules had been violated because the government hadn’t
first consulted defense counsel before requesting a warrant.
Judge Werlein denied the motion. He noted that he had spoken ex parte
with a witness, not the jury, which would’ve been a more serious situation.
Further, the government’s ex parte request for a warrant didn’t concern the
case’s merits. Instead, it was an emergency measure necessary to secure tes-
timony from a witness under subpoena. Finally, the judge noted that when he
had first brought the matter up, “[n]o one objected at the time. And then there
was a whole three days[’] waiting period before three of the defendants did
cross-examination, and still no one asked her anything about it. It was a
nonevent.” Rose and Sanders now contend that Judge Werlein erred in refus-
ing to declare a mistrial.
B.
We usually review a denial of a motion for a mistrial for abuse of dis-
cretion. See Velasquez, 881 F.3d at 343. But where counsel does not object
contemporaneously to the actions that form the basis for the mistrial motion,
plain error review follows. 21 Such a requirement gives the district court the
21 See United States v. Harms, 442 F.3d 367, 378 (5th Cir. 2006) (applying plain error
24
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chance to fix the mistake or take measures to reduce any prejudicial effect. See
Puckett v. United States, 556 U.S. 129, 134 (2009).
Rose and Sanders failed to comply with that requirement, so we review
only for plain error. 22 No one objected when Judge Werlein first informed
defense counsel that he’d spoken with Ramirez. Ramirez testified for the rest
of the day, and counsel never cross-examined her about the encounter. It
wasn’t until four days later that counsel for Mrs. Rose and Sanders moved for
a mistrial. By waiting so long to raise their objection, the lawyers robbed Judge
Werlein of any opportunity to reduce the prejudice. 23
Moreover, plain error applies when “the basis for [the defendant’s] objec-
tion during trial is different from the theory [s]he . . . raises on appeal.” United
States v. Green, 324 F.3d 375, 381 (5th Cir. 2003). Repeatedly, Mr. Rose’s
counsel told Judge Werlein that he had no issue with how the judge had han-
dled the situation. And the later-submitted written motion sang the same
tune, complaining only of the prosecution’s actions. Now, Rose and Sanders
assert—rather darkly—that Judge Werlein implicitly coerced Ramirez into
review to denial of mistrial because “Harms objected to the remark after the conclusion of
closing argument and out of the jury’s presence”); United States v. Caucci, 635 F.2d 441, 448
(5th Cir. Unit B Jan. 1981) (applying plain error “[b]ecause Caucci’s motion for a mistrial was
not made until after the conclusion of the summation and because he failed to object to the
prosecutor’s comments when made”); see also United States v. Pena, 71 F. App’x 367, 368 (5th
Cir. 2003) (per curiam) (“Because Pena failed to timely object to the admission of the evidence
upon which his motion for mistrial is based, we review this issue only for plain error.”).
22 See United States v. Roberts, 913 F.2d 211, 216 (5th Cir. 1990) (establishing that
plain error review can apply when a party fails to object to ex parte communications).
23 Of course, neither Rose nor Sanders had a chance to object when Judge Werlein
invited Ramirez into chambers, because they didn’t know it was happening. Perhaps for that
reason, Rose contends that she raised the objection at a practicable time. But defendants’
silence when Judge Werlein first brought the matter up still requires plain error review. See
Pena, 71 F. App’x at 368. If defense counsel had objected at that time, Judge Werlein could
have considered various mechanisms to reduce the prejudicial effect. But because defendants
failed timely to object, the error was sown into the record when Ramirez started testifying.
See Puckett, 556 U.S. at 134.
25
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testifying favorably for the government. Plain error review applies. Naturally,
the first prong of plain-error analysis is the requirement of an error. United
States v. Daniel, 933 F.3d 370, 382 (5th Cir. 2019). There is none.
C.
At the district court, the defendants relied only on Federal Rule of
Criminal Procedure 43 in requesting a mistrial. 24 That rule provides that “the
defendant must be present at . . . every trial stage.” FED. R. CRIM. P. 43(a)(2).
The rule does not, however, require the defendant’s presence when “[t]he pro-
ceeding involves only a conference or hearing on a question of law.” FED. R.
CRIM. P. 43(b)(3). Citing that latter provision, the government contends that
neither its request for a bench warrant nor Judge Werlein’s and the prosecu-
tion’s subsequent meeting with Ramirez were subject to Rule 43 because they
involved only a conference on a legal question.
We agree with the government. In United States v. Cornett, 195 F.3d
776, 781 (5th Cir. 1999), we concluded that a hearing about possible juror
misconduct involved a question of law and hence didn’t trigger Rule 43. 25 If a
hearing about a juror’s misconduct presents a question of law, see Cornett,
195 F.3d at 781, then so too does a conference about a witness’s misconduct.
There is no reason to treat the two situations differently in this regard. The
government’s last-minute motion, and the judge and government’s meeting
with Ramirez, were “an efficient way to assess the extent of any [witness]
24They’ve also maintained that the government violated a district court rule in failing
to keep them in the loop. At no point, however, have they identified the rule. Nor have they
explained why it could serve as a basis for a mistrial. Their contention is therefore waived
as inadequately briefed. E.g., United States v. Davis, 603 F.3d 303, 307 n.5 (5th Cir. 2010).
25See also United States v. Peterson, 385 F.3d 127, 138 (2d Cir. 2004) (holding that
the question-of-law exception applied to a judge’s private conversation with a juror about jury
misconduct).
26
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misconduct and formulate an appropriate response.” Peterson, 385 F.3d at 138.
Thus, at the first step of the plain error analysis, the district court didn’t err.
See Daniel, 933 F.3d at 382.
D.
Rose and Sanders rely on United States v. U.S. Gypsum Co., 438 U.S.
422 (1978), and United States v. Stratton, 649 F.2d 1066 (5th Cir. Unit A July
1981), in contending that the court erred in inviting Ramirez to chambers. 26
Defendants seem to think that Gypsum and Stratton prove a violation of their
due process right of presence. Plain error review applies, because defendants
never told the court that they objected to how it had handled the odd situation.
Regardless, neither case is apropos. Both involved more serious and
more prejudicial ex parte communications. Gypsum, 438 U.S. at 462, dealt with
what was effectively an ex parte supplemental instruction to the jury. And
Stratton, 649 F.2d at 1081, concerned a novel severance procedure that basi-
cally prevented the defendant from being present at the guilt phase of his own
trial. This case, by stark contrast, involves a sensible attempt by a longtime
district judge to reason with a witness who threatened to hike off early to
vacation. Gypsum and Stratton are seated in a different ballpark.
Moreover, a criminal defendant has a due-process right to be present at
26 Indeed, Rose and Sanders accuse Judge Werlein of coercing Ramirez into testifying
favorably for the government. That is a serious accusation seriously lacking in evidentiary
support. Judge Werlein explained that Ramirez wasn’t generally unwilling to testify. She
did not, for example, fear retribution for her testimony. Instead, she wanted to head off for
vacation. There is no support for the charge that the judge somehow dictated the contents of
Ramirez’s testimony or encouraged her to testify in a way that pleased the prosecution.
In response, Rose complains that she can’t verify what Ramirez’s reason for hesitating
was, because counsel wasn’t a part of the meeting and a transcript wasn’t created. Yet
despite ample opportunity, Rose’s lawyer failed to cross-examine Ramirez about the encoun-
ter. Rose cannot complain that she had no way of knowing.
27
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No. 17-20492
a proceeding only where his presence might affect “his opportunity to defend
against the charge” or “thwart[]” the possibility of “a fair and just hearing.” 27
Here, neither defendant’s presence would have made any difference. Ramirez
was going to testify one way or another—either voluntarily on her subpoena or
involuntarily under a bench warrant. Defendants had no right or ability to
prevent Ramirez from taking the stand, so they “could have done nothing had
they been at the conference, nor would they have gained anything by attend-
ing.” Gagnon, 470 U.S. at 527. “There is nothing [defendants] could [have]
do[ne] if [they] were there, and almost nothing [they] could [have] gain[ed].”
Snyder, 291 U.S. at 108.
IV. CRIMINAL FORFEITURE
Mrs. Rose was ordered to forfeit six properties after a forfeiture jury trial.
She contends that the government failed to prove the required statutory nexus
for the forfeitures. We affirm.
A.
The second superseding indictment notified the Roses that the govern-
ment sought forfeiture of
(a) At least $8,925,388.00.
(b) A 1.026 acre lot in Fort Bend County, Texas, owned by the Roses.
(c) $63,309.61 seized from a BWR bank account.
(d) $90,392.46 seized from a FWR bank account.
(e) $41,397.37 seized from a FWRN bank account.
(f) $25,707.93 seized from a TWR bank account.
(g) An annuity contract held by the Roses.
27 United States v. Gagnon, 470 U.S. 522, 526 (1985) (per curiam); see also Snyder v.
Massachusetts, 291 U.S. 97, 108 (1934) (holding that defendant had no right of presence at
jury’s viewing of the crime scene because he couldn’t have gained anything from being there),
overruled in unrelated part by Malloy v. Hogan, 378 U.S. 1 (1964).
28
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No. 17-20492
The Roses asked to retain the same jury to decide the forfeiture, so the district
court presided over a forfeiture jury trial. See FED. R. CRIM. P. 32.2(b)(5)(A)
(permitting guilt-phase jury to decide criminal forfeiture). At that trial, Spe-
cial Agent Lucy Tan testified about her review of the bank accounts, annuity,
and plot of land. She stated that the overwhelming majority of the funds—at
least ninety percent, usually more—in each of the accounts came from DOL
payments. Using the first-in-first-out (“FIFO”) accounting method, Tan also
traced the real property back to federal money.
Despite not taking the stand during the guilt phase, Mrs. Rose testified.
She contended that some of the money in the accounts, and the money used to
purchase the land, came from non-DOL sources, such as personal-injury
patients or other lines of business. She also claimed that her tax records sug-
gested the government had incorrectly estimated the amount of DOL revenue.
The jury determined that the bank accounts, annuity, and real property
were forfeitable. 28 The first two were traceable to the conspiracy to commit
health care fraud charged in Count 1. 29 And the real property was both trace-
able to the Count 1 conspiracy and involved in the Count 25 money laundering
offense. The forfeitures were finalized at sentencing.
B.
We review the jury’s verdict regarding criminal forfeiture for sufficiency
of the evidence. 30 Criminal forfeiture “is an aspect of punishment” and hence
28 The jury didn’t determine, and Rose doesn’t contest, item (a). The district court
later ordered a money judgment of $14,537,548.54.
29For the accounts, the jury found that the entire listed amounts were forfeitable. But
for the annuity, the jury found that $98,601.47 of the $100,000 used to purchase it was
criminal proceeds.
30See United States v. Vogel, 459 F. App’x 439, 442 (5th Cir. 2012) (“[A] rational jury
could have concluded there was a preponderance of evidence that all prescriptions issued by
29
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No. 17-20492
“an aspect of sentencing.” Id. (quotation marks removed). District courts must
order the forfeiture of property connected to health care fraud and money laun-
dering. See 18 U.S.C. § 982. “[S]tatutorily-prescribed forfeiture is warranted
upon a showing of a preponderance of the evidence.” United States v. Gasa-
nova, 332 F.3d 297, 301 (5th Cir. 2003).
Where the government wants to forfeit “specific property, the court must
determine whether the government has established the requisite nexus be-
tween the property and the offense.” FED. R. CRIM. P. 32.2(b)(1)(A). The gov-
ernment seeks forfeiture of Mrs. Rose’s properties under two nexus theories.
The first is 18 U.S.C. § 982(a)(7), which states that “[t]he court, in imposing
sentence on a person convicted of a Federal health care offense, shall order the
person to forfeit property, real or personal, that constitutes or is derived, dir-
ectly or indirectly, from gross proceeds traceable to the commission of the
offense.” The second is § 982(a)(1), which mandates that “[t]he court, in
imposing sentence on a person convicted of [money laundering] . . . , shall order
that the person forfeit . . . any property, real or personal, involved in such
offense, or any property traceable to such property.”
In United States v. Ayika, 837 F.3d 460, 468 (5th Cir. 2016), we con-
fronted criminal forfeiture in the health care fraud context. The defendant ran
a pharmacy and was convicted of health care fraud in connection with false
claims for benefits. Id. at 463–64. The district court ordered forfeiture of
several assets, including funds in the pharmacy’s main bank account. Id. at
468–69. The defendant contended, as Rose does, that some of the funds
deposited into that account over its life came from legitimate sources such as
lawful billings, thus precluding forfeiture. Id. at 470.
MPC were invalid, so all of its $26.3 million in revenue was subject to forfeiture.”); see also
United States v. Betancourt, 422 F.3d 240, 252 (5th Cir. 2005).
30
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No. 17-20492
Applying § 982(a)(7)—one of the provisions at issue here—we held that
the government hadn’t shown that the funds in the account were directly or
indirectly derived from the health care fraud. Id. at 474. We noted that it’s
difficult “to determine the exact source of any specific dollar or dollars” where
“legitimate money and illegitimate money are placed in the same account, and
various withdrawals and other deposits occur over time.” Id. at 472. In light
of that difficulty, we interpreted the “requirements of tracing under § 982(a)(7)
. . . to be demanding for establishing forfeiture.” Id. at 474. And because the
government conceded that only about thirty-four percent of the funds deposited
into the account were proceeds of the health care fraud, id. at 471 n.17, the
seized funds were not traceable to that offense, id. at 474. Rose suggests that
her case is similar, inasmuch as some of the accounts had non-federal money
at the time of the seizures.
C.
First, we analyze the forfeitures of the annuity and the amounts in the
bank accounts. Rose maintains that this case is like Ayika, but there are sali-
ent differences. Most importantly, in Ayika the government conceded that only
about a third of the money placed in the account over its lifetime was proceeds
of the health care fraud. Ayika, 837 F.3d at 471 n.17, 474. By contrast, here
the government persuasively contends that there was a “mountain of evidence
that every claim filed by FWR was fraudulent in multiple ways”—in that billed
services often weren’t necessary or provided one-on-one by a licensed profes-
sional, among other things.
Sister circuits applying other provisions have upheld forfeiture where
there’s evidence of pervasive illegality at the institution, such that the “fraud
31
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No. 17-20492
touched everything.” 31 FWR is one such institution, because there is no evi-
dence that any OWCP billing it ever made was legitimate. 32 Instead, the
evidence suggested that each claim was fraudulent in at least one and often
multiple ways.
Rose’s strongest response is her point that some of FWR’s earnings—and
hence the money in the bank accounts—came from non-DOL sources, such as
personal-injury patients. Hence, she continues, some of the seized funds may
not have been tainted. But those other funds do not invalidate the forfeiture.
Tan testified, without rebuttal, that at least ninety percent of the clinics’
revenues came from DOL, which leaves only de minimis non-DOL revenue in
the accounts. 33 And even that de minimis non-federal money is traceable to
the fraud. That is because, in a company with such widespread deceit as FWR,
a jury could have believed that FWR couldn’t have existed absent the fraud.
The government’s burden was only to show that the seized money “consti-
tute[d] . . . gross proceeds traceable to the commission of the offense.”
18 U.S.C. § 982(a)(7) (emphasis added). If the business couldn’t have existed
absent the fraud, then even the non-DOL revenue traces to it. 34
31 United States v. Smith, 749 F.3d 465, 488 (6th Cir. 2014) (affirming criminal forfeit-
ture of two checks drawn from a company’s accounts, because the company “was used as a
vehicle to commit fraud” and the “fraud touched everything”); see United States v. Warshak,
631 F.3d 266, 332–33 (6th Cir. 2010) (affirming criminal forfeiture of company’s revenues,
because “the entire operation was permeated with fraud,” and any “legitimate” sales also
indirectly derived from the conspiracy, since the company “would have been unable to con-
duct” those sales if the scheme “had never been implemented”).
32 See United States v. Bogdanov, 863 F.3d 630, 634 (7th Cir. 2017) (“[Defendant] mar-
shaled no evidence showing that any of the alleged goods in question were obtained legiti-
mately. . . .”).
33See United States v. $448,342.85, 969 F.2d 474, 477 (7th Cir. 1992) (“Even if the
fraud stopped at the end of 1988, the criminal proceeds vastly exceed the sums on deposit at
the time of the seizure.”).
34 See United States v. Juluke, 426 F.3d 323, 327 (5th Cir. 2005) (per curiam) (drug
case) (agreeing with the district court’s reasoning, in affirming forfeiture, that even if “some
32
Case: 17-20492 Document: 00515327502 Page: 33 Date Filed: 03/02/2020
No. 17-20492
Rose misfires in suggesting that it was problematic that Tan couldn’t say
exactly how each individual dollar in the accounts was fraudulently derived.
The government’s burden was to show a nexus to the conspiracy, not the speci-
fic form that the fraud took with respect to every billing FWR ever submitted.
See 18 U.S.C. § 982(a)(7). In sum, the government proved the requisite nexus
between the bank account and annuity forfeitures and the Count 1 conspiracy
conviction.
D.
Rose maintains that there was no link between the forfeited real prop-
erty and her offenses. The jury found that the real property was forfeitable on
two theories: (1) The check used to purchase it was connected to the Count 1
conspiracy, and (2) the land was involved in the Count 25 money laundering.
We need not review the parties’ extensive briefing on the first theory, because
the second one is easily met. Mrs. Rose’s purchase of a cashier’s check, which
was used to buy the real property, was the basis for her Count 25 money-
laundering conviction. The land is therefore “involved in” that offense.
18 U.S.C. § 982(a)(1).
AFFIRMED.
of the money in the account could have come from legitimate sources, . . . any legitimate
income in the account served to facilitate Juluke’s illegal activity”); United States v. Hoffman-
Vaile, 568 F.3d 1335, 1344 (11th Cir. 2009) (“The amounts that [defendant] received from
private insurance companies and patients are gross proceeds traceable to the commission of
her fraud because, but for her Medicare fraud, she would not have been entitled to collect
these sums from the companies and patients.” (quotation marks removed)); Warshak,
631 F.3d at 332–33 (“[A]ny sales post-dating the bank-fraud counts were proceeds resulting
indirectly from fraud, as [the company] would have been unable to conduct credit-card trans-
actions if the [fraud] scheme had never been implemented.”).
33