United States v. Hoogenboom, Carol ( 2000 )

In the
United States Court of Appeals
For the Seventh Circuit
Nos. 98-3961 & 98-4139
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
CAROL HOOGENBOOM,
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 97 CR 123--Milton I. Shadur, Judge.
Argued February 24, 2000--Decided April 4, 2000
Before POSNER, Chief Judge, and CUDAHY and EVANS,
Circuit Judges.
EVANS, Circuit Judge. Dr. Carol Hoogenboom’s
scheme to swindle Medicare by filing bills for
services she did not provide to elderly mental
patients hinged on her assumption that "no one
will believe a crazy lady." But the FBI did. More
importantly, so did a federal judge who found
Hoogenboom guilty on a bevy of charges after a
week-long bench trial. In all, Hoogenboom’s
shenanigans led to convictions on 15 counts: 5
for mail fraud, 3 for filing false claims with
Medicare, 6 for money laundering, and 1 for
obstruction of justice. These earned her
concurrent sentences, the top being for 70
months.
Hoogenboom isn’t your typical chiseler. After
earning undergraduate and master’s degrees in
psychology from Western Michigan University, she
completed a PhD at the Forrest Institute of
Professional Psychology. She then spent 2 years
interning, passed the Illinois state licensing
exam, and received her state psychologist’s
license. With that, after nearly 15 years of hard
work, Hoogenboom founded her own practice.
When she set up shop, Hoogenboom contracted
with Medicare to become a part B provider. This
meant she could submit reimbursement claims to
Medicare for any medically necessary services she
provided to Medicare beneficiaries. As it turned
out, she preferred submitting claims to providing
services.
Beginning in June 1995 Hoogenboom filed claims
stating that she frequently visited her
"patients"--a group of elderly, mentally ill
Medicare beneficiaries living in three Chicago
retirement homes--to conduct 45- to 50-minute
individual therapy sessions. To receive payment
for the purported sessions Hoogenboom would fax
"activity sheets" to her sister, Carrie Weldy,
containing the patients’ names, medicare numbers,
the alleged dates of service, and the type of
services allegedly provided. Weldy, who served as
a salaried bookkeeper, would then phone in the
claims to Medicare for reimbursement. Unbeknownst
to Weldy, the services she billed for were either
not performed, or not performed as billed.
In January 1996 Hoogenboom hired Hanan Shaktah
to help expand her operation. Hanan/1 had an
undergraduate degree in psychology which she
hoped she might put to use in her new job.
Instead, Hoogenboom gave her a list of about 70
patients and told her to visit them once or twice
a week to make sure they were still "alive and
breathing." When Hanan mastered the routine,
Hoogenboom added another 53 patients to her
rounds. The visits lasted only a minute or two,
but on Hoogenboom’s orders Hanan submitted
activity sheets stating that she provided 45- to
50-minute counseling sessions to each of her
patients at least three times a week. In exchange
for her efforts, Hoogenboom gave Hanan a taste of
the Medicare reimbursement money.
Hoogenboom was so impressed with Hanan’s work
that by June she decided to bring Hanan’s brother
Thaer onto the workforce. Thaer did not have a
degree in psychology, but he had been arrested
for assault and battery on numerous occasions. So
Hoogenboom thought he’d make a fine "therapist,"
and soon enough he, too, was submitting activity
sheets recapping lengthy counseling sessions. In
reality, Thaer performed the same job as his
sister--moving door-to-door within the retirement
homes making sure that the Medicare recipients
were still alive.
With the Shaktahs taking care of her clients,
Hoogenboom stopped visiting the facilities. And
once Thaer came on board, Hanan also ceased her
visits. Nevertheless, the billing continued on
pace. In all, from June 1995 until October 1996
Hoogenboom submitted approximately 11,000 claims
to Medicare for reimbursement. Based on these
claims, she received $480,617.54, which she
deposited into two accounts at First National
Bank in Chicago.
Despite the fact that she was bilking the
federal government out of nearly $50,000 a month,
and frequently billed for more than 24 hours in
a day, Hoogenboom confidently predicted that she
would never get caught. She told Hanan that when
it came to filing false Medicare claims "the
sky’s the limit." She further explained to Thaer
that even if some of the patients became aware of
the scam it would never put her in jeopardy,
since no one would take the word of a "crazy
lady" over that of her psychologist.
Unfortunately for Hoogenboom, the FBI did not
operate on the same assumption. Thus, when a few
of Hoogenboom’s more nimble-witted patients
reported to Medicare that they were receiving
statements detailing counseling services that had
not been performed, the FBI launched an
investigation and quickly began to uncover
evidence of Hoogenboom’s scheme.
Bureau agents confronted Hoogenboom about her
billing discrepancies on October 2. She told them
that she and her assistants had in fact performed
the services claimed, that they had provided
mostly psych testing services and very little
therapy, that she was always present when her
assistants conducted the testing, that she
visited all the facilities three to four times
per week, and that her assistants both had
undergraduate degrees in psychology.
When the interview ended, the cover-up began.
Hoogenboom immediately met with Hanan and
instructed her not to speak to the FBI. She then
called Weldy and told her to tell the FBI that
the two didn’t know each other. The next day,
Hoogenboom withdrew $101,000 from First National,
explaining to Thaer that she feared the Bureau
would "freeze her accounts."
By October 21 Hoogenboom had become desperate.
She sent the following fax to Weldy, written in
print so small Weldy had to blow it up on her
copier to read it:
Ner,/2 immediately burn all logs, time sheets of
everyone. Make sure only ashes are left. Burn
this page, too. I will explain later. Tell Mommo
and Conco/3 to talk to no one about me. If the
FBI visits them they are to say nothing. Even
that they don’t know me./4 Tell them the same
thing. . . . You guys are to talk to no family or
relatives about me, no neighbors, and no new
friends.
Weldy, the hero of our story, not only refused to
comply, but immediately gave the FBI the fax and
all the materials she was supposed to burn.
The Shaktahs, who flipped following their arrest
(they pled guilty to charges and received
probation), also reported that Hoogenboom
attempted to thwart the FBI. At trial they
testified that during the investigation
Hoogenboom tried to persuade Hanan not to
cooperate, instructed Hanan to prepare fake
progress notes for the services covered in the
indictment, attempted to convince a real
psychologist to falsely testify that she treated
the patients, and threatened Thaer that if he
ever testified against her she would press
charges against him for forging her checks.
Hoogenboom told a markedly different story. She
testified that she performed all the work she
billed up until she hired Hanan, but that from
then on she assumed a purely supervisory role.
She said that, after initially supervising
Hanan’s activities quite closely, she was fooled
into believing that Hanan was still treating the
patients. She also said that Hanan convinced her
to hire Thaer and that Hanan was responsible for
supervising his work. Finally, she reported that
once she became aware that the two were conning
her, she immediately fired them both.
The judge was underwhelmed by this defense. He
said Hoogenboom’s "preposterous effort to
rationalize" her conduct and "prevail on the
balance of her own perjury" could hardly "avoid
the crushing impact . . . [of] the overwhelming
evidence that the government provided with
respect to her guilt."
On appeal, Hoogenboom attacks three of her four
convictions and argues that the judge erroneously
applied a couple of 2-point adjustments to his
calculus of her sentence under the guidelines.
Interestingly, she does not contest her
conviction for obstruction of justice--the crime
for which she drew the longest concurrent
sentence. This means that even if Hoogenboom
prevails--gets her money laundering, false
claims, and mail fraud convictions overturned and
both 2-point adjustments set aside--she stands to
gain only mild relief. But she is entitled to
seek what she can, so with the limited prospects
for a real major victory in mind, we turn to her
contentions.
We begin with Hoogenboom’s first challenge to
her money laundering conviction. To violate the
federal money laundering statute the government
must prove, inter alia, that a defendant engaged
in or attempted to engage in "a monetary
transaction." 18 U.S.C. sec.1957. As defined by
the statute, a monetary transaction "does not
include any transaction necessary to preserve a
person’s right to representation as guaranteed by
the Sixth Amendment to the Constitution." 18
U.S.C. sec.1957(f)(1)./5 Hoogenboom argues that
since she testified that she eventually used the
money she removed from her bank accounts to pay
her attorneys, the withdrawals were not "monetary
transactions."
To the extent Hoogenboom challenges the
sufficiency of the evidence supporting her
conviction, we review to determine whether the
fact finder’s take on the evidence was wholly
irrational when viewed in the light most
favorable to the government. See United States v.
Thornton, 197 F.3d 241, 253-254 (7th Cir. 1999),
cert. denied sub nom. Reynolds v. United States,
___ S. Ct. ___, 2000 WL 190036 (Mar. 6, 2000). To
the extent that she asks us to interpret the
federal money laundering statute, we review the
district court’s determinations de novo. See
United States v. Shriver, 989 F.2d 898, 901 (7th
Cir. 1992).
Hoogenboom’s claim that she used the money she
withdrew on October 3 to pay her lawyers is
supported only by her conclusory testimony at
trial. She did not specify the dates or the
number of payments she made, nor did she
introduce any records or other evidence to show
how she used the money. She simply stated that at
some point, well after the transaction, she paid
her attorneys with the funds. This evidence in no
way undermines the district court’s findings.
Standing alone, Hoogenboom’s testimony, rejected
as it was by the district court, could not show
that she used the funds in the manner she
claimed.
But even if Hoogenboom were believed, the same
result would follow. She does not contest Thaer’s
statement that she made the October 3 withdrawals
to prevent the FBI from freezing her accounts.
She rather argues that since she later spent the
money on lawyers the transactions should be
covered by the statute’s Sixth Amendment
exception.
This is preposterous. Under Hoogenboom’s
conception of the statute, every defendant
charged with money laundering under 18 U.S.C.
sec.1957 could, at any time, beat the charge by
funneling the proceeds which constituted the
initial, illegal transaction toward their
defense. Since this interpretation would render
the statute useless in the face of any money
launderer armed with a minimally competent
attorney, we reject it. Congress would not bother
passing such an easily circumvented law. Instead,
the exception appears to have been inserted to
prevent the broad reach of the statute from
criminalizing a defendant’s bona fide payment to
her attorney. See United States v. Rutgard, 116
F.3d 1270, 1291 (9th Cir. 1997); see also, 134
Cong. Rec. S17630 (daily ed. Nov. 10, 1988)
(statements of Sens. Biden and Kennedy).
Correctly read, the statute offers a defense
where a defendant engages in a transaction
underlying a money laundering charge with the
present intent of exercising Sixth Amendment
rights. This allows a defendant to preserve her
rights without undermining the prosecution of
those the statute seeks to punish. Since
Hoogenboom did not clear out her accounts to pay
her attorney--the evidence is that she engaged in
the transaction to prevent the FBI from seizing
the money--she cannot squeeze within the slim
Sixth Amendment exception to the statute’s broad
definition of what constitutes a monetary
transaction.
Hoogenboom next contends that the government
failed to show that she possessed the requisite
mens rea to support her convictions on all crimes
except obstruction of justice. She argues that
since the prosecution’s only evidence of her
intent came from the testimony of the Shaktahs,
and this directly conflicted with her own more
believable testimony, the prosecution failed to
prove its case beyond a reasonable doubt.
Again, preposterous. The district court called
the evidence against Hoogenboom "crushing" and
"overwhelming." Indeed, the court noted that even
without the Shaktahs’ testimony Hoogenboom was
proven guilty beyond a reasonable doubt. Plus,
the judge expressly found that Hoogenboom’s
testimony was perjured. Viewing the case in any
light--let alone that most favorable to the
government--there was ample evidence to support
the finding that Hoogenboom intended to commit
her crimes.
This brings us to the sentencing issues which
are not presented, by either side, with great
clarity. And that’s not surprising since the
sentencing hearing itself was not a model of
clarity as everyone, in a desultory fashion,
engaged in long musings which led to a rather
confusing record.
On appeal, the parties have confused several
concepts, using terms of art like "upward
departures" interchangeably with "adjustments."
Similar misstatements pop up where, for instance,
Hoogenboom says in her brief that the judge set
"the base offense level" at "27" which reflected
"the following four upward enhancements." This
statement is then followed by a list of five, not
four, adjustments. Also, the "base offense level"
in this case was not "27." It was "6" for two of
Hoogenboom’s crimes (mail fraud and false
claims), "12" for the obstruction charge, and
"17" for money laundering. But because the mail
fraud and false claim counts ended up a little
higher after various adjustments, we need only
focus on them. And here’s how the sentence was
built:
6 points--Base offense level
9 points--A specific offense characteristic
adjustment under guideline sec.2F1.1(b)(1)(J)
because the fraud exceeded $350,000
2 points--A specific offense characteristic
adjustment under sec.2F1.1(b)(2) because "more
than minimal planning" was involved.
To these computations, four 2-point
"adjustments" were added to bring the "adjusted
offense level" to 25, which yielded a sentencing
range of 57 to 71 months. With 5 years as the
statutory maximum penalty for all crimes except
obstruction (which is 10 years), Hoogenboom
received 60-month terms on all the charges except
obstruction, for which she drew a 70-month
sentence. The sentences were ordered to be served
concurrently.
The four 2-point adjustments were for:
(1) Vulnerable Victim--sec.3A1.1(b)(1)
(2) Abuse of Trust--sec.3B1.3
(3) Role in the Offense--an Organizer--
sec.3B1.1(c)
(4) Obstruction of Justice--sec.3C1.1
Hoogenboom challenges two adjustments:
vulnerable victim and abuse of trust. Although we
have spent quite some time laying out the
framework of this sentence, we will tarry only a
moment on Hoogenboom’s objections, which we find
to be without merit.
The best argument against the "vulnerable
victim" enhancement might have been that the
victim was really the government, not the infirm
nursing home patients who were denied services.
But that argument wasn’t made below, so it’s
waived on appeal. And even if not waived, in
these circumstances the elderly and infirm
residents were so closely involved with the
scheme that it does no violence to the guidelines
to conclude that they were victims. One of the
reasons for increasing a criminal penalty based
on the type of victim is that vulnerable ones are
less likely to report that they have been
cheated, so crimes against them are more
difficult to uncover. Here, Hoogenboom’s choice
of victims allowed her to go undetected for more
than a year. In fact, if she had made sure all of
her patients were incoherent, she might not have
been caught. The vulnerable victim enhancement,
accordingly, was correctly applied.
Ditto for the abuse of trust enhancement.
Medical service providers occupy positions of
trust with respect to private or public insurers
(such as Medicare) within the meaning of
guideline sec.3B1.3. See United States v. Geiger,
190 F.3d 661 (5th Cir. 1999), and United States
v. Ntshona, 156 F.3d 318 (2d Cir. 1998). Medicare
providers such as Dr. Hoogenboom enjoy
significant discretion and consequently a lack of
supervision in determining the type and quality
of services that are necessary and appropriate
for their patients. This forces Medicare to
depend, to a significant extent, on a presumption
of honesty when dealing with statements received
from medical professionals. The adjustment here
was properly invoked.
For all of these reasons, the judgment of the
district court is AFFIRMED.
/1 Hanan’s brother enters the scene in a moment, so
we’ll refer to Ms. Shaktah by her first name.
/2 Weldy’s family pet name.
/3 Weldy and Hoogenboom’s parents.
/4 By this point, it seems Hoogenboom really should
have been giving the FBI a little more credit. To
think that they’d be thrown off by tiny print and
parents who claim they do not know their own
child suggests Hoogenboom could have used some
counseling herself.
/5 In full, this section of the statute reads:
[T]he term "monetary transaction" means the
deposit, withdrawal, transfer, or exchange, in or
affecting interstate or foreign commerce, of
funds or a monetary instrument (as defined in
section 1956(c)(5) of this title) by, through, or
to a financial institution (as defined in section
1956 of this title), including any transaction
that would be a financial transaction under
section 1956(c)(4)(B) of this title, but such
term does not include any transaction necessary
to preserve a person’s right to representation as
guaranteed by the Sixth Amendment to the
Constitution[.]