United States v. Sylvia Walter-Eze , 869 F.3d 891 ( 2017 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 15-50315
Plaintiff-Appellee,
D.C. No.
v. 14-CR-00259-
RGK-1
SYLVIA OGBENYEANU WALTER-EZE,
AKA Sylvia O Okam,
Defendant-Appellant. OPINION
Appeal from the United States District Court
for the Central District of California
R. Gary Klausner, District Judge, Presiding
Argued and Submitted February 7, 2017
Pasadena, California
Filed August 25, 2017
Before: Sidney R. Thomas, Chief Judge, Jacqueline H.
Nguyen, Circuit Judge, and Carol Bagley Amon,*
District Judge.
Opinion by Judge Amon;
Concurrence by Judge Nguyen
*
The Honorable Carol Bagley Amon, United States District Judge for
the Eastern District of New York, sitting by designation.
2 UNITED STATES V. WALTER-EZE
SUMMARY**
Criminal Law
The panel affirmed a jury conviction and sentence for
health care fraud and conspiracy.
The panel held that the defendant was not denied effective
assistance of counsel when her attorney obtained only a short
continuance of trial and declined the district court’s offer of
a longer continuance conditioned on counsel’s paying the
costs incurred by the continuance, including witness and jury
fees. The panel held that both the threat of fees and the risk
of a bar investigation and sanctions as a result of the fees
created an actual conflict of interest that adversely affected
counsel’s performance. The panel assumed without deciding
that the rule of Cuyler v. Sullivan, 446 U.S. 335 (1980),
regarding a presumption of prejudice upon a showing of an
actual conflict, can extend to a case of pecuniary conflict.
Under the circumstances of this case, however, Sullivan did
not control because the actual conflict was relegated to a
single moment of the representation and resulted in a single
identifiable decision that adversely affected the defendant,
rather than tainting every interaction with or decision made
by counsel. The defendant therefore was required to
demonstrate that she was prejudiced by her counsel’s failure
to obtain the longer continuance. The defendant did not make
this showing, and thus failed to establish a Sixth Amendment
violation.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
UNITED STATES V. WALTER-EZE 3
The panel held that the district court did not abuse its
discretion in ruling on the defendant’s morning-of-trial
request for a fifth continuance.
The panel held that the district court did not abuse its
discretion in giving a deliberate ignorance jury instruction.
Even though the government’s case-in-chief relied primarily
on the claim that the defendant had actual knowledge of the
health care fraud, the jury instruction had foundation in the
evidence. The timing of the instruction, after the defense had
already made its summation but before the government’s
rebuttal, did not deprive the defendant of the right to fully
defend herself.
The panel held that the district court did not plainly err in
its oral recitation of a jury instruction on the elements of
health care fraud. The jury instructions as a whole properly
conveyed the government’s burden of proof.
The panel held that at sentencing, the district court did not
err in calculating the amount of loss based on the total
amount billed to Medicare and Medi-Cal. The district court
did not plainly err in applying an enhancement for the
defendant’s leadership role in a criminal activity involving
five or more people. The district court also did not plainly err
in calculating the amount of restitution.
Concurring only in the judgment, Judge Nguyen joined
fully in the majority’s conclusions. She wrote separately
because she feared that the majority’s reasoning regarding
conflicts of interests could create confusion in the court’s
case law. Judge Nguyen would hold that there was no “actual
conflict” that adversely affected counsel’s performance, and
thus Sullivan’s presumed prejudice rule did not apply. Like
4 UNITED STATES V. WALTER-EZE
the majority, she would apply the prejudice standard and hold
that the defendant could not show prejudice due to the
overwhelming evidence against her.
COUNSEL
David J. Bernstein (argued), Law Office of David Jay
Bernstein PA, Deerfield Beach, Florida, for Defendant-
Appellant.
Ellen R. Meltzer (argued), Special Counsel; Joanna K.W.
Bowman, Alexander F. Porter, and Blanca Quintero,
Assistant United States Attorneys; Sung-Hee Suh, Deputy
Assistant Attorney General; Leslie R. Caldwell, Assistant
Attorney General; Fraud Section, Criminal Division, United
States Department of Justice, Washington, D.C.; for Plaintiff-
Appellee.
OPINION
AMON, District Judge:
Appellant Sylvia Walter-Eze stands convicted after a jury
trial of one count of conspiracy to commit health care fraud
in violation of 18 U.S.C. § 1349 (Count 1); four counts of
health care fraud in violation of 18 U.S.C. § 1347 (Counts 2,
3, 5, and 6); and one count of conspiracy to pay and receive
health care kickbacks in violation of 18 U.S.C. § 371 (Count
7). She was acquitted of one count of conspiracy to commit
health care fraud in violation of 18 U.S.C. § 1347 (Count 4).
Walter-Eze was sentenced to 97 months imprisonment and
UNITED STATES V. WALTER-EZE 5
three years of supervised release and was ordered to pay
restitution of $1,939,529.27.
On appeal, Walter-Eze raises challenges to her conviction
and sentence on the following grounds: (1) a conflict of
interest created by the district court when it conditioned an
adjournment on counsel’s paying jury costs and witness fees
violated her Sixth Amendment right to counsel, and (2) the
district court erred (a) in refusing to grant defense counsel’s
morning-of-trial request for a continuance; (b) in giving a
deliberate ignorance instruction; (c) in instructing the jury on
the burden of proof; (d) in calculating the loss under United
States Sentencing Guideline (“U.S.S.G.”) § 2B1.1(b)(1);
(e) in applying a leadership role under U.S.S.G. § 3B1.1(a);
and (f) in calculating restitution. Because we conclude that
none of these claims is meritorious, we affirm.
BACKGROUND
I. Pre-Trial Continuances
Walter-Eze was initially represented by a court-appointed
attorney for whom the district court granted three separate
trial continuances, on June 27, 2014 (continuing trial from
July 1, 2014, to November 12, 2014), on November 4, 2014
(continuing trial to January 13, 2015), and on January 7, 2015
(continuing trial to March 3, 2015). In granting the last
continuance, the district court found that counsel had not set
forth any good cause for failing to be prepared for trial and
found that counsel had not been diligent in handling the case.
Nonetheless, in the interest of justice, the district court
granted the third continuance, admonishing the parties that
“you’re going to have a really hard time” convincing the
court to continue the trial any further.
6 UNITED STATES V. WALTER-EZE
After three continuances over nearly eight months and
only two weeks before trial, Walter-Eze filed a motion on
February 17, 2015, to substitute in Christopher Darden and
Oma Nkele as counsel. On February 18, 2015, the district
court held a hearing on the motion. During this hearing, the
district court expressed concern that Walter-Eze’s last-minute
request to change attorneys was an attempt to delay trial even
further. The district court therefore requested that before
being substituted in, new counsel guarantee that they would
be prepared to proceed on the current trial date, or at the
latest, March 10, 2015. Although at first asserting that she
would need another three months in order to deal with the
over 21,000 pages of documents at issue, Nkele made an
express commitment that she and the firm of Christopher
Darden would be prepared to try the case no later than March
10, 2015. On this representation, the district court allowed
the substitution, retained the existing trial date of March 3,
2015, and instructed counsel to let it know if they needed the
extra week until March 10, 2015. On February 25, 2015,
Walter-Eze filed a Motion to Continue Trial and the district
court continued trial to March 10, 2015.
II. Conflict of Interest
On the morning of the first day of trial, March 10, 2015,
Walter-Eze filed an Emergency Motion to Continue Trial.
Appearing in court, defense counsel requested a continuance
from March 10, 2015, to April 7, 2015, due to Nkele’s
inability to prepare for trial as a result of an illness and
alleged problems with the discovery materials. The district
court reminded counsel of their prior representation that they
would be prepared to try the case on March 10. The district
court also expressed suspicion that Walter-Eze had used the
substitution of counsel and other events in the preceding
UNITED STATES V. WALTER-EZE 7
month as a delaying tactic, knowing that this was the only
way it would agree to another continuance. Based on the
events that had transpired, the district court found that
defense counsel had made misrepresentations to the court.
The district court nonetheless cautioned counsel that if
they were unprepared, it was their duty to not proceed and
trial would be continued to April 28, 2015, conditioned on
counsel’s paying the costs incurred by the continuance,
including witness and jury fees, which totaled approximately
$3,600. Alternatively, the district court stated that if counsel
could affirm that they could adequately represent their client,
trial would commence that day and no fees would be
assessed. Darden expressed his concern that the proposed
fees might require reporting to the California State Bar
Association.1 The district judge replied that, because he
understood the reporting rule to only apply to sanctions, he
would characterize the costs as fees if that would help avoid
the issue. Recognizing the difficult position that counsel was
in, the district court instructed counsel to discuss the matter
before making their decision. After further discussion—and
an initial statement that counsel were not prepared to try the
case—Darden stated that he would be prepared to proceed but
proposed that the district court empanel the jury that day
(March 10), and then continue trial for two days. During the
two days, Darden stated that he would familiarize himself
with Nkele’s portion of the case in the event she became
unavailable due to physical limitations. Based on Darden’s
representation that he would be prepared to proceed on March
1
California law requires an attorney to report to the Bar Association
“[t]he imposition of judicial sanctions against the attorney, except for . . .
monetary sanctions of less than one thousand dollars.” Cal. Bus. & Prof.
Code § 6068(o)(3).
8 UNITED STATES V. WALTER-EZE
12, 2015, the district court granted the fifth continuance of
trial to March 12, 2015.
III. Evidence at Trial
At trial, witnesses called by the government testified to a
five-year scheme run by Walter-Eze through her company
Ezcor-9000 (“Ezcor”) to fraudulently bill Medicare and
Medi-Cal for durable medical equipment (“DME”) provided
to patients who had no need for the devices.2 Recruiters
would be paid kickbacks to find patients and doctors would
be paid for prescriptions. Among the witnesses called were
Wilmer Guzman and Elder Aguilar, workers for Walter-Eze,
who explained the illegal kickback scheme and the provision
of the DME; Dr. Edna Calaustro, who was paid by Ezcor to
write prescriptions for unnecessary devices; and several
beneficiaries (or their relatives) whose receipt of unnecessary
devices served as the predicates for each of the substantive
claims in Counts 2 through 6 of the indictment. The federal
and state investigators who worked on the Ezcor case also
testified.
Walter-Eze testified in her own defense. No other
witnesses were called by the defense.
The majority of the government’s evidence at trial
pertained to one type of DME in particular—power
wheelchairs—for which Medicare paid a particularly high
rate of reimbursement and which, in order to be prescribed,
required doctors to determine that their patients had such
2
Medi-Cal is California’s Medicaid program serving low-income
individuals, which will reimburse the DME supplier up to 20 percent of
the maximum allowable amount after Medicare pays.
UNITED STATES V. WALTER-EZE 9
limited mobility that they lacked the ability to perform
activities of daily living in the home. Over 50% of the
$3,432,776 of claims that Walter-Eze submitted to Medicare
and Medi-Cal through Ezcor were for these high-value power
wheelchairs and wheelchair accessories. The fraudulent
claims were not limited to these items, but included
additional DME, such as hospital beds and knee and back
braces, which accounted for an additional 33% of Ezcor’s
business. Walter-Eze would pay recruiters such as Guzman
kickbacks for each prescription that they brought in to Ezcor;
the kickback amount would vary based on the reimbursement
value of the piece of DME. Accordingly, the highest
kickbacks were paid for power wheelchair prescriptions,
followed by hospital beds, and knee and back braces. From
January 2007 through early March 2012, Ezcor submitted
$3,432,776 in reimbursement claims to Medicare and was
paid $1,866,261. During this same period, Ezcor submitted
claims to Medi-Cal totaling $89,011 and was paid $73,269.
Walter-Eze denied that she paid kickbacks to recruiters,
instead characterizing them as commissions paid to
independent contractors. She also denied paying any money
to Dr. Calaustro for prescriptions.
IV. Jury Instructions
During the charging conference, the government
requested a deliberate ignorance instruction based on
Guzman’s testimony that he told Walter-Eze that Medicare
beneficiaries were only accepting the power wheelchairs
because Guzman was offering them money, to which
Guzman said Walter-Eze replied “I don’t care. Just do what
you have to do.” The district court replied that, “if that’s
what she said, that’s part of the conspiracy,” and thus refused
10 UNITED STATES V. WALTER-EZE
to give that instruction. Based on this ruling, the
government’s summation focused on Walter-Eze’s actual
knowledge of the fraud, and the defense’s summation
centered almost entirely on the argument that Walter-Eze was
a naïve businesswoman who unwittingly became involved
with unsavory characters who were violating the law. After
the defense completed its summation, the government
renewed its request for the deliberate ignorance instruction,
and the district court explained that, while it had previously
believed that the instruction would not be relevant,
“defendant’s theory in argument makes it relevant” because
“after argument, the issue as to whether or not [Walter-Eze]
was simply careless is directly in front of the Court.”
Defense counsel argued that the instruction was not
appropriate. The district court disagreed and instructed the
jury regarding deliberate ignorance using Model Criminal
Jury Instruction 5.7.
V. Sentencing
The district court calculated Walter-Eze’s sentencing
range to be 97 to 121 months. In reaching this result, the
district court found an intended loss of more than $2.5 million
pursuant to U.S.S.G. § 2B1.1(b)(1) and also found that
Walter-Eze was the leader of a scheme involving five or more
participants pursuant to U.S.S.G. § 3B1.1(a). The district
court sentenced Walter-Eze to 97 months in prison to be
followed by a three-year term of supervised release, and
ordered her to pay restitution of $1,939,529.27, which
consisted of the $1,866,260.62 of payments Ezcor received
from Medicare and the $73,268.65 it received from Medi-Cal.
UNITED STATES V. WALTER-EZE 11
DISCUSSION
I. Conflict of Interest
The Sixth Amendment entitles criminal defendants to the
effective assistance of counsel. To establish that counsel’s
representation was constitutionally defective, a defendant
must show both that counsel’s performance was deficient in
that it “fell below an objective standard of reasonableness”
and prejudice; namely, that there was a reasonable probability
that but-for counsel’s unprofessional errors, the result of the
proceedings would have been different. See Strickland v.
Washington, 466 U.S. 668, 688–94 (1984). An exception to
this general rule applies where “counsel is burdened by an
actual conflict of interest.” Id. at 692. In such cases, where
it is often “difficult to measure the precise effect on the
defense of representation corrupted by conflicting interests,”
the Supreme Court has held that prejudice is presumed. Id.
Walter-Eze argues that the district court created a conflict
between her and her counsel Darden by offering Darden the
alternative of obtaining a requested continuance but paying
fees and potentially facing some form of reprimand from the
state bar or forgoing the continuance and avoiding the fees
and possible sanctions. She asserts that a continuance would
have been in her interest but was against Darden’s personal
interests, and thus amounted to a conflict. Because counsel
declined the continuance and began trial without having
reviewed all the discovery, subpoenaed or spoken with
potential defense witnesses, or prepared jury instructions, she
claims her defense was compromised. She argues that Cuyler
v. Sullivan, 446 U.S. 335 (1980), dictates that this Court
presume that she was prejudiced by the “actual conflict,” and
must therefore vacate her conviction.
12 UNITED STATES V. WALTER-EZE
This case thus requires this Court to decide whether, after
the Supreme Court’s decision in Mickens v. Taylor, 535 U.S.
162 (2002), Sullivan—which set out the conditions under
which a court should presume prejudice upon a showing of an
actual conflict—applies to the circumstances of this case.
Assuming without deciding that Sullivan’s rule of presumed
prejudice as a matter of law can extend to a case of a
pecuniary conflict, we hold that under the facts presented,
Sullivan does not control this case. Accordingly, under the
traditional analysis dictated by Strickland, Walter-Eze must
demonstrate that she was prejudiced by her counsel’s failure
to obtain the longer continuance which, on this record, she
has failed to do.
1. Actual Conflict
“A claim that trial counsel had a conflict of interest with
the defendant is a mixed question of law and fact and is
reviewed de novo by the appellate court.” United States v.
Nickerson, 556 F.3d 1014, 1018 (9th Cir. 2009). In Sullivan,
a case where the alleged conflict of interest was based on
counsel’s joint representation of multiple co-defendants, the
Supreme Court found that if a defendant can show that his
counsel operated under an “actual conflict of interest
adversely affect[ing] his lawyer’s performance”—i.e. that
counsel “actively represented conflicting interests”—the
client need not demonstrate that he was prejudiced by the
attorney’s conflict. 446 U.S. at 350.
“An actual conflict need not be a direct conflict, and it
need not be established separately from adverse effect.
Instead, an actual conflict ‘is a conflict of interest that
adversely affects counsel’s performance.’” Hovey v. Ayers,
458 F.3d 892, 908 (9th Cir. 2006) (quoting Mickens, 535 U.S.
UNITED STATES V. WALTER-EZE 13
at 172 n.5) (internal citation omitted). “There is an actual,
relevant conflict of interests if, during the course of the
representation, the defendants’ interests do diverge with
respect to a material factual or legal issue or to a course of
action.” Sullivan, 446 U.S. at 356 n.3. In other words, an
“actual conflict” is “a conflict that affected counsel’s
performance—as opposed to a mere theoretical division of
loyalties.” Mickens, 535 U.S. at 171. The inquiry is
accordingly fact specific and does not rely on the
characterization or type of conflict presented: an “actual
conflict is defined by its impact” on counsel’s representation.
Hovey, 458 F.3d at 908.
To establish an “adverse effect” a defendant must show
“that some plausible alternative defense strategy or tactic
might have been pursued but was not and that the alternative
defense was inherently in conflict with or not undertaken due
to the attorney’s other loyalties or interests.” United States v.
Wells, 394 F.3d 725, 733 (9th Cir. 2005) (quoting United
States v. Stantini, 85 F.3d 9, 16 (2d Cir. 1996)); see also
McClure v. Thompson, 323 F.3d 1233, 1248 (9th Cir. 2003)
(noting that to establish an adverse effect, a defendant “must
demonstrate that his attorney made a choice between possible
alternative courses of action that impermissibly favored an
interest in competition with those of the client”).
A showing of “adverse effect” is not the same as showing
prejudice under the Strickland analysis. United States v.
Miskinis, 966 F.2d 1263, 1268 (9th Cir. 1992). As this Court
has explained, “overwhelming evidence of guilt might . . .
make almost impossible a showing that a relatively minor
error resulted in actual prejudice. But such evidence would
be completely irrelevant to an inquiry whether the same error,
if caused by an actual conflict of interest, showed an adverse
14 UNITED STATES V. WALTER-EZE
effect on counsel’s performance.” United States v. Hearst,
638 F.2d 1190, 1194 (9th Cir. 1980). Accordingly, “[t]he
strength of the prosecution’s case is not relevant to whether
counsel’s performance was adversely affected.” United
States v. Mett, 65 F.3d 1531, 1535 (9th Cir. 1995). Rather,
“[t]o establish that a conflict of interest adversely affected
counsel’s performance, the defendant need only show that
some effect on counsel’s handling of particular aspects of the
trial was ‘likely.’” Miskinis, 966 F.2d at 1268 (emphasis
added); see also Lockhart v. Terhune, 250 F.3d 1223, 1231
(9th Cir. 2001) (clarifying that to show an adverse effect, a
defendant need “only to meet the lower standard of showing
that ‘the attorney’s behavior seems to have been influenced’
by the conflict” (quoting Sanders v. Ratelle, 21 F.3d 1446,
1452 (9th Cir. 1994))). That is to say, a defendant need not
“show[] actual harm,” but just “actual conflict.” United
States v. Finlay, 55 F.3d 1410, 1415 (9th Cir. 1995).
When faced with a defendant’s claim that her counsel
operated under an actual conflict, “[t]he central question that
we consider in assessing a conflict’s adverse effect is ‘what
the advocate [found] himself compelled to refrain from
doing’ because of the conflict.” Lockhart, 250 F.3d at 1231
(alteration in original) (quoting United States v. Allen,
831 F.2d 1487, 1497 (9th Cir. 1987)) (internal quotation
marks omitted). This and other circuits have found that a
conflict has adversely affected counsel’s representation in
cases where, as a likely result of the conflict, counsel failed
to put on certain defenses and witnesses, Miskinis, 966 F.2d
at 1268, failed to explore the possibility of a plea agreement,
Mannhalt v. Reed, 847 F.2d 576, 582–83 (9th Cir. 1988), or
failed to seek a continuance despite having taken the case
only eight days earlier, United States ex rel. Duncan v.
O’Leary, 806 F.2d 1307, 1315 (7th Cir. 1986).
UNITED STATES V. WALTER-EZE 15
There are two bases for finding a conflict here: the
imposition of the fees themselves, and the risk of a bar
investigation and sanctions as a result of the fees. Without
deciding whether such conflicts can amount to an “actual
conflict” for the purposes of Sullivan’s presumption of
prejudice, we hold that under the circumstances present here,
both the threat of fees and the threat of potential sanctions
created a conflict of interest that adversely affected counsel’s
performance.
2. Pecuniary Conflict
As this Circuit has made clear, the mere fact that counsel
has a profit motive in a representation is insufficient to show
that counsel’s interests came in direct conflict with those of
the client. “Lawyers almost always undertake representation
of clients because of their desire to profit from the
representation . . . . The fact that an attorney undertakes the
representation of a client because of a desire to profit does not
by itself create [a] direct ‘actual’ conflict of interest.” Bonin
v. Calderon, 59 F.3d 815, 826 (9th Cir. 1995). Similarly, the
fact that in a pro bono case a lawyer may have to pay expert
witness fees does not without more raise a conflict of
constitutional dimension when such witnesses are not
retained. Williams v. Calderon, 52 F.3d 1465, 1473 (9th Cir.
1995). If differences and commonplace disagreements
between client and counsel over costs amounted to “actual
conflicts” under Sullivan, “the rule would become hopelessly
unworkable. As human beings, attorneys always have
interests of their own independent of those of their clients.”
Bonin, 59 F.3d at 827. Thus, courts have held that as a
general matter, there is a “presumption that the lawyer will
subordinate his pecuniary interests and honor his primary
professional responsibility to his clients in the matter at
16 UNITED STATES V. WALTER-EZE
hand.” United States v. Jeffers, 520 F.2d 1256, 1265 (7th Cir.
1975).
This Court has nonetheless recognized instances wherein
an attorney’s financial interests do result in a conflict with
their client’s interests at trial. Although ultimately finding
that no conflict existed, we noted in Bonin that an “actual”
conflict does arise where circumstances “squarely place[] the
interests of the client in opposition to those of the attorney,
and [are] likely to compromise a reasonable attorney’s ability
to comply with his legal and ethical obligation to represent
his client with undivided loyalty.” 59 F.3d at 827; see also
Hearst, 638 F.2d at 1193 (remanding for a hearing where
defendant claimed that her counsel had a conflict of interest
because his publication rights to her story led him to, among
other things, fail to seek a continuance). That is, the
presumption of ethical behavior that we afford to attorneys
must necessarily fade where, as it is argued here, counsel
explicitly favors his own pecuniary interests above his
client’s interests.
3. Threat of Sanctions Conflict
As a general matter, the threat of sanctions can influence
an attorney’s conduct at trial; indeed, that is often their
express purpose. See, e.g., In re DeVille, 361 F.3d 539, 553
(9th Cir. 2004) (describing the purpose of sanctions as “to
deter repetition of the conduct by the offending person or
comparable conduct by similarly situated persons” (quoting
Fed. R. Civ. P. 11 Advisory Committee’s Note to 1993
amendment)).
Although this Court has recognized the potential power of
sanctions, it is not the case that a court necessarily creates a
UNITED STATES V. WALTER-EZE 17
conflict of interest between an attorney and their client any
time the court issues or threatens to issue sanctions. In most
cases, a court’s imposition of sanctions can often help to
better align the interests of a deficient attorney with those of
their client by incentivizing counsel to handle the case with
greater care. Nonetheless, Mickens’ directive that “an actual
conflict is defined by its effect on counsel” requires courts to
consider “the impact the conflict had on [counsel’s]
performance.” Alberni v. McDaniel, 458 F.3d 860, 871 (9th
Cir. 2006). The existence of a conflict must therefore be
determined on a case-by-case basis, and where a threat of
sanctions would instead serve to divorce counsel’s interests
from those of their client, an actual conflict would exist.
4. Darden’s Conflict
In this case, the conflict was concretely manifest in real
time, as Darden was called upon to choose between being
fined and potentially facing a bar investigation or going to
trial even though he and his co-counsel repeatedly indicated
on the record that they were unprepared. For this reason, the
government is wrong to assert that Darden was faced with
only a “possible” conflict. In fact, the existence and impact
of the conflict could not have been clearer.
Even ignoring Darden’s vague protest that he was
“conflicted” by the choice being put to him, he made plain to
the district court that his decision was influenced by the
pressures imposed by the fees and potential sanctions: “If I
were forced to try the case, then I would try the case. If I
were—if it came down to sanctions or try the case, I would
try the case.” Darden thus perceived the district court’s
proffered alternatives not so much as affording him a choice,
but “compelling” him to try the case before he was fully
18 UNITED STATES V. WALTER-EZE
prepared, rather than face the district court’s stiff fines. Nor
was this dilemma unapparent to the district court.
Immediately after indicating that he would impose fees if
counsel insisted on a continuance, the trial judge offered
counsel time to consider his decision, noting that, “I
appreciate and I feel sorry for the bind that you’re in here,”
and that “it’s a tough, tough area that you’re in right now and
a tough decision that you have to make.” And after hearing
for the first time that obtaining a continuance for his client
would require him to incur fines, Darden protested that this
could require him to report to the state bar, adding that he has
“worked awfully hard, and my family . . . .” Finally, while
acknowledging that he had the responsibility to “protect [his]
client’s rights,” he complained that to subordinate his own
interests to those of his client’s in this case was “a sharp
sword to fall on.”
Ultimately, this led Darden to arrive at the compromise
that the district court accepted: that the district court would
choose the jury that day (Tuesday) and then continue the trial
until Thursday afternoon, to afford Darden the opportunity to
“catch up on the other part of the case that I’m not familiar
with and be prepared to go forward.” Therefore, unlike in
Bonin or Williams, where the Court found an undifferentiated
and abstract interest in saving money insufficient to create an
“actual” conflict, this case exhibits a definite and precisely
articulated conflict that even according to the district court
created a divergence between counsel’s and Walter-Eze’s
interests.
As a result of the conflict, Darden’s representation of
Walter-Eze was adversely affected. Not only did the conflict
lead Darden to forgo the plausible alternative tactic of
accepting the district court’s offer of a longer continuance,
UNITED STATES V. WALTER-EZE 19
but Walter-Eze alleges that as a result of the failure to obtain
the lengthier continuance, counsel proceeded to trial without
having subpoenaed defense witnesses or having fully engaged
with the discovery materials. To establish that Darden’s
conflict was “adverse,” Walter-Eze need not show that these
shortcomings affected the outcome of the trial or even that
counsel would have cured these failures if given more time,
but only that they were the likely result of the conflict. See
Miskinis, 966 F.2d at 1268; Finlay, 55 F.3d at 1415. She has
adequately done so.
Moreover, the facts here indicate that counsel was very
concerned about the risk of bar reporting associated with the
district court’s imposition of costs, regardless of the how the
district court described them. It was counsel who first raised
the issue of reporting. Recognizing the legitimacy of the
concern and its impact on counsel’s decision whether to seek
a continuance, the district court suggested that counsel utilize
a brief recess to determine whether the fees would be
reportable, and to make his decision based on whatever he
learned. Contrary to the government’s contention, the fact
that the negative effect on the lawyer is only a possibility
does not make the conflict that arises out of counsel’s
apprehension of that risk merely “potential.”
The D.C. Circuit has held that an attorney-client conflict
existed where appellate counsel was being sued for
defamation by trial counsel for arguing on appeal that trial
counsel was ineffective. This led appellate counsel to fear
that in his continued representation of the appellant on
remand to the district court, he would argue trial counsel’s
errors less vigorously in order to protect himself against
additional defamation claims. United States v. Hurt, 543 F.2d
162, 166–67 (D.C. Cir. 1976). The D.C. Circuit determined
20 UNITED STATES V. WALTER-EZE
that, although the defamation suit was almost surely
meritless, appellate counsel was sincerely concerned about
the potential consequences. Finding that, in the mind of
counsel, “[t]he chance that the suit might be lost, though
small, had not abated” and that “[t]he stakes, measured by the
gravity of defamation of professional character, were high,”
the court held that “however counsel’s apprehensions might
appear to a disinterested observer, the record indulges only
the conclusion that to counsel they were very real.” Id.
The record in this case likewise demonstrates counsel’s
sincere concern regarding the potential of disciplinary
consequences affecting his professional reputation. That
sanctions might not be imposed did not mitigate the validity
and urgency of counsel’s contemporaneous concerns. To the
extent that a desire to avoid either the ultimate consequence
or the headache associated with determining and limiting the
extent of his exposure affected counsel’s decision-making
with regard to seeking the continuance, such considerations
self-evidently suffice to establish an “actual conflict” under
this Circuit’s precedent.
Because the district court’s ultimatum “squarely place[d]”
Darden’s interests “in opposition” to Walter-Eze’s and
explicitly “compromise[d Darden’s] ability to comply with
his legal and ethical obligation to represent his client with
undivided loyalty,” it created an “actual” conflict. Bonin,
59 F.3d at 827. This Court must therefore decide whether,
after Mickens and in light Sullivan’s reasoning, we should
presume prejudice requiring that Walter-Eze’s conviction be
vacated, or instead require that Walter-Eze establish that there
is a “reasonable probability that, but for” this conflict, “the
result of the proceeding would have been different.”
Strickland, 466 U.S. at 694. As is discussed below, under the
UNITED STATES V. WALTER-EZE 21
facts of this case, Walter-Eze must show that she was
prejudiced by this actual conflict, and because she is unable
to do so, we do not disturb the verdict.
5. Sullivan and Presumed Prejudice
In Mickens, the Supreme Court called into question the
application of a presumed prejudice rule to conflicts other
than those caused by the joint representation of two or more
defendants. 535 U.S. at 174–75; see also Earp v. Ornoski,
431 F.3d 1158, 1184 (9th Cir. 2005) (explaining that the
Mickens Court “cautioned that its own conflict jurisprudence
had not yet reached beyond joint representation”). The
Mickens Court noted that lower courts had applied Sullivan’s
presumed prejudice rule “unblinkingly to all kinds of alleged
attorney ethical conflicts,” “even” including alleged conflicts
involving counsel’s “personal or financial interests.”
Mickens, 535 U.S. at 174 (citations and internal quotation
marks omitted). The Mickens Court emphasized that
Sullivan required a showing that “counsel actively
represented conflicting interests,” which did not support the
expansive application to other sorts of conflicts or ethical
violations, such as conflicts between a client’s welfare and
counsel’s financial interests. Id. at 175–76.
Accordingly, this Circuit has noted that Mickens
“explicitly concluded that [Sullivan’s presumption of
prejudice] was limited to joint representation, and that any
extension of Sullivan outside of the joint representation at
trial context remained, ‘as far as the jurisprudence of [the
Supreme Court was] concerned, an open question.’” Foote v.
Del Papa, 492 F.3d 1026, 1030 (9th Cir. 2007) (quoting
Earp, 431 F.3d at 1184).
22 UNITED STATES V. WALTER-EZE
In Mickens, the Supreme Court explained that the
presumed prejudice rule was needed in situations of multiple
representations because of “the high probability of prejudice
arising from multiple concurrent representation, and the
difficulty of proving that prejudice,” but that “[n]ot all
attorney conflicts present comparable difficulties.” 535 U.S.
at 175. In the multiple representation context, “[o]nce an
actual conflict has been demonstrated, prejudice is presumed
since the harm may not consist solely of what counsel does,
but of ‘what the advocate finds himself compelled to refrain
from doing, not only at trial but also’ during pretrial
proceedings and preparation.” Sanders, 21 F.3d at 1452
(quoting Holloway v. Arkansas, 435 U.S. 475, 490 (1978));
see also Mickens, 535 U.S. at 168 (“The presumption [of
prejudice is] justified because joint representation of
conflicting interests is inherently suspect, and because
counsel’s conflicting obligations to multiple defendants . . .
make it difficult to measure the precise harm arising from
counsel’s errors.”); Strickland, 466 U.S. at 692 (“[I]t is
difficult to measure the precise effect on the defense of
representation corrupted by conflicting interests.”).
As the Supreme Court explained in Holloway, when
discussing the dangers inherent in cases of conflicting joint
representation:
[T]o assess the impact of a conflict of
interests on the attorney’s options, tactics, and
decisions in plea negotiations would be
virtually impossible. Thus, an inquiry into a
claim of harmless error here would require,
unlike most cases, unguided speculation.
UNITED STATES V. WALTER-EZE 23
435 U.S. at 491. In other words, where counsel represents
clients with conflicting interests throughout the trial, it is
impossible to pinpoint at what point or to what extent
counsel’s performance on behalf of one client was impaired,
and consequently impossible to determine what impact such
elusive defects had on the outcome of the trial. In such a
case, a court faced with an actual conflict has no recourse but
to assume that the defendant was prejudiced by counsel’s
dual representation.
In this case, however, “we do know precisely the impact
of any conflict on the trial,” Bergman v. Witek, 99 F. App’x
773, 775 (9th Cir. 2004) (Berzon, J., concurring)
(memorandum). It was Darden’s decision to forgo the extra
preparation that he could have been afforded by virtue of a
longer continuance in order to avoid the monetary penalties
and the risk of bar sanctions. Thus, even if Sullivan’s
presumption of prejudice can extend, as a matter of law,
beyond the case of multiple concurrent representations to the
type of circumstances implicating counsel’s financial
interests as are faced here, this is not a case where the
presumption applies. This case does not present an example
of a situation—present in the case of a joint representation—
where every interaction with or decision made by counsel is
tainted by the conflict. Rather, where, as here, the actual
conflict is relegated to a single moment of the representation
and resulted in a single identifiable decision that adversely
affected the defendant, the Supreme Court’s reasoning
regarding when prejudice should be presumed does not
control. See id.
As the Supreme Court clarified in Mickens, the presumed
prejudice rule was not intended “to enforce the Canons of
Legal Ethics, but to apply needed prophylaxis in situations
24 UNITED STATES V. WALTER-EZE
where Strickland itself is evidently inadequate to assure
vindication of the defendant’s Sixth Amendment right to
counsel.” 535 U.S. at 176. It follows that where a case is
sufficiently straightforward such that it can be resolved under
Strickland’s familiar performance-and-prejudice framework,
Sullivan’s rule of presumed prejudice does not apply.
Strickland articulates the standard normally employed when
assessing potential Sixth Amendment violations, and it
directs courts to require the defendant to demonstrate how
there is a reasonable probability that, but for this discrete
adverse act, “the result of the proceeding would have been
different.” 466 U.S. at 694. Accordingly, although Darden
operated under an actual conflict, Walter-Eze must
nonetheless show that Darden’s “defects in assistance [had a]
probable effect upon the trial’s outcome.” Mickens, 535 U.S.
at 166.
6. Prejudice
Walter-Eze cannot, on this record, carry her burden to
show that she was prejudiced by Darden’s actual conflict.
United States v. Petersen, 777 F.2d 482, 484 (9th Cir. 1985)
(per curium) (recognizing that defendants carry the burden of
showing prejudice). She lists a litany of errors supposedly
resulting from Darden’s unpreparedness: his failure to review
all of the government’s exhibits; his failure to prepare jury
instructions; his failure to complete a PowerPoint
presentation, resulting in the district court refusing to allow
it to be shown; his failure to secure the attendance of
witnesses at trial; and his failure to provide the government
with a timely list of witnesses and experts. However, with
this catalogue of errors, Walter-Eze has merely identified a
number of alleged deficiencies in counsel’s representation;
she has not identified the prejudice that resulted therefrom.
UNITED STATES V. WALTER-EZE 25
As the Supreme Court has reiterated, “[e]ven if a defendant
shows that particular errors of counsel were unreasonable . . .
the defendant must show that they actually had an adverse
effect on the defense.” Strickland, 466 U.S. at 693. Walter-
Eze has not even attempted to do so.
For instance, Walter-Eze has not provided any indication
of what her “witnesses would have testified to, or how their
testimony might have changed the outcome” of the trial.
United States v. Berry, 814 F.2d 1406, 1409 (9th Cir. 1987).
Nor has she indicated the detrimental effect, if any, of
counsel’s alleged failure to review all the exhibits or to
submit jury instructions. Regarding the exclusion of the
PowerPoint presentation, the record reflects that the
presentation was being prepared during trial for the purposes
of counsel’s closing argument, and it was excluded because
counsel failed to provide the final copy of the presentation to
the government by 10:00 p.m. on the night before the closing,
as the district court had required. There is no indication that
counsel’s failure to disclose the presentation on time was at
all related to the conflict of interest, and thus it cannot serve
as an example of prejudice resulting from the conflict. See
Strickland, 466 U.S. at 694 (requiring a showing that the
“specified errors resulted in the required prejudice”).
Where there is no showing concerning what evidence
could have been adduced to alter the outcome of the
proceeding, Walter-Eze cannot demonstrate the prejudice
necessary to succeed on an ineffectiveness claim on direct
appeal. See Berry, 814 F.2d at 1409.3
3
This Court’s review on direct appeal is limited to the trial record
developed below. (Fed. R. App. P. 10(a) (“The following items constitute
the record on appeal: (1) the original papers and exhibits filed in the
26 UNITED STATES V. WALTER-EZE
II. Walter-Eze’s Continuance Request
A district court’s decision to deny a motion for a
continuance is reviewed for abuse of discretion. United
States v. Nguyen, 262 F.3d 998, 1002 (9th Cir. 2001).
Walter-Eze argues that the district court abused its discretion
by denying her morning-of-trial request for a continuance.
The government responds that, to the contrary, the district
court did not deny counsel’s request because it offered (albeit
with the conditions discussed above) to continue the trial for
over a month and a half—until April 28—and ultimately
granted the two-day continuance that Darden requested.
Indeed, although Walter-Eze continues to press this challenge
in her Reply Brief, the brief opens by conceding that “[i]t is
true that the trial court did not deny defense counsel’s
continuance.” Because the district court not only offered to
grant the longer continuance that Walter-Eze requested
(which defense counsel rejected), but also ultimately gave a
shorter two-day continuance upon defense counsel’s request,
the district court plainly did not deny counsel’s request for a
continuance.
Even if this Court construes the district court’s
conditioned grant of the requested one-month continuance to
be effectively a denial of that request, this Court would still
find no abuse of discretion. The Supreme Court has
reiterated that “broad discretion must be granted trial courts
district court; (2) the transcript of proceedings, if any; and (3) a certified
copy of the docket entries prepared by the district clerk.”)). To the extent
that Walter-Eze believes she can substantiate her allegations of prejudice
through additional factual development beyond the record of the trial, the
procedurally proper way to do so is by collaterally raising a claim for
ineffective assistance of counsel under 28 U.S.C. § 2255. See, e.g.,
Massaro v. United States, 538 U.S. 500, 504–06 (2003).
UNITED STATES V. WALTER-EZE 27
on matters of continuances.” Morris v. Slappy, 461 U.S. 1,
11 (1983). This Court has therefore held:
When the defendant’s sixth amendment right
to counsel is implicated . . . a court must
balance several factors to determine if the
denial [of a continuance] was “fair and
reasonable.” Among the factors are: whether
the continuance would inconvenience
witnesses, the court, counsel, or the parties;
whether other continuances have been
granted; whether legitimate reasons exist for
the delay; whether the delay is the defendant’s
fault; and whether a denial would prejudice
the defendant.
United States v. Studley, 783 F.2d 934, 938 (9th Cir. 1986)
(quoting United States v. Leavitt, 608 F.2d 1290, 1293 (9th
Cir. 1979) (per curiam)). In Studley, the Court affirmed the
denial of a continuance even though it resulted in the
defendant being unrepresented at trial, because, for among
other reasons, the request for a continuance had not been
made in good faith and trial had already been continued
several times. Id. at 939; see also United States v. Garrett,
179 F.3d 1143, 1146–47 (9th Cir. 1999) (same where record
demonstrated the “patience and consideration” the district
court afforded to the defendant over a one-year period and the
district court stated that the motion for continuance was being
made to delay trial).
Here, after four continuances over nearly nine months,
Walter-Eze on the morning of trial sought a fifth continuance.
This request came after the district court had expressly
warned Walter-Eze and her counsel that it would only grant
28 UNITED STATES V. WALTER-EZE
her motion to substitute counsel if they represented that they
would be prepared to go to trial on the date it was set. When
Walter-Eze asked for another continuance on the morning of
trial, the district court noted that “we have witnesses that
come in again and again and again. They’re getting older.
There’s been inconvenience, all caused by the defense.”
Indeed, the government had advised the district court that Dr.
Calaustro had suffered a stroke and that her attorney indicated
that she would not be able to medically tolerate additional
travel to appear at trial at a later date. The district court also
explicitly noted its suspicion that the defendant herself was to
blame for the delays in the trial and that it perceived the last-
minute request to substitute counsel to be a part of these
“dilatory” practices. The district court further expressed its
doubt about the reasonableness of this additional request,
given that counsel was aware of the scope of the evidence
before taking the case and had been clearly warned by the
district court that it would not allow a substitution if counsel
could not be prepared by the day of trial. Finally, Walter-Eze
has not established that she was prejudiced by the alleged
failure to grant a continuance. Although Walter-Eze cites
deficiencies in counsel’s performance that she asserts
followed from the lack of a continuance, she has not shown
that any of them affected the outcome of the trial. See United
States v. George, 85 F.3d 1433, 1440 (9th Cir. 1996) (finding
no prejudice where defendant has not “shown how a
continuance would have assisted him”). This Circuit’s
precedent and an analysis of the Studley factors dictate that if
the district court’s actions are construed as in effect denying
a continuance, it did not abuse its discretion.
UNITED STATES V. WALTER-EZE 29
III. Deliberate Ignorance Instruction
Walter-Eze next argues that the trial court erred when
after denying the government’s initial request to instruct the
jury on “deliberate ignorance” and after the defense had
already delivered its closing argument under the assumption
that the instruction would not be given, the district court
reversed itself, agreed to give the instruction, and allowed the
government to argue deliberate ignorance in its rebuttal. We
review the decision to give a deliberate ignorance
instruction—also known as Jewell instruction, after United
States v. Jewell, 532 F.2d 697 (9th Cir. 1976) (en banc)—for
abuse of discretion. United States v. Heredia, 483 F.3d 913,
922 (9th Cir. 2007).
Walter-Eze makes two arguments related to the district
court’s decision. First, she argues that because the
government’s case-in-chief relied primarily on the claim that
Walter-Eze had actual knowledge of the healthcare fraud, the
deliberate ignorance instruction had no basis in the evidence,
created the risk that the jury would convict her based simply
on criminal negligence, and thus was improper. Second,
Walter-Eze contends that the timing of the district court’s
decision to give the instruction (after the defense had already
made its summation, but before the government’s rebuttal),
deprived Walter-Eze of the right to fully defend herself.
Neither argument has merit.
A Jewell instruction may be given “if the instruction is
‘supported by law and has foundation in the evidence.’”
Heredia, 483 F.3d at 922 (quoting Jones v. Williams,
297 F.3d 930, 934 (9th Cir. 2002)). Jewell’s “core holding”
was that, for the purposes of a criminal statute, an individual
without “positive knowledge” can be found to have acted
30 UNITED STATES V. WALTER-EZE
“knowingly” if the individual “consciously avoided”
obtaining actual knowledge. Id. at 918 (quoting Jewell
532 F.2d at 702). In deciding whether to give a Jewell
instruction, “in addition to an actual knowledge instruction,
the district court must determine whether the jury could
rationally find willful blindness even though it has rejected
the government’s evidence of actual knowledge. If so, the
court may give a Jewell instruction.” Id. at 922. It follows
that, if the record contains evidence to support a deliberate
ignorance instruction, it does not matter that the government
primarily relied upon a theory of actual knowledge. See
United States v. Ramos-Atondo, 732 F.3d 1113, 1120 (9th
Cir. 2013) (“[N]o established principle of law declares that
the deliberate ignorance instruction cannot be given unless
deliberate ignorance is the main thrust of the government’s
case-in-chief or closing argument. The law indeed is to the
contrary.”).
A review of the record shows that the district court acted
within its sound discretion in giving a deliberate ignorance
instruction. At trial, evidence was presented upon which a
reasonable jury could have concluded that even if Walter-Eze
did not know about the illegal kickbacks and healthcare fraud,
she deliberately failed to investigate while being aware of a
high probability of the fraud. Once the defense in their
summation articulated their theory of the case, i.e. that
Walter-Eze was caught up in other peoples’ schemes and had
no knowledge of the criminal conduct, the district court
rightly found that the defense had made the deliberate
ignorance charge relevant to the entire course of conduct.
In summation, in addressing the evidence that Dr.
Calaustro was paid by Walter-Eze to write bogus
prescriptions for power wheelchairs, the defense argued that
UNITED STATES V. WALTER-EZE 31
there was no evidence that Walter-Eze ever went to Northern
California to watch Dr. Calaustro examine a patient, denied
that she ever spoke with Dr. Calaustro, and asserted that “she
didn’t know” that Dr. Calaustro was “writing hundreds and
hundreds and hundreds of wheelchair prescriptions for a
hundred dollars each.” However, Brent Person, who works
for the Centers for Medicare and Medicaid Services, testified
that in his experience, “most physicians go their entire careers
and only prescribe one or two power wheelchairs,” but that
most of Ezcor’s power wheelchair prescriptions came from
just four physicians, each of whom were “prescribing
wheelchairs in the double-digits in only a few years.” Allison
Davis, a Special Agent for the Department of Health and
Human Services, testified that it was “unusual” and “defies
common sense” to see a DME supplier in Southern California
supply patients who live in Northern California.
Given the unusually high number of high-value
prescriptions that came from just four doctors, one of whom,
Dr. Calaustro, was located far from Ezcor’s offices, a
reasonable jury could find that Walter-Eze knew there was a
high probability that the referrals were being obtained
fraudulently but failed to investigate the matter to ascertain
the truth. See, e.g., United States v. Nicholson, 677 F.2d 706,
710–11 (9th Cir. 1982) (finding deliberate ignorance
instruction proper where the defendant remained willfully
ignorant of the nature of his activity after the circumstances
would “have put any reasonable person on notice that there
was a ‘high probability’ that the [conduct] was illegal”).
Walter-Eze’s additional contention that the instruction
was inappropriate because it could have led the jury to
convict based on simple negligence is unavailing. Walter-
Eze does not claim that the charge itself was an incorrect
32 UNITED STATES V. WALTER-EZE
statement of the law, and the charge makes plain that
negligence is not a sufficient basis for guilt. In Heredia, this
Court unequivocally rejected the argument that “the Jewell
instruction risks lessening the state of mind that a jury must
find to something akin to recklessness or negligence.”
483 F.3d at 924 (“Recklessness or negligence never comes
into play, and there is little reason to suspect that juries will
import these concepts, as to which they are not instructed,
into their deliberations.”).
Walter-Eze’s second claim is that she was denied “the
right to defend herself” because, in violation of Federal Rule
of Criminal Procedure 30(b)’s requirement that courts
“inform the parties before closing arguments how it intends
to rule on the requested instructions,” the district court only
decided to allow the deliberate ignorance instruction after the
defense had already delivered its summation. As an initial
matter, the district court correctly determined that defense
counsel did make arguments in his summation which made a
deliberate ignorance charge relevant, by asserting that
Walter-Eze did not know and had no reason to know about
her co-conspirator’s criminal conduct. Indeed, defense
counsel explicitly argued this point at length:
And if that person is taken to a licensed
physician, and there’s no indication that these
doctors were not licensed, and if that person
gives a true and honest medical history which
is then conveyed to my client, why should she
think it’s fraudulent? Why should she think
there’s no medical necessity? Why should she
be convicted of Counts 2 through 6? It is
ridiculous.
UNITED STATES V. WALTER-EZE 33
It was therefore only as a result of defense counsel’s
argument that the district court felt it necessary to allow the
government to articulate a deliberate ignorance theory. That
argument invited an explanation for why and how Walter-Eze
missed all the warning signs that fraud was occurring under
her watch.
But even if defense counsel did not have the opportunity
to directly address the instruction in his summation, Walter-
Eze was not prejudiced by this limitation. “Failure to comply
with [Federal Rule of Criminal Procedure] 30 is reversible
error . . . only if counsel’s closing argument was prejudicially
affected thereby,” meaning counsel “was unfairly prevented
from arguing his or her defense to the jury or was
substantially misled in formulating and presenting
arguments.” United States v. Foppe, 993 F.2d 1444, 1451
(9th Cir. 1993) (quoting United States v. Gaskins, 849 F.2d
454, 458 (9th Cir. 1988)). Walter-Eze has not indicated how
her counsel’s summation would have been different had he
known that the deliberate ignorance standard would apply.
See United States v. Scott, 642 F.3d 791, 798 (9th Cir. 2011)
(finding no prejudice where defendant does not articulate
“any way in which his closing argument would have been
different if the court had provided the instructions earlier”).
As noted above, defense counsel already had argued not only
that Walter-Eze did not know about her co-conspirators’
scheme, but also that she had no reason to know of it, such
that she should not be found guilty even under a deliberate
ignorance theory. Because the inability to make additional
argument to the jury did not “prevent [ ] defense counsel from
making a point essential to the defense” that he did not
already make, Walter-Eze was not prejudiced and the district
court did not abuse its discretion in adding the deliberate
ignorance instruction. United States v. Horton, 921 F.2d 540,
34 UNITED STATES V. WALTER-EZE
547 (4th Cir. 1990) (alteration in original) (quoting United
States v. Sawyer, 443 F.2d 712, 713 (D.C. Cir. 1971)).
Finally, defense counsel never asked the district court for
the opportunity to respond to the added instruction, which we
have previously found precludes a challenge upon appeal.
United States v. Fontenot, 14 F.3d 1364, 1368 (9th Cir.
1994); see also United States v. James, 998 F.2d 74, 79 (2d
Cir. 1993) (“Having failed to request additional argument and
having thereby deprived [the district court] of the opportunity
to correct any potential error, [defendant’s] argument on
appeal that Fed. R. Crim. P. 30 was violated because he was
never given the chance to reargue is without merit. . . .”).
IV. Burden of Proof Instruction
Walter-Eze next challenges the district court’s oral
recitation of a jury instruction. Because she did not object at
trial, this Court reviews for plain error, which requires a
showing that “(1) there is an error; (2) the error is clear or
obvious, rather than subject to reasonable dispute; (3) the
error affected [defendant’s] substantial rights, which in the
ordinary case means it affected the outcome of the district-
court proceedings; and (4) the error seriously affected the
fairness, integrity, or public reputation of judicial
proceedings.” United States v. Walls, 784 F.3d 543, 546 (9th
Cir.), cert. denied, 136 S. Ct. 226 (2015). “In reviewing jury
instructions, the relevant inquiry is whether the instructions
as a whole are misleading or inadequate to guide the jury’s
deliberation.” United States v. Anderson, 741 F.3d 938, 947
(9th Cir. 2013) (quoting United States v. Chao Fan Xu,
706 F.3d 965, 985 (9th Cir. 2013)).
UNITED STATES V. WALTER-EZE 35
When delivering its oral instructions on the elements of
the health care fraud conspiracy charge (Count 1), the district
court stated that “[i]n order for the defendant to be found
guilty of this charge, the defendant must—or the government
must prove each of the following elements beyond a
reasonable doubt.” Walter-Eze thus claims that the district
court thereby incorrectly placed the burden of proof beyond
a reasonable doubt upon the defendant. The argument is
meritless.
When considered as a whole with the remainder of the
district court’s instructions and the fact that the jury was
provided a copy of the correct written instructions, the oral
instruction did not constitute an error that “affected
substantial rights.” Both before and after the misstatement,
the district court read numerous other instructions to the jury
that correctly articulated that the government bore the burden
of proof. Here, the district court provided the jury members
with proper written instructions and explicitly—both before
reading the instructions, and later when the jury asked for
clarification—directed the jury to reference these instructions
during its deliberations. As such, the district court’s slip of
the tongue was unlikely to have misled the jury or affected
the outcome of the proceedings. See United States v. Soto,
519 F.3d 927, 932 (9th Cir. 2008) (per curiam); see also
United States v. Ancheta, 38 F.3d 1114, 1117 (9th Cir. 1994)
(finding jurors not confused by district court’s slip of the
tongue when reading oral instructions where they were
thereafter provided with proper written instructions).
36 UNITED STATES V. WALTER-EZE
V. Guideline Range Calculation
1. Intended Loss
Walter-Eze next argues that the district court erred when
it found based upon the total amount billed to Medicare and
Medi-Cal that the scheme involved an intended loss of more
than $2.5 million, adding an 18-point offense level increase
to Walter-Eze’s guideline calculation pursuant to section
2B1.1(b)(1) of the United States Sentencing Guidelines.
Walter-Eze argues that this overestimates her intended loss
because (1) she never actually expected that Medicare would
pay the full value of the claims, and (2) the government failed
to carry its burden to prove that all of Ezcor’s Medicare and
Medi-Cal claims were fraudulent. These arguments fail.
“A district court’s factual determinations, including the
amount of loss in cases of fraud, are reviewed for clear error.”
United States v. Popov, 742 F.3d 911, 914 (9th Cir. 2014).
“Clear error review is ‘significantly deferential’ and requires
us to accept the district court’s findings absent a ‘definite and
firm conviction that a mistake has been committed.’” Leavitt
v. Arave, 646 F.3d 605, 608 (9th Cir. 2011) (quoting Rhoades
v. Henry, 596 F.3d 1170, 1177 (9th Cir. 2010)). A district
court “need not make its loss calculation with absolute
precision; rather, it need only make a reasonable estimate of
the loss based on the available information.” United States v.
Zolp, 479 F.3d 715, 719 (9th Cir. 2007) (citing U.S.S.G.
§ 2B1.1 cmt. n.3(C)). “[A]ll that is required is that the
government prove the loss by a preponderance of the
evidence.” United States v. Torlai, 728 F.3d 932, 946 n.13
(9th Cir. 2013). Accordingly, in Popov, this Court ruled:
UNITED STATES V. WALTER-EZE 37
In health care fraud cases, the amount billed
to an insurer shall constitute prima facie
evidence of intended loss for sentencing
purposes. If not rebutted, this evidence shall
constitute sufficient evidence to establish the
intended loss by a preponderance of evidence.
However, the parties may introduce additional
evidence to support arguments that the
amount billed overestimates or understates the
defendant’s intent.
742 F.3d at 916.
Since Popov established this burden-shifting standard in
the Circuit, this Court has rejected claims similar to Walter-
Eze’s where the defendant does not present evidence at trial
or sentencing to support the assertion that the total amount
billed overestimated the defendant’s intent. See United States
v. Agbu, 640 F. App’x 613, 616 (9th Cir. 2016)
(memorandum); United States v. Adebimpe, 649 F. App’x
449, 452 (9th Cir.) (memorandum), cert. denied, 137 S. Ct.
317 (2016), and cert. denied sub nom. Abad v. United States
(U.S. Dec. 12, 2016); United States v. Rush, No. 13-50169,
2016 WL 7228826, at *2 (9th Cir. Dec. 14, 2016)
(memorandum). Thus, because Walter-Eze failed to provide
any evidence that she did not intend for Medicare and Medi-
Cal to reimburse her for the full $3.5 million (or, indeed, even
that she intended to be reimbursed for less than 72% of her
claims, which would still amount to $2.52 million), the
district court did not clearly err in relying upon the total
amount billed to determine intended loss.
Nor, we should add, do counsel’s arguments, unsupported
by any evidence at trial or sentencing, that Walter-Eze was
38 UNITED STATES V. WALTER-EZE
familiar with Medicare’s reimbursement practices or that she
did not expect to recoup the full billed amount suffice to rebut
this presumption. The Court therefore denies Walter-Eze’s
request that we remand to allow her the opportunity to present
the sentencing court with evidence of her knowledge of
Medicare’s reimbursement practices. Having already been
afforded such an opportunity, and having declined to pursue
it, Walter-Eze cannot now complain about this alleged
sentencing error. Cf. United States v. Visman, 919 F.2d 1390,
1394 (9th Cir. 1990) (holding that a defendant waives the
right to challenge sentence adjustments by failing to present
the issue in district court).
Walter-Eze further contends that even if the total amount
billed is used, the government did not carry its burden at trial
to show that all of the billed claims were fraudulent and
should be counted as part of the intended loss under § 2B1.1.
Although the government in presenting its case focused
heavily on power wheelchairs, it presented sufficient
evidence regarding the remainder of Walter-Eze’s business to
permit the district court to make an inference that most, if not
all, of Ezcor’s Medicare and Medi-Cal billing was tainted by
fraud.4 See, e.g., United States v. Yi, 704 F.3d 800, 807 (9th
Cir. 2013).
Although it was the government’s burden to prove
intended loss, Walter-Eze did not challenge the reasonable
4
The evidence at trial was not limited to power wheelchairs and their
accessories. Patients who received power wheelchairs were often
prescribed unneeded hospital beds and back and knee braces, which were
prescribed by the same cadre of corrupt doctors. Recruiters were also paid
kickbacks for these additional items. These items accounted for at least
another 33% of Ezcor’s business.
UNITED STATES V. WALTER-EZE 39
inferences drawn from the government’s proof. Despite
knowing that the Pre-Sentence Report’s (“PSR”) loss
calculations were based upon the view that all the sales were
fraudulent and being afforded an opportunity at
sentencing—three months after the trial—to rebut the
government’s case and establish how much of Ezcor’s
business was legitimate and untainted by the fraud, Walter-
Eze provided no evidence to counter the government’s case
or to further develop the record.5 Accordingly, the district
court did not clearly err in making the “reasonable estimate
. . . based on the available information” that over $2.5 of the
$3.5 million that Ezcor billed to Medicare and Medi-Cal was
connected to the fraud. See Zolp, 479 F.3d at 719.6
2. Enhancement for Scheme Involving Five or More
Participants
Walter-Eze also claims that the district court erred in
applying a four-point Guidelines enhancement for Walter-
Eze’s leadership role in a criminal activity involving five or
more people because the district court never made explicit
findings that the scheme involved five or more people.
Although Walter-Eze at sentencing denied that she was the
leader of the conspiracy, she never contested the conspiracy’s
size; we therefore review this newly raised contention under
5
While Walter-Eze argues that she was barred from introducing
evidence of her legitimate business activity by virtue of the government’s
successful motion in limine preventing such testimony or evidence, there
was nothing to prevent defendant from introducing that evidence as part
of the sentencing hearing. See U.S.S.G. § 6A1.3(a).
6
Because the district court did not err in determining the intended
loss, the Court need not address Walter-Eze’s request that a new judge be
appointed for resentencing.
40 UNITED STATES V. WALTER-EZE
the plain error standard. See United States v. Carvajal,
905 F.2d 1292, 1296 (9th Cir. 1990).
The Sentencing Guidelines provide for an offense level
enhancement of four points “[i]f the defendant was 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). As with other sentencing factors, the government
must establish the enhancement by a preponderance of the
evidence. United States v. Avila, 95 F.3d 887, 889 (9th Cir.
1996). At trial, the government proved by a preponderance
of the evidence that at least five individuals participated in
the healthcare fraud. Aside from Walter-Eze herself who
“may be included among the participants in the criminal
activity for purposes of section 3B1.1(a),” United States v.
Egge, 223 F.3d 1128, 1134 (9th Cir. 2000), the government
showed that Guzman, Dr. Calaustro, Jean Aves, and Judith
Estrella all participated in the scheme. Thus, even excluding
the other recruiters listed on Walter-Eze’s contact sheet, the
government presented sufficient evidence to support the
district court’s conclusion that the scheme involved at least
five participants.
Nor does the district court’s failure to expressly make this
finding on the record necessitate a remand for resentencing.
At sentencing, Walter-Eze challenged that she was a “leader”
of the scheme, but she did not contest the number of
participants involved; indeed she conceded that the
conspiracy consisted of “a number of members.” The PSR
calculated that “approximately 17 other patient recruiters”
were involved in the scheme, and defense counsel did not
object. Accordingly, the fact that Walter-Eze’s scheme
involved at least five individuals was not a disputed or
“controverted matter” before the district court at sentencing,
UNITED STATES V. WALTER-EZE 41
and thus did not trigger the court’s responsibility to make an
explicit finding on the record under Federal Rule of Criminal
Procedure 32(i)(3)(B). See United States v. Carter, 219 F.3d
863, 866 (9th Cir. 2000) (holding that except as where
required by what is now Rule 32(i)(3), “[a] finding that a
defendant is eligible for a sentence enhancement ordinarily
does not require specific fact-finding”). The four-point
enhancement was thus warranted and not plainly erroneous.
VI. Restitution Calculation
Walter-Eze relatedly argues that, due to its alleged error
in calculating the intended loss, the district court erred in
calculating the restitution amount. Because Walter-Eze raises
an objection to restitution for the first time on appeal, we
review for plain error. United States v. Van Alstyne, 584 F.3d
803, 819 (9th Cir. 2009).
For the same reasons discussed above in addressing
Walter-Eze’s challenges to the loss calculation, the district
court did not plainly err in determining that all of the
reimbursements that Walter-Eze received from Medicare and
Medi-Cal were fraudulently obtained and thus subject to
restitution under the Mandatory Victims Restitution Act,
18 U.S.C. § 3663A(a)(1) & (c)(1)(A)(ii). Walter-Eze did not
object to the district court’s restitution calculations either at
the sentencing hearing or in her pre-sentencing briefs. Given
the government’s evidence at trial, the PSR, and Walter-Eze’s
failure at sentencing to rebut the inferences raised therefrom,
the district court’s finding by a preponderance of the evidence
that all of Walter-Eze’s claims to Medicare and Medi-Cal
were fraudulent or tainted by fraud and subject to restitution
was not error. The district court reasonably ordered that
42 UNITED STATES V. WALTER-EZE
Walter-Eze repay $1,866,260.62 to Medicare and $73,268.65
to Medi-Cal.
CONCLUSION
To summarize, we hold: (1) Walter-Eze failed to establish
that she was denied her Sixth Amendment right to counsel
because, although she established a conflict of interest, she
failed to meet the prejudice prong of Strickland; (2) the
district court did not erroneously fail to grant a continuance;
(3) the jury instructions as a whole properly conveyed the
government’s burden of proof; (4) it was not error to give a
deliberate ignorance charge; (5) the district court properly
calculated loss under U.S.S.G. § 2B1.1(b)(1); (6) the district
court properly applied a leadership role enhancement
pursuant to U.S.S.G. § 3B1.1(a); and (7) the district court did
not err in calculating restitution based upon the entire amount
of reimbursements received by the defendant from Medicare
and Medi-Cal. Accordingly, we affirm.
AFFIRMED.
NGUYEN, Circuit Judge, concurring only in the judgment:
I join fully in the majority’s conclusions. But I write
separately because I fear that the majority’s reasoning could
create confusion in our case law.
I.
As the majority explains, as a general matter a defendant
must show “prejudice” under Strickland v. Washington,
UNITED STATES V. WALTER-EZE 43
466 U.S. 668, 694 (1984), to establish that counsel was
constitutionally defective. There is an exception, however,
when counsel is burdened by an “actual conflict of interest.”
Id. at 692. In such cases, prejudice is presumed. See Cuyler
v. Sullivan, 446 U.S. 335 (1980). As we have said in the past,
an “actual conflict” is defined as a “conflict of interest that
adversely affected counsel’s performance.” United States v.
Miskinis, 966 F.2d 1263, 1268 (9th Cir. 1992). Under our
case law, the term “actual conflict” is used in this context to
mean the sort of conflict that requires the presumption of
prejudice. See, e.g., Bonin v. Calderon, 59 F.3d 815, 826 (9th
Cir. 1995); Hovey v. Ayers, 458 F.3d 892, 908 (9th Cir. 2006)
(stating that an “actual conflict is defined by its impact”).
Here, the majority analyzes at length whether Walter-
Eze’s counsel was burdened by an “actual conflict” of
interest—or simply put, one that adversely affected his
performance—and answers resoundingly yes. See e.g. Op. at
15 (“[W]e hold that under the circumstances present here,
both the threat of fees and the threat of potential sanctions
created a conflict of interest that adversely affected counsel’s
performance.”); see also Op. at 20 (stating the circumstances
“self-evidently suffice to establish an ‘actual conflict’ under
this Circuit’s precedent”); see also Op. at 23 (describing the
conflict as “[an] actual conflict [] relegated to a single
moment of the representation and result[ing] in a single
identifiable decision that adversely affected the defendant”).
The majority’s conclusion that Walter-Eze’s counsel was
burdened by an actual conflict, one that adversely affected his
counsel’s performance, would appear to settle the matter
under our case law. As we have repeatedly held, if an actual
conflict exists that adversely affected counsel’s performance,
we must presume prejudice.
44 UNITED STATES V. WALTER-EZE
Yet the majority goes on to hold that after determining
that an “actual conflict” exists, it must then consider whether
to apply Sullivan presumed prejudice or the Strickland
standard for prejudice, ultimately deciding on the latter. This
sequencing is confusing. The majority crafts a new rule
without acknowledging our well-established precedent that
prejudice is presumed when an “actual conflict” adversely
affecting counsel’s performance exists. See, e.g., Hovey,
458 F.3d at 907–08; Earp v. Ornoski, 431 F.3d 1158, 1183
(9th Cir. 2005) (“In order to establish a . . . Sullivan
exception, the defendant must demonstrate that an actual
conflict of interest adversely affected his lawyer’s
performance” (internal quotation marks omitted)); United
States v. Wells, 394 F.3d 725, 733 (9th Cir. 2005) (holding
that if a defendant “demonstrate[s] that an actual conflict of
interest adversely affected his lawyer's performance . . .
prejudice is presumed,” citing Sullivan); United States v.
Rodrigues, 347 F.3d 818, 823 (9th Cir. 2003) (“prejudice is
presumed if a defendant demonstrates that his counsel labored
under an actual conflict of interest,” citing Sullivan (internal
quotation marks omitted)); see also, e.g., United States v.
Shwayder, 312 F.3d 1109, 1117 (9th Cir. 2002); Bonin,
59 F.3d at 825. Even though the majority’s conclusion
appears to satisfy the presumed prejudice test from Sullivan,
the majority instead concludes that Sullivan does not apply.
I find the majority’s approach difficult to reconcile with our
many cases on this subject.
II.
Here, I would hold that there was no “actual conflict” that
adversely affected counsel’s performance, and thus Sullivan’s
presumed prejudice rule does not apply. Perhaps our
precedents defining the term “actual conflict” to mean only
UNITED STATES V. WALTER-EZE 45
a conflict of interest that requires a presumption of prejudice
are confusing; there are certainly conflicts of interest that
look “actual” in the colloquial sense that do not merit the
application of Sullivan. The majority’s opinion, however,
will only confuse further still.
As I would find no “actual conflict” under Sullivan, like
the majority I would apply the prejudice standard from
Strickland and hold that Walter-Eze cannot show prejudice
due to the overwhelming evidence against her. 466 U.S. at
694.
I respectfully concur in the judgment.