United States v. Kenneth Karow ( 2018 )

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 14-14689
________________________
D.C. Docket No. 9:11-cr-80106-KAM-17
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
JOEL ANTONIO SIMON RAMIREZ,
Defendant,
KENNETH KAROW,
HERMANN J. DIEHL,
HAL MARK KREITMAN,
Defendants-Appellants.
________________________
Appeals from the United States District Court
for the Southern District of Florida
________________________
(January 30, 2018)
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Before WILLIAM PRYOR, MARTIN, and BOGGS, ∗ Circuit Judges.
MARTIN, Circuit Judge:
Kenneth Karow, Hermann Diehl, and Hal Kreitman appeal their convictions
and sentences imposed after a jury found them guilty of mail fraud; conspiracy to
commit mail fraud; money laundering; and conspiracy to commit money
laundering. After careful consideration, and with the benefit of oral argument, we
affirm Mr. Karow’s and Mr. Diehl’s convictions and sentences. We also affirm
Mr. Kreitman’s convictions but vacate his sentence and remand for further
proceedings.
I. BACKGROUND
Florida law requires all car insurance policies to include personal injury
(“PIP”) coverage. See Fla. Stat. § 627.730 et seq. Each car insurance policy has a
minimum of $10,000 of PIP coverage per person involved in an accident,
regardless of fault. See id. § 627.736(1). After the insured person has paid his co-
pay and deductible, the PIP coverage pays 80% of all reasonably necessary
medical expenses, subject to certain conditions. See id. § 627.736(1)(a).
A group of friends from Pinar del Rio, Cuba, all living in South Florida,
wanted to take advantage of Florida’s PIP coverage. They opened several clinics
in South Florida, beginning in October 2006. These clinics intentionally
∗
Honorable Danny J. Boggs, United States Circuit Judge for the Sixth Circuit, sitting by
designation.
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maximized patients’ medical expenses to the mandatory PIP coverage amount.
Patients were recruited for the scheme in two ways. Sometimes, the conspirators
found people who had been involved in legitimate car accidents. Other times, they
used recruiters who found people to stage accidents. The recruiters and the
participants in the staged accidents would get kickbacks for their work. The pay
varied, depending on how many passengers were in the staged accident, because
PIP coverage is per person. The pay also varied based on which insurance
company insured the participant, because certain companies paid out claims faster
and more easily than others. The average rate for recruiting two participants in an
accident was $4,500. The drivers in these “accidents” would agree in advance on
where and how to get in an accident. Sometimes they damaged the cars in
advance. For example, an informant for the FBI videotaped one of these stagings.
In this video, a recruiter used a sledgehammer on the participants’ cars in a parking
lot. Then, the participants drove onto the road, stopped their cars, and called the
police to report the “accident.”
Regardless of whether a recruited participant was in a real or staged
accident, after the accident the recruit would go to one of the clinics in the scheme
to become a patient. At the clinic, the participants were coached on what to say to
the clinic’s chiropractor and the insurance company. They would then see a
chiropractor who routinely prescribed 35 to 40 therapy sessions to cure their
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injuries. This was just about the number of sessions needed to maximize the PIP
coverage of each patient. Patients also pre-signed a number of therapy session
forms so the clinic could bill claims for several sessions without actually seeing the
patient again. These “patients” were instructed to tell their insurance companies
that the clinic collected copays and deductibles that were never actually collected
and that each therapy session lasted over an hour, which they hadn’t.
Mr. Karow, Mr. Diehl, and Mr. Kreitman were all chiropractors involved in
this scheme. Mr. Karow’s and Mr. Diehl’s roles in the scheme, however, grew in
light of some provisions of Florida law. Florida regulates health care clinics in the
state through the Florida Agency for Health Care Administration (“AHCA”). Fla.
Stat. § 400.9905. Generally, health care clinics are required to have a license from
the AHCA in order to bill insurance companies. The licensing process is quite
extensive, and requires inspections and background checks for the owner, medical
director, financial officer, all medical practitioners, and anyone who has contact
with clients or client funds. It also requires any “nonimmigrant aliens” with an
ownership interest in the clinic to file a surety bond of at least $500,000. Id.
§ 408.8065(2). This requirement for a license does not apply to health care clinics
“wholly owned” by a licensed chiropractor. Id. § 400.9905(4)(g). These “wholly
owned” health care clinics can get a “certificate of exemption” from the AHCA.
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On October 1, 2007, Florida updated its PIP statutes. Compare Fla Stat.
§§ 627.736, 627.739 (2007), with id. §§ 627.736, 627.739 (2008). Among other
things, Florida law imposed a requirement that health care clinics be licensed
continuously for three years before they were allowed to bill insurance companies
for reimbursement under the PIP coverage. Id. § 627.736(1)(a). But the law again
provided for an exception for health care clinics “wholly owned” by a licensed
chiropractor. Id. Because of this legal framework under Florida law, the leaders of
the scheme looked for chiropractors to serve as “straw owners” for their clinics.
Mr. Karow was the straw owner for Florida Therapy & Rehab Center,
Franco Chiropractor Center, and New York Medical & Rehab Center. He also
owned and operated his own clinic, the Karow Chiropractic Center. He allowed
two of the scheme’s leaders to run a “back clinic” out of the Karow Chiropractic
Center’s office space, but with a separate entrance, staff, and bank account. The
“back clinic” served primarily Spanish-speaking clients. Over time, the scheme’s
leaders became suspicious of Mr. Karow, fearing he was stealing money from the
back clinic’s reimbursements. For that reason, they closed the back clinic as well
as New York Medical & Rehab Center. They then opened Florida Mango
Massage Therapy Center in the same building where New York Medical had been
and set up a new arrangement with Mr. Karow. They sent accident participants to
Mr. Karow at Karow Chiropractic Center to be prescribed therapy at Florida
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Mango. Mr. Karow billed for the evaluation, and Florida Mango billed for the
prescribed therapies.
Mr. Diehl was the straw owner for Febre’s Medical Center and 36
Rehabilitation Center. He signed a fraudulent bill of sale saying he paid $200 to
purchase Febre’s. The AHCA documentation for Febre’s, signed by Mr. Diehl,
said he was an “owner[] of a financial interest . . . and supervise[d] the business
activities and is legally responsible for . . . compliance with all federal and state
laws.” And he signed AHCA documentation for 36 Rehab with the same
language. In February 2009, Mr. Diehl signed another fraudulent bill of sale
saying he sold both Febre’s and 36 Rehabilitation to another codefendant who is
not part of this appeal.
Mr. Kreitman was not a straw owner. He first worked as an independent
contractor for AllCare Consultants, which is a company that provides chiropractic
staffing and placement services. AllCare placed him at three clinics that played a
part in the scheme: Universal Rehabilitation, 36 Rehabilitation, and Elite
Rehabilitation. After some time, he also began working directly for the owner of
Progressive Rehabilitation, who was yet another codefendant in this scheme, but is
not part of this appeal.
After a 24-day trial, the jury convicted Mr. Karow and Mr. Kreitman on all
counts, and Mr. Diehl on all but one count. Mr. Karow was convicted of 1 count
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of conspiracy to commit mail fraud, 48 counts of mail fraud, 1 count of conspiracy
to commit money laundering, and 11 counts of money laundering. He was
sentenced to 132-months imprisonment and 2 years of supervised release, and
ordered to pay $6,640,354.07 in restitution and an assessment of $6,100.
Mr. Diehl was convicted of 1 count of conspiracy to commit mail fraud, 2
counts of mail fraud, 1 count of conspiracy to commit money laundering, and 3
counts of money laundering. He was sentenced to 108-months imprisonment and 2
years of supervised release, and ordered to pay $1,685,345.01 in restitution and an
assessment of $700.
Mr. Kreitman was convicted of 1 count of conspiracy to commit mail fraud,
21 counts of mail fraud, 1 count of conspiracy to commit money laundering, and 2
counts of money laundering. He was sentenced to 96-months imprisonment and 2
years of supervised release, and ordered to pay $1,634,195.83 in restitution and an
assessment of $2,500.
II. SUFFICIENCY OF THE EVIDENCE
All three defendants challenge the sufficiency of the evidence for their
convictions. “We review both a challenge to the sufficiency of the evidence and
the denial of a Rule 29 motion for judgment of acquittal de novo.” United States v.
Chafin, 808 F.3d 1263, 1268 (11th Cir. 2015) (quotation omitted). “We examine
the evidence in the light most favorable to the government and resolve all
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reasonable inferences and credibility issues in favor of the guilty verdicts.” Id.
(quotation omitted and alteration adopted). This Court will not overturn a guilty
verdict nor disturb the denial of a Rule 29 motion unless no reasonable trier of fact
could find guilt beyond a reasonable doubt. Id.
A. MAIL FRAUD
To prove a conspiracy to commit mail fraud under 18 U.S.C. § 1349, the
government must prove beyond a reasonable doubt “(1) that a conspiracy [to
commit mail fraud] existed; (2) that the defendant knew of it; and (3) that the
defendant, with knowledge, voluntarily joined it.” United States v. Vernon, 723
F.3d 1234, 1273 (11th Cir. 2013) (quotation omitted). For the substantive mail
fraud charges under 18 U.S.C. § 1341, the government must prove beyond a
reasonable doubt: “(1) an intentional participation in a scheme to defraud a person
of money or property, and (2) the use of the mails in furtherance of the scheme.”
United States v. Hill, 643 F.3d 807, 858 (11th Cir. 2011) (quotation omitted).
All three defendants challenge the knowledge and intent elements of their
mail fraud and conspiracy to commit mail fraud convictions. Mr. Karow says “he
was an honest doctor” and that the only witness who directly linked him to the
conspiracy was one of his patients, Wilfredo Sauceda. Mr. Sauceda testified that
Mr. Karow told him where his pain was located, and that he had been told that Mr.
Karow was in on the conspiracy. Mr. Karow argues that Mr. Sauceda’s testimony
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alone was not enough to find him guilty of conspiracy to commit mail fraud. But
Mr. Sauceda’s testimony was not the only evidence the government presented
against Mr. Karow. Among other things, the government presented evidence that
Mr. Karow signed examination forms and prescribed therapies for patients he
never saw. A massage therapist who worked for Mr. Karow testified that Mr.
Karow gave him $6,000 to pay recruited patients. And his secretary participated in
two staged accidents and performed patient examinations that Mr. Karow later
signed as having performed himself. Under this Court’s precedent, knowledge of a
conspiracy as well as intent to commit mail fraud can be inferred from
circumstantial evidence of a scheme and the defendant’s conduct. United States v.
Bradley, 644 F.3d 1213, 1239 (11th Cir. 2011); United States v. Molina, 443 F.3d
824, 828 (11th Cir. 2006). On this record, we cannot say “no reasonable trier of
fact could find guilt beyond a reasonable doubt.” Chafin, 808 F.3d at 1268
(quotation omitted).
Mr. Diehl says he was an unwitting participant in this scheme. He argues
that his patient files show, contrary to the government’s assertions, that he did not
order standard courses of treatments for patients that were designed to maximize
PIP payments. Nevertheless, the government presented evidence that Mr. Diehl
admitted to an FBI agent that he had filled out therapy prescriptions designed to
“max [the PIP],” backdated forms, and routinely saw patients for only five
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minutes. Mr. Diehl also admitted to the agent that prescribing approximately 28 to
36 therapy sessions was “standard protocol” and that “he considered [backdating]
to be fraud.” Mr. Diehl said “he felt it was obvious that patients were just signing
for therapy and were not receiving [it]” and knew “there was no way the clinic
could handle the volume of therapies that were being prescribed.” Although Mr.
Diehl disputes the testimony of the FBI agent about his statements, the jury was
free to make its own credibility determinations and draw reasonable conclusions
from the evidence presented. United States v. Garcia, 447 F.3d 1327, 1334 (11th
Cir. 2006). On this record, we cannot say “no reasonable trier of fact” could
conclude Mr. Diehl knew about the conspiracy and intentionally participated in the
scheme. See Chafin, 808 F.3d at 1268 (quotation omitted).1
Mr. Kreitman also says he was an unknowing participant. He claims that he
worked at the fake clinics only because he was assigned to them by AllCare, and
that he never actually knew a conspiracy was going on. He also argues that while
any forms he signed without seeing patients, the similarities in treatment plans, and
his statements to law enforcement agents may be suspicious, such evidence fails to
show that he knowingly participated in the conspiracy. But again, the government
presented additional evidence that would allow a reasonable factfinder to conclude
1
Because we affirm on this theory of the government’s case, we need not and do not
address Mr. Diehl’s argument about the government’s alternative theory of the case, that his
convictions cannot stand because the Florida statutes the government alleged he violated are
constitutionally void for vagueness or should be interpreted using the rule of lenity.
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otherwise. The jury was shown photographs of Mr. Kreitman going into Elite
Rehab and leaving after one hour and ten minutes. One-half hour after he left, a
patient went in. Despite Mr. Kreitman and the patient not being there at the same
time, Mr. Kreitman signed an examination form and prescribed treatment for the
patient that was billed to AllState. Mr. Kreitman also admitted to an FBI agent that
he thought patients were being coached and paid. He told the agent that he
followed a “standard prescription” for all patients aimed at “trying to maximize the
$10,000 PIP limit.” He described things to the agent as “not on the up and up.”
On this record, we cannot say “no reasonable trier of fact” could conclude Mr.
Kreitman knew of and intentionally participated in the scheme. See Chafin, 808
F.3d at 1268 (quotation omitted).
The evidence was sufficient to support a jury finding that all three
defendants had knowledge of the mail fraud conspiracy and intentionally
participated in both it and the substantive mail fraud scheme. And the government
presented evidence that claim documentation in the conspiracy was frequently sent
to insurance providers through the U.S. mail. Our precedent provides that “[p]roof
of a routine practice of using the mail to accomplish a business end is sufficient to
support a jury’s determination that mailing occurred in a particular instance.”
United States v. Waymer, 55 F.3d 564, 571 (11th Cir. 1995). Viewing the
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evidence in the light most favorable to the government, we affirm the mail fraud
and conspiracy to commit mail fraud convictions of all three defendants.
B. MONEY LAUNDERING
To prove a conspiracy to commit money laundering under 18 U.S.C.
§ 1956(h), the government must prove: “(1) agreement between two or more
persons to commit a money-laundering offense; and (2) knowing and voluntary
participation in that agreement by the defendant.” United States v. Broughton, 689
F.3d 1260, 1280 (11th Cir. 2012). The underlying money laundering offenses
were charged in violation of 18 U.S.C. §§ 1956(a)(1)(A)(i), 1956(a)(1)(B)(i), and
1956(a)(1)(B)(ii). To prove money laundering, the government must show the
defendant (1) engaged in a financial transaction that (2) he knew involved funds
that were the proceeds of some unlawful activity, and (3) those funds were in fact
the proceeds of that unlawful activity. See 18 U.S.C. § 1956(a). Here, the
unlawful activity is mail fraud. In addition to these three requirements, the
government is required to show either: (1) the defendant intended to promote the
carrying on of the unlawful activity, see id. § 1956(a)(1)(A)(i); (2) the defendant
knew the transaction was designed to conceal the nature of the proceeds of the
unlawful activity, see id. § 1956(a)(1)(B)(i); or (3) the defendant knew the
transaction was designed to avoid a state or federal reporting requirement, see id.
§ 1956(a)(1)(B)(ii). These three types of money laundering are called promotion
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money laundering, concealment money laundering, and structuring transactions,
respectively.
The evidence was sufficient to support a jury finding that all three
defendants conspired to commit money laundering. In United States v. Azmat, 805
F.3d 1018 (11th Cir. 2015), we upheld a conviction for conspiracy to commit
promotion money laundering under facts similar to those offered at trial here. In
that case involving a “pill mill” scheme, we concluded that trial testimony
permitted the jury to infer that Azmat’s codefendants agreed to dispense controlled
substances for cash, which was then used to support further activities of the “pill
mill.” Id. at 1037–38. We also concluded that sufficient evidence had been
presented for the jury to find that Azmat had knowingly and voluntarily
participated in that agreement. Azmat knew patients paid the clinic in cash and
received his salary in cash. Although Azmat “may not have been aware of all of
the uses of the clinic’s proceeds, it was reasonable for the jury to infer that he knew
that the cash was used to pay salaries and cover the clinic’s operating costs.” Id. at
1038. We also found it reasonable for the jury to conclude that, because Azmat
had already agreed “to dispense medications outside the course of his usual
professional practice[,] . . . and by continuing to work and generate profits, Dr.
Azmat had knowingly joined a conspiracy to launder money, in which illegal
proceeds were used to ‘promote’ [the clinic]’s drug-dispensing activities.” Id.
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As in Azmat, the evidence introduced in the District Court would permit a
jury to determine that various individuals at the center of the conspiracy, including
Luis Ivan Hernandez, Maria Testa, Lazaro Vigoa Mauri, and Vladimir Lopez,
agreed to submit fraudulent insurance reimbursement claims and use that money to
pay the participants in the scheme, fund clinics, and pay the salaries of the
employees at the clinics where the chiropractors worked. The trial evidence was
also sufficient to permit a jury to find that Mr. Karow, Mr. Diehl, and Mr.
Kreitman knew that their salaries, as well as the expenses of the clinics, were
funded with the fraudulent insurance proceeds. Because all three codefendants
continued to work and generate profits knowing that fraudulent insurance proceeds
were being used to pay their salaries and clinic expenses, the jury could determine
that all three had joined the conspiracy to commit money laundering. See id.
Because the evidence was sufficient to establish that the chiropractors
participated in a conspiracy to commit promotion money laundering, the jury could
also find the chiropractors guilty of all of the substantive counts of money
laundering under the rule of coconspirator liability established by Pinkerton v.
United States, 328 U.S. 640, 66 S. Ct. 1180 (1946). “Under Pinkerton, each
member of a conspiracy is criminally liable for any crime committed by a
coconspirator during the course and in furtherance of the conspiracy, unless the
crime did not fall within the scope of the unlawful project, or was merely a part of
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the ramifications of the plan which could not be reasonably foreseen as a necessary
or natural consequence of the unlawful agreement.” United States v. Alvarez, 755
F.2d 830, 847 (11th Cir. 1985) (quotation omitted). In other words, a
coconspirator is liable for “all of the acts and foreseeable consequences of the
conspiracy.” United States v. Silvestri, 409 F.3d 1311, 1335 (11th Cir. 2005)
(emphasis and quotation omitted). This doctrine “has been applied to money
laundering conspiracy cases; a defendant who joins a money laundering conspiracy
may be found substantively liable for money laundering offenses committed by co-
conspirators.” Id. at 1336.
Under this theory, the evidence was sufficient to support a jury verdict for
the substantive money laundering counts involving paychecks written to Mr.
Karow, Mr. Diehl, and Mr. Kreitman. Evidence was introduced to establish that
the leaders of the conspiracy wrote the paychecks to ensure the chiropractors
would continue to serve as “owners” of the clinic, show up to work, and write
fraudulent prescriptions. Such payments were within the scope of the conspiracy
to commit money laundering because they paid the expenses of the clinics,
including the salaries of the employees, and thus, were designed to promote the
carrying on of the mail fraud scheme. 2
2
We asked for supplemental briefing on the question of whether there was sufficient
evidence to support the convictions for counts 80–83 in light of the Supreme Court’s decision in
United States v. Santos, 553 U.S. 507, 128 S. Ct. 2020 (2008). In that case, a plurality of the
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We also affirm the substantive money laundering counts that did not involve
paychecks to the three codefendants. Mr. Karow’s conviction for count 112
involved a check payable to Dagoberto Milian drawn on the New York Medical
checking account, signed by Vladimir Lopez. Evidence established that Mr.
Milian was a recruiter paid to bring in patients to the clinics and that he staged
accidents and participated in an accident himself. From this evidence, a reasonable
factfinder could infer that Mr. Milian was paid for his participation in the
conspiracy, with the intent to encourage him to continue participating in it and to
bring more patients into the clinics. Such a payment would be within the scope of
the conspiracy to commit promotion money laundering.
The evidence was also sufficient to support Mr. Karow’s convictions on
counts 87 and 96. Both counts involved checks for $9,000, payable to Maykel
Marquez, Vladimir Lopez’s brother in law. Count 87 involved a check drawn on
Supreme Court held that “proceeds” in the money laundering statute should be read to mean
“profits” not “receipts.” Id. at 514, 128 S. Ct. at 2025. Applying this definition would mean that
the payment of salaries and other essential expenses would not be sufficient to support a
conviction for money laundering. The year after Santos was decided, Congress amended the
money laundering statute to define “proceeds” as “gross receipts,” effectively superseding the
interpretation in Santos. Fraud Enforcement and Recovery Act of 2009, Pub. L. No. 111-21, § 2,
123 Stat. 1617, 1618 (codified at 18 U.S.C. § 1956(c)(9)). Counts 80–83 were based on conduct
that occurred between when Santos was decided and when the statute was amended. However,
prior panels of this Court have held that the narrower definition of “proceeds” set out in Santos
should only be applied to conduct relating to unlicensed gambling operations that took place
between when Santos was issued and the statute was amended. See United States v. Jennings,
599 F.3d 1241, 1252 (11th Cir. 2010); United States v. Demarest, 570 F.3d 1232, 1242 (11th Cir.
2009). Because our prior precedent requires us to confine Santos to the unlicensed gambling
context, we apply the broader definition of “proceeds” to this case, which includes the payment
of salaries. We therefore affirm counts 80–83 under the logic set out above.
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the New York Medical account, and count 96 involved a check drawn on the
account for the “back clinic” at Karow Chiropractic Center. Mr. Karow was a
signatory on both accounts but did not sign either check. Testimony established
that Mr. Marquez would cash checks for Mr. Lopez, and that the check that formed
the basis of count 87 was a check cashed on behalf of Mr. Lopez. Testimony also
established that at least once Mr. Marquez was paid for his participation in a staged
accident, but that the check in count 87 was not related to that activity. Both Mr.
Marquez and Mr. Lopez were involved in the underlying conspiracy, and sufficient
evidence was presented to allow the jury to find that the payments were made to
compensate either or both of them for their participation in the scheme and to
encourage them to continue participating. Because Mr. Karow is liable for all of
the acts and foreseeable consequences of the conspiracy, there was sufficient
evidence to support his convictions under these counts. Silvestri, 409 F.3d at 1335.
We therefore affirm the codefendants’ convictions on all of the money laundering
counts.
III. JURY INSTRUCTIONS
We review for an abuse of discretion the District Court’s refusal to give a
requested jury instruction. United States v. Tokars, 95 F.3d 1520, 1531 (11th Cir.
1996). This Court will reverse a conviction for the failure to give a requested jury
instruction only where the instruction: “(1) was correct, (2) was not substantially
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covered by a charge actually given, and (3) dealt with some point in the trial so
important that failure to give the requested instruction seriously impaired the
defendant’s ability to conduct his defense.” United States v. Dohan, 508 F.3d 989,
993 (11th Cir. 2007) (per curiam) (quotation omitted).
Three of Mr. Karow’s requested jury instructions were refused by the
District Court. The first was a “theory of defense” instruction. Mr. Karow’s
proposed instruction on his theory of defense emphasized the requirements that the
jury find “he knowingly and voluntarily participated in fraudulent conduct.” His
proffered instruction also said that “being a bad business manager” or “being a
joint signatory on a bank account” could not alone support the charges. Although
the District Court did not give Mr. Karow’s requested charge verbatim, it included
several instructions that expressly required the jury to find knowledge and
voluntary participation. We agree with the District Court that these other
instructions substantially covered Mr. Karow’s requested instruction.
Mr. Karow’s second requested instruction was a modified pattern instruction
about the “spillover effect” of codefendants’ statements. Mr. Karow asked the
District Court to add a clause to the standard Eleventh Circuit jury instruction. Mr.
Karow asked that the court say: “Any such [codefendant] statement is not evidence
about any other Defendant and cannot be used by you to infer knowledge or intent
of any other Defendant.” The District Court instead said: “Any such statement is
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not evidence about any other defendant.” We conclude that the given instruction
substantially covered Mr. Karow’s proposed instruction here as well.
Mr. Karow’s third request was for a “failure to record interviews”
instruction. This instruction pointed out that the FBI testimony about Mr. Karow’s
statements was based on the FBI agents’ recollections, as it is FBI policy not to
record interviews. The requested instruction told the jury to be cautious with this
testimony as a result of this failure to record. The District Court instead instructed
the jury to consider all the evidence cautiously, including “the circumstances under
which it was made.” We are aware of no legal requirement, nor has Mr. Karow
shown us one, that the FBI must record its interviews. Rather, it is the role of the
jury to weigh the credibility of witnesses on the basis of their testimony. The
District Court’s instruction substantially covered Mr. Karow’s requested
instruction. And in any event, we conclude the failure to give Mr. Karow’s
requested instruction did not seriously impair his ability to conduct his defense.
The District Court did not abuse its discretion with regard to these jury charges.
See Tokars, 95 F.3d at 1531.
IV. EVIDENTIARY CHALLENGE
We review for an abuse of discretion the District Court’s decision to admit
evidence under Federal Rule of Evidence 404(b). United States v. Phaknikone,
605 F.3d 1099, 1107 (11th Cir. 2010). Whether the District Court abused its
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discretion in admitting evidence of a prior bad act under Rule 404(b) is evaluated
with a three-part test:
First, the evidence must be relevant to an issue other than the
defendant’s character. Second, as part of the relevance analysis, there
must be sufficient proof so that a jury could find that the defendant
committed the extrinsic act. Third, the probative value of the evidence
must not be substantially outweighed by its undue prejudice, and the
evidence must meet the other requirements of Rule 403.
Id. (quotations and citations omitted). Rule 404(b) allows evidence of a
defendant’s prior bad acts to show “motive, opportunity, intent, preparation, plan,
knowledge, identity, absence of mistake, or lack of accident.” Fed. R. Evid.
404(b)(2).
Mr. Diehl challenges the testimony of one of the government’s witnesses,
Yoandra Marrero. Over Mr. Diehl’s objection, Ms. Marrero testified about Christ
Medical, a clinic she owned that was not named in the indictment. In addition to
the clinics in this case, Mr. Diehl also worked at Christ Medical. Christ Medical
employed an insurance fraud scheme similar to the one in this case, where patients
visited the clinic only a handful of times, but insurance companies were billed for
many more visits. The government introduced evidence that Mr. Diehl worked at
Christ Medical and told Ms. Marrero he would pay her $1,000 for each clinic she
referred him to. Ms. Marrero said she referred Mr. Diehl to several clinics. She
also testified that she taught Mr. Diehl how to run insurance fraud schemes.
Specifically, she told him how to schedule billing to minimize the chance of
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investigation and to list injuries to the extremities to maximize the rate at which
PIP would be exhausted. At Mr. Diehl’s request, however, the District Court did
read a limiting instruction about this testimony.
Mr. Diehl argues this testimony was not relevant to this case and
inadmissible under Rule 404(b). But applying our test from Phaknikone, we
conclude that the District Court did not abuse its discretion. First, this evidence
was relevant to an issue other than Mr. Diehl’s character: his intent and knowledge.
See Phaknikone, 605 F.3d at 1107; see also Fed. R. Evid. 404(b)(2). Indeed as we
have discussed, the government was required to prove knowledge and intent for all
of his charged offenses. Second, although Mr. Diehl concedes that witness
testimony can be sufficient to show the existence of a prior act, he disputes that the
record evidence does so. However, we conclude that Ms. Marrero’s testimony was
itself sufficient proof that Mr. Diehl committed the “extrinsic acts.” Third, the
probative value of this evidence outweighed any “undue prejudice.” See
Phaknikone, 605 F.3d at 1107 (quotation omitted). Mr. Diehl’s knowledge and
intent were key issues at trial, and this evidence spoke to those issues. The proof
this testimony offered outweighed any “undue” prejudice to Mr. Diehl from the
jury learning he had been involved in a similar scheme before. Considering the
“overall similarity between the extrinsic act and the charged offense,” as well as
the District Court’s limiting instruction, we cannot say the District Court abused its
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discretion. See United States v. Jernigan, 341 F.3d 1273, 1282 (11th Cir. 2003)
(quotation omitted).
V. MOTION TO SUPPRESS
The District Court’s denial of a motion to suppress involves mixed questions
of fact and law. We review de novo the District Court’s legal conclusions and its
findings of fact for clear error. United States v. Hollis, 780 F.3d 1064, 1068 (11th
Cir. 2015). We review the entire record in the light most favorable to the
prevailing party. Id. The voluntariness of a confession is a question of law, so it is
subject to de novo review. Hubbard v. Haley, 317 F.3d 1245, 1252 (11th Cir.
2003). We evaluate voluntariness under the totality of the circumstances. Id.
Mr. Kreitman argues the District Court erred when it denied his motion to
suppress statements he made to federal agents. He says the circumstances under
which he made his statements rendered them involuntary. In 2005 and 2011, Mr.
Kreitman worked as a cooperating witness for the FBI in investigations into
steroids and MDMA. Mr. Kreitman was not granted immunity for his assistance in
these investigations. But neither was he charged with any crime as a result of the
investigations and, in fact, the DEA paid him for his help. While working with the
FBI in 2011, Mr. Kreitman said he was interested in assisting the FBI with health
care fraud investigations. In 2013, FBI agents contacted Mr. Kreitman about this
case. They set up a meeting where he told them about his involvement in the
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clinics. The FBI then set up a second meeting, during which Mr. Kreitman
requested immunity and, to his surprise, was denied. Mr. Kreitman argues his
previous work with the government led him to believe he would not be prosecuted
for assisting with this case. In other words, he argues the FBI made him an
“implied promise.”
A confession is voluntary if “it is the product of the defendant’s free and
rational choice.” Harris v. Dugger, 874 F.2d 756, 761 (11th Cir. 1989). It may
“not be extracted by any sort of threats or violence, or obtained by any direct or
implied promises, or by the exertion of any improper influence.” Id. We have said
that “even a mild promise of leniency” can “undermine[] the voluntariness of a
confession.” United States v. Lall, 607 F.3d 1277, 1285 (11th Cir. 2010)
(quotation omitted). Our review of the record, however, shows no promises or
assurances were made to Mr. Kreitman that he would not be prosecuted. He
acknowledges as much. Neither does our review of the record show any “implied”
promises. Had the FBI agents explicitly lied to Mr. Kreitman, misrepresented their
authority, or given any indication (however slight) that he was safe from
prosecution, then the result here might be different. But on this record, we agree
with the District Court that, based on the totality of the circumstances, Mr.
Kreitman’s statements were voluntary.
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VI. GUIDELINES CALCULATIONS
We review de novo the District Court’s interpretation and application of the
Sentencing Guidelines but accept the court’s factual findings unless they are
clearly erroneous. United States v. Ford, 784 F.3d 1386, 1396 (11th Cir. 2015).
Mr. Kreitman challenges the procedural reasonableness of three of the District
Court’s determinations in calculating his guidelines range. We address each in
turn.
A. LOSS AND NUMBER OF VICTIMS
Mr. Kreitman first argues the District Court miscalculated the amount of loss
and number of victims under the United States Sentencing Guidelines
§ 2B1.1(b)(1) and (2). The District Court “needs only to make a reasonable
estimate of the loss amount . . . . because often the amount of loss caused by fraud
is difficult to determine accurately.” United States v. Medina, 485 F.3d 1291,
1304 (11th Cir. 2007) (quotation omitted). Estimates are permissible, but they
cannot be overly speculative. Id. “The amount of loss must be proven by a
preponderance of the evidence, and the burden must be satisfied with reliable and
specific evidence.” Id. (quotation omitted).
At sentencing, the government sought to hold Mr. Kreitman responsible for
$2,333,172.15 in loss. The District Court found Mr. Kreitman responsible for a
$1,634,195.83 loss to 30 victim insurance companies. Mr. Kreitman objected to
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this loss amount. While he conceded that it reflected the proceeds the clinics got
from insurance companies, he argued that it did not accurately reflect his conduct
because he was not the only chiropractor at the clinics. On appeal, Mr. Kreitman
raises this same argument and says he should be held responsible for much less
than this figure because he worked at the clinics only part time and other
chiropractors were responsible for substantial portions of the loss amount. In
particular, Mr. Kreitman argues that the District Court failed to make factual
findings “that misconduct on the part of other chiropractors was reasonably
foreseeable to Kreitman,” as it was required to under USSG § 1B1.3(a)(1)(B).
The District Court based its calculation of the loss amount and number of
victims on the testimony of a federal agent who examined clinic bank accounts and
PIP claim reimbursement information from insurance companies. The agent
presented spreadsheets showing the PIP claims for each insurance company. At
Mr. Kreitman’s request, the same agent produced a special calculation representing
the loss amount specifically for the time frame he worked at those clinics. The
agent acknowledged it was not possible to determine which chiropractor’s
submission resulted in each PIP payment. The District Court determined this was
sufficient to establish Mr. Kreitman’s loss amount because “[a]s a member of a
conspiracy he is held accountable for all of the loss that was generated during the
course of the conspiracy. So it’s all relevant conduct that is attributable to him.”
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This was an incorrect statement of the law. The Sentencing Guidelines
provide that a defendant is only responsible for “all reasonably foreseeable acts
and omissions of others in furtherance of the jointly undertaken criminal activity.”
USSG § 1B1.3(a)(1)(B) (2013). The Application Notes further state that
“[b]ecause a count may be worded broadly,” the jointly undertaken criminal
activity can be narrower than the scope of the entire conspiracy. Id. § 1B1.3, cmt.
n.2. In 2015, the Sentencing Commission amended Section 1B1.3 to state that a
defendant is responsible for all acts and omissions of others that were “(i) within
the scope of the jointly undertaken criminal activity, (ii) in furtherance of that
criminal activity, and (iii) reasonably foreseeable in connection with that criminal
activity.” USSG § 1B1.3(a)(1)(B) (2015). Because this amendment was
clarifying, it applies retroactively to Mr. Kreitman’s sentence. See United States v.
Presendieu, No. 15-14830, slip op. at *14 (11th Cir. Jan. 19, 2018). As a result,
when determining Mr. Kreitman’s accountability for the conduct of others, the
District Court should have (1) made “individualized findings concerning the scope
of criminal activity undertaken by [the] defendant” and (2) “determine[d]
reasonable foreseeability.” United States v. Hunter, 323 F.3d 1314, 1319 (11th
Cir. 2003) (quotation omitted).
Here, the District Court did not make individualized findings on the scope of
criminal activity undertaken by Mr. Kreitman, or whether the actions of the other
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chiropractors were reasonably foreseeable acts taken “in furtherance of the jointly
undertaken criminal activity.” See USSG § 1B1.3(a)(1)(B). Instead, the District
Court attributed a loss amount and number of victims to Mr. Kreitman merely
based on his participation in the conspiracy. This was clear error. We therefore
vacate Mr. Kreitman’s sentence and remand for the District Court to make
individualized factual findings in calculating the loss amount and number of
victims attributable to Mr. Kreitman.
B. ABUSE OF A POSITION OF TRUST OR USE OF A SPECIAL SKILL
Mr. Kreitman next argues the District Court erred by finding he abused a
position of trust or used a special skill under USSG § 3B1.3. We agree that Mr.
Kreitman’s conduct did not rise to an “abuse of trust.” See United States v.
Ghertler, 605 F.3d 1256, 1264 (11th Cir. 2010) (explaining that in the fraud
context, this enhancement applies “where the defendant is in a fiduciary, or other
personal trust, relationship to the victim of the fraud, and the defendant takes
advantage of this relationship to perpetuate or conceal the offense” (quotation
omitted)). In Ghertler, we said sentencing courts must be careful not to be “overly
broad” in applying this enhancement because all fraud involves some abuse of
trust. Id. (quotation omitted). Thus, we concluded, “there must be a showing that
the victim placed a special trust in the defendant beyond ordinary reliance on the
defendant’s integrity and honesty that underlies every fraud scenario.” Id.
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(quotation omitted). In Mr. Kreitman’s case, there was no showing made by the
government that Mr. Kreitman stood in a fiduciary relationship to the victim
insurance companies or that they placed special trust in him. In this case, “there is
no basis for concluding that he is ‘more culpable’ than any common fraudster.” Id.
at 1267.
On the other hand, Mr. Kreitman did use a special skill. The Guidelines
define a “special skill” as “a skill not possessed by members of the general public
and usually requiring substantial education, training or licensing.” USSG § 3B1.3
cmt. n.4. Mr. Kreitman does not contest that being a licensed chiropractor
qualifies him as possessing a “special skill.” Instead, he says that § 3B1.3 requires
he “used a special skill.” Id. § 3B1.3 (emphasis added). Mr. Kreitman points out
that the government’s position was that he often did not examine patients and that
when he did, he did so only in a perfunctory manner. He asks us to adopt the
approach used by the Sixth Circuit in United States v. Weinstock, 153 F.3d 272
(6th Cir. 1998), and to differentiate between his status as a chiropractor and using
his skills as one. Id. at 281. To the contrary, the government asks us to adopt the
Third Circuit’s approach from United States v. Tai, 750 F.3d 309 (3d Cir. 2014),
which views the use of a special skill as including any action that requires the
“skill and credentials [as] the means by which [a defendant] could participate.” Id.
at 318.
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We adopt the Sixth Circuit’s approach to interpreting USSG § 3B1.3. Our
reading of the word “use” does not by its plain language include refraining from
the use of one’s skills. See, e.g., Black’s Law Dictionary 1775 (10th ed. 2014)
(defining “use” as “[t]he application or employment of something”). But under
either definition, the record shows that Mr. Kreitman did indeed use his skills as a
licensed chiropractor. Mr. Kreitman admits he examined at least some patients and
prescribed them therapies. This necessarily required him to apply and employ his
skills, even if he was prescribing unnecessary therapies. We therefore affirm the
District Court on this issue.
C. SOPHISTICATED MEANS
Mr. Kreitman last argues the District Court improperly applied an
enhancement based on sophisticated means under USSG § 2B1.1(b)(10)(C). The
Guidelines define “sophisticated means” as “especially complex or especially
intricate offense conduct pertaining to the execution or concealment of an offense.”
Id. § 2B1.1 cmt. n.9(B). Also, “[t]here is no requirement that each of a defendant’s
individual actions be sophisticated in order to impose the enhancement. Rather, it
is sufficient if the totality of the scheme was sophisticated.” Ghertler, 605 F.3d at
1267.
Mr. Kreitman argues that the enhancement is inapplicable because he did not
use sophisticated means and because the use of sophisticated means by others was
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not reasonably foreseeable. We disagree. The scheme in this case involved a large
number of defendants operating a network of clinics. It included staging accidents;
recruiting patients; training patients; setting treatment schedules aimed at
maximizing benefits; completing extensive paperwork; and billing a large number
of insurance claims. It is hardly plausible for Mr. Kreitman to say that the
sophisticated means used by his co-conspirators were unforeseeable. On this
record, we agree with the District Court that this enhancement was appropriate.
VII. RESTITUTION
We review de novo the legality of a restitution order. United States v. Foley,
508 F.3d 627, 632 (11th Cir. 2007). We review for clear error the District Court’s
factual findings about the specific amount of restitution. Id.
Mr. Kreitman makes the same argument here as he did in his challenge to
the District Court’s calculation of the loss amount for which he was responsible
under the Guidelines. A restitution order can hold a defendant responsible for the
losses caused by the “reasonably foreseeable acts of others committed in
furtherance of the conspiracy.” United States v. Odom, 252 F.3d 1289, 1299 (11th
Cir. 2001). The District Court did not therefore clearly err and Mr. Kreitman
cannot prevail on this claim for the same reasons discussed before. We affirm the
restitution order.
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VIII. CONCLUSION
We affirm Mr. Karow’s and Mr. Diehl’s convictions and sentences for mail
fraud, conspiracy to commit mail fraud, money laundering, and conspiracy to
commit money laundering. We affirm Mr. Kreitman’s convictions but vacate his
sentence and remand for further proceedings.
AFFIRMED IN PART, VACATED AND REMANDED IN PART.
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