United States v. Sandra Galvez ( 2010 )

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 07-10480 MAY 26, 2010
________________________ JOHN LEY
D. C. Docket No. 06-20322-CR-CMA CLERK
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
DIANA SOTTO,
Defendant-Appellant.
________________________
Appeals from the United States District Court
for the Southern District of Florida
_________________________
(May 26, 2010)
Before PRYOR and FAY, Circuit Judges, and QUIST,* District Judge.
QUIST, District Judge:
Defendant, Diana Sotto (Sotto), appeals her convictions and sentences on three
counts: (1) conspiracy to defraud the United States and to pay and receive health care
*
Honorable Gordon J. Quist, United States District Judge for the Western District of
Michigan, sitting by designation.
kickbacks, in violation of 18 U.S.C. § 371 (Count I); (2) conspiracy to commit health
care fraud, in violation of 18 U.S.C. § 1349 (Count II); and (3) conspiracy to launder
money, in violation of 18 U.S.C. § 1956(h) (Count V). Soto raises ten issues on
appeal. After review and oral argument, we affirm the convictions and sentences.
I. BACKGROUND
Sotto owned and ran All Medical Billing Solutions (All Medical), a company
that provided billing services to medical providers for Medicare and other health
insurances. Project New Hope, (PNH), a medical clinic, was a client of All Medical.
In September 2004, Luis Manuel Fernandez (Fernandez) and his wife, Maria Julia
Loriga (Loriga), assumed control of PNH in connection with a purchase of the clinic
financed, in part, by Sotto. At the time of the purchase Sotto, Fernandez, and Loriga
had been good friends for about five years. Sotto was instrumental in facilitating
Fernandez’s and Loriga’s involvement with PNH. In fact, although Sotto did not
manage the daily affairs of the clinic, she and her cousin, Miguel Libera, “call[ed] the
shots” for the business.
PNH’s business changed substantially following the sale, both with regard to
Medicare billings and the patient medical conditions. Prior to the sale, PNH had
billed Medicare less than $26,000 and received slightly more than $10,000, while in
the two weeks or so following the sale, PNH billed Medicare more than $262,000 and
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received approximately $125,000. Prior to the sale, none of PNH’s patients had
AIDS, while after the sale all of PNH’s patients were treated exclusively for AIDS.
Patients were given cash payments known as “candy,” typically in the amount
of $200, each time they went to the clinic, regardless of whether they received
treatment. Manuel Ivan Perez recruited patients for the clinic. Beatriz Fernandez, the
daughter of Fernandez and Loriga, worked as a receptionist and was in charge of
getting patient signatures on blank superbills1 that she then gave to Sandra Galvez,
the clinic’s nurse, to fill out. Galvez always completed the superbills, indicating that
the patient had received treatment, even when the patient was not treated.
After Fernandez became involved with PNH, PNH billed Medicare for
treatment of 45 individuals, all of whom had AIDS. In several instances, the
quantities of prescription drugs for AIDS infusion therapy in PNH’s bills far
exceeded the quantities PNH actually purchased. For example, PNH billed for 1,183
vials of the drug Procrit but only purchased 74 vials. Similarly, in many instances,
claims that Sotto submitted to Medicare were for quantities far in excess of what was
shown on the treatment sheets and superbills that Galvez filled out and, in fact, were
far in excess of the amount that could possibly be administered to an individual.
1
A superbill is a billing form used by medical providers containing patient information and
diagnostic codes for submission to Medicare/Medicaid and insurance companies.
3
Moreover, some of the drugs billed as administered to the patients are infrequently
used to treat AIDS.
Sotto received 5% of all Medicare receipts as payment for her billing services,
but in addition, she received substantial amounts from PNH in the form of checks
made payable to sham corporations that Sotto owned or helped to form. One such
corporation, Falcon Transport, was set up by Francisco Falcon at the request of his
stepdaughter, Scarlet Duarte, and her friend, Sotto. Falcon Transport never
conducted any business, and Falcon, himself, never used the entity for any purpose,
business or otherwise; yet, Falcon Transport received checks from PNH totaling
$158,597. Francisco Falcon was unaware of these checks, although Sotto did give
him one check from Falcon Transport for $5,000. Records that Fernandez kept of
payments by PNH showed a January 5, 2005, payment to Sotto of $61,425, that
corresponded by date and amount with a check that PNH had written to Falcon
Transport. Scarlet Duarte, a friend of Sotto and employee of All Medical, used
Falcon Transport funds for personal expenditures and on several occasions asked
acquaintances to cash checks written on Falcon Transport’s account.
In September 2005 PNH ceased doing business, and a new company, Outreach
Medical Center (OMC), began operating a clinic in the same building where PNH
was located. Sotto formed OMC and identified Beatriz Fernandez as the owner on
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the corporate documents. OMC essentially picked up business where PNH left off,
with the same employees and same business practice of giving patients cash
payments. OMC submitted $242,000 in claims to Medicare and was paid
approximately $50,000.
Sotto and six other co-defendants were charged in a six-count superseding
indictment with various health care fraud and money laundering offenses. Soto was
charged with: (1) conspiracy to defraud the United States and to pay and receive
health care kickbacks, in violation of 18 U.S.C. § 371 (Count I); (2) conspiracy to
commit health care fraud, in violation of 18 U.S.C. § 1349 (Count II); and (3)
conspiracy to launder money, in violation of 18 U.S.C. § 1956(h) (Count III). Prior
to trial Sotto filed a motion to suppress all of the documents seized in a search of All
Medical’s offices on the grounds that the agents flagrantly disregarded the scope of
the warrant. Following a hearing, the district court granted the motion with respect
to the documents outside the scope of the warrant but denied the motion with regard
to the PNH documents.
Five of the co-defendants pled guilty prior to trial, and Sotto and Sandra Galvez
proceeded to trial. At the conclusion of the trial, the jury convicted Sotto and Galvez
on all counts. The district court sentenced Sotto to 121 months.
Sotto then filed this timely appeal.
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II. DISCUSSION
On appeal Sotto argues that: (1) there was insufficient evidence to support
Sotto’s convictions on Counts I, II, and V; (2) the district court erred in denying
Sotto’s motion to suppress all of the documents seized during the search of All
Medical; (3) the district court erred in denying Sotto’s motion to dismiss Count II as
multiplicitous; (4) the district court abused its discretion when it admitted Rule
404(b) evidence of uncharged bad acts committed by Sotto, including previously
uncharged conduct of money laundering for a medical clinic; (5) the district court
abused its discretion by admitting prejudicial hearsay and double hearsay statements
by Beatriz Fernandez regarding a conversation between her father and an unknown
male; (6) the admission of hearsay statements by Beatriz Fernandez regarding
statements by her father and an unknown male violated the Confrontation Clause; (7)
the cumulative effect of the district court’s evidentiary errors influenced the outcome
of the trial; (8) the district court erred by applying U.S.S.G. § 2S1.1(a)(2) to the
amount of money Sotto laundered; and (9) the district court erred by adding a two-
level enhancement for sophisticated means pursuant to U.S.S.G. 2S1.1(b)(3). We
review these arguments in turn.
A. Sufficiency of the Evidence
1. Counts I and II
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The district court denied Sotto’s Rule 29 motion for judgment of acquittal. We
review the denial of a motion for judgment of acquittal de novo. See United States
v. Hansen, 262 F.3d 1217, 1236 (11th Cir. 2001). “An appellate court must view the
evidence in the light most favorable to the government, drawing all reasonable
inferences and credibility determinations in favor of the verdict.” United States v.
Simpson, 228 F.3d 1294, 1299 (11th Cir. 2000) (citation omitted).
In Count I, Sotto was charged with conspiracy under 18 U.S.C. § 371 to
defraud the United States and violate 42 U.S.C. § 1320(a)-7b(b)(2)(B) by paying
kickbacks to Medicare patients. The elements of a conspiracy under § 371 include
(1) an agreement among two or more people to achieve an unlawful objective, (2) the
defendant’s knowing and voluntary participation in the agreement, and (3) an overt
act by a conspirator in furtherance of the agreement. See United States v. Adkinson,
158 F.3d 1147, 1153 (11th Cir. 1998). In Count II, Sotto was charged with
participating in a conspiracy, in violation of 18 U.S.C. § 1349, to execute a scheme
to defraud the Medicare program, which is a violation of 18 U.S.C. § 1347.
The government presented a plethora of evidence supporting Sotto’s
convictions. Sotto fronted half of the money to purchase PNH from its previous
owner and remained part owner of PNH while she worked closely with Fernandez.
Fernandez and Loriga had no medical training or experience prior to purchasing PNH
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but managed to bill Medicare $262,000 in their first sixteen days of operations, and
$10 million in their first year, while the previous owner billed Medicare for less than
$26,000 in five months of operations. Sotto furthered the fraud by inflating Medicare
claims for expenses above the amounts listed on PNH’s superbills. Moreover, in an
undercover tape recording, Sotto told Lori Sanchez, an employee of All Medical
whose husband was the corporate officer for one of Sotto’s sham corporations, that
PNH paid kickbacks to patients and that Sotto was behind the whole scheme.
Sotto’s role did not stop at this. Sotto also set up several sham companies,
including Dade County Medical Consulting, Medical Consultants of Miami, and
Seapointe Investments, through which Sotto cashed checks, evidenced by the ledger
found in the search of Fernandez’s home. Finally, Sotto prepared false invoices to
cover the money Sotto received from Unified Transport. Therefore, the government
presented more than sufficient evidence to convict Sotto of Counts I and II.
2. Count V
Sotto waived her right to challenge the sufficiency of the evidence supporting
the jury’s guilty verdict on Count V. In her Rule 29 motion, Sotto’s counsel stated,
“With respect to [Count V], I must honestly concede that in the light most favorable
to the Government, they have put forth sufficient evidence that I think a reasonable
and prudent jury could find the defendant guilty of that, so I’ll waive [Count V].”
8
(Tr. of Jury Trial Proceedings, docket no. 340, at 4.) Sotto thus failed to move for
judgment of acquittal on Count V at the close of evidence, which “‘operates as a
waiver of the motion for acquittal and forecloses any review of the sufficiency of the
evidence except where a miscarriage of justice would result.’” United States v.
Hernandez, No. 08-17207, 2010 WL 125847, at *4 (11th Cir. Jan. 14, 2010) (citing
United States v. Tapia, 761 F.2d 1488, 1491-92 (11th Cir. 1985)). A miscarriage of
justice results where “the evidence on a key element of the offense is so tenuous that
a conviction would be shocking.” Tapia, 761 F.2d at 1492 (citation and quotations
omitted).
In Count V, Sotto was charged with conspiring to (1) conduct or attempting to
conduct a financial transaction, (2) knowing that the property involved represented
the proceeds of some form of unlawful activity, (3) where the property was in fact the
proceeds of an unlawful activity, and either (i) intending to promote the carrying on
of the specified unlawful activity, or (ii) knowing that the transaction was designed
to conceal or disguise the nature, location, source, ownership, or control of the
proceeds of the unlawful activity, all in violation of 18 U.S.C. § 1956(h).
Sotto has not shown that the evidence on a key element of her conviction is so
tenuous that a conviction would be shocking and cause a miscarriage of justice.
Indeed, as Sotto stated in her Rule 29 motion, “The Government put on plenty of
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evidence . . . . They [the government] went through Scarlet Duarte, the bank accounts.
. . . They went through all the companies, every single one of those companies, charts,
everything went toward the money laundering counts.” (Tr. of Jury Trial
Proceedings, docket no. 340, at 6.) There was overwhelming evidence to convict
Sotto of Count V.
B. Motion to Suppress
“Because rulings on motions to suppress involve mixed questions of fact and
law, we review the district court’s factual findings for clear error, and its application
of the law to the facts de novo. Further, when considering a ruling on a motion to
suppress, all facts are construed in the light most favorable to the prevailing party
below.” United States v. Bervaldi, 226 F.3d 1256, 1262 (11th Cir. 2000) (citation
omitted).
“The Fourth Amendment requires that a warrant particularly describe the place
to be searched and the terms or person to be seized; exploratory rummaging is
prohibited.” United States v. Jenkins, 901 F.2d 1075, 1081 (11th Cir. 1990).
Generally, when law enforcement officers conduct a search that exceeds the proper
scope of a warrant, evidence obtained in that search may be excluded. United States
v. Henderson, 234 F.3d 494, 497 (11th Cir. 2000) (citing Horton v. California, 496
U.S. 128, 140, 110 S. Ct. 2301, 2310 (1990)). “Only the evidence seized while the
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police are acting outside of the boundaries of the warrant is subject to suppression.”
Id. Evidence that is properly within the scope of the warrant will be suppressed only
where there has been a “flagrant disregard” of the terms of the warrant. United States
v. Waugneux, 683 F.2d 1343, 1354 (11th Cir. 1982).
Sotto argued in her motion to suppress that all documents obtained in the
search of All Medical should be suppressed because by seizing documents for
medical clinics other than PNH, the agents deliberately and flagrantly exceeded the
scope of the warrant. The district court concluded that the agents did not use the
warrant as “pretext” for a general search, largely due to the nature of the search and
the manner in which the records were maintained in All Medical’s offices. The
district court also noted that the incriminating nature of the non-PNH documents –
disclosing evidence of similar AIDS infusion therapy schemes by other clinics – was
immediately apparent to the supervising agent in charge of the search. While the
district court agreed that the majority of the documents seized were outside the scope
of the warrant, it concluded that suppression of the PNH documents was unwarranted.
FBI Special Agent Huy Nguyen, the case agent in charge of the investigation
of Sotto and the other defendants, testified on behalf of the government at the
suppression hearing. At the time of the hearing Agent Nguyen had been investigating
health care fraud for about two years and had received training from medical
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professionals concerning indicators of health care fraud, particularly with regard to
AIDS infusion therapy. Agent Nguyen learned that AIDS infusion therapy is
generally medically necessary only for AIDS patients who are hospitalized and that
Medicare had deemed billings for Neupogen and Procrit – the two most common
drugs used in AIDS infusion therapy – as prone to fraud. Agent Nguyen also knew
that OMC began billing Medicare for AIDS infusion therapy shortly after PNH
ceased operations, that OMC employed the same personnel as PNH, and that OMC
had paid a kickback to at least one patient. Agent Nguyen explained that he, or his
agents, had to briefly examine all of the records to determine whether they obtained
anything relevant to the search. Some documents were in file cabinets labeled only
with a letter range, such as M-Z, while others were lying on counter tops, in cubby
holes, or scattered throughout the office. The agents found documents for OMC, a
company named New Hope Medical Center, and other companies, all of which billed
for AIDS infusion therapy and had superbills showing AIDS infusion therapy on a
frequency indicating fraud. Some of these documents disclosed the names of
beneficiaries known to have received kickbacks at other clinics. Given his training
and experience, Agent Nguyen deemed these document to be evidence of Medicare
fraud. Although Agent Nguyen interpreted the warrant as authorizing the seizure of
any billing records associated with All Medical, he took only those records relating
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to AIDS infusion therapy.
Nothing in the record suggests that the agents flagrantly disregarded the scope
of the warrant. Rather, in reviewing all of the documents, as required by the nature
of the search, the agents reasonably concluded that the disputed documents contained
evidence of the same type of criminal activity covered by the warrant. The agents
took only those documents believed to be related to the purpose of the search. We
find no error in the district court’s conclusion.
C. Multiplicity of Counts I and II
Sotto next argues that the district court erred in denying her motion to dismiss
either Count I or Count II as multiplicitous. While we ordinarily review de novo
whether counts in an indictment are multiplicitous, United States v. Smith, 231 F.3d
800, 807 (11th Cir. 2000), Sotto failed to raise her multiplicity challenge before trial.
Our cases hold that when a defendant fails to object to multiplicitous counts prior to
trial, she is procedurally barred from challenging her convictions. United States v.
Mastrangelo, 733 F.3d 793, 800 (11th Cir. 1984); Fed. R. Crim. P. 12(b). Sotto thus
waived any objection with regard to any alleged error in the indictment. Id.2
2
While Sotto is barred from objecting to her convictions, she is not barred from challenging
her separate sentences. United States v. Grinkiewicz, 873 F.2d 253, 255 (11th Cir. 1989). Although
Sotto does not challenge her separate sentences on appeal, any error would be harmless, because
Sotto received concurrent sentences on the counts she claims were multiplicitous. United States v.
Langford, 946 F.2d 798, 804-05 (11th Cir. 1991) (noting that “the principal danger in a
multiplicitous indictment . . . that the defendant may receive multiple sentences for a single offense”
is not a concern where “the sentences for multiplicitous counts run concurrently”).
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D. Evidentiary Issues
1. Confrontation Clause
Sotto argues that Beatriz Fernandez’s testimony about a conversation Beatriz
overheard between her father, Fernandez, and an unknown male violates the
Confrontation Clause. During this conversation, Fernandez said that he did not call
the shots at PNH, but that Sotto and her cousin, Miguel Libera, called the shots.
Fernandez’s statement is not testimonial in nature because the statement regarding
Sotto’s role at PNH was made in the dining room of Fernandez’s house with no
expectation that the statement would be repeated at any trial. Cf. United States v.
Underwood, 446 F.3d 1340, 1347 (11th Cir. 2006) (noting that the class of
“testimonial” statements includes a statement made under circumstances which would
lead the declarant to reasonably believe the statement would be available for use at
a later trial).
In any event, Sotto failed to object to the admissibility of Beatriz’s testimony.
We therefore review the admission of this testimony for plain error. Fed. R. Crim. P.
52(b). Cf. United States v. Jernigan, 341 F.3d 1273, 1289 (11th Cir. 2003) (applying
plain error review where defendant failed to object to the admission of a testimonial
statement to a police officer). For a judgment to be reversed for plain error, “(1) a
legal error must have been committed; (2) that error must be plain; and (3) the error
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must have affected the substantial rights of the appellant.” United States v. Pielago,
135 F.3d 703, 708 (11th Cir. 1998).
Assuming for the sake of argument that the admission of Beatriz’s testimony
was legal error, the overwhelming evidence of Sotto’s involvement in the PNH fraud
ensured that Sotto’s substantial rights were not affected. Therefore, Sotto’s
Confrontation Clause argument lacks merit.
2. Other Evidentiary Issues
Sotto’s other evidentiary issues also lack merit. Sotto argues for the first time
on appeal that the district court erred in admitting (1) evidence of her prior uncharged
conduct in money laundering for another medical clinic, and (2) the allegedly hearsay
testimony of Beatriz Fernandez that she heard her father tell someone that Sotto and
her cousin called the shots at PNH. Sotto further contends that the cumulative error
of these evidentiary rulings influenced the outcome of her trial.
“The cumulative error doctrine provides that an aggregation of non-reversible
errors (i.e., plain errors failing to necessitate reversal and harmless errors) can yield
a denial of the constitutional right to a fair trial, which calls for reversal.” United
States v. Baker, 432 F.3d 1189, 1223 (11th Cir. 2005) (quotation omitted). When
addressing a claim of cumulative error we must examine the trial as a whole to
determine whether the defendant was afforded a fundamentally fair trial. United
15
States v. Calderon, 127 F.3d 1314, 1333 (11th Cir. 1997).
Even assuming that the district court erred in admitting both pieces of
evidence, Sotto’s substantial rights were not affected. As discussed above, in an
undercover tape recording, Sotto told Sanchez that PNH paid kickbacks to patients
and that Sotto was behind the whole scheme. Sotto furthered the fraud by inflating
Medicare claims for expenses above the amounts listed on PNH’s superbills. Sotto
also set up several sham companies through which Sotto cashed checks, evidenced
by the ledger found in the search of Fernandez’s home. Finally, Sotto prepared false
invoices to cover the money Sotto received from Unified Transport. No alleged error,
alone or cumulatively, resulted in a fundamentally unfair trial.
E. Sentencing Issues
Sotto raises two sentencing issues. First, she argues that the district court erred
in relying upon subsection (a)(2), rather than (a)(1), of U.S.S.G. § 2S1.1 (the money
laundering guideline) in calculating her base offense level, thereby rendering her
sentences procedurally unreasonable. Second, she argues that the district court
plainly erred by applying a two-level enhancement for “sophisticated laundering,”
pursuant to U.S.S.G. § 2S1.1(b)(3).
With respect to guideline issues, we review “purely legal questions de novo,
a district court’s factual findings for clear error, and, in most cases, a district court’s
16
application of the guidelines to the facts with ‘due deference.’” United States v.
Rodriguez-Lopez, 363 F.3d 1134, 1136-37 (11th Cir. 2004). When reviewing a
district court’s application of a guidelines provision to the facts, we have held that
“due deference” is tantamount to clear-error review. See United States v. White, 335
F.3d 1314, 1318-19 (11th Cir. 2003). For a finding to be clearly erroneous, we “must
be left with a definite and firm conviction that a mistake has been committed.”
Rodriguez-Lopez, 363 F.3d at 1137 (internal quotation marks omitted).
1. The Money Laundering Guideline
A defendant convicted of a money-laundering offense is sentenced pursuant to
U.S.S.G. § 2S1.1. Under this guideline, a defendant who did not commit the
underlying offense from which the laundered money derived, or for whom the base
offense level of the underlying offense cannot be determined, is given a base offense
level of eight plus the number of offense levels in the U.S.S.G. § 2B1.1 loss table that
correspond to the value of the laundered funds. U.S.S.G. § 2S1.1(a)(2). On the other
hand, when a defendant committed the underlying offense and the base level for that
offense can be determined, a defendant is given the base offense level for that
underlying offense. U.S.S.G. § 2S1.1(a)(1).
The relevant commentary indicates that:
In order for subsection (a)(1) to apply, the defendant must have
committed the underlying offense or be accountable for the underlying
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offense under § 1B1.3(a)(1)(A). The fact that the defendant was
involved in laundering criminally derived funds after the commission of
the underlying offense, without additional involvement in the underlying
offense, does not establish that the defendant committed, aided, abetted,
counseled, commanded, induced, procured, or willfully caused the
underlying offense.
U.S.S.G. § 2S1.1, cmt. n.2(B).
Subsection (a)(2) applies to any case in which (i) the defendant did not
commit the underlying offense; or (ii) the defendant committed the
underlying offense (or would be accountable for the underlying offense
under § 1B1.3(a)(1)(A)), but the offense level for the underlying offense
is impossible or impracticable to determine.
U.S.S.G. § 2S1.1, cmt. n.3(A).
Sotto argued to the district court that the entire amount of the loss should not
be attributed to her because there was insufficient proof that she had been involved
in the Medicare fraud conspiracy from the beginning or that the entire amount of the
loss was reasonably foreseeable to her. The government argued that Sotto should be
held responsible for the entire loss, but that if the district court determined she should
not be held responsible for the full amount, the amount of the loss attributable to her
could not be determined and she should be sentenced under subsection (a)(2) based
on the amount of funds she laundered.
In adopting the government’s reasoning with regard to whether (a)(1) or (a)(2)
of U.S.S.G. § 2S1.1 applies, the district court determined that the amount of overall
Medicare fraud attributable to Sotto from the underlying offense could not be
18
determined and rejected Sotto’s argument that the amount of loss attributable to her
was the amount of money she laundered. Therefore, as the amount of loss could not
be determined, Sotto’s base offense level for the underlying offense of Medicare
fraud could not be determined. See U.S.S.G. § 2B1.1(a), (b). Because the base
offense level for Medicare fraud could not be determined, subsection (a)(1) was
inapplicable to Sotto’s case.
Accordingly, the district court properly applied subsection (a)(2) and
determined Sotto’s base offense level to be 22.
2. Sophisticated Laundering Enhancement
“[W]aiver is the intentional relinquishment or abandonment of a known right.”
United States v. Olano, 507 U.S. 725, 733, 113 S. Ct. 1770, 1777 (1993) (internal
quotation marks omitted); see also United States v. Lewis, 492 F.3d 1219, 1222 (11th
Cir. 2007) (en banc). We are barred from reviewing waived arguments. See Olano,
507 U.S. at 732–33, 113 S. Ct. at 1777. Sotto waived or abandoned her argument
regarding the “sophisticated laundering” enhancement for money laundering before
the district court. Accordingly, we affirm.
III. Conclusion
Sotto’s convictions and sentences are AFFIRMED.
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