USCA11 Case: 22-12837 Document: 48-1 Date Filed: 12/19/2023 Page: 1 of 14
[DO NOT PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 22-12837
Non-Argument Calendar
____________________
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
ARMANDO VALDES,
Defendant-Appellant.
____________________
Appeal from the United States District Court
for the Southern District of Florida
D.C. Docket No. 1:21-cr-20590-KMW-1
____________________
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Before WILSON, LUCK, and HULL, Circuit Judges.
PER CURIAM:
After pleading guilty, Armando Valdes appeals his 60-month
sentence for health care fraud, in violation of
18 U.S.C. § 1347.
Valdes’s conviction and sentence arise out of his scheme to submit
millions of dollars in fraudulent medical claims to United
Healthcare and Blue Cross Blue Shield for intravenous infusions of
Infliximab, an expensive immunosuppressive drug. These
infusions, purportedly given to patients at Valdes’s medical clinic,
Gasiel Medical Services (“Gasiel”), were either not provided or
were medically unnecessary.
On appeal, Valdes argues that the district court erred by:
(1) applying a 22-level increase in his offense level under U.S.S.G.
§ 2B1.1(b)(1) because the loss amount exceeded $25 million;
(2) applying a two-level increase under U.S.S.G. § 2B1.1(b)(10)(C)
for using sophisticated means; (3) applying a two-level increase
under U.S.S.G. § 3B1.3 for abusing a position of trust or using a
special skill; and (4) ordering the forfeiture of his primary residence
as substitute property. After review, we affirm Valdes’s sentence.
I. LOSS AMOUNT
Under U.S.S.G. § 2B1.1(b)(1), a defendant’s offense level
increases with the amount of “loss” caused by the offense. In
Valdes’s case, his base offense level was increased by 22 levels
because the district court found that the loss amount was $38
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22-12837 Opinion of the Court 3
million, and thus more than $25 million, as provided in
§ 2B1.1(b)(1)(L).
A. U.S.S.G. § 2B1.1(b)(1)
Section 2B1.1(b)(1)(L) provides that a defendant’s base
offense level is increased by 22 levels if the loss from the fraud
offense was more than $25 million but less than $65 million.
U.S.S.G. § 2B1.1(b)(1)(L),(M). The commentary to § 2B1.1 defines
loss as the greater of either the actual loss, which is the “reasonably
foreseeable pecuniary harm that resulted,” or the intended loss,
which is the “pecuniary harm that the defendant purposely sought
to inflict.” Id. § 2B1.1 cmt. n.3(A)(i)-(ii). Intended loss includes
harm “that would have been impossible or unlikely to occur.” Id.
§ 2B1.1 cmt. n.3(A)(ii). Insurance fraud, in which the claim
exceeded the insured value, is cited as an example of impossible or
unlikely harm. Id.
The Guidelines do not require a precise determination of
loss. United States v. Barrington,
648 F.3d 1178, 1197 (11th Cir. 2011).
Instead, the district court need make only a reasonable estimate
based on the available information. Id.; see also U.S.S.G.
§ 2B1.1 cmt. n.3(C).
While the government has the burden to prove the loss
amount with specific, reliable evidence, the district court may
make its factual findings as to the loss amount based on, among
other things, evidence presented at trial or sentencing or on the
undisputed statements in the presentence investigation report
(“PSI”). United States v. Moran,
778 F.3d 942, 973 (11th Cir. 2015).
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We review a district court’s loss determination for clear error.
Barrington,
648 F.3d at 1197.
B. Analysis
Here, Valdes has not shown the district court’s loss amount
of $38 million was clear error. In his factual proffer and at his plea
hearing, Valdes admitted that through Gasiel, he submitted
approximately $33 million in fraudulent claims to United
Healthcare and approximately $5 million in fraudulent claims to
Blue Cross Blue Shield. Because there is a strong presumption that
those statements are true, United States v. Medlock,
12 F.3d 185, 187
(11th Cir. 1994), the district court could rely on them in
determining the loss amount.
Valdes contends some of the $33 million submitted to
United Healthcare was attributable to duplicate claims and
therefore should not have been included in the intended loss
amount. 1 Valdes also claims the intended loss amount “was the
30% contracted payment” under United Healthcare’s pricing
payment agreement. There are several problems with Valdes’s
arguments.
First, for purposes of the loss amount under § 2B1.1, the
intended loss includes unlikely amounts of pecuniary harm, such
1 Valdes has never disputed that the intended loss amount was the appropriate
measure of loss in his case or argued that the definition of loss in the Guidelines
commentary should not apply. He has merely argued that duplicate claims
should not be part of the intended loss because he did not intend them to be
paid.
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as claims that exceed the insured value. U.S.S.G. § 2B1.1 cmt.
n.3(A)(ii); United States v. Moss,
34 F.4th 1176, 1191-92 (11th Cir.
2022) (affirming district court’s use of the amount billed, rather
than the amount the defendant expected to be reimbursed, even
though it was unlikely the defendant would be paid the full billed
amount). Thus, even if United Healthcare was unlikely to
reimburse Valdes for the entire amount billed or for duplicate
claims, those claims were nonetheless properly included in the
intended loss amount.
Second, at the sentencing hearing, Valdes’s own fraud
analyst testified that, even accounting for duplicate claims, the total
loss amount was above $25 million, the threshold for the 22-level
increase in Valdes’s offense level. Further, Valdes did not present
any testimony or evidence at sentencing to support his assertion
that he intended United Healthcare to reimburse him only 30% of
the billed amount. 2 See Moss, 34 F.4th at 1192 (affirming where the
defendant did not point to any evidence, such as revenue
projections based on the actual reimbursable amount, showing he
intended to obtain less than the amount billed). Accordingly,
Valdes has not shown clear error in the district court’s
determination of the loss amount or its application of the 22-level
increase in Valdes’s offense level under § 2B1.1(b)(1).
2 Valdes himself did not testify.
Valdes’s expert testified about the duplicate
billing but not about an agreement with United Healthcare to reimburse only
30% of the amount billed.
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II. SOPHISTICATED MEANS ENHANCEMENT
Valdes also challenges the district court’s application of a
sophisticated means enhancement under U.S.S.G. § 2B1.1. Valdes
argues that his offense involved the largely repetitive act of billing
for a service that was not provided and was easily detectable.
A. U.S.S.G. § 2B1.1(b)(10)(C)
If a defendant’s fraud offense involved sophisticated means,
his offense level is increased by two levels. U.S.S.G.
§ 2B1.1(b)(10)(C). The commentary defines “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). Hiding assets or transactions using fictitious
entities or corporate shells ordinarily indicates sophisticated
means. Id.
Whether conduct is sophisticated is based on the conduct as
a whole, not on the individual steps. Barrington,
648 F.3d at 1199.
Repetitive and coordinated conduct can be a sophisticated scheme
even when no one step is particularly complicated.
Id. When a
large amount of money is stolen gradually and the fraud is not
discovered over a long period, the length of time for which the
conduct is not detected can reflect the sophistication of the scheme.
United States v. Feaster,
798 F.3d 1374, 1381 (11th Cir. 2015).
In addressing a sophisticated means enhancement, we
review a district court’s factual findings for clear error and its
application of the guideline provision to those facts de novo. See
United States v. Humber,
255 F.3d 1308, 1311 (11th Cir. 2001).
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B. Analysis
Here, we find no error in the district court’s application of
the two-level sophisticated means enhancement.
Based on his factual proffer and undisputed facts in the PSI,
Valdes operated an elaborate, years-long scheme to defraud
insurance companies for expensive Infliximab infusions, obtaining
over $7 million as a result. The large amount of money defrauded
and the six-year period the scheme went undetected support a
finding of sophisticated means. See Feaster,
798 F.3d at 1381. The
fact that Gasiel was a real medical clinic that provided other,
legitimate medical services to real patients, including primary care
services and other intravenous infusions, made the fraud scheme
involving Infliximab infusions more difficult to detect.
Contrary to Valdes’s claims, his fraudulent billing was not
simple, repetitive conduct. To be paid for the fraudulent Infliximab
infusions and related services, Valdes had to submit itemized claim
forms to the insurance companies that required various
information, including descriptions of the services provided and
billing codes. These claim forms had to be prepared in compliance
with applicable laws and regulations, including certifying that the
billed services were medically necessary and actually provided.
This is the kind of repetitive, yet complex, conduct that qualifies as
sophisticated means. See Barrington,
648 F.3d at 1199.
Moreover, Valdes, the beneficial owner and operator of
Gasiel, took steps to conceal his ownership of Gasiel and his
involvement in the fraud. At the sentencing hearing, FBI Special
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Agent Zachary Mandell testified that Valdes was not listed in
Gasiel’s corporate records despite being the actual owner and
operator. Valdes hid behind two licensed doctors, Hilario Isaba
and Ramon Santiago, who claimed no ownership interest in Gasiel
and did not prescribe Infliximab. Valdes, who had medical training
in Cuba, held himself out to patients as a doctor, but Isaba and
Santiago were identified as the referring providers for all $38
million in false claims. 3 In addition, Isaba was listed as Gasiel’s
registered agent and president. Valdes’s false paper trail initially
worked, as Isaba was the original target of Special Agent Mandell’s
investigation.
In light of these facts, the district court properly applied a
two-level sophisticated means enhancement.
III. ABUSE-OF-TRUST ENHANCEMENT
Valdes also argues that the district court’s application of
U.S.S.G. § 3B1.3’s abuse-of-trust enhancement was unwarranted.
A. U.S.S.G. § 3B1.3
If a defendant abused a position of public or private trust, or
used a special skill, in a manner that significantly facilitated the
3 On appeal, Valdes argues that he never held himself out as a doctor at the
clinic. However, Valdes did not object to that factual statement in paragraph
13 of the PSI, so it is deemed admitted for sentencing purposes. See United
States v. Wade,
458 F.3d 1273, 1277 (11th Cir. 2006). Special Agent Mandell
also testified that many of the clinic patients he interviewed referred to Valdes
as “Dr. Armando” and that Valdes dispensed pills to patients and sometimes
reviewed charts and test results with patients.
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commission or concealment of the fraud offense, the sentencing
court increases his offense level by two levels. U.S.S.G. § 3B1.3. A
special skill is one not possessed by members of the general public
and usually requires substantial education, training, or
licensing. Id. § 3B1.3 cmt. n.4. Being a doctor is a type of special
skill. Id.
The district court applied the two-level enhancement
because: (1) Valdes engaged in activities consistent with what a
doctor would do and (2) the clinic’s patients thought he was a
doctor.
B. Analysis
On appeal, the parties vigorously dispute whether Valdes—
who trained as a doctor in Cuba but was not licensed in the United
States—occupied, and abused, a position of trust vis-à-vis the clinic
patients.
We need not answer that question, however, because the
enhancement also applies if Valdes used a special skill to facilitate
the commission of the fraud scheme. The undisputed facts show
Valdes used his skills as a trained doctor, whether licensed or not,
to facilitate his fraud by submitting false medical claims. Given that
Valdes used a special skill in the commission of his offense, the
district court properly applied § 3B1.3’s two-level enhancement.
IV. FORFEITURE OF VALDES’S RESIDENCE
Valdes argues the district court erred by ordering the
forfeiture of his home as substitute property. Valdes admits that as
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part of his plea agreement, he agreed to forfeit his primary
residence as substitute property. Valdes claims, however, that this
agreement was not voluntary because the district court failed to
advise him that his home was a substitute forfeiture asset during
the plea colloquy, in violation of Federal Rule of Criminal
Procedure 11.
A. General Principles
A district court must order a defendant guilty of a federal
health care offense to forfeit property derived, directly or
indirectly, from the commission of the offense.
18 U.S.C.
§ 982(a)(7). Further, the district court is required to order the
forfeiture of other property of the defendant, i.e., substitute
property, if any property derived from the commission of the
offense cannot be forfeited as a result of the defendant’s actions.
21
U.S.C. § 853(p).
As to Valdes’s guilty plea, a district court must ensure that a
defendant’s guilty plea is knowing and voluntary. United States v.
Sosa,
782 F.3d 630, 636 (11th Cir. 2015). To that end, the district
court accepting a guilty plea must comply with Rule 11 and, in
particular, address the three core concerns by ensuring that (1) the
guilty plea is free from coercion, (2) the defendant understands the
nature of the charges, and (3) the defendant understands the
consequences of his plea. Fed. R. Crim. P. 11(b); United States v.
Utsick,
45 F.4th 1325, 1337-38 (11th Cir. 2022).
To comply with the third core concern, “Rule 11(b)(1)
provides a list of rights and other relevant matters about which the
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court is required to inform the defendant prior to accepting a guilty
plea, including . . . the possibility of forfeiture.” United States v.
Moriarty,
429 F.3d 1012, 1019 (11th Cir. 2005) (emphasis added);
Fed. R. Crim. P. 11(b)(1)(J) (requiring the district court to inform
the defendant of “any applicable forfeiture” and determine that the
defendant understands it).
B. Guilty Plea
The record shows that the forfeiture allegations in Valdes’s
indictment and the plea agreement he signed both expressly
identified Valdes’s primary residence by address as being substitute
property potentially subject to forfeiture.
Then, at his plea hearing, Valdes confirmed to the district
court that he had read, thoroughly reviewed with his lawyer, and
understood the indictment and plea agreement, both of which
were translated into Spanish. The district court also reviewed the
forfeiture provision in Valdes’s plea agreement, and explained,
among other things, that Valdes “not only agree[d] to give up
property that was directly derived from this crime,” but also “to
give up what is known as substitute assets.” Valdes responded that
he understood the forfeiture provision.
C. Plain Error Review
The day before sentencing, the government filed a motion
for a preliminary order of forfeiture that, among other things,
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forfeited Valdes’s primary residence as substitute property. 4 Valdes
did not oppose the motion or object to the proposed forfeiture of
his residence before or during his sentencing.
In fact, Valdes did not raise any issue about the forfeiture of
his home until after his sentencing, at a status conference at which
Valdes’s trial attorney was permitted to withdraw. Valdes also did
not object to the adequacy of his guilty plea proceedings or move
to withdraw his guilty plea, despite being given the opportunity to
do so with his newly appointed counsel.
As such, Valdes agrees that our review of his forfeiture issue
is for plain error only. See United States v. Monroe,
353 F.3d 1346,
1349 (11th Cir. 2003); see also Sosa,
782 F.3d at 636 & n.2 (concluding
the defendants’ “post-sentencing filings did not timely preserve”
the issue of whether they knowingly and voluntarily agreed to the
forfeiture provisions in their plea agreements).
Under plain error review, (1) there must be error; (2) that is
plain; (3) that affects the defendant’s substantial rights; and (4) that
seriously affects the fairness, integrity, or public reputation of
judicial proceedings. Monroe,
353 F.3d at 1349. When neither the
Supreme Court nor this Court has resolved an issue, there can be
no plain error. Sosa,
782 F.3d at 637. We may review the whole
4 The government’s motion for a preliminary forfeiture order sought
forfeiture of Valdes’s primary residence as substitute property because the
government was unable to locate all of the directly forfeitable property.
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record when determining whether acceptance of a plea was plain
error. United States v. Vonn,
535 U.S. 55, 59, 74 (2002).
D. Analysis
Here, we strongly presume Valdes’s statements made
during the plea colloquy are true. See Medlock,
12 F.3d at 187. In
these statements, Valdes acknowledged he had read and
understood his indictment and plea agreement.
Valdes has not explained how he could have read and
thoroughly reviewed the indictment and plea agreement with his
attorney without understanding that the substitute property
potentially subject to forfeiture was his primary residence. Indeed,
his primary residence was the only substitute property specifically
identified in the documents. And the indictment spelled out that
under certain circumstances caused by Valdes, the government
was “entitled to the forfeiture of the substitute property.”
If that’s not enough, at sentencing Valdes’s attorney stressed
in mitigation that Valdes had agreed to forfeit “five properties”—
his primary residence was one of the five real properties listed in
the plea agreement—and that Valdes would be homeless after his
release from prison. There are no indications in the record that
Valdes disagreed with his attorney’s statements, corroborating that
Valdes had agreed to forfeit his primary residence. The record as a
whole reflects that Valdes understood that his primary residence
was the substitute property that could be subject to forfeiture.
Valdes points out that during the plea colloquy, the district
court did not specifically mention his home, define “substitute
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property,” or explain the legal ramifications of having his home
listed as substitute property. Valdes does not cite any binding
precedent from this Court or the Supreme Court requiring such a
detailed discussion of the forfeiture provision to satisfy the
requirements of Rule 11. In the absence of such precedent, the
district court’s failure to discuss the substitute property in more
detail cannot be plain error. See Sosa,
782 F.3d at 637.
Because Valdes has shown no plain error in the district
court’s accepting his guilty plea as to the forfeiture allegations, he
has not shown the district court erred in ordering the forfeiture of
his primary residence as substitute property.
AFFIRMED
