Justia U.S. 6th Circuit Court of Appeals Opinion Summaries

The Medocks’ company, MAS, transported patients to kidney dialysis for Medicare reimbursement. Reimbursement of non-emergency ambulance transport is allowed only if medically necessary for bedridden patients; both a driver and an EMT must accompany any such passenger. Certification of medical necessity (CMN) must be signed by a doctor. A “run sheet” is reviewed by a Medicare contractor other than the ambulance company, such as AdvanceMed, to reduce fraud. AdvanceMed identified MAS as a high biller in Tennessee for dialysis ambulance transport and audited MAS. MAS’s records were missing some CMNs. Covert surveillance resulted in videotapes of patients walking, riding in the front seat, being double-loaded, being driven by single-staffed ambulances, or being transported by wheelchair. MAS had billed the transports as single-passenger and “stretcher required.” Executing a search warrant at the Medlocks’ home, agents seized CMNs and run tickets; some had been altered or forged. The Sixth Circuit reversed a conviction for aggravated identity theft, 18 U.S.C. 1028A, agreeing that misrepresentations that certain beneficiaries were transported by stretcher did not constitute a “use” of identification, but affirmed health-care fraud convictions, rejecting arguments that the court should have instructed the jury that Medicare, not merely a prudent person, was the relevant decision-maker; that Medicare would have reimbursed MAS without their misrepresentations; and that refusal to sever a defendant was prejudicial. View "United States v. Medlock" on Justia Law

In 2005, Lee, a Sevierville contractor, owed a substantial debt to Whaley, for loans that financed houses being built by Lee. Whaley proposed to recruit straw buyers for sham purchases of the properties. Eight straw buyers were referred to Bevins, a mortgage broker with whom Whaley had previously dealt. Whaley prepared the contracts and set the prices. Bevins prepared loan applications that falsely inflated the buyers’ incomes and assets and stated that they would bring funds to closing. The closings were conducted by Kerley’s title company. Although none of the buyers brought funds to the closings, Kerley signed HUD-1 forms, indicating that they did. The properties later went into foreclosure. The lenders incurred substantial losses. Lee and Bevins pled guilty and agreed to cooperate. The judge denied Kerley’s motion to sever, concluding that proposed redactions to Whaley’s statement remedied potential violation of Kerley’s Confrontation Clause rights and held that Whaley was not entitled to introduce his own hearsay statements. Both were convicted of money laundering, conspiracy to commit wire fraud affecting a financial institution and bank fraud, wire fraud affecting a financial institution, bank fraud, and making a false statement to a financial institution. They were sentenced to 60 months and 48 months imprisonment, respectively, and ordered to pay $1,901,980.31 in restitution. The Sixth Circuit affirmed the convictions and Kerley’s sentence, rejecting challenges to the sufficiency of the evidence, evidentiary rulings, and the court’s refusal to sever. View "United States v. Whaley" on Justia Law

Singer, a Muskegon, Michigan landlord who claimed insurance proceeds for nine rental units that were burned, was convicted of 12 counts of mail fraud, use of fire to commit mail fraud, arson, tax fraud, and obstruction of the administration of the internal revenue laws, and was sentenced to a total term of 55 years in prison. The Sixth Circuit affirmed, rejecting arguments that: the mail-fraud count of his indictment was duplicitous; the district court should have severed the tax-fraud counts from the other charged offenses; certain counts in the indictment were outside of the relevant statute of limitations or brought within an improper venue; and the district court erred by imposing consecutive sentences under 18 U.S.C. 844(h). View "United States v. Singer" on Justia Law

Miner marketed two schemes that promised to avoid taxes. Miner’s first scheme, IRx Solutions, offered to assist clients in requesting alterations to their Individual Master Files (IMFs), which are internal IRS records pertaining to each taxpayer. Miner claimed that the IRS was engaged in widespread fraud by improperly coding individuals as businesses on their IMFs so that tax could be assessed against them. The second scheme, Blue Ridge Group, helped clients create common-law business trusts, into which he claimed that they could place any or all of their assets in order to avoid paying income tax. Affirming his conviction under 26 U.S.C. 7212(a) for corruptly endeavoring to obstruct the “due administration” of federal income tax laws, the Sixth Circuit rejected arguments that the district court reversibly erred in failing to instruct the jury that section 7212(a) required proof that he was aware of a pending IRS proceeding; that his conduct was constitutionally and statutorily protected; and that certain witness testimony was improperly introduced at trial because the witness opined about his state of mind. View "United States v. Miner" on Justia Law

Waters, a former Michigan state legislator, became involved in a corruption probe involving her then-live-in companion, political consultant Riddle. With a negotiated plea agreement, Waters pleaded guilty to filing a fraudulent tax return (26 U.S.C. 7207). The district court sentenced her to a year’s probation on the misdemeanor charge. Eight days later, Waters moved pro se to withdraw her guilty plea. The district court denied that motion. The Sixth Circuit affirmed and later affirmed Waters’s conviction and sentence. More than three years later, Waters petitioned for a writ of error coram nobis, claiming that her attorney was constitutionally ineffective in promising that her misdemeanor conviction could “easily” be expunged and in failing to represent her vigorously at sentencing because he had a conflict of interest arising from his simultaneous representation of Riddle. The district court denied the petition. The Sixth Circuit affirmed. Waters did not establish an ongoing civil disability. At most she has alleged an injury to reputation, but this is not enough to warrant coram nobis. Although Waters claimed that her ability to travel outside the United States has been impaired, she did not show how this is the case. View "United States v. Waters" on Justia Law

Reid was the Executive Director for State and Federal Programs for the River Rouge School District. One of the vendors who received contracts for the district was Flaggs, owned by Reid’s brother-in-law. In a scenario typical of their relationship, Reid made a false representation that the program was mandatory, parents enrolled their children, Flaggs received a total of $75,000 for a “Jump Start” program, and Flaggs returned $2,500 to Reid as an individual. Reid ultimately admitted that she had received $10,000 to $20,000 from Flaggs for providing preferential treatment to his company. The Sixth Circuit affirmed her convictions for bribery and mail fraud, rejecting, as having not been timely raised, claims that the prosecution committed a Batson violation when it struck jurors for cause after asking them whether they would be prejudiced against the government’s use of information from Reid’s prayer journal and that the government violated Miranda in questioning Reid without a Miranda warning. The court also rejected her claim that trial counsel was ineffective in failing to challenge the sentencing guidelines computation and in failing to timely raise objections to the other claims.View "United States v. Reid" on Justia Law

In 2008, Musgrave, a CPA, became involved in a tire recycling venture with Goldberg. Musgrave obtained a loan, guaranteed by the Small Business Administration (SBA), through Mutual Federal Savings Bank. The venture ultimately lost the $1.7 million loan and Musgrave lost his $300,000 investment. In 2011, the two were indicted. Goldberg pled guilty to one count of misprision of felony, and the recommended a sentence of three years of probation, restitution, and a special assessment. Musgrave was convicted of: conspiracy to commit wire and bank fraud and to make false statements to a financial institution, 18 U.S.C. 1349; wire fraud, 18 U.S.C. 1343; bank fraud, 18 U.S.C. 1344. The district court sentenced him to one day of imprisonment with credit for the day of processing, a variance from his Guidelines range of 57 to 71 months and below the government’s recommendation of 30 months. The Sixth Circuit vacated, noting that economic and fraud-based crimes are more rational, cool, and calculated than sudden crimes of passion or opportunity and are prime candidates for general deterrence. The district court relied on impermissible considerations and failed to address adequately how what amounted to a non-custodial sentence afforded adequate general deterrence in this context. . View "United States v. Musgrave" on Justia Law

Snelling defrauded investors by soliciting funds for two fictitious financial companies, CityFund and Dunhill, which supposedly invested clients’ money in overseas mutual funds and overnight depository accounts, and promised investors an annual return of 10 to 15%. In reality, Snelling and his partner operated a Ponzi scheme in which “returns” on earlier investors’ capital were part of new investors’ deposits. The rest of the new deposits went to Snelling and his partner, who used the money to buy vacation houses and boats, pay private-school tuition, and live extravagantly. Among the tactics they employed were intentional targeting of victims’ IRA and 401(k) accounts, issuance of false quarterly statements by mail and, in confronting investors’ suspicions, production of false records that showed a balance of $8.5 million in the fund when it actually held $995.. Neither Snelling nor his partner paid taxes on the diverted funds. Snelling pled guilty to conspiracy to commit mail and wire fraud, 18 U.S.C. 1349; obstruction of justice, 18 U.S.C. 1519 and 2; and tax evasion, 18 U.S.C. 7201. Snelling appealed his 131-month prison sentence, claiming that the Guidelines-range calculation employed a loss figure that did not take into account the sums paid back to investors in the course of the fraud. The Sixth Circuit agreed and vacated the sentence.View "United States v. Snelling" on Justia Law

Elsass and his companies, FRG, and STS, were charged with violations of the Tax Code, including claiming theft-loss deductions for losses that did not involve criminal conduct, claiming those deductions before it was clear that there was no reasonable prospect of recovery, falsely characterizing theft losses as losses incurred in a trade or business to artificially inflate refunds, claiming theft-loss deductions to which taxpayers were not entitled because the losses were incurred by deceased relatives, negotiating customers’ tax-refund checks and depositing them into defendants’ bank accounts, falsely indicating that Elsass was an attorney in good standing, making deceptive statements to customers that substantially interfered with the administration of the tax laws, promoting an abusive tax shelter through false or fraudulent statements about the tax benefits of participation, and aiding and abetting the understatement of tax liability. The district court held that there was no genuine issue as to whether Elsass and FRG had engaged in each of these prohibited practices and enjoined them from serving as tax-return preparers. While it granted summary judgment to STS with respect to all claims except on, because STS is wholly owned by Elsass, it enjoined STS to the same extent as Elsass and FRG. The Sixth Circuit affirmed. View "United State v. Elsass" on Justia Law

The Federal Trade Commission (FTC) filed a complaint alleging that Defendants fraudulently marketed and sold debt-related services, failed to provide those services, and retained money as upfront fees in violation of the FTC Act, 15 U.S.C. 45(a); the Telemarketing Sales Rule, 16 C.F.R. 310; and the Mortgage Assistance Relief Services Rule, 12 C.F.R. 1015. The FTC also sought a temporary restraining order and a preliminary injunction, and provided more than 1,000 pages of exhibits. Defendants sought to stay proceedings, asserting that a criminal investigation had been launched into their business activities, as evidenced by a raid conducted by the Royal Canadian Mounted Police that resulted in seizure of records they claim were necessary to defend against the FTC’s allegations. The district court denied the motion; the FTC and Defendants entered into a stipulated preliminary injunction. Defendants later renewed the motion for a stay, claiming that they were unable to access critical records. Without explanation, the district court denied the motion and later granted the FTC’s motion for summary judgment, ordering Defendants to jointly pay restitution in the amount of $5,706,135.48 to injured consumers. The Sixth circuit affirmed, finding clear evidence of the violations. View "Fed. Trade Comm'n v. E.M.A. Nationwide, Inc." on Justia Law