Œ This opinion was originally issued as an unpublished order

on November 17, 2005. Upon request, the panel has determined

that this decision should now issue as a published opinion.

In the

United States Court of Appeals

For the Seventh Circuit ____________

No. 04-4329

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

THERESA PHILLIPS,

Defendant-Appellant.

____________

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 03 CR 1063—Blanche M. Manning, Judge.

____________

ARGUED SEPTEMBER 28, 2005—DECIDED NOVEMBER 17, 2005

PUBLISHED JANUARY 24, 2006Œ

____________

Before FLAUM, Chief Judge, and MANION and EVANS,

Circuit Judges.

PER CURIAM. Prior to the filing of the indictment in this

case, Chief Judge Charles Kocoras of the Northern District of Illinois issued an order, at the request of the

government, freezing assets belonging to Theresa Phillips

in the amount of $326,646.77. Phillips wants the assets—or

at least most of them—released.
2 No. 04-4329

Phillips and Fernandos Johnson were charged with health

care fraud, in violation of 18 U.S.C. §§ 2 and 1347. After

Phillips was indicted, she filed a motion in the district court

for return of the frozen assets. In response to the motion,

the government filed a superseding indictment, apparently

to undermine one of Phillips’ arguments. Judge Blanche

Manning, to whom the case was assigned for trial, denied

Phillips’ motion and the subsequent request for reconsideration. Phillips filed this interlocutory appeal, over which our

jurisdiction is established, see United States v.

Kirschenbaum, 156 F.3d 784 (7th Cir. 1998).

The allegations of the superseding indictment are that

Phillips owned and operated Health Care Creations (HCC),

a company designed to provide psychotherapy services

to Medicare and Medicaid recipients residing in skilled

nursing facilities. Defendant Johnson was employed by

HCC as a therapist even though he was not licensed to

conduct psychotherapy services. Phillips billed the Medicare

program, the indictment alleges, for psychotherapy services

rendered by unlicensed persons, including Johnson.

Medicare reimbursement checks were sent through the mail

to HCC at an address in Bolingbrook, Illinois. Phillips and

her husband deposited the checks into a bank account at

West Suburban Bank in the name of HCC. Then they

transferred some of the proceeds into other bank accounts

held in their names, either individually or jointly. In

addition, Ms. Phillips used some of the proceeds to purchase

a Mercedes Benz 430 and two residences in Bolingbrook.

Through this scheme—it is alleged in the superseding

indictment—Phillips defrauded Medicare to the tune of

some $1,165,000. In addition to the general allegation of

fraud, five specific counts of fraud based on specific checks

are set out, totaling $47,947.87 in ill-gotten gains.

It is because the latter specific counts in the indictment

allege fraud in the amount of $47,947.87 that Phillips
No. 04-4329 3

argues she is entitled to the release of property in excess of

that amount. However, she also claims that there are no

forfeiture provisions in the superseding indictment and

therefore all of the assets must be released. Along the way,

she mentions, very briefly, that the assets must be released

because she does not have money to pay for her defense in

this case. Finally, she argues that the assets belonging to

her husband must be released because he has not been

indicted.

It is true that specific allegations set out $47,947.87 in

fraudulently obtained receipts from Medicare. However, as

we have hinted, in response to Phillips’ argument in the

district court that the forfeiture would be limited to that

amount, the government beefed up the allegations in the

superseding indictment. Paragraph 11 states:

It was further part of the scheme that defendant

Theresa Phillips knowingly accepted payment from

Medicare for psychotherapy services which she knew

had not been performed. Through the scheme, defendant Theresa Phillips defrauded Medicare out of more

than $1,165,000 from approximately December 3, 1999,

to March 17, 2003.

This allegation more than covers the amount of the frozen

assets.

Phillips contends, however, that amounts in excess of

$47,947.87 are not traceable to the alleged fraud. She states

that she and her husband had another business called Pure

Baby and that over half of their income was from that

business. We reject that argument as well.

For one thing, there are no facts to support her claim. In

the decision denying Phillips’ motion for return of property,

Judge Manning noted that before issuing the pre-indictment order to freeze the assets, Chief Judge Kocoras

conducted an evidentiary hearing to determine whether

there was probable cause for forfeiture. However, no
4 No. 04-4329

transcripts or orders from that hearing were provided to

Judge Manning, who noted that “Phillips has not put

forth any arguments or evidence to show that [Judge

Kocoras’s] decision was incorrect.” Quite naturally, then,

the record before us is also insufficient to carry the day for

Phillips. We have no basis on which to say that the decision

of the district court was in error. We have simply a

conclusory statement that over half the income was

from Pure Baby. That is far from sufficient.

The law also is not on Phillips’ side. The superseding

indictment (which does indeed contain forfeiture allegations

despite Phillips’ claim to the contrary, a point on which we

will say no more) calls for forfeiture pursuant to 18 U.S.C.

§ 982(b)(1). That provision is governed by procedures set out

in 21 U.S.C. § 853. We have said that § 853 “prohibit[s] a

post-indictment hearing for the defendant to challenge the

indictment’s factual basis.” Kirschenbaum, 156 F.3d at 792

(quoting United States v. Moya-Gomez, 860 F.2d 706, 729

(7th Cir. 1988)). But, as is relevant here, even were a postindictment hearing held concerning the restraint of funds,

“the probable cause established in the indictment . . . is to

be determinative of any issue regarding the merits of the

government’s case on which the forfeiture is to be based.”

Moya-Gomez, 860 F.2d at 728. Phillips loses on this point.

The claim that Phillips is unable to provide for her

defense is also set out in conclusory fashion. Her alleged

inability to obtain counsel seems to be of equal importance

to her inability to send her children to summer camp:

[T]heir children couldn’t go to summer camp because

the Phillips didn’t have the money to send them and

last but not least, they don’t have money to pay for her

Defendant, Theresa Phillips defense.

This is the only insight we have into this claim. We surmise

that Phillips’ contention is not that the procedures used in

the district court were lacking, but rather simply that the

outcome was erroneous. Despite that, our very brief discus-
No. 04-4329 5

sion of this issue cannot entirely avoid touching on procedural issues.

It is established that under the Sixth Amendment, the

claim fails. Phillips has a right to counsel, but not a right to

the release of funds to obtain counsel of her choice. United

States v. Monsanto, 491 U.S. 600 (1989); Caplin & Drysdale,

Chartered v. United States, 491 U.S. 617 (1989);

Kirschenbaum, 156 F.3d at 792; Moya-Gomez, 860 F.2d

at 731.

There is, however, a related Fifth Amendment question

raised in Moya-Gomez and left unresolved in Monsanto,

Caplin & Drysdale, and Kirschenbaum. That issue is

whether the Due Process Clause requires an evidentiary

hearing regarding the deprivation of the defendant’s liberty

interest in the Sixth Amendment right to counsel of her

choice. Unfortunately for Phillips, we find this case, as we

did Kirschenbaum, an inadequate vehicle by which to

consider the issue. In Kirschenbaum we said the defendant

“simply failed to ‘show a bona fide need to utilize assets

subject to the restraining order to conduct his defense[.]’ ”

Kirschenbaum, 156 F.3d at 792 (quoting Moya-Gomez, 860

F.2d at 730). If anything, Phillips has provided us with even

less support for her claim, and certainly no basis to disturb

the district court decision or to require a hearing.

We also find that Ms. Phillips cannot raise the issue

of her husband’s claim to the property. Mr. Phillips did

not raise the issue in the district court, nor has he appealed

even though he probably has standing to appeal. See

Kirschenbaum, 156 F.3d at 794. Even were we to consider

the issue of Mr. Phillips’ claim to the property, once again

we would find that the record is insufficient to allow us to

evaluate the issue. Furthermore, the superseding indictment alleges that Theresa and Lance Phillips transferred

some of the proceeds from the fraudulently obtained

Medicare checks into an account at West Suburban Bank in
6 No. 04-4329

the name of HCC. It also alleges that some funds from this

account were transferred to a Bank One account in Lance

Phillips’ name. The forfeiture allegation specifically alleges

that $15,119.67 in this account is subject to forfeiture. The

problem for Mr. Phillips is that title to forfeitable assets is

vested in the United States “at the time of the criminal act

giving rise to forfeiture.” Caplin & Drysdale, 491 U.S. at

627. By the time the Medicare funds were deposited in

accounts in which Lance Phillips had an interest, title to

the funds was already vested in the government.

Accordingly, the decision of the district court denying the

motion for release of assets is AFFIRMED.

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-02-C-0072—1-24-06