In the

United States Court of Appeals

For the Seventh Circuit ____________

Nos. 07-4052 & 07-4053

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

RICHARD WALLACE and DOWNSTATE

TRANSPORTATION SERVICES, INC.,

Defendants-Appellants.

____________

Appeals from the United States District Court

for the Southern District of Illinois.

No. 06-40041-GPM—G. Patrick Murphy, Judge.

____________

ARGUED JUNE 2, 2008—DECIDED JULY 1, 2008

____________

Before EASTERBROOK, Chief Judge, and ROVNER and

WOOD, Circuit Judges.

EASTERBROOK, Chief Judge. Many people eligible for

health benefits under the Medicaid program do not have

access to automobiles, and many rural areas lack publictransit systems. So Medicaid will pay the cost of taxicabs

to transport patients between their homes and medical

providers. The program reimburses taxi services at the

“community rate” for “loaded miles.” 89 Ill. Admin. Code

§140.492. (Medicaid operates through state agencies, and

Illinois supplies the rules that govern these events.) A
2 Nos. 07-4052 & 07-4053

“community rate” is the price set by the public agency

with jurisdiction over taxi services, and “loaded miles” are

miles traveled with the patient in the taxi. The forms on

which taxi companies submit claims for reimbursement

include boxes prominently labeled “loaded miles”; a

handbook covering transportation services informs businesses that only loaded miles are compensable.

Richard Wallace and his business Downstate Transportation Services (collectively “Wallace”) furnished taxi service to Medicaid recipients in 16 rural counties in southern

Illinois. Wallace applied for payment on forms that

called for truthful statements of “loaded miles.” Evidence

in this criminal prosecution established, however, that

Wallace billed for many miles in which the taxi carried

only the driver. For some trips Wallace calculated miles

from the driver’s base station to the patient’s home, to the

medical provider, back to the patient’s home. For other

trips Wallace calculated miles as if the trip started at his

headquarters in Carterville, Illinois, and returned there.

Wallace collected from Medicaid about $500,000 more

than he was entitled to. A jury convicted him of 18 counts

of mail fraud, 18 U.S.C. §1341, and health-care fraud,

18 U.S.C. §1347.

Wallace concedes that he billed for unloaded miles. He

contends, however, that Carterville has a “community rate”

of $1.25 a mile, from the taxi’s dispatch point to the passenger’s destination, plus a fee of $3.00, no matter how

many (or how few) of those miles a passenger is in the

taxi. In rural areas it may be sensible to calculate fares that

way, because a driver is unlikely to pick up another fare

on the way. Wallace says that he understood a “community rate” to cover the flag-pull (pickup) fee, the price

per mile, and the miles to which that price would be
Nos. 07-4052 & 07-4053 3

applied. The jury did not agree, and the district court

denied Wallace’s motion for acquittal. 2007 U.S. Dist.

LEXIS 49556 (S.D. Ill. July 10, 2007).

Like the district court, we find it impossible to see how

Wallace could have been confused. The form requires

operators to disclose how many “loaded miles” were

provided. The handbook tells transportation firms that

they may bill only for loaded miles, at a community

rate—that is, the regulated price per mile (or, if there is no

regulatory authority, at a rate specified by the Medicaid

program itself). If Wallace believed that $1.25 a mile for

all miles, loaded and unloaded, was a better deal for

Medicaid than some higher price per mile for loaded miles

alone, he was free to propose a variance from the program’s normal rules. But he did not do that—not, at least,

in any way that produced a favorable ruling. He says that

his application to participate in the Medicaid program

revealed his rate structure, but no responsible official

approved it or told him to put all miles in the box labeled

“loaded miles.” Instead he lied repeatedly, saying in the

reimbursement forms that he was charging $1.25 a mile

for loaded miles. This deceit made it impossible for the

people running the Medicaid program to decide whether

Wallace was supplying transportation at a competitive

price. He was charging at least $1.75 a loaded mile—how

much more is in dispute; that depends on the ratio of

loaded to unloaded miles. If other companies were

willing to carry patients for $1.50 a loaded mile,

Medicaid would have done better to use them. By stating

that he was charging only $1.25 a loaded mile, Wallace

made his price look lower than it actually was.

That’s not Wallace’s only problem. Evidence showed

that he billed for some phantom miles. When drivers, who
4 Nos. 07-4052 & 07-4053

were stationed throughout the 16-county region, picked

up passengers near their bases, Wallace sometimes billed

as if the trip had started and ended in Carterville, which

is farther away. Sometimes Wallace just tacked miles onto

what the drivers actually logged. He contends that evidence about fictitious miles should have been excluded

under Fed. R. Evid. 404(b), but this proof concerned the

charged offense rather than “other” wrongs. The indictment alleged a scheme to bill for travel in addition to

loaded miles. Whether these spurious “loaded miles” were

unloaded miles, or miles never driven at all, does not

matter.

As it happens, Wallace could not prevail even if we

were to conclude that a “community rate” includes the

rate base (that is, the miles to which the rate is applied) as

well as the rate per mile. For Wallace treated Carterville’s

ordinance as if it were in force throughout 16 counties. It

wasn’t; it applied only within the City of Carterville, a

part of Williamson County. Other cities in the 16-county

area, including Carbondale and Marion, had their own

rules, and many unincorporated areas had no taxi regulation. A taxi company must use the rates of the jurisdiction in which it picks up passengers. Wallace does not

argue that any portion of the 16-country area other than

the City of Carterville authorized, let alone required,

taxis to charge for unloaded miles, so the bulk of Wallace’s Medicaid billings is not supported by his theory

that Carterville’s “community rate” includes unloaded

miles.

This is not to say that the trial was problem-free. The

district court should not have allowed the prosecutor to

argue that Wallace put one over on Carterville when he

persuaded its city council to enact the $1.25/mile-for-all-
Nos. 07-4052 & 07-4053 5

miles ordinance. People are entitled to lobby for favorable

laws; the first amendment protects self-interested campaigning. See, e.g., Eastern Railroad Presidents Conference v.

Noerr Motor Freight, Inc., 365 U.S. 127 (1961); Mine Workers

v. Pennington, 381 U.S. 657 (1965); Columbia v. Omni Outdoor

Advertising, Inc., 499 U.S. 365 (1991). The reason why

Carterville enacted its taxi-rate ordinance does not alter

the ordinance’s effects, and the prosecution’s strategy

created a risk that the jury might think that defendants

were on trial for crafty lobbying (or, worse, political

bribery). But the risk was not realized. The instructions

focused the jury on fraud in the reimbursement forms,

and Wallace does not contend that he might have been

convicted for his use of political influence, as opposed to

the excessive bills to Medicaid.

Wallace was sentenced to 36 months’ imprisonment. He

says that this is unreasonably high, even though it was

below the bottom of the Guideline range (51 to 63 months).

We have never deemed a below-range sentence to be

unreasonably high. United States v. Booker, 543 U.S. 220

(2005), gave district judges extra discretion without holding

that they must be lenient. More discretion means that

sentences are easier to justify than before. A 36-month

sentence would have been too low before Booker; an

increase in judicial discretion does not make it too high. See

United States v. Gama-Gonzales, 469 F.3d 1109 (7th Cir. 2006).

A sentence within the range is presumptively reasonable,

see Rita v. United States, 127 S. Ct. 2456 (2007); United

States v. Mykytiuk, 415 F.3d 606, 608 (7th Cir. 2005), and it

follows that a sentence below the range also is presumptively not too high. (The prosecutor has not taken a crossappeal to argue that 36 months is unreasonably low. See

Gall v. United States, 128 S. Ct. 586 (2007).) Although in
6 Nos. 07-4052 & 07-4053

principle extraordinary circumstances could make even a

below-range sentence excessive, generic arguments for

lenity, of the sort normally wheeled out before a district judge, are wasted on an appellate court. We have

made this point even for above-range sentences, given the

scope of the district judge’s discretion after Booker. See

United States v. Bullion, 466 F.3d 574 (7th Cir. 2006). A

feeble contention that a below-range sentence is too high

diminishes the force of the brief’s remaining arguments.

Although Wallace contends that the district court overstated the loss to the Medicaid program, he does not

offer a competing estimate or argue that the error (if one

occurred) affected the sentence. Any loss exceeding

$120,000 would produce a final sentencing range that

contains or exceeds 36 months. At all events, the district

judge was conservative; the real loss probably exceeded

$500,000. Wallace’s total billings were approximately

$1.4 million, and the district court gave him credit for

having a passenger in the taxi for almost 2/3 of all

billed miles. The district judge did not make a clearly

erroneous finding when setting the loss at approximately

$500,000.

AFFIRMED

USCA-02-C-0072—7-1-08