Source: https://law.justia.com/cases/federal/appellate-courts/F3/325/471/478467/
Timestamp: 2020-08-06 23:16:14
Document Index: 418796662

Matched Legal Cases: ['§ 371', '§ 287', '§ 7206', '§ 1956', '§ 1956', '§ 1956', '§ 1956', '§ 1956', '§ 1956', '§ 1956', '§ 1956', '§ 1956', '§ 1957', '§ 1956', '§ 1956', '§ 1956', '§ 371', '§ 846', '§ 371', '§ 846', '§ 846', '§ 1956', '§ 1956', '§ 846', '§ 1956', '§ 1956', '§ 1956', '§ 1957', '§ 1956', '§ 1956', '§ 287', '§ 287', '§ 3', '§ 3', '§ 3', '§ 1', '§ 1', '§ 1', '§ 1', '§ 1', '§ 1', '§ 1', '§ 1', '§ 1', '§ 1', '§ 3', '§ 3', '§ 3', '§ 3', '§ 2', '§ 3', '§ 3', '§ 3', '§ 3', '§ 3', '§ 1956', '§ 1956', '§ 1956', '§ 1956', '§ 1957', '§ 1957', '§ 287', '§ 287', '§ 287', '§ 3']

United States of America, Plaintiff-appellee, v. Glennis L. Bolden, Defendant-appellant.united States of America, Plaintiff-appellee, v. Clifford E. Bolden, Defendant-appellant, 325 F.3d 471 (4th Cir. 2003) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Fourth Circuit › 2003 › United States of America, Plaintiff-appellee, v. Glennis L. Bolden, Defendant-appellant.united State...
United States of America, Plaintiff-appellee, v. Glennis L. Bolden, Defendant-appellant.united States of America, Plaintiff-appellee, v. Clifford E. Bolden, Defendant-appellant, 325 F.3d 471 (4th Cir. 2003)
US Court of Appeals for the Fourth Circuit - 325 F.3d 471 (4th Cir. 2003) Argued: October 31, 2002
In November of 1998, after a nine-day jury trial in Asheville, the Boldens were convicted of multiple offenses. In particular, each was convicted of conspiracy to commit mail and wire fraud (in contravention of 18 U.S.C. § 371); two counts of submitting false claims to the Government (in violation of 18 U.S.C. § 287); six counts of filing false income tax returns (in violation of 26 U.S.C. § 7206(1)); six substantive counts of money laundering (in violation of 18 U.S.C. § 1956(a) (1)); and a separate count of money laundering conspiracy (in contravention of 18 U.S.C. § 1956(h)). Ms. Bolden was also convicted on eighteen separate false claims charges.
First, in reviewing the sufficiency of evidence, a verdict must be upheld if there is substantial evidence, taking the view most favorable to the Government, to support it. Glasser v. United States, 315 U.S. 60, 80, 62 S. Ct. 457, 86 L. Ed. 680 (1942); see also United States v. Bennafield, 287 F.3d 320, 324 (4th Cir. 2002). Second, we review de novo a challenge to the validity of an indictment. United States v. Loayza, 107 F.3d 257, 260 (4th Cir. 1997). Finally, we review for abuse of discretion a district court's rulings on jury instructions. United States v. Bostian, 59 F.3d 474, 480 (4th Cir. 1995). In reviewing the adequacy of instructions, we "accord the district court much discretion and will not reverse provided that the instructions, taken as a whole, adequately state the controlling law." Teague v. Bakker, 35 F.3d 978, 985 (4th Cir. 1994).
The Boldens first challenge the sufficiency of the evidence supporting their convictions for money laundering. Each of their six money laundering convictions, pursuant to 18 U.S.C. § 1956(a) (1), arose out of the Related Party Transactions.17 Three of those convictions resulted from checks written by Emerald Health to Industrial, and the other three involved checks written by Industrial to Carolina Supply (collectively, the "Industrial Check Transactions").18 As explained below, sufficient evidence supports the money laundering convictions.
In the common understanding, money laundering occurs when money derived from criminal activity is placed into a legitimate business in an effort to cleanse the money of criminal taint. The money laundering statute, however, as codified at 18 U.S.C. § 1956(a) (1), proscribes a much broader range of conduct, specifically prohibiting four distinct types of money laundering activity. In order to contravene § 1956(a) (1), a defendant must, first of all, know that the property involved in a "financial transaction" represents the "proceeds" of some "specified unlawful activity." If this "proceeds" element is satisfied, a money laundering violation occurs when a defendant conducts or attempts to conduct a financial transaction:
Contrary to the Boldens' contention, the money laundering statute does not require the underlying criminal activity be completed prior to the money laundering transactions. See United States v. Butler, 211 F.3d 826, 829 (4th Cir. 2000) ("Funds are criminally derived if they are derived from an already completed offense, or a completed phase of an ongoing offense." (internal quotation omitted) (emphasis added)). Thus, the key inquiry is not whether the specified unlawful activity was completed prior to the alleged money laundering transaction. Instead, we must determine whether the specified unlawful activity generated proceeds prior to the money laundering, and whether the money laundering actually involved those criminally-derived proceeds.
We begin our analysis by noting that certain criminal activities can produce proceeds long before their completion. A mail fraud scheme, such as the Medicaid fraud scheme of the Boldens, is the prototype of an activity that can generate proceeds before the mailings take place. See United States v. Mankarious, 151 F.3d 694, 705 (7th Cir. 1998) ("A mail fraud scheme ... can create proceeds long before the mailing ever takes place."). Indeed, as the Tenth Circuit recognized in United States v. Massey, 48 F.3d 1560, 1566 (10th Cir. 1995), a "`scheme to defraud' has a wider meaning than an individual act of fraud." A mail or wire fraud scheme often encompasses a range of activities that occur prior to, and culminate in, mail and wire submissions. Accordingly, in order to sustain the Boldens' money laundering convictions, there must simply have been sufficient evidence for the jury to "have inferred that the [proceeds] came from a fraudulent scheme and that the use of the mails furthered that scheme." Mankarious, 151 F.3d at 703.
For our purposes, the relevant fact is that the fraud scheme produced proceeds through the prospective payments prior to the financial transactions — the Industrial Check Transactions — on which the money laundering convictions were based. The 1993 and 1994 Cost Reports merely justified Emerald Health's receipt of those prospective payments. See United States v. Allen, 76 F.3d 1348, 1361 (5th Cir. 1996) (concluding that fraud scheme "produces proceeds at the latest when the scheme succeeds in disgorging the funds from the victim and placing them into the control of the perpetrators"); United States v. Morelli, 169 F.3d 798, 800 (3d Cir. 1999) (concluding for purposes of money laundering statute "that the money became the proceeds of fraud as soon as it entered the hands of members of the scheme"). The prospective payments constituted the proceeds used by the Boldens in the Industrial Check Transactions. Accordingly, the contention that the money laundering offenses were not conducted with the "proceeds" of the fraud scheme must fail.
Similarly unavailing is the contention that the Industrial Check Transactions failed to constitute either promotion money laundering or concealment money laundering. According to the Boldens, the Industrial Check Transactions were only used to carry on the legitimate business of Carolina Supply, and they thus did not qualify as promotion or concealment money laundering. Indeed, several courts have vacated money laundering convictions where the financial transactions were utilized for legitimate purposes. See e.g., United States v. Olaniyi-Oke, 199 F.3d 767, 770 (5th Cir. 1999) (concluding there was no evidence that computers purchased in financial transaction charged as money laundering were to be used for "anything other than fully legal personal use"); United States v. Calderon, 169 F.3d 718, 721-22 (11th Cir. 1999) (determining there was no evidence "that Appellant's conduct furthered the alleged underlying narcotics trafficking"). For the reasons explained below, we reject this contention.
In other decisions, we have ruled similarly. For example, in United States v. Wilkinson, 137 F.3d 214 (4th Cir. 1998), we found the evidence sufficient to sustain convictions for promotion money laundering. There, the defendants had obtained loans from a insurance company by misrepresenting that the funds would be used to finance accounts receivable for physicians. The funds were instead employed to promote risky non-medical businesses. In their scheme, the defendants created a sham business for the purpose of handling the loans. The insurance company wired loan proceeds to the sham business, which transferred those proceeds to the non-medical businesses. We found the transactions to constitute promotion money laundering, in contravention of § 1956(a) (1) (A) (i), because, as Judge Hamilton explained, "the transfer of money from [the sham business] to the non-medical businesses was integral to the success of the overall scheme." Id. at 221. In this case, Industrial was a sham business, used solely to deceive Medicaid on the Related Party Transactions, and it was thus "integral to the success" of the scheme.
The evidence also established that the Industrial Check Transactions constituted concealment money laundering, pursuant to § 1956(a) (1) (B) (i). On this point, the Boldens maintain that, while the Industrial Check Transactions were designed to avoid the requirements of the Medicaid regulations, they were not designed to conceal the fact that Emerald Health had obtained prospective payments from Medicaid. On this basis, they assert that their convictions for concealment money laundering are invalid.
The creation and use of sham businesses is highly relevant to the proof of concealment money laundering. The Fifth Circuit, in United States v. Willey, 57 F.3d 1374, 1385 (5th Cir. 1995), observed that the use of "a third party, for example, a business entity or a relative, to purchase goods on one's behalf or from which one will benefit usually constitutes sufficient proof of a design to conceal." And in United States v. Ladum, 141 F.3d 1328, 1333 (9th Cir. 1998), the Ninth Circuit, in an analogous situation, concluded that a defendant who concealed his ownership in a business from a bankruptcy trustee, through the use of "nominees who held themselves out as owners of the stores," had committed concealment money laundering. The court reasoned that the use of nominees "prevented the bankruptcy trustee from knowing that [the defendant] was the legitimate owner of the stores." Id. at 1340. Likewise, the Boldens' use of Industrial concealed the fact that Emerald Health was billing Medicaid (at inflated prices) for the Related Party Transactions. In sum, the evidence sufficiently proves the allegations of concealment money laundering.
In analyzing the sufficiency of Count Thirty-Seven, we look first to the requirements of an indictment. A valid indictment must: (1) allege the essential facts constituting the offense; (2) allege each element of the offense, so that fair notice is provided; and (3) be sufficiently distinctive that a verdict will bar a second prosecution for the same offense. United States v. Smith, 44 F.3d 1259, 1263 (4th Cir. 1995) (citing Hamling v. United States, 418 U.S. 87, 117, 94 S. Ct. 2887, 41 L. Ed. 2d 590 (1974)); see also Fed. R. Crim. P. 7(c) (1) ("The indictment ... shall be a plain, concise, and definite written statement of the essential facts constituting the offense charged."). As a basic proposition, an indictment is sufficient "`if it alleges an offense in the words of the statute.'" United States v. Brandon, 298 F.3d 307, 310 (4th Cir. 2002) (quoting United States v. Wicks, 187 F.3d 426, 427 (4th Cir. 1999)).
The Boldens contend that Count Thirty-Seven, which alleged a violation of 18 U.S.C. § 1956(h),21 was defective in three respects: (1) it failed to allege any overt acts; (2) it failed to identify the specified unlawful activity that produced the proceeds they conspired to launder; and (3) it failed to specify the offense defined in § 1956(a) (1) or § 1957 that the Boldens conspired to commit.22 We examine each of these three contentions in turn.
The first of these specifications, that Count Thirty-Seven is defective for failing to allege overt acts, is baseless. The Boldens were charged with and convicted of money laundering conspiracy, pursuant to 18 U.S.C. § 1956(h), and § 1956(h) does not require an overt act to be either alleged or proven. As we observed in United States v. Godwin, 272 F.3d 659, 669 (4th Cir. 2001), "a conspiracy under 18 U.S.C. § 1956(h), as opposed to a conspiracy under 18 U.S.C. § 371, does not explicitly require proof of an overt act." In addressing a similar challenge to the drug conspiracy statute, the Supreme Court, in United States v. Shabani, 513 U.S. 10, 15, 115 S. Ct. 382, 130 L. Ed. 2d 225 (1994), held that an overt act is not an element of 21 U.S.C. § 846. As the Court observed, Congress explicitly required the commission of an overt act as an element of the conspiracy defined in 18 U.S.C. § 371, and the Court concluded that Congress must be presumed to have acted deliberately in failing to include similar language in § 846. Id. at 14, 115 S. Ct. 382. The drug and money laundering conspiracy statutes — § 846 and § 1956(h) — are drawn in similar terms, and neither requires an overt act. See United States v. Tam, 240 F.3d 797, 802 (9th Cir. 2001) ("The language of 18 U.S.C. § 1956(h) is nearly identical to the language of 21 U.S.C. § 846, which the Supreme Court held ... does not require proof of an overt act."); see also United States v. Abrego, 141 F.3d 142, 164 (5th Cir. 1998) ("Section 846 has language virtually identical to the language of § 1956(h)."). Thus, because an overt act is not an element of a § 1956(h) offense, there was no need for the grand jury to make such an allegation in Count Thirty-Seven.
The Boldens next assert that Count Thirty-Seven failed to identify the "specified unlawful activity" that produced the proceeds they conspired to launder. We have observed that " [t]he core of money laundering ... is the laundering transaction itself," and that "details about the nature of the unlawful activity underlying the character of the proceeds need not be alleged." Smith, 44 F.3d at 1265. In any event, Count Thirty-Seven spelled out the unlawful activity that produced the proceeds the Boldens conspired to launder.
Finally, the Boldens contend that Count Thirty-Seven is fatally flawed because it failed to specify a specific statutory object of the conspiracy, that is, which one of five offenses — the four defined in § 1956(a) (1) or § 1957's single offense — they conspired to commit.23 Count Thirty-Seven was not required to allege the specific type of money laundering the Boldens conspired to commit; it was simply alleging a multiple-object conspiracy. Courts have uniformly upheld multiple-object conspiracies, and they have consistently concluded that a guilty verdict must be sustained if the evidence shows that the conspiracy furthered any one of the objects alleged. Griffin v. United States, 502 U.S. 46, 112 S. Ct. 466, 116 L. Ed. 2d 371 (1991); United States v. Hudgins, 120 F.3d 483, 487 (4th Cir. 1997). For example, the Third Circuit upheld a conviction where the indictment alleged a conspiracy with three statutory objects — including violations of § 1956(a) (1) and § 1956(a) (2). See United States v. Carr, 25 F.3d 1194, 1201-02 (3d Cir. 1994). The court observed that the convictions could be sustained if the defendants "knowingly and intentionally committed acts furthering any of the three objects of the conspiracy." Id. at 1202. Pursuant to the foregoing, this contention must also be rejected.
A defendant may only be tried on charges alleged in an indictment, and only "the grand jury may broaden or alter the charges in the indictment." United States v. Randall, 171 F.3d 195, 203 (4th Cir. 1999) (internal quotation and citation omitted). An indictment is constructively amended "when the essential elements of the offense ... are altered to broaden the possible bases for conviction beyond what is contained in the indictment." United States v. Keller, 916 F.2d 628, 634 (11th Cir. 1990); see also United States v. Floresca, 38 F.3d 706, 710 (4th Cir. 1994) ("A constructive amendment to an indictment occurs when either the government, [the court], or both, broadens the possible bases for conviction beyond those presented by the grand jury."). Where an indictment has been constructively amended, we have found reversible error, and we "conclusively presume that the defendant has been prejudiced by the constructive amendment." Floresca, 38 F.3d at 711.
In support of their constructive amendment claim, the Boldens rely almost exclusively on the Eleventh Circuit's decision in Keller, 916 F.2d 628, where two defendants were indicted for conspiracy, and the indictment failed to allege that there were unnamed coconspirators. An initial instruction permitted the jury to convict Keller if the jury found he had conspired with anyone, while the indictment, like our Count Thirty-Seven, alleged that he had conspired only with his codefendant. The court gave a supplemental instruction, using a hypothetical conspiracy example, emphasizing that Keller could be convicted if the jury found he entered into an unlawful agreement with anyone. The jury then convicted Keller and acquitted his codefendant. The Eleventh Circuit ruled that, where an indictment alleges "that only two individuals conspired, ... an essential element of the offense is the identity of the individuals who agreed." Id. at 634. The court observed that, " [w]hile the initial instruction standing alone may not have been enough to constitute an amendment, the trial court exacerbated the problem with its supplemental instructions in response to the jury's question." Id. at 636.
Contrary to the Boldens' contention, the instruction did not fatally amend Count Thirty-Seven. Even if a coconspirator's identity is an essential element of the conspiracy charge (but see United States v. Am. Waste Fibers Co., Inc., 809 F.2d 1044, 1046 (4th Cir. 1987)), the jury, by convicting the Boldens of the money laundering conspiracy alleged, necessarily found that they had conspired with each other, as Count Thirty-Seven alleged, and as the instruction permitted.26
The false claims statute, codified at § 287 of Title 18, criminalizes the submission of a false claim to the United States, or any department or agency thereof, if the defendant knows that such claim is "false, fictitious, or fraudulent."28 Thus, we must uphold such a conviction if the evidence shows the submission of a false claim and if the defendant "acted with knowledge that the claim was false ... and with a consciousness that he was either doing something which was wrong, or which violated the law." United States v. Maher, 582 F.2d 842, 847 (4th Cir. 1978) (internal citations omitted); see also United States v. Blecker, 657 F.2d 629, 634 (4th Cir. 1981) (upholding false claim conviction even though there was "evidence that the government got its money's worth").
Although the jury was required to find, in order to convict Ms. Bolden, that she had knowingly submitted the eighteen false claims to Medicaid, it was entitled to do so on the basis of circumstantial evidence. Indeed, " [t]he question of one's intent is not measured by a psychic reading of [the defendant's] mind but by the surrounding facts and circumstances; i.e., circumstantial evidence." United States v. Larson, 581 F.2d 664, 667 (7th Cir. 1978). On the evidence presented, the jury could conclude that Ms. Bolden "knowingly" submitted the eighteen false claims to Medicaid. She controlled Emerald Health's Medicaid Bills, and Emerald Health was strapped for funds. Ms. Bolden was aware that Emerald Health's patient census was incorrect, and she nonetheless instructed Emerald Health's employees to submit the Medicaid Bills.29 According to Ms. Cox, the accounts receivable clerk, "many times [Emerald Health] would get behind on the census" and "most of the time [they] would go ahead and ... submit a bill to Medicaid." Ms. Cox informed Ms. Bolden that Emerald Health's patient census was inaccurate, yet Ms. Bolden instructed her to go ahead and bill Medicaid because it was necessary "to get money into the facility," and Emerald Health could, in any event, "send in a recoupment if [it] billed something in error." Even if Ms. Bolden had contemplated correcting these Medicaid Bills, such an effort would not have been a valid defense to the charges. Under § 287, the Government was obliged to establish only her knowing submission of the false claims. The jury was entitled to conclude, on the evidence of Ms. Cox and the related circumstances, that Ms. Bolden knowingly submitted false claims to Medicaid. See United States v. Adamson, 700 F.2d 953, 962 (5th Cir. 1983) ("Where sufficiency is at issue, a finding that an accused acted recklessly may be enough to sustain a jury verdict, because a jury may properly infer the requisite intent." (emphasis in original)); United States v. Cincotta, 689 F.2d 238, 242 (1st Cir. 1982) (concluding that evidence of defendant's pervasive involvement in operations of corporation involved in transactions in question was sufficient "for a reasonable juror to infer that [defendant] knew of ... the conspiracy").
Having resolved the issues related to the Boldens' convictions, we turn to their sentences. In that respect, they first contend that the court erred in grouping their fraud and money laundering offenses. They then assert that the sentencing court failed to comply with Rule 32(c) (1) of the Federal Rules of Criminal Procedure. Finally, they maintain that, if the court made adequate findings under Rule 32(c) (1), it erred in its calculation of fraud losses, and in its application of adjustments to Ms. Bolden for offenses involving "abuse of position of trust" and "vulnerable victim [s]."
In assessing challenges to a sentencing court's application of the Guidelines, we review factual determinations for clear error and legal issues de novo. United States v. Singh, 54 F.3d 1182, 1190 (4th Cir. 1995). The grouping of multiple convictions, pursuant to U.S.S.G. § 3D1.2, "involves a legal interpretation of guidelines terminology, [and] we review [grouping issues] de novo." United States v. Toler, 901 F.2d 399, 402 (4th Cir. 1990). A sentencing court's factual findings in its application of the Guidelines, made under Rule 32(c) (1), are reviewed for clear error. United States v. Souther, 221 F.3d 626, 632 (4th Cir. 2000). When a sentencing court has failed to resolve a disputed fact on which it relied at sentencing, we remand for resentencing. United States v. Morgan, 942 F.2d 243, 245 (4th Cir. 1991). A finding of fraud loss is a factual issue, which we review for clear error. United States v. Godwin, 272 F.3d 659, 671 (4th Cir. 2001). Finally, whether a defendant occupies a position of trust is a factual determination reviewable for clear error. United States v. Glymph, 96 F.3d 722, 727 (4th Cir. 1996).
The Boldens contend that the sentencing court erroneously grouped their fraud and money laundering convictions. Pursuant to U.S.S.G. § 3D1.2(d) of the Guidelines, all "counts involving substantially the same harm shall be grouped together into a single group." In construing § 3D1.2(d), we have concluded that fraud and money laundering offenses should only be grouped when they are "`closely related.'" United States v. Walker, 112 F.3d 163, 167 (4th Cir. 1997) (quoting United States v. Porter, 909 F.2d 789, 792-93 (4th Cir. 1990)). According to the Boldens, their fraud and money laundering offenses are not so closely related as to warrant grouping. We disagree.
The Walker principles are applicable here. The Boldens were found to have engaged in both promotion and concealment money laundering, and the Industrial Check Transactions not only concealed the Related Party Transactions from Medicaid, they promoted those transactions as an essential component of the fraud scheme. By obtaining funds from the Industrial Check Transactions, the Boldens were able to provide Emerald Health with a portion of the supplies reflected on the Industrial invoices. These actions gave an aura of legitimacy to their criminal endeavor and enabled their scheme to continue. As such, the money laundering and the Related Party Transactions were not only closely related, they were inextricably intertwined. In every aspect of the fraud scheme, the Boldens' goal was the same: the improper extraction of monies from Medicaid. Their money laundering activities were essential to achieving that goal, and their money laundering and fraud activities were part of a continuous, common scheme to defraud Medicaid. Thus, the fraud and money laundering offenses are "closely related" and, in the context of the Guidelines, were properly "grouped together" by the sentencing court.30 See United States v. Emerson, 128 F.3d 557, 566 (7th Cir. 1997) (approving grouping when defendant had "embarked upon his money laundering scheme with the intent of promoting his mail fraud swindle"); United States v. Landerman, 167 F.3d 895 (5th Cir. 1999) (upholding grouping when money laundering was used to promote and enhance fraud scheme). In these circumstances, the contention that the court erred on the grouping issue must be rejected.
The Boldens next contend that their sentences should be vacated because the court failed to comply with Rule 32(c) (1).31 Specifically, they assert that the court failed to make adequate factual findings on the issues in dispute. In a sentencing hearing, the court, under Rule 32(c) (1), is to "rule on any unresolved objections to the [PSR]." On controverted matters, the court is to make either "a finding on the allegation or a determination that no finding is necessary." Pursuant to Rule 32(b) (6) (D), the sentencing court may, once objections are resolved, "accept the [PSR] as its findings of fact."
A sentencing court's findings on controverted matters ensure a record "as to how the district court ruled on any alleged inaccuracy in the PSR [and] allow [s] effective appellate review of the sentence imposed." United States v. Walker, 29 F.3d 908, 911 (4th Cir. 1994). We have concluded, however, that the "court need not articulate [findings] as to disputed factual allegations with minute specificity." United States v. Perrera, 842 F.2d 73, 76 (4th Cir. 1988). In fact, the court may simply adopt the findings contained in a PSR, provided that it makes clear "which disputed issues were resolved by its adoption." Walker, 29 F.3d at 911 (citing United States v. Morgan, 942 F.2d 243, 245 (4th Cir. 1991)). In the Boldens' sentencing hearings, the court satisfied Rule 32 on nearly all factual disputes. Two of those matters, however, warrant further scrutiny from the Rule 32(c) (1) standpoint: (1) Mr. Bolden's fraud loss calculation and (2) Ms. Bolden's "vulnerable victim" adjustment.
At Mr. Bolden's sentencing hearing on Oct. 7, 1999, the court first ruled on several of his objections. It then stated: " [Mr. Bolden's] remaining objections are overruled; and the Court determines that the [PSR] is fully supported by the evidence and the government's filing is correct and adopted by the Court." Although the adoption of Mr. Bolden's PSR is sufficient to permit review of his sentence in most respects, it is insufficient on whether the Lease Transactions were properly included in his fraud loss calculation. Neither the PSR nor the "government's filing," i.e., the Government's Sentencing Memorandum, contained factual assertions sufficient to justify inclusion of the Lease Transactions in that calculation.32 Mr. Bolden unsuccessfully sought to exclude approximately $82,000 (attributable to the Lease Transactions) from his fraud loss calculation. He contends that the court failed to find that he directly participated in the Lease Transactions or that those transactions were in furtherance of jointly undertaken criminal activity.
In calculating fraud loss, a sentencing court must first apply the principles of "relevant conduct." See U.S.S.G. § 1B1.3. Pursuant thereto, specific offense characteristics, such as the fraud loss properly attributable to a defendant, must be determined on the basis of (1) the acts and omissions committed, aided, abetted, counseled, commanded, induced, procured, or willfully caused by a defendant; and (2) in the case of a jointly undertaken criminal activity, all reasonably foreseeable acts and omissions of others in furtherance of the jointly undertaken criminal activity. U.S.S.G. § 1B1.3(a) (1) (A)-(B).
United States v. Childress, 58 F.3d 693, 722 (D.C. Cir. 1995). And as Judge Wilkins has aptly put it: "One participant in a multi-participant ... conspiracy may be held accountable, for sentencing purposes, for a greater or lesser [amount] than other coparticipants." United States v. Gilliam, 987 F.2d 1009, 1013 (4th Cir. 1993) (discussing commentary to U.S.S.G. § 1B1.3(a) (1)).
In further support of the fraud loss calculation on Mr. Bolden, the Government contends that the losses arising from the Lease Transactions were appropriately includable under the second prong of § 1B1.3(a) (1), i.e., that they were reasonably foreseeable and "in furtherance of the jointly undertaken criminal activity." The commentary to § 1B1.3 provides guidance on this point, observing that the scope of a defendant's criminal activity "is not necessarily the same as the scope of the entire conspiracy, and hence relevant conduct is not necessarily the same for every participant." U.S.S.G. § 1B1.3, cmt. n. 2. As such, a sentencing court, in applying § 1B1.3, must first determine the scope of the criminal activity a defendant "agreed to jointly undertake (i.e., the scope of the specific conduct and objectives embraced by the defendant's agreement)." Id. (emphasis added).
The commentary to § 1B1.3 also provides that, " [i]n determining the scope of the criminal activity that the particular defendant agreed to jointly undertake, ... the court may consider any explicit agreement or implicit agreement fairly inferred from the conduct of the defendant and others." Id. The commentary points out, however, that "the fact that the defendant is aware of the scope of the overall operation is not enough to hold him accountable for the activities of the whole operation." United States v. Studley, 47 F.3d 569, 575 (2d Cir. 1995). Instead, a sentencing court must assess and determine the "role the defendant agreed to play in the operation." Id.
In light of the commentary to § 1B1.3, several circuits require a sentencing court to "make particularized findings with respect to both the scope of the defendant's agreement and the foreseeability of his co-conspirators' conduct before holding the defendant accountable for the scope of the entire conspiracy." United States v. Campbell, 279 F.3d 392, 400 (6th Cir. 2002) (emphasis in original); see also Studley, 47 F.3d at 574 (concluding that sentencing court must make particularized findings as to "scope of the criminal activity agreed upon by the defendant" and "whether the activity was foreseeable to the defendant"); United States v. Bush, 28 F.3d 1084, 1087 (11th Cir. 1994) (requiring individualized findings concerning scope of criminal activity undertaken by defendant and whether activity was reasonably foreseeable to defendant); United States v. Evbuomwan, 992 F.2d 70, 72-74 (5th Cir. 1993) (same). We agree with our sister circuits that a sentencing court, in order to hold a defendant accountable for the conduct of his coconspirators, should make particularized findings with respect to both prongs of § 1B1.3(a) (1) (B). As to Mr. Bolden, however, neither the PSR nor the Sentencing Memorandum — nor the court — made findings on (1) the scope of the criminal activity he agreed to jointly undertake, or (2) whether all the Lease Transactions were reasonably foreseeable.33 As such, his fraud loss findings are inadequate.34
Ms. Bolden contends that the sentencing court failed to make adequate factual findings on her sentencing adjustment based on "vulnerable victim," pursuant to U.S.S.G. § 3A1.1. In ruling on Ms. Bolden's objection on this point, the court stated that " [t]he defendant's objection to the vulnerable victim two-level enhancement is overruled." After sustaining her objections to adjustments for "sophisticated concealment" and "role in the offense," the court found "that the [PSR] was correct in all other respects and [was] fully supported by the supporting affidavits filed by the government."
Ms. Bolden asserts that the PSR's recommendation of the vulnerable victim adjustment "rested on a legally erroneous interpretation of the terms `victim' and `vulnerable,' ... and that the PSR failed to apply the `targeting' requirement," as necessitated by the 1994 Guidelines. In recommending the vulnerable victim adjustment, the PSR relied on the 1994 Guidelines, which provide for such an adjustment " [i]f the defendant knew or should have known that a victim of the offense was unusually vulnerable due to age, physical or mental condition, or that a victim was otherwise particularly susceptible to the criminal conduct." U.S.S.G. § 3A1.1. The PSR, in recommending the adjustment, stated that " [t]he investigation revealed information from various sources that residents received inadequate care, due in part to the lack of adequate staff at the long term care nursing home facility."
In order to apply the vulnerable victim adjustment, a sentencing court must identify the victims of the offense, based not only on the offense of conviction, but on all relevant conduct. United States v. Blake, 81 F.3d 498, 503-04 (4th Cir. 1996) ("We therefore reject [the defendant's] argument that, for the purpose of § 3A1.1, `a victim of the offense' is only an individual considered a victim of the specific offense of conviction."). Accordingly, the residents of Emerald Health would be "victims" of the fraud scheme if Ms. Bolden failed to provide them with adequate care as a result of the scheme.
Under the 1994 Guidelines, we utilize a two-part test for assessing the applicability of the vulnerable victim adjustment. First, the victim must be "unusually vulnerable," United States v. Holmes, 60 F.3d 1134, 1135 (4th Cir. 1995), and second, "the victim must also have been targeted by the defendant because of the victim's unusual vulnerability."35 Id.; see also U.S.S.G. § 3A1.1, cmt. n. 1 (1994) ("This adjustment applies ... where an unusually vulnerable victim is made a target of criminal activity by the defendant."). It is insufficient for a sentencing court to find only that a victim is elderly or physically infirm, it must also determine that "the victim's vulnerability or susceptibility facilitated the defendant's crime in some manner." United States v. Monostra, 125 F.3d 183, 190 (3d Cir. 1997). While it is indisputable that the residents of Emerald Health were elderly, and many of them likely suffered from both mental and physical ailments, neither the sentencing court nor the PSR found the vulnerability of Emerald Health's residents to have facilitated Ms. Bolden's offenses. The court also did not find that Emerald Health's residents were targeted because of their unusual vulnerability. United States v. Gary, 18 F.3d 1123, 1128 (4th Cir. 1994) (ruling that, before applying vulnerable victim adjustment, a sentencing court first must find that defendant "initially chose [] his victim because of her particular vulnerability"). In these circumstances, we vacate this aspect of Ms. Bolden's sentence.36
Ms. Bolden next contends that the court clearly erred in calculating her fraud loss. Pursuant to § 2F1.1(b) (1) of the 1994 Guidelines, a sentencing court is obliged to increase, on a graduated basis, the offense level of a defendant convicted of fraud, depending on the amount of loss resulting from the fraud scheme. Ms. Bolden challenges the inclusion in her fraud loss of: (1) her salary and that of a physician assistant, (2) the Aequitron Invoices, and (3) costs included on the Cost Reports for which supporting invoices could not be found.
Ms. Bolden first maintains that the court erred in including her salary and the salary of a physician assistant, Frank Dickerson, in her fraud loss calculation. She contends that Dickerson's salary was a proper "direct cost" of Emerald Health and, in the alternative, that there is no evidence connecting her to the improper classification of his salary or showing that the misclassification was deliberate.37 At trial, a Medicaid investigator and a Medicaid auditor each testified that only those salaries directly related to patient care are proper direct costs on the Cost Reports. Thus, administrative salaries, such as Ms. Bolden's, are reportable on the Cost Reports only as indirect costs. Additionally, the compensation of physicians and physician assistants are separately reimbursed by Medicaid and are not includable on the Cost Reports. According to the Medicaid auditor, a physician assistant, such as Dickerson, should have "bill [ed] the Medicaid program directly." As such, the court did not err in deciding that Dickerson's salary was an improper direct cost on the 1993 and 1994 Cost Reports.
Ms. Bolden's final contention on her fraud loss calculation relates to the inclusion of approximately $170,000 in costs billed to Medicaid by Emerald Health for which vendors' invoices could not be located (the "Missing Invoice Costs"). She asserts that the Government failed to establish by a preponderance of the evidence that the Missing Invoice Costs were fraudulent. See United States v. Harris, 882 F.2d 902, 907 (4th Cir. 1989). As explained below, the sentencing court erred in its inclusion of the Missing Invoice Costs in Ms. Bolden's fraud loss calculation.
Finally, Ms. Bolden contends that the sentencing court erred in applying the "abuse of position of trust" adjustment (the "Trust adjustment") to her sentence. She asserts that, although she may have occupied a position of trust with Emerald Health, she held no such position with respect to Medicaid, and the court erred in applying the Trust adjustment to her. Pursuant to U.S.S.G. § 3B1.3, an adjustment in the base offense level is authorized " [i]f the defendant abused a position of public or private trust ... in a manner that significantly facilitated the commission or concealment of the offense." U.S.S.G. § 3B1.3. The commentary to § 3B1.3 explains that a position of trust is "characterized by professional or managerial discretion," and points out that the Trust adjustment applies where "the position of trust ... contributed in some significant way to facilitating the commission or concealment of the offense." U.S.S.G. § 3B1.3, cmt. n. 1.
We have observed that "`the question of whether an individual occupies a position of trust should be addressed from the perspective of the victim.'" United States v. Moore, 29 F.3d 175, 179-80 (4th Cir. 1994) (quoting United States v. Queen, 4 F.3d 925, 929 (10th Cir. 1993)). In order to apply the Trust adjustment to Ms. Bolden, the sentencing court was obliged to first identify the victims of her fraudulent activities. And in this case, the victims were Medicaid and the American taxpayers. See United States v. Adam, 70 F.3d 776, 782 (4th Cir. 1995) (concluding that victims of Medicaid fraud were "the American taxpayers"). As such, the court could apply the Trust adjustment to Ms. Bolden only if she occupied a position of trust as to Medicaid.
We have upheld application of the Trust adjustment in situations where physicians have defrauded Medicaid. See Adam, 70 F.3d at 782. In Adam, the adjustment was found appropriate for a physician involved in Medicaid fraud because such activity "is terribly difficult to detect because physicians exercise enormous discretion." Id.; see also United States v. Hoogenboom, 209 F.3d 665, 671 (7th Cir. 2000) ("Medical service providers occupy positions of trust with respect to private or public insurers (such as Medicare) within the meaning of guideline § 3B1.3."). Compellingly, the Second Circuit, in United States v. Wright, 160 F.3d 905, 910-11 (2d Cir. 1998), has upheld application of the Trust adjustment in similar circumstances. In Wright, the defendants had embezzled funds from a Medicaid-funded residence facility. The court observed that public funds were entrusted to the facility, for the benefit of its patients, and the defendants, through their positions at the facility, had embezzled the funds "without fear of timely detection by ... the government, who entrusted them with the funds." Id. at 911. The court concluded that application of the Trust adjustment was appropriate in such a situation, when "viewed from the standpoint of the governmental agencies that entrusted the funds to [the facility's] management to use them properly for the well-being of the intended beneficiaries."41 Id. As in Wright, Ms. Bolden, through her position at Emerald Health, was entrusted by Medicaid with its funds, and she abused the trust placed in her. Thus, the court did not err in finding that Ms. Bolden occupied a position of trust with respect to Medicaid, and we affirm its application of the Trust adjustment.
The Boldens challenge the sufficiency of the evidence on several of their convictions, as well as the sufficiency of the evidence underlying the court's sentencing rulings. On the Conviction Issues, we review the facts in the light most favorable to the Government; with respect to the Sentencing Issues, we review the facts in the light most favorable to the district court's determinations United States v. Wilkinson, 137 F.3d 214, 217-18 (4th Cir. 1998) ("Because the Defendants challenge the sufficiency of the evidence ... we present the facts in the light most favorable to the government."); United States v. Brown, 314 F.3d 1216, 1221 (10th Cir. 2003) ("Evidence underlying a district court's sentence is reviewed by viewing the evidence, and inferences drawn therefrom, in the light most favorable to the district court's determination.").
In addition to billing Medicaid for patients not in its nursing facility, Emerald Health falsified its Medicaid Bills for patients it actually treated. It charged Medicaid at the more costly ventilator care rate for Medicaid patients, even though such patients actually received less costly intermediate or skilled nursing care See supra note 8.
Pursuant to § 1956(a) (1) of Title 18, criminal penalties are provided for:
(A) (i) with the intent to promote the carrying on of specified unlawful activity; or (ii) with intent to engage in conduct constituting a violation of section 7201 or 7206 of the Internal Revenue Code of 1986; or
A single count of an indictment may permissibly allege either one or more of the types of money laundering contained in § 1956(a) (1)See e.g., United States v. Booth, 309 F.3d 566, 572 (9th Cir. 2002) ("When a statute specifies two or more ways in which an offense may be committed, all may be alleged in the conjunctive in one count.").
Although the instructions required the jury to find, in order to convict, that the Boldens had engaged in both promotion money laundering and concealment money laundering, such instructions were unnecessarily favorable to them. When an indictment alleges both promotion and concealment money laundering, a conviction can be premised on proof of either. See United States v. LeDonne, 21 F.3d 1418, 1427 (7th Cir. 1994) (" [W]here a statute defines two or more ways in which an offense may be committed, all may be alleged in the conjunctive in one count in order to adequately apprise the defendant of the government's intention to charge him under either prong of the statute."); United States v. Street, 66 F.3d 969, 974 (8th Cir. 1995) (same).
Section 1956(h), the money laundering conspiracy statute, provides that " [a]ny person who conspires to commit any offense defined in this section or section 1957 shall be subject to the same penalties as those prescribed for the offense the commission of which was the object of the conspiracy." 18 U.S.C. § 1956(h)
did knowingly, willfully, and unlawful [sic] ... conspire ... with one another, to commit money laundering offenses ... in violation of Title 18, United States Code, Sections 1956(a) (1) and 1957.
The five statutory objects referred to in Count Thirty-Seven include the four types of money laundering offenses contained in § 1956(a) (1),see supra Part III.B.1, plus the money laundering offense contained in § 1957. Under § 1957, it is unlawful to engage in a monetary transaction of more than $10,000 with property derived from a specified unlawful activity.
18 U.S.C. § 287 (emphasis added). Importantly, the submission of a false claim to a state agency to obtain federal funds that were provided to the state falls within the parameters of § 287. See United States v. Littlefield, 840 F.2d 143, 151 (1st Cir. 1988) (submission of false claims to state agency violated § 287 because federal monies were used to fund state program).
Ms. Bolden also contends that grouping is inappropriate here because the sum of money laundered (approximately $50,000) was small in comparison to the losses attributable to the overall fraud scheme (approximately $700,000). This contention, however, is also without merit See Walker, 112 F.3d at 166 (permitting grouping of fraud and money laundering offenses even though Walker had laundered only $5,000 of $850,000 that his scheme had produced).
Rule 32(c) (1) of the Federal Rules of Criminal Procedure provides, in relevant part:
In 1995, the Sentencing Commission adopted Amendment 521, rendering it unnecessary for a sentencing court to find that a defendant had specifically targeted his victim. In adopting Ms. Bolden's PSR, however, the court applied the 1994 Guidelines, which, under our precedent, require the sentencing court to find that the defendant targeted his victim See Holmes, 60 F.3d at 1135. On appeal, the Government contends that targeting is not required under the 1994 Guidelines because the 1995 amendment simply "clarified" that, even under the 1994 Guidelines, U.S.S.G. § 3A1.1 did not require targeting. In this Circuit, this "clarification" is more appropriately an "alteration" because our precedent under the 1994 Guidelines required the Government to demonstrate targeting. Consequently, the targeting requirement of the 1994 Guidelines must be applied to Ms. Bolden in order to avoid Ex Post Facto issues. See United States v. Stover, 93 F.3d 1379, 1386 (8th Cir. 1996).
In support of her position that the Trust adjustment was inappropriately applied, Ms. Bolden relies on the Eleventh Circuit's decision in United States v. Mills, 138 F.3d 928, 941 (11th Cir. 1998). The court there concluded that "a Medicare-funded care provider, as a matter of law, does not occupy a position of trust vis-a-vis Medicare." It based this ruling on its conclusion that Medicare-funded care providers owe contractual, rather than fiduciary, duties toward Medicare. Because of the discretion Medicaid confers upon care providers, we agree with the Second Circuit, however, that such providers owe a fiduciary duty to Medicaid. See Wright, 160 F.3d at 911. Indeed, we see it as paramount that Medicaid be able to "trust" its service providers.
The Boldens have requested that, in the event we remand, their case be reassigned to a different judge. There is no evidence to suggest that this able district judge would have "substantial difficulty in putting out of his ... mind" any previously expressed views, nor do we find reassignment to be necessary to "preserve the appearance of justice."See United States v. Guglielmi, 929 F.2d 1001, 1007 (4th Cir. 1991) (quoting United States v. Robin, 553 F.2d 8, 10 (2d Cir. 1977)). In fact, because of the nature of this case, assignment to a different judge "would entail waste and duplication." Id.