Opinion ID: 2967751
Heading Depth: 4
Heading Rank: 1

Heading: The Lease Transactions

Text: Beginning in 1991, Ms. Bolden caused Emerald Health to enter into certain lease transactions that were used for fraudulent purposes. She perpetrated this aspect of the scheme with the assistance of Buford Sonny Nelson.11 She and Nelson used Nelson Enterprises, which was Nelson’s office supplies business, to arrange leases between Emerald Health and several leasing companies for the purpose of extracting monies from Medicaid. In a typical lease transaction, Nelson would contact a leasing company (the Lessor) and, on behalf of Nelson Enterprises, represent that he had a customer, Emerald Health, that was interested in leasing nursing facility equipment. Thereafter, the Lessor would enter into a 10 Although the Boldens personally obtained substantial sums of money from the fraud scheme between 1989 and 1995, they failed to report those monies on their income tax returns. As a result, they were each convicted of six counts of filing false federal tax returns. Their tax convictions are not on appeal. 11 Although Nelson was involved in several aspects of the fraud scheme, he was not charged in the indictment. He entered into a plea agreement with the Government and was a key witness in the Boldens’ trial. UNITED STATES v. BOLDEN 9 lease agreement with Emerald Health. Pursuant to the agreement, the Lessor would agree to purchase the equipment from Nelson Enterprises and lease it to Emerald Health. In each transaction, the equipment was to be delivered directly from Nelson Enterprises to Emerald Health. When they initiated the Lease Transactions, Ms. Bolden and Nelson had no intention of providing equipment for Emerald Health. Instead, Nelson Enterprises would simply invoice the Lessors, indicating that the leased equipment had been delivered to Emerald Health. Before disbursing its payment to Nelson Enterprises, a Lessor would contact Emerald Health to confirm receipt of the equipment. Ms. Bolden would assure the Lessor that Emerald Health had received and accepted the leased equipment. The Lessor would then disburse its payment to Nelson Enterprises. Instead of delivering the leased equipment to Emerald Health, however, Nelson would either send it a portion of the equipment ordered or none at all. Nelson would then divide the payment received from the Lessor between himself and Ms. Bolden. Thereafter, pursuant to the terms of the lease agreement, Emerald Health was obligated to make lease payments to the Lessor. For example, in July of 1993, Nelson brokered a lease between Emerald Health and a company called North Star Leasing (North Star). Prior to arranging the North Star lease, Ms. Bolden borrowed $11,800 from Nelson for the down payment on a vehicle for Mr. Bolden. Nelson then brokered the North Star lease, in the sum of $23,500, for the purpose of financing Emerald Health’s purchase of bathtub equipment from Nelson Enterprises. After receiving an invoice from Nelson Enterprises and confirming with Ms. Bolden that the bathtub equipment had been delivered to Emerald Health, North Star disbursed a $23,500 payment to Nelson Enterprises. Nelson kept $11,800 as repayment of his earlier loan to Ms. Bolden, paid himself $2,700 as a broker’s fee, and gave Ms. Bolden the remaining $9,000. This transaction obligated Emerald Health to make monthly payments of approximately $1,000 to North Star for three years for bathtub equipment it never received. Between 1991 and 1993, Ms. Bolden and Nelson involved Emerald Health in seven Lease Transactions. In the end, Nelson Enterprises 10 UNITED STATES v. BOLDEN received over $200,000 from seven Lessors. Only $23,000 of that sum was applied to actual equipment delivered to Emerald Health. The remaining $177,000 was divided between Nelson and Ms. Bolden. Nelson received approximately $33,000 and Ms. Bolden received approximately $144,000, $11,800 of which was used to purchase the automobile for Mr. Bolden.12 Ms. Bolden classified Emerald Health’s lease payments as indirect costs on its 1991 and 1992 Cost Reports. On the 1993 and 1994 Cost Reports, however, over $33,500 in payments on the Lease Transactions were misclassified as direct costs, thereby increasing Emerald Health’s Medicaid receipts for 1993 and 1994.