Opinion ID: 749850
Heading Depth: 2
Heading Rank: 3

Heading: The Health Insurance Fund Allegations (Counts 112-123, 125-128)

Text: 1 Mail Fraud (Counts 112-115) Kelly contends that the Government failed to prove mail fraud because it failed to prove that he knowingly and willfully embezzled from the Greenville account. He claims that there is no evidence that HDR transferred the funds from the Greenville account to the Augusta II account based his false statement that he could obtain a better yield elsewhere, or that his statement was material in influencing HDR's decision to comply with his request. The Government argues that mail fraud was committed when Kelly requested that HDR issue four (Medicare-reimbursed) Greenville account checks and mail them to him for deposit in the Augusta II account, creating a $1,587,775 slush fund. It claims that Kelly's better yield statement was relevant because it falsely implied that he planned to use the money to benefit the trust fund when in fact he used it to benefit himself and Master Health. To prove Kelly violated the mail fraud statute, the Government must show that he intentionally participated in a scheme to defraud and used the United States mails to carry out that scheme or artifice. 18 U.S.C. § 1341; see Waymer, 55 F.3d at 568. And, although proof of specific intent to defraud is necessary, id., circumstantial evidence of criminal intent can suffice. United States v. Cox, 995 F.2d 1041, 1045 (11th Cir.1993). See also Part V.B.1 supra. Viewing the evidence in the light most favorable to the Government and resolving all reasonable inferences and credibility evaluations in favor of the jury's verdict, we agree. See Massey, 89 F.3d at 1438. The Government need not produce direct proof of scienter in a mail fraud case, circumstantial evidence will suffice. See Hawkins, 905 F.2d at 1496. Kelly's false statement constituted circumstantial evidence of criminal intent. Id.; see Cox, 995 F.2d at 1045. We think the record is clear that a reasonable juror could conclude that Kelly committed mail fraud when he caused the Greenville account Medicare funds to be mailed to and deposited in the Augusta II account. 2 Embezzlement from an employee benefit plan (Counts 116-121) Kelly contends that there is no evidence to prove that he acted willfully or knew that his use of the money in the Augusta II account violated any legal duty. He claims that the embezzlement conviction should be set aside because the Government failed to prove the requisite criminal intent. The Government claims that the evidence easily demonstrated that Kelly embezzled $1,587,775 from the Greenville account, through the Augusta II account, both for his own use and for the benefit of Master Health. A charge of embezzlement from an employee benefit fund requires that the Government prove that Kelly is a person who embezzles, steals, or unlawfully and wilfully abstracts or converts to his own use or to the use of another, any moneys, funds, securities, premiums, credits, property, or other assets of any employee welfare benefit plan.... 24 18 U.S.C. § 664. Section 664 requires a showing of fraudulent intent to sustain a conviction. See United States v. Andreen, 628 F.2d 1236 (9th Cir.1980). In United States v. Snyder, 668 F.2d 686 (2d Cir.1982), the Second Circuit recognized that [t]he only real question ... was whether [the defendant] took [the funds] with the requisite criminal intent. Id. at 690. We conclude that the evidence was sufficient to sustain a conviction for violating section 664 beyond a reasonable doubt. A reasonable jury could have found that Kelly possessed the specific criminal intent necessary to satisfy the statute and that he embezzled Medicare money from an employee benefit plan for his own use and that of Master Health. He used the funds to purchase a $1 million certificate of deposit for Master Health which had been unable to meet Georgia's new capitalization requirements and took three checks ($116,160; $78,400; $71,256) for his own benefit. Kelly's argument that there was no evidence that these funds wouldn't someday be returned to the Augusta II account is without merit. See United States v. Wuagneux, 683 F.2d 1343, 1359 (11th Cir.1982) (citations omitted)(where the possibility that funds will be recovered does not preclude criminal liability). We find no error on this issue. 3 Money Laundering (Counts 122-123, 125-128) Kelly contends that since he should be acquitted on the mail fraud and embezzlement counts, he is therefore entitled to a judgment of acquittal on the money laundering counts. The Government points to the record and to the fact that Kelly did not report the three checks on his income tax return. In order to prove that Kelly laundered money in connection with the mail fraud and embezzlement counts, the Government is required to show that the property involved in a financial transaction represented proceeds of some form of unlawful activity, 18 U.S.C. § 1956(a)(1); that Kelly conducted or attempted to conduct such financial transaction with the intent to evade income taxes, 18 U.S.C. § 1956(a)(1)(A)(ii); knowing that the transaction was designed in whole or in part to conceal or disguise the nature, location, source, ownership, or control of those proceeds. 18 U.S.C. § 1956(a)(1)(B)(i). As Kelly did not report these three checks on his income tax return, the jury's conclusion that Kelly laundered these Medicare monies is supported by a reasonable construction of the evidence.