Court Opinion

ID: 768353
Source: CourtListenerOpinion
Date Created: 2012-04-18 09:02:53+00
Date Added: 2024-06-11T17:55:35.108320
License: Public Domain

209 F.3d 665 (7th Cir. 2000)
UNITED STATES OF AMERICA,    Plaintiff-Appellee,v.Carol HOOGENBOOM,    Defendant-Appellant.
Nos. 98-3961 & 98-4139
In the  United States Court of Appeals  For the Seventh Circuit
Argued February 24, 2000Decided April 4, 2000

Appeal from the United States District Court  for the Northern District of Illinois, Eastern Division.  No. 97 CR 123--Milton I. Shadur, Judge.
Before POSNER, Chief Judge, and CUDAHY and EVANS,  Circuit Judges.
EVANS, Circuit Judge.

1
Dr. Carol Hoogenboom's  scheme to swindle Medicare by filing bills for  services she did not provide to elderly mental  patients hinged on her assumption that "no one  will believe a crazy lady." But the FBI did. More  importantly, so did a federal judge who found  Hoogenboom guilty on a bevy of charges after a  week-long bench trial. In all, Hoogenboom's  shenanigans led to convictions on 15 counts: 5  for mail fraud, 3 for filing false claims with  Medicare, 6 for money laundering, and 1 for  obstruction of justice. These earned her  concurrent sentences, the top being for 70  months.

2
Hoogenboom isn't your typical chiseler. After  earning undergraduate and master's degrees in  psychology from Western Michigan University, she  completed a PhD at the Forrest Institute of  Professional Psychology. She then spent 2 years  interning, passed the Illinois state licensing  exam, and received her state psychologist's  license. With that, after nearly 15 years of hard  work, Hoogenboom founded her own practice.

3
When she set up shop, Hoogenboom contracted  with Medicare to become a part B provider. This  meant she could submit reimbursement claims to  Medicare for any medically necessary services she  provided to Medicare beneficiaries. As it turned  out, she preferred submitting claims to providing  services.

4
Beginning in June 1995 Hoogenboom filed claims  stating that she frequently visited her  "patients"--a group of elderly, mentally ill  Medicare beneficiaries living in three Chicago  retirement homes--to conduct 45- to 50-minute  individual therapy sessions. To receive payment  for the purported sessions Hoogenboom would fax  "activity sheets" to her sister, Carrie Weldy,  containing the patients' names, medicare numbers,  the alleged dates of service, and the type of  services allegedly provided. Weldy, who served as  a salaried bookkeeper, would then phone in the  claims to Medicare for reimbursement. Unbeknownst  to Weldy, the services she billed for were either  not performed, or not performed as billed.

5
In January 1996 Hoogenboom hired Hanan Shaktah  to help expand her operation. Hanan1 had an  undergraduate degree in psychology which she  hoped she might put to use in her new job.  Instead, Hoogenboom gave her a list of about 70  patients and told her to visit them once or twice  a week to make sure they were still "alive and  breathing." When Hanan mastered the routine,  Hoogenboom added another 53 patients to her  rounds. The visits lasted only a minute or two,  but on Hoogenboom's orders Hanan submitted  activity sheets stating that she provided 45- to  50-minute counseling sessions to each of her  patients at least three times a week. In exchange  for her efforts, Hoogenboom gave Hanan a taste of  the Medicare reimbursement money.

6
Hoogenboom was so impressed with Hanan's work  that by June she decided to bring Hanan's brother  Thaer onto the workforce. Thaer did not have a  degree in psychology, but he had been arrested  for assault and battery on numerous occasions. So  Hoogenboom thought he'd make a fine "therapist,"  and soon enough he, too, was submitting activity  sheets recapping lengthy counseling sessions. In  reality, Thaer performed the same job as his  sister--moving door-to-door within the retirement  homes making sure that the Medicare recipients  were still alive.

7
With the Shaktahs taking care of her clients,  Hoogenboom stopped visiting the facilities. And  once Thaer came on board, Hanan also ceased her  visits. Nevertheless, the billing continued on  pace. In all, from June 1995 until October 1996  Hoogenboom submitted approximately 11,000 claims  to Medicare for reimbursement. Based on these  claims, she received $480,617.54, which she  deposited into two accounts at First National  Bank in Chicago.

8
Despite the fact that she was bilking the  federal government out of nearly $50,000 a month,  and frequently billed for more than 24 hours in  a day, Hoogenboom confidently predicted that she  would never get caught. She told Hanan that when  it came to filing false Medicare claims "the  sky's the limit." She further explained to Thaer  that even if some of the patients became aware of  the scam it would never put her in jeopardy,  since no one would take the word of a "crazy  lady" over that of her psychologist.

9
Unfortunately for Hoogenboom, the FBI did not  operate on the same assumption. Thus, when a few  of Hoogenboom's more nimble-witted patients  reported to Medicare that they were receiving  statements detailing counseling services that had  not been performed, the FBI launched an  investigation and quickly began to uncover  evidence of Hoogenboom's scheme.

10
Bureau agents confronted Hoogenboom about her  billing discrepancies on October 2. She told them  that she and her assistants had in fact performed  the services claimed, that they had provided  mostly psych testing services and very little  therapy, that she was always present when her  assistants conducted the testing, that she  visited all the facilities three to four times  per week, and that her assistants both had  undergraduate degrees in psychology.

11
When the interview ended, the cover-up began.  Hoogenboom immediately met with Hanan and  instructed her not to speak to the FBI. She then  called Weldy and told her to tell the FBI that  the two didn't know each other. The next day,  Hoogenboom withdrew $101,000 from First National,  explaining to Thaer that she feared the Bureau  would "freeze her accounts."

12
By October 21 Hoogenboom had become desperate.  She sent the following fax to Weldy, written in  print so small Weldy had to blow it up on her  copier to read it:

13
Ner,2 immediately burn all logs, time sheets of  everyone. Make sure only ashes are left. Burn  this page, too. I will explain later. Tell Mommo  and Conco3 to talk to no one about me. If the  FBI visits them they are to say nothing. Even  that they don't know me.4 Tell them the same  thing. . . . You guys are to talk to no family or  relatives about me, no neighbors, and no new  friends.

14
Weldy, the hero of our story, not only refused to  comply, but immediately gave the FBI the fax and  all the materials she was supposed to burn.

15
The Shaktahs, who flipped following their arrest  (they pled guilty to charges and received  probation), also reported that Hoogenboom  attempted to thwart the FBI. At trial they  testified that during the investigation  Hoogenboom tried to persuade Hanan not to  cooperate, instructed Hanan to prepare fake  progress notes for the services covered in the  indictment, attempted to convince a real  psychologist to falsely testify that she treated  the patients, and threatened Thaer that if he  ever testified against her she would press  charges against him for forging her checks.

16
Hoogenboom told a markedly different story. She  testified that she performed all the work she  billed up until she hired Hanan, but that from  then on she assumed a purely supervisory role.  She said that, after initially supervising  Hanan's activities quite closely, she was fooled  into believing that Hanan was still treating the  patients. She also said that Hanan convinced her  to hire Thaer and that Hanan was responsible for  supervising his work. Finally, she reported that  once she became aware that the two were conning  her, she immediately fired them both.

17
The judge was underwhelmed by this defense. He  said Hoogenboom's "preposterous effort to  rationalize" her conduct and "prevail on the  balance of her own perjury" could hardly "avoid  the crushing impact . . . [of] the overwhelming  evidence that the government provided with  respect to her guilt."

18
On appeal, Hoogenboom attacks three of her four  convictions and argues that the judge erroneously  applied a couple of 2-point adjustments to his  calculus of her sentence under the guidelines.  Interestingly, she does not contest her  conviction for obstruction of justice--the crime  for which she drew the longest concurrent  sentence. This means that even if Hoogenboom  prevails--gets her money laundering, false  claims, and mail fraud convictions overturned and  both 2-point adjustments set aside--she stands to  gain only mild relief. But she is entitled to  seek what she can, so with the limited prospects  for a real major victory in mind, we turn to her  contentions.

19
We begin with Hoogenboom's first challenge to  her money laundering conviction. To violate the  federal money laundering statute the government  must prove, inter alia, that a defendant engaged  in or attempted to engage in "a monetary  transaction." 18 U.S.C. sec.1957. As defined by  the statute, a monetary transaction "does not  include any transaction necessary to preserve a  person's right to representation as guaranteed by  the Sixth Amendment to the Constitution." 18  U.S.C. sec.1957(f)(1).5 Hoogenboom argues that  since she testified that she eventually used the  money she removed from her bank accounts to pay  her attorneys, the withdrawals were not "monetary  transactions."

20
To the extent Hoogenboom challenges the  sufficiency of the evidence supporting her  conviction, we review to determine whether the  fact finder's take on the evidence was wholly  irrational when viewed in the light most  favorable to the government. See United States v.  Thornton, 197 F.3d 241, 253-254 (7th Cir. 1999),  cert. denied sub nom. Reynolds v. United States,  120 S. Ct. 1282, 2000 WL 190036 (Mar. 6, 2000). To  the extent that she asks us to interpret the  federal money laundering statute, we review the  district court's determinations de novo. See  United States v. Shriver, 989 F.2d 898, 901 (7th  Cir. 1992).

21
Hoogenboom's claim that she used the money she  withdrew on October 3 to pay her lawyers is  supported only by her conclusory testimony at  trial. She did not specify the dates or the  number of payments she made, nor did she  introduce any records or other evidence to show  how she used the money. She simply stated that at  some point, well after the transaction, she paid  her attorneys with the funds. This evidence in no  way undermines the district court's findings.  Standing alone, Hoogenboom's testimony, rejected  as it was by the district court, could not show  that she used the funds in the manner she  claimed.

22
But even if Hoogenboom were believed, the same  result would follow. She does not contest Thaer's  statement that she made the October 3 withdrawals  to prevent the FBI from freezing her accounts.  She rather argues that since she later spent the  money on lawyers the transactions should be  covered by the statute's Sixth Amendment  exception.

23
This is preposterous. Under Hoogenboom's  conception of the statute, every defendant  charged with money laundering under 18 U.S.C.  sec.1957 could, at any time, beat the charge by  funneling the proceeds which constituted the  initial, illegal transaction toward their  defense. Since this interpretation would render  the statute useless in the face of any money  launderer armed with a minimally competent  attorney, we reject it. Congress would not bother  passing such an easily circumvented law. Instead,  the exception appears to have been inserted to  prevent the broad reach of the statute from  criminalizing a defendant's bona fide payment to  her attorney. See United States v. Rutgard, 116  F.3d 1270, 1291 (9th Cir. 1997); see also, 134  Cong. Rec. S17630 (daily ed. Nov. 10, 1988)  (statements of Sens. Biden and Kennedy).

24
Correctly read, the statute offers a defense  where a defendant engages in a transaction  underlying a money laundering charge with the  present intent of exercising Sixth Amendment  rights. This allows a defendant to preserve her  rights without undermining the prosecution of  those the statute seeks to punish. Since  Hoogenboom did not clear out her accounts to pay  her attorney--the evidence is that she engaged in  the transaction to prevent the FBI from seizing  the money--she cannot squeeze within the slim  Sixth Amendment exception to the statute's broad  definition of what constitutes a monetary  transaction.

25
Hoogenboom next contends that the government  failed to show that she possessed the requisite  mens rea to support her convictions on all crimes  except obstruction of justice. She argues that  since the prosecution's only evidence of her  intent came from the testimony of the Shaktahs,  and this directly conflicted with her own more  believable testimony, the prosecution failed to  prove its case beyond a reasonable doubt.

26
Again, preposterous. The district court called  the evidence against Hoogenboom "crushing" and  "overwhelming." Indeed, the court noted that even  without the Shaktahs' testimony Hoogenboom was  proven guilty beyond a reasonable doubt. Plus,  the judge expressly found that Hoogenboom's  testimony was perjured. Viewing the case in any  light--let alone that most favorable to the  government--there was ample evidence to support  the finding that Hoogenboom intended to commit  her crimes.

27
This brings us to the sentencing issues which  are not presented, by either side, with great  clarity. And that's not surprising since the  sentencing hearing itself was not a model of  clarity as everyone, in a desultory fashion,  engaged in long musings which led to a rather  confusing record.

28
On appeal, the parties have confused several  concepts, using terms of art like "upward  departures" interchangeably with "adjustments."  Similar misstatements pop up where, for instance,  Hoogenboom says in her brief that the judge set  "the base offense level" at "27" which reflected  "the following four upward enhancements." This  statement is then followed by a list of five, not  four, adjustments. Also, the "base offense level"  in this case was not "27." It was "6" for two of  Hoogenboom's crimes (mail fraud and false  claims), "12" for the obstruction charge, and  "17" for money laundering. But because the mail  fraud and false claim counts ended up a little  higher after various adjustments, we need only  focus on them. And here's how the sentence was  built:

6 points--Base offense level

29
9 points--A specific offense characteristic  adjustment under guideline sec.2F1.1(b)(1)(J)  because the fraud exceeded $350,000

30
2 points--A specific offense characteristic  adjustment under sec.2F1.1(b)(2) because "more  than minimal planning" was involved.

31
To these computations, four 2-point  "adjustments" were added to bring the "adjusted  offense level" to 25, which yielded a sentencing  range of 57 to 71 months. With 5 years as the  statutory maximum penalty for all crimes except  obstruction (which is 10 years), Hoogenboom  received 60-month terms on all the charges except  obstruction, for which she drew a 70-month  sentence. The sentences were ordered to be served  concurrently.

The four 2-point adjustments were for:

32
(1)  Vulnerable Victim--sec.3A1.1(b)(1)

33
(2)  Abuse of Trust--sec.3B1.3

34
(3)  Role in the Offense--an Organizer--  sec.3B1.1(c)

35
(4)  Obstruction of Justice--sec.3C1.1

36
Hoogenboom challenges two adjustments:  vulnerable victim and abuse of trust. Although we  have spent quite some time laying out the  framework of this sentence, we will tarry only a  moment on Hoogenboom's objections, which we find  to be without merit.

37
The best argument against the "vulnerable  victim" enhancement might have been that the  victim was really the government, not the infirm  nursing home patients who were denied services.  But that argument wasn't made below, so it's  waived on appeal. And even if not waived, in  these circumstances the elderly and infirm  residents were so closely involved with the  scheme that it does no violence to the guidelines  to conclude that they were victims. One of the  reasons for increasing a criminal penalty based  on the type of victim is that vulnerable ones are  less likely to report that they have been  cheated, so crimes against them are more  difficult to uncover. Here, Hoogenboom's choice  of victims allowed her to go undetected for more  than a year. In fact, if she had made sure all of  her patients were incoherent, she might not have  been caught. The vulnerable victim enhancement,  accordingly, was correctly applied.

38
Ditto for the abuse of trust enhancement.  Medical service providers occupy positions of  trust with respect to private or public insurers  (such as Medicare) within the meaning of  guideline sec.3B1.3. See United States v. Geiger,  190 F.3d 661 (5th Cir. 1999), and United States  v. Ntshona, 156 F.3d 318 (2d Cir. 1998). Medicare  providers such as Dr. Hoogenboom enjoy  significant discretion and consequently a lack of  supervision in determining the type and quality  of services that are necessary and appropriate  for their patients. This forces Medicare to  depend, to a significant extent, on a presumption  of honesty when dealing with statements received  from medical professionals. The adjustment here  was properly invoked.

39
For all of these reasons, the judgment of the  district court is AFFIRMED.

Notes:

1
 Hanan's brother enters the scene in a moment, so  we'll refer to Ms. Shaktah by her first name.

2
 Weldy's family pet name.

3
 Weldy and Hoogenboom's parents.

4
 By this point, it seems Hoogenboom really should  have been giving the FBI a little more credit. To  think that they'd be thrown off by tiny print and  parents who claim they do not know their own  child suggests Hoogenboom could have used some  counseling herself.

5
 In full, this section of the statute reads:    [T]he term "monetary transaction" means the  deposit, withdrawal, transfer, or exchange, in or  affecting interstate or foreign commerce, of  funds or a monetary instrument (as defined in  section 1956(c)(5) of this title) by, through, or  to a financial institution (as defined in section  1956 of this title), including any transaction  that would be a financial transaction under  section 1956(c)(4)(B) of this title, but such  term does not include any transaction necessary  to preserve a person's right to representation as  guaranteed by the Sixth Amendment to the  Constitution[.]