Court Opinion

ID: 4527853
Source: CourtListenerOpinion
Date Created: 2020-04-22 18:00:22.165507+00
Date Added: 2024-06-11T12:17:08.639741
License: Public Domain

NOT PRECEDENTIAL

                        UNITED STATES COURT OF APPEALS
                             FOR THE THIRD CIRCUIT
                                 _______________

                                      No. 19-2166
                                    _______________

                            UNITED STATES OF AMERICA

                                             v.

                                    SETH REHFUSS,
                                               Appellant
                                    _______________

                     On Appeal from the United States District Court
                               for the District of New Jersey
                               (D.C. No. 3:18-cr-00134-001)
                      District Judge: Honorable Anne E. Thompson
                                     _______________

                        Submitted Under Third Circuit L.A.R. 34.1
                                  on January 31, 2020

             Before: CHAGARES, RESTREPO, and BIBAS, Circuit Judges

                                  (Filed: April 22, 2020)
                                    _______________

                                       OPINION*
                                    _______________

BIBAS, Circuit Judge.

    Using a fake charity to target senior citizens warrants extra punishment, even if the

scam’s profits come from Medicare kickbacks instead of charitable donations or the sen-

iors’ own wallets. Seth Rehfuss ran a Medicare-fraud scheme that bilked the Government

*
  This disposition is not an opinion of the full Court and, under I.O.P. 5.7, is not binding
precedent.
out of hundreds of thousands of dollars. It used a supposedly charitable organization to

persuade seniors to undergo genetic tests that their own doctors never approved. Instead,

doctors on the scheme’s payroll blindly approved the tests, which were sent to labs in ex-

change for lucrative kickbacks. Rehfuss pleaded guilty to conspiracy but contests his Sen-

tencing Guidelines enhancements for his leadership role, the scheme’s charitable pretense,

and its focus on vulnerable older victims. Because the District Court properly applied all

three enhancements, we will affirm.

                                      I. BACKGROUND

   A. The sham charity, needless medical tests, and Medicare kickbacks

   Rehfuss and others ran a purported charity called the Good Samaritans of America. As

a representative of Good Samaritans, Rehfuss visited senior centers throughout New Jersey

to give presentations about senior-citizen benefits like eyeglasses, hearing aids, and pre-

scription drugs. But the Good Samaritans did not provide those benefits; that just got their

foot in the door. It was all a ruse to pocket Medicare kickbacks on needless genetic tests.

   At the end of his presentations, Rehfuss would scare his audiences by suggesting that

they were at risk of heart attacks, strokes, cancer, and even suicide. Unless they got genetic

tests, they would not get the “[p]ersonalized medicine” that they supposedly needed to

avoid those lethal risks. App. 273. In response, more than a thousand seniors submitted to

cheek swabs and gave Rehfuss their Medicare information.

   To get the Government to pay a lab to run the tests, the Good Samaritans needed a

doctor to approve them. See 42 C.F.R. § 410.32(a). At first, they made up doctors’ contact

information and answered referral inquiries themselves. Later, Rehfuss advertised on

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Craigslist, recruiting doctors to approve the tests for $2,000 per week for just a couple of

hours’ work. These doctors never met the seniors, but just rubber-stamped the referrals.

    From there, the Good Samaritans submitted the cheek swabs and Medicare-

reimbursement forms to one of two labs with which they had kickback agreements. The

labs ran the tests and submitted the paperwork to the Government for reimbursement. The

Government then sent Medicare reimbursements back to the labs, the labs sent kickbacks

to the Good Samaritans, and the Good Samaritans paid the doctors who had approved the

tests.

    B. The guilty plea and sentence

    After local officials in New Jersey caught on, federal officers arrested and charged

Rehfuss with two counts of conspiracy to violate several healthcare statutes. He later

pleaded guilty to a single, consolidated conspiracy count.

    At sentencing, the Government sought three Guidelines enhancements that are relevant

here: a two-level enhancement for targeting vulnerable victims, a two-level enhancement

for exploiting a charity’s guise for personal gain, and a four-level enhancement for his

leadership role in the offense. U.S.S.G. §§ 3A1.1(b)(1), 2B1.1(b)(9)(A), 3B1.1(a). Rehfuss

opposed all three.

    After considering both sides’ arguments, the District Court applied all three enhance-

ments. Then it calculated Rehfuss’s Guidelines range at 51 to 63 months’ imprisonment.

After weighing his pleas for leniency, it sentenced him to 50 months in prison.

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   C. This appeal

   Rehfuss now appeals all three enhancements. The District Court had jurisdiction under

18 U.S.C. § 3231. We have jurisdiction under 18 U.S.C. § 3742(a) and 28 U.S.C. § 1291.

We review the District Court’s interpretation of the Guidelines de novo. United States v.

Bell, 947 F.3d 49, 54 (3d Cir. 2020). Because these enhancements are “predominantly fact-

driven,” we review their application for clear error. United States v. Thung Van Huynh, 884
F.3d 160, 165 (3d Cir. 2018) (internal quotation marks omitted) (leadership role); see

United States v. Adeolu, 836 F.3d 330, 334 (3d Cir. 2016) (vulnerable victim); United

States v. Bennett, 161 F.3d 171, 190 (3d Cir. 1998) (misrepresentation of charity).

        II. THE DISTRICT COURT PROPERLY APPLIED EACH ENHANCEMENT

   The District Court interpreted the Guidelines correctly. And we are not left “with the

definite and firm conviction” that it misapplied them. Thung Van Huynh, 884 F.3d at 168

(quoting United States v. Wise, 515 F.3d 207, 218 (3d Cir. 2008)). So all three enhance-

ments were proper.

   A. The scheme preyed on vulnerable older victims

   The District Court properly enhanced Rehfuss’s Guidelines range because his scheme

targeted older, low-income victims and intimidated them into undergoing genetic tests.

   The Guidelines authorize a two-level enhancement “[i]f the defendant knew or should

have known that a victim of the offense was a vulnerable victim.” U.S.S.G. § 3A1.1(b)(1).

Age counts as a vulnerability. Id. cmt. n.2(B). This enhancement applies when the Gov-

ernment shows that at least one victim was vulnerable, that the defendant knew or should

                                            4
have known of that vulnerability, and that vulnerability had some link to the crime’s suc-

cess. Adeolu, 836 F.3d at 333. Rehfuss concedes that the seniors who he tested count as

victims, even though only Medicare suffered financial harm. Appellant’s Br. 6 n.2; see

United States v. Zats, 298 F.3d 182, 186–87 (3d Cir. 2002).

   Rather, Rehfuss argues that the District Court made no “individualized determination”

that any victim was particularly vulnerable. Appellant’s Br. 10. He objects that the court

improperly “relied on an inaccurate ‘generalization’ that elderly people sometimes” are

less alert. Appellant’s Br. 11.

   That objection is hardly fatal. The District Court did generalize that Rehfuss’s elderly

victims were susceptible to fraud. But such generalizations, while disfavored, are not for-

bidden. Adeolu, 836 F.3d at 332 n.3; see United States v. Sims, 329 F.3d 937, 944 (7th Cir.

2003) (holding that elderly victims are especially vulnerable to crimes involving their fi-

nances). District courts can paint with a broad brush when appropriate.

   The District Court was right to do so here for four reasons. First, Rehfuss preyed on

more than a thousand seniors, and only one had to be vulnerable for the enhancement to

apply. Second, he admitted to targeting Medicare participants living in low-income hous-

ing, exactly the kind of victim primed to accept free medical tests. Third, he bypassed the

victims’ personal doctors, who might have questioned or objected to his tactics. Finally,

his presentation worked by scaring seniors into undergoing his test and sharing their per-

sonal medical information for fear of lethal conditions associated with aging.

                                            5
   In short, he preyed on vulnerabilities linked to his victims’ age, health, and income.

That “made it easier to [perpetrate] the fraud.” United States v. Hawes, 523 F.3d 245, 255

(3d Cir. 2008). So the District Court’s generalization was not error, let alone clear error.

   B. The charitable guise facilitated the scam

   The District Court also correctly applied a two-level enhancement because Rehfuss

“misrepresent[ed] that [he] was acting on behalf of a charitable . . . organization,” when he

really “intended to divert all or part of th[e] benefit” for his “personal gain.” U.S.S.G.

§ 2B1.1(b)(9)(A) & cmt. n.8(B). We have upheld the application of this enhancement when

the victims would not have engaged with the defendant’s charity if they had known that in

fact it rested on lies and was exploited for the defendant’s own profit. Bennett, 161 F.3d

at 192.

   That is true here. Rehfuss used the Good Samaritans’ name and ostensibly charitable

mission to persuade senior centers to let him make his presentations and conduct his genetic

tests. Had he disclosed his personal financial stake, the centers would likely not have in-

vited him to speak, let alone to test their residents. Without the scheme’s charitable pre-

tense, the fraud would not have worked.

   Rehfuss does not contest these facts. Rather, he claims that the enhancement does not

apply because he never diverted charitable donations, but profited only from the labs’ kick-

backs. That, he argues, distinguishes his scheme from the examples listed in the enhance-

ment’s application notes. See U.S.S.G. § 2B1.1 cmt. n.8(B)(i)–(iii).

   But as we and many of our sister circuits have recognized, the enhancement itself is

much broader than those examples. See Bennett, 161 F.3d at 191; accord United States v.

                                              6
Wiant, 314 F.3d 826, 829 (6th Cir. 2003) (collecting cases). It applies whenever a defendant

commits fraud by “misrepresent[ing] that he was conducting an activity wholly on behalf

of [a charitable] organization.” United States v. Kinney, 211 F.3d 13, 20 (2d Cir. 2000)

(quoting United States v. Aramony, 166 F.3d 655, 664 (4th Cir. 1999)).

   That is exactly what Rehfuss did. The District Court thus interpreted and applied this

enhancement correctly.

   C. Rehfuss directed the scheme and controlled others

   Finally, the District Court did not err in applying an enhancement for Rehfuss’s lead-

ership role. A four-level enhancement applies if the defendant was an “organizer or leader”

and the crime involved at least five participants. U.S.S.G. § 3B1.1(a). To qualify, the de-

fendant must have had exerted control over at least one other participant. Id. cmt. n.2;

United States v. Felton, 55 F.3d 861, 864 (3d Cir. 1995). One way to prove a leadership

role is by showing that the defendant recruited others to join the scheme. U.S.S.G. § 3B1.1

cmt. n.4.

   Substantial evidence supports the District Court’s finding that Rehfuss was an organizer

or leader. For instance, he wrote the script for and gave the presentations at senior centers

as the “front man.” App. 337. He admitted that he “was key to designing the [scheme’s]

system.” App. 119. He negotiated with the labs for bigger kickbacks. App. 319. And he

recruited and controlled other participants, including by advertising for and coordinating

with the doctors who responded to his Craigslist posts.

   Rehfuss objects that another participant, Sheila Kahl, did not get this enhancement,

even though she was equally responsible and split the profits with him. But Kahl gave the

                                             7
Government substantial assistance and got a plea agreement that stipulated that she was a

minor player. The court could accept the Government’s role stipulation for Kahl, a coop-

erator, while reviewing the record anew to determine Rehfuss’s involvement. See Thung

Van Huynh, 884 F.3d at 170 n.4.

   Rehfuss also objects that he could not have been a leader because he had to take in-

structions from the directors of the labs and others. But that does not mean that Rehfuss

never exercised control over others beneath him. After all, the Guidelines allow multiple

people to be leaders or organizers of a conspiracy. U.S.S.G. § 3B1.1 cmt. n.4. And the

record confirms Rehfuss’s authority in the organization. So the District Court properly ap-

plied the leadership enhancement.

                                        * * * * *

   Seth Rehfuss used a sham charity to scare seniors into undergoing needless genetic

tests, bypassing their doctors and pocketing Medicare kickbacks. The District Court

properly enhanced his Guidelines range for his leadership role, the scheme’s charitable

guise, and its focus on vulnerable older victims. Finding no error, we will affirm.

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