Court Opinion

ID: 2998612
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:45:32.012499+00
Date Added: 2024-06-11T11:25:18.753940
License: Public Domain

In the
    United States Court of Appeals
                 For the Seventh Circuit
                            ____________

No. 04-4329
UNITED STATES       OF   AMERICA,
                                                   Plaintiff-Appellee,
                                   v.

THERESA PHILLIPS,
                                              Defendant-Appellant.
                            ____________
              Appeal from the United States District Court
         for the Northern District of Illinois, Eastern Division.
            No. 03 CR 1063—Blanche M. Manning, Judge.
                            ____________
    ARGUED SEPTEMBER 28, 2005—DECIDED NOVEMBER 17, 2005
                PUBLISHED JANUARY 24, 2006Œ
                            ____________

  Before FLAUM, Chief Judge, and MANION and EVANS,
Circuit Judges.
  PER CURIAM. Prior to the filing of the indictment in this
case, Chief Judge Charles Kocoras of the Northern Dis-
trict of Illinois issued an order, at the request of the
government, freezing assets belonging to Theresa Phillips
in the amount of $326,646.77. Phillips wants the assets—or
at least most of them—released.

Œ
  This opinion was originally issued as an unpublished order
on November 17, 2005. Upon request, the panel has determined
that this decision should now issue as a published opinion.
2                                                No. 04-4329

  Phillips and Fernandos Johnson were charged with health
care fraud, in violation of 18 U.S.C. §§ 2 and 1347. After
Phillips was indicted, she filed a motion in the district court
for return of the frozen assets. In response to the motion,
the government filed a superseding indictment, apparently
to undermine one of Phillips’ arguments. Judge Blanche
Manning, to whom the case was assigned for trial, denied
Phillips’ motion and the subsequent request for reconsidera-
tion. Phillips filed this interlocutory appeal, over which our
jurisdiction is established, see United States v.
Kirschenbaum, 156 F.3d 784 (7th Cir. 1998).
  The allegations of the superseding indictment are that
Phillips owned and operated Health Care Creations (HCC),
a company designed to provide psychotherapy services
to Medicare and Medicaid recipients residing in skilled
nursing facilities. Defendant Johnson was employed by
HCC as a therapist even though he was not licensed to
conduct psychotherapy services. Phillips billed the Medicare
program, the indictment alleges, for psychotherapy services
rendered by unlicensed persons, including Johnson.
Medicare reimbursement checks were sent through the mail
to HCC at an address in Bolingbrook, Illinois. Phillips and
her husband deposited the checks into a bank account at
West Suburban Bank in the name of HCC. Then they
transferred some of the proceeds into other bank accounts
held in their names, either individually or jointly. In
addition, Ms. Phillips used some of the proceeds to purchase
a Mercedes Benz 430 and two residences in Bolingbrook.
Through this scheme—it is alleged in the superseding
indictment—Phillips defrauded Medicare to the tune of
some $1,165,000. In addition to the general allegation of
fraud, five specific counts of fraud based on specific checks
are set out, totaling $47,947.87 in ill-gotten gains.
  It is because the latter specific counts in the indictment
allege fraud in the amount of $47,947.87 that Phillips
No. 04-4329                                                 3

argues she is entitled to the release of property in excess of
that amount. However, she also claims that there are no
forfeiture provisions in the superseding indictment and
therefore all of the assets must be released. Along the way,
she mentions, very briefly, that the assets must be released
because she does not have money to pay for her defense in
this case. Finally, she argues that the assets belonging to
her husband must be released because he has not been
indicted.
  It is true that specific allegations set out $47,947.87 in
fraudulently obtained receipts from Medicare. However, as
we have hinted, in response to Phillips’ argument in the
district court that the forfeiture would be limited to that
amount, the government beefed up the allegations in the
superseding indictment. Paragraph 11 states:
    It was further part of the scheme that defendant
    Theresa Phillips knowingly accepted payment from
    Medicare for psychotherapy services which she knew
    had not been performed. Through the scheme, defen-
    dant Theresa Phillips defrauded Medicare out of more
    than $1,165,000 from approximately December 3, 1999,
    to March 17, 2003.
This allegation more than covers the amount of the frozen
assets.
  Phillips contends, however, that amounts in excess of
$47,947.87 are not traceable to the alleged fraud. She states
that she and her husband had another business called Pure
Baby and that over half of their income was from that
business. We reject that argument as well.
  For one thing, there are no facts to support her claim. In
the decision denying Phillips’ motion for return of property,
Judge Manning noted that before issuing the pre-indict-
ment order to freeze the assets, Chief Judge Kocoras
conducted an evidentiary hearing to determine whether
there was probable cause for forfeiture. However, no
4                                                No. 04-4329

transcripts or orders from that hearing were provided to
Judge Manning, who noted that “Phillips has not put
forth any arguments or evidence to show that [Judge
Kocoras’s] decision was incorrect.” Quite naturally, then,
the record before us is also insufficient to carry the day for
Phillips. We have no basis on which to say that the decision
of the district court was in error. We have simply a
conclusory statement that over half the income was
from Pure Baby. That is far from sufficient.
  The law also is not on Phillips’ side. The superseding
indictment (which does indeed contain forfeiture allegations
despite Phillips’ claim to the contrary, a point on which we
will say no more) calls for forfeiture pursuant to 18 U.S.C.
§ 982(b)(1). That provision is governed by procedures set out
in 21 U.S.C. § 853. We have said that § 853 “prohibit[s] a
post-indictment hearing for the defendant to challenge the
indictment’s factual basis.” Kirschenbaum, 156 F.3d at 792
(quoting United States v. Moya-Gomez, 860 F.2d 706, 729
(7th Cir. 1988)). But, as is relevant here, even were a post-
indictment hearing held concerning the restraint of funds,
“the probable cause established in the indictment . . . is to
be determinative of any issue regarding the merits of the
government’s case on which the forfeiture is to be based.”
Moya-Gomez, 860 F.2d at 728. Phillips loses on this point.
  The claim that Phillips is unable to provide for her
defense is also set out in conclusory fashion. Her alleged
inability to obtain counsel seems to be of equal importance
to her inability to send her children to summer camp:
    [T]heir children couldn’t go to summer camp because
    the Phillips didn’t have the money to send them and
    last but not least, they don’t have money to pay for her
    Defendant, Theresa Phillips defense.
This is the only insight we have into this claim. We surmise
that Phillips’ contention is not that the procedures used in
the district court were lacking, but rather simply that the
outcome was erroneous. Despite that, our very brief discus-
No. 04-4329                                                   5

sion of this issue cannot entirely avoid touching on proce-
dural issues.
  It is established that under the Sixth Amendment, the
claim fails. Phillips has a right to counsel, but not a right to
the release of funds to obtain counsel of her choice. United
States v. Monsanto, 491 U.S. 600 (1989); Caplin & Drysdale,
Chartered v. United States, 491 U.S. 617 (1989);
Kirschenbaum, 156 F.3d at 792; Moya-Gomez, 860 F.2d
at 731.
  There is, however, a related Fifth Amendment question
raised in Moya-Gomez and left unresolved in Monsanto,
Caplin & Drysdale, and Kirschenbaum. That issue is
whether the Due Process Clause requires an evidentiary
hearing regarding the deprivation of the defendant’s liberty
interest in the Sixth Amendment right to counsel of her
choice. Unfortunately for Phillips, we find this case, as we
did Kirschenbaum, an inadequate vehicle by which to
consider the issue. In Kirschenbaum we said the defendant
“simply failed to ‘show a bona fide need to utilize assets
subject to the restraining order to conduct his defense[.]’ ”
Kirschenbaum, 156 F.3d at 792 (quoting Moya-Gomez, 860
F.2d at 730). If anything, Phillips has provided us with even
less support for her claim, and certainly no basis to disturb
the district court decision or to require a hearing.
  We also find that Ms. Phillips cannot raise the issue
of her husband’s claim to the property. Mr. Phillips did
not raise the issue in the district court, nor has he appealed
even though he probably has standing to appeal. See
Kirschenbaum, 156 F.3d at 794. Even were we to consider
the issue of Mr. Phillips’ claim to the property, once again
we would find that the record is insufficient to allow us to
evaluate the issue. Furthermore, the superseding indict-
ment alleges that Theresa and Lance Phillips transferred
some of the proceeds from the fraudulently obtained
Medicare checks into an account at West Suburban Bank in
6                                                No. 04-4329

the name of HCC. It also alleges that some funds from this
account were transferred to a Bank One account in Lance
Phillips’ name. The forfeiture allegation specifically alleges
that $15,119.67 in this account is subject to forfeiture. The
problem for Mr. Phillips is that title to forfeitable assets is
vested in the United States “at the time of the criminal act
giving rise to forfeiture.” Caplin & Drysdale, 491 U.S. at
627. By the time the Medicare funds were deposited in
accounts in which Lance Phillips had an interest, title to
the funds was already vested in the government.
 Accordingly, the decision of the district court denying the
motion for release of assets is AFFIRMED.

A true Copy:
       Teste:

                         ________________________________
                         Clerk of the United States Court of
                           Appeals for the Seventh Circuit

                    USCA-02-C-0072—1-24-06