Wire Fraud, Mail Fraud, Tax Fraud and other Federal Fraud Cases

Published on: December 26, 2018

Defendant changed his mind but about cooperating but it cost him his right to remain silent

Khaled Elbeblawy was convicted and sentenced in Miami federal court for conspiracy to commit health care fraud in violation of 18 U.S.C. 1349. His offense arose from his ownership and management of home health agencies that provided in-home medical nursing and other services to homebound patients which he used to defraud Medicare for millions of dollars. His fraud included billing Medicare for services that were never provided, paying doctors in case for referring patients, hiring patient recruiters and nurses for referrals. He would disguise check by inflating the rates paid for staffing services and described checks to patient recruiters as payments for consulting and other services.

After an investigation focused on Elbeblawy, he decided to cooperate with the government and helped investigators obtain evidence against his former conspirators. He signed a plea agreement and a written factual basis for the agreement. The agreement stated that the government would be free to use against him in any criminal proceedings any of the statement provided by him including the factual basis for the plea. After he signed the agreement, he changed his mind and refused to plead guilty and the government prosecuted him for the charges he was indicted. Prior to trial Elbeblawy filed a motion to suppress the signed factual basis for the plea agreement on the ground that he did not knowingly and voluntarily waive the Rule 11 and Rule 410 protections. The district court denied his motion.

Published on: November 30, 2018

Defendant’s change of heart cost him his right to silence

by The Swartz Law Firm

Elbeblawy was convicted and sentenced in Miami, Florida, for conspiracy to commit health care fraud in violation of 18 U.S.C. 1349. His offense arose from his ownership and management of home health agencies that provided in-home medical nursing and other services to homebound patients which he used to defraud Medicare for millions of dollars. His fraud included billing Medicare for services that were never provided, paying doctors in case for referring patients, hiring patient recruiters and nurses for referrals. He would disguise check by inflating the rates paid for staffing services and described checks to patient recruiters as payments for consulting and other services.

After an investigation focused on Elbeblawy, he decided to cooperate with the government and helped investigators obtain evidence against his former conspirators. He signed a plea agreement and a written factual basis for the agreement. The agreement stated that the government would be free to use against him in any criminal proceedings any of the statement provided by him including the factual basis for the plea. After he signed the agreement, he changed his mind and refused to plead guilty and the government prosecuted him for the charges he was indicted. Prior to trial Elbeblawy filed a motion to suppress the signed factual basis for the plea agreement on the ground that he did not knowingly and voluntarily waive the Rule 11 and Rule 410 protections. The district court denied his motion.

Published on: November 26, 2018

Hiding cash payments from the IRS for luxury car purchases resulted in conviction

by The Swartz Law Firm

This appeal followed the conviction of Geovanys Guevara for causing a car dealership in Miami to file Form 8300s with the United States Treasury Department that contained false statements concerning Guevara’s identity as the individual who provided cash payments over $10,000 to buy four luxury cars: a Rolls Royce, a Lamborghini, a Porshe, and a Farrari. The Bank Secrecy Act requires any person engaged in a non-financial trade or business to file a Form 8300 with the United States Treasury. The form reports any cash payment over $10,000 received by the business or trade. It requires the business to verify and record the name and address of the person from whom the cash payment was received along with social security numbers and taxpayer identification numbers of any person on whose behalf the cash payment is offered.

At trial the Government presented a witness who testified that Guevara paid him $1,000 to go to the car dealer and put title for two of the four cars in his name. The government also presented Guevara’s interview in which he admitted that he was the true owner of all four cars. He admitted purchasing the cars and placing two of the titles in the name of his friend. He also admitted that the car dealer owner knew that Guevara was paying for theses vehicle. He said he bought the cars using money from a therapy clinic he owned and admitted paying his friend to go to the dealership to take title to the cars.

Published on: October 12, 2018

Bribery conviction upheld while last minute defense rejected

by The Swartz Law Firm

Defendant Whitman started a trucking company called United Logistics. To increase business and profits he bribed three employees of the federal Defense Logistics Agency to steer transportation contracts his way. Whitman was convicted of federal crimes including bribery, wire fraud, and obstruction involving government contracts and took this appeal.

The evidence at trial showed that for about four years Whitman’ scheme defrauded the United States of more than $15 million by bribing three employees of the Defense Logistics Agency on a Marine Corps base to use his trucking company to ship military equipment around the country.

Because the Department of Defense hired an outside company to book shipment carriers, the four schemers devised shipment requirements that all but guaranteed that United would receive assignments. Yet Whitman rarely if ever satisfied the special requirements the Defense Logistics Agency imposed. Furthermore, Whitman’s company only owned two trucks and his assistant would have to hire other trucking companies to handle the shipments he contracted with the Defense Department.

Although the Defense Logistics Agency employees never discussed with each other the specifics of their individual arrangements with Whitman, they knew about the criminal conduct of their coconspirators. Whitman told the others that McCarty was working for him and that he was paying McCarty to get him as many loads as possible. One of the coconspirators was McCarty’s supervisor and he frequently reviewed McCarty’s work and had identified fraudulent activity without taking any corrective measures.

Published on: October 3, 2018

Mortgage fraud conviction upheld despite speedy trial challenge

by The Swartz Law Firm

Nelson Machado lived in Orlando, Florida from 2005 through 2009, then moved to Bradenton, Florida, before he moved back to his native Brazil in December of 2009, to work as a pastor in Brazil. In April of 2010, he was indicted for three counts of wire fraud. The indictment charged him with wire fraud in violation of U.S.C. section 1343 accusing him of making false representations as part of a scheme to obtain mortgage loans. The evidence showed he applied for and obtained three mortgage loans worth a total of $739,900. When he applied for the loans Machado had a monthly salary of $3,000 and very little savings. The monthly payments for those three loans totaled $5,322.00. The properties he purchased with the loans were located in Cape Coral, Florida and valued at $509,900 with first and second mortgages totaling $490,000. The false statements he provided were that he was the manager of a tile corporation with $79,949 in personal savings. He also provided false documents regarding his employment and bank account.

He then contracted to purchase a second property and applied for a $249,900 mortgage loan. As in the first property, he provided false statements about his employment and his bank account with false documents to back it up. On top that, he failed to disclose the financial details of his first property purchase, indicating that it would be his primary home.

Published on: March 20, 2018

Sentence reversed for inaccurate loss amount and denying a minor role

by The Swartz Law Firm

Presendieu and Jean were indicted on bank fraud conspiracy and aggravated identity theft for participating in a check cashing scheme where they cashed fraudulent checks at Kwik Stop Food Store owned by Habib. Presendieu pled guilty to conspiracy to commit bank fraud in violation of 18 U.S.C. 1349 and aggravated identity theft in violation of 18 U.S.C. 1028A. As part of his guilty plea Presendieu signed a seven page detailed Factual Proffer in Support of Guilty Plea admitting his participation in Habib’s illicit check cashing services by cashing stolen checks with forged endorsements and using false identification documents to cash them. He then entered his guilty plea colloquy pursuant to Rule 11.

In his appeal Presendieu complains that his guilty plea was procedurally defective and unconstitutional because the district court failed to inform him of the nature of the charges, never outlined separately each element of his two offenses, and never asked him whether he understood those elements. He did not raise these objections before the district court and raised them for the first time in his appeal to the Eleventh Circuit Court of Appeals.

The appellate court concluded that the district court did not commit plain error under Rule 11 or under the constitution in accepting Presendieu’s guilty plea. It found that Presendieu was aware of the charges to which he plead guilty, he was sufficiently intelligent to understand the nature of those charges, he understood that the facts set forth in the factual proffer established that he was guilty of those two particular offenses, he had discussed the two charges and the facts in the proffer with his attorney, and he intelligently pled guilty to both charges in the plea agreement.

Published on: February 16, 2018

Double jeopardy challenge rejected for therapists convicted of Medicare fraud

by The Swartz Law Firm

In US v Crabtree a therapist at a health care clinic in Miami was convicted along with her two therapist codefendants of conspiracy to commit health care fraud in violation of 18 U.S.C. 1349. In this appeal they raised several issues, including a constitutional challenge under the double jeopardy clause. The underlying facts involved the operation of a mental health centers in Florida and North Carolina called the Health Care Solutions Network (HCSN) which billed Medicare for over $63 million in fraudulent claims. Crabtree and two of the co-defendants were former employees of HCSN who worked therapists.

HCSN was set up as a “partial hospitalization program” (PHP) that was purportedly designed to provide intensive psychiatric therapy to patients with “serious and acutely symptomatic mental illnesses.” These programs serve as a bridge between restrictive in patient care (psychiatric hospitalization) and routine outpatient care.

A PHP complying with federal and state law may seek Medicare reimbursement for its services. However, HCSN was not following Medicare standards and practices. From intake to discharge HCSN organized its business around Medicare fraud by editing intake information, fabricating treatment plans, and falsifying therapy and treatment notes to support Medicare claims. Therapist fabricated therapy notes for absent patients, falsified details from therapy sessions, and cloned notes by copying and pasting therapy notes from one patient’s file to another’s.

At the conclusion of the first trial the jury acquitted Crabtree and her two codefendant therapists of the false statement counts but it failed to reach a verdict on the conspiracy counts. At the first trial the court gave an instruction for Pinkerton liability with the false statement instruction. Under the Pinkerton instruction if the jury found the defendant guilty of participating in conspiracy it could find the defendant guilty of the substantive false statement crime even though the defendant did not personally participate in the false statement crime. The defendants were retried and convicted of the conspiracy count at the second trial.

Published on: February 6, 2018

Conviction for fraudulent investment scheme upheld

by The Swartz Law Firm

Lawrence Foster was charged and convicted in Miami following a federal court jury trial of conspiring to commit wire fraud and six counts of wire fraud in violation of 18 U.S.C. section 1349. He raised three challenges. First, he claimed the trial judge erred by denying his motion for judgment of acquittal. Second, he claimed the loss amount was incorrectly calculated. Third, he claimed his verdict should be set aside due to jury misconduct.

Foster was charged with defrauding investors who thought they were investing in property in the island of Rum Cay in the Bahamas. He solicited investors by offering them two investment opportunities. They could either purchase Rum Cay land or lend money to his company Paradise is Mine (PIM) in return for a security interest in the land. Foster used several marketing strategies including celebrity endorsements to promote PIM. He also represented to prospective investors that hundreds of news organizations including USA Today and the Wall Street Journal had featured articles about PIM. But PIM was a scam because it never owned the land that it claimed it owned and the newspaper reports were not legitimate. Some articles were created by Foster himself. The investors never received tit to the land.

Published on: June 29, 2017

FSU professor avoids federal conviction for embezzling from FSU organization

by The Swartz Law Firm

In U.S. v Doran, Dr. James Doran was convicted under 18 U.S.C. 666 of embezzlement form the Florida State University (FSU) as an organization receiving federal funds. He argued on appeals that he is entitled to a judgment of acquittal because any embezzlement was not from FSU and that the government did not prove that the victimized organization under the statutes was a recipient of federal benefits. Under the federal statute it is a federal crime for and agent of an organization to embezzle or convert to the use of any person other than he rightful owner any property valued at $5,000 or more that is owned or in the custody of that organization, government, or agency. The provision also requires that the organization, government or agency receive in any one year period benefits in excess of $10,000 under a federal program involving a grant contract subsidy, or other form of federal assistance.

The facts as they unfolded at trial showed that Doran was a professor in the College of Business of FSU and was a director and officer of the Student Investment Fund (SIF) a non-profit corporation established by FSU for charitable and educational purposes. He had a signatory authority over the SIF bank account. During his tenure he transferred SIF money from the SIF accounts to his own personal account. This embezzlement was discovered after an investigation. He was charged in an indictment that alleged he embezzled funds or property from FSU which it described was the recipient of federal benefits.

On appeal he challenged his conviction on the grounds that the SIF was the victimized organization under section 666 but that it received no federal benefits. He maintained that SIF and FSU are separate entities. The government’s response was that the embezzlement by Doran came within the ambit of section 666 because the SIF was closely affiliated with FSU which did receive millions of federal dollars and that Doran was a FSU professor and an agent of FSU when he committed the crime.

Published on: June 16, 2017

Tax evasion conviction for failing to report robust cash revenue upheld

by The Swartz Law Firm

The Horners were convicted of two counts of assisting in the preparation of a fraudulent corporate tax return in violation of 26 U.S.C. 6206 and filing a false individual tax return in violation of 26 U.S.C. 7206. This couple owned and operated Topcat Towing and Recovery, Inc. an S-corporation, in Lithonia, Georgia. Because Topcat required customer to pay in cases for most of its services, the Horners deposited approximately $3 million in cases into several business accounts in various banks as well as in personal accounts. They did not tell their tax preparer H&R Block about any of the cash deposits into their personal accounts. The IRS investigators concluded that theses person cash deposits were actually diverted Topcat receipts which means the defendants underreported Topcat’s income as well as their own income. On this evidence, the defendants were indicted.

One issue raised on appeal was the resulted from the testimony from IRS Agent Owns who examined their tax returns and testified regarding what she calculated as their correct tax liability. In her estimation, they owed an additional $474,147 over a four-year period. Her calculation did not account for any business expenses the Horners may have paid from their personal accounts but that they did not claim as a reduction. In her cross examination she said that such unclaimed deductions would reduce the Horners unreported income tax liability, but that it would not have a “really big impact” and would still leave “a substantial understatement.” When calculating the amount of tax due during the sentencing phase, the trial court ultimately accepted a figure of unclaimed business expense deductions which reduced the unreported income in the relevant periods by approximately one-third.