Justia Government Contracts Opinion Summaries

In 2014, following investigations by the Indiana Attorney General and FBI, a grand jury indicted Shorter and her company, Empowerment, which provided transportation to Medicaid patients, for health care fraud, 18 U.S.C. 1347, and three counts of misusing a means of identification, 18 U.S.C. 1028A. The government submitted evidence of Shorter’s personal involvement in Empowerment’s billing practices; the results of an Indiana Attorney General Investigation into Empowerment’s billing practices; an FBI search of Empowerment’s records; and the experiences of Empowerment employees and of clients who used its services. The Seventh Circuit affirmed her convictions rejecting arguments challenging the indictment, the admission of certain evidence at trial and the sufficiency of the evidence as a whole. The court noted “powerful” circumstantial evidence that permitted the jury to convict her, especially because the jury could reasonably infer from the evidence that she “caused” the fraudulent billings. View "United States v. Shorter" on Justia Law

Kolbusz, a dermatologist, submitted thousands of claims to the Medicare system and private insurers for the treatment of actinic keratosis, a skin condition that sometimes leads to cancer. He received millions of dollars in payments. Convicted of six counts of mail or wire fraud, 18 U.S.C. 1341, 1343, he was sentenced to 84 months in prison plus $3.8 million in restitution. The Seventh Circuit affirmed. The evidence permitted a reasonable jury to conclude that many, if not substantially all, of the claims could not have reflected an honest medical judgment and that the treatment Kolbusz claimed to have supplied may have failed to help any patient who actually had actinic keratosis. Because the indictment charged a scheme to defraud, the prosecutor was entitled to prove the scheme as a whole, and not just the six exemplars described in the indictment. The judge did not err in excluding evidence that, after his arrest and indictment, Kolbusz continued to submit claims to Medicare, and many were paid. “It would have been regrettable to divert the trial into an examination of Medicare’s claims-processing procedures in 2013 and 2014, rather than whether Kolbusz knew that he was submitting false claims in 2010 and earlier." View "United States v. Kolbusz" on Justia Law

Former FBI agent Robert Lustyik wanted to help his friend and business partner, Michael Taylor, in return for payment. Taylor owned American International Security Corporation (AISC), a company that offered security and defense contracting services. The Department of Defense awarded AISC a contract in 2007 to provide training and related services to Afghan Special Forces. In mid-2010, the United States began investigating AISC regarding fraud and money laundering in connection with the 2007 contract. In September 2011, the United States filed a civil forfeiture action against assets owned by Taylor and AISC, which resulted in the seizure of more than $5 million dollars from AISC’s bank account. Lustyik used his status as an FBI agent to impair the government’s investigation of Taylor, including attempting to establish Taylor as a confidential source. Lustyik was indicted on charges related to the obstruction of justice. Prior to trial, Lustyik pleaded guilty to all charges in the indictment without a plea agreement. After his plea, his lead counsel withdrew and Lustyik obtained new counsel. On the eve of sentencing, counsel sought an order allowing him to obtain security clearance to review classified material he believed might be relevant for sentencing. The district court, having previously reviewed the documents, deemed them irrelevant to the sentencing issues, denied the motion, and subsequently sentenced Lustyik to 120 months’ imprisonment. Lustyik argued on appeal that the district court’s order denying his counsel access to the classified materials violated his Sixth Amendment rights at sentencing. Finding that the district court’s decision was not presumptively prejudicial to Lustyik’s advocacy at sentencing, nor did the district court abuse its discretion in concluding the documents were not relevant for sentencing, the Tenth Circuit affirmed. View "United States v. Lustyik" on Justia Law

In 2008, Javidan shadowed Shahab, who was involved with fraudulent home-health agencies. Javidan, Shahab, and two others purchased Acure Home Care. Javidan managed Acure, signing Medicare applications and maintaining payroll. She had sole signature authority on Acure’s bank account and, was solely responsible for Medicare billing. Javidan illegally recruited patients by paying “kickbacks” to corrupt physicians and by using “marketers” to recruit patients by offering cash or prescription medications in exchange for Medicare numbers and signatures on blank Medicare forms. Javidan hired Meda as a physical therapist. Meda signed revisit notes for patients that he did not visit. He told Javidan which patients were not homebound and which demanded money for their Medicare information. The government charged both with health care fraud conspiracy (18 U.S.C. 1347) and conspiracy to receive kickbacks (18 U.S.C. 371). At trial, Javidan testified that she did not participate in and was generally unaware of Acure’s fraudulent business practices. Meda called no witnesses. Javidan and Meda were sentenced to terms of 65 and 46 months of imprisonment, respectively. The Sixth Circuit affirmed, rejecting Meda’s claims that his conviction violated the Double Jeopardy Clause and that he was subjected to prosecutorial vindictiveness for refusing to plead guilty and requesting a jury trial in prior case and Javidan’s claims of improper evidentiary rulings and sentence calculation errors. View "United States v. Javidan" on Justia Law

A jury found Ferrell, a licensed psychologist, and Bryce, Ferrell’s employee, guilty of six counts of healthcare fraud, 18 U.S.C. 1347. Ferrell was sentenced to 88 months of imprisonment. The Seventh Circuit affirmed, upholding the district court’s refusal to admit two out-of-court statements made by Bryce’s brother (also Ferrell’s employee), and contained in a voicemail and an email. The district court held that these statements were hearsay and did not fall within Rule 804(b)(3)’s hearsay exception. The district court held that although the brother was unavailable to testify, the statements were not against his interest and the corroborating circumstances did not indicate that his statements were trustworthy. The court also upheld admission of testimony by another doctor concerning Ferrell’s conduct while in Texas. The court found that the testimony did not constitute impermissible character evidence under Fed. R. Evid. 404(b). View "United States v. Ferrell" on Justia Law

Nagle and Fink were co-owners and executives of concrete manufacturing and construction businesses. The businesses entered into a relationship with a company owned by a person of Filipino descent. His company would bid for subcontracts on Pennsylvania transportation projects as a disadvantaged business enterprise. Federal regulations require states that receive federal transportation funds to set annual goals for participation in transportation construction projects by disadvantaged business enterprises, 49 C.F.R. 26.21. If his company won the bid for the subcontract, Nagle and Fink’s businesses would perform all of the work. Fink pled guilty to conspiracy to defraud the United States. A jury found Nagle guilty of multiple charges relating to the scheme. The Third Circuit affirmed Nagle’s conviction, upholding the admission of electronic evidence discovered during searches of the businesses’ offices, but vacated both sentences, based on loss calculation errors. View "United States v. Nagle" on Justia Law

Beginning in 2008 Mullins served as Cook County’s Director of Public Affairs and Communications. At that time, contracts requiring the county to spend $25,000 or more had to be approved by its Board of Commissioners. Contracts that required the county to spend less than $25,000 only required the approval of the county’s purchasing agent. The government charged Mullins and co-defendants—vendors to whom the county awarded contracts—with manipulating the system. Mullins helped these vendors obtain payment under county service contracts, without the vendors having to complete any work, and in exchange they paid Mullins $34,748 in bribes. Jurors convicted him of four counts of wire fraud, 18 U.S.C. 1343, and four counts of bribery, section 666. The Seventh Circuit rejected Mullins’s challenge to the sufficiency of the evidence and claim of prosecutorial misconduct. View "United States v. Mullins" on Justia Law

The six-month trial of former Detroit mayor Kilpatrick and Detroit contractor Ferguson, included almost 100 government witnesses and over 700 exhibits. The government’s main theory was that Kilpatrick and Ferguson conspired to extort money from other Detroit-area contractors by pressuring them to include Ferguson’s companies in their city contracts—even when Ferguson’s companies were not the most qualified candidates and even when Ferguson’s companies did no work. Kilpatrick was convicted of 24 counts: RICO conspiracy, 18 U.S.C. 1962(d); four counts of extortion, 18 U.S.C. 1951; attempted extortion, 18 U.S.C. 1951; bribery, 18 U.S.C. 666(a); 11 counts of mail and wire fraud, 18 U.S.C. 1341, 1343; five counts of subscribing a false tax return, 26 U.S.C. 7206(a); and income tax evasion, 26 U.S.C. 7201. Ferguson was convicted of nine counts: RICO conspiracy, six counts of extortion, attempted extortion, and bribery. The Sixth Circuit affirmed the convictions but vacated a restitution order, rejecting arguments that Kilpatrick was denied conflict-free counsel because his lead attorneys had recently become “of counsel” to a firm that was suing Kilpatrick for alleged conduct related to his criminal charges; extensive testimony by two case agents violated the Rules of Evidence; and the court erred in allowing witnesses to report what other people had told them about Kilpatrick and Ferguson as evidence that witnesses feared the defendants. View "United States v. Ferguson" on Justia Law

McClellan operated T&M Daycare. Nearly all of its clients participated in an Illinois program that reimbursed daycare centers. To qualify, a parent or guardian had to reside in Illinois, be employed or attend school, and have an income below a specified amount. McClellan instructed T&M’s director to falsify records so that T&M could receive state reimbursement. McClellan was also seen changing numbers on sheets submitted for state reimbursement of meals. McClellan purchased Paragon restaurant. The Department of Homeland Security had been investigating information that illegal aliens were working there. Paragon’s manager agreed to record conversations with McClellan and to provide documentary evidence that McClellan was paying wages in cash and was not reporting those wages to the state. McClellan used T&M’s account to purchase a house, where undocumented kitchen staff lived rent‐free. Recorded conversations revealed McClellan’s knowledge of the workers’ illegal status. Agents executed search warrants and found 12 workers without legal status. McClellan was charged with harboring illegal aliens, 8 U.S.C. 1324(a)(1)(A)(iii); mail fraud, 18 U.S.C. 1341, based on his submission of fraudulent employment tax reports; and engaging in a monetary transaction involving criminally derived property, 18 U.S.C. 1957, based on the transfer of T&M funds for the house purchase. The Seventh Circuit affirmed his convictions, rejecting challenges to the sufficiency of the evidence and to jury instructions. View "United States v. McClellan" on Justia Law

Clark’s trucking business was hired to perform hauling services on a state‐ and federally funded highway project in Missouri. Because federal funds were involved, Clark’s contract with the project’s general contractor required that he pay his truck drivers the federal prevailing wage pursuant to the Davis‐Bacon Act (then $35.45/hour). Clark did not do so, but individually contracted with his drivers for roughly $15/hour instead. Throughout the project, Clark submitted weekly payroll certifications in which he falsely attested to paying his workers $35.45/hour. After his work concluded, he submitted an affidavit to the Missouri Department of Transportation, certifying compliance with Missouri state law and its state wage order. Based on these attestations, the government charged Clark with 10 counts of making false statements,18 U.S.C. 1001. The Seventh Circuit affirmed his convictions on nine counts, rejecting An argument that there was insufficient evidence to conclude that his false statements were material to the federal government. The court agreed that the government failed to prove that his affidavit to MODOT had a natural capability of influencing the federal government and reversed conviction on Count 10. View "United States v. Clark" on Justia Law