Current Topics in Federal Criminal Defense

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THE OFFICE OF THE FEDERAL PUBLIC DEFENDER FOR THE EASTERN DISTRICT OF VIRGINIA AND THE FEDERAL BAR ASSOCIATION’S CRIMINAL LAW SECTION AND ITS CHAPTERS IN NORTHERN VIRGINIA, RICHMOND, & HAMPTON ROADS

PRESENT A CJA PANEL TRAINING PROGRAM

CURRENT TOPICS IN FEDERAL CRIMINAL DEFENSE

Wednesday, November 16, 2016, 10:30 a.m. - 3:30 p.m. Hilton Downtown Richmond, 501 East Broad Street, Richmond This page intentionally left blank for double-sided pagination and printing TABLE OF CONTENTS

Program Schedule...... iii

Faculty Information...... iv

Lessons From Defending Federal Fraud Charges...... 1

Discussion overview...... 1

Memorandum, Managing Large Volumes of Discovery in Federal CJA Cases (May 14, 2015)...... 3

Memorandum opinion and order (re. government interference with witnesses)...... 7

Motion reply (re. government sending of “victim notification” letters to potential defense witnesses)...... 14

Order (re. witnesses receiving “victim notification” letters, admissibility of certain testimony)...... 23

Rule 29 motion for judgment of acquittal (wire fraud, conspiracy)...... 27

Rule 29 motion for judgment of acquittal (health care fraud, aggravated identity theft)...... 46

Sentencing position (conspiracy to commit wire fraud)...... 62

National Institute of Justice, Five Things About Deterrence (July 2014) ...... 100

Amendments to the U.S. Sentencing Guidelines...... 101

Presentation slides...... 102

U.S. Sentencing Comm’n, Amendments to the Sentencing Guidelines (effective Aug. 1, 2016)...... 122

-i- Amy Baron-Evans et al., Litigating Challenges to the Amended Definition of “Crime of Violence” in § 4B1.2(a)...... 135

U.S. Sentencing Comm’n, Amendments to the Sentencing Guidelines (effective Nov. 1, 2016)...... 154

Cooperation: Preparing for Success in Dealing With the Devil...... 225

Discussion overview...... 225

Sample, proffer letter...... 227

Sample, plea agreement...... 230

Sample, motion for sentence reduction...... 244

Memorandum, Public Internet Access to Plea Agreements (Mar. 20, 2008)...... 251

Standing Order 2013-03 (D. Md.)...... 254

How to Deal With a Government Hack: Law Enforcement’s Use of Remote Search Technology...... 257

Presentation slides...... 258

Search and seizure warrant...... 277

Application for search warrant...... 280

Affidavit in support of application...... 281

Rule 41, as amended...... 314

-ii- PROGRAM SCHEDULE

10:00 Program check-in begins

10:30 Opening remarks Geremy Kamens

10:35 Lessons From Defending Federal Fraud Charges Peter White Nina Ginsberg Geremy Kamens, moderator

11:35 Amendments to the U.S. Sentencing Guidelines Patrick Bryant Fran Pratt

12:35 Lunch (provided as part of program)

1:20 Cooperation: Preparing for Success in Dealing Jonathan Fahey With the Devil Dennis Fitzpatrick Rick Colgan

2:20 Break

2:30 How to Deal With a Government Hack: Law Andrew Grindrod Enforcement’s Use of Remote Search Technology

3:30 Complete evaluations and adjourn

-iii- FACULTY INFORMATION

PATRICK L. BRYANT Appellate Attorney, Office of the Federal Public Defender, Eastern District of Virginia

Education: B.A. 1998, Duke University; J.D. 2002, Washington and Lee University School of Law

Professional: Staff attorney, U.S. Court of Appeals for the Fourth Circuit, Richmond, Virginia, 2002-04 and 2005-07; law clerk, Hon. Charles R. Wilson, U.S. Court of Appeals for the Eleventh Circuit, Tampa, Florida, 2004-05; research and writing attorney, Office of the Federal Public Defender, Alexandria, Virginia, 2007-present

RICHARD J. COLGAN Assistant Federal Public Defender, Eastern District of Virginia

Education: B.A. 1975, State University of New York at Buffalo; J.D. 1979, University of Tennessee College of Law

Professional: Weisberg and Stein, P.C. ,1980-88; private solo practice, Virginia Beach, Virginia, 1988-98; Colgan & Kimball, Virginia Beach, Virginia, 1998-2004; Colgan, Kimball & Carnes, Virginia Beach, Virginia, 2004-06; assistant public defender for Isle of Wight and Southampton Counties, 2006-07; assistant federal public defender, Norfolk, Virginia, 2007-present

JONATHAN L. FAHEY Assistant U.S. Attorney, Eastern District of Virginia

Education: B.S. 1994, James Madison University; J.D. 1999, University of San Diego School of Law

Professional: Law clerk, Arlington County Circuit Court, Arlington, Virginia, 1999-2000; assistant Commonwealth’s attorney, Fairfax County, Virginia, 2000-02; special assistant U.S. attorney, Alexandria,

-iv- Virginia, 2002-05; assistant U.S. attorney, Alexandria, Virginia, 2005-present

DENNIS M. FITZPATRICK Assistant U.S. Attorney, Eastern District of Virginia

Education: B.A. 1990, George Mason University; J.D. 1999, University of Maine School of Law

Professional: Assistant Commonwealth’s attorney, Fairfax County, 2000-04; special assistant U.S. attorney, Alexandria, Virginia, 2005-07; assistant U.S. attorney, 2007-present; adjunct professor, George Mason University School of Law, 2012-present

NINA J. GINSBERG Partner, DiMuroGinsberg, P.C., Alexandria, Virginia

Education: B.A. 1973, University of Rochester; J.D. 1978, Antioch School of Law

Professional: Private practice, Alexandria, Virginia, 1978-2011, with an emphasis on complex criminal litigation, including financial and corporate fraud, computer crime, national security litigation, professional ethics (individual and corporate defendants); past and present member of numerous committees of the Virginia State Bar, Bar Association of the District of Columbia, U.S. Sentencing Commission, and National Association of Criminal Defense Lawyers

ANDREW W. GRINDROD Assistant Federal Public Defender, Eastern District of Virginia

Education: B.A. 2008, Wake Forest University; J.D. 2012, University of Chicago Law School

Professional: Law clerk, Hon. Paul S. Diamond, U.S. District Court, Philadelphia, Pennsylvania, 2012-13; associate, Kirkland & Ellis,

-v- LLP, Washington, D.C., 2013-15; assistant federal public Defender, Norfolk, Virginia, 2015-present

GEREMY C. KAMENS Federal Public Defender, Eastern District of Virginia

Education: B.A. 1992, College of William and Mary; J.D. 1997, University of Virginia School of Law

Professional: Law clerk, Justice Henry W. Whiting, Virginia Supreme Court, Winchester, Virginia, 1997-98; law clerk, United States District Judge Harold L. Murphy, Rome, Georgia, 1998-2000; associate, Hunton & Williams, Richmond, Virginia, 2000-02; assistant federal public defender, Norfolk, Virginia, 2002; assistant federal public defender, Alexandria, Virginia, 2002-14; acting federal public defender, 2014-15; federal public defender, 2015-present

FRANCES H. PRATT Assistant Federal Public Defender, Eastern District of Virginia

Education: B.A. 1986, Duke University; J.D. 1993, Duke University

Professional: Law clerk, Hon. William L. Osteen, Sr., U.S. District Court, Greensboro, North Carolina, 1993-94; contract attorney, North Carolina Resource Center, Durham, North Carolina, 1994-95; staff attorney, Office of Defender Services Training Branch, Administrative Office of the United States Courts, Washington, DC, 1995-2002; appellate attorney, Office of the Federal Public Defender, Alexandria, Virginia, 2002-08; assistant federal public defender (appeals), Alexandria, Virginia, 2008-present

PETER H. WHITE Partner, Schulte Roth & Zabel LLP, Washington, DC

Education: B.A. 1985, University of Notre Dame; J.D. 1989, University of Virginia School of Law

-vi- Professional: Law clerk, Hon. Richard L. Williams, U.S. District Court, Richmond, Virginia, 1989-90; assistant U.S. attorney, District of Columbia, 1992-97; assistant U.S. attorney, Eastern District of Virginia, 1997-99; private practice, 1999-present, serving as lead defense counsel for individuals charged with federal fraud offenses

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-viii- LESSONS LEARNED FROM DEFENDING FEDERAL FRAUD CHARGES

Peter H. White Nina J. Ginsberg Geremy C. Kamens, moderator

DISCUSSION OVERVIEW

I. Discovery

II. Motions Before Trial

- CJA 1 - III. Motions At and After Trial

IV. Sentencing

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IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Alexandria Division

) UNITED STATES OF AMERICA ) ) Case No. 1:14-CR-278 v. ) ) Honorable Gerald Bruce Lee AMIR A. BAJOGHLI, M.D., ) ) Trial: October 22, 2014 Defendant. ) )

DEFENDANT’S REPLY TO GOVERNMENT’S RESPONSE TO MOTION IN LIMINE SEEKING CORRECTIVE WITNESS INSTRUCTION FOR CERTAIN PATIENT WITNESSES

Defendant Amir A. Bajoghli, M.D., by and through counsel, hereby submits this Reply to the Government’s Response to the Motion in Limine Seeking Corrective Witness Instruction for

Certain Patient Witnesses. (Def. Mot. (Dkt. No. 43); U.S. Resp. (Dkt. No. 55).)

The pending Motion in Limine presents a simple question of law: whether the patients to whom the government sent “victim notification” letters can be considered “victims” under the

Crime Victims’ Rights Act (“CVRA”), 18 U.S.C. § 3771, or Victims’ Rights and Restitution Act

(“VRRA”), 42 U.S.C. § 10607, such that the government did not act improperly. The government’s reliance on its automated notification system and a work culture that fears disciplinary sanctions is immaterial. Regardless of how the government sent Dr. Bajoghli’s patients these letters, the fact remains that none of the recipients qualify as “victims” as that term is used in the CVRA and VVRA. Accordingly, the defendant respectfully requests that the Court remedy the government’s error through a curative instruction.

As previously articulated, the government’s conduct is tantamount to witness coercion and tampering. (See Dkt. No. 43). Given the clear state of the law, the question remains how to

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remedy the situation in a way that allows the defense an opportunity to present unbiased evidence to the jury. Rather than seek dismissal of the case, the defendant simply requests that the Court instruct the witnesses that received these letters in a manner so that they are not under the misimpression that they are “victims” under CVRA and VRRA. As outlined below, the letters were not required by law, and the government concedes that they were mailed to key exculpatory witnesses six weeks before trial in a case that has been under investigation for over four years -- or since the spouse of a Supervisory Special Agent at the FBI complained about a biopsy taken by Dr. Bajoghli.

As a justification for sending the letters, the Response filed by the government puts forth an analysis grounded on inapplicable law. The government cites Fifth and Sixth Circuit decisions for the proposition that “[c]ircuit courts have . . . recognized that patients may be victims in health care fraud cases.” (U.S. Resp. at 3.) All of the cases that the government cites, however, concern the application of U.S. Sentencing Guidelines § 3A1.1(b)(1), the “vulnerable victim” enhancement. See United States v. Valdez, 726 F.3d 684 (5th Cir. 2013) (discussing applicability of § 3A1.1(b)(1)); United States v. Patel, 485 F. App’x 702, 719 (5th Cir. 2012)

(same); United States v. Moon, 513 F.3d 527, 540 (6th Cir. 2008) (same).

By analogizing to the U.S. Sentencing Guidelines, the government ignores that unlike a sentencing, which occurs after a conviction, Dr. Bajoghli intends to establish his absolute innocence. The government’s ill-founded assumption of guilt in its legal analysis is at the heart of the issue because they are telling exculpatory witnesses (those that will testify that the defendant is not in fact guilty) that they are “victims” of a crime as an effort to chill their willingness to testify. At bottom, the government inexplicably overlooks the consensus statutory interpretation of the CVRA. As the Court recently observed, federal courts routinely hold “that,

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given the similarity between the statutory text of the CVRA and the VWPA, a ‘victim’ under the

VWPA is the same as a ‘crime victim’ under the CVRA.”1 United States v. Credit Suisse AG,

No. 1:14-CR-188, 2014 WL 5026739, at *3 (E.D. Va. Sept. 29, 2014) (emphasis added) (citing

In re McNulty, 597 F.3d 344, 350 (6th Cir. 2010); In re Rendon Galvis, 564 F.3d 170, 173 (2d

Cir. 2009); United States v. Sharp, 463 F. Supp. 2d 556, 563 (E.D. Va. 2006); United States v.

Warwick, No. WDQ-11-0167, 2011 WL 4527285, at *2 n.1 (D. Md. Sept. 26, 2011)).2

Moreover, “one of the chief co-sponsors of the CVRA, Senator Jon Kyl, coauthored a

law review article . . . that asserts that ‘[t]he CVRA’s definition of a crime victim is based on the

[VWPA and MVRA].’” Id. (quoting The Hon. Jon Kyl et al., On the Wings of Their Angels: The

Scott Campbell, Stephanie Roper, Wendy Preston, Louarna Gillis, and Nila Lynn Crime Victims’

Rights Act, 9 Lewis & Clark L. Rev. 581, 594 & n.65 (2005)) (alterations in original). Thus, the

manner in which the U.S. Supreme Court and the Fourth Circuit have interpreted the definition

of “victim” under the VWPA is highly persuasive to the meaning of “victim” under the CVRA,

and shows that the government is attempting to stretch the CVRA’s meaning beyond its

congressional design.

1 The VWPA is the Victim and Witness Protection Act of 1982, 18 U.S.C. § 3663. 2 Some of the cases cited in Credit Suisse also purport to rely on the Mandatory Victim Restitution Act of 1996, 18 U.S.C. § 3663A, in interpreting the CVRA. As Chief Judge Beach Smith has explained, because the MVRA “contains the exact same language defining ‘victim’ as the VWPA[,] . . . . [t]he Fourth Circuit interprets ‘victim’ under the VWPA and the MRVA as having the same definition.” 2014 WL 5026739, at *3 n.7 (citing United States v. Adelbary, 746 F.3d 570, 578 (4th Cir. 2014).

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Like the CVRA,3 the VWPA’s definition of “victim” consists of two elements. A victim

is someone who is (1) directly and (2) proximately harmed “as a result of the commission of an

offense for which restitution may be ordered.” 18 U.S.C. § 3663(a)(2). The direct and

proximate harm requirement is conjunctive. That is, an individual does not qualify as a victim

under the VWPA unless he or she suffered a harm that was both direct and proximate.

The Fourth Circuit has narrowly interpreted the direct harm element of VWPA. An

individual claiming victim status must show that the harm incurred was “‘caused by the specific

conduct that is the basis of’ the defendant’s offense of conviction.” United States v. Freeman,

741 F.3d 426, 435 (4th Cir. 2014) (quoting Hughey v. United States, 495 U.S. 411, 420 (1990)).

Accordingly, “‘the act that harms the individual must be either conduct underlying an element of

the offense of conviction, or an act taken in furtherance of a scheme, conspiracy, or pattern of

criminal activity that is specifically included as an element of the offense of conviction.’”

Freeman, 741 F.3d at 436 (quoting United States v. Blake, 81 F.3d 498, 506 (4th Cir. 1996))

(emphases added).

3 The definition of victim in the VRRA is narrower than the definitional language used in the CVRA. Compare 18 U.S.C. § 3771(defining a “crime victim” as “a person directly and proximately harmed as a result of the commission of a Federal offense”), with 18 U.S.C. § 10607 (defining “victim” as “a person that has suffered direct physical, emotional, or pecuniary harm as a result of the commission of a crime”). Although it appears that no court has addressed the issue, there is no reason to believe that the CVRA and VRRA should be interpreted differently. If an individual cannot qualify as a victim under the broad definition set forth in the CVRA, then a fortiori that person cannot meet the narrower VRRA definition. Moreover, one district court in the Fourth Circuit has explained that the VRRA is a “procedural statute[].” Credit Suisse, 2010 WL 5026739, at *2 n.5. If, for instance, an individual is not entitled to restitution under the VWPA, then the VRRA is inapplicable. Id. The same logic applies here. If Dr. Bajoghli’s patients are not entitled to the rights afforded under the CVRA, then the identification and notification required by the VRRA is inapplicable. For these reasons, the Reply will refer to the CVRA for ease of reference.

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With respect to the proximate harm element, the watchword is “foreseeable.” As Chief

Judge Beach Smith has explained, “the injury suffered by the individual must have been a foreseeable consequence of the crime of conviction.” Credit Suisse, 2014 WL 5026739, at *4

(citing In re McNulty, 597 F.3d 344, 352 (6th Cir. 2010)). “A person will not qualify as a ‘crime victim’ merely because he suffers harm at the hands of the defendant, even if such harm qualifies as a separate crime.” Id.

Here, the government has charged Dr. Bajoghli with fifty-three counts of health care fraud and six counts of aggravated identity theft. Although the government references a number of Dr. Bajoghli’s patients in the Indictment, it has not explained how any these individuals were directly and proximately harmed by the alleged conduct underlying the actual elements of each charged offense. This is because the Government cannot. The essential elements of the health care fraud charges are that Dr. Bajoghli (1) knowingly devised or participated in a scheme to defraud a health care benefit program, (2) with the intent to defraud, (3) a health care benefit program. See 18 U.S.C. § 1347. Likewise, the essential elements of the aggravated identity theft charges are that Dr. Bajoghli (1) knowingly transferred, possessed, or used a means of identification of another person during and in relation to a health care fraud offense, (2) he knew that the identification belonged to someone else, and (3) he did so without lawful authority. See

18 U.S.C. § 1028A. Neither of these offenses require any showing that a patient was harmed.

Further, even if they could make such allegations, the government’s very own reports of interviews of the patients who received these letters show that these witnesses are favorable to the defense.

In this regard, the case that the government has brought against Dr. Bajoghli is akin to the prosecution in United States v. Blake, 81 F.3d 498 (4th Cir. 1996). There, the defendant pled

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guilty to using stolen credit cards. The district court deemed the owners of the credit cards to be

victims under the VWPA, and directed the defendant to pay these individuals for the costs

associated with the items that the defendant took when he stole the credit cards (e.g.,

pocketbooks and wallets). The Fourth Circuit, however, reversed the restitution award. It

explained that the crime to which the defendant had pled guilty (i.e., using stolen credit cards)

did not “include the theft of the credit cards.” Id. at 506. As a result, the losses incurred by the

“robbery victims [were] not caused by [the defendant’s] offense of conviction.” Id. at 507.

In United States v. Kones, 77 F.3d 66, 71 (3d Cir. 1996), the Third Circuit held that a patient allegedly harmed by a physician’s medical services was not eligible for restitution where the physician was convicted of mail fraud, because that offense only proscribes using the mails to defraud. Fourth Circuit case law is replete with analogous decisions that reached similar results. See, e.g., United States v. Freeman, 741 F.3d 426, 427 (4th Cir. 2014) (defendant’s conviction for obstructing federal bankruptcy proceedings did not render individuals, who allegedly suffered losses arising out of a loan, victims for purposes of restitution); United States v. Davis, 714 F.3d 809, 816 (4th Cir. 2013) (homeowner not a victim for purposes of VWPA where defendant burglarized home but pled guilty only to possession of a stolen firearm); Credit

Suisse, 2014 WL 5026739, at *4 (bank’s guilty plea to conspiring to defraud the IRS did not render bank customer, who was allegedly harmed by unrelated commercial transaction, a victim under the CVRA); United States v. Fuller, Nos. 1:12-CR-397-1, 1:12-CR-397-2, 2014 WL

640600 (M.D.N.C. Feb. 19, 2014) (rejecting restitution request by employee who was fired after reporting defendant’s health care fraud scheme, explaining that although the employee may have been harmed “by her proximity to the criminal conduct of the defendants,” she was not a victim under the MVRA; rather the “clear victim” of the health care scheme was “the health care benefit

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program itself”); see also United States v. Fallon, 470 F.3d 542, 548 n.12 (3d Cir. 2006)

(explaining that, in the context of the MVRA, district courts cannot grant restitution for “scheme or conspiracy base crimes” unless the government satisfies its “burden of showing that the loss suffered was ‘directly’ caused by defendants’ actions.” (citing several decisions, including

United States v. Henoud, 81 F.3d 484, 489 (4th Cir. 1996)).4

The prevailing law establishes that the recipients of the victim notification letters do not qualify as “victims” under the CVRA. For the reasons discussed in the Motion in Limine, the government’s transmittal of these letters is highly prejudicial to the ability of Dr. Bajoghli to put on a defense. Although Dr. Bajoghli could ask for a dismissal, at this time he does not. His request for an instruction to the witnesses who received these letters should they be called to testify, therefore, is not only reasonable but necessary.

4 The government is incorrect in its contention that United States v. Weinberger, No. 2:06-CR- 230, 2011 WL 445815 (N.D. Ind. Feb. 4, 2011), does not support Dr. Bajoghli’s argument.

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CONCLUSION

For the reasons stated herein and in Dr. Bajoghli’s opening Motion, the defendant respectfully requests that the curative instruction be given.

Dated: October 17, 2014 Respectfully submitted

/s/ Peter H. White /s/ Kirk Ogrosky Peter H. White (VSB# 32310) Kirk Ogrosky (pro hac vice) SCHULTE ROTH & ZABEL LLP Murad Hussain (pro hac vice) 1152 15th Street, NW, Suite 850 ARNOLD & PORTER LLP Washington, D.C. 20005 555 Twelfth Street, NW Tel: (202) 729-7470 Washington, DC 20004-1206 [email protected] Tel: (202) 942-5000 [email protected] [email protected]

Attorneys for Amir A. Bajoghli, M.D.

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CERTIFICATE OF SERVICE

I hereby certify that on this 17th day of October 2014, I caused the foregoing to be filed electronically using the Court’s CM/ECF system, which automatically sent a notice of electronic filing to all counsel of record.

Dated: October 17, 2014 Respectfully submitted,

Attorneys for Amir A. Bajoghli, M.D.

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IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA ALEXANDRIA DIVISION

UNITED STATES OF AMERICA

AMIR A. BAJOGHLI, M.D., Case No. l:14-cr-278 (GBL)

Defendant.

ORDER

THIS MATTER is before the Court on Defendant's Motion in Limine Seeking Corrective

Witness Instructions for Certain Patient Witnesses (Doc. 43), Defendant's Motion in Limine to

Exclude Irrelevant and Unfairly Prejudicial Evidence (Doc, 45), the Government's Motion in

Limine to Treat Janice Rasmussen as a Hostile Witness (Doc. 56), and Defendant's Motion in

Limine to Exclude 404(b) Evidence (Doc. 65). Having reviewed the pleadings, it is hereby

ORDERED that Defendant's Motion in Limine Seeking Corrective Witness Instructions for Certain Patient Witnesses (Doc. 43) is GRANTED. The Court will provide those fact witnesses who received the Government's victim impact statement, but who are not victims of the crimes alleged, with a letter addressing their status and role in the proceeding (Exhibit A).

The Government is further directed to provide each witness with the letter, without comment forthwith, but no later than one hour prior to the witnesstestifying. It is further

ORDERED that the Defendant's Motion in Limine to Exclude Irrelevant and Unfairly

Prejudicial Evidence (Doc. 45) is GRANTED IN PART and DENIED IN PART.

Specifically,

1. Lay witness testimony regarding the legality of suturing by medical assistant or

the appropriate diagnosis and treatment of any patient is inadmissible, because

such testimony concerning a lay witnesses' understanding ofwhether a license is

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required to perform certain medical procedures is a legal opinion which is beyond

the lay witnesses' competence because the lay witnesses' understanding is what

the witness was told by a third party, which is hearsay and a legal opinion;

2. Lay witness testimony regarding ones understanding of the medical procedures

they were licensed and permitted to perform is inadmissible;

3. Lay witness testimony by an employee who performed suturing is admissible;

4. Lay witness testimony regarding an employee's training, experience, and

qualifications is admissible;

5. Any evidence of affirmative misrepresentations allegedly made by the Defendant

to patients about medical assistants' qualifications is limited to the specific

charges presented in the indictment but is admissible;

6. Employees' testimony as to Defendant disregarding their concerns about feeling

unqualified to perform certain procedures is admissible but is limited to the those

specific cases charged in the indictment;

7. Lay witness testimony concerning conversations Defendant had with a specific

witness is admissible to prove knowledge, intent, and lack ofgood faith.

8. Expert testimony as to the general standard for diagnosing and treating particular

skin conditions, specifically as it relates to Mohs patients is admissible, but the

testimony must be stated as an opinion held by the expert to a reasonable degree

ofmedical certainty for a practitioner practicing in the field;

9. Expert testimony regarding personal preferences is inadmissible; and

10. All testimony is fiirther limited to the 53 charges ofthe indictment.

It is further

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ORDERED that the Government's Motion in Limine to Treat Janice Rasmussen as a

Hostile Witness (Doc. 56) is DENIED; it is further

ORDERED that Defendant's Motion in Limine to Exclude 404(b) Evidence (Doc. 65) is

GRANTED. In a criminal case, Rule 404(b) requires the prosecution, upon request by the accused, to "provide reasonable notice in advance of trial ... of the general nature of any . . .

[Rule 404(b)] evidence it intends to introduce at trial." Fed. R. Evid. 404(b). The requirement that a criminal defendant receive prior notice of the government's intent to introduce such evidence protects against the misuse of prior "bad act" evidence. See U.S. v. Queen, 132 F.3d

991, 997 (4th Cir. 1997). The Government failed to provide reasonable notice in advance of trial. Accordingly, the Court will not allow use of any use of prior "bad act" evidence, including any evidence tending to show Defendant's efforts to: conceal evidence, alter records, direct his staff to submit revised fraudulent claims to health care benefit programs, stop submitting claims for pathology work that he did not perform, direct employees to submit false amended claims for wound repairs, delete scheduling data for wound repairs performed by medical assistants, stop performing Mohs surgery before confirming a cancer diagnosis, no longer allow medical assistants to perform unsupervised wound repair. Even if the Government would have provided reasonable Notice the evidence discussed would have nonetheless been excluded pursuant to

Fed. R. Evid. 403 because the probative value of such evidence is substantially outweighed by the danger of unfair prejudice concerning uncharged criminal conduct, confusing the jury as to the specific conduct Defendant is charged with in the indictment, and waste of judicial resources.

IT IS SO ORDERED.

ENTERED this lay of October, 2014.

Alexandria, Virginia 10/^/2014 /s/ Gerald Bruce Lee United States District Judge 3

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^tatcs Ptstrict Court

EASTERN DISTRICT OF VIRGINIA 401 COURTHOUSE SQUARE ALEXANDRIA. VIRGINIA 22314-5799

CHAMBERS OF TELEPHONE (703) 299-2117 GERALD BRUCE LEE FACSIMILE (703) 299-3339

October 21, 2014

Re: Letter to Witness in U.S. v. Amir A. Bajoghli, M.D regarding Victim Impact Statement

Dear Witness:

The Court understands that you received a letter on or about September 3, 2014, from the U.S. Department ofJustice concerning a criminal matter captioned U.S. v. Amir A. Bajoghli, M.D. (14-cr-00278). Though this letter was styled as a Victim Impact Statement pursuant to certain provisions ofthe United States Code, the Court has not made any determination that you are a victim ofthe alleged criminal activity being charged in this indictment. The charges in the indictment relate to health insurance fraud and aggravated identity theft. Unless your name appears in the indictment relating to identity theft, the Court will render a decision about your status after the case is resolved. You will not receive any restitution based on this proceeding. Your role in this judicial proceeding is that ofa fact witness, sworn to tell the whole truth under penalty ofpeijury.

Dr. Bajoghli is presumed to be innocent and may only be found guilty ifa jury is convinced that it has been proven beyond a reasonable doubt that he committed the crime(s) charged in the indictment. Ifthe Government does not meet its burden ofproof. Dr. Bajoghli will be found not guilty. Should you have any questions regarding this letter or its contents please direct them to me upon appearing in Court.

Respectfiilly,

/s/ Gerald Bruce Lee United States District Judge

Gerald Bruce Lee

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IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Alexandria Division

UNITED STATES OF AMERICA, ) ) v. ) No. 1:10-CR-317(GBL) ) CHUN YU ZHAO, ) Trial: May 2, 2011 ) and ) ) DONALD CONE, ) ) Defendants. )

DEFENDANT’S RULE 29 MOTION FOR JUDGMENT OF ACQUITTAL ON COUNTS ONE, SIXTEEN, SEVENTEEN, AND TWENTY-THREE AS TO WIRE FRAUD AND CONSPIRACY TO COMMIT WIRE FRAUD

COMES NOW the defendant, Donald Cone, by counsel, and moves this Court for entry of a judgment of acquittal pursuant to Federal Rule of Criminal Procedure 29 as to certain allegations contained in Counts One, Sixteen, Seventeen, and Twenty-Three of the Superceding

Indictment, on grounds that no factfinder could find all elements of wire fraud and conspiracy to commit wire fraud under 18 U.S.C. §§ 371 and 1343 beyond a reasonable doubt, and shows the following:

I. INTRODUCTION AND BACKGROUND

Mr. Cone is charged, as relevant to this motion, with three substantive counts of wire fraud and one count of conspiracy to commit wire fraud pursuant to 18 U.S.C §§ 371 and 1343

(“the wire fraud counts”). See Superceding Indictment ¶¶ 15-27, 51, and 53-57 (Rec. Doc. 69).

As relevant to the wire fraud counts, the Superceding Indictment alleges that Mr. Cone was an

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employee of JDC Networking, Inc. (“JDC”) during some portion of the relevant time period. Id.

¶ 10. The government alleges that in collaboration with JDC’s sole owner and operator, co-

defendant Chun-Yu Zhao, Mr. Cone “would purchase Cisco equipment from an authorized U.S.

Cisco distributor by knowingly misrepresenting the identity of JDC Networking’s customers in

order to procure equipment and discounts that would not have been offered had the U.S. Cisco

distributor been informed of the actual JDC Networking customers.” Id. at ¶ 22. Specifically, the

government alleges that Mr. Cone sent or caused to be sent three wires containing material

misrepresentations as to the end users of Cisco equipment purchased from Comstor, Inc.

(“Comstor”), and that these misrepresentations caused Comstor to give JDC discounts to which

it was not entitled:

1. a wire from Comstor, Inc. to JDC containing a price quote misrepresenting the end user as the U.S. Department of Defense (Count 16); 2. a purchase order from JDC to Comstor containing a misrepresentation that the end user of the equipment was the U.S. Department of Defense (Count 17); and

3. a purchase order from JDC to Comstor containing a misrepresentation that the end user of the equipment was “Café of Art” (Count 23).

Superceding Indictment ¶¶ 51, 57.

Trial on the merits has shown these allegations to be utterly unfounded. The testimony of

the government’s own witnesses has directly contradicted the allegation that Comstor was

“deceived” by JDC’s purchase orders. The evidence adduced was that Comstor did not require

JDC to report the end user on its purchase. Rather, Comstor gave JDC the best available price— using whatever discount was needed to get that price—regardless of the end user JDC reported

or even whether an end user was reported at all. Simply put, Mr. Cone never tried to deceive

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Comstor and, in turn, Comstor was never deceived. Further, the government has established at

most that Cisco lost control of the downstream distribution of its products, which is not a

property interest within the meaning of the wire fraud statute. Given these facts, established at

trial, dismissal under Rule 29 of all wire fraud counts is warranted.

II. STANDARD OF REVIEW

Under Federal Rule of Criminal Procedure 29(a), a district court “must enter a judgment of acquittal of any offense for which the evidence is insufficient.” When reviewing the sufficiency of the evidence, the Court must examine whether any factfinder could find all of the elements of the offense beyond a reasonable doubt. Jackson v. Virginia, 443 U.S. 307 (1979);

Glasser v. United States, 315 U.S. 60, 80 (1942); see also Evans-Smith v. Doe, 19 F.3d 899, 906

(4th Cir. 1994) (“[The Jackson test] was adopted . . . to give added assurance that guilt should never be found except on a rationally supportable ‘state of near certitude.’”) (internal citation omitted). At this stage, to overcome acquittal under Rule 29, the government must have presented sufficient evidence to support a conviction based on reasonable inferences, for the factfinder is not entitled to make “leaps of logic.” Evans-Smith, 19 F.3d at 908 n.22.

III. ARGUMENT

The wire fraud statute prohibits using wires sent in interstate commerce to effect “any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises.” 18 U.S.C. § 1343 (2000 ed., Supp. II). To obtain a conviction under the statute, the government must prove (1) the existence of a scheme to

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defraud, (2) a material misrepresentation and (3) the use of interstate wire communications to

facilitate the scheme. See United States v. ReBrook, 58 F.3d 961, 966 (4th Cir. 1995); United

States v. Lenertz, 63 F. App’x 704, 709 (4th Cir. 2003). To establish the first element, the

government must prove that the defendant acted with specific intent to defraud. See 18 U.S.C. §

1343; United States v. Godwin, 272 F.3d 659, 666 (4th Cir. 2001) (holding that proof of specific

intent to defraud is required in the prosecution of the similar crime of mail fraud under § 1341).

The wire fraud counts allege that JDC’s employees, including Mr. Cone, reported and conspired to report inaccurate information on purchase orders “in order to conceal JDC Networking’s true customer and in order to receive terms of sale to which JDC Networking was not entitled.”

Superceding Indictment at ¶ 27, subparagraphs i, m.

A. The government has failed to prove a material misrepresentation, specific intent to defraud, or an agreement to commit the offense of wire fraud as to Count One.

To carry its burden on conspiracy to commit wire fraud, the government must prove that

Mr. Cone and some other person entered into an agreement to commit the substantive offense of

wire fraud, and also an overt act in furtherance of the conspiracy. United States v. Cardwell, 433

F.3d 378, 390 (4th Cir. 2005). A conspiracy conviction requires that the government show at

least the degree of criminal intent necessary for the substantive offense itself. See Ingram v.

United States, 360 U.S. 672, 678 (1959). But the government has not proved that Mr. Cone made

a material misrepresentation or had the specific intent to defraud when he sent any of the

purchase orders whose transmission is alleged to be an overt act. Superceding Indictment at ¶ 27,

sub. i-r, v, w. Accordingly, there is no evidence from which the jury could conclude that Mr.

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Cone entered into any agreement to commit the offense of wire fraud. Therefore, dismissal of

Count One is warranted.

1. The government has failed to prove a material misrepresentation in any of the purchase orders whose transmission is alleged to be an overt act.

For a misrepresentation to be material, it must be one that would reasonably influence a

person to part with money or property. See Pasquantino v. United States, 544 U.S. 349, 355

(2005) (noting that object of the fraud must be money or property in the victim’s hands). The

government’s allegation is that Mr. Cone reported inaccurate end users for Cisco equipment on

purchase orders sent to Comstor, in order to receive discounts to which JDC was not entitled.

Superceding Indictment at ¶ 27, subparagraphs i, m. The government has failed to prove a

material misrepresentation, because it has not proved that Comstor was influenced to part with

money or property by a misrepresentation, or even that there was a misrepresentation at all.

That Comstor was not influenced by any misrepresentation was shown by the

government’s own witness, Jason Lucas, who agreed with counsel’s query that Comstor “didn’t

require an end user” to get a federal discount on Cisco equipment. Trial Tr. at __ (Lucas

testimony, 5/11/11). In fact, Mr. Lucas testified that Comstor “never really asked who the end

user was” when its employees prepared the price quotes that served as the basis for the purchase

orders at issue in this case, id. at ___, and that Comstor did not seek to obtain information concerning the identity of the end user during the sales process, id. at __. Mr. Lucas further

testified that Comstor did not attempt to check the identity of the end user when it received

purchase orders from JDC. Id. at __. Further, in response to the government’s suggestion that

Mr. Cone may have misrepresented the identity of the end user by phone in cases where the JDC

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purchase order had no end user listed, Mr. Lucas testified that Mr. Cone “didn’t make any

statements that I know of” about the identity of the end user on those particular purchase orders.

Id. at ___. Mr. Lucas agreed that Comstor’s primary objective was to give its customers the

biggest discount possible regardless of who the end user was, and that if Mr. Cone “wanted

commercial [discounts], he got commercial, and if he wanted federal [discounts], he got federal.”

Id. at ___.

The gravamen of Mr. Lucas’s testimony—elicited in large measure by the government on

redirect—was clear: JDC received the biggest discount Comstor could give regardless of what

end user was listed on its purchase orders. Mr. Lucas’s testimony was buttressed by that of Gary

Tribby, a fellow Comstor employee. Mr. Tribby testified about numerous JDC purchase orders

that had no end user information, on which JDC was nonetheless given the federal discount

pricing. Id. at __ (Tribby testimony, 5/11/11); see also Cone Exh. 4-A (summary chart of JDC

purchase orders and Comstor invoices). Mr. Tribby also confirmed that on several occasions

Comstor gave JDC the federal discount even when JDC reported a commercial end user. Trial

Tr. at __ (Tribby testimony, 5/11/11); Cone Exh. 4-A. Mr. Tribby was also unable to recall any

instance when he received the identity of the end user by phone from Mr. Cone. Id. at ___.

Taken together, the testimony from these two witnesses establishes that Comstor was not influenced to change the discount it offered to JDC by any misrepresentation contained in JDC’s purchase orders. Because any such misrepresentation did not influence Comstor to part with

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money or property, the misrepresentations are not material within the meaning of the wire fraud

statute.1

2. The government has failed to prove that Mr. Cone had the specific intent to defraud when he sent any of the purchase orders whose transmission is alleged to be an overt act.

To establish the existence of a “scheme to defraud,” the government must prove “that the

defendant acted with specific intent to defraud.” Lenertz, 63 F. App’x at 709. See also United

States v. Cloud, 872 F.2d 846, 852 n.6 (9th Cir.), cert. denied, 493 U.S. 1002 (1989) (“intent to

defraud” means “to act willfully, and with the specific intent to deceive or cheat for the purpose

of either causing some financial loss to another, or bringing about some financial gain to

oneself”). A party’s consent to or knowledge of a misrepresentation is a defense to a charge that

a defendant had a specific intent to defraud that party. See United States v. Cauble, 706 F.2d

1322, 1353 (5th Cir. 1983) (quoting United States v. Riley, 550 F.2d 233, 236 (5th Cir. 1977));

United States v. Klock, 210 F.2d 217, 221 (2d Cir. 1954). This defense may be proved by evidence of a custom or practice of consenting to or ratifying certain actions that form the basis of the substantive criminal charge. Riley, 550 F.2d at 237. See also United States v. Braunstein,

281 F.3d 982, 990 (9th Cir. 2002) (noting with approval the argument that a manufacturer’s

knowledge and approval of a defendant’s allegedly fraudulent distribution practices could negate

intent to defraud in a wire fraud prosecution).

1 In fact, the government has elicited no testimony showing that the end user information was even a misrepresentation. The sum of the testimony from Sandra Canyon, a Department of Defense investigator, was that the Department’s internal database did not show a Department facility at 16th Street NW in Washington. See Trial Tr. at __ (Canyon testimony). But Ms. Canyon never testified that the Department was not, in fact, the end user of the equipment attributed to the Department in the JDC purchase orders, nor has any other witness in this case.

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In this case, the evidence adduced shows that Comstor ratified and approved of JDC’s

practice of listing particular end users on purchase orders. As noted above, supra at § III(A)(1),

Comstor employee Lucas testified that Comstor had a policy of not asking JDC the identity of

the end users when it developed price quotes containing the relevant discount for Cisco goods.

See Trial Tr. at __ (Lucas testimony, 5/11/11) (noting that Comstor “never really asked who the

end user was” during the sales process). Lucas also confirmed that Comstor made no attempt to

check the accuracy of end user identifications. Id. at ___. Mr. Lucas testified that rather than being deceived by Mr. Cone, Comstor was aware of his desire for the largest possible discount and readily provided it to him. See id. at __ (testifying that if Mr. Cone “wanted commercial

[discounts], he got commercial, and if he wanted federal [discounts], he got federal”).

Emails introduced into evidence also show that Comstor not only knew and approved of

JDC’s practices concerning identification of end users, Comstor’s employees actually coached

JDC as to how to use the identity of the end user to obtain the best price on Cisco equipment:

 “Please make it a commercial end user on your PO.” Zhao Exh. 124 (4/10/2008 email from Gary Tribby to [email protected]).

 “Will need two separate PO’s one with Café of Art as the end user for PWR- 2811-AC-IP. For AIR-AP1252G-A-K9 use Dept of Defense as end user.” Zhao Exh. 120 (4/14/2008 email from Gary Tribby to [email protected]).

Taken together, the testimony and documentary evidence is clear that Comstor knew of,

approved of, and even participated in the practice of reporting certain end users on purchase

orders for Cisco equipment regardless of whom the actual end user was. This ratification of

JDC’s practice by Comstor negates any specific intent on Mr. Cone’s part to deceive Comstor.

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3. The government has not proved an agreement to commit the offense of wire fraud beyond a reasonable doubt.

To carry its burden on Count One, the government must show that Mr. Cone entered into

an agreement to commit the offense of wire fraud with some other person. The government has

offered no evidence from which a reasonable jury could conclude that there was any agreement between Mr. Cone and Ms. Zhao, or with other persons known and unknown, to commit the offense of wire fraud. The gist of the offense of conspiracy is agreement to commit a crime.

United States v. Manbeck, 744 F.2d 360, 386 (4th Cir. 1984). Circumstantial evidence will suffice to prove an agreement. United States v. Ellis, 121 F.3d 908, 922 (4th Cir. 1997). But inferences from the evidence must be reasonable ones, for the jury is not entitled to make “leaps of logic.” Evans-Smith, 19 F.3d at 908 n.22. The “critical inquiry is whether the circumstances, acts, and conduct of the parties are of such a character that the minds of reasonable men may conclude therefrom that an unlawful agreement exists.” United States v. Dazey, 403 F.3d 1147,

1159 (10th Cir. 2005).

The government has failed to prove an agreement to commit the offense of wire fraud.

No direct evidence of a criminal agreement to commit wire fraud has been presented in this case.

There is also no circumstantial evidence from which a reasonable inference of an agreement to commit the crime of wire fraud could be made. The evidence shows clearly that Mr. Cone had no specific intent to defraud. Nor is there any evidence that employees of JDC made material misrepresentations as to the identity of the end users when they sent purchase orders to Comstor, since Comstor was not influenced to part with money or property by any misidentification of the end users. Given all the circumstances, acts, and conduct of the parties, there is simply no

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evidence from which a reasonable jury could infer an agreement to commit the crime of wire

fraud, and dismissal of Count One to the extent it alleges conspiracy to commit wire fraud is warranted.

C. The government has failed to prove that Mr. Cone was even involved in the communications that constitute Counts 16 and 17.

The government charged Mr. Cone in two substantive counts of wire fraud relating to communications to and from Comstor involving Purchase Order # 1690. As shown above, the government has failed to show that Mr. Cone made a material misrepresentation or had the specific intent to defraud when he sent any of the purchase orders alleged in the Superceding

Indictment. On these grounds alone Counts 16 and 17 should be dismissed.

However, these counts should be dismissed on the separate ground that the government has failed to prove that Mr. Cone was involved in this communication at all. To obtain any conviction under the wire fraud statute, the government must show, at bottom, that the defendant participated in a scheme to deceive. Pasquantino, 544 U.S. at 355. The communications that constitute Counts 16 and 17 involved a price quote sent by Mr. Tribby to the email address

“[email protected]” on October 17, 2007. Superceding Indictment at ¶ 51. The indictment alleges that the resulting purchase order, reflecting a discount that was fraudulently obtained, contained the initials “DC” in the requistioner line. From these initials, the government alleges that a reasonable jury could conclude that Donald Cone caused the communications to be sent.

This assertion is contradicted by the testimony of the government’s own witness, Mr.

Tribby. At trial, Mr. Tribby testified that he associated the email address

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“[email protected]” with Ms. Zhao. Trial Tr. at __ (Tribby testimony, 5/11/11). He

also testified that the request for the price quote came from Ms. Zhao. Id. at __. Mr. Tribby noted this fact on the price quote itself. See Govt. Exh. ___ (Comstor price quote noting “Jessie JDC” as person requesting quote). Mr. Tribby was unable to testify as to Mr. Cone’s involvement with the communications that constitute Counts 16 and 17. Given Mr. Tribby’s testimony, no reasonable jury could conclude that Mr. Cone caused the communications at issue in Counts 16 and 17 to be sent, and dismissal of the counts is warranted.

D. The government has failed to prove that there was a misrepresentation in Purchase Order # 1414.

Finally, the government charged Mr. Cone with a substantive count of wire fraud in

Count 23. This count relates to Purchase Order # 1414, which Mr. Cone sent to Mr. Lucas at

Comstor on June 7, 2006, and which “list[ed] Café of Art as the shipping address.” Superceding

Indictment at ¶ 57. As shown above, the government has failed to show that Mr. Cone had the specific intent to defraud when he sent any of the purchase orders alleged in the Superceding

Indictment. On this ground alone Count 23 should be dismissed. Nonetheless, Count 23 should be dismissed on the separate ground that the government has failed to prove that the purchase order contains any misrepresentation at all, much less a material one. This purchase order does not have an end user listed, and the evidence at trial has demonstrated that JDC did not have to make any representation about the identity of the end user to obtain discount pricing. No evidence has been presented by any witness that establishes that Café of Art was actually the end user of this equipment. And in any event, such a misrepresentation would not be material since

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the evidence shows that Comstor did not rely on end user information to set its price. See supra at § III(A)(1).

E. Cisco has not been deprived of money or control of property within the meaning of the wire fraud statute.

The government has also failed to adduce any evidence that Cisco suffered any loss of money or property within the meaning of the wire fraud statute. To obtain a conviction under the wire fraud statute, the government must prove that the defendant engaged in a scheme or artifice to defraud, and that the object of the fraud was money or property in the victim’s hands.

Pasquantino, 544 U.S. at 355. The wire fraud counts allege that JDC’s employees, including Mr.

Cone, reported inaccurate information on purchase orders “in order to conceal JDC

Networking’s true customer and in order to receive terms of sale to which JDC Networking was not entitled.” Superceding Indictment at ¶ 27, sub. i, m.

At least when the charged conduct does not encompass bribery or kickback, the wire fraud statute is “limited in scope to the protection of property rights.” McNally v. United States,

483 U.S. 350, 360 (1987). The right to certain forms of intangible property are protected by the statute, but the right must be to a form of property traditionally recognized at law. Compare

Carpenter v. United States, 484 U.S. 19, 25-26 (1987) (property right in confidential business information protected by wire fraud statute) with Cleveland v. United States, 531 U.S. 12, 15

(2000) (grant of government or municipal license not a form of property protected by wire fraud statute). These limits on the boundaries of the wire fraud statute are critical to ensure that any conviction comports with due process requirements because, as the Supreme Court has noted,

“‘There are no constructive offenses; and before one can be punished, it must be shown that his

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case is plainly within the statute.’” McNally, 483 U.S. at 360 (quoting Fasulo v. United States,

272 U.S. 620, 629 (1926)).

1. The government has not shown that Cisco was deprived of money or property by the reporting of inaccurate end users.

The evidence adduced at trial shows clearly that Cisco has not lost money by JDC listing inaccurate end users on purchase orders. To start, the government has not even introduced the

Interchannel Partner Agreement (“ICPA”) that JDC and Cisco entered into on April 13, 2007.

See Trial Tr. at __ (Johnson testimony) (noting that agreement from April 13, 2007 had not been introduced). The later ICPA, dated April 25, 2007, by its own terms was not “a sale, purchase, or distribution agreement.” Govt. Exh. 37 at 4 (ICPA § 3.2); Trial Tr. at ___ (Johnson testimony).

Each party was an independent contractor and there was no agency, partner, or franchise relationship between them. Govt. Exh. 37 at 8. (ICPA § 12.3); Trial Tr. at ___ (Johnson testimony). Cisco representative Johnson confirmed the terms of this agreement, noting that JDC purchased Cisco equipment from Comstor and paid Comstor, not Cisco, for that equipment. Trial

Tr. at ___ (Johnson testimony).2 In any event, the evidence at trial showed that regardless of the end user listed on the purchase orders JDC sent to Comstor—or even whether one was listed at all—JDC received the largest discount that Comstor could provide. See supra at § III(A)(1). Nor has the government adduced any evidence that Cisco was deprived of any money or property by

JDC obtaining these discounts. The government has completely failed to carry its burden of

2 These facts distinguish this case from United States v. Gray, on which the government relies. In Gray, the Fourth Circuit held that “[t]he Government need not prove that the victim suffered a monetary loss as a result of the alleged fraud; it is sufficient that the victim was deprived of some right over its property.” United States v. Gray, 405 F.3d 227, 234 (4th Cir. 2005). But the government has not shown that the Cisco had any right or expectation to control the Cisco equipment sold to Comstor and then resold to JDC. The ICPA introduced by the government— which is by government witness Johnson’s admission not the agreement entered into by JDC and Cisco on April 13, 2007—in fact disclaims any such interest in controlling the Cisco equipment ultimately sold to JDC. Meanwhile, the

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showing that JDC received “special” or “additional” discounts that cost Cisco money by

reporting the end user inaccurately on purchase orders sent to Comstor.

2. Cisco does not have a property right in controlling the identity of the end user of equipment purchased from Comstor.

Perhaps recognizing that it has failed to show any monetary loss by Cisco, the

government’s fall-back position is that Cisco could have terminated JDC from its authorized

partner program for failing to report end users accurately, and thus was deprived of downstream

control of the equipment that JDC purchased from Comstor. This allegation is insufficient to

support a conviction because it does not satisfy the statutory element of money or property in the

victim’s hands.

There is no generalized duty to tell the truth in commercial transactions, the breach of

which will support a prosecution for wire or mail fraud. See, e.g., United States v. Handakas, 286

F.3d 92, 111-12 (2d Cir. 2002) (violation of contractual duty to report prevailing wage rates not

deprivation of a property right for purposes of wire fraud); United States v. F.J. Vollmer & Co.,

Inc., 1 F.3d 1511 (7th Cir. 1993) (not a violation of wire fraud statute to misrepresent end user of rifles in license application seeking permission to resell); United States v. Gimbel, 830 F.2d 621,

627 (7th Cir. 1987); United States v. Regent Office Supply Co., 421 F.2d 1174, 1179 (2d Cir.

1970) (not an essential element of the bargain to misrepresent salesman’s identity to entice potential customers to listen to sales pitch). See also Skilling v. United States, 130 S. Ct. 2896,

2931 (2010) (wire fraud statute does not encompass breach of fiduciary duty to disclose conflicts of interest).

government has not alleged that Comstor had any right or expectation of control over the equipment.

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Controlling the ultimate destination of goods sold to a reseller is not among the property rights protected by the wire fraud statute. For example, in United States v. Bruchhausen, 997

F.2d 464 (9th Cir. 1992), weapons manufacturers sold an arms dealer weapons after he gave false assurances that those weapons would not be sold to Soviet bloc countries. Id. at 466-67.

The appeals court overturned the dealer’s wire fraud conviction because the manufacturers’ interest in controlling resale of the weapons was not a property right within the meaning of

McNally and the wire fraud statute. Importantly to the instant case, the appeals court rejected the contention that “the manufacturers lost part of their bargain because they would not have sold the products if they had been told that the products were destined for the Soviet Bloc” and that

“the assurance that the products would be used domestically was, in the government’s view, part of the consideration for the sale, and the manufacturers were defrauded of that portion of their bargain.” Id. at 467-68. The court concluded that a manufacturer’s “interest in the disposition of goods it no longer owns is not easily characterized as property” for purposes of the wire fraud statute. Id. at 468.

Bruchausen’s holding—that mere downstream control of a product’s distribution is not a property interest for purposes of the wire fraud statute—was confirmed by United States v. Ali,

620 F.3d 1062, 1068 (9th Cir. 2010) (noting that Bruchhausen “held that the right to control the future sales of property is not an interest cognizable as property”). In Ali, the defendants’ convictions under the wire fraud statute were upheld because the manufacturer was deprived of money based on a contractual right to a differentiated payment if the product was sold to a non- educational customer. Id. But the Ali court recognized that “a mere loss of control” of the

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downstream sale of equipment is not a property right within the meaning of McNally and the wire fraud statute. Id.

In this case, the government has proved nothing more than a loss of control by Cisco as to the downstream distribution of its product. The government has failed to introduce any evidence that an agreement entered into by JDC varied the amount of money that JDC paid to

Comstor for Cisco equipment. See Trial Tr. at ___ (Johnson testimony) (agreeing that ICPA was not a sales, franchise, or distribution agreement). Indeed, the evidence adduced shows exactly the opposite: JDC got exactly the best price that Comstor could offer regardless of what end user was on its purchase orders, or if any end user was identified at all. See supra at § III(A)(1). And in fact, JDC continued to get that best price even after its agreement with Cisco was terminated, and any obligations it had to Cisco ended. Id. This failure to adduce any proof of a contractual agreement to vary the price of the equipment based the circumstances of the equipment’s downstream sale means that the government has not established an essential element of the wire fraud statute: money or property in Cisco’s hands. Given this failure, dismissal of the wire fraud counts is warranted.

United States v. Gray, 405 F.3d 227 (4th Cir. 2005), is not the contrary. In Gray, the defendant was convicted of five counts of wire fraud and three counts of mail fraud relating to her receipt of insurance proceeds following the death of her husband and her boyfriend. The indictment alleged that Gray intentionally caused the deaths and then concealed her involvement from two insurance companies from which she received more than $150,000 in insurance policy payouts. Id. at 234. She argued that the insurance companies had no property interest in the

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proceeds, since they “were merely disinterested third parties that held the insureds’ money for the named beneficiaries,” and that the only victims of her alleged crime was the rightful beneficiaries. Id. at 235. The Fourth Circuit rejected this argument, noting that whether or not they paid the correct beneficiaries, the companies “would not have been required to pay anyone had Gray not killed their insureds.” Id. (emphasis in original). Thus, Gray is a relatively simple case involving a scheme to defraud that deprives the victims of money—i.e., benefits the companies would not have paid out absent the fraud—and is quite different from the instant case, where the government has failed to prove that Cisco lost any money as a result of representations on the JDC purchase orders. To the extent that the government cites Gray for the proposition that a property owner has an “intangible right to control the disposition of its assets,” id. at 234, that language, which is dicta, arose in the context of rebutting Gray’s argument that the companies suffered no monetary loss by paying the wrong beneficiary, because, as the Circuit noted, the companies had to liquidate assets to pay out the fraudulent claims. “The money that Gray received was money that belonged to the insurance companies. They wrote the checks and those checks were backed by the insurance companies’ assets.” Id. At bottom, Gray is not about downstream control of equipment, as per Bruchausen, but about a garden variety scheme to defraud a victim of money. That is exactly the kind of evidence that the government has failed to adduce in this case.

IV. CONCLUSION

WHEREFORE, the defendant, Donald Cone, by counsel, requests that this Court enter a judgment of acquittal on all counts alleging wire fraud and conspiracy to commit wire fraud,

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because no reasonable factfinder could find all elements of wire fraud and conspiracy to commit wire fraud.

DATED: May 17, 2011 Respectfully submitted, Donald Cone

By Counsel,

Michael S. Nachmanoff, Federal Public Defender

By: /s/ Geremy Kamens Va. Bar # 41596 Assistant Federal Public Defender Attorney for Donald Cone 1650 King Street, Suite 500 Alexandria, Virginia 22314 (703) 600-0848 (telephone) (703) 600-0880 (facsimile) [email protected] (email)

/s/ Brooke Sealey Rupert Va. Bar # 79729 Assistant Federal Public Defender Attorney for Donald Cone 1650 King Street, Suite 500 Alexandria, Virginia 22314 (703) 600-0800 (telephone) (703) 600-0880 (facsimile) [email protected] (email)

/s/ Justin Torres Va. Bar # 77404 Pro Bono Counsel Gibson, Dunn, and Crutcher LLP 1050 Connecticut Ave, NW Washington, DC 20036 (202) 955-8619 (telephone) (202) 955-8619 (facsimile) [email protected] (email)

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CERTIFICATE OF SERVICE

I hereby certify that on May 17, 2011, I will electronically file the foregoing pleading with the Clerk of the Court using the CM/ECF system, which will then send a notification of such filing (NEF) to:

Jay Prahbu, Esq. Assistant U.S. Attorney 2100 Jamieson Avenue Alexandria, Virginia 22314 (703) 299-3700

/s/ Geremy C. Kamens Va. Bar # 41596 Assistant Federal Public Defender Attorney for Donald Cone 1650 King Street, Suite 500 Alexandria, Virginia 22314 (703) 600-0848 (telephone) (703) 600-0880 (facsimile) [email protected] (email)

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IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Alexandria Division

) UNITED STATES OF AMERICA ) ) v. ) Case No. 1:14-CR-278 ) AMIR A. BAJOGHLI, M.D., ) Hon. Gerald Bruce Lee ) Defendant. ) )

DR. AMIR BAJOGHLI’S RULE 29 MOTION FOR JUDGMENT OF ACQUITTAL ON COUNTS 18-49

Defendant Amir A. Bajoghli, M.D., by and through counsel, hereby moves pursuant to

Federal Rule of Criminal Procedure 29 for judgment of acquittal on Counts 18 through 49 of the

pending Superseding Indictment. Taking all evidence in the light most favorable to the

government for purposes of this Rule 29 Motion, the prosecution has failed to produce direct or

circumstantial evidence that could sustain a conviction on Counts 18 through 49.

I. NO EVIDENCE OF AGGRAVATED IDENTITY THEFT (COUNTS 44-49)

Counts 44 through 49 charge “aggravated identity theft” under 18 U.S.C. § 1028A. The

record is completely devoid of evidence that aggravated identity theft occurred. Every single

witness who testified about the use of patient-identifying information by Dr. Bajoghli’s practice

said that such information was voluntarily provided by the patients and used for the proper

purpose of billing for services that were actually rendered.

Section 1028A “imposes a mandatory consecutive two year prison sentence against one

who, ‘during and in relation to any felony violation enumerated in subsection (c) [i.e., including

18 U.S.C. §§ 1341-1351 from Chapter 63 of Title 18], knowingly . . . uses, without lawful

authority, a means of identification of another person.’” United States v. Otuya, 720 F.3d 183,

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189 (4th Cir. 2013) (quoting § 1028A(a)(1)). Counts 44 through 49 allege that Dr. Bajoghli violated this provision by using six patients’ names, dates of birth, and healthcare insurance information when submitting payment claims. The record evidence fails to support the charges contained in these Counts, not least because there has been absolutely no showing that Dr.

Bajoghli “used” such information “without lawful authority.”

The Government called four of the five living patients in these Counts – patients

Frederick Farber (Counts 1 and 44), Helen Fletcher (Counts 10 and 45), Karen Shumake (Counts

24 and 47), and Donald Lake (Counts 28 and 48).1 There is no dispute that these six patients

received the services for which claims were submitted.2 Upon calling these four witnesses to

testify, the Government did not ask a single question about whether they would have withheld

their consent for Dr. Bajoghli’s use of their information. Nor can it be assumed that such

consent would have been withheld, in light of the evidence that is before the jury: testimony

from both current and former employees of Dr. Bajoghli’s practice confirms that no patient’s

information was ever used for a purpose other than submitting claims for services rendered.

When opposing Dr. Bajoghli’s Motion to Dismiss (Dkt. 28), the Government relied upon

the decision in United States v. Abdelshafi, 592 F.3d 602 (4th Cir. 2010), citing it as the only

Fourth Circuit decision to discuss § 1028A in the context of healthcare fraud. Based on the

evidence now before the Court, the Abdelshafi decision is radically different and distinct from

this case. Abdelshafi merely affirmed the § 1028A conviction of the operator of a medical

1 The Government did not call living patient Janet Buccola (Counts 12 and 46), and patient Robert Hash (Counts 30 and 49) died prior to the Indictment. 2 For patient Helen Fletcher, the Government does not contend that she did not receive Mohs surgery. In fact, they have charged in Count 10 that Mohs was performed on Ms. Fletcher. Further, the Government’s witness Jessica Drawdy (née Barnette), who is listed as the surgical assistant during Ms. Fletcher’s Mohs surgery (see GX 10 at 13 (“JB”)), appears to have confirmed, based on the medical files, that she assisted with that surgery.

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transportation service, where he had used patient information for claims for services “that did

not, in fact, occur.” Id. at 606 (emphasis added). In this case, there is no dispute that the Mohs

surgeries and wound closures associated with the six cited patients did, in fact, occur. Further,

the record is absolutely clear that Dr. Bajoghli exclusively used patient identifying information

within the explicit scope of each patient’s authorization: to submit claims for services rendered.

Because the services at issue were performed and there is zero evidence in the record that

any patient disapproved of the use of their information, there can be no unauthorized use of a

patient’s identification within the meaning of § 1028A. See id.; accord United States v.

Medlock, 792 F.3d 700, 707-08 (6th Cir. 2015) (favorably citing Abdelshafi and holding that

although defendants acted “without lawful authority” under § 1028A by misrepresenting that

certain beneficiaries were transported by stretchers to medical appointments, this was not “a

‘use’ of those beneficiaries’ identification under . . . § 1028A, because their company really did

transport them” (emphasis in original)). Therefore, Counts 44 to 49 must be dismissed at this

stage. Submitting these charges to the jury for consideration would severely prejudice Dr.

Bajoghli and could confuse the jury by presenting charges for consideration on which no jury

could ever convict.

II. NO EVIDENCE OF HEALTHCARE FRAUD AS A MATTER OF LAW (COUNTS 18-43).

Counts 18 through 43 allege healthcare fraud in violation of 18 U.S.C. § 1347. The

Superseding Indictment groups Counts 18 to 43 into two distinct categories. Each fails as a

matter of law and should be dismissed.

A. Elements of 18 U.S.C. § 1347

In relevant part, § 1347 makes it a felony to “knowingly and willfully execute[], or

attempt[] to execute, a scheme or artifice . . . to defraud any health care benefit program . . . .”

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18 U.S.C. § 1347(a)(1). Thus, the essential elements of a charge under § 1347 are that the defendant (1) knowingly and willfully, with specific intent to defraud, (2) executed (or attempted to execute) a scheme to defraud a healthcare benefit program in connection with the provision of healthcare services, (3) through the use of material falsehoods or material misrepresentations.

See United States v. Perry, 757 F.3d 166, 175-76 (4th Cir. 2013).

“In considering whether there existed a scheme to defraud, [courts] must look to the common-law understanding of fraud,” which the Fourth Circuit has “interpreted to include acts taken to conceal, create a false impression, mislead, or otherwise deceive in order to prevent the other party from acquiring material information.” Perry, 757 F.3d at 176 (quotation marks and

brackets omitted). Thus, within the meaning of § 1347, “[t]o act with intent to defraud means to

act knowingly and willfully with the specific intent to deceive for the purpose of receiving

greater payments than [the actor] was entitled to.” Jury Instruction Tr. at 84:6-8, United States v.

Perry, No. 1:12-CR-173 (D. Md. Feb. 27, 2013) (Dkt. No. 63), conviction aff’d, 757 F.3d at 177.

In other words, to establish that Dr. Bajoghli had the requisite specific intent to defraud, the

government must put forth sufficient evidence that Dr. Bajoghli “made . . . false representations

to [the insurers] knowingly and willfully, in order to receive money to which he was not

otherwise entitled.” United States v. Makarita, 576 F. App’x 252, 264 (4th Cir. 2014) (affirming

§ 1347 conviction).

Proof of “participating in a scheme or artifice to defraud [also] requires proof of a material misrepresentation,” and “the defendant must be shown to have known that the claims submitted were, in fact, false.” United States v. Myers, 550 F. App’x 837, 841 (11th Cir. 2013)

(quotation marks omitted). “[A] statement is material . . . if it has a natural tendency to influence, or is capable of influencing, the decision-making body to which it was addressed.”

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United States v. Cunningham, 554 F. App’x 126, 127 (4th Cir. 2014) (non-precedential)

(quotation marks omitted).

To act “willfully” means to act intentionally and purposely and with the intent to do something the law forbids, i.e., with the bad purpose to disobey or to disregard the law. See Jury

Instructions at 18, United States v. Li, No. 1:12-CR-258 (E.D. Va. Sept. 26, 2012) (Lee, J.) (Dkt.

No. 250-3) (Instr. No. 17); accord, e.g., RSM, Inc. v. Herbert, 466 F.3d 316, 320-22 (4th Cir.

2006) (“‘[W]illfully” has been held to denote a mental state of greater culpability than the

closely related term, ‘knowingly’). ‘Knowingly’ refers only to one’s knowledge of the facts that

make his conduct unlawful, not to one’s knowledge of the law. Whereas ‘willfully,’ especially

when used in a criminal statute, usually requires a showing of a ‘bad purpose’ – proof that ‘the

defendant acted with knowledge that his conduct was unlawful.’” (quoting Bryan v. United

States, 524 U.S. 184, 192 (1998)) (quotation marks and citations omitted)); see, e.g., United

States v. Franklin-El, 554 F.3d 903, 908 (10th Cir. 2009) (applying Bryan’s definition to 18

U.S.C. § 1347); United States v. Dearing, 504 F.3d 897, 901 (9th Cir. 2007) (same). To act

“knowingly” means to act with awareness of one’s actions and not because of ignorance,

mistake, or accident. See, e.g., Jury Instructions at 16, Li, No. 1:12-CR-258 (Instr. No. 15).

B. The Government Has Failed To Sustain Its Burden To Show That Dr. Bajoghli Had Any Intent to Defraud.

The Government has not introduced any evidence that Dr. Bajoghli “knowingly and

willfully” acted with specific intent to deceive any healthcare payor “for the purpose of receiving

greater payments than [her] was entitled to.” Jury Instruction Tr. at 84:6-8, Perry, No. 1:12-CR-

173. The Government cannot point to any conversation, email, or other communication that

would possibly support a finding, beyond a reasonable doubt, that Dr. Bajoghli submitted a

single claim with the intent to steal money. Reviewing the evidence in the light most favorable

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to the Government, the evidence merely establishes a reasonable differences of opinion about the proper interpretation of applicable billing statutes, rules, and contractual requirements. Further, the Government’s case highlights the constitutional infirmity of charging a crime based on unclear government regulations.

The mere fact of such a reasonable difference of opinion precludes the possibility of guilt. As a matter of law, an intentional fraud – whether civil or criminal – cannot arise from the violation of an ambiguous legal obligation. “It is settled that when the law is vague or highly debatable, a defendant – actually or imputedly – lacks the requisite intent to violate it.” United

States v. Critzer, 498 F.2d 1160, 1162 (4th Cir. 1974) (discussing tax law, reversing conviction

for tax evasion, and directing exoneration from criminal liability). This is especially true in

cases of alleged contracting fraud, where claims based on “differences in interpretation growing

out of a disputed legal question are . . . not false.” U.S. ex rel. Wilson v. Kellogg Brown & Root,

Inc., 525 F.3d 370, 377 (4th Cir. 2008) (quotation marks omitted).

The Government could not sustain even civil false claims liability on the basis of unclear regulatory requirements. See, e.g., United States v. DRC, Inc., 856 F . Supp. 2d 159, 168

(D.D.C. 2012) (explaining, in a case under civil False Claims Act, that it is well established that

“[i]f parties to a contract merely disagreed about how to interpret ambiguous contract language, the government cannot satisfy the requirement to show that the defendant present claims knowingly”); cf. U.S. ex rel. Ivanich v. Bhatt, No. 13-CV-4241, 2015 WL 249413, at *2 (N.D.

Ill. Jan. 20, 2015) (while denying Rule 11 sanctions, the court dismissed a civil Medicare fraud

case because allegations erroneously asserted that dermatologist could not bill under her provider

number if she did not personally supervise auxiliary personnel’s services that were billed

“incident to” her own services). To the extent that the Government wishes to litigate the

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meaning of ambiguous federal laws and private contracts, “the appropriate vehicle to decide [the government’s] pioneering interpretation . . . is the civil procedure of administrative

[enforcement], with judicial review . . . ; not [this] prosecution, with attendant potential loss of freedom.” Critzer, 498 F.2d at 1164.

1. The Wound Closure Counts

Prior to trial, Dr. Bajoghli offered to stipulate that his medical assistant (“MA”) Marina

Yemdin performed most, if not all, of the wound closures alleged in Counts 18 to 32. The

Government declined to so stipulate, and instead put on days of testimony concerning Dr.

Bajoghli’s practice of having a select number of highly capable and trained medical assistants perform wound closures “incident to” his course of treatment when performing Mohs surgery.

Yet for all of that testimony, there is no evidence that any payor had a lawful basis to withhold payment on a wound closure claim where it is not disputed that a healthcare provider who was part of Dr. Bajoghli’s clinic practice was “present in the office suite” and “available to assist if needed” during all charged conduct – in other words, providing “direct supervision.” In fact, the record confirms that Dr. Bajoghli permissibly billed for closures performed by his medical assistants. The testimony of every witness who discussed the issue, including Janice Rasmussen and Teresa Walter, established that a provider was always “in the office suite” during a wound closure. Additionally, Ms. Yemdin was unable to identify whether any of the Counts charged here concerned an occasion when Dr. Bajoghli was not present in the building. Furthermore, other testimony (including by Ms. Yemdin, Ms. Walter, Zineb Moussafir, and Mindy Hoffman) confirmed that Dr. Bajoghli did not believe that he was doing anything wrong.

Medicare pays for services “incident to the service of a physician (or other practitioner),” provided that the services are “an integral, though incidental, part of the service of a physician

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(or other practitioner) in the course of diagnosis or treatment of an injury or illness.” 42 C.F.R.

§ 410.26(b)(2) (version effective through Dec. 31, 2012). The evidence further shows that Dr.

Bajoghli’s “course of treatment” began with the performance of Mohs surgery, with wound closures serving as the integral completion of that course of treatment. And as Medicare contractor Shea Chappell testified on November 16, 2015, MAs are among the “auxiliary personnel” who may perform services “incident to” a physician’s procedures. See, e.g., id.

§ 410.26(a)(1) (effective through Dec. 31, 2012).

The Medicare regulations state that although a provider “must directly supervise”

“incident to” services, “[t]he physician (or other practitioner) directly supervising the auxiliary

personnel need not be the same physician (or other practitioner) upon whose professional

service the incident to service is based.” 42 C.F.R. § 410.26(b)(5) (emphasis added). This

means that Dr. Bajoghli “may bill in [his] name for services provided by [auxiliary

personnel] as long as a physician [or other practitioner] within the practice group

supervised the services; Dr. [Bajoghli] need not h[im]self be the supervisor.” See Bhatt,

2015 WL 249413, at *2 (interpreting § 410.26(b)(5) in the context of physician group and

services performed by physician’s assistants and supervised by other physicians in the billing

dermatologist’s practice). “Because Medicare authorizes this practice, [the Government’s]

contention that Dr. [Bajoghli] did not personally supervise the services provided by [auxiliary

personnel] . . . is entirely compatible with Medicare guidelines and therefore fails to state a[]

[statutory fraud] violation.” Id. (granting motion to dismiss civil False Claims Act suit).

Therefore, the “direct supervision” requirement was explicitly met under the evidence put forth

by the government.

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To further establish the point of law, Medicare recently announced that it will change

§ 410.26(b)(5) by deleting the “need not be the same physician” language, so that starting in

January 2016, CMS will require the provider who is directly supervising to the bill the claim under his or her NPI. CMS, Medicare Program; Revisions to Payment Policies Under the

Physician Fee Schedule and Other Revisions to Part B for CY 2016, 80 Fed. Reg. 70886, 71066

(Nov. 16, 2015). CMS’s stated purpose for changing the regulation is to “further clarify the

meaning” of a separate amendment that will now, for the first time, require that “the physician or other practitioner who bills for incident to services must also be the physician or other practitioner who directly supervises the auxiliary personnel who provide the incident to services.” Id. This new regulation is a clear concession by CMS that the regulatory provisions at issue between 2009 and 2012, the period charged in the Indictment, were at least ambiguous.

And where regulations are ambiguous, the Fourth Circuit has held that no defendant can have

“the requisite intent to violate” a “vague or highly debatable” law. Critzer, 498 F.2d at 1162.

Therefore, as a matter of law, Dr. Bajoghli could not have knowingly and willfully submitted any wound closure claims to Medicare that violated the direct supervision requirement.3

3 Additionally, no law prohibits MAs from assisting physicians or performing wound closures. See, e.g., Va. Code Ann. § 54.1-2901(A)(6) (permitting physicians to delegate “nondiscretionary” activities to their personnel without violating state law prohibiting unlicensed medical practice). Even if such a prohibition existed under Virginia law, throughout the relevant period, “the Medicare regulations for ‘incident to’ services and supplies did not specifically make compliance with state law a condition of payment for services and supplies furnished and billed as incident to a practitioner’s services.” CMS, Medicare Program; Revisions to Payment Policies under the Physician Fee Schedule, Clinical Laboratory Fee Schedule & Other Revisions to Part B for CY 2014, 78 Fed. Reg. 74230, 74414 (Dec. 10, 2013). It was not until January 2014 – over a year after the end of the conduct charged in this case – that Medicare revised the incident-to regulations to make auxiliary personnel’s compliance with state law, including licensure, a condition of Medicare payment for incident-to services. See 42 C.F.R. § 410.26(a)(1) (effective Jan. 27, 2014). As reported in August 2009 by the Department of Health and Human Services (“HHS”) Office of Inspector General (“OIG”), which is the entity that polices Medicare fraud: “the ‘incident to’ rule allows physicians to bill for services performed by any personnel (licensed or unlicensed),” and therefore “we cannot report that the services Footnote continued on next page

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Assuming arguendo that Dr. Bajoghli’s was legally required to be in the office to directly supervise his MAs as opposed to any other provider in the clinic, the only evidence before the jury is inherently unreliable. This was demonstrated most clearly during the testimony of

Special Agent Michael Palian on November 17, 2015. Rather than produce evidence that Dr.

Bajoghli was not in the office to supervise, the Government chose to rely upon a “summary exhibit” based on a work calendar that Agent Palian failed to review. At best, the evidence shows that Dr. Bajoghli was not listed on his work calendar on certain days. Even after testifying that he “triple-checked” his summary exhibits, Agent Palian admitted during cross examination that according to the calendar, Dr. Bajoghli was, in fact, in the office suite during the charged wound closures performed for Marvin Bryant and Joseph Mitchell (Counts 31-32).

(See GX 95 and DXs 165-166.)

Finally, only two wound closure counts relate to non-Medicare payors: one for governmental payor Tricare and one for private payor BCBS FEP. No evidence has been introduced to show that Dr. Bajoghli’s interpretation of the relevant policies and contractual provisions violated any law. For all of these reasons, a judgment of acquittal should be entered on Counts 18-32.

2. The Path Counts

Counts 33 through 43 allege that Dr. Bajoghli improperly submitted claims under his own name for readings of “permanent section” biopsy slides that were performed by Dr. Ning Li, a dermatopathologist in Connecticut, with whom Dr. Bajoghli had an independent consultation agreement. The evidence shows that Dr. Bajoghli had a financial arrangement with a slide

Footnote continued from previous page were paid in error by Medicare solely because they were performed by unqualified nonphysicians.” (Defense Ex. 124 at 19 (emphasis added)).

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preparation company in Ohio, Pathworks, whereby he sent Pathworks biopsied tissue from which to prepare permanent section slides; Pathworks would then forward the newly prepared slides to

Dr. Li, who would examine the slides and consult with Dr. Bajoghli about her assessment, pursuant to a separate financial arrangement with him. The evidence also shows that dermatologists’ practice of submitting claims under their own name for pathology services rendered by contractors is known as “client-billing.” The Government has failed to prove that

Dr. Bajoghli’s submission of claims for Dr. Li’s slide readings were fraudulent, because it has failed to put forth evidence of any specific intent to defraud. Nor do they plead the knowing and willful submission of any material falsehood.

First, the Government has not introduced evidence of a specific intent to defraud. There is no evidence that Dr. Bajoghli entered his financial arrangement with Dr. Li because he wanted to deceive anyone in order to earn more money than he would otherwise have been paid.

Indeed, the record confirms that Dr. Bajoghli prepared tax forms for Dr. Li’s submission to the

IRS, and that he enlisted his staff to process these 1099 forms, thus refuting any intent to conceal for the purpose of stealing money. (See DX 167.)

Dr. Li’s testimony shows that she requested that Dr. Bajoghli not place her name on the pathology reports and that he conceal her identity from his staff. As she explained, she sought to have Dr. Bajoghli keep her work a secret and to avoid the costs and administrative burdens of purchasing medical malpractice insurance. (See, e.g., Nov. 17, 2015 Trial Tr. at approx. 3:34

p.m. (“I didn’t want my name on the report because of the malpractice issue and my employer

issue.”); id. at approx.. 2:50 p.m. (“I didn’t want his staff calling me at my day job.”)). In other words, the undisputed evidence is that Dr. Bajoghli’s purpose for concealing Dr. Li’s participation in the slide readings was to mitigate Dr. Li’s concerns. There is no evidence in the

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record that Dr. Bajoghli undertook his client-billing arrangement with Dr. Li with the purpose to

deceive anyone in order to obtain more money than would otherwise have been paid. Because

Dr. Li testified that the purpose of the arrangement was not fraudulent, there could be no possible

healthcare fraud, because no matter who submitted the claims, the government would have paid

exactly the same fee scheduled amounts and received exactly the same interpretation.

Second, as a matter of law, it was reasonable for Dr. Bajoghli to believe that the law

permitted his “client-billing” for Dr. Li’s pathology readings. The evidence reflects numerous

circumstances in which a physician is hired as an independent contractor and paid a wage while

the hiring entity bills for the contractor’s services under the hiring entity’s own name. For

example, CMS contractor Shea Chappell testified that such contracting is common with locum

tenens physicians, who are often hired by hospitals to substitute for doctors on leave. She

confirmed that locum tenens physicians do not bill insurance payors for their services; rather, the

contracting hospital will pay them a wage and then bill Medicare or other insurers under the

regular physician’s NPI.

“Client-billing” for the work of pathologists was permissible under Virginia law during

the relevant period of 2009 to 2012. Only in July 2014, two years after the end of the period

covered by the Indictment, did a new “anti-markup” statute take effect to limit physicians to

billing insurers at-cost for “anatomic pathology services” that the physicians obtain from third-

party pathologists. See Va. Code Ann. § 54.1-2962.01(A) (effective July 1, 2014). Anatomic

pathology services are defined to include both the “processing” of human tissue as well as the

“examination” of that tissue. See id. § 54.1-2962.01(B). That law does not govern the

allegations here, because it did not exist during the relevant period. But its enactment in 2014

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confirms the lawfulness of client-billing before 2014 under state law, and thus confirms the

reasonableness of Dr. Bajoghli believing client-billing be a lawful practice.

Client-billing for physician consultations also remains permissible under federal statute.

Under Medicare, Congress prohibited client-billing with price markups and non-disclosure of

contractors only when “a physician’s bill . . . includes a charge for a diagnostic test.” See 42

U.S.C. §1395u(n) (emphasis added); see also Metrolina Family Practice Grp., P.A. v. Sullivan,

767 F. Supp. 1314, 1318 (W.D.N.C. 1989) (rejecting constitutional challenge to statute and summarizing § 1395u(n)’s focus on “diagnostic tests”), aff’d, 929 F.2d 693 (4th Cir. 1991).

Consequently, when a physician’s bill does not “include[] a charge for a diagnostic test,”

Medicare’s prohibition does not apply. See 42 U.S.C. § 1395u(n). No evidence shows that Dr.

Bajoghli ever willfully included charges for “diagnostic tests” on Medicare claims submitted for

pathology readings by Dr. Li. All of the claims at issue in the charged Counts involve charges

for physician’s services.

Under federal law, “diagnostic tests” are an entirely separate statutory concept from

“physicians’ services.” See 42 U.S.C. § 1395x(s) (setting forth various types of reimbursable

healthcare services, including subsection (1) for “physicians’ services” and subsection (3) for

“diagnostic tests”); see also 42 C.F.R. § 410.10 (setting forth subsection (a) for “physicians’

services” and subsection (e) for “diagnostic tests”). “Diagnostic tests” include X-rays,

mammograms, and laboratory tests. See 42 U.S.C. § 1395x(s)(3). By contrast, “physicians’

services” means “professional services performed by physicians, including . . . consultation.” Id.

§ 1395x(q). Thus, by definition, if a physician’s bill only “includes a charge” for a physician’s

“consultation,” that is not a charge for a “diagnostic test,” and therefore does not trigger the anti-

markup and contractor-disclosure requirements. See id. § 1395u(n).

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The evidence, including Dr. Bajoghli’s 1099 forms for Dr. Li, reflects that Dr. Bajoghli believed was paying Dr. Li for dermatopathology “consulting.” Therefore, Dr. Bajoghli’s submissions of bills to Medicare for charges related to those physician consultations did not trigger the statutory anti-markup and contractor-disclosure requirements.

In the Indictment, the Government elected to indict Dr. Bajoghli for a handful of

Medicare claims where the procedure code modifier “26” was originally omitted by mistake.

But those claims were corrected before the original Indictment was returned.4 Given the

absence of any evidence of Dr. Bajoghli’s fraudulent intent, the repeated testimony about the

complexity of managing claims submitted to multiple healthcare payors with different policy

requirements, and the complexity of the client-billing regulatory framework, the Government has

failed to show that any violation by Dr. Bajoghli of a payor’s client-billing conditions was a

knowing and willful fraud.

4 In 2009, CMS created an anti-markup regulation that purports to impose Congress’s anti- markup and contractor-disclosure requirements to both diagnostic tests (i.e., slide preparation) and physicians’ services (i.e., slide reading). The Rule cannot apply to a physician’s bill that includes only a charge for slide reading but not slide preparation, because such an application would ignore Congress’s statutory command that the anti-markup principles apply only to bills including charges for “diagnostic tests” set forth in 42 U.S.C. § 1395x(s)(3), rather than bills including charges for “physicians’ services” set forth in § 1395x(s)(1).

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CONCLUSION

For the foregoing reasons, Dr. Bajoghli respectfully requests that the Court order

acquittal on Counts 18-49.

Date: November 18, 2015 Respectfully submitted,

/s/ Peter White /s/ Kirk Ogrosky Peter H. White (VSB# 32310) Kirk Ogrosky (pro hac vice) SCHULTE ROTH & ZABEL LLP Murad Hussain (pro hac vice) 1152 Fifteenth Street, NW ARNOLD & PORTER LLP Suite 850 601 Massachusetts Ave., NW Washington, DC 20005 Washington, DC 20001 Tel: (202) 729-7470 Tel: (202) 942-5000 Fax: (202) 730-4520 Fax: (202) 942-5999 [email protected] [email protected] [email protected]

Attorneys for Amir A. Bajoghli, M.D.

- 15 - - CJA 60 - Case 1:14-cr-00278-GBL Document 150 Filed 11/18/15 Page 16 of 16 PageID# 1496

CERTIFICATE OF SERVICE

I hereby certify that on this the 18th day of November 2015, I caused the foregoing to be

filed electronically using the Court’s CM/ECF system, which automatically sent a notice of

electronic filing to all counsel of record.

Date: November 18, 2015 Respectfully submitted,

Attorneys for Amir A. Bajoghli, M.D.

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IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Alexandria Division

UNITED STATES OF AMERICA : : v. : Case No.: 1:15-CR-00338 : OLUDAYO EDGAL, : : The Hon. Leonie M. Brinkema Defendant, : Sentencing Date: May 13, 2016 :

DEFENDANT OLUDAYO EDGAL’S POSITION ON SENTENCING

In accordance with this Court’s policy regarding guideline sentencing, 18 U.S.C. §

3553(a), and the remedial scheme set forth in United States v. Booker, 543 U.S. 220 (2005) and

United States v. Hughes, 401 F.3d 540 (4th Cir. 2005), Oludayo Edgal submits his objections to the presentence report and his position with respect to sentencing.

On February 4, 2016, Mr. Edgal pled guilty to a Conspiracy to Commit Wire Fraud in violation of 18 U.S.C. § 1349. He immediately and fully accepted responsibility, exhibiting true contrition for his crime. Even though the withdrew from the conspiracy more than two years before his arrest, he confessed to law enforcement when they first confronted him and before being appointed a lawyer, pled to a criminal information without the need for formal discovery, and has fully cooperated with the government. Mr. Edgal is a naturalized U.S. citizen who was born in Lagos, Nigeria. He has resided in California since he immigrated to the United States to join his mother in 2005 at the age of 22. On January 10, 2013, Mr. Edgal married his wife,

Opeyemi Oluwatomisin Olaoye, who he brought to the United States from Nigeria in 2012.

Their first child was born on October 30, 2014. His involvement in the conspiracy came at a

time of financial stress that clouded his judgment and has forever changed the course of his life.

Mr. Edgal has worked or attended school since arriving in the United States in 2005, and

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has no criminal record. While there is a need for punishment, there is no chance of recidivism, and as a matter of general deterrence, a felony conviction, forfeiture, restitution, and a lengthy period of probation with a condition of community confinement or home detention and community service will be sufficient but not greater than necessary to advance the objectives of federal sentencing policy. A sentence falling substantially outside the Guidelines also addresses the government’s concern about “chang[ing] the cost-benefit analysis for economic crimes,” particularly where the loss amount exponentially exceeds Mr. Edgal’s $5,000.00 financial gain.

See Position of the United States With Respect to Sentencing, Dkt. 33, at 8. A lengthy sentence of probation with conditions is authorized under 18 U.S.C. § 3553(b), and is justified by the facts of the case.

I. OFFENSE CONDUCT

Beginning in early 2010, several .mil websites and email addresses were spoofed with .us domains including the Defense Threat Reduction Agency (DCRA), the Defense Contract Audit

Agency (DCAA), and the Defense Information Systems Agency (DISA), in addition to other government agencies. (Affidavit in Support of Criminal Complaint ¶ 6, Dkt. 2 at 3). Persons impersonating high-ranking government officials used these spoofed websites and email addresses to place fraudulent orders of computer hardware from government contractors and vendors. Known losses to government contractors targeted by the conspiracy have exceeded $2 million. In addition, members of the conspiracy have attempted to steal millions of dollars more in computer hardware, but these attempts have been detected and prevented by law enforcement.

(Affidavit in Support of Criminal Complaint ¶ 7, Dkt. 2 at 3).

The conduct which resulted in Mr. Edgal’s plea did not begin until the conspiracy had been operating for approximately one and a half years. In 2012, for a period lasting roughly four

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months, Mr. Edgal agreed to assist Babtunde Raphael Opeifa (“Opeifa”), a friend with whom he

attended college in Nigeria. He provided this assistance by relaying information by telephone to

another friend (Solomon Oyesanya) in New York who had also agreed to assist Opeifa by selling

some of the fraudulently obtained computers and shipping others to Nigeria. Approximately

eight months later, Mr. Edgal also agreed to make several calls to one of Opeifa’s contacts at a

warehouse in New York when Opeifa was having difficulty getting one of his fraudulent

shipments delivered to Nigeria. The actual loss caused by Mr. Edgal is $161,313.23 from the

first and only successful shipment. His intended loss for guidelines purposes is approximately

$975,000. Mr. Edgal received a total of $5,000 compensation for his role in the conspiracy.

The conspiracy itself is accurately described in the presentence report. It was conceived

of and controlled by Opeifa who operated the scheme from Lagos, Nigeria. In 2010, Opeifa devised a scheme to fraudulently obtain computer hardware and related products from contractors and vendors who were approved to do business with the U.S. Government by impersonating Department of Defense employees and placing fraudulent orders with the victim contractors and vendors. To accomplish the scheme, Opeifa created fake, (or “spoofed”) U.S. government agency websites, domain names, and email accounts which he used to send fraudulent government purchase orders for computer hardware and Apple computer products to government contractors and vendors. Opeifa convinced the victim contractors to ship the computers to New York for resale in New York or eventual shipment to him in Nigeria. After

Opeifa enlisted Mr. Edgal’s involvement, he continued to use the same spoofed websites and fraudulent domains, including DTRA, DCAA and DISA, that he had been using since 2010.

(Affidavit in Support of Criminal Complaint ¶¶ 8, 9, 12, 15, 21, Dkt. 2 at 4, 5, 6, 10). Opeifa continued to use these same fraudulent websites, emails and domain names after Mr. Edgal

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withdrew from the conspiracy. (Affidavit in Support of Criminal Complaint ¶¶ 21, 24, 29, Dkt. 2 at 10, 11, 12).

When Opeifa contacted Mr. Edgal and asked for his assistance, Mr. Edgal understood from their conversations that Opeifa had acquired the computers through some type of fraud but had no knowledge that Opeifa had impersonated government officials, created spoofed websites and email accounts, or had used these spoofed email accounts to send fraudulent purchase orders to government contractors and vendors.

Mr. Edgal was only able to assist Opeifa with the help of Solomon Oyesanya who lived in New York where Opeifa intended to ship the computers. Mr. Edgal arranged for Oyesanya to meet Opeifa during the summer of 2012 while Oyesanya was traveling in Lagos, Nigeria. When

Oyesanya returned from Nigeria, he purchased a fraudulent New Jersey driver’s license in the name of John Williams for the purpose of retrieving fraudulent shipments for Opeifa. (PSR ¶ 31,

Dkt. 28, at 8). Opeifa clearly approved Oyesanya’s involvement and enlisted his services as a member of the conspiracy.

On three occasions in 2012, Mr. Edgal received shipping details from Opeifa, including the tracking number and the location of the warehouse where the computers had been delivered in New York. Mr. Edgal would, in turn, provide this information to Oyesanya so that he could pick up and sell the computers according to Opeifa’s instructions. After Oyesanya sold requested number of computers from the first shipment, he wired $10,000 to Mr. Edgal’s bank account. Mr. Edgal kept $5,000 for himself and sent the remaining $5,000 to Opeifa in Nigeria.

Mr. Edgal confirmed with the shipping company that they shipped the unsold computers to

Nigeria.

Opeifa provided similar information to Mr. Edgal in September and November of 2012.

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The contractors discovered that these orders were fraudulent and contacted law enforcement before the computers were shipped. Mr. Edgal provided the information he received from

Opeifa to Oyesanya. When Oyesanya went to pick up the computers, he was told by warehouse employees that there were no shipments matching the information he provided. After the third shipment failed to arrive in Nigeria, Opeifa concluded that Oyesanya and Mr. Edgal sold the computers and kept the proceeds for themselves. The two argued and broke off contact. Mr.

Edgal assumed that Oyesanya stole the computers.

In August 2013, Opeifa contacted Mr. Edgal again to ask for his help in moving a stalled shipment of computers from a warehouse in New York to Nigeria. Mr. Edgal agreed to contact the shipping agent without asking for any payment to make up for Oyesanya’s disappearance.

This shipment was also intercepted as fraudulent. After Mr. Edgal was told by Opeifa’s contact at the warehouse that he needed to supply an invoice for the computers, he decided not to make any additional calls or assist Opeifa further. He was arrested in California on November 5,

2015, over two years after he broke off contact with Opeifa.

II. OBJECTIONS TO THE ADVISORY GUIDELINES

The presentence report calculates Mr. Edgal’s offense level at 24 and his Criminal

History Category as I, with a resulting recommended guideline range of 51-63 months. Mr.

Edgal objects to the probation officer’s Offense Level computation which assigns a two-level upward adjustment for role in the offense, (PSR ¶ 78, Dkt. 28, at 16), and a second two-level upward adjustment for misrepresentation that the defendant was acting on behalf of a government agency, (PSR ¶ 75, Dkt. 28, at 16). He also disagrees that the Guidelines provide the correct starting place for determining the appropriate sentence.

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A. Mr. Edgal’s Offense Did Not Involve A Misrepresentation That The Defendant Was Acting On Behalf Of A Governmental Agency

The probation officer’s application of a two-level adjustment is not supported by the text

of the Guideline. The adjustment under U.S.S.G. § 2B1.1(b)(9)(A) requires that the offense involve a misrepresentation that the defendant was acting on behalf of a governmental agency.

The Commentary to the Guidelines provides that Subsection (b)(9)(A) calls for a two-level enhancement “in any case in which the defendant represented that the defendant was acting to

obtain a benefit on behalf of ... a government agency (regardless of whether the defendant

actually was associated with the ... government agency).” U.S.S.G. § 2B1.1(b)(9), cmt. n. 8(B)

(emphasis added); United States v. Howard, 621 F. App'x 243, 244 (4th Cir. 2015). Here, there

is no claim that Mr. Edgal ever represented that he was acting on behalf of a governmental

agency, or that he aided or procured Opeifa’s sophisticated computer deceptions. The Guideline

Commentary makes clear that the adjustment applies only where the defendant being sentenced

represents that he was acting on behalf of a government agency and is therefore, unwarranted.

In addition, Mr. Edgal is not responsible for the misrepresentation under U.S.S.G. §

1B1.3 as relevant conduct. Relevant conduct includes “all reasonably foreseeable acts and

omissions of others in furtherance of the jointly undertaken criminal activity.” U.S.S.G. §

1B1.3(a)(1)(B). However, as the Guidelines point out,

the scope of the criminal activity jointly undertaken by the defendant (the “jointly undertaken criminal activity”) is not necessarily the same as the scope of the entire conspiracy, and hence relevant conduct is not necessarily the same for every participant....Accordingly, the accountability of the defendant for the acts of others is limited by the scope of his or her agreement to jointly undertake the particular criminal activity. Acts of others that were not within the scope of the defendant’s agreement, even if those acts were known or reasonably foreseeable to the defendant, are not relevant conduct under subsection (a)(1)(B).

U.S.S.G. § 1B1.3, cmt. n. 3(B) (emphasis added). Thus, the conduct of others that was both in

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furtherance of, and reasonably foreseeable in connection with the criminal activity jointly

undertaken by the defendant is relevant conduct under this provision. The conduct of others that was not in furtherance of the criminal activity jointly undertaken by the defendant, or was not reasonably foreseeable in connection with that criminal activity, is not relevant conduct under

this provision. Id. The scope of the criminal activity undertaken by Mr. Edgal is not the same as

the entire conspiracy undertaken by Opeifa. Nor was Opeifa’s impersonation of government

officials reasonably foreseeable.

In order to determine the defendant's accountability for the conduct of others under subsection (a)(1)(B), the Court must first determine the scope of the criminal activity the particular defendant agreed to jointly undertake, i.e., the scope of the specific conduct and objectives embraced by the defendant's agreement. U.S.S.G. § 1B1.3(B); United States v.

Flores-Alvarado, 779 F.3d 250, 255 (4th Cir. 2015), as amended (Mar. 11, 2015). The Fourth

Circuit requires sentencing courts to “make particularized findings with respect to both the scope of the defendant's agreement and the foreseeability of [the conduct at issue].” Id. at 256; United

States v. Bolden, 325 F.3d 471, 499 (4th Cir.2003) (second emphasis added; internal quotation marks omitted).

Here, Opeifa designed an elaborate scheme to defraud government contractors through

the use of sophisticated computer and Internet technology. Opeifa intentionally concealed his

use of fake government websites and email addresses from Mr. Edgal and strictly limited his

involvement to selling or shipping some of the computers he illegally obtained. Mr. Edgal is

responsible for the computers that agreed to help sell or ship to Nigeria, including his three unsuccessful attempts. However, like the defendant who is hired to off-load ships containing marijuana, or the retail seller of child pornography, Mr. Edgal is not accountable for how the

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computers were procured as part of his jointly undertaken criminal activity. He is accountable

only for conduct which he jointly agreed to undertake – here, the sale or shipment of the stolen

computers – which is the only part of the conspiracy Opeifa enlisted him to join.

For the same reasons, Opeifa’s fraudulent misrepresentations differ from the assault on

the bank teller in the Guideline illustration cited by the government. (Position of the United

States With Respect to Sentencing, Dkt. 33, at 5). In the illustration, the getaway car driver is held accountable for the assault on the teller that occurred during the course of the armed robbery in which he participated. He is accountable because he aided and abetted the act of taking the money and taking the money was the specific objective of the offense he joined. Similarly, obtaining money by fraud was the specific object of the conspiracy Mr. Edgal joined. He can only be held accountable for conduct that was reasonably foreseeable and in furtherance of the offense in which he participated and agreed to join.

Nor is there any support whatsoever for the government’s claim that Opeifa’s sophisticated misrepresentations and highly technical capabilities were reasonably foreseeable to

Mr. Edgal. Nothing in the presentence report or the government’s Position with Respect to

Sentencing suggests that Mr. Edgal had reason to suspect Opeifa’s methods, or believe he was capable of accomplishing such complex deceptions. Both Mr. Edgal and Oyesanya made full confessions to law enforcement and neither could describe how Opeifa obtained the computers.

There is simply no basis upon which to find that Mr. Edgal had reason to know that the computers were fraudulently obtained from government contractors, as opposed to any other source. Nor is there reason to believe that a scheme such as the one employed by Opeifa in

Nigeria was reasonably foreseeable to Mr. Edgal. As such, the adjustment is not warranted.

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B. Mr. Edgal Did Not Function As An Organizer, Leader, Manager Or Supervisor In The Conspiracy

Mr. Edgal objects to the Presentence report’s application of a two-level role adjustment under U.S.S.G. § 3B1.1(c) based the probation officer’s assessment that he recruited Oyesanya and supervised some of his activities. (PSR ¶ 61, Dkt. 28 at 15). The government does not seek an enhancement for leadership role. (Position of the United States with Respect to Sentencing,

Dkt. 33, at 3-4).

U.S.S.G. § 3B1.1(c) provides for a two-level increase when a court finds that a defendant

“was an organizer, leader, manager, or supervisor in any criminal activity other than that discussed in [§ 3B1.1] (a) or (b).” U.S.S.G. § 3B1.1(c); see United States v. Sayles, 296 F.3d

219, 224 (4th Cir. 2002). The Sentencing Commission has indicated that a court should consider seven factors in determining a defendant's “leadership and organizational role.”

U.S.S.G. § 3B1.1, cmt. n. 4. These include: “[1] the exercise of decision making authority, [2] the nature of participation in the commission of the offense, [3] the recruitment of accomplices,

[4] the claimed right to a larger share of the fruits of the crime, [5] the degree of participation in planning or organizing the offense, [6] the nature and scope of the illegal activity, and [7] the degree of control and authority exercised over others.” Id.; See e.g., United States v. Sayles, 296

F.3d at 224-25 (rejecting § 3B1.1(c) adjustment where Government offered no evidence that either defendant recruited drug couriers or claimed a larger share of the fruits of the conspiracy);

United States v. Luppold, 259 F. App'x 560, 563 (4th Cir. 2007) (affirming § 3B1.1(b) adjustment where the evidence showed the defendant recruited an accomplice, planned and organized the offense both before and after the accomplice entered it, and exercised some degree of control over the accomplice’s activities while he was a participant); United States v. Rashwan,

328 F.3d 160, 166 (4th Cir. 2003) (affirming § 3B1.1(b) adjustment where the defendant

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exercised direction and control over the entire scheme and was responsible for persuading

codefendant and others to take part in his crimes).

The presentence report recommended a two-level role adjustment because Mr. Edgal

allegedly recruited Solomon Oyesanya and supervised some of his activities. (PSR ¶ 61, Dkt. 28

at 15). However, no matter how generously the facts are read, Mr. Edgal, who was 3000 miles

away, did no more than introduce Oyesanya to Opeifa and carry out Opeifa’s instructions. There

are no facts cited in the presentence report indicating that Mr. Edgal persuaded Oyesanya to join

the conspiracy or that he exercised decision making authority over whether, or to what extent,

Oyesanya would be accepted into its ranks. After arranging for Oyesanya to meet Opeifa in

Nigeria, it was Opeifa who recruited Oyesanya by sanctioning his involvement in the conspiracy.

Opeifa also trusted Oyesanya to determine the circumstances under which to sell the computers

and how to handle the proceeds.

Even where there is evidence that the defendant recruited an accomplice, recruitment can

provide the basis for a § 3B1.1 adjustment “only if the evidence demonstrated that [the

defendant] was an organizer, leader, manager or supervisor of people.” United States v. Sayles,

296 F.3d at 226 (quoting United States v. Capers, 61 F.3d 1100, 1109 (4th Cir.1995)).

(emphasis added). There is no evidence in this case that Mr. Edgal functioned as any sort of

“organizer, leader, manager or supervisor,” by exercising decision making authority, planning

and organizing the offense, exercising control and authority over others, or claiming a larger

share of the fruits of the conspiracy. U.S.S.G. § 3B1.1, cmt. n. 4.

Not only is the recommended adjustment unwarranted, Mr. Edgal believes that his role is

closer to that of a drug courier who introduces a friend to the drug kingpin and who together with

that friend, makes arrangements to deliver some of the drug dealer’s product. Accordingly,

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Court should consider reducing his advisory guideline range by two levels pursuant to U.S.S.G. §

3B1.2(b), or grant a variance based on his minor role.

A defendant seeking a downward adjustment for his minor role in the offense must prove that he is entitled to it by a preponderance of the evidence. See United States v. Akinkoye, 185

F.3d 192, 201-02 (4th Cir. 1999); United States v. Sharp, 927 F.2d 170, 176 (4th Cir. 1991).

The commentary to U.S.S.G. § 3B1.2 makes clear that these adjustments are aimed at defendants who are “substantially less culpable than the average participant.” U.S.S.G. § 3B1.2 cmt., backg'd., Note 3(A). In determining whether the adjustments apply, the court not only looks at the defendant's conduct relative to the other defendants, but also at his conduct relative to the elements of conviction. See United States v. Daughtrey, 874 F.2d 213, 216 (4th Cir.1989). In doing so, the court is required to ask whether “the defendant's conduct is material or essential to committing the offense.” United States v. Akinkoye, 185 F.3d at 202.

While the determination of whether the defendant played a minor role depends in part on a comparison of his conduct with that of other participants, the “critical inquiry is ... not just whether the defendant has done fewer bad acts than his co-defendants, but whether the defendant's conduct is material or essential to committing the offense.” See United States v.

Pratt, 239 F.3d 640, 646 (4th Cir.2001) (noting that a court must measure defendant's individual acts and relative culpability against the elements of the offense) (citations omitted). As framed by the government, the conspiracy began in early 2010. The purpose of the conspiracy was to fraudulently obtain computer products by impersonating U.S. government employees and placing fraudulent orders with victim contractors by creating fake government agency websites and email accounts. The known losses to government contractors targeted by Opeifa have exceeded $2 million. In addition, members of the conspiracy have attempted to steal millions of

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dollars more in computer hardware, but these attempts have been detected and prevented by law enforcement. (Affidavit in Support of Criminal Complaint ¶ 7, Dkt. 2 at 3). By comparison, the actual loss caused by Mr. Edgal is $161,313.23 from the first and only successful shipment in

August 2012. His intended loss for guidelines purposes is approximately $975,000 which includes the three shipments that were intercepted by law enforcement in September and

November 2012 and August 2013. Mr. Edgal received a total of $5,000 for his role in the conspiracy which was a miniscule share of the fruits of the crime. On these facts alone, it is fair to say that Mr. Edgal’s participation was neither essential nor material to the success of the conspiracy.

Additionally, Mr. Edgal could not have provided the limited help Opeifa was seeking without Oyesanya’s participation in New York and did not control the circumstances under which Oyesanya sold the computers or handled the proceeds. His lack of control over Oyesanya made his conduct even less material or essential to committing the offense.

The Commentary to U.S.S.G. § 3B1.2 provides additional guidance for when a defendant should receive a mitigating adjustment:

A defendant who is accountable under 1.3 (Relevant Conduct) only for the conduct in which the defendant personally was involved and who performs a limited function in concerted criminal activity is not precluded from consideration for an adjustment under this guideline. For example, a defendant who is convicted of a drug trafficking offense, whose role in that offense was limited to transporting or storing drugs and who is accountable under 1.3 only for the quantity of drugs the defendant personally transported or stored is not precluded from consideration for an adjustment under this guideline. Likewise, a defendant who is accountable under § 1B1.3 for a loss amount under § 2B1.1 (Theft, Property Destruction, and Fraud) that greatly exceeds the defendant's personal gain from a fraud offense and who had limited knowledge of the scope of the scheme is not precluded from consideration for an adjustment under this guideline. For example, a defendant in a health care fraud scheme, whose role in the scheme was limited to serving as a nominee owner and who received little personal gain relative to the loss amount, is not precluded from consideration for an adjustment under this guideline.

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U.S.S.G. § 3B1.2, cmt., backg'd., Note 3(A) (emphasis added).

Application Note 3(C) further states that the determination of whether to apply subsection

(a) or (b), or an intermediate adjustment, “is based on the totality of the circumstances and involves a determination that is heavily dependent upon the facts of the particular case.”

Under the totality of the circumstances, Mr. Edgal is entitled to a downward adjustment or a variant sentence because he performed an extremely limited function as measured by his contribution to the overall conspiracy. He is being held accountable for a loss amount

($973,643.23) that greatly exceeds the actual loss for which he is responsible ($161,313.23), and that exponentially exceeds his personal gain of $5,000. Like the example in Application Note

3(A), Mr. Edgal had limited knowledge of the scope of the conspiracy or the types of profits

Opeifa obtained. He played no part in the complex, highly technical deceptions that were a necessary part of Opeifa’s scheme, and did not develop the contacts with shipping agents that permitted Opeifa to conceal the ultimate destination where the computers were being shipped.

While he knew the computers were illegally obtained, the losses created by Opeifa’s conduct and the sophisticated methods utilized to effectuate the scheme were not reasonably foreseeable to

Mr. Edgal or part of his jointly undertaken criminal activity – activity from which he withdrew more than two years before he was arrested.

For the reasons stated, Mr. Edgal submits that the Guidelines are more properly calculated without the two-level upward adjustment for misrepresentation that the defendant was acting on behalf of a government agency (U.S.S.G. § 2B1.1(b)(9)(A)), and without a second two- level upward adjustment for role in the offense, (U.S.S.G. § 3B1.1(c)), reducing his offense level to 20, and resulting in a recommended guideline range of 33-41 months. Mr. Edgal further submits that an additional two-level downward adjustment for minor role pursuant to U.S.S.G. §

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3B1.2(b), or a variant sentence substantially below the advisory guideline range is justified by the facts in this case. A two-level downward adjustment would further reduce his offense level to 18, and result in an advisory guideline range of 27-33 months.

III. APPLICATION OF SENTENCING FACTORS

The Court is conversant with the landscape of the remedial sentencing scheme set forth in

United States v. Booker, 543 U.S. 220 (2005) and United States v. Hughes, 401 F.3d 540 (4th Cir.

2005). As it was before November 1, 1987, this Court is once again charged with the traditional role of judging the unique defendant presently facing sentencing with no presumption of reasonableness attaching to the Guideline range. Gall v. United States, 552 U.S. 38, 50 (2007)

(reversing Court of Appeals and reinstating a probationary sentence where advisory guideline range was 30-37 months). After considering the properly calculated guideline range and the §

3553(a) factors, the Court must “impose a sentence sufficient, but not greater than necessary” to comply with the intent of § 3553(a). Id. at 52 (quoting Koon v. United States, 518 U.S. 81, 98

(1996)) (“It has been uniform and constant in the federal judicial tradition for the sentencing judge to consider every convicted person as an individual and every case as a unique study in the human failings that sometimes mitigate, sometimes magnify, the crime and the punishment to ensue.”). Thus, after Booker and Gall, sentencing courts must impose the minimum sentence that is sufficient to accomplish the objectives of § 3553(a).

Having considered the § 3553(a) factors, the Court may find that “the guidelines sentence itself fails properly to reflect the § 3553(a) considerations,” or that “the case warrants a different sentence regardless.” Rita v. United States, 551 U.S. 338, 351 (2007). While the Court must begin its analysis by correctly calculating the advisory Guideline range, it is then free, in light of the other statutory sentencing factors, to disagree and to impose an entirely different sentence.

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Id., at 350.

A. The Nature And Circumstances Of The Offense

The Guidelines attribute much more significance to the intended loss resulting from Mr.

Edgal’s involvement than is warranted by the circumstances of the offense or by the pecuniary

harm caused by his conduct. U.S.S.G. § 2B1.1, App. Note 3(A) defines “loss” as “the greater of

actual loss or intended loss,” and defining “intended loss” as “the pecuniary harm that was

intended to result from the offense ... includ[ing] intended pecuniary harm that would have been

impossible or unlikely to occur.” However, Application Note 20(C) to U.S.S.G. § 2B1.1 also provides: “There may be cases in which the offense level determined under this Guideline

substantially overstates the seriousness of the offense. In such cases, a downward departure may

be warranted.” This is plainly such a case. While Mr. Edgal’s offense level was correctly

increased by 14 points based on an intended loss of approximately $975,000, it is clear that this

was not a $975,000 case, particularly in view of Mr. Edgal’s limited involvement and meager

$5,000 profit.1

The Court must impose a sentence sufficient, but not greater than necessary, to comply

with the purposes set forth in U.S.S.G. § 3553(a)(2), which are “the need for the sentence imposed—

(A) to reflect the seriousness of the offense, to promote respect for the law, and to provide just punishment for the offense;

(B) to afford adequate deterrence to criminal conduct;

(D) to provide the defendant with needed educational or vocational

1 If the loss was calculated at $161,313.23, (the restitution loss due to Government Acquisitions Incorporated and Chubb Insurance), the offense level would have increased by 10 instead of 14 points. 15

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training, medical care, or other correctional treatment in the most effective manner.”

18 U.S.C. § 3553(a)(2). In determining the particular sentence to be imposed, the Court must also consider the nature and circumstances of the offense and the history and characteristics of the defendant, the need to avoid unwarranted disparities, and the need to provide restitution to any victims of the offense. See 18 U.S.C. § 3553(a)(1)–(7). The unique circumstances of this case make the need to avoid unwarranted disparities less relevant.

“While the fraud guideline focuses primarily on aggregate monetary loss and victimization, it fails to measure a host of other factors that may be important, and may be a basis for mitigating punishment, in a particular case.” Allan Ellis, John R. Steer, Mark Allenbaugh, At a “Loss” for Justice: Federal Sentencing for Economic Offenses, 25 Crim. Just. 34, 37 (2011); see also United States v. Ovid, slip op., 2010 WL 3940724, *1 (E.D.N.Y. Oct. 1, 2010) (“[T]he fraud guideline, despite its excessive complexity, still does not account for many of the myriad factors that are properly considered in fashioning just sentences, and indeed no workable guideline could ever do so.”). A substantial variance is needed in this case because of a surfeit of mitigating factors, all of which are highly relevant to the purposes of sentencing and none of which is taken into account by the advisory guideline range.2

B. The Personal Characteristics Of The Defendant

Mr. Edgal has attended school and worked multiple jobs at the same time since coming to the United States. He has been married since 2013. His wife, whom he has known since 2003, is a college student and works part-time at California Respite Care, an agency for the home care of children with autism where she earns $722.84 per month. His wife describes him as “an

2 The sentencing brief for Governor McDonnell, Case No. 3:14cr12, ECF No. 582, at Pages 42- 45, provides an excellent summary of the emerging recognition that the economic loss table does not appropriately measure culpability in economic offenses. 16

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industrious hardworking family man who is community-minded and people oriented” and a man

who is very active in his daughter’s life. She also describes him as extremely dedicated to his

work and to mentoring the young men in his department who are getting ready for college. “He

is determined to change and add value to families, one at a time.” The common denominator is

“his selfless personality and always putting people first.” (Opeyemi Edgal, Exhibit 1). A prison

term will cause the most hardship on Mr. Edgal’s wife who has no immediate family in the

United States as she will “single handedly bear the responsibilities of the family, financially,

physically and emotionally.” As a result of his offense, Mr. Edgal has lost credibility in the public eye and is truly despondent for what he has done. (Opeyemi Edgal). He lives in constant fear of the impoverishment and deprivation he will have caused his wife and child to suffer if he is not able to provide them with his income.

Mr. Edgal has also committed himself to the church where he is seen as a devoted

Christian and a dedicated family man who is also involved in his local community and his daughter’s education. He is the head of his church’s technical department and is an executive member of the Men’s Fellowship of his ministry. (Pastor Ade Oyeyemi, Exhibit 1). According to his pastor, Mr. Edgal “has shown commitment in the house of God by giving his time and actively participating in volunteering to assist people who are in need.” He is seen as putting

“his full effort into any work that is given to him” and as always willing to assist. (Pastor Ade

Oyeyemi).

Mr. Edgal is considered a role model and father figure by his three sisters since their father passed away in 1990 and is seen by them as “a prudent, conscientious, hardworking and caring man” who has dedicated his weekends to serving his church and building a life in which his daughter sees him being a dedicated follower of Christ. (Oluwasyi Adeyinka, Exhibit 1).

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As a certified filed trainer at Transamerica Financial Advisors, Mr. Edgal is known by his co-workers as “an extremely positive, honorable and respectable man who promotes an office environment that fosters positive development and team work.” He travels two hours per day to his full-time job and is committed to building his financial business at World Financial Group in the evenings and on the weekends. (Julianna M. Taillon, Exhibit 1). At that business, Mr. Edgal has won many awards and has been recognized in the top ranks of the office. He is described by the owner of the company and mentor as “as great an individual as they come,” a man

“passionate about succeeding in life through the service of others” who has demonstrated “the highest standard of integrity, character, compassion and respect,” and who always delivers the highest quality of work. He is considered to be a huge blessing to his office, his team, and his clients. (Jay Gauthier Jr., Exhibit 1).

C. The Need For The Sentence Imposed To Reflect The Seriousness Of The Offense, Promote Respect For The Law, And Provide Just Punishment

The need for retribution is measured by the degree of “blameworthiness,” which “is generally assessed according to two kinds of elements: the nature and seriousness of the harm caused or threatened by the crime; and the offender’s degree of culpability in committing the crime, in particular, his degree of intent (mens rea), motives, role in the offense, and mental illness or other diminished capacity.” Richard S. Frase, Excessive Prison Sentences, Punishment

Goals, and the Eighth Amendment: “Proportionality” Relative to What?, 89 Minn. L. Rev. 571,

590 (February 2005). The fraud Guidelines include none of the factors bearing on Mr. Edgal’s degree of culpability, or the extremely limited role he played in the scheme.

One of the primary limitations of the Guidelines, particularly in white-collar cases, is their mechanical correlation between loss and offense level. United States v. Ranum, 353 F.

Supp. 2d 984, 990 (E.D. Wis. 2005). While it is true that from the victim's perspective the loss is

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the same no matter why it occurred, from the standpoint of personal culpability, there is a

significant difference among defendants. See United States v. Emmenegger, 329 F.Supp.2d 416,

427-28 (S.D.N.Y.2004) (“Were less emphasis placed on the overly-rigid loss table, the identification of different types of fraud or theft offenses of greater or lesser moral culpability or danger to society would perhaps assume greater significance in assessing the seriousness of different frauds.”). The government equates the high dollar amount of the four shipments with culpability, but Mr. Edgal did not orchestrate the conspiracy, did not use special skills and did not take advantage of vulnerable people. Ultimately, the nature and circumstances of his offense conduct reflect a level of culpability significantly below the advisory guideline range.

Mr. Edgal’s individual offense conduct was more typical of a run of the mill theft offense, than a complex financial fraud. His offense was aberrant and was motivated by a period of financial stress. He did not commit the offense to finance a lavish lifestyle. Rather, he was a foreign national, living in California with his mother, and working three jobs so that he could bring his fiancé from Nigeria to the United States.

Mr. Edgal lived a completely law-abiding life until he was persuaded by Opeifa to join the conspiracy when he was 29 years old. His offense conduct, which lasted roughly four short months, is uncharacteristic when viewed in the context of his otherwise law-abiding and productive adult life. This Court should therefore grant a variance based on the aberrant nature of his conduct. See, e.g., United States v. Howe, 543 F.3d 128 (3rd Cir. 2008) (variance based on

“isolated mistake” in otherwise long and entirely upstanding life); United States v. Hadash, 408

F.3d 1080, 1084 (8th Cir. 2005) (defendant was a “law abiding citizen, who [did] an incredibly dumb thing”); United States v. Davis, 2008 WL 2329290 (S.D.N.Y. June 5, 2008) (defendant was a first offender who had worked throughout his 15-year marriage to educate his six children

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and whose offense was prompted by economic pressures).

D. Need For Deterrence

There is no reason to believe Mr. Edgal will reoffend. Having been caught two years

after withdrawing from the conspiracy, Mr. Edgal has suffered severe emotional turmoil over the

past year. He has become a convicted felon. He risks being separating from family including his

wife who arrived in the United States in 2013, and an 18 month old daughter who are without

any other means of support. He has lost all of the security of a lengthy and successful

employment history and will have a $161,000 forfeiture judgment that will significantly hinder

his ability to provide his young family with financial stability for the foreseeable future.

Research has consistently shown that while the certainty of being caught and punished

has a deterrent effect, “increases in severity of punishments do not yield significant (if any)

marginal deterrent effects.” Michael Tonry, Purposes and Functions of Sentencing, 34 Crime &

Just. 1, 28 (2006). “Three National Academy of Science panels . . . reached that conclusion, as

has every major survey of the evidence.” Id.; see also Zvi D. Gabbay, Exploring the Limits of the

Restorative Justice Paradigm: Restorative Justice and White Collar Crime, 8 Cardozo J. Conflict

Resol. 421, 447-48 (2007) (“[C]ertainty of punishment is empirically known to be a far better deterrent than its severity.”). Typical of the findings on general deterrence are those of the

Institute of Criminology at Cambridge University. See Andrew von Hirsch et al., Criminal

Deterrence and Sentence Severity: An Analysis of Recent Research (1999), summary available at http://members.lycos.co.uk/lawnet/SENTENCE.PDF. Research regarding white

collar offenders in particular found no difference in the deterrent effect of probation and that of

imprisonment. See David Weisburd et al., Specific Deterrence in a Sample of Offenders

Convicted of White Collar Crimes, 33 Criminology 587 (1995); see also Gabbay, supra, at 448-

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49 (“[T]here is no decisive evidence to support the conclusion that harsh sentences actually have

a general and specific deterrent effect on potential white-collar offenders.”). According to “the

best available evidence, . . . prisons do not reduce recidivism more than noncustodial sanctions.”

Francis T. Cullen et al., Prisons Do Not Reduce Recidivism: The High Cost of Ignoring Science,

91 Prison J. 48S, 50S-51S (2011).

For each of these reasons, a variant sentence substantially below the advisory guideline

range is sufficient but not greater than necessary in this case to deter others who may consider

committing similar fraud-based economic crimes. See United States v. Urbina, 2009 WL

565485, *3 (E.D. Wis. Mar. 5, 2009) (considering low risk of recidivism indicated by

defendant’s lack of criminal record, positive work history, and strong family ties); United States

v. Cabrera, 567 F. Supp. 2d 271, 279 (D. Mass. 2008) (granting variance because defendants

“with zero criminal history points are less likely to recidivate than all other offenders”).

E. The Need To Provide Restitution

Mr. Edgal has agreed to pay full restitution to the victim of his crime in his plea

agreement.

CONCLUSION

Mr. Edgal has expressed his profound remorse and accepted full responsibility for his

actions. Over the past three years, he has proven without exception that he can gain financial

freedom while living within the limits of the law. (Oludayo Edgal, Exhibit 2).

For all of these reasons, the Court should find that the Guidelines are properly calculated at an offense level 18 with an advisory guideline range of 27-33 months. Mr. Edgal respectfully

requests the Court impose a sentence substantially below the Guidelines, specifically a lengthy

sentence of probation with a condition of community confinement or home detention, and

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community service which would allow him to support his family. Mr. Edgal has consented to the entry of a forfeiture order in the amount of $5,000 and a restitution order in the amount of

$161,314.28.

Respectfully submitted,

OLUDAYO EDGAL, By Counsel /s/______Nina J. Ginsberg, Esq. VSB # 19472 Counsel for Defendant Oludayo Edgal DiMuroGinsberg, P.C. 1101 King Street, Suite 610 Alexandria, VA 22314 703-684-4333 703-548-3181 (facsimile) [email protected]

CERTIFICATE OF SERVICE

I hereby certify that on this 11th day of May, 2016, I electronically filed the foregoing with the Clerk of Court using the CM/ECF system, which will send a notification of such filing (NEF) to counsel of record.

I further certify that a copy was also sent by email to Terrell C. Sewell, Jr., U.S. Probation Officer ([email protected]).

/s/______Nina J. Ginsberg, Esq.

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- CJA 99 - U.S. Department of Justice Office of Justice Programs National Institute of Justice

NATIONAL INSTITUTE OF JUSTICE FIVE THINGS ABOUT DETERRENCE

Deter would-be criminals by using scientific evidence about human behavior and perceptions about the costs, risks and rewards of crime.

1. The certainty of being caught is a vastly more 4. Increasing the severity of punishment does little powerful deterrent than the punishment. to deter crime. Research shows clearly: If criminals think there’s only a slim chance Laws and policies designed to deter crime are ineffective partly they will be caught, the severity of punishment — even draconian because criminals know little about the sanctions for specific crimes. punishment — is an ineffective deterrent to crime. Seeing a police officer with handcuffs and a radio is more likely to influence a criminal’s behavior than passing a new law increasing 2. Sending an offender to prison isn’t a very penalties. effective way to deter crime. Prisons are good for punishing criminals and keeping them off the 5. There is no proof that the death penalty deters street, but prison sentences are unlikely to deter future crime. Prisons criminals. actually may have the opposite effect: Inmates learn more effective According to the National Academy of Sciences, “Research on the crime strategies from each other, and time spent in prison may deterrent effect of capital punishment is uninformative about desensitize many to the threat of future imprisonment. whether capital punishment increases, decreases, or has no effect on homicide rates.” 3. Police deter crime by increasing the perception Source: Daniel Nagin, “Deterrence in the 21st Century,” in Crime that criminals will be caught and punished. and Justice in America: 1975-2025 (ed. Michael Tonry, University of The police deter crime when they do things that strengthen a Chicago Press, 2013). criminal’s perception of the certainty of being caught. Strategies that use the police as “sentinels,” such as hot spots policing, are Findings and conclusions of the research reported here are those of the particularly effective. authors and do not necessarily reflect the official position or policies of the U.S. Department of Justice.

National Institute of Justice • Strengthen Science • Advance Justice July 2014 - CJA 100 - AMENDMENTS TO THE U.S. SENTENCING GUIDELINES

Frances H. Pratt Patrick L. Bryant

NOTES

- CJA 101 - 11/11/2016

AMENDMENTS TO THE U.S. SENTENCING GUIDELINES

Frances H. Pratt Patrick L. Bryant Office of the Federal Public Defender

November 16, 2016, Richmond, Virginia