Wednesday, July 08, 2015

Prosecutorial Conduct, Response to Jury's Request and Evidentiary and Sentencing Issues Denied by Circuit

In United States v. Kolodesh, No. 14-2904 (3d. Cir. May 28, 2015), the Third Circuit affirmed the district court’s sentence of 176 months’ imprisonment, three years supervised release, and an order for $16.2 million in restitution.

Kolodesh, who co-owned Home Care Hospice, Inc., appealed his conviction of one count of conspiracy to defraud a health care benefit program (18 U.S.C. § 1349), twenty-one counts of health care fraud (18 U.S.C. § 1347), two counts of mail fraud (18 U.S.C. § 1341), and eleven counts of money laundering (18 U.S.C. § 1957) based on his company’s involvement in a Medicare fraud scheme.  Kolodesh and his co-workers falsified records to show that patients were eligible for continuous Hospice care that the patients never received, gave doctors kickbacks, gifts, and cash for referrals, and even put some doctors on the company’s payroll with sham job titles.  Kolodesh’s company also submitted fraudulent claims for Medicare reimbursement, which constituted 90% of their revenue.

On appeal, Kolodesh alleged prosecutorial misconduct, evidentiary issues, errors in responding to a request from the jury, and in sentencing.

Prosecutorial Misconduct
 
The first allegation of prosecutorial misconduct involved wiretap recorded conversations of Kolodesh talking about opening a Swiss bank account but avoiding one specific Swiss bank because “[it] reports everything to the American government.”  The Court of Appeals found that the district court did not err by allowing the government to refer to this recorded conversation of the defendant because he did not object, and, the recording was relevant.
 
The second allegation of prosecutorial misconduct involved a translated wiretap and testimony about Russian stereotypes.  FBI wiretaps recorded Kolodesh stating he had to “f*** them [Medicare] over this time, one more time .…” Kolodesh argued that the statement was inaccurately translated from Russian to English, and that it was irrelevant.  The Circuit found that the government did not commit prosecutorial misconduct by eliciting testimony about Russian stereotypes because the statements were innocuous and volunteered by the witnesses without government suggestion.

Evidentiary Issues

The Third Circuit found the district court erred by not allowing Kolodesh’s wife to testify that he was home and very ill during some of the years in question.  However, the Court ruled the error was harmless, as other testimony indicated that Kolodesh met with co-workers via phone and at his home while he was ill.

Kolodesh’s former co-workers and co-conspirators pled guilty and testified for the government.  The Court held it was not error to admit testimony of their uncharged acts of fraud because they were not offered to show Kolodesh’s character as a defrauder, but rather as circumstantial evidence of his knowledge of fraudulent activity at the company.

The Court of Appeals also held that the district court did not err in allowing the previously discussed recorded conversation about Kolodesh’s Swiss bank account to be introduced into evidence as the evidence’s probative value substantially outweighed its prejudicial effect.

Response to Jury’s Request

The jury requested the testimony of certain government witnesses at various times during deliberations.  The district court told the jury that, if possible, they should continue their deliberations while the audio recordings and transcripts were prepared.  Two hours later, before the recordings and transcripts were delivered, the jury returned a verdict.  The Third Circuit found that the district court acted properly in instructing the jury that they could wait for the transcripts or continue deliberating using their recollection.

Sentencing

The Court of Appeals held that the district court did not err in determining that the government proved a $16.2 million loss due to Kolodesh’s fraud because witnesses were competent to testify to the amount of loss.

The Court also held that the district court did not err in holding Kolodesh jointly and severally liable for the full amount of loss since no atypical situation had occurred.

Kolodesh objected to the four-level sentencing enhancement for his role as an organizer or leader of fraudulent activity.  The Third Circuit found no error and upheld the sentencing enhancement.

Kolodesh likewise objected to the two-level adjustment for obstruction of justice.  The Court of Appeals upheld the enhancement because Kolodesh pointed to nothing in the record indicating error.

The Court held that the district court did not err in deciding that Kolodesh was an appropriate candidate for a lengthy incarceration because the BOP was fully capable of provide adequate medical care for him.

The Circuit also held that a lengthy prison sentence combined with restitution was not substantively unreasonable because the restitution merely served to make the government whole and the district court imposed a sentence below the applicable guideline range.

Many thanks to Law Clerks Robert K. Lavelle and Anne Yoskoski who prepared this post.

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