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United States v. Iwuala

United States Court of Appeals, First Circuit

June 10, 2015

UNITED STATES OF AMERICA, Appellee,
v.
BLESSING SYDNEY IWUALA, Defendant, Appellant

Page 2

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS. Hon. Richard G. Stearns, U.S. District Judge.

W. Daniel Deane, with whom Brian D. Duffy and Nixon Peabody LLP were on brief, for appellant.

Mark T. Quinlivan, Assistant United States Attorney, with whom Carmen M. Ortiz, United States Attorney, was on brief, for appellee.

Before Howard, Selya and Kayatta, Circuit Judges.

OPINION

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SELYA, Circuit Judge.

This case is a poster child for the adage that easy money often leads to hard lessons. For several months, defendant-appellant Blessing Sydney Iwuala was awash in a flood of easy money as a Medicare-approved provider of durable medical equipment (DME). But when the easy money dried up, he found himself facing criminal prosecution on multiple charges of health-care fraud. The trial did not go well for the defendant, and he now challenges both his conviction and his sentence. After careful consideration of his asseverational array, we affirm.

I. BACKGROUND

In 2007, the defendant -- a college graduate who had obtained a master's degree in business administration while in Nigeria -- opened Above All Home Care and Medical Supply, Inc. (Above All), a DME supplier. The following year, Above All gained Medicare approval, which authorized it to bill Medicare directly after filling DME prescriptions for Medicare beneficiaries.

Despite securing this certification, the defendant's business lagged. His fortunes changed dramatically when, in 2009, he entered into a business arrangement with John Nasky. The defendant had known Nasky for two years both through their mutual involvement in the community of Nigerian immigrants in the Boston area and through the defendant's publication of a magazine covering Nigerian-American cultural and social events as far away as Texas. The two men traveled in the same social circles and often saw each other at social events.

Nasky operated his own medical supply and medical billing business with an office in Massachusetts. He represented himself as having a client base in Texas. Nasky had a problem: in June of 2008, his supply company had been placed on payment suspension by Medicare due to a suspicion of fraudulent billing. Nasky had prescriptions to fill and inventory in Texas, but he could not bill Medicare and expect to get paid. So Nasky and the defendant reached an agreement: in exchange for a supply of blank Above All forms and the right to bill Medicare in Above All's name,

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Nasky would obtain DME prescriptions for Medicare beneficiaries, fill them from his inventory in Texas, and bill for the prescribed equipment in Above All's name. Whatever proceeds Above All received would be split 65% to Nasky and 35% to the defendant. This was easy money for the defendant, who had to do no more than maintain his storefront in Massachusetts and funnel money to Nasky when Medicare paid Above All.

The scheme was fraudulent through and through: the Above All billings submitted by Nasky were based largely on illicitly obtained Medicare beneficiary identification numbers, forged prescriptions, and reimbursement requests for unnecessary medical equipment that in many instances was never delivered.

The plotters prospered: Above All billed Medicare for over $1,000,000 of DME between February and May of 2009 and received payments of more than $400,000. But these halcyon days did not last long. In July, Nasky was charged with Medicare fraud as a result of his involvement in a separate scheme. Above All submitted no further claims to Medicare after that time, and its Medicare provider status was subsequently terminated.

In due course, a federal grand jury sitting in the District of Massachusetts indicted the defendant on one count of conspiracy to commit health-care fraud, see 18 U.S.C. § 1349, four substantive counts of health-care fraud, see id. § § 2, 1347, and one count of making a false statement to the government, see id. § 1001. During an eight-day trial, the defendant maintained that his business arrangement with Nasky was above board, that he was an innocent dupe, and that he did not know at the time that any of the claims submitted were bogus. The jury rejected his defense, finding him guilty on four counts.[1] The district court imposed a 42-month term of immurement, and this timely appeal followed.

II. ANALYSIS

In this venue, the defendant challenges certain of the district court's evidentiary rulings, the sufficiency of the government's proof, and the way in which the court calculated loss in constructing his guideline sentencing range. We examine these plaints one by one.

A. Evidentiary Rulings.

The defendant reproves the district court's admission of evidence relating to Nasky's reputation and criminal history. We describe what transpired before addressing the defendant's argument.

Prior to trial, the defendant moved in limine to preclude the government from adducing evidence that Nasky was known as a " 419" -- a slang term in the Nigerian-American community for " crook." [2] The district court denied the motion subject to " the court's policing of the boundaries of any so-called '419' evidence."

At trial, the government sought to show the defendant's guilty knowledge through, inter alia, his awareness of Nasky's reputation in the social circles that both of them frequented. To this end, the government called Sunday Joseph Edem (Nasky's coconspirator in a different fraud), who testified over objection that Nasky was " very flamboyant . . . . [a]lways dressing -- showing off, like we call -- in Nigeria . . . '419.'"

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Edem later testified, again over objection, that Nasky carried on a lifestyle in which he always wanted to be noticed and treated like a celebrity or a " man of the hour." Without objection, Edem went on to testify how Nasky drew attention to himself at restaurants by paying everyone's bill or even tossing money out of buckets at parties as people followed him. In the same vein, Ana Gonzalez (who had been employed in Nasky's Massachusetts office) testified without objection that Nasky often wore distinctive clothing and gold necklaces and rings.

When asked specifically whether Nasky had a particular reputation in the community, Edem responded: " He had a reputation that you couldn't trust him with money. . . . You couldn't trust him with your wife . . . . You could not trust him in a business deal." The jury also heard that Nasky had been convicted of health-care fraud in 2000; that he was arrested on July 29, 2009 for his participation in a health-care fraud that did not involve the defendant; and that he later pleaded guilty to the latter charges. The defendant himself elicited the information regarding Nasky's 2000 conviction, and he failed to object to the admission of evidence concerning Nasky's 2009 arrest and conviction.

In his summation, the prosecutor referenced the testimony of both Edem and Gonzalez, stating:

Could the defendant really not have known that Nasky was a fraud? . . . You heard testimony from [Edem]. . . . Remember his description about Nasky, the way he looked, the ridiculous jewelry that he wore, the particular way that he carried himself, with the money being thrown [out of] the buckets? . . . Ana Gonzalez also testified that Nasky wore distinctive gold jewelry . . . . There were warning signs flashing everywhere that [Nasky] was not an honest businessman, someone not to be trusted.

The prosecutor added: " [Y]ou now know that Nasky was someone who previously went to prison. . . . Is it really plausible that the defendant didn't know that either?"

The defendant now contends that the district court abused its discretion in admitting the 419 testimony and other evidence of Nasky's appearance, reputation, and prior bad acts. This evidence, he says, was not admissible for any proper purpose and unfairly prejudiced him. The defendant adds that the prosecutor's summation (to which no contemporaneous objection was made) improperly capitalized on ...


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