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United States v. Dillon

United States District Court, D. Idaho

October 27, 2017

UNITED STATES OF AMERICA, Plaintiff,
v.
CHERIE RENEE DILLON, Defendant.

          MEMORANDUM DECISION AND ORDER

          B. Lynn Winmill, United States District Court Chief Judge

         INTRODUCTION

         Following a jury trial, the defendant was convicted of health care fraud and aggravated identity theft. At sentencing, the Court issued a preliminary finding on amounts to be paid as restitution and forfeiture, and scheduled an evidentiary hearing to hear testimony and argument before making a final determination as to those amounts. Following that hearing, the Court ordered further briefing that has now been received. For the reasons set forth below, the Court imposes forfeiture in the sum of $847, 016.00, and restitution in the sum of $139, 769.80.

         LITIGATION BACKGROUND

         Defendant was originally charged with 24 counts of health care fraud and 24 counts of aggravated identity theft. The case went to trial, and after the Government rested its case, the defendant pled guilty to all counts. The 24 counts of health care fraud that she pled guilty to alleged a scheme from January 1, 2010 through December 31, 2013.

         At the conclusion of the sentencing hearing, the Court issued a preliminary finding that forfeiture be imposed in the amount of $847, 016. That amount represents the gross receipts received by defendant's clinic, reported on her IRS form 1040 Schedule C for the years 2010 to 2013. See Exhibit 1303.

         The Court also made a preliminary finding that restitution be imposed in the amount of $549, 605.18. That figure was computed by adding the amounts paid to the clinic by insurance companies from defendant's billings for the years 2010 to 2013. It did not include insurance company payments to the clinic during times when there was no dentist in the office for the years 2008 to 2009, a sum of $46, 946.21 sought by the Government.

         The Court then scheduled a hearing to take testimony and argument on these amounts. That hearing was held and the Court requested further briefing that has been received.

         The Government seeks forfeiture in the amount of $847, 016 and restitution in the amount of $549, 605.18. The defendant asks the Court to set the forfeiture amount at $126, 571.62 and the restitution amount at $139, 769.80.

         ANALYSIS

         Forfeiture

         In imposing a sentence on a person convicted of a health care offense, courts “shall order the person to forfeit property, real or personal, that constitutes or is derived, directly or indirectly, from the gross proceeds traceable to the commission of the offense.” See 18 U.S.C. § 982(a)(7). In criminal cases, the government must prove by a preponderance of the evidence that property is subject to forfeiture. See U.S. v. Garcia-Guizar, 160 F.3d 511, 517 (9th Cir.1998).

         The forfeiture process is governed by Rule 32.2 of the Federal Rules of Criminal Procedure and 21 U.S.C. § 853. U.S. v. Lazarenko, 476 F.3d 642, 648 (9th Cir.2007). “Criminal forfeiture provisions operate in personam against the assets of the defendant and serve as part of the penalty for the defendant's conviction.” U.S. v. Nava, 404 F.3d 1119, 1124 (9th Cir.2004). Criminal forfeiture reaches any property involved in the offense or any property traceable as proceeds to it. Lazarenko, 476 F.3d at 647. As to the amount of the money judgment, “[t]he statute mandates that a defendant forfeit a very specific amount-the proceeds of his criminal activity, ” or in other words, the amount “he received in connection with the commission of the crime.” U.S. v. Casey, 444 F.3d 1071, 1076 (9th Cir.2006). The purpose is to “eliminate the gains realized from criminal activity.” Id. at 1074. Generally, proceeds are limited to funds involved in the offenses of conviction, and should not be based on uncharged or acquitted conduct. Nava, 404 F.3d at 1129 n. 5. However, for offenses charging a “scheme or artifice” - as was charged here - the court may forfeit proceeds generated over the course of the entire scheme, not just by the particular executions of it charged in the counts of conviction. U.S. v. Pena, 2010 WL 2054442 at *3 (9th Cir. May 25, 2010) (holding that forfeiture was “not limited to amounts related to the specific checks and victims alleged in the twenty counts of conviction”).

         During the trial, the Government established through the testimony of several witnesses that between the years alleged in the Superseding Indictment - 2010 to 2013 - all of the defendant's billings were fraudulent. Those billings were for (1) dental services done improperly by defendant; (2) hygiene services done by the defendant and others without the proper supervision of a dentist; and (3) dental services done by contract dentists proceeding under the defendant's misrepresentation that Dr. Fricke had seen the patient and planned their treatment. During these years, Dr. Fricke was completely disabled and not coming into the office or doing any work. The defendant fraudulently misrepresented to contract dentists that Dr. Fricke ...


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