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United States v. Barker

United States District Court, N.D. Texas, Dallas Division

September 20, 2017

UNITED STATES OF AMERICA, Plaintiff,
v.
WADE NEAL BARKER (3), WILTON MCPHERSON BURT (4), JACKSON JACOB (8), DOUGLAS SUNG WON (9), MICHAEL BASSEM RIMLAWI (10), DAVID DAESUNG KIM (11), WILLIAM DANIEL NICHOLSON, IV (12), SHAWN MARK HENRY (13), MRUGESH KUMAR KUMAR SHAH (14), ANDREW JONATHAN HILLMAN (19), and SEMYON NAROSOV (20), Defendants.

          MEMORANDUM OPINION AND ORDER

          SIDNEY A. FITZWATER, UNITED STATES DISTRICT JUDGE

         Several defendants who are charged in a multi-count indictment alleging various crimes related to an alleged health care bribe and kickback scheme move under Fed. R. Crim. P. 12(b)(1) to dismiss certain counts of the indictment. Concluding that the indictment sufficiently states the offenses charged and that no other reasons warrant dismissal, the court denies the motions.[1]

         I

          Defendants are physicians or other individuals who were associated with the now-closed Forest Park Medical Center Dallas (“FPMC”), a physician-owned surgical hospital. The indictment charges defendants with various health care and financial crimes. In nine motions, several defendants move to dismiss Count 1[2] of the indictment, which charges a conspiracy to pay and receive health care bribes and kickbacks, in violation of 18 U.S.C. § 371, and/or to dismiss Counts 12, 13, 15, and 17, which allege violations of the Travel Act, 18 U.S.C. § 1952, and are predicated on violations of Texas law.[3] The government opposes the motions.[4]

         II

          Defendants Andrew Jonathan Hillman (“Hillman”), Semyon Narosov (Narosov”), Michael Bassem Rimlawi (“Rimlawi”), Douglas Sung Won (“Won”), Mrugeshkumar Kumar Shah (“Shah”), Shawn Mark Henry (“Henry”), and Jackson Jacob (“Jacob”) move to dismiss Count 1 of the indictment, which alleges a conspiracy to pay and receive health care bribes and kickbacks, in violation of 18 U.S.C. § 371.

         A

          Some or all defendants maintain that the indictment relies on conduct that is barred by the five-year statute of limitations that applies to violations of 18 U.S.C. § 371, or neglects to disclose that certain defendants did not engage in alleged criminal conduct or participate in the alleged conspiracy within the limitations period; that to the extent defendants were involved in a conspiracy, it was a separate conspiracy that was completed before the limitations period began; that although the government may generally rely on a presumption of continuity to show that participation continued into the limitations period in the absence of overt acts by a defendant, the government is barred from doing so here because its own evidence conclusively establishes that defendants terminated their participation in the alleged conspiracy before the limitations period; that the indictment purports to charge one general conspiracy but actually charges several, separate conspiracies (e.g., three separate conspiracies, or twelve separate conspiracies); and that the indictment fails to adequately allege that the defendant in question was involved in a conspiracy or in any unlawful conduct. The court will consider defendants' motions together.[5]

         B

         To be sufficient, an indictment must “‘allege each essential element of the offense charged so as to enable the accused to prepare his defense and to allow the accused to invoke the double jeopardy clause in any subsequent proceeding.'” United States v. Lawrence, 727 F.3d 386, 397 (5th Cir. 2013) (quoting United States v. Morrow, 177 F.3d 272, 296 (5th Cir. 1999)). “Thus, an indictment is sufficient if it ‘contains the elements of the offense charged and fairly informs the defendant of the charge against which he must defend.'” Id. (quoting United States v. Fuller, 974 F.2d 1474, 1480 (5th Cir. 1992)). “It is not necessary for an indictment to go further and to allege in detail the factual proof that will be relied upon to support the charges.” United States v. Crippen, 579 F.2d 340, 342 (5th Cir. 1978) (citations omitted). “Generally, an indictment which follows the language of the statute under which it is brought is sufficient to give a defendant notice of the crime of which he is charged.” United States v. Thomas, 348 F.3d 78, 82 (5th Cir. 2003) (internal quotation marks and citations omitted); see also United States v. Massey, 849 F.3d 262, 264 (5th Cir. 2017); United States v. Hagmann, 950 F.2d 175, 182-83 (5th Cir. 1991). When the court decides a motion to dismiss the indictment for failure to state an offense, it is required to “‘take the allegations of the indictment as true and to determine whether an offense has been stated.'” United States v. Kay, 359 F.3d 738, 742 (5th Cir. 2004) (quoting United States v. Hogue, 132 F.3d 1087, 1089 (5th Cir. 1998)).

         C

         18 U.S.C. § 371-one of several federal conspiracy statutes-provides, in pertinent part:

If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined under this title or imprisoned not more than five years, or both.

18 U.S.C. § 371. Count 1, which explicitly incorporates the preceding 41 paragraphs of the indictment, includes 104 paragraphs of its own (¶¶ 42-145), 47 paragraphs (¶¶ 99-145) of which allege overt acts. Paragraph 43 specifically identifies the offenses against the United States that defendants allegedly conspired to commit:

From in or around early 2008, through in or about January 2013, the exact dates being unknown to the Grand Jury, in the Dallas Division of the Northern District of Texas and elsewhere, [defendants] and others known and unknown to the Grand Jury, did knowingly and willfully combine, conspire, confederate, and agree with each other to commit certain offenses against the United States, that is: a. to violate 42 U.S.C. § 1320a-7b(b)(2) . . .; b. to violate 42 U.S.C. § 1320a-7b(b)(1) . . .; c. to violate 42 U.S.C. § 1320a-7b(b)(1) . . .; and d. to violate 18 U.S.C. § 1952[.]

Indictment ¶ 43.

         The court concludes that Count 1 of the indictment is sufficient “because it contains the elements of the offense charged and fairly informs the defendants of the charge against which they must defend.” United States v. Petras, 2016 WL 1054597, at *2 (N.D. Tex. Mar. 17, 2016) (Fitzwater, J.) (citing United States v. Persing, 318 Fed.Appx. 152, 154 (4th Cir. 2008) (per curiam) (“Because the indictment filed against [the defendant] alleged the essential elements of the offense, and tracked the statutory language, we find that the indictment was valid.”)), appeals docketed, Nos. 16-11631 and 16-11648 (5th Cir. Nov. 16, 2016).

         D

          As noted, defendants also contend that Count 1 is barred by the statute of limitations, as applied to them. The force of this argument depends, however, on the conclusion that Count 1 of the indictment charges multiple, independent conspiracies. The court agrees with the government that the allegations of Count 1, taken as true, charge a single, overarching conspiracy from in or around early 2008 through in or about January 2013. See, e.g., United States v. Lokey, 945 F.2d 825, 831 (5th Cir. 1991) (addressing constructive amendment challenge based on assertion that defendants were convicted of multiple conspiracies, not single conspiracy charged in indictment, and stating that “[w]hether the evidence proved one or more conspiracies turns on (1) whether there was a common goal, (2) the nature of the scheme, and (3) the overlap among the participants in the various dealings.”). Because the court concludes that Count 1 sufficiently charges a single, overarching conspiracy, it holds that Count 1 cannot be dismissed on the basis that it charges an offense that is time-barred. This is so because the indictment charges that the last overt act occurred on September 28, 2012, within the limitations period. See Indictment ¶ 125.

         Accordingly, the court denies Hillman and Narosov's April 21, 2017 motion to dismiss indictment; Rimlawi's May 25, 2017 motion to dismiss count one of the indictment and to join codefendants' motions to dismiss; Won's May 26, 2017 motion to dismiss count one of the indictment and to join codefendants' motions to dismiss; Shah's May 31, 2017 motion to dismiss count one of the indictment and to join codefendants' motions to dismiss; Henry's June 13, 2017 motion to dismiss count 1 of the indictment; and the part of Jacob's June 30, 2017 motion to dismiss indictment count one and the Travel Act Counts (13 through 18) and to join codefendants motions to dismiss that addresses count one.

         III

          Defendants Henry, Kim, Nicholson, Rimlawi, Won, [6] Barker, Jackson, and Wilton McPherson Burt (“Burt”) move to dismiss the Travel Act counts-Counts 12, 13, 15, and 17.[7] In four motions to dismiss, some or all defendants maintain that the indictment fails to state Travel Act offenses against the Surgeon Defendants[8] because it relies on the conduct of other defendants to satisfy the Act's most basic elements; the indictment cannot rely on the Texas Commercial Bribery Statute (“TCBS”), Tex. Penal Code Ann. § 32.43 (West 2017), as the predicate state-law violation because the TCBS is preempted by the federal Anti-Kickback Statute since the TCBS criminalizes conduct that the Anti-Kickback Statute specifically identifies as lawful and shields from prosecution under numerous “safe harbors”; the TCBS conflicts with a later-enacted and more specific Texas law-the Texas Solicitation of Patients Act (“TSPA”), Tex. Occ. Code Ann. § 102.001 (West 2012)-which incorporates federal safe harbors and governs the arrangements at issue in this case; the TCBS is unconstitutionally vague because it fails to provide adequate notice of the conduct it prohibits and encourages arbitrary and discriminatory enforcement; allowing the federal government to prosecute a health care provider under TCBS via the Travel Act would violate principles of federalism and Supreme Court precedent, given that the State of Texas has never prosecuted health care providers under the TCBS; the TCBS applies only to certain acts undertaken by a “fiduciary” in relation to the affairs of his “beneficiary, ” and it is clear from the face of the statute that Burt is neither a “fiduciary” under the statute nor did he have a fiduciary-beneficiary relationship with any of FPMC's patients; and the Travel Act count against Kim (Count 13) should be dismissed because it is barred by the statute of limitations.. In the Surgeon Defendants' motion to dismiss the Travel Act counts in the superseding indictment, in addition to reasserting the arguments of their previous motions, they maintain that the new Counts 19, 20, and 21 must be dismissed for failing to properly allege a use of a facility in interstate commerce, as required under the Travel Act.

         IV

          The court considers first the contention that the indictment fails to state Travel Act offenses against the Surgeon Defendants-either as principals or as aiders and abettors-because it relies on the conduct of other defendants to satisfy the Act's most basic elements. Defendants contend that the indictment should be dismissed because the Travel Act counts fail to allege facts that would show the use of a facility in interstate commerce, the requisite mens rea, and the subsequent performance of an unlawful act covered by the statute. As noted above, to be sufficient, an indictment must “allege each essential element of the offense charged so as to enable the accused to prepare his defense and to allow the accused to invoke the double jeopardy clause in any subsequent proceeding.” Lawrence, 727 F.3d at 397 (citation omitted); see supra § II(B). The court concludes that the Travel Act counts are sufficiently alleged because they include the elements of the charged crime and therefore allow defendants to prepare their defenses.

         A

          The Travel Act prohibits use of interstate facilities to promote or carry on certain unlawful activities. See 18 U.S.C. § 1952(a). The Act provides:

(a) Whoever travels in interstate or foreign commerce or uses the mail or any facility in interstate or foreign commerce, with intent to-
(1) distribute the proceeds of any unlawful activity; or
(2) commit any crime of violence to further any unlawful activity; or
(3) otherwise promote, manage, establish, carry on, or facilitate the promotion, management, establishment, or carrying on, of any unlawful activity, and thereafter performs or attempts to perform-
(A) an act described in paragraph (1) or (3) shall be fined under this title, imprisoned not more than 5 years, or both[.]

Id. When defining “unlawful activity, ” the statute lists “extortion, bribery, or arson in violation of the laws of the State in which committed or of the United States.” Id. at § 1952(b). To sustain a conviction under the Travel Act, the government must prove (1) travel in interstate or foreign commerce, or use of the mail (or any facility) in interstate or foreign commerce; (2) with specific intent to promote, manage, establish, carry on-or distribute the proceeds of-unlawful activity; and (3) knowing and willful commission of an act in furtherance of that intent subsequent to the act of travel. United States v. Logan, 949 F.2d 1370, 1380-81 (5th Cir. 1991) (citing United States v. Hernandez-Palacios, 838 F.2d 1346, 1350 (5th Cir. 1988)). Ultimately, because the Travel Act “‘fully and unambiguously sets out the essential elements of the offense, indictments drafted substantially in its language are sufficient.'” Hagmann, 950 F.2d at 183 (quoting United States v. Stanley, 765 F.2d 1224, 1239 (5th Cir. 1985)).

         18 U.S.C. § 2, which governs guilt as an aider and abettor, provides:

(a) Whoever commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal.
(b) Whoever willfully causes an act to be done which if directly performed by him or another would be an offense against the United States, is punishable as a principal.

18 U.S.C. § 2. It does not define a separate crime. United States v. Walker, 621 F.2d 163, 166 (5th Cir. 1980). Instead, it merely makes punishable as a principal one who aids or abets another in the commission of a substantive offense. Id. (citing United State v. Cowart, 595 F.2d 1023, 1031 n.10 (5th Cir. 1979)). To prove that a defendant is guilty as an aider and abettor, the government must prove that “the elements of the substantive offense occurred; and the defendant ‘associate[d] himself with the venture, . . . participate[d] in it as something . . . he wishe[d] to bring about, . . . [and sought] by his actions to make it succeed.'” United States v. McDowell, 498 F.3d 308, 313 (5th Cir. 2007) (brackets and ellipses in original) (quoting Nye & Nissen v. United States, 336 U.S. 613, 619 (1949)). In this way, aiding and abetting liability requires “knowledge of all elements of the underlying crime.” Id. at 315 (citing United States v. Longoria, 569 F.2d 422, 425 (5th Cir. 1978)). At the indictment stage, “‘the rule is well-established, both in this circuit and others, that one who has been indicted as a principal may be convicted on evidence showing that he merely aided and abetted the commission of the offense.'” United States v. Davis, 97 Fed.Appx. 486, 487 (5th Cir. 2004) (per curiam) (quoting United States v. Bullock, 451 F.2d 884, 888 (5th Cir. 1971)); Walker, 621 F.2d at 166.

         Paragraph 149 of the Indictment (¶ 147 of the superseding indictment) asserts Travel Act violations under an aiding and abetting theory of liability. It charges, in relevant part:

From on or about November 15, 2011 through in or about January 2013 . . . Toussaint, Barker, Beauchamp, Burt, Jacob, Henry, Kim, Foox, Won, Gonzales, and Nicholson, aiding and abetting one another and others known and unknown to the Grand Jury, used and caused to be used facilities in interstate commerce with the intent to promote, manage, establish, carry on, distribute the proceeds of, and facilitate the promotion, management, establishment, carrying on, and distribution of the proceeds of an unlawful activity, that is, Commercial Bribery in violation of [the TCBS], and thereafter, to perform and attempt to perform acts to promote, manage, establish, carry on, distribute the proceeds of, and facilitate the promotion, management, establishment, carrying on, and distribution of the proceeds of such unlawful activity[.]

Indictment ΒΆ 149. Paragraph 149 also contains a table with more specific factual allegations. The table is divided into six columns with the following titles: Count, Bribe or Kickback Payors, Bribe or Kickback Recipient, Use of Facility in Interstate Commerce, Acts Performed Thereafter, ...


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