U.S.A v. Dvorak

• Decision Date: 20 August 2010
• Docket Number: No. 09-3463.,09-3463.
• Citation: 617 F.3d 1017
• Parties: UNITED STATES of America, Appellee,v.Douglas P. DVORAK, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

617 F.3d 1017

UNITED STATES of America, Appellee,v.Douglas P. DVORAK, Appellant.

No. 09-3463.

United States Court of Appeals,

Eighth Circuit.

Submitted: June 18, 2010.

Filed: Aug. 20, 2010.

COPYRIGHT MATERIAL OMITTED

Stanley A. Roush, argued, Cedar Rapids, IA, for appellant.

Robert L. Teig, AUSA, argued, Rebecca Goodgame Ebinger, AUSA, on the brief, Cedar Rapids, IA, for appellee.

Before WOLLMAN, EBEL,¹ and COLLOTON, Circuit Judges.

EBEL, Circuit Judge.

Defendant-Appellant Douglas Dvorak was convicted of multiple counts of mail fraud, aggravated identity theft, and money laundering. The indictment alleged that Dvorak, a chiropractor, submitted false Medicaid claims in the names of children for whom he did not provide treatment. He would then deposit the Medicaid reimbursement checks he received into a checking account and, within a few days withdraw the entire amount of the check, in cash, from the account.

After a jury trial, Dvorak was found guilty on all thirty-nine counts in the indictment, which charged him with mail fraud, aggravated identity theft, and money laundering. On appeal, Dvorak argues 1) that the evidence presented at trial does not support his convictions for money laundering; 2) that the jury was not properly instructed as to the elements of aggravated identity theft in light of the Supreme Court's decision in Flores-Figueroa v. United States, --- U.S. ----, 129 S.Ct. 1886, 173 L.Ed.2d 853 (2009); and 3) that the district court ² abused its discretion when it ordered the sentences for two of his aggravated identity theft convictions to run consecutively. We affirm.

I.

Dvorak was a licensed chiropractor in Cedar Rapids, Iowa, who, in November 2003, became an authorized Medicaid service provider. Medicaid providers in Iowa submit their reimbursement claims either through an electronic submission to Iowa Medicaid Enterprise (IME) or by mailing a claim form to IME. The claim must include the patient's name and birth date, the patient's unique Medicaid Identification Number, the diagnosis and treatment of the patient, and the amount billed to Medicaid.

From 2005 through 2007, Dvorak obtained the names and birth dates of numerous children in the Cedar Rapids area. One of his methods for obtaining this information was to pay one of his patients to seek out Medicaid-eligible children and give the children $5 in exchange for their names and birthdays, as well as the names and birthdays of other children they knew. Dvorak would then contact IME with the name and birthday information, and IME would provide him with the Medicaid Identification Numbers for those children. Armed with that information, Dvorak then created Medicaid claims for chiropractic services for the children without actually treating them-and in most cases, without actually meeting them-and submitted the claims through the mail to IME for reimbursement.³ Two of the children in whose name Dvorak falsely filed a claim were ten-day old Medicaid-eligible babies who were, at the time, held in the Newborn Intensive Care Unit at St. Luke's Hospital in Cedar Rapids.

After submitting these claims to IME, Dvorak would receive a reimbursement check in the mail from IME. Through this mail fraud scheme, Dvorak received at least $71,375.82 from Medicaid; the district court ultimately concluded that the intended loss was $120,000.

Dvorak would take the Medicaid remittance checks to a Wells Fargo bank, which would cash the checks for him. Benita Messer, the service manager at the bank, testified that she found Dvorak's behavior odd, and she even called Medicaid to verify that the checks were authentic. Ms. Messer recommended that he open a checking account with the bank to make it easier to process the checks, and Dvorak did so. He then would deposit the Medicaid check into the account, and within a few days withdraw the entire amount of the check from his account, usually bringing his balance in the account back to zero. The amount of these deposits and subsequent withdrawals was large, ranging from $8,274.36 to $19,865.72. Ms. Messer testified that this, too, was unusual-Dvorak could have written checks against the account or withdrawn the money from an ATM rather than withdrawing the entire amount of the check in cash.

In response to a phone call from Wells Fargo, IME began a review of claims submitted by Dvorak. Dvorak was ultimately indicted on mail fraud, identity theft, and money laundering charges. Eleven counts of aggravated identity theft, in violation of 18 U.S.C. § 1028A(a)(1) (Counts 23-33), relate to eleven children whose identities he used in submitting false claims to IME. Each of the eleven identities corresponds to two counts of mail fraud (18 U.S.C. § 1341): one for mailing in Medicaid claims (Counts 1-11), and one for receipt of checks in payment for those claims (Counts 12-22). The six money laundering charges, in violation of 18 U.S.C. § 1956(a)(1)(B)(i), are for the cash withdrawals of the Medicaid payments (Counts 34-39).

On April 10, 2009, a jury found Dvorak guilty on all thirty-nine counts. The court sentenced him to 37 months for the mail fraud and money laundering charges to run concurrently, and 24 months for the identity theft charges, with two of those charges to run consecutively to the 37 month mail fraud/money laundering sentence, for a total of 85 months. Dvorak filed a timely appeal.

II.

On appeal, Dvorak raises three issues. First, he argues that the evidence does not support his conviction for money laundering because the act of withdrawing cash from his checking account demonstrates no intent to conceal the proceeds of his illegal activity. Second, he argues that the jury instructions given on the aggravated identity theft charges were flawed because they failed to include an element of the offense that the Supreme Court has since held must be proven beyond a reasonable doubt. Finally, Dvorak contends that the district court erred in making the sentences for two of his aggravated identity theft convictions run consecutively because the court failed to consider factors set forth in the Sentencing Guidelines. We consider each argument in turn.

A.

Dvorak first argues that his convictions for money laundering are not supported by sufficient evidence. “This court reviews the sufficiency of the evidence supporting a conviction de novo, viewing the evidence most favorably to the verdict, resolving conflicts in favor of the verdict, and giving it the benefit of all reasonable inferences.” United States v. Spencer, 592 F.3d 866, 876 (8th Cir.2010). The “verdict must be upheld if there is an interpretation of the evidence that would allow a reasonable jury to find the defendant guilty beyond a reasonable doubt.” Id. (quotations omitted).

Dvorak was convicted under the provision of the money laundering statute that makes it a crime for a defendant to conduct, or attempt to conduct, a financial transaction that involves the proceeds of a specified unlawful activity, “knowing that the transaction is designed in whole or in part ... to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity.” 18 U.S.C. § 1956(a)(1)(B)(i).

There are four elements to this offense: (1) defendant conducted, or attempted to conduct a financial transaction which in any way or degree affected interstate commerce or foreign commerce; (2) the financial transaction involved proceeds of illegal activity; (3) defendant knew the property represented proceeds of some form of unlawful activity; and (4) defendant conducted or attempted to conduct the financial transaction knowing the transaction was “designed in whole or in part [ ] to conceal or disguise the nature, the location, the source, the ownership or the control of the proceeds of specified unlawful activity.”

United States v. Phythian, 529 F.3d 807, 813 (8th Cir.2008) (quoting 18 U.S.C. § 1956(a)(1)(B)(i)). The financial transactions identified in the indictment were Dvorak's “withdrawal[s] of cash from his Wells Fargo Bank account.” (Indictment at 11.)

The provision of § 1956(a)(1)(B)(i) with which we are principally concerned here is whether Dvorak's withdrawals were “designed in whole or in part [ ] to conceal or disguise the location ” of the illegal proceeds. 18 U.S.C. § 1956(a)(1)(B)(i) (emphasis added). Although cases addressing § 1956(a)(1)(B)(i) often focus upon whether the transaction was intended to conceal the “nature” or “source” of the funds, a transaction intended to conceal the location of the funds is also a violation of the money laundering statute. Concealing the location of proceeds from illegal activity is a serious offense because money that cannot be found cannot be subject to forfeiture. Indeed, Congress enacted both the money laundering and forfeiture statutes together in the same law, underscoring the common purpose served by those statutes. See Anti-Drug Abuse Act of 1986, Pub.L. No. 99-570, §§ 1352, 1366 (1986); see also 18 U.S.C. §§ 981, 982 (subjecting property involved in a money laundering offense to forfeiture). In fact, the Senate Judiciary Committee Report on the legislation identified the first two purposes of the statute as “creat[ing] a Federal offense against money laundering” and “authoriz[ing] forfeiture of the profits earned by launderers.” S.Rep. No. 99-433, at 1 (1986).

On appeal, Dvorak argues that nothing about the withdrawals demonstrates that he had an intent to conceal the location of the funds. In fact, as Dvorak points out, these transactions led to the ultimate discovery of his scheme, as Wells Fargo contacted IME, which initiated an investigation into Dvorak's claims.

Dvorak relies on a number of out-of-circuit cases in which the courts held that ordinary commercial transactions, without any additional evidence of an intent to conceal, cannot support a money laundering conviction. For example, in United States v. Sanders, 929 F.2d 1466 (10th Cir.1991) ...