United States v. Atias

• Decision Date: 20 September 2022
• Docket Number: 2:14-cr-403-GRB-SIL-1,2:21-cv-5769-GRB,2:14-cr-403-GRB-SIL-2. 2:21-cv-5785-GRB
• Parties: UNITED STATES OF AMERICA v. SOFIA ATIAS, Defendant.
• Court: U.S. District Court — Eastern District of New York

UNITED STATES OF AMERICA v. SOFIA ATIAS, Defendant.

Nos. 2:14-cr-403-GRB-SIL-1, 2:21-cv-5769-GRB, 2:14-cr-403-GRB-SIL-2. 2:21-cv-5785-GRB

United States District Court, E.D. New York

September 20, 2022

APPEARANCES

LAW OFFICES OF DAVID ZARMI, Attorneys for Defendant/Petitioner Sofia Atias, By: David Zarmi, Esq., Joseph Atias, pro se.

BREON PEACE, UNITED STATES ATTORNEY FOR THE EASTERN DISTRICT OF NEW YORK, By: Charles P. Kelly Esq.

MEMORANDUM AND ORDER

GARY R. BROWN, District Judge:

INTRODUCTION

Presently before the Court are motions to vacate pursuant to 28 U.S.C § 2255 filed by Defendants/Petitioners Sofia Atias and Joseph Atias. For the reasons stated below, the motions are denied.

BACKGROUND

In March 2017, Defendants were found guilty of bank fraud conspiracy to commit bank fraud, and theft of government funds. DE 237. They appealed the convictions in August 2018 DEs 333-35, 337, which the Second Circuit affirmed in a Summary Order and Judgment dated April 1, 2020. DE 264 United States v. Atias, Nos. 18-2059, 18-2259 (2d Cir.) (“Atias Appeal”). Defendants petitioned the Circuit for a panel rehearing. DE 277. The Second Circuit denied their petition on July 15, 2020. DE 281. Defendants did not file a petition for certiorari with the Supreme Court. See DE 365. Defendants filed the instant 28 U.S.C. § 2255 petitions with this Court on October 15, 2021. DE 365, 366.^[1]

On May 26, 2022, this Court ordered Defendants to show cause why their motion should not be dismissed as untimely. DE 372. Defendants responded on June 20, 2022. DE 374. The government replied on July 18, 2022. DE 375.

DISCUSSION

I. Statute of Limitations

A one-year limitations period applies to § 2255 petitions, which starts to “run from the latest of the date on which the judgment of conviction becomes final.” 28 U.S.C. § 2255(f)(1). “[F]or federal criminal defendants who do not file a petition for certiorari with [the Supreme Court] on direct review, § 2255's one-year limitation period starts to run,” i.e. a conviction becomes final, “when the time for seeking such review expires.” Clay v. United States, 537 U.S. 522, 532 (2003). Under Supreme Court Rule 13, a party must petition for certiorari “within 90 days” of either “the date of entry of the judgment or order sought to be reviewed” or the date on which rehearing is denied by the lower court.

Here, Defendants' time to petition the Supreme Court for a writ of certiorari began on July 15, 2020 (the date on which the Second Circuit denied their rehearing petition) and thus expired on October 13, 2020 (ninety days later). As a consequence, the one-year limitations period to bring their § 2255 petitions lapsed on October 13, 2021. Defendants filed their § 2255 petitions on October 15, 2021, i.e., two days after the deadline. Neither Sofia nor Joseph Atias argues their filings are timely. Rather, petitioners claim equitable tolling, a doctrine that would permit relief only if petitioners can show “‘(1) that [they have] been pursuing [their] rights diligently, and (2) that some extraordinary circumstance stood in [their] way' and prevented timely filing.” Holland v. Florida, 560 U.S. 631, 649 (2010) (quoting Pace v. DiGuglielmo, 544 U.S. 408, 418 (2005)).

Petitioners argue, unconvincingly, that extraordinary circumstances prevented them from timely filing their § 2255 petition, although the petition parrots, nearly verbatim, their prior request for a rehearing before the Second Circuit. Compare DE 365 at 16, 18-19, 22-23, 25-26, 29-32 with Atias Appeal, DE 277 at 612. Given that the brief was largely written before the limitations period even began, petitioners cannot credibly contend they could not timely file. See, e.g., Marte v. Brown, 2010 WL 1644271, at *4 (S.D.N.Y. Apr. 21, 2010) (Sullivan, J.) (“Petitioner has previously raised the same claims of prosecutorial misconduct and deprivation of a fair trial in other appeals, indicating that his alleged limitations are not exceptional circumstances that would justify his failure to file a timely habeas petition.”). Additionally, their attorney did not fall ill with COVID for more than three months after receipt of the purported “newly discovered” evidence concerning Medicaid eligibility which forms the principal basis for their § 2255 petition. See Ex. B to DE 365 (letters dated April 2021); Zarmi Decl., ¶¶ 8, 11 (counsel fell ill in August 2021).

Thus, the petitions are barred by the statute of limitations, and must be denied. However, out of an abundance of caution, the Court has considered the substance of the petitions, and finds them without merit as discussed below.

II. Jurisdiction

Petitioners argue this Court lacked jurisdiction over the underlying Medicaid fraud prosecutions because determinations of eligibility and fraud are delegated to state agencies in the first instance. DE 365 at 15-28. The cases cited in support of this novel argument proved inapposite, as these authorities address the issue of a district court's power to hear civil cases brought by applicants challenging Medicaid determinations. See Arkansas Dep't of Health & Hum. Servs. v. Smith, 370 Ark. 490, 491 (2007) (state court lacks jurisdiction to grant petitioner's request for an increase in certain Medicaid funds); Alford v. Mississippi Div. of Medicaid, 30 So.3d 1212, 1221 (Miss. 2010) (“the plain language of the [Medicare Catastrophic Coverage Act] does not confer jurisdiction upon our state courts to increase the [minimum monthly maintenance needs allowance] and [community spouse resource allowance] prior to an exhaustion of administrative remedies”); Mykonos v. United States, 59 F.Supp.3d 100, 106 (D.D.C. 2014) (applicant who claimed she was wrongfully denied Medicaid benefits failed to exhaust administrative remedies). None of these cases concern the criminal statutes under which petitioners were found guilty, 18 U.S.C. §§ 1344, 1349 (bank fraud) and 18 U.S.C. § 641 (theft of government funds). None of these authorities bear upon the distinct question of whether this Court has jurisdiction to hear a case of Medicaid fraud brought by criminal prosecutors. The thought is that the United States was required to seek a determination from New York's Medicaid agency that the petitioners were ineligible before criminally prosecuting them for Medicaid fraud. DE 365 at 26. Although it is undisputed that the applicable state agencies have the authority to make Medicaid eligibility determinations in the first instance, neither law nor common sense dictate that this somehow deprives federal grand juries of indicting individuals believed to have engaged in a fraud scheme aimed at improperly obtaining Medicaid funds.

III. Sufficiency of the Evidence

Title 18 U.S.C. § 641 criminalizes the theft of “any record, voucher, money, or thing of value of the United States or of any department or agency thereof, or any property made or being made under contract for the United States or any department or agency thereof.” “To obtain a conviction under . . . § 641, the government must prove that money was intentionally embezzled, stolen or converted, that the money taken was the property of the United States, and that the United States suffered some loss.” United States v. Gibbs, 704 F.2d 464, 465 (9th Cir. 1983). See United States v. Girard, 601 F.2d 69, 70-71 (2d Cir. 1979) (18 U.S.C. § 641 covers intangible property of the United States).

Petitioners argue that there was insufficient evidence to support their 18 U.S.C. § 641 conviction because the government was not the victim of the fraud. Courts evaluate a number of factors to determine whether funds retain a sufficiently federal character to sustain jurisdiction under 18 U.S.C. § 641, including: “(1) [the existence of a] specific reversionary interest in the federal government, (2) the statutory requirement that funds be used for the purpose intended, and (3) whether the recipient is required by federal law to maintain financial records, file reports, adopt government methods of management, or submit to federal oversight.” United States v. Tana, 618 F.Supp. 1393, 1395 (S.D.N.Y. 1985) (quoting United States v. Barreda, 607 F.Supp. 419, 420 (N.D. Ind. 1985)). “The greater the control, the more likely the courts are to find a violation of section 641.” Id.

Here, it was established at trial that the federal government provides over half of Medicaid funds distributed in New York State. See DE 244-1, Tr. at 384:16-18 (federal government provides approximately 54% of Medicaid funds in New York State). As Assistant Director of the Office of Investigations for the Nassau County Department of Social Services (“NCDSS”) Heather Griffin explained in a sworn statement, although the judgment in this case ordered restitution be made to the New York State Medicaid Fraud Office, “adjustments are made to credit part of the restitution payment to the account of the United States of America, reflecting the contributions of the United States to New York State Medicaid, which is approximately fifty percent.” DE 368-1, Aff. of Heather Griffin ¶ 11. Because the federal government provides the majority of New York's Medicaid funds and is eligible for credits when such funds are returned, the federal government retains sufficient control over those funds to sustain jurisdiction. Thus, the Medicaid funds at issue are property of the United States under 18 U.S.C. § 641.

The cases petitioners cite are distinguishable because they all involved situations where a defendant fraudulently obtained funds from a recipient after distribution. See United States v. Gavin, 535 F.Supp. 1345, 1346-49 (W.D. Mich. 1982) (“[18 U.S.C. § 641] does not provide for continued federal ownership of the loaned funds” after their delivery to the recipient); United...