United States v. Barrett

• Decision Date: 23 December 2015
• Docket Number: 15-CR-103 (KAM)
• Citation: 153 F.Supp.3d 552
• Parties: United States of America, v. Andrew Barrett, Defendant.
• Court: U.S. District Court — Eastern District of New York

153 F.Supp.3d 552

United States of America,

v.Andrew Barrett, Defendant.

15-CR-103 (KAM)

United States District Court, E.D. New York.

Signed December 23, 2015

William Patrick Campos, United States Attorney's Office, Brooklyn, NY, for United States of America.

Jeffrey A. Granat, Jacobson and Goldberg, LLP, Garden City, NY, Juliet L. Fink, Kostelanetz & Fink, LLP, New York, NY, for Defendant.

MEMORANDUM AND ORDER

MATSUMOTO

, United States District Judge

On March 11, 2015, a grand jury in the Eastern District of New York returned an indictment charging Andrew Barrett (“defendant”), a licensed pharmacist, with health care fraud, six counts of submitting false claims to the United States, eight counts of money laundering involving the proceeds of the charged health care fraud, three counts of filing a false personal income tax return for the years 2010-2012, three counts of filing a false corporate tax return for the years 2010-2012, and three counts of aiding and assisting in the preparation of false corporate tax returns for the years 2010-2012. (See ECF No. 18, Indictment.) A superseding indictment (for purposes of this opinion, “the indictment”) adding eight additional money laundering counts was returned on October 28, 2015. (See ECF No. 56, Superseding Indictment (“Indictment”) ¶¶ 29–42.)

Defendant has filed pre-trial motions seeking dismissal of the tax-related counts (the “Tax Counts”), a bill of particulars, and certain early evidentiary disclosures from the government. (ECF No. 46, Defendant's Pre-Trial Motions for Severance, a Bill of Particulars, and Other Relief (“Def. Mot.”).) The government subsequently filed an opposition brief (ECF No. 50, Response in Opposition (“Gov't Resp.”)), the defendant filed a reply (ECF No. 58, Letter Reply (“Def. Reply”)), and the government filed a sur-reply. (ECF No. 60, Reply to Response (“Gov't Sur-Reply.”).)

Separately, the government filed a motion in limine seeking to introduce evidence related to the Tax Counts, in the event the court were to dismiss those counts for lack of venue. (ECF No. 47, Motion in Limine (“Gov't Mot.”).) Defendant responded to that motion. (ECF No. 48, Memorandum in Opposition to Motion in Limine (“Def. Resp.”).) For the reasons discussed below, defendant's motions are GRANTED in part and DENIED in part. The government's motion is GRANTED.

BACKGROUND

The indictment alleges that defendant owned and operated several pharmacies in New York. (Indictment ¶¶ 21-24.) He was the owner and sole proprietor of a Queens-based pharmacy that operated under the name Economy Drug and Surgical Pharmacy (“Economy Drug”). (Id. ¶ 21.) Defendant also owned EDS Healthcare Pharmacy Inc. (“EDS”), a Floral Park-based pharmacy that was not open to the public, and Clarkstown Pharmacy Inc. (“Clarkstown”), a pharmacy in West Nyack. (Id. ¶¶ 22, 24.) Defendant's wife was the owner and chief executive officer of B&P Pharmacy Inc. (“B&P Pharmacy”), a Bronx-based pharmacy. (Id. ¶ 23.) Economy Drug and EDS were located in the Eastern District of New York (“Eastern District”), and Clarkstown and B&P were located in the Southern District of New York (“Southern District”).

The indictment charges that between January 2011 and December 2012, defendant—“together with others”—“submitted and caused the submission of claims for reimbursement to Medicare and Medicaid for drugs purportedly dispensed from Economy Drug and EDS which were in fact never dispensed to Medicare or Medicaid beneficiaries.” (Id. ¶ 25.) Three undercover patients entered Economy Drug with prescriptions that also allowed for refills. (Id. ; see also Gov't Resp. at 2.) After defendant properly filled and billed the initial subscriptions, the undercover agents did not request or receive refills of their prescriptions. (Indictment ¶ 25.) The government contends that defendant nevertheless billed Medicaid for the additional refills. (Id. )

The government claims that defendant failed to purchase “sufficient levels of pharmaceutical products from wholesale distributors to meet the purported demand at Economy Drug and EDS” and that he improperly billed health insurers including Medicare and Medicaid in excess of approximately $5.8 million. (Id. ¶ 26.) Between 2011 and 2012, Economy Drug was, according to the government, the third-highest biller of Medicare for HIV medication in Queens. (Id. ¶ 21.)

Between April 2011 and December 2012, defendant allegedly used a portion of the illegal proceeds he received from causing Economy Drug to overbill Medicare and Medicaid to purchase pharmaceutical products for B&P and Clarkstown. (Id. ¶ 27.) Between January 2010 and approximately December 2012, the indictment charges that defendant withdrew funds from B&P and Clarkstown “for his personal benefit while falsely claiming the funds were used to pay business related expenses,” but he did not claim the funds as his personal income. (Id. ¶ 28.)

DISCUSSION

Defendant seeks (1) dismissal of the Tax Counts for lack of venue; (2) a bill of particulars providing the identities of unindicted co-conspirators¹ and more information about the allegedly unauthorized refill prescriptions; and (3) disclosure of certain evidence 60 days in advance of trial.² The government seeks to introduce evidence of defendant's alleged tax fraud regardless of whether the Tax Counts are dismissed. The court will address these issues in turn.

I. Venue

Defendant first claims that venue for the Tax Counts is not proper in the Eastern District, and although he initially sought to transfer those counts to the Southern District, he now seeks dismissal of the Tax Counts for improper venue. See Fed. R. Crim. P. 12(b)(3)(A)(i)

(permitting a motion alleging “improper venue”). The government claims that defendant's motion is untimely and without merit. For the reasons that follow, the court concludes that the motion is timely and venue for the Tax Counts is proper in the Eastern District.

A. Timeliness

The government contends that defendant's initial motion to transfer venue was not timely, arguing that 18 U.S.C. § 3237(b)

precludes defendant's current venue challenge because it was not filed within 20 days after his initial arraignment. (See Gov't Resp. at 5-6; Gov't Sur-Reply at 5.) Defendant argues that § 3237(b) is inapplicable. (Def. Reply at 2-4.) Section 3237(b) provides in relevant part:

[W]here venue for prosecution of an offense described in [§ 7206(1) or (2) ] ... is based solely on a mailing to the Internal Revenue Service , and prosecution is begun in a judicial district other than the judicial district in which the defendant resides, he may upon motion filed in the district in which the prosecution is begun, elect to be tried in the district in which he was residing at the time the alleged offense was committed:

Provided, That the motion is filed within twenty days after arraignment of the defendant upon indictment or information

§ 3237(b)

(emphasis added).

Defendant first formally objected to venue in the Eastern District over five months after his arraignment on the initial indictment, well outside the 20-day window prescribed by § 3237(b)

. (See Def. Mot. at 2; Gov't Resp. at 6.) Nothing in the indictment, however, indicates that the Tax Counts are based “solely on a mailing to the Internal Revenue Service,” a prerequisite to the applicability of 18 U.S.C. § 3237(b). See

In re United States , 608 F.2d 76, 81 (2d Cir.1979) (“We construe § 3237(b) to apply, at most, to tax prosecutions that involve the use of the mails in the sense that a mailing ... is the basis on which the prosecution seeks to establish venue in a district other than the taxpayer's district of residence.”); see also

United States v. Humphreys , 982 F.2d 254, 260 (8th Cir.1992) (“Venue in this instance was not based solely on a mailing to the IRS, but upon the commission of the crime in the Northern District of Iowa.”).

Indeed, the indictment does not even mention use of the mail in any of the Tax Counts. (See Indictment ¶¶ 38, 40, 42.) Nor does the government in its briefing suggest that venue for the Tax Counts is “based solely on a mailing” to the IRS. Consequently, 18 U.S.C. § 3237(b)

is inapplicable and defendant's failure to object within 20 days of arraignment under that provision is irrelevant to whether venue is proper under § 3237(a). The court must therefore address the merits of defendant's request for dismissal for lack of venue.

B. Proper Venue

Arguing improper venue, defendant moves for a dismissal of Counts 24 through 32, the tax fraud charges. Upon review of the indictment, the parties' submissions, and the current record, the court finds that venue for the Tax Counts is likely to be proven by a preponderance of the evidence at trial. The court therefore denies defendant's motion to dismiss without prejudice to a renewal at the close of the government's trial evidence pursuant to Fed. R. Crim. P. 29(a)

.

Counts 24 through 26 charge defendant with filing three false personal tax returns for the years 2010, 2011, and 2012, and counts 27 through 29 charge him with filing three false corporate income tax returns in the same period, all in the Southern District. See 26 U.S.C. § 7206(1)

(criminalizing “willfully mak[ing] and subscrib[ing] any return, statement, or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which [a defendant] does not believe to be true and correct as to every material matter”). Counts 30 through 32 charge defendant with aiding and assisting the preparation of false tax returns in the Southern District. See 26 U.S.C. § 7206(2) (providing for criminal liability where an individual “[w]illfully aids or assists in, or procures, counsels, or advises the preparation or presentation under, or in connection with any matter arising under, the internal revenue laws, of a return, affidavit, claim, or other document, which is fraudulent or is false as to any material matter, whether or not such falsity or fraud is...