United States v. De Leon

• Decision Date: 29 August 2013
• Docket Number: No. 12–40244.,12–40244.
• Parties: UNITED STATES of America, Plaintiff–Appellee v. Juan DE LEON, Jr., Defendant–Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

728 F.3d 500

UNITED STATES of America, Plaintiff–Appellee

v.Juan DE LEON, Jr., Defendant–Appellant.

No. 12–40244.

United States Court of Appeals,

Fifth Circuit.

Aug. 29, 2013.

Terri–Lei O'Malley, Assistant U.S. Attorney, Renata Ann Gowie, Assistant U.S. Attorney, U.S. Attorney's Office, Southern District of Texas, Houston, TX, for Plaintiff–Appellee.

Marjorie A. Meyers, Federal Public Defender, H. Michael Sokolow, Assistant Federal Public Defender, Federal Public Defender's Office, Houston, TX, for Defendant–Appellant.

Appeal from the United States District Court for the Southern District of Texas.

Before STEWART, Chief Judge, and DAVIS and WIENER, Circuit Judges.

WIENER, Circuit Judge:

Defendant–Appellant Juan De Leon, Jr. (“De Leon”) was convicted on all counts of a five-count indictment that charged him with health-care fraud in connection with his durable medical equipment (“DME”) ¹ business. As part of his sentence, De Leon was ordered to pay a total of $750,000 in restitution to Medicare and Medicaid—the victims defrauded by the scheme. De Leon appeals his convictions, claiming that the district court erred in excluding some of the character evidence that he proffered. He also appeals the amount of restitution, claiming that the district court (1) erroneously included restitution attributable to acts that occurred outside the dates of the specific conspiracy for which he was charged and convicted and (2) made “an unreasonable estimate or guess” in calculating the amount of actual loss. We affirm in part, and vacate and remand in part.

I. FACTS AND PROCEEDINGS

A. Indictment and Trial

De Leon was the owner, director, president, and treasurer of United DME, Inc., in Weslaco, Texas. The business provided DME to Medicare and Medicaid beneficiaries. According to the indictment, De Leon defrauded Medicare and Medicaid by billing for (1) DME prior to delivery to beneficiaries rather than after delivery, as required by applicable regulations; (2) new PWCs but delivering used PWCs or cheaper scooters; and (3) diabetes supplies that were never delivered. Count One charged that the conspiracy began in July 2008 and ended in April 2010, in violation of 18 U.S.C. § 1349. Counts Two through Four charged three specific fraudulent claims that violated 18 U.S.C. §§ 1347 and 2. Count Five charged aggravated identify theft, in violation of 18 U.S.C. § 1028A, in connection with Count Three. Named as a co-defendant and co-conspirator in Counts One through Four was David Villanueva (“Villanueva”), an employee of De Leon who delivered the PWCs or scooters.

In a three-day jury trial, the government presented ample evidence of De Leon's guilt, including testimony regarding his fraudulent billing practices, from investigators and former employees and from beneficiaries who did not receive new PWCs. Villanueva testified that he falsified delivery dates and receipt signatures, and that he delivered scooters instead of PWCs, all pursuant to De Leon's instructions. The government also presented a signed statement in which De Leon admitted that (1) he delivered a scooter, but billed for a PWC; (2) he billed for more diabetic and incontinence supplies than he actually delivered; (3) he knew “it was wrong to bill for a powered wheelchair and provide a scooter was illegal [sic]”; and (4) he “wanted to make this right, by paying [M]edicare and [M]edicaid the money that [he] owe [d], because of [his] fraudulent claims to the programs.”

De Leon did not testify at trial. After calling two government investigators involved in the case, De Leon's counsel called De Leon's mother as a character witness. She testified about De Leon's upbringing, his military service and awards, and his career. Then the following exchange occurred:

Counsel: Okay. And is he a law-abiding citizen?

Mother: Yes.

Government: Object, your Honor, this is improper 608(a)—

Court: Correct. Sustained.

Counsel: Can I get—

Court: Sustained. That objection—608(a).

De Leon's mother then testified that her son was “truthful and honest” and had never had problems with anyone.

Defense counsel then attempted to call another character witness and asked the district court: “Do we get to go into character, truthfulness and all those things?” The district court again cited Federal Rule of Evidence 608 and informed counsel he could “only ask, ‘Are you familiar with the reputation?’ ” or “ ‘Do you know him for being truthful?’ ” De Leon's counsel chose not to call the second witness and did not explain who he was or what his testimony might have been. The defense then rested.

In closing argument, De Leon's counsel attempted to blame Villanueva and offered innocent explanations of various claims alleged at trial to have been fraudulent. In particular, counsel argued that the absence of complaints from beneficiaries indicated that De Leon had no way of knowing that scooters were being delivered instead of PWCs. The district court instructed the jury to disregard any testimony or evidence to which objections had been sustained. The jury convicted De Leon on all counts.

B. Sentencing and Restitution

The United States Probation Office prepared a presentence investigation report (“PSR”) on De Leon. The PSR stated that Medicare and Medicaid had sustained actual losses of $1,161,737.58 and $1,783,440.46, respectively, reflecting their payments to De Leon between 2005 and 2011, for a total of $2,945,178.04. The PSR recommended restitution in that amount. The district court held a series of hearings on loss calculation for sentencing and restitution purposes. At one of these hearings, the government submitted spreadsheets detailing the fraudulent claims that totaled $2,945,178.04. De Leon objected to the restitution calculation, contending that not all of the claims he submitted to Medicare and Medicaid were fraudulent and offering a confusing calculation of actual loss totaling only $120,000.

At the final sentencing hearing, the district court stated that it had “spent hours reviewing the [government's] spreadsheets” and that, because it was “difficult, if not impossible, to ascertain with precision the actual loss,” the court would “estimate” the loss. It then stated that the loss totaled $750,000. When the probation officer remarked that Medicare and Medicaid were distinct victim entities, the court responded that “[t]he fraud was about equal to each so, yes, the Court will just divide it in half as to each.” The district court sentenced De Leon to 120 months' imprisonment and ordered him to pay $375,000 in restitution to each victim, for a total of $750,000. De Leon timely filed a notice of appeal.

II. ANALYSIS

A. Character Evidence

De Leon first asserts that the district court reversibly erred in excluding admissible character evidence pursuant to Rule 608(a). He contends that the district court should have admitted the evidence of his law-abiding character pursuant to Rule 404(a), and that its failure to do so prevented him from demonstrating that he did not act with the requisite state of mind. As a result, he insists, his convictions should be reversed.

1. Standard of Review

As a threshold matter, the parties dispute whether De Leon preserved for appeal the exclusion of his character evidence. The government claims that De Leon failed to preserve this claimed error, so that we should review it only for plain error.² De Leon responds that he asked a permissible question but the government “led the court down a legally erroneous path” by citing Rule 608, so the error should be treated as preserved. De Leon thus urges us to review the district court's evidentiary rulings for abuse of discretion, which is subject to harmless error analysis.³

2. Analysis

The district court did err when it excluded De Leon's evidence of his law-abiding character. “[E]vidence of the defendant'spertinent trait” is admissible.⁴ And evidence of the defendant's “character as a law-abiding citizen ... is always relevant.” ⁵ The evidence can take the form of a witness's opinion or testimony regarding the defendant's reputation. ⁶Rule 608(a), which the district court cited in limiting testimony to De Leon's character for truthfulness, applies only to a witness's credibility.⁷ As De Leon was not a witness, the district court erred when it sustained an objection to the question, “And is [De Leon] a law abiding citizen?,” and when it limited the second witness's testimony to the “very, very narrow” topic of De Leon's reputation for truthfulness. This error of law was an abuse of discretion.⁸

Even though the district court erred in excluding such evidence, however, we must “affirm[ ] the judgment unless the ruling affected a substantial right of the complaining party.” ⁹ We “will not overturn a conviction based on the exclusion of evidence unless a reasonable probability exists that the error contributed to conviction.” ¹⁰ Although De Leon cites several cases reversing convictions based on the exclusion of character evidence, none is factually similar. The defendant in United States v. Hewitt was charged with several counts of unlawful possession or receipt of firearms. We observed that “[i]n some circumstances, evidence of good character may of itself create a reasonable doubt as to guilt.” ¹¹ Then, without discussion of the specific prejudice to that defendant, we reversed his convictions.¹² Similarly, the defendant in United States v. John was charged with molesting a young girl, and the case “hinged entirely on credibility” because the government presented no “witnesses or other corroborating evidence supporting the child's accusations.” ¹³ Although the trial court allowed the defendant's character evidence, it denied a defense-requested instruction that the jury consider such evidence, as it could give rise to reasonable doubt.¹⁴ Because the defendant's “main theory of defense” was his credibility, and the court's rejection of the defense-requested instruction denied him the benefit of his admissible...