United States v. Rigo, 13 Cr. 897 (RWS)
| Decision Date | 13 January 2017 |
| Docket Number | 13 Cr. 897 (RWS) |
| Parties | UNITED STATES OF AMERICA Plaintiff, v. BLADIMIR RIGO, Defendant. |
| Court | U.S. District Court — Southern District of New York |
APPEARANCES:
Attorney for Plaintiff
One Saint Andrew's Plaza
New York, NY 10007
By: Edward B. Diskant, Esq.
SPEARS & IMES LLP
51 Madison Avenue
New York, NY 10010
By: Joanna C. Hendon, Esq.
Alicia K. Amdur, Esq.
Sweet, D.J.
Defendant Bladimir Rigo ("Rigo" or "Defendant") was sentenced by this Court to 38 months of incarceration and ordered to pay $2.9 million in restitution upon his guilty plea to conspiracy to commit healthcare fraud and to commit adulteration and distribution of prescription medication. On appeal of his sentence, the Second Circuit Court of Appeals remanded the case to this Court for reconsideration of the loss amount attributable to Rigo, directing the Court to make particularized findings as to the foreseeability and scope of the criminal activity ascribed to Rigo. Upon the facts and conclusions set forth below, the loss attributable to Rigo is $2.9 million.
Familiarity with the prior proceedings and facts set forth in the Court's prior opinions is assumed. See United States v. Rigo, 86 F. Supp. 3d 235 (S.D.N.Y. 2015); see also United States v. Rigo, No. 13 Cr. 897 (RWS), 2015 WL 2240309 . A summary of relevant facts is set forth below.
On November 14, 2013, Rigo was charged in a two-count indictment. Count One charged Rigo with conspiracy to commit healthcare fraud and Count Two charged Rigo with conspiracy to commit adulteration and unlawful wholesale distribution of prescription medications.
The charges stem from Rigo's participation in a large-scale scheme to obtain various prescription medications—typically those prescribed to treat HIV and AIDS—which had previously been dispensed to individuals in Newark, New Jersey and elsewhere, and then to attempt to cause these bottles to re-dispensed as "new" to unsuspecting patients. The drugs involved in this scheme were not controlled substances, but rather brand-name pharmaceuticals used exclusively by patients with valid prescriptions and for which the price tags, almost always paid by insurance programs such as Medicaid, ran into the thousands of dollars per bottle.
The scheme worked, in general terms, as follows: first, the lowest level participants in the scheme (the "Insurance Beneficiaries") filled prescriptions for month-long supplies of drugs at pharmacies throughout the country, including in the Southern District of New York and the Newark,New Jersey area. These Insurance Beneficiaries were typically HIV or AIDS patients who paid little or no money of their own for the drugs in question because their insurance plans, typically Medicaid, footed the bill. The Insurance Beneficiaries then sold their bottles of medication for cash at locations like street corners and bodegas to other participants in the scheme, referred to in the investigation as "Collectors." Collectors, in turn, sold the second-hand bottles to "Aggregators" who bought large quantities of second-hand drugs from multiple Collectors. Eventually, the second-hand drugs made their way to corrupt distributors and pharmacies willing to re-dispense these second-hand drugs to unsuspecting consumers.
Health care benefit programs, such as Medicaid, were defrauded twice in this scheme. On the front end, health care benefit programs were fraudulently induced into paying for these drugs under the false representation that the drugs were for the sole intended use of the program beneficiary, i.e., the Insurance Beneficiary. On the back end of the scheme, participants fraudulently concealed the true, illegitimate source of the bottles thereby fraudulently inducing health care benefit programs to pay for the exact same bottles a second time.
Rigo participated in this scheme as an Aggregator based in Newark, New Jersey. From at least 2000 up until his arrest in 2013, Rigo purchased large numbers of these bottles of second-hand medications before selling them to even high-level scheme participants for cash. To facilitate his activities, Rigo employed workers who would act as Collectors and purchase bottles of second-hand medications from the Insurance Beneficiaries. Among others, Rigo employed Arcadio Reyes-Arias and Rogelio Leyba who, for a period of approximately five years from at least 2000 through about 2005, bought significant numbers of bottles of these medications for Rigo to resell. After that time period, both Reyes-Arias and Leyba went off on their own, opening their bodegas from which they continued to work in furtherance of the the scheme with Rigo and others.
To make the scheme work, the bottles purchased by Rigo and others needed to be "cleaned"; that is, the patient labels affixed when the bottles were initially dispensed to the Insurance Beneficiaries needed to be removed so that the bottles would appear to be new. To "clean" the bottles, Rigo and his co-conspirators doused the medication bottles with lighter fluid or a similar chemical to melt off the initial patient label. As inspection of bottles recovered during the investigation confirmed, this process of "cleaning" was inherently dangerous:testing of the bottles showed that the "cleaning" materials frequently seeped into the bottles and contaminated the pills themselves with chemicals known to be dangerous or even fatal if swallowed.
Rigo was arrested on September 17, 2013 and pleaded guilty to his participation in the conspiracy on April 23, 2014 without an agreement with the Government.
In October 2014, this Court held a hearing pursuant to United States v. Fatico, 603 F.2d 1053 (2d Cir. 1979) focused on the issue of the loss amount properly attributable to Rigo. The Government called three witnesses. One of its witnesses was Reyes-Arias, who testified pursuant to a cooperation agreement with the Government and who, as noted above, worked for and then with Rigo as part of the conspiracy for many years prior to their arrests. As the Court heard from each of the witnesses at the Hearing and from Rigo himself via a consensual recording made during the investigation, Rigo was a large-scale Aggregator in the scheme between at least 2000 and his arrest in 2013. During that time, Rigo aggregated bottles of these second-hand medications by employing workers in his bodega to purchase the medicines from Insurance Beneficiaries on the streets of Newark, New Jersey and by buying bottles from other, independentCollectors.
Based on the evidence presented at the Fatico hearing, this Court concluded that Rigo's involvement in this conspiracy spanned many years, that Rigo was a "principal player in the New Jersey branch" of this nationwide scheme, and that Rigo was consistently involved in planning and consummating transactions involving hundreds of thousands of dollars in second-hand medications. Rigo, 86 F. Supp. at 241-42. During the time period leading immediately up to the arrest—a period for which evidence of precise transactions was more readily available—this Court found that Rigo's conduct involved at least $2.9 million worth of second-hand medications.
In reaching that figure, the Court determined that: (1) Rigo was responsible for his December 2012 purchase of medications from Reyes-Arias having an approximate Medicaid value of $300,000; (2) Rigo was responsible for an unconsummated September 2012 purchase from Reyes-Arias and Leyba having an approximate value of $250,000. The Court treated these as roughly $500,000 of the total loss attributable to Rigo. These findings and this loss amount are not at issue on remand.
The Court's loss calculation also included nearly $2.4million worth of sales of second-hand medications documented in a series of drug ledgers. At the time of Rigo's arrest, agents recovered four notebooks, and introduced them into evidence as Government's Exhibits 204-207 at the Fatico hearing. Hr'g Tr. 100:2-14. Found folded up in two of the notebooks were twelve loose sheets of paper containing what appear to be handwritten lists of prescription medications, some containing dollar amounts and quantities. Hr'g Tr. 101:11-13; Mohan Decl. Ex. L (GX-202). The ledgers reflected logs of nearly 2,700 bottles and over 168,000 pills of black market drugs.
Some of the pages in the ledgers seemed to be written in Rigo's handwriting while other pages appeared to contain the handwriting of other co-conspirators. At the Fatico hearing, Reyes-Arias identified certain pages in the ledger as bearing his handwriting and reflecting lists of second-hand medication that he was offering for sale to Rigo. Rigo was deemed liable for the value of all of the medications reflected in the ledgers because he was responsible for the plans and intentions of the conspiracy, whether consummated or not. The decision to include the $2.4 million in value based on the drug ledgers was "corroborated [by] Reyes-Arias' testimony regarding the magnitude of Rigo's involvement in this conspiracy from 2005-2012, as well as Rigo's self-characterization as a principalplayer in the New Jersey branch of the market." Rigo, 86 F. Supp. at 241.
By written opinion in May 2015, Rigo was sentenced to 48 months' imprisonment and ordered to pay $2.9 million in restitution following his release from federal custody. Rigo, 2015 WL 2240309 at *1. At the sentencing proceeding, Rigo's sentence was reduced to 38 months' imprisonment.
Rigo appealed from the June 2, 2015 judgment of conviction, arguing that his sentence was procedurally unsound because the Court did not make the two-pronged finding required by United States v. Studley, 47 F.3d 569 (2d Cir. 1995), before determining that the entire calculated amount of loss derived from the drug ledgers was attributable to him. On May 23, 2016, the Court of Appeals issued a summary order remanding the case to this Court for...
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