Justia U.S. 7th Circuit Court of Appeals Opinion Summaries

Carrie Musselman, a chiropractor in Illinois, expanded her practice to include non-chiropractic medical services and subsequently engaged in fraudulent billing practices targeting Medicare. She directed staff to bill services performed by nurse practitioners and physician assistants under physicians’ names, circumventing Medicare’s “Incident To” requirements, which resulted in higher reimbursements. Additionally, she billed a non-surgically implanted pain-relief device using a code for surgically implanted devices and billed sublingual allergy drops under a code intended for injectable allergy treatments. Despite repeated internal and external warnings about these improper practices, Musselman persisted, primarily seeking advice from sources with vested financial interests.A federal grand jury indicted Musselman on charges of healthcare fraud, wire fraud, and obstruction of a federal audit. Following a 13-day trial in the United States District Court for the Central District of Illinois, a jury found her guilty of healthcare fraud and five counts of wire fraud, acquitting her on other charges. Post-verdict, the district court discovered that the jury foreperson had created a deliberation guide based on online articles, which included references to non-unanimous verdicts. Musselman moved for a new trial on this basis and challenged the court’s use of an “ostrich” instruction regarding deliberate ignorance. The district court denied both motions, reasoning that the outside research was harmless and the ostrich instruction was justified by the evidence.On appeal, the United States Court of Appeals for the Seventh Circuit affirmed. The court held that the district court properly found no reasonable possibility that the jury’s verdict was affected by the foreperson’s outside research and that Musselman had waived a further evidentiary hearing. The appellate court also concluded that the evidence supported the ostrich instruction, given Musselman’s repeated disregard of obvious red flags and her heightened duty to inquire about her practice’s billing practices. View "USA v. Musselman" on Justia Law

A federally insured bank in Chicago, Washington Federal Bank for Savings, was involved in a multi-year scheme orchestrated by its president and senior officials to benefit a select group of borrowers, including the defendant. These borrowers received millions in commercial real estate loans that were poorly secured, improperly documented, and concealed from regulators. Over time, the true poor condition of these loans was hidden through manipulated records and false documentation. When regulators from the Office of the Comptroller of the Currency eventually discovered the scheme, the bank collapsed, resulting in significant losses for the Federal Deposit Insurance Corporation. The defendant, who was among the favored borrowers, submitted false information to the FDIC after the bank’s failure.A grand jury indicted the defendant on conspiracy and aiding and abetting embezzlement, alleging his involvement in the scheme from 2004 to 2018. The United States District Court for the Northern District of Illinois, Eastern Division, presided over a ten-day trial, during which the defendant raised several evidentiary challenges and argued that the evidence only showed imprudent lending, not criminal conduct. The jury convicted him on both counts. The district court subsequently denied his post-trial motions for acquittal and a new trial, finding the evidence sufficient and its evidentiary rulings proper.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed the defendant’s claims regarding variance or constructive amendment, sufficiency of the evidence, and evidentiary rulings. The court found no fatal variance or constructive amendment, concluded that sufficient evidence supported the convictions for conspiracy and aiding and abetting embezzlement, and held that the district court did not abuse its discretion in its evidentiary decisions. The appellate court affirmed the judgment of the district court. View "USA v. Krejza" on Justia Law

Heritage Operations Group operates long-term care facilities in Illinois, with Green Tree Pharmacy providing pharmacy services to these facilities. Both companies are family-owned and operated. A. Samuel Enloe, who has extensive experience in the long-term care pharmacy industry, alleged that Heritage and Green Tree dispensed Schedule II controlled substances to residents without valid prescriptions, particularly during emergencies when the pharmacy was closed. Enloe claimed that this practice violated the Controlled Substances Act (CSA) and that subsequent claims for Medicare reimbursement were fraudulent under the False Claims Act (FCA).The United States District Court for the Northern District of Illinois, Eastern Division, dismissed Enloe’s second amended complaint. The court concluded that Enloe failed to plead his FCA claims with the particularity required by Federal Rule of Civil Procedure 9(b), specifically not identifying the “who, what, when, where, and how” of the alleged fraud. It also found that the CSA does not provide a private cause of action and, as a result, dismissed the related unjust enrichment claim. Enloe appealed, challenging only the dismissal of his FCA claims.The United States Court of Appeals for the Seventh Circuit reviewed the district court’s dismissal de novo. The appellate court held that Enloe’s allegations were speculative and lacked the concrete factual detail required under Rule 9(b). The court found that Enloe did not sufficiently allege either a clear violation of the CSA or that any misrepresentation was material to the government’s payment decision. Thus, the Seventh Circuit concluded that Enloe failed to state a claim under the FCA and affirmed the district court’s judgment dismissing his complaint. View "Enloe v Heritage Operations Group, LLC" on Justia Law

Rishi Shah and Shradha Agarwal, executives at Outcome Health, were indicted in 2019 for orchestrating a years-long, multi-million-dollar fraud scheme affecting both clients and investors of the company. Outcome Health sold advertising space in doctors’ offices and allegedly inflated its inventory and performance metrics, misleading clients and investors. The fraud resulted in substantial revenue, which was used both for company growth and personal gain. Following public exposure of the scheme, Shah and Agarwal settled civil suits, resigned from Outcome, paid significant sums to investors, and retained funds for legal fees.The United States District Court for the Northern District of Illinois, Eastern Division, entered a pretrial protective order freezing assets deemed traceable to the alleged fraud, including funds Shah and Agarwal intended for legal fees. Shah and Agarwal unsuccessfully challenged the restraint of these funds before trial, resulting in their preferred counsel withdrawing. Both defendants were convicted by a jury on multiple counts of mail, wire, and bank fraud, with Shah also convicted of money laundering. The district court imposed prison terms, fines, and forfeiture orders, and denied post-trial motions challenging the asset restraint, evidentiary rulings, and alleged government misconduct.The United States Court of Appeals for the Seventh Circuit reviewed the case. It held that Shah and Agarwal forfeited their Sixth Amendment right-to-counsel claim by not timely raising it, and, in the alternative, failed to prove that the government’s asset restraint prevented them from affording their counsel of choice. The court further found no Fifth Amendment violation, as the government did not knowingly present or fail to correct false testimony to the grand jury. The court also rejected evidentiary and jury instruction challenges, concluding any errors were harmless and that convictions rested on valid legal theories. The Seventh Circuit affirmed the convictions and all related district court rulings. View "USA v. Agarwal" on Justia Law

Thomas Duncan, a supervisor at the Jesse Brown VA Medical Center in Chicago, participated in a fraudulent scheme with his co-defendant, Daniel Dingle. Duncan used his purchasing authority to submit or direct others to submit false orders for blood pressure cuffs from Dingle’s medical supply company. These orders were structured to avoid detection by staying under authorization thresholds and were never actually fulfilled. Dingle received payments from the VA for these phantom orders and paid Duncan kickbacks in return. Altogether, the VA paid nearly $1.9 million to Dingle’s company, with over $1.7 million related to these patterned, fraudulent orders.The United States District Court for the Northern District of Illinois, Eastern Division, oversaw Duncan’s guilty plea to one count of wire fraud. At sentencing, the court considered a Presentence Investigation Report and heard arguments regarding sentencing enhancements for multiple bribes and the loss calculation. Duncan contended he was responsible for only a portion of the loss and that the scheme involved only a single bribe. The district court disagreed, finding Duncan responsible for all patterned orders and concluding the offense involved multiple bribes. The court calculated the Sentencing Guidelines range accordingly and sentenced Duncan to 84 months’ imprisonment.The United States Court of Appeals for the Seventh Circuit reviewed the district court’s legal interpretations de novo and factual findings for clear error. The appellate court held that the district court did not err in applying enhancements for multiple bribes and a loss amount over $1.5 million. The court found the district court’s conclusions were supported by reasonable inferences from the evidence and that any possible error would be harmless, given the district court’s explicit statement that it would impose the same sentence regardless of the enhancements. Accordingly, the judgment was affirmed. View "USA v. Duncan" on Justia Law

The defendant, a physician specializing in obstetrics and gynecology in Illinois, owned and operated a medical practice where she engaged in fraudulent billing to health care benefit programs, including Medicaid and Tricare, from February 2018 to April 2022. She submitted claims for procedures and services that were either not provided or not medically necessary, including telemedicine visits, office visits, and tests. Some of these fraudulent claims were for endometrial ablations, a procedure with significant consequences for patients’ reproductive health.Facing a thirteen-count indictment for health care fraud, the defendant pleaded guilty to two counts pursuant to a plea agreement. These counts specifically alleged the submission of fraudulent claims to Tricare for a telemedicine visit and lab testing. The United States District Court for the Northern District of Illinois, Eastern Division, held a sentencing hearing, during which it considered testimony from patients, expert witnesses, and victim impact statements. The court found that the defendant performed medically unnecessary procedures without informed consent, and that her statements during the plea hearing and subsequent professional regulation proceedings indicated a failure to accept responsibility.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed three main issues: the district court’s denial of a reduction for acceptance of responsibility, application of a sentencing enhancement for reckless risk of serious bodily injury, and the substantive reasonableness of the 120-month sentence. The Seventh Circuit held that the district court did not clearly err in its factual findings, properly applied the sentence enhancement, and did not abuse its discretion in weighing aggravating and mitigating factors. The court affirmed the judgment of the district court, upholding the defendant’s sentence. View "USA v Ghosh" on Justia Law

The case concerns the owner and CEO of a telemarketing company that sold limited indemnity healthcare insurance plans, which provided fewer benefits than traditional health insurance. The CEO, along with other executives, instructed sales employees to use deceptive and misleading scripts to sell these plans, resulting in customers being misled about the scope of coverage. The government alleged that these practices were designed to create the false impression that customers were purchasing more comprehensive health insurance than they actually received.The case was first tried in the United States District Court for the Southern District of Illinois. One executive pleaded guilty and testified against the CEO and another defendant, who were tried before a jury. After an eleven-day trial, the jury convicted both remaining defendants on all counts, including conspiracy to commit wire fraud, wire fraud, and mail fraud. The CEO moved for acquittal or a new trial, but the district court denied those motions and sentenced him to 300 months imprisonment on the conspiracy count and 240 months on the other counts, with all terms to be served concurrently.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed several challenges to the conviction. The court held that the jury instructions on “scheme to defraud” accurately reflected the law, clarifying that actual falsity is not required and that misleading or deceptive statements, including omissions or half-truths, can support a conviction under the relevant statutes. The court also found no plain error in the admission and use of a training video exhibit during jury deliberations, and rejected claims of constructive amendment and the need for a specific unanimity instruction. The Seventh Circuit affirmed the district court’s judgment. View "USA v Dorfman" on Justia Law

Between December 2020 and April 2021, a licensed accountant from Mexico participated in a complex conspiracy to launder over $5.1 million in criminal proceeds. She acted as a broker, converting U.S. cash to Bitcoin for a fee, and coordinated with multiple coconspirators who picked up, deposited, and tracked cash, and purchased Bitcoin for clients. Her involvement was central to directing and managing the steps of the operation, including overseeing cash pickups, maintaining ledgers, directing the conversion of funds, and serving as the sole contact with clients for Bitcoin wallet information. The scheme came to light following an investigation into a theft from a Wisconsin business.After pleading guilty to conspiracy to commit money laundering, she entered a binding plea agreement in the United States District Court for the Western District of Wisconsin, limiting her sentence to between three and six and a half years. The initial presentence report did not recommend a sentencing enhancement for a managerial or supervisory role. However, after the government’s objection, the probation office revised the report to include a three-level enhancement under the United States Sentencing Guidelines. The district court adopted this enhancement, finding that she played a managerial role, and sentenced her to 60 months in prison, which was below the calculated guidelines range but within the plea agreement’s bounds.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed whether the district court erred in applying the managerial enhancement and in failing to address sentencing disparities among coconspirators. The appellate court held that the record supported the enhancement, as she exercised sufficient control and coordination over others. The court further found that the sentence was reasonable and not procedurally flawed, affirming the judgment. View "USA v. Mendoza-Rubio" on Justia Law

Federal authorities were investigating an individual suspected of orchestrating transnational cyber fraud and money laundering schemes originating in Nigeria and targeting U.S. nationals. Information from two sources, including a co-conspirator, implicated him as a leader of fraudulent operations. Investigators gathered corroborating evidence, such as suspicious messages, unusually high activity on messaging apps, and bank records showing millions in transactions with no apparent legitimate source. When authorities learned he would return to the U.S. from Nigeria, they requested a manual search of his electronic devices upon arrival at Atlanta’s international airport. Customs officers searched his phones, found evidence of criminal activity, and subsequently seized the devices for forensic imaging. Two days later, law enforcement obtained search warrants for the phones and their extracted data.The United States District Court for the Northern District of Illinois, Eastern Division, reviewed the defendant’s motion to suppress evidence from the warrantless border search of his cell phones, which he argued violated his Fourth Amendment rights. After an evidentiary hearing, the district court found law enforcement witnesses credible and denied the motion, concluding that the manual search at the border was justified under the border search doctrine. The defendant then entered a conditional guilty plea to wire fraud, preserving his right to appeal the suppression ruling.The United States Court of Appeals for the Seventh Circuit reviewed the district court’s denial de novo. The court reaffirmed that routine, manual searches of electronic devices at the border do not require a warrant or individualized suspicion under circuit precedent, specifically United States v. Mendez, and Supreme Court precedent. The court held that the search was routine, reasonable, and justified by the border search exception. Even if a Fourth Amendment violation occurred, the good-faith exception would preclude suppression. The judgment of the district court was affirmed. View "USA v Eta" on Justia Law

Babajide Adefusi entered a plea agreement with the United States Attorney’s Office for the Southern District of Texas in 2018, pleading guilty to aiding and abetting passport fraud. The scheme involved using counterfeit passports with Adefusi’s photo and false identity information to open bank accounts, into which funds from internet scam victims were wired. The total loss from the passport fraud scheme was approximately $2.2 million. The plea agreement included a promise by the “United States” not to pursue additional charges arising out of the scheme alleged in the charging document. The agreement, however, specified that it bound only the U.S. Attorney’s Office for the Southern District of Texas and not any other U.S. Attorney.After completing his sentence, Adefusi was indicted by a federal grand jury in the Central District of Illinois in 2023 for conspiring to commit wire fraud related to a scheme defrauding E-MedRx, a pharmacy billing company. Adefusi moved to dismiss the indictment, arguing that the earlier plea agreement barred the Central District of Illinois from prosecuting him due to factual overlap between the two schemes. The United States District Court for the Central District of Illinois denied the motion, finding the plea agreement unambiguously bound only the Southern District of Texas office.The United States Court of Appeals for the Seventh Circuit reviewed the district court’s denial of Adefusi’s motion to dismiss. Applying principles of contract interpretation to the plea agreement, the Seventh Circuit held that the agreement unambiguously bound only the U.S. Attorney’s Office for the Southern District of Texas and not other U.S. Attorney’s Offices. Thus, the Central District of Illinois was not barred from prosecuting Adefusi for wire fraud conspiracy. The Seventh Circuit affirmed the district court’s decision. View "USA v. Adefusi" on Justia Law