United States of America, vs. Philip Esformes - The New York ...

Laurie Webb Daniel

Nicholas Boyd

HOLLAND& KNIGHTLLP

1180West PeachtreeStreet NW

Suite 1800

Atlanta,GA 30309

404-817-8533

[email protected]

[email protected]

Case: 19-14874 Date Filed: 09/04/2020 Page: 1 of 78

Howard SrebnickJackie Perczek

BLACK,SREBNICK,KORNSPAN & STUMPF, P.A.

201S. Biscayne Boulevard,Ste. 1300Miami,FL 33131

[email protected]@RoyBlack.com

Attorneys for Defendant-Appellant Philip Esformes

OnAppealfromthe UnitedStates DistrictCourt

SouthernDistrictof Florida

In the

United States Court Of Appeals

For the

Eleventh Circuit___________________

United States of America,

Plaintiff/Appellee

vs.

Philip Esformes,

Nos. 19-13838, 19-14874

Brief ofAppellant

PhilipEsformes____________

Defendant/Appellant

submits the followingCertificateof InterestedPersonsand CorporateDisclosure

Statementpursuantto Rule26.1of the FederalRulesof AppellateProcedureand

Rules26.1-1and 26.1-2of the Rulesof the UnitedStates Courtof Appeals for the

EleventhCircuit:

The undersignedcounselof recordfor Plaintiff-AppellantPhilipEsformes

AdirhuAssociatesLLC

ADMEInvestmentPartnersLTD

ALFHoldingsInc.

Almovea AssociatesLLC

Arteaga-Gomez,Rossana

AyintoveAssociatesLLC

BakerBotts LLP

Barcha,Odette

Benczkowski,BrianA.

Bernstein,Daniel

Black,Roy

Boyd,Nicholas

Bradylyons,Drew


CERTIFICATE OF INTERESTED PERSONS

AND CORPORATE DISCLOSURE STATEMENT

Carmouze,Arnaldo

C-1of 5

Centers for MedicareandMedicaidServices

Christianson,Jennifer

CourtyardManorRetirementInvestorsLtd.

CourtyardManorRetirementLiving,Inc.

Daniel,LaurieWebb

Descalzo,Marissel

Do Campo,Orlando

EdenGardensLLC

Esformes,Philip

FairHavensCenter,LLC

Ferrer,WifredoA.

FlamingoParkManorLLC

Goode,David

Gould,William

Grove,Daren

Hayes,James V.

Holland& Knight,LLP

Jene’s RetirementInvestorsLtd.

Jene’s RetirementLiving,Inc.


KabirhuAssociatesLLC

C-2of 5

Kuntz,RobertJ.

LaHaciendaGardensLLC

LakeErswinLLC

LauderhillManorLLC

Lehr,AlisonWhitney

Lenard,The Hon.JoanA.

McFarlane,Ashlee

Medina,AllanJ.

Meltzer,EllenR.

Miner,MatthewS.

MorseyLC

Orshan,Ariana Fajardo

Otazo-Reyes,The Hon.Alicia M.

Pasano,MichaelS.

Perczek,Jackie

Quigley,Brendan

Rabin,SamuelJ.

RainbowRetirementInvestorsLtd.

Rasco,Guy A.


Sanders,Jeremy

C-3of 5

the outcomeof this appeal.

Scola,The Hon.RobertN.Jr.

Sefardik Associates,LLC

Shipley,John C,Jr.

Sierra ALF ManagementLLC

Smachetti,EmilyM.

Sombuntham,Nalina

Srebnick,HowardM.

Srebnick,Scott

TakifhuAssociatesLLC

Tettlebaum,HarveyM.

The PointeRetirementInvestorsLtd.

Torres,The Hon.EdwinG.

Wagner,Catherine

Young,Elizabeth

The undersignedcertifies that no publicallyheld companyhas an interestin


Signatureon NextPage

C-4of 5


/s/ Laurie Webb Daniel

Laurie Webb Daniel

Nicholas Boyd

HOLLAND& KNIGHTLLP

1180 West Peachtree Street NW

Suite 1800

Atlanta,Georgia 30309

404-817-8533

[email protected]

[email protected]

Attorneys for Plaintiff-Appellant

PhilipEsformes

C-5of 5

presents issues of lawhavingsignificantconsequencesnotonly for the Appellant,

PhilipEsformes,but also for the individualprosecutorswho were found to have

knowinglytrampledon his privilegedcommunications,for the Departmentof

Justice,which has an overarchinginterest inpreservingthe integrityof its

prosecutions,and for criminaldefendantsin generalwho needthis Court to specify

the remediesfor the serious multipleerrorsdiscussedbelow.

Medicarefraudbut its third supersedingindictmentdroppedthat description,as the

prosecutors—despitereviewinga mountainof patientfiles fromEsformes’

healthcarefacilities—couldnot finda single one showingany billingfor an

unnecessaryservice or servicenot rendered.The governmentwas unableto

convict Esformeson its mainclaimof healthcarefraud,though the jury did convict

himof Medicare-relatedkickbackcharges,money-laundering,payinga regulator

to get an inspectionschedule,payinga basketballcoachin connectionwitha

college-admissionprocess,andone obstructionincident.

court sentencedEsformesto a 20-yearprisonterm.Despitethe government’s


STATEMENT REGARDING ORAL ARGUMENT

Oral argument should be granted because the lengthy record in this case

Ina nutshell,the governmentinitiallychargedEsformeswith a billion-dollar

Despitethe government’sinability to proveits principalcharge,the district

inabilityto show a singleinstanceof fraudulentbilling,the district court entereda

$5 millionrestitutionorder.And despite a jury verdict rejectingthe government’s

$38 millionforfeitureclaim,the court orderedforfeiturein that amount.

Esformesprosecutionteamwhich the magistratejudge characterizedas

“deplorable”and which the district court judge—whilerejectingthe magistrate’s

credibilityfindings without conductinghis own evidentiaryhearing—nonetheless

foundto be a “stubbornrefusal” to be sensitiveto Esformes’attorney-clientand

work productprivileges,even ifnot done in“badfaith.” Indeed,the recordshows

withoutdisputethat the leadprosecutorinjectedher personalself-interestinto the

case,insistedon remainingon the prosecutionteameven thoughshe knowingly

obtainedEsformes’privilegedinformationthenused it againsthim,andviolated

the advocate-witnessrule inthe proceedingson Esformes’motionsto dismiss the

indictmentor disqualifyher.

Daubertrulingon the government’ssole medicalexpert,Dr.Cifu,on the critical

“loss” issueuntilafter he testifiedbefore the jury—andthenadmittedhis opinions

even thoughthey conflictedwith indisputablefacts,lackedmethodology,and were

(inthe wordsof the district court)akinto a perfumeexpert’s “sniff.”Basically,

Cifu’s theory was that psychiatricpatientsshouldnot be admittedto skilled


The first enumerationof error describes a course of misconductby the

The second issueasks whether the districtcourt erred indeferringits

nursingfacilities (“SNFs”),and becausethere were psychiatricpatientsat

ii

Esformes’SNFs,there mustbe healthcarefraud.Esformescontends that this

theory cannotsupportany convictioninvolvinghealthcareservices becauseit

overlooksfederaland state regulations(“PASRR”)—thatCifudidnot know of—

requiringthird-partycertificationthat everypsychiatricpatientat an Esformes

facilitywas admittedbasedon a medicalnecessity.There also is other unrebutted

confirmationof medicalnecessityby independentthird-partiessuchas HMOs.

Becauseundisputedevidencenegates the government’stheoryof the case,

Esformessubmitshe is entitledto acquittalon all counts involvingthe proprietyof

the healthcareservices providedat Esformes’facilities.At the very least,a new

trialshould be grantedbecauseof the errors relatedto the Cifu opinions.

levels based on Cifu’s legallydeficientopinionswithout proof of loss,as the

governmentcouldnot prove any billingfor unnecessaryor phantomservices,or

any patientadmittedwithoutmedicalnecessity.Esformescontends that the $5

millionrestitutionorder mustbe overturnedfor the same reason.He also

challengesthe $38 millionjudicialforfeiture judgmentbecauseit lacks any

evidentiarybasis,rests entirelyon money-launderingcharges that fail as a matter

of law,conflictswith the jury’s forfeitureverdictand,Esformessubmits,is

unconstitutional—anissue that requiresre-examinationof circuitprecedent.

Finally,Esformes’contends the districtcourt increasedhis prisontermby 18


Oralargumentwouldaid the Court inits resolutionof all these issues.

iii

Case: 19-14874 Date Filed:09/04/2020 Page: 10 of 78

TABLE OF CONTENTS

STATEMENT REGARDING ORAL ARGUMENT ............................................... I

STATEMENT OF JURISDICTION..................................................................... XIII

STATEMENT OF THE ISSUES............................................................................... 1

STATEMENT OF THE CASE.................................................................................. 2I. Nature of the case............................................................................................... 2II. Statement of facts and proceedings below......................................................... 4

A. The skilled nursing facilities run by Esformes. ............................................ 4B. The invasion of Esformes’ confidential relationships. .................................4

C. The indictment accuses Esformes of a billion-dollar Medicare fraud..........7D. The inability to prove unnecessary or phantom services. .............................8E. The verdict on kickbacks, money-laundering and obstruction. ..................10F. The jury’s limited forfeiture verdict. .......................................................... 11G. The sentence, restitution award, and forfeiture judgment. .........................11

III. Standards of review.......................................................................................... 12

SUMMARY OF THE ARGUMENT ...................................................................... 13

ARGUMENT ........................................................................................................... 16I. The district court erred by condoning the “deplorable” prosecutorial

misconduct found by the magistrate judge. ..................................................... 16

A. The district court improperly rejected the magistrate’s credibilityfindings without an evidentiary hearing. .................................................... 25

B. Multiple conflicts of interest required Young’s disqualification................28C. The district court’s suppression analysis contains legal error. ...................35

II. The district court erred by upholding the Cifu theory of guilt.........................40A. The district court abdicated its gatekeeping duty. ......................................40B. Cifu’s theory is insufficient to support a healthcare-related count.............42

III. The district court erred in its sentencing, restitution, and forfeiture rulings. ..46

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A. The record negates the loss finding. ........................................................... 46

B. There was no proof of money-laundering................................................... 49

C. The forfeiture judgment conflicts with the jury verdict..............................53

CONCLUSION ........................................................................................................ 57

v


TABLE OF AUTHORITIES

Page(s)

Cases

U.S. ex rel. Absher v. Momence Meadows Nursing Center,754 F.3d 699 (7th Cir. 2014) .............................................................................. 42

Alexander v. United States,509 U.S. 544 (2017)............................................................................................ 56

Amlong & Amlong, P.A. v. Denny’s, Inc.,500 F.3d 1230 (11th Cir. 2007) .................................................................... 26, 27

Bammerlin v. Navister,30 F.3d 898 (7th Cir. 1994) ................................................................................ 44

Bradley v. Sebelius,621 F.3d 1330 (11th Cir. 2010) .......................................................................... 44

* Brooke Group Ltd. v. Brown & Williamson Tobacco Corp.,509 U.S. 209 (1993)...................................................................................... 42, 45

Brown v. Alabama Dept. of Transportation,597 F.3d 1160 (11th Cir. 2010) .......................................................................... 54

Carlson v. Bioremedi Therapeutic Sys., Inc.,822 F.3d 194 (5th Cir. 2016) .............................................................................. 42

Connecticut General Life Ins. Co. v. Universal Ins. Co.,838 F.2d 612 (1st Cir. 1988)............................................................................... 53

Cullen v United States,194 F.3d 401 (2nd Cir. 1999) ............................................................................. 25

* Daubert v. Merrell Dow Pharm., Inc.,509 U.S. 579 (1993).....................................................................................passim

Duncan v. Walker,533 U.S. 167 (2001)............................................................................................ 54

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Page:13of 78

Hendrix ex rel.G.P. v. Evenflo Co., Inc.,609 F.3d 1183 (11th Cir. 2010) ..........................................................................41

Goodgame v. American Cast Iron Pipe Co.,75 F.3d 1516 (11th Cir. 1996)............................................................................54

Kastigar v. United States,406 U.S.441 (1972)......................................................................................37, 39

Kucel v.Walter Heller & Co.,813 F.2d 67 (1987)..............................................................................................42

Libretti v. United States,516 U.S.29 (1995)..............................................................................................55

Louis v. Blackburn,630 F.2d 1105 (5th Cir. 1980)............................................................................25

Luis v. United States,136 S. Ct. 1083 (2017)........................................................................................56

Martinez v. State,665 So. 2d 301(4th DCA 1995).........................................................................33

* McClain v. Metabolife Int’l,Inc.,401 F.3d 1233 (11th Cir. 2005) ....................................................................12,42

McMillan v. Pennsylvania,477 U.S 79 (1986)...............................................................................................55

Inre MJK Clearing, Inc.,371 F.3d 397 (8th Cir. 2004) ..............................................................................53

Morgenstern v. Wilson,29 F.3d 1291(8th Cir. 1994)..............................................................................42

Olmstead v. L.C. ex rel.Zimring,527 U.S.581 (1999)............................................................................................49

Rink v. Cheminova, Inc.,400 F.3d 1286 (11th Cir. 2005) ..........................................................................45

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Inre Search Warrant Issued June 13,2019,942 F.3d 159 (4th Cir. 2019) ..................................................................33, 37, 38

United States v. Almeida,341 F.3d 1318 (11th Cir. 2003) ..........................................................................38

United States v. AseraCare, Inc.,938 F.3d 1278 (11th Cir. 2019) ..........................................................................48

United States v. Ayika,873 F.3d 460 (5th Cir. 2016) ..............................................................................56

United States v. Bajakajian,524 U.S.321 (1998)............................................................................................56

* United States v. Blankenship,382 F.3d 1110 (11th Cir. 2004) ..............................................................50, 51, 52

United States v. Bobb,577 F.3d 1366 (11th Cir. 2009) ..........................................................................56

United States v. Cavallo,790 F.3d 1202 (11th Cir. 2015) ..........................................................................12

* United States v. Christo,129 F.3d 578 (11th Cir. 1997)......................................................................50, 52

United States v. City of Miami,Fla.,115 F.3d 870 (11th Cir. 1997)............................................................................45

United States v. Conner,752 F.2d 566 (11th Cir. 1985)............................................................................55

* United States v. Danielson,325 F.3d 1054 (9th Cir. 2003) ..........................................................33, 36, 37, 39

United States v. Dobbs,63 F.3d 391 (5th Cir. 1995)................................................................................52

United States v. Duboc,694 F.3d 1223 (11th Cir. 2012) ..........................................................................12

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United States v. Elbeblawy,899 F.3d 925 (11th Cir. 2018) ............................................................................56

United States v. Gilbert,244 F.3d 888 (11th Cir. 2001) ............................................................................54

* United States v. Hamaker,455 F.3d 1316 (11th Cir. 2006) ..........................................................................48

* United States v. Hawkins,934 F.3d 1251(11th Cir. 2019) ....................................................................43, 45

United States v. Haymond,139 S. Ct. 2369 (2019)........................................................................................55

United States v. Hernandez-Rodriguez,443 F.3d 138 (1st Cir. 2006)...............................................................................25

United States v. Hosford,782 F.2d 936 (11th Cir. 1986)......................................................................33, 34

United States v. Huff,609 F.3d 1240 (11th Cir. 2010) ..........................................................................47

United States v. Johnston,690 F.2d 638 (7th Cir. 1982)..............................................................................34

* United States v. Liss,265 F.3d 1220 (11th Cir. 2001) ..........................................................................48

United States v. Machado-Erazo,901F.3d 326 (D.C.Cir. 2018)............................................................................40

United States v. Majors,196 F.3d 1206 (11th Cir. 1999)..........................................................................50

United States v. Martin,803 F.3d 581 (11th Cir. 2015) ............................................................................48

United States v. Medina,485 F.3d 1291(11th Cir. 2007) ....................................................................47, 48

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* United States v. Powell,628 F.3d 1254 (11th Cir. 2010) ..............................................................25, 26, 27

United States v. Schwimmer,892 F.2d 237 (2d Cir. 1989) ...............................................................................39

United States v. Sepulveda,115 F.3d 882 (11th Cir. 1997)............................................................................12

United States v. Sharma,394 Fed.App’x. 591 (11th Cir. 2010) ................................................................34

United States v. Sheffield,939 F.3d 1274 (2019)..........................................................................................47

United States v. Siegelman,786 F.3d 1322 (11th Cir. 2015) ..............................................................29, 30, 34

United States v. Singletary,649 F.3d 1212 (2011)..........................................................................................48

* United States v. Spiker,649 Fed.App’x 770 (11th Cir. 2016) .....................................................29, 30, 31

United States v. Stein,846 F.3d 1135 (11th Cir. 2017) ..........................................................................48

United States v. Stewart,294 F.Supp. 2d 490 (S.D.N.Y. 2003) ................................................................37

United States v. Thelisma,559 F.App’x 898 (11th Cir. 2014).....................................................................25

United States v. Waked Hatum,2020 WL 4590542 (11th Cir. Aug.11,2020) ....................................................56

United States v. Walker,243 F.App’x 621(2d Cir. 2007) ........................................................................37

United States v. Willey,57 F.3d 1374 (5th Cir. 1995)..............................................................................51

x

Weatherford v. Bursey,429 U.S. 545 (1977)............................................................................................ 36

Weisgram v. Marley Co.,528 U.S. 440 (2000)...................................................................................... 42, 43

* Young v. United States ex rel. Vuitton et Fils S.A.,481 U.S. 787 (1987)................................................................................ 29, 30, 32

Statutes

U.S. Const. Sixth Amd................................................................................. 33, 36, 55

U.S. Const. Eighth Amd. ......................................................................................... 56

18 U.S.C.§ 1956................................................................................................49, 50

18 U.S.C.§ 3231.....................................................................................................xii

18 U.S.C.§ 3742 .....................................................................................................xii

28 U.S.C.§ 528 ........................................................................................................29

28 U.S.C.§ 530B .....................................................................................................20

28 U.S.C.§ 1291.....................................................................................................xii

42 U.S.C.§ 1395......................................................................................................44

42 U.S.C.§ 1396r...................................................................................................8, 9

Fla.Admin. Code § 59G-1.040................................................................................44

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Other Authorities

Fed. R.Crim. P. 16................................................................................................... 40

Fed. R.Crim. P. 31................................................................................................... 54

Fed. R.Crim. P. 32.2.......................................................................................... 55, 56

Fed. R.App. P. 4 ................................................................................................. xii, 5

28 C.F.R. § 483.102 et seq....................................................................................... 43

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42 C.F.R.483.106....................................................................................................44

Fla.Rule of ProfessionalConduct 4-4.2..................................................................39

xii

jurisdictionunder28 U.S.C.§ 1291and18 U.S.C.§ 3742(a)andFederalRuleof

AppellateProcedure4(b)(A).The final judgment was entered inthis case on

September13,2019,DE#1387,and a noticeof appealwas timely filedon

September26,2019,DE#1390.An amendedjudgmentwas enteredon November

25,2019,DE#1459,and a noticeof appealwas timely filed on December5,2019,

DE#1461.(The two appeals have been consolidated.)1


STATEMENT OF JURISDICTION

The district court had jurisdiction under 18 U.S.C. § 3231. This Court has

1 Recordcitations take the formDE#[docketnumber]-[exhibitnumber]:[page].

client relationshipsalongwith an attemptedcover-up—foundby the magistrate

judge to be “deplorable”—by(a)overturningthe magistrate’scredibilityfindings

withoutanevidentiaryhearing;(b)refusingto disqualify the leadprosecutor

despite her self-interestin the matter,her review and use of Esformes’privileged

communicationsagainsthim,and her violationof the advocate-witnessrule;and

(c)issuingan order repletewith legalerror to deny Esformesa meaningfulremedy;

Cifu,untilafter he presentedhis Medicare-fraudopinions to the jury;allowedthe

jury to considerCifu’s theory though it conflictswithundisputedfacts suchas

third-partyconfirmationsof medicalnecessitythat negate allegationsof improper

Medicarebilling;anddenied Esformes’motionfor acquittalon that ground;and

(a)subjectingEsformesto a 20-yearprisonsentence(an18-levelenhancement)

and a $5-millionrestitutionorder based on Cifu’s legallydeficient loss opinion;(b)

relyingon money-launderingconvictionsthat fail as a matter of lawfor its

sentenceand forfeitureruling;and(c)enteringa $38-millionjudicial forfeiture


STATEMENT OF THE ISSUES

Didthe district court commitreversibleerror whenit:

1. Condonedrepeatedintrusionson AppellantPhilipEsformes’attorney-

2. Deferreda Daubertrulingon the government’smedicalexpert,Dr.

3. Contravenedcontrollinglegalprinciplesat the sentencingphase by

judgmentthat has no factualbasis andoverridesthe jury’s forfeitureverdict?

Esformes,who ran skillednursingfacilities (SNFs),was guilty of a billion-dollar

Medicarefraud.But,whentheir reviewof a pile of patientfiles showedno

fraudulentbilling,they had to changetheories mid-stream,claiminginsteadthat

Esformescouldbe tried and convictedfor admittingpsychiatricpatients to his

SNFs.But the prosecutors’almostcategoricalstanceagainst providingskilled

nursingservices to psychiatricpatientshas no basis;indeed,it is contraryto

Medicareregulationsthemselvesand the undisputedfact that allpsychiatric

patientsat Esformes’facilitieshadreceivedindependentcertificationsof medical

necessity insupport of their admissionin accordancewith federal regulations.

Medicarefraud,but it nonethelessobtainedconvictionson kickbackandmoney-

launderingcountsbased on its new,untenabletheory.And,thoughthe government

never couldprove any actualloss—asit couldnot identifya singleinstanceof

improperbilling—Esformesis servinga 20-yearprisonsentenceandwas ordered

to pay $5 millionin restitutionand another$38 millionas a forfeiture.


STATEMENT OF THE CASE

I. Nature of the case.

This is a case of governmentoverreach.Prosecutorsinitiallyclaimedthat

The governmentwas unable to convictEsformeson its principalclaimof

This outcomecannotbe sustainedbecauseharmfulerror infectedevery

phaseof this case,andthese errors cannotbe viewed inisolation.Startingwith

2

their investigation,the prosecutorsknowinglyandrepeatedlyinvadedEsformes’

privilegedattorney-clientrelationships,usedhis confidentialinformationagainst

him,then injectedpersonalinterest intothe case by convincingthe district court to

overturnthe magistratejudge’s credibilityfindings favoringEsformesto protect

the prosecutors’reputations.This was reversibleerror underCircuitprecedent.

tell the jury about his new“psychpatientsshould be keptout of SNFs”opinion

beforerulingon Esformes’Daubertmotion.The court then submittedthe case to

the jury and laterentered judgment basedon this theory even thoughitwas

deficient as a matter of law,as it was negatedby undisputedfact.Given the

insufficiencyof this evidence,Esformesis entitledto anacquittalon all counts

involvinghealthcareservices,or at the very least a new trial.

sentenceby 18 levels and order $5 millionin restitution—thoughthere was no

evidenceof any psychiatricpatient beingadmittedwithoutcertificationof medical

necessityor of a single instanceof improperbilling.It also imposedthe forfeiture

judgmentbased on money-launderingcharges that fail as a matter of law.These

sentencing-phaserulingsalso are error underbindingauthorities.Indeed,Esformes

submits that the judicial forfeiturefinding improperlyoverrides the jury’s rejection


At trial, the districtcourt let the government’ssole medicalexpert,Dr.Cifu,

After trial,the court reliedon Cifu’s loss theory to increaseEsformes’

of the government’s$38 millionforfeitureclaimand is constitutionallyinfirm.

3

interestsin,sixteenhealthcarefacilities inthe Miamiarea—bothSNFs and assisted

livingfacilities—thatprovided,and with limitedexceptionstillprovide,services to

thousandsof patients,includingmanyMedicareandMedicaidpatients,some of

whomhave primarilypsychiatricconditions.DE#228:3.

(“Gaby”)andGuillermo(“Willy”)Delgado,who were businessassociatesof

Esformes.DE#1407:169;DE#1410:170.A billof particularsin their case named

Esformesas a co-conspiratorintheir allegedhealthcarefraud.DE#694:48-49.

signeda joint-defenseagreement(“JDA”)withEsformesand his counsel.

DE#694:23-24,44,57-58,111.But they entered intosealed plea agreementson

June 5,2015,then began to secretlyrecordconversationswithEsformes,all the

while pretendingto defendagainstthe criminalaccusationsso that Esformeswould

not suspectthey were workingagainsthim,inviolationof the JDA.DE#899:94-

98. Andthe government,knowingof the JDA,didnot obtain courtauthorization


II. Statement of facts and proceedings below.

A. The skilled nursing facilities run by Esformes.

Until his arrest in July, 2016, Esformes operated, and owned minority

B. The invasionof Esformes’confidential relationships.

The case against Esformes started with the arrest of two brothers,Gabriel

BecauseEsformeshadinformationcriticalto their defense,the Delgados

for the recordings.DE#899:93.

4

conversationsbetweenEsformesand the Delgados—somewith Esformes’defense

counsel.DE#899:113-114.And later,whenit sought after-the-factjudicial

approvalto releasethe recordingsto the prosecutors,the governmentwithheldthe

JDA andother materialinformationfromthe reviewingcourt.Id.;DE#975:7.

housecounsel,NormanGinsparg—wherehe kept “legalpaperwork”—whichwas

at Esformes’EdenGardensfacility.See DE#933:14;DE#442-20:4.Knowingthat

Ginspargwas Esformes’lawyer,the governmentobtaineda warrant to search Eden

Gardens,but withoutdisclosingit houseda law office.See DE#442-20:5.The

governmentseized privilegeddocumentsfromEdenGardens,includinglegalfiles

of Ginspargand his paralegal,JacobBengio.DE#899:2,27-28,30,38,44,49;

DE#625:112-13.

that morningandexpresslyassertedthe attorney-clientprivilegeas to materials

beingseized,DE#899:108.She also alertedthe lead prosecutor,ElizabethYoung,

to the privilegeby email andphone calls.DE#899:44-45.Nonetheless,Young,

with the aid of forensic agents,immediatelybegan reviewingall but one of the 70

boxes of seized documents—includingBengio’snotes of investigativework he


Startingon June 5,2015,the governmenttapedover 40 hours of confidential

The Delgadosalso toldprosecutorshow to locatethe office of Esformes’in-

Esformes’criminaldefense attorney,MarisselDescalzo,appearedin person

was doing for Descalzo.DE#899:46.Youngthen used this privilegedwork-

5

productto interviewGinspargand Bengioon severaloccasionsfrom Septemberto

November,2016—anddidso despitethe furtherassertionof privilegeby their

lawyers.DE#899:53,74.Youngdidnot stop reviewingprivilegeddocumentsuntil

December2016.DE#899:109.

Esformeslearnedof it months laterwhen examiningthe seizedmaterial.

DE#899:72-73.He then movedto dismiss the indictmentor disqualify the

prosecutionteam due to their knowingviolationsof his attorney-clientandwork-

productprivileges,DE#275,and askedalternativelyfor suppressionof the tapes

and other documents.DE#278.The motionswere referredto MagistrateJudge

Otazo-Reyeswho,after nine days of evidentiaryhearings,issueda 117-pagereport

and recommendation(the “R&R”).DE#899.

Esformes’privilegedcommunicationsthen tried to cover that up duringthe

evidentiaryhearingswith a “newnarrative.”DE#899:110.She gave“no

credibility”to the prosecutors’excuses as to why they ignoredthe timely-invoked

privilegeand violated the government’sownprotocolsby reviewingandusing

privilegedmaterialsthat were “importantor relevant,”DE#899:67-68,to their


The prosecutorsneverdisclosedits intrusionon Esformes’privileges;

The magistratefound,inter alia,that the prosecutorsknowinglyinfringedon

investigationof Esformes.DE#899:110.She recommendedsuppressionof the

6

tapes and any testimonyabout them,but not dismissalor disqualification.

DE#899:116.

disqualification,DE#933:3,and the governmentobjectedto its credibilityfindings

and proposedremedies.DE#931:29.At the hearingon the R&R,Youngandtwo

other prosecutorsappearedin their individualcapacitiesrepresentedby private

attorneysand arguedthat the credibilityfindings should be overturnedbecause,if

not,they would harmthem personally—evenimpedinggainfulemploymentdown

the road.DE#974:215,231.And,withoutanevidentiaryhearingof its own,the

districtcourt did as asked,rejectingthe credibilityfindings and leavingEsformes

withno meaningfulremedy for the government’sintrusionon his privileges.

indictmentunsealed.DE#11.As trumpetedin a press release,the indictment

alleged a billion-dollarMedicarefraud.DE#3:10.It also allegedkickbackand

money-launderingconspiracies,relatedsubstantiveoffenses,and obstructionof

justice.DE#3.Twobriberycounts were addedlater,which are not a focus of this


Esformesobjectedto the R&R’sfailure to recommenddismissalor

C. The indictmentaccuses Esformes of a billion-dollar Medicare fraud.

On the same day as the EdenGardens raid,Esformes was arrested and his

appeal.DE#869:30-37.

7

supersedingindictment.DE#869.And it abandonedrelianceon patientfiles to

proveits case.The governmenthad subpoenaed198 patientfiles it saidwere

“essentialto the Government’scase concerningthe submissionof kickback-driven

false and fraudulentclaims.”DE#207:8.But those files did not showunnecessary

servicesor servicesnot received,so the governmentdid a “bait-and-switch”with

its theoryof guilt—contendingfor the first time that Esformescommitted

Medicarefraudby havingpsychiatricpatientsadmittedto his SNFs.DE#1402:30.

health issues shouldnot be placedinan SNF.DE#1432:204,210,212,222.But

fatal to that theory is the undisputedfact that all “mentallyill”patientsadmittedto

SNFs mustundergoa “Pre-AdmissionScreeningandResidentReview”

(“PASRR”),which requiresan independentcertification—regulatedby the State of

Florida—of medicalneed for the care.DE#1423:148-50,155-56,192-93;

DE#1427:219-221;42 U.S.C.§ 1396r(e)(1)(A)(i).And the governmenthad no

evidencethat any patientat Esformes’facilities lackedthe PASRRcertificationor

that those medicalreviewswere somehowcompromised.


D.The inability to prove unnecessary or phantomservices.

The government dropped its billion-dollar fraud claim from the third

Basically,the governmenttook the positionthat peoplewithserious mental

Inadditionto the PASRRs,medicalnecessityalsowas certifiedby doctors

who referredpatientsto Esformes’facilities,DE#1423:193,DE#1425:49-50;

8

medicalstaff uponadmissionof a new patientandperiodicallyduring their

treatment,DE#1427:212-13,DE#1425:34-35,50,52-54;the FloridaDepartment

of ElderAffairs,DE#1425:40-43,216-17;and HMOsadministeringMedicareand

Medicaid.DE#1423:163-66;DE#1425:43.

agenciesnot under Esformes’control,the governmentturned to anecdotal

testimony fromthree patientshavingmentalhealth issues—eventhough their

PASRRcertificationsandtreatingphysiciansrefutedthese mentallyillpatients’

subjectiveviews on their medicalneeds.DE#1404:182;DE#1427:134-36,190-91,

194,196-97;DE#1412:84;DE#1423:9-22;DE#1420:30;DE#1425:192.The

governmentalso reliedon testimonyof a doctorwho had been at an Esformes

facility ten years earlier,andof a formernurse,but neitherhad an opinionabout

medicalnecessityof any particularpatientservice.DE#1405:66;DE#1415:71-72.

Indeed,the districtcourtnotedthis was “certainlynot the type of evidenceI’m

usedto seeing inthese type of significantcases.” DE#1430:158.

theory that the admissionof psychiatricpatients to SNFs was somehowimproper.

But Cifu—whowas not a psychiatrist—didnot evenknow aboutPASRR,a key

componentof the federalsystemgoverningplacementof “mentallyill” patients in


Facedwith this mountainof documentaryevidencefromindependent

Dr.Cifuwas the only medicalexpert to testify for the governmenton its new

skillednursingfacilitiessince1989.42 U.S.C.§ 1396r(e)(7)(A)(i);DE#1419:11,

9

96.Cifuhadonly limitedexperiencewithpatientshavingprimarypsychiatric

diagnoses(whichwas the focus of the government’scase),and did not review a

single patient file.DE#1417:201-02,148.

beforethe court ruledon Esformes’Daubertmotion.DE#1166,DE#1417:128,

137-38,205.Forexample,though Cifu had not reviewedstatisticson psychiatric

patientsat SNFs andknew nothingof PASRRscreeningrequirements,the jury

heardhis baseless,conclusoryopinionthat “individualswho havechronic mental

healthconditionsthat are no longerin acute care,but who canwalk and talk and

kindof manage,are not appropriatefor a SNF,so kickbackscould explainmany of

those issues.”DE#1417:256;see also DE#1417:162,206.

(Count1).DE#1245:1.Andthe substantivehealthcarefraud charges were

dismissedfor insufficientevidence(Counts2 and3).DE#1422:136-39,141.The

jury did convictfor conspiracyto frustrate administrativefunctionsof the United

States (Count6).DE#1245:3;DE#1216:13.It also convictedon some substantive

healthcare-relatedkickbackcounts (Counts8-13),conspiracyto commit money-

laundering(Count16),severalsubstantivemoney-launderingoffenses (Counts18-


Over Esformes’objections,Cifu was allowedto give hisopinions to the jury

E. The verdict on kickbacks,money-launderingand obstruction.

The jury did not convict Esformes of conspiracy to commit healthcarefraud

21,25-28,30),obstruction(Count34),and the briberycounts.(Counts31-32).

10

DE#1245.Becausethere was insufficientevidenceto supportthe convictions

relatedto healthcareservices andmoney-laundering,Esformesmovedfor acquittal

on those counts,which was denied.DE#1324;DE#1352.

did not find that any of Esformes’bank accounts,personaleffects,or real property

were involvedin or traceable to the specifiedoffenses chargedinthe indictment.

DE#1263.Of the 29 Esformes-relatedbusiness interests listedon the verdict form,

the jury found only 7 were traceableto the specifiedoffenses.Id.

by 18levels by supposingthat 1%of allbillingfromEsformes’facilitieswas for

servicesprovidedto psychiatricpatientswho shouldnot be at an SNF—despitethe

undisputedfact that all the psychiatricpatientsat Esformes’facilitieshad

independentcertificationof medicalnecessityand the lackof evidenceof any

charge for unnecessaryservices.DE#1439:51;DE#1460:55.Itcalculated

sentencingloss as 1%of all amountsall Esformes’facilities receivedfromall

governmentbillingbetween2006and 2016,and awardedthat same amount—$5.5

million—asrestitution.DE#1439:51;DE#1293-1;DE#1419:178-81.And the court


F. The jury’s limited forfeiture verdict.

After the guilt phase, the district court held a jury forfeiture trial. The jury

G.The sentence, restitution award, and forfeiture judgment.

Relying on Cifu’s opinions, the district court increased Esformes’ sentence

overrodethe jury’s rejectionof the government’s$38millionforfeitureclaimby

11

III. Standards of review

Esformes claims legal error in the handling of the prosecutorial misconduct,

enteringa judicial forfeitureof $38,700,795basedon its view that all profits from

allEsformesfacilities were tainted by money-laundering,even thoughthe money-

launderingconvictionsinvolvedtransactionstotalingonly $177,000.DE#1455:2.

and this Court reviewsde novoissues of law.UnitedStates v.Cavallo,790F.3d

1202,1219(11thCir.2015).Regardingthe Cifuissues,a Daubertrulingis

reviewedfor abuse of discretion,but it is an abuse of discretionas a matterof law

to not do a properDaubertanalysis,so that issuealso is reviewedde novo.

McClainv. MetabolifeInt’l,Inc.,401F.3d1233,1238(11thCir.2005).Whether

Cifu’s opinion is insufficientas a matterof law to supporta jury verdictalso is

reviewedde novo.See Cavallo,790 F.3dat 1219.The determinationof loss inthe

sentencingphase is reviewedfor clear error,but it is clear error to find loss where

undisputedevidenceshows there was none.UnitedStates v. Sepulveda,115 F.3d

882,890-92(11thCir.1997).Finally,the de novo standardapplies to the claimed

legalerror in enteringa forfeiturejudgment that conflictswith the jury’s verdict

and is otherwiseclaimedto be unconstitutional.UnitedStates v. Duboc,694 F.3d


1223,1226n.2 (11thCir.2012).

12

fraudbut laterdroppedthat allegation,as the prosecutors—afterreviewingalmost

two hundredpatient files from Esformes’healthcarefacilities—couldnot finda

single one showingany billingfor an unnecessaryservice or servicenot rendered.

Nonetheless,Esformeswas prosecutedwith a vengeance,a courseof conductthat

intrudedon his attorney-clientandwork productprivilegesandusedhis

confidentialinformationagainsthimon the kickback issues.

healthcarefraud,Esformeswas convictedof Medicare-relatedkickbackcharges,

money-laundering,payinga regulatorfor an inspectionschedule,payinga

basketballcoachduring a college-admissionprocess,andan obstructionincident.

subjectedEsformesto a 20-yearprisonterm and a $5 millionrestitutionorder

basedon a legallydeficientopinionon Medicareloss fromthe government’ssole

medicalexpert,Dr.Cifu,that conflictswith indisputablefact—independentthird-

partycertificationsof medicalnecessity for the patientsat Esformes’facilities.

And despite a jury verdict rejectingthe government’s$38millionforfeitureclaim,


SUMMARY OF THE ARGUMENT

The governmentinitiallychargedEsformeswitha billion-dollarMedicare

While the governmentwas unable to convictEsformeson its mainclaim of

Thoughthere was no evidenceof any fraudulentbilling,the districtcourt

the court entered a judicial forfeiturejudgment in that amount.

13

cannotbe viewed in isolation.The first relates to prosecutorialmisconductand

Esformes’motionsto dismiss,disqualify,or at leastbar the useof improperly

obtainedinformation.After nine days of evidentiaryhearings,the magistratejudge

foundthat the prosecutorsknowinglyandrepeatedlyinvadedEsformes’privileged

relationshipsthen tried to cover that up—whichshe characterizedas “deplorable”

and an “attemptto obfuscatethe evidentiaryrecord.”But the district court—

concernedabout the impacton the prosecutorspersonally—overturnedthe findings

withouta new evidentiaryhearing.That violateddue process.Andit compounded

this error by refusingto disqualifythe lead prosecutor—anddenyingEsformesany

meaningfulremedy—eventhough the leadprosecutorinjectedher personalself-

interest intothe case then controlledthe prosecutionusingEsformes’confidential

information,and violatedthe advocate-witnessrulein the proceedingson

Esformes’motion.This error requiresdismissalof the indictmentor at least a new

trial.See infraat 16-40(citing,e.g.,UnitedStates v. Powell,628 F.3d1254,1257

(11thCir.2010);UnitedStates v. Spiker,649Fed.App’x770 (11thCir.2016)).

with no evidenceof any fraudulentbilling.Relyingon Dr.Cifu’s opinions,the

government’stheory was that psychiatricpatientsshouldnot be admittedto skilled


This appeal focuses on legalerror at three phases of the case,errors that

The second issuerelates to the government’shope to proveMedicareloss

nursingfacilities,and becausethere were psychiatricpatientsat Esformes’

14

facilities,there mustbe healthcarefraud.But that theoryoverlooksPASRR

regulations—thatCifudidnotknow of—requiringindependentcertificationsthat

confirmedthe psychiatricpatientsat Esformes’facilitieswere admittedbased on

medicalnecessity.The trial court abdicatedits gatekeepingrole by,inter alia,

allowingCifu to opine on healthcareissues before rulingon Esformes’Daubert

motion.The court erred againby submittingCifu’s theory to the jury and entering

judgmentbased on it,as it conflictswith undisputedfacts.This insufficiencyof

evidencerequiresacquittalon all counts relatedto healthcareservices,or at least a

new trial.See infraat 40-46 (citing,e.g.,McClain,401F.3dat 1238;Brooke

GroupLtd.v. Brown& WilliamsonTobaccoCorp.,509 U.S.209,242 (1993);

UnitedStates v. Hawkins,934 F.3d1251,1265-66(11thCir.2019)).

sentenceby 18 levels and ordering$5 millionin restitutionbased on Cifu’s legally

deficientopinionswithout any proofof loss.Italsoerredby enteringa $38-million

forfeiturejudgment that lacks evidentiarybasis,rests on money-launderingcharges

that fail as a matterof law,conflictswith the jury’s forfeitureverdict and is,

Esformessubmits,unconstitutional.See infra at 46-56 (citing,e.g.,UnitedStates v.

Hamaker,455 F.3d1316,1337-38(11thCir.2006);UnitedStates v. Liss,265 F.3d

1220,1232(11thCir.2001);UnitedStates v. Blankenship,382 F.3d1110,1130-31


Finally,Esformesshows that the districtcourt erred by increasinghis

(11thCir.2004);UnitedStates v. Christo,129F.3d578,580 (11thCir.1997)).

15

they hadobtainedthen used confidentialmaterialin violationof his attorney-client

and work productprivileges.Alternatively,he soughta broadsuppressionruling.

reportwithspecificcredibilitydeterminationsneededto resolveconflicting

testimonygivenby the leadprosecutor,ElizabethYoung,and other witnesses.The

magistrateconcludedthat the prosecutorsknowinglyandrepeatedlyinvaded

Esformes’confidentialrelationshipsthen tried to cover that up.Inher words,the

conduct was “deplorable”and “an attemptto obfuscatethe evidentiaryrecord.”

The R&Rrecommendedsuppressionof the tapes,amongother remedies.But the

districtcourt judge overrodethose findings withouta hearingandrewrotethem

using the verbiage given himby the privateattorneyswho representedthe lead

prosecutorand two others in their individualcapacitiesat the hearingon the R&R.

determinationscannot be overturnedwithout a newevidentiaryhearing;and (2)

structuralerror occurredwhentaintedprosecutorsinjectedtheir personalinterests

intothe case andcontinuedto controlthe prosecutionnotwithstandingmultiple


ARGUMENT

I. The district court erred by condoning the “deplorable” prosecutorialmisconduct found by the magistrate judge.

Esformes moved to dismiss or disqualify the prosecution team after learning

After nine days of evidentiaryhearings,the magistrateissued a lengthy

This was reversibleerror because:(1)a magistrate’scredibility

conflictsof interest.

16

Ginsparg,the governmentseized legal files of Ginspargand his paralegal.

DE#899:107.“[O]nly a handfulof documentswere placed in the single ‘taint’box,

while numerousdocumentsbearinglaw firmletterheads,and documentsvariously

marked‘privileged,’‘confidential,’‘work product,’and ‘attorney/client’went into

the 69 other boxes of purportedlynon-‘taint’materials.”Id.“[T]he ‘taint’protocol

utilizedby the governmentwas both inadequateand ineffective.”Id.at 107-108.

her agents were seizingprivilegeddocuments.Id.at 108.Thus,Esformesacted

promptlyto protect his privilegeclaims and there is “no basis for the government’s

argumentthat he waived those claims throughsubsequentinaction.”Id.


The Magistrate’sfindings.

1. “The ‘taint’protocolfor the searchof EdenGardenswas inadequate

andineffective.”DE#899:107.

Knowingthat EdenGardenshousedEsformes’in-houselawyer,Norman

2. “Esformes’ counsel acted with dispatch at the time of the Eden

Gardens search to alert the search team and the prosecution team of

Defendant’s attorney client and work product privilege claims and

there is no factual basis for the government’s argument that those

claims were waived by subsequent inaction.” DE#899:108.

Esformes’criminaldefense attorney,Ms.Descalzo,specificallytold Young

3. “The Esformes prosecution team improperly reviewed materials

from the Eden Gardens search prior to further scrutiny by ‘taint’

attorneys.” DE#899:108.

Despiteknowingthat no “taintprosecutor”hadreviewedthe documents,

“AttorneyYoungbeganreviewingthe search materialsfromthe 69 purportednon-

17

‘taint’boxes inlate July and continuingintoAugust,2016whenall but two of the

boxes were shippedto WashingtonDCfor scanningby a vendor.” DE#899:109.

“AttorneyYoungfoundthe ‘Descalzodocuments’”—documentspreparedby

Ginsparg’sparalegal,Bengio,inresponseto a request fromDescalzoaskinghimto

analyze transactionsrelatingto the Delgadosthat the governmenthadpublicly

claimedwere meantto disguise illegalkickbacks.Id.Young then “used them

extensivelyin the Ginspargreverseprofferandthe Bengiodebriefings,which

severalmembersof the Esformesprosecutionteamattended.”Id.

Nevertheless,AttorneyYoungcontinuedher reviewof the EdenGardenssearch

materials.”Id.Indeed,the “Descalzodocuments”were placedin one of the two

boxes that were withheldfromthe electronicproductionof seized materials.Id.

and id.n.51.Esformesdidnot learn this untilmonths later.See DE#975:34.

“facially inconsistentwith the priorsworn narratives,as well as withAttorney

Kaplan’sand Mr.Bengio’scrediblehearingtestimony.”DE#899:110.Kaplan,

who was Bengio’sattorney,crediblytestified that she told Youngthat the Descalzo


“[T]heprivilegeissue was broughtto AttorneyYoung’sattention.

4. “The Esformes [prosecution] team presented a facially inconsistent

and not credible explanation for their continued use of the Bengio

notes at the Bengio debriefings despite privilege warnings from

Attorney Kaplan.” DE#899:410.

At the magistrate’shearings,the prosecutionteam gave testimonythat was

documentsraiseda potentialprivilegeissue.Id.The magistrate,after hearingthe

18

live testimony,“assign[ed]no credibilityto the prosecutionteam’s ‘new’

narrative,”claimingthat only one of Bengio’snotes was privileged,which“makes

no logicalsense[.]” Id.The magistrate“deplore[d]the prosecutionteams attempts

to obfuscatethe record.”Id.Andshe “assign[ed]nocredibilityto the proposition

that Attorney Youngstoppedaskingquestionsabout the QuickBooks/Excel

spreadsheets[that were partof the Descalzodocuments]afterMr.Bengio

identifiedNormanGinsparg’shandwritingon them.” Id.Insum, “AttorneyYoung

whollydisregardedall privilegeconcerns in conductingthe Bengiodebriefing.”Id.

accept[ed]it as an accuratedescriptionof the events inwhichhe participated.”

DE#899:110.Bengioexplainedto Young that his notes were froma meeting

“betweenhim andNormanGinspargregardinga project he was workingon for

Ms.Descalzo.”Id.at 111.“This disclosureput the governmenton noticeof the

potentialwork privilegenatureof the Bengionotes.” Id. But“Youngcontinuedto

ask [Bengio]questionsabout those spreadsheets,whichhe answered.”Id.The

magistrate“conclude[d]that the government’sexhaustivequestioningof Mr.

Bengioregardingall details of the Bengionotes andthe relatedQuickBooks/Excel

spreadsheetsconstitutesa violationof the Esformes/Ms.Descalzowork product


5. “The government utilized privileged materials in conducting the

Bengio debriefings.” DE#899:110.

The magistratefound“Bengio’stestimonyto be cogentand credibleand

privilege.”Id.

19

EsformesandGinspargbut lateragreednot to use themas evidence.DE#974:7.

without lettingEsformesknow they were withdrawingfromthe JDA as required

by the agreement—executedsealedplea agreementson June 5,2015.

DE#899:112-13.That same day AgentHunterdirectedthe Delgadosto secretly

tape conversationswith Esformeseventhoughhe understood“there was a

potentialfor privilegeissuesdue to the existenceof a JDA.” Id.The government

laterclaimedthe crime-frauddoctrineexcuses this,“but nothingwas submittedto

a courtprior to the tapingabouta crime fraud exceptionthat would vitiate the

attorneyclientprivilegeencompassedwithin the JDA.” Id.Andevenwhenthe

governmentsoughtafter-the-factcourt-approvalof the taping,it “didnot provide

the reviewingcourt a completerecordof attorney interceptions.”Id.at 114.This

violated the government’sownprotocolsas well as the CitizensProtectionAct,28


6. “The Ginsparg/Esformes text messages included in the government’s

‘Hard Drive One’ containing its proposed trial exhibits are protected

by the attorney/client privilege.” DE#899:111.

The governmentconcededit listedas trialexhibits text messagesbetween

7. “The governmentimproperlydirectedthe recordingof Esformesby

the DelgadoBrothersinearly June2015.”DE#899:112.

The magistratefoundthat the JDA was bindingbut that the Delgados—

U.S.C.§ 530B,which “makes federal prosecutorssubject to stateethics rules.” Id.

20

that the governmentrepeatedlyviolatedEsformes’attorney-clientand work-

productprivileges,and its “attempt to obfuscatethe evidentiaryrecordto be

deplorable.”DE#899:114.She also found that Esformesprovedprejudice“to some

extent.” Id.at 115.Younghadadmittedthat,“for purposesof the Esformes

investigation,”itwouldbe “importantor relevant”to have the Bengioanalysis—

createdfor Esformes’criminaldefenseattorney—whichYoungreviewedandused

despitebeing told itwas privileged.See DE899 at 67-68,¶¶ 339-40;at 85 ¶¶ 431-

32; at 111.The magistrate,however,recommendedsuppressionratherthan

dismissalor disqualification.Id.at 115-116.

proposedremediesbecause,at a minimum,Youngshouldhavebeendisqualified.

DE#933:3-4.The governmentalsoobjectedto the R&R.It asked the districtcourt

to override the magistrate’scredibilityfindingswithouta new evidentiaryhearing,

DE#931:1-2,andsaid it coulddo so as longas it was basedon “somethingother

than a hunch.”DE#974:149;see also id.at 155(“Soboth of those adverse

credibilityfindings I suggestyou can reject,basedentirelyon the recordas it

exists,even withoutthe need to reheartestimony.”);id.at 208 (“[T]oarticulatea


The magistrate’sconclusionsand proposedremedies.The magistratefound

The districtcourt’s hearingon the R&R.Esformesobjectedto the R&R’s

reasonfor your analysis . . . is somethingmore than a hunch.”).

21

capacitiesat the hearingon the R&R,representedby their privateattorneys.

DE#974:213.They told the court to rewritethe magistrate’scredibilityfindings

becauseotherwisethose findings would harmthempersonally.Id.at 215; see also

id.at 232 (“Thosefindingswillhaveimplicationsto Ms.Young for the restof her

lifeas a professional.”).Young’sprivateattorneyargued that the findings,if left

undisturbed,would impactYoung if she were “to seek some other position”—a

clear referenceto her personallivelihood.Id.at 232.The district court took that to

heart,sayinghe had a “moralburden,okay,to worry about whatever rulingI make

here is going to haveon the careerof a prosecutor.”Id.at 218-19.

specific wordingthat youwant me to findor add or delete?”Id.at 217.Andthey

toldhimexactly howto revisethe credibilityfindings to avoid personalharm to

the prosecutors.See id.at 217,219 (Bernstein’sprivatelawyer);see also id.at

237; DE#976-4(Young’sattorney,asking the court to substitutehis languagefor

the wordinginthe R&R).Inparticular,they asked the district court to find—

withoutanevidentiaryhearing—thatthe conflictingtestimonyof Youngon the

one hand andKaplanand Bengioon the other was only a “misunderstanding,”

DE#974:208,211; that Young“actedin goodfaith,” id.at 215,219;and that


Remarkably,Youngand two other prosecutorsappearedin their personal

Accordingly,the court askedthe prosecutors’privateattorneys:“What is the

Young just “did not understand”Kaplanto be assertingprivilegeas to “the entirety

22

of [Bengio’s]notes” ratherthan “whollydisregard[ing]allprivilegeconcerns in

conductingthe Bengiodebriefings”as foundby the magistrateafter hearingthe

live testimony.Id.at 239.

privateattorneysactuallysupportedEsformes’motionto disqualify the prosecution

team.Id.at 225.Indeed,Esformesargued that the only effectiveremedywouldbe

a dismissalof the indictmentwithoutprejudice“to simply restoreorder to this case

so that the governmentcan assign new prosecutorsto the case who are not tainted,

proceedto get a fresh indictmentif they can withoutusingthe benefitsof either the

Bengiodebriefings,the Descalzodocuments,anythingfromEdenGardens . . . [or

the tapes].”Id.at 261.

credibilityfindings usingthe languagesuggestedby the prosecutors’attorneys.

See,e.g.,DE#974:45-46(substituting“misunderstanding”for “newnarrative”and

“attempt to obfuscatethe record”).But the courtstill found the governmenthad

committed“multipleerrors over the course of its investigation,”and“infringedon

Esformes’sattorney-clientand/orwork productprivileges.”DE#975:49.Insum,

the prosecutorsandagents “failedto upholdthe highstandardsexpectedfrom

federal agents andprosecutors”andactedwith a “stubbornrefusalto be


Esformespointedout that the prosecutors’self-interestas expressedby their

The districtcourt’s order.The districtcourt rewrotethe magistrate’s

sufficientlysensitiveto issues impactingthe attorneyclientprivilege.”Id.at 48-49.

23

pervasivepatternof misconduct,which harmedEsformeswhethercharacterizedas

bad faith or “stubborn”indifference.The court foundthe governmenthad

“mooted”the prejudicefromthe EdenGardenssearchby saying itwould not use

privilegeddocumentsas exhibitsat trial.Id.at 49.But that rulingoverlookedthe

indelibletaint resultingfromYoung’s intimateknowledgeof the defense’sanalysis

of kickbackallegationsgoing to the heartof the case.This can be remediedonly

by a dismissalor disqualificationbecause a prosecutorcannot unlearninformation

gained through a violationof attorney-clientprivilege.See DE#974:261(citing

cases).And avoidinguse of the documentsas trial exhibitsdoes not cure this taint.

The magistratehad foundthat the tapes andrelatedtestimonyshouldbe suppressed

becausethe governmentviolatedthe “No-ContactRule”as well as the JDA,then

gave the tapes to the prosecutorsafter withholdingmaterialinformationfromthe

court reviewingthe government’safter-the-factrequestto bless this evidence.See

DE#899:113.But the districtcourt heldthat “any purportedjoint privilegewas

waived by the Delgados[not Esformes]whenthey [secretly]agreedto cooperate

with the Government,”DE#975:20,that anafter-the-factclaimof a crimefraud

exceptionallowedthe governmentto use the tapes,and that the No-ContactRule


Nonetheless,the court refusedto provideany meaningfulremedyfor this

The court then turnedto the magistrate’srulingon the tapes.DE#975:49.

didnot apply to pre-indictmentmisconduct.Id.at 26.

24

credibilityfindings without a newevidentiaryhearing.Powell,628F.3dat 1257;

see alsoLouisv. Blackburn,630 F.2d1105,1106(5thCir.1980)(“[D]ueprocess

requiresthe district judge to hear the testimonyhimself”);UnitedStates v.

Thelisma,559 F.App’x 898,901(11thCir.2014)(“[T]hedistrict judge shouldnot

enter an order inconsistentwith the credibilitychoices made by the magistrate

[judge]withoutpersonallyhearingthe live testimonyof the witnesseswhose

testimony is determinative.”)(internalcitationsomitted).

a recordingof the testimony.See Powell,628 F.3dat 1255,1258(vacating

convictionandsentencebecauseof failure to conducta new evidentiaryhearing);

see alsoUnitedStates v. Hernandez-Rodriguez,443 F.3d138,147–48(1stCir.

2006)(remandingfor a new trial before a differentjudge after districtcourt

improperlyoverrodemagistrate’scredibility findings);Cullen v UnitedStates,194

F.3d401,407-08(2ndCir.1999)(same).

court to rejecta magistratejudge’s factualdeterminationswhere they contradict the

record.. . . ‘[if]there is an “articulablebasis for rejectingthe magistrate’soriginal


A. The district court improperly rejectedthe magistrate’scredibilityfindings without an evidentiary hearing.

It is a violation of due process for a district court to override a magistrate’s

This is so evenif the districtcourt has reviewedthe transcriptandlistenedto

Itis true “[a]narrowexceptionto the generalrule might allowa district

resolutionof credibility.”’”Powell,628 F.3dat 1257n.7 (quotingAmlong &

25

Amlong,P.A.v. Denny’s,Inc.,500 F.3d1230,1250(11thCir.2007)).But the

exceptioncannot applywhenthere is conflictingtestimonyon the issue.See id.at

1257 (observingthat where there is conflictingtestimony,the issue “turns squarely

on the credibilityof the witnesses.”).And Amlongmade clear that “a determination

of a lawyer’sbadfaith is particularlysensitiveto demeanorand other intangible

cues often not reflectedina transcript.”Amlong,500 F.3dat 1250.

overridethe magistrate’scredibility findings as long as its decisionwas not based

on “a hunch.”See DE#974:149,155.The generalrule requiringa new evidentiary

hearinghas only a “smallexceptioninthe ‘rare case.’” Cofield,272 F.3dat 1306

(quotingUnitedStates v. Marshall,609 F.2d152,155 (5thCir.1980)).Undisputed

facts “in the transcript”must negate the magistrate’sfindings.See Powell,628

F.3dat 1258n.7,1306.Andthis case does notmeet that test.

descriptionof the testimonyin her 117-pagereport that reconciledconflicting

testimony anddocuments.See,e.g.,DE#899:49,¶ 264 (describinghowthe

testimonyof Kaplanand Bengioconflictedwith the “new narrative”presentedby

YoungregardingBengio’sand Ginsparg’snotes);see also id at 75,¶ 377 (“After

listeningto AttorneyYoung’s testimony,Attorney Kaplanfelt that she hadbeen


Here,the governmentinvitederror whenit told the district court it could

The magistrate’scredibilityfindings were supportedby the detailed

untruthfulandbroughtit to the attentionof AUSA Bernstein.”);id.at ¶ 379

26

(similarfinding).Eventhe district court acknowledgeda conflictinthe testimony

on the privilegeissues.See DE#975:38(notingdispute intestimonyof Young as

opposedto that of Kaplanand Bengio“whichthe magistratejudge had to

resolve”).

rejectingthe credibilityfindings was “the adverse consequencesof such findings to

the careers of the prosecutors.”Id.at 45.But the districtcourt hadno authority to

overturnthe magistrate’scredibilityfindingswithoutan evidentiaryhearinggiven

the undeniableconflict inthe testimonyas to whetherYoungknowinglyand

intentionallyintrudedon Esformes’confidentialrelationships—anditwas

particularlyinappropriateto considerthe impactof those findings on the personal

careers of the prosecutors.

rehearingthe relevanttestimonyamountedto an impermissibleshortcut that

renderedthe result invalidand an abuse of discretion.”Amlong,500 F.3dat 1250;

see alsoPowell,628 F.3dat 1257n.8 (findingerror where districtcourt “credited

the view of witnesseswhomthe magistratefound unconvincinganddrew different

inferencesthan the magistratejudge on the basis of that testimony”).Thus,under


Inthe end,the only “articulablebasis”identifiedby the districtcourt for

Simply put:“Discardingthe magistratejudge’s credibility findings without

the lawof this Circuit,the judgmentbelow mustbe vacated.

27

a matterof law: (1)Youngcould not be considereda disinterestedprosecutorafter

injectingher personalinterest inoppositionto Esformes’motionsto dismissor

disqualify;(2)Youngcould not serve boththe government’sinterestinprotecting

the integrityof prosecutionsand the government’sinterest in zealous advocacy

usingall availableinformation;and (3) Youngcould not be botha witness andan

advocatein the proceedingson Esformes’motionto disqualify.

the hearingin the district court,representedby her privateattorney,and askedthe

district court to reject the magistrate’scredibilityfindings because,otherwise,

those findingswouldirreparablyharmher career and potentiallivelihood.Inno

uncertainterms,Youngmade a “me againsthim”argument,pittingher own

personalinterestagainst Esformes,the criminaldefendant.See,e.g.,DE#974:231-

232 (arguingthat the magistrate’sfindings “willhaveimplicationsto Ms.Young

for the restof her life . . . whenevershe deals with a court inany jurisdictionor if

she has to one day testify or perhapsseek some other position.”).


B. Multiple conflicts of interest requiredYoung’s disqualification.

Young had multiple conflicts of interest that should have disqualified her as

1. Youngviolatedthe disinterestedprosecutor rule.

Young injectedher personalinterest into this matterwhen she appearedat

The district court judge madeclear he was concernedabout the impactof the

credibilityfindings on Young.See DE#974:174(“Iknow that there are serious

28

negativeimplicationsto people’scareers.. . . So youare tellingme that if I adopt

the findings of the [magistrate]judge,their careers are injeopardy.”);id.at 218-

219 (“Ihave an additionalmoralburden,okay,to worry aboutwhateverrulingI

make hereis going to have on the careerof a prosecutor.”);DE#975:44-45(finding

the credibility findings should be overturned,“particularlygiventhe adverse

consequencesof such findings to the careers of the prosecutors.”).

self-interestat the center of this controversyand for the district court to consider

her personalinterestwhen rulingagainstEsformes.See Youngv. UnitedStates ex

rel.Vuittonet Fils S.A.,481U.S.787,807 (1987)(plurality)(holdingthat havinga

self-interestedprosecutorcontrol the prosecutionis a structuraldefect);United

States v. Siegelman,786 F.3d1322,1329(11thCir.2015) (explainingthat,under

Young,a criminaldefendantis entitledto a disinterestedprosecutor);Spiker,649

Fed.App’x.at 773 (reversingfor plainerror because a self-interestedprosecutor

directedthe government’scase); see also28 U.S.C.§ 528 (requiring

disqualificationof a prosecutorwhoseparticipationinthe proceeding“mayresult

in a personal,financial,or politicalconflictof interest,or the appearancethereof”).

prosecutor’sbroadpower anddiscretionto decide,inter alia,“what methodsof


Itwas reversibleerror,however,for Young,a lead prosecutor,to put her

The dangerpresentedby a self-interestedlead prosecutorflows from the

investigationshould be used,what informationwill be soughtas evidence,which

29

personsshouldbe chargedwithwhat offenses,whichpersonsshouldbe utilizedas

witnesses,whether to enter intopleabargains”andsuch.Young,481U.S.at 807.

Federallaw“categoricallyforbids an interestedpersonfromcontrollingthe

defendant’sprosecution.”Siegelman,786 F.3dat 1329.As Young explains,the

effects of a self-interestedprosecutorare “pervasive,”which“calls into question,

and therefore requiresscrutinyof, the conductof an entireprosecution,ratherthan

simply a discreteprosecutorialdecision.”481U.S.at 812.Becausethe decisionsof

a prosecutor“shape the record”but often are not “partof the record,” the harmless

error rule is incapableof remedyingthe wrong.Id.at 813.

was not disinterested—anddid so under the plainerror doctrine.“Membersof a

U.S.Attorney’sstaff shouldnot participate‘in a particularinvestigationor

prosecutionif suchparticipationmay result in a personal. . . conflict of interest,or

the appearancethereof.’”Spiker,649 Fed.App’x.at 773 (internalcitations

omitted).Spiker distinguishedcases where the prosecutorhad only a minor role or

voluntarilyrecusedonce the conflictbecameapparent.Id.at 773-74.But inthis

case,Younghada blatant conflictof interestbecauseof her very personalinterest

inthe outcomeof this prosecution.Esformessoughta dismissalof the indictment

basedon Young’s intentionalpursuitanduseof materialsprotectedby his


InSpiker,this CourtappliedYoungand reversedbecausethe lead prosecutor

attorney-clientand work productprivileges.After the magistratefoundYounghad

30

committedthis wrongdoingandthen tried to cover it up,Youngarguedthat the

magistrate’sfindings shouldbe rejectedbecause,if adopted,they would hurt her

personallyand threatenher future job opportunities.So Youngactuallyadmitted

havinga personalinterestinan outcomethat went againstEsformes.

player.Young’sdominantrolein Esformes’prosecutionis clear fromthe

magistrate’sreport,the districtcourt order,andthe trial transcript.She took charge

of the EdenGardenssearch—personallyreviewingthe privileged“Descalzo

documents”knowingthey were removedfromthe office of Esformes’in-house

lawyer,then used themwhen“debriefing”Bengioandconductinga “reverse

proffer” to Ginsparg.And,as found by the magistrate,“Youngacknowledgedthat,

for purposesof the Esformesinvestigation,it wouldbe importantor relevant”to

have that analysis.DE#899:67,¶ 339; id.at 68,¶ 340.Then,armed with this

“importantor relevant”confidentialinformation,Youngtook a leadingroleat trial,

using the privilegedinformationshe learnedfromthe Bengiodebriefingsto

examine a key governmentwitness,Mr.Baldwin,on the transactionsanalyzedby

Bengio’swork product.See DE#1414:58(“Myprimarypointof contact is Ms.

ElizabethYoung,andall of the exhibits—allof informationcame throughher.”);


Moreover,as in Spiker,herethe self-interestedprosecutorwas not a minor

DE#1413:129-30(discussingrelianceon the underlyingQuickBooksanalyzedby

31

Bengio);DE#1413:193-94(summarizingBaldwin’sopinionthat lease transactions

that Bengioanalyzedwere disguisedkickbacks).

Younggained access to the defense strategy indealingwith the challenged

transactionsthat are at the heartof the government’scase againstEsformes.And,

after obtaininga verdict,she argued that Esformesshould receivean exceptionally

high-endsentence.See DE#1362:19(arguingfor lifesentence);DE#1439:20

(arguingfor loss amount above$550 million).Therecanbe no doubt,Young—

witha personalstake in the game—prosecutedEsformeswith a vengeance,before,

during,andafter trial.Thus,underYoung and its progeny,a reversalis required.

protocolsandethics rules.Youngcould not serveboth the government’sinterest in

ensuringthe integrityof its prosecutionsand its interest inzealous advocacy.There

is a reasonwhy the governmentseparates its taint teams fromits prosecution

teams,andwhy there is a conflictof interestfor a governmentlawyer to perform

bothfunctions.See DE#974:30-31(describingprotocolsfor searchinga law

office).A memberof the taint teamserves the government’sinterestin preserving

the integrityof the judicial processby ensuringthat confidentialinformationis not


Thus,as a result of her intrusionsintoEsformes’confidentialrelationships,

2. Youngviolatedthe rule separatingtaint and prosecutionteams.

Younghadanotherconflictof interestthat is squarelyat odds withDOJ

usedto convicta defendant inviolationof the attorney-clientand work-product

32

privileges—whichhas SixthAmendmentimplications.See InreSearchWarrant

IssuedJune13,2019,942 F.3d159,174(4thCir.2019)(“[T]hework-product

doctrineis vital to ‘assur[e]the properfunctioningof the criminaljustice

system[.]’”);UnitedStates v.Danielson,325 F.3d1054,1069(9thCir.2003)

(holdingthat improperinterferenceby the governmentwith the confidential

relationshipbetweena criminaldefendantandhis counselviolates the Sixth

Amendmentif such interference“substantiallyprejudices”the defendant).In

contrast,a memberof the prosecutionteam serves the government’sinterestin

havingits lawyersrepresentit with zealous advocacyusing their full knowledgeof

the case.See Fla.BarRulesof ProfessionalConduct,Chapter4,Preamble(noting

advocate’srole to zealouslyassert the client’s position).

interest.See,e.g.,Martinezv. State,665 So.2d 301,302 (4th DCA1995)(holding

that prosecutorhad to be disqualifiedafter overhearingtaped conversationbetween

defendantand attorney);see also Danielson,325 F.3dat 1071(holdingthat

government’saffirmativeintrusiononconfidencesprotectedby attorney-client

privilegeestablishesprima facieshowingof prejudiceand disqualification).


The same lawyersimply cannot fulfillbothroles withouthavinga conflictof

3. Youngviolatedthe advocate-witnessrule.

A lawyer“mustnot act as both prosecutorandwitness.”UnitedStates v.

Hosford,782 F.2d936,938 (11thCir.1986).“This is a part of the general

33

‘advocate-witness’rule.”Id.Under the “advocate-witnessrule,”lawyers“must

elect inwhichcapacitythey intendto proceed,either as counselor as a witness,

and promptlywithdraw fromthe conflictingrole.”UnitedStates v. Sharma,394

Fed.App’x.591,594-95(11thCir.2010)(citingUnitedStates v. Prantil,764 F.2d

548,553 (9thCir.1985)(reversinginpart based on violationof advocate-witness

rule));see also UnitedStates v. Johnston,690 F.2d638,644 (7thCir.1982)

(holdingthat advocate-witnessrule applies to proceedingsbefore a judge as well as

a jury).

lengthbefore the magistrateon the issue of prosecutorialmisconduct,she becamea

witness-turned-advocateat the districtcourthearing,arguingthroughher private

attorneythat the magistrate’sfindings should be overturned.Whetherviewed

underthe advocate-witnessruleor the disinterestedprosecutorrule,it was a

conflictof interestfor Young to act bothas a witness andas an advocatein these

proceedings.Andthe establishedremedyfor suchconductis disqualification.E.g.,

Sharma,394 F.App’xat 594;Siegelman,786 F.3dat 1326.DE#933:28;

DE#954:18-21.Accordingly,given Young’s multipleconflictsof interest,Young


Youngviolatedthis well-establishedethicalrule when,after testifyingat

shouldhave been disqualified,and it was reversibleerror not to do so.

34

over the course of its investigationand infringedon Esformes’sattorney-client

and/orwork productprivileges”—includinga “stubbornrefusal” to be sensitive to

Esformes’attorney-clientprivilege.DE#975:49.Yet,the court failedto provide

any meaningfulremedyfor these wrongs.It denied the motionsto dismiss or

disqualifyandtook away mostof the reliefrecommendedby the Magistrate—such

as suppressionof the illegallyobtainedtapes.

above,at a minimumdisqualificationwas requiredas a matterof law due to the

lead prosecutor’sconflictsof interest.Andthe court furthererredby: (1)placing

the burdenof proofof prejudiceon Esformesafter he madea prima facie showing

of prosecutorialintrusionon his confidentialrelationships;(2) holdingthat the

Delgadoscouldwaive Esformes’protectionsunder the JDA; and(3)approvingthe

government’sunilateralextra-judicialassertionof the crime-fraudexceptionto

protectionof privilegedcommunications.

burdenof proofon the prejudiceissue.Itsaid that Esformeshad the “burdenof


C. The district court’s suppressionanalysis contains legal error.

The district court concludedthat “the Government conducted multiple errors

The district court’s rulingson remediesare riddledwitherror.As shown

1. The court improperlyshifted the burdenof proof.

The district court rejecteddisqualificationbased on a misperceptionof the

showingmisconductand prejudicewith regardto his motionto disqualify.”

35

DE#975:5.But,where,as here,there is solidproofthat the government“acted

affirmativelyto intrudeintothe attorney-clientrelationshipand therebyto obtain

the privilegedinformation,”then “‘theburdenshifts to the governmentto show

that there has beenno prejudiceto the defendant[]as a result of these

communications.’”Danielson,325 F.3dat 1071(quotingUnitedStates v.

Mastroianni,749 F.2d900,908 (1st Cir.1984));cf.Weatherfordv. Bursey,429

U.S.545,558 (1977)(findingno Sixth Amendmentviolationwhen intrusionon

confidenceswas unintentionaland didnot infringeon defense strategy).

privilegedcommunicationsandwork product.DE#899:111.By doing so, they

gained relevantand importantinformationabouthow Esformes’criminaldefense

attorneywas approachingEsformes’defenseof the kickbackclaims.DE#899:111;

see also id.at 58,67-68.Eventhe district court foundthat,as a result of the

government’s“stubbornrefusal” to observeprivilegeissues,it “infringedon

Esformes’sattorney-clientand/orwork productprivileges.”DE#974:49.Andthat

findingconstitutesa prima facie showingof prejudiceto Esformesthat shiftedthe

burdenof proof to the government.Danielson,325 F.3dat 1071.

taint; rather,it imposeson the prosecutionthe affirmativeduty to prove that the


The magistratefoundthat prosecutorsknowinglyintrudedon Esformes’

Notably,the government’sburdenof proof“is not limitedto a negationof

evidenceit proposesto use is derivedfroma legitimatesource wholly independent

36

of the compelledtestimony.”Id.(adoptingapproachto immunityissue set out in

Kastigarv. UnitedStates,406 U.S.441,462 (1972)).“As the Court stated in

Kastigar,the mere assertionby the governmentof ‘theintegrityandgood faith of

the prosecutingauthorities’is not enough.”Id.at 1072.The governmentmust

showby a preponderance“that ‘allof the evidenceit proposesto use,’andallof its

trialstrategy,were ‘derivedfromlegitimateindependentsources.’”Id.(quoting

Kastigar,406 U.S.at 460).“In the absenceof suchanevidentiaryshowingby the

government,the defendanthas sufferedprejudice.”Id.

otherwise.See DE#975:5(citingUnitedStates v. Walker,243F.App’x621,622-

24 (2d Cir.2007),andUnitedStates v. Stewart,294 F.Supp.2d 490,494

(S.D.N.Y.2003)).InWalker,the prosecutorsinadvertentlystumbledonto a limited

exposureof a handfulof privilegeddocumentsthat did not touch on defense

strategy.InStewart,the prosecutorinadvertentlyreada single privilegedemail.

Bothare easilydistinguishable.Itmustbe concluded,therefore,that the district

court committedharmfulerror in relievingthe governmentof its burdenof proof

on the prejudiceissuewhenits ownfindings establishedthe government’s

affirmativeintrusionon Esformes’attorney-clientandwork productprivileges.


Neitherof the two cases cited by the districtcourton this issue hold

Danielson,325 F.3dat 1071-72;see also In reSearchWarrant,942 F.3dat 175

37

(findingirreparableharmbecauseprosecutorscouldnot unlearnwhat they had

seen).

the Delgados,the district court erredby holdingthat the Delgadoswaived

otherwisebindingprotectionsunder the JDA.DE#975:20.For this holding,the

districtcourt reliedon UnitedStates v. Almeida,341F.3d1318(11thCir.2003).

But Almeida just reaffirmedthe rule that a witness maywaivehis or her own

attorney-clientprivilegeifheor she takes the standto testify for the government.

341F.3dat 1325-26.That holdingdoes not supportthe districtcourt’s findingthat

the Delgadoscould waive anotherparty’sprotectionsunder the JDA,anditwas

legalerror for the court to rule that the DelgadoswaivedEsformes’rights.

the crime-frauddoctrine to excuse its intrusionon communicationsprotectedby

the JDA withoutfirst seekingcourt approval.The determinationof whether

communicationsare privileged(includingan exceptionto that privilege)is a

judicial functionthat cannotbe performedby prosecutorson their own.See In re

SearchWarrant,942 F.3dat 176-77.And,as the magistratefound,the government


2. The Delgadoscould not waive Esformes’JDA protection.

Incondoningthe secret tapingof Esformes’confidentialconversationswith

3. The crime-fraudexceptiondid notauthorizeuse of the recordings.

The court also incorrectlyapprovedof the government’sunilateralclaimof

improperlysought after-the-factjudicial approvalof prosecutorialuse of the

38

recordings,as it gave the reviewingcourtmisleadinginformationon the parties’

adherenceto the JDA,and withheldother materialinformationat that ex parte

proceeding.DE#899:112-114;see alsoDE#975:7.This lack of candorviolated

Florida’sethicalrulerequiringa party to discloseall materialfacts,evenadverse

facts,whenseekinga court order throughan ex parteproceeding.Fla.Ruleof

ProfessionalConduct4-4.2(a).That misleadingconductcannotvalidate the taping

of privilegedcommunicationsor their disclosureto the prosecutionteam.

communicationswith judicialapprovalthrough a misleadingpresentationto the

reviewingcourt also shifts to the governmentthe burdenof disprovingprejudiceto

Esformes.And,underDanielsonandKastigar,the governmentshouldhave been

barredfromusingany informationderivedfromthis taping.See also UnitedStates

v. Schwimmer,892 F.2d237,244-45(2dCir.1989)(holdingjoint defense

protectionis “anextensionof the attorney clientprivilege”and that there canbe no

derivativeuse of informationobtainedin violationof it).

handlingprivilegedmaterials,the districtcourt erred infailingto provideany

meaningfulremedy for the prejudiceto Esformes.The multiplelegalerrors in the

district court’s rulingson remediesfor the prosecutorialmisconductrequire that


This attemptto cloak the intentionalinvasionof Esformes’confidential

Insum,giventhe government’srepeatedviolationof itsownprotocolson

the judgmentsbe vacated.

39

to its healthcarefraudcase.DE#207:8.But the files didnot show healthcarefraud.

So the governmenthadto change its approachand,in the middleof trial,disclosed

that Dr.Cifuwouldgive a newhealthcarefraudopinionbasedon his interpretation

of Medicaremanuals.DE#1156;DE#1159.Esformesobjectedto this late

disclosureandaskedfor a DauberthearingbeforeCifutestified.DE#1417:6,137-

138.He alsosought an acquittalbecausethe new Cifu theoryconflictswith

undisputedfacts.DE#1324.The denialof these requests is reversibleerror.

opinions three weeks intotrial—it violatedFederalRuleof CriminalProcedure

16(a)(1)(G)becausethe substanceof Cifu’s trial testimonydifferedmaterially

from the government’spretrialdisclosures.See DE#1062-1;DE#1062-3;

DE#1156.Allowingthat was harmfulproceduralerror.See UnitedStates v.

Machado-Erazo,901F.3d326,337–38 (D.C.Cir.2018).

requiredby Daubert.The importanceof a Daubertscreening“cannot be

overstated”becauseexpert testimony“can be both powerfulandquite misleading.”


II. The district court erred by upholding the Cifu theory of guilt.

The government subpoenaed 198 patient files, saying they were “essential”

A. The district court abdicatedits gatekeepingduty.

When the government changed its theory of the case—disclosingCifu’s new

Inaddition,the districtcourt failed to performthe gatekeepingfunction

See Frazier,387 F.3d1244,1260(11thCir.2004)(quotingDaubertv. Merrell

40

Dow Pharm.,Inc.,509 U.S.579,595 (1993)).The trial judge must“evaluatethe

reliabilityof the testimonybeforeallowingits admissionat trial.” Id.at 1262.But

here the court “defer[red]”its Daubertrulinguntilafter the jury heardCifu’s

testimony.DE#1417:137-38;see also id.at 6,109.That is not “gatekeeping.”

in a ‘rigorousthree-partinquiry’”assessingwhether(1)the expert is qualified;(2)

the methodologyis reliable“as determinedby the sort of inquirymandatedin

Daubert”;and(3)the methodology“fits” the issues in the case.Hendrixex rel.

G.P.v. EvenfloCo.,Inc.,609 F.3d1183,1194 (11thCir.2010)(internalcitations

omitted).The proponentof the expertmustshow,“by a preponderanceof the

evidence,that the testimonysatisfieseachprong.”Id.

comments,not a “rigorousanalysis”of eachprongof the test.On the qualification

issue,Cifu hadno experiencewithprimarypsychiatricadmissions(claimingnone,

and admittingno knowledgeof the PASRRrequirements),anddid not review

availablestatisticson psychiatricpatients in nursinghomes.DE#1417:200-201.

And Cifuadmittedpreviouslythat he was not an experton the subject matterof his

currenttestimony.DE#1422:190.But the district courtdidnot care.Id.(“So it’s

not what is relevant inhis mind,whetherhe considershimselfto be an expert”).


Moreover,“[t]hiscircuit requirestrialcourts acting as gatekeepersto engage

Inthis case,however,the court’s analysisconsistedof only a few conclusory

The court even observedthat Cifu “didn’t have any scientificmethods.”Id.at 191.

41

Yet it retroactivelyapprovedhis opinionson medicalnecessityby comparingCifu

to a perfumeexpert who “candistinguishamong140odors just witha sniff.” Id.

methodologyrequirement,and neverevenmentionedthe essential“fit” analysis.

See id.And its failureto consider the factors requiredby a properDaubertanalysis

was prejudiciallegalerror.See,e.g.,McClain,401F.3dat 1238 (reversing

becausedistrictcourt abdicatedits gatekeepingrole); see also Carlsonv.

BioremediTherapeuticSys.,Inc.,822 F.3d194,201(5th Cir.2016)(remandingfor

new trialafter medicaltestimonywas allowedwithno Daubertinquiry).

the eyes of the law,or whenindisputablerecordfacts contradictor otherwise

renderthe opinionunreasonable,it cannotsupport a jury’s verdict.” BrookeGroup,

509 U.S.at 242 (affirmingjudgment notwithstandingthe verdict); see also

Weisgramv.MarleyCo.,528 U.S.440,442 (2000)(“Inadmissibleevidence

contributesnothingto a ‘legallysufficientevidentiarybasis.’”);U.S.ex rel.Absher

v. MomenceMeadowsNursingCenter,754 F.3d699,710 (7thCir.2014)

(reversingwith judgmentrenderedfor defendanton “worthlessservices”

healthcarefraudclaim);Morgensternv. Wilson,29 F.3d1291,1297(8thCir.


Thus,the court skimpedon the qualificationfactor,skippedthe

B. Cifu’s theory is insufficientto support a healthcare-relatedcount.

“Whenan expert opinion is not supported by sufficient facts to validate it in

1994)(reversingdue to legallydeficientexpertopinion);Kucelv. Walter Heller &

42

Co.,813 F.2d67,72-73(1987)(finding“clearerror” in a damagesaward basedon

an expert’sopinionthat cannotbe reconciledwith undisputedfacts).

noticeof the exactingstandardsof reliabilitysuchevidencemustmeet.”Weisgram,

528 U.S.at 442.Thus,the governmentknowinglyacceptedthe risk of reversal

when it changedits theoryof the case mid-streamand reliedon Cifu’s legally

insufficientexpert opinions to convict Esformesand obtainan enhancedsentence

and excessivemonetarypenalties.See id.; see also Hawkins,934 F.3dat 1265-66

(vacatingconvictionsandremandingfor newtrialwhere inadmissibletestimonyof

dual expert/laywitness went to heartof government’scase).

generallyshouldnot be placedinskillednursingfacilitiesand that havingsuch

patientsat an SNF couldindicatekickbacks.But this view actuallyconflictswith

Medicareregulationsand the PASRRrequirements.See 28 C.F.R.§ 483.102 et

seq.; DE#1419:96-97.AndCifu’s opinionthat havingpsychiatricpatientsat an

SNFsuggestskickbacksis prejudicialspeculationon an ultimateissuethat requires

a new trial,if not an acquittalon counts involvinghealthcareservicesdue to

insufficiencyof evidence.See Hawkins,934 F.3dat 1265-66.


“Since Daubert,moreover,parties relyingon expertevidencehavehad

Inthis case,Cifuopinedthat psychiatricpatientswho can“walk and talk”

The MedicaremanualsnegateCifu’s opinionthat primary-diagnosis

psychiatricpatients“really don’t need” SNFcare,DE#1419:128,as they specify

43

that “[s]killedobservationand assessmentmay also be requiredfor patientswhose

primaryconditionand needs are psychiatricinnatureor for patientswho,in

additionto their physicalproblems,have a secondarypsychiatricdiagnosis.”

DE#1295-24:30.Inaddition,as implementedinFlorida,PASRRrequiressucha

certificationfor each individualwith a serious mentalillnessenteringa SNF that

care at the facility is necessary,based on a “qualifiedmentalhealth

professional[’s]”reviewof their records.Fla.Admin.Code § 59G-1.040(6)(b)

(2013);DE#1423:148-50,155-56,192-93;DE#1427:219-221.The certification

must be providedby an independententity (not the nursingfacility),and the state

is responsiblefor the determination.42 C.F.R.483.106(d)(1).Numerousmedical

professionalsconfirmedthis regulatoryframework.DE#1411:201-07;

DE#1417:89;DE#1423:148-50,155-56,192-93;DE#1427:219-23;DE#1428:222-

24; DE#1429:38-40.Yet Cifudidnot evenknow about it.DE#1419:96-97.

standardsfor admissionto SNFs.See DE#1417:137;67,221.Underthe Medicare

Act itself,the federal agency is prohibitedfromsupervising“thepracticeof

medicineor the mannerin whichmedicalservices are provided.”See 42 U.S.C.

§ 1395;see alsoBradleyv. Sebelius,621F.3d1330,1338(11thCir.2010)

(guidancedocumentsare Secretary’s“ipsedixit” and notentitledto deference);see


Further,Cifu incorrectlythoughtthat Medicaremanualsestablishthe

also Bammerlinv. Navister,30 F.3d898,900 (7thCir.1994)(reversingjury

44

verdictafter districtcourtadmittedincorrecttestimony as to the meaningof federal

regulations).

that the percentageof primary-diagnosispsychiatricpatientsadmittedto SNFs is

“smallto none.”DE#1417:245;see alsoDE#1419:153;DE#1417:252-53.He did

not,however,consultany of the availablestatisticson the rate of admissionfor

primary-diagnosispsychiatricpatients.DE#1417:200-201.Instead,he drew on his

anecdotalexperienceat facilities inRichmond,Virginia,which he superimposedas

a standardfor admissionsin Miami,which has a significantpopulationof indigent

and mentallyillpatients.DE#1417:260-263.But that was legalerror because

“transpositionof data basedon … conjectureand roughapproximationlacks the

‘intellectualrigor’requiredby Daubert.” Rink v. Cheminova,Inc.,400 F.3d1286,

1292(11thCir.2005); see also UnitedStates v.City of Miami,Fla.,115 F.3d870,

873 (11thCir.1997)(reversingdue to incompetentexpert testimony).

undisputedfacts,Esformessubmits he is entitled to anacquittalon the counts

involvinghealthcareservices,includingCount Onewhichresultedina hung-jury.

See,e.g.,BrookeGroup,509 U.S.at 242.At the very least a newtrial is required,

as Cifu’s opinions taintedthe jury’s findings on healthcareandkickbackissues.


Cifu,withno backgroundin statistics,alsomade the unsupportedassertion

Thus,becausethe government’stheoryof healthcarefraud conflictswith

See Hawkins,934 F.3dat 1265-66.

45

III. The district court erred in its sentencing, restitution, and forfeiturerulings.

If the Court does not grant the relief requested above, it should remand for

resentencingbecause invalidloss considerationsincreasedEsformes’sentenceby

18 levels—andthe $5 millionrestitutionand $38 millionforfeiturefindings fail as

a matterof law.

“individualswho havechronic mentalhealthconditionsthat are no longerinacute

care,but who canwalk and talk and kindof manage,are not appropriatefor a

SNF.” DE#1417:256.There is “no” methodologyunderlyingthis conclusion;it is,

accordingto the districtcourt,likea perfumeexpert whose “sniff” is enoughfor an

opinion.DE#1422:191.ButCifu’ssniff cannot supporta loss calculationthat is

negatedby irrefutablefacts like the independentPASRRcertifications.

had an independentmedicalnecessitycertificationissuedunderthe auspicesof the

State of Florida;manypatientshad periodicmedicalnecessitydeterminationsby

HMOsandother independentagencieswho were not underEsformes’control;

Medicareregulationsprovidefor the admissionof psychiatricpatients to SNFs;


A. The record negates the loss finding.

Again, the government’s loss theory focused on Cifu’s view that

Again,it is undisputedthat everypsychiatricpatientat Esformes’facilities

and there is no evidencethat a single patient receivedunnecessaryservices.

46

calculatingloss.DE#1439:27(“Giveme a number.. . -- how do you get to a

specific number?”).Inthe end,the court came upwith an arbitraryfigure—1%of

all Medicarereceiptsby all Esformes’facilities for ten years—whichapparently

was anextrapolationbased on the lay opinionof a formerweekendnurseat a

single facilitywho just thought some youngpatientswith mentalhealthissues

shouldnot havebeenthere.See DE#1414:233,235.But that witness was not

qualifiedto—anddidnot—opineas to medicalnecessity,DE#1415:171,173,176,

and nothingin the recordsupports this 1%numberfor a loss calculation.And

there was no evidenceof any loss at all.

rulings.“Sentencingloss”canbe basedon “intendedloss,” whereas restitutionis

strictly limitedto “actualloss.”See UnitedStates v. Huff,609F.3d1240,1247-48

(11thCir.2010);UnitedStates v. Medina,485 F.3d1291,1303-04(11thCir.

2007).But both types of loss mustbe groundedin solidevidence;speculationis

prohibited.Id.at 1304.The governmenthas the burdenof provingloss “with

‘reliableand specific evidence.’”Id.(internalcitationsomitted);see alsoUnited

States v. Sheffield,939 F.3d1274,1278(2019)(“[A defendant]has the ‘right not

to be sentencedon the basis of inaccurateor unreliableinformation.’”)(internal


At the sentencinghearing,the district court struggledto find a basis for

The invalidloss calculationinfectsboththe sentenceand the restitution

citationsomitted);Huff,609F.3dat 1249(“Restitutionis not intendedto ‘provide

47

a windfall.’”)(internalcitationsomitted);UnitedStates v. Martin,803 F.3d581,

594-95(11thCir.2015)(vacatingrestitutionwhere there was no evidenceof

victimloss);UnitedStates v. Singletary,649 F.3d1212(2011)(vacatingrestitution

where calculationwas not linkedto specific findingsof loss).

unnecessary;thus the sentencehad to be vacatedbecausemere proofof healthcare

kickbackswas insufficientto show eitheractual or intendedloss.Medina,485 F.3d

at 1304;see alsoHamaker,455 F.3dat 1337-38(vacatingsentencewhere loss

calculationwas basedonspeculationas to basis for jury verdict);UnitedStates v.

Stein,846 F.3d1135,1154 (11thCir.2017)(vacatingsentencewhere loss

calculationwas basedonunsupportedextrapolationfromtwo victims). Indeed,the

unsupportedeighteen-levelsentenceenhancementherewas substantively

unreasonable.

this case is clearly erroneousbecausethere is noevidenceat allof actualloss;

indeed,it is negatedby undisputedfacts.See id.;see alsoLiss,265 F.3dat 1232

(vacatingrestitutionorder where governmentprovidedinsufficientevidenceof loss

to Medicare);UnitedStates v. AseraCare,Inc.,938 F.3d1278,1298(11thCir.

2019)(subjectiveopinionof an expert is not sufficientex post to overridemedical


InMedina,there was no evidencethat any treatmentwas medically

Likethe loss-basedsentencecalculation,the $5-millionrestitutionorder in

documentationof clinical judgment).

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skillednursingfacilitiescontravenesthe public policyembodiedincivil rights

laws that prohibitdiscriminationbasedon mentalhealth.See generallyOlmsteadv.

L.C.ex rel.Zimring,527 U.S.581(1999)(holdingthat state governmentcannot

arbitrarilyoverride the medicaljudgmentof a treatingphysicianas to the proper

residentialplacementof an individualbasedon mentalhealthconsiderations

withoutscrutiny underanti-discriminationlaws).There is no reasonwhy Esformes

shouldhave or could have legitimatelydoubtedthe admissiondecisionsof

patients’treatingphysiciansthat were supportedby independentreviewing

agenciessimplybecausethe patienthada mentalhealthissue.And nursinghome

operatorsshouldnothave to face this impossiblechoice—barringpsychiatric

patients from their facilities thus riskingconsequencesunderthe civil rights laws,

or admittingproperlycertifiedpsychiatricpatientsat the riskof criminal

prosecutionfor healthcarefraud.

judgment mustbe reversedbecausethere was insufficientevidenceon these

charges as a matterof law.Severalguidingprinciplesmandatethis result.


Indeed,Cifu’s opinionthat psychiatricpatientsshouldnot be allowedinto

B. There was no proof of money-laundering.

The money-launderingconvictions and related sentence and forfeiture

First,because the governmentchargedonly “concealmentmoney-

laundering”under18 U.S.C.§ 1956(a)(1)(B)(i),it hadthe burden—a“substantial”

49

burden—ofprovingthe receiptandconcealmentof illegalmoneys.See United

States v. Majors,196F.3d1206,1213(11thCir.1999)(“evidenceof concealment

must be substantial”);UnitedStates v.Blankenship,382 F.3d1110,1130-31(11th

Cir.2004).Second,transactionsthat are for personalexpensesare not actionable

underthe concealmentmoney-launderingstatutebecause§ 1956(a)(1)(B)(i)is “not

a spendingstatute.”Majors,196 F.3dat 1213.Third,transactionsthat are one and

the same as the initial illegalconductby definitionare not money-laundering.

Majors,196 F.3dat 1212;UnitedStates v.Christo,129 F.3d578,580 (11thCir.

1997).

actionableconcealmentmoney-launderinghere and thus Esformesis entitledto an

acquittalon thosecounts.The money-launderingcharges are very specific,set out

in Counts 16-30of the third supersedingindictment.Count16incorporatesby

referencethe generalallegationsof ¶¶ 1-46—whichbasicallyjust identify

Esformes’companiesandcertificationsof compliancewithall Medicarelaws,

regulations,and programinstructions—andalso the allegationsof Counts 17-30,

which includea helpfulchart specifyingwhichparticulartransactionsthe

governmentclaims give rise to the money-launderingcharges.DE#869:27-30.The

pertinenttransactionsare those listedin the chart relatingto Counts18-21,25-26,


The operativeindictment,however,shows on its face that there is no

27-28,and 30—as Counts 17,24,and 29 were withdrawnand there was no

50

convictionon Counts 22 and 23.Andthese transactionsare easilysortedinto three

categories:(1)checks paidby Esformesto a Delgadoentity,DiversifiedMedical

Group,which also were allegedlythe kickbacksidentifiedin Counts 10-13(Counts

18-21);(2)a check paidby a Delgadoentity,PreferredProvidersGroup,on

Esformes’behalf to a femalecompanionand anotherto a basketballcoach (Counts

25-26);and (3)paymentsfromEsformes’accounts for personalexpensesrelating

to a car,basketballcoach andhouseholdexpenses(Counts27-28,30; see also

DE#1422:164-70;DE#1430:164-65).

First,Esformesneverconcealedhis receiptof Medicaredollars and the

governmenthas noproofthat any dollars were illegalmonies.BecauseEsformes

nevertried to hide wherehis funds came from—andthe governmentalways knew

that his facilitieswere receivingthese funds as Medicarepayments—therewas no

concealmentas neededto convict under§ 1956.See Blankenship,382 F.3dat

1128-29;UnitedStates v. Willey,57 F.3d1374,1388(5th Cir.1995).

Petron.ButPetron’scharts and testimony show nothingother than the transferof

funds openlyreceivedby Esformes’facilities as Medicarepaymentsto other

Esformesaccountsas neededto cover expenses.See DE#1419:276 (“Noone is


These money-launderingcounts fail as a matter of lawfor severalreasons.

The government’sproofreliedon the testimonyof its “summarywitness,”

denyingthe money came fromMedicare”);DE#1419:180(“Ihave noopinionon

51

what shouldhave been paid.”).Andmovingfunds from one of the defendant’s

bank accounts to anotheris not money-launderingas a matterof law.Blankenship,

382 F.3dat 1128;see also DE#1263(forfeitureverdict formlistingvarious bank

accountsbearingEsformes’name).

laundering.Counts 18-21and 25-26fail as a matterof lawbecausethe paymentsto

or fromthe Delgadoentity are the same transactionsallegedto constitutethe

underlyingillegalactivity—thekickbacksallegedinCounts 8-13.See Christo,129

F.3dat 580-81(reversingmoney-launderingconvictionbecausethere was no

separatesubsequentconcealment).Andthe remainingpaymentswere for personal

expenses that are not actionableas a matterof law; indeed,some post-datethe end

of the allegedkickbackscheme.DE#1408:51,93,121,135.See Blankenship,383

F.3dat 1130(reversingmoney-launderingconvictionbecause“[i]f transactionsare

engagedin for presentpersonalbenefit.. . they do not violatethe money-

launderingstatute.”)(internalcitationsomitted);see also UnitedStates v. Dobbs,

63 F.3d391,397 (5thCir.1995)(same).

must be reversed,along with the $38 millionmoneyforfeiturethat is tied

exclusivelyto the money-launderingcounts.As inBlankenship,“[t]his seems to be


Evenwithout those shortcomings,there still is insufficientproofof money

Accordingly,Esformes’money-launderingconvictionsandrelatedsentence

a simple case of governmentoverreaching.”382 F.3dat 1131.

52

jury’s forfeitureverdict.The ten money-launderingtransactionscharged in the

indictmentinvolvedonly about$117,000,yet the governmentaskedthe jury to

subjectEsformesto a $38-millionforfeiture,based entirely on the analysisof a

summarywitness,Mr.Petron.The jury refusedto do so,andfor good reason.

laundering.DE#1421:173.Hetestifiedthat he used“the lowestintermediate

balancerule” (LIBR),and he calculatedthe total amountreceivedby Esformes

was $38 million.DE#1421:229.But,as Petronconceded,that does not trace these

funds to money-launderingactivities;he made noeffort to connecta single alleged

money-launderingtransactionto a patient treatment,bill,or resultingloss.During

the forfeiturehearing, Petronexplained,“Iwouldn’tclassify Exhibit1B as a

tracing.I would just classify it as a summaryof accounts received.” DE#1437:73.

Inother words,Petron’stestimonyis just a big“sowhat.”

beyondthe competenceof a summarywitness and on the merits,becausecourts

have rejectedit as a reliableway to prove the flow of moniesbetweenaccounts.

See,e.g.,In re MJK Clearing,Inc.,371F.3d397,403 (8thCir.2004); Connecticut


C. The forfeiture judgment conflicts with the jury verdict.

The forfeiture judgment is untenable for another reason—it overrides the

Petrondisavowed—andwas notqualifiedto give—anopinionon money-

Moreover,EsformesdiscreditedPetron’saccountingmethodologybothas

GeneralLife Ins.Co.v. UniversalIns.Co.,838 F.2d612,619-20 (1stCir.1988).

53

And the jury obviouslydidnot credithis work becauseit did not findany Medicare

moniescould be tracedto any of Esformes’bankaccounts,personalitems,or real

estateholdings.DE#1263:1-8,17-19.It found forfeiturewith respect to only a

fractionof Esformes’business interestslistedon the verdict form.DE#1263:8-17.

See Goodgamev. AmericanCast IronPipe Co.,75 F.3d1516,1520(11thCir.

1996).Evenwhen a factualissue is subject to sequentialjury andjudicial

determinations,the jury’s determinations“are bindingon ...the trialcourt.” Brown

v. AlabamaDept.of Transportation,597 F.3d1160,1184 (11thCir.2010).

Rulingthat Esformesmust forfeit everyMedicaredollar receivedconflictswith the

court’sownfinding that 99%of the Medicarereceiptswere legitimate.Further,

Petron,who concededhis work showedno connectionto money-laundering,did

not providea basis for overturningthe jury’s findings.

jury determinethe forfeiturequestion.Rule31(e)creates “a statutoryright to have

the amountof propertysubjectto forfeituredeterminedby a jury.” UnitedStates v.

Gilbert,244 F.3d888,916 (11thCir.2001).Under establishedcanons of

construction;the rule on judicial forfeiturecannot renderthe jury forfeiturerule


Itwas a violationof the jury trial rightto disregarda jury’s findings of fact.

Here,the trialcourt had no factualbasis for overridingthe jury verdict.

Indeed,Esformeshadboth a rule-basedand a constitutionalrightto have the

mere surplusage.See,e.g.,Duncanv. Walker,533U.S.167,174(2001).

54

Librettiv. UnitedStates,516 U.S.29,49 (1995)—recentSupremeCourtauthority

indicatesthat juries playan essentialrole insentencing,overrulingthe very case

reliedupon inLibrettito concludethat there is no such a right in criminal

forfeitures.See UnitedStates v. Haymond,139 S.Ct.2369,2376,2380 (2019)

(Gorsuch,J.) (notingthat McMillanv.Pennsylvania,477 U.S79 (1986)(which

Librettireliedon),has since been “expresslyoverruled,”andstating that “juries in

our constitutionalorder exercisesupervisoryauthorityover the judicial functionby

limitingthe judge’s powerto punish”).Inother words,takingforfeituretracing

from the jury violatesthe SixthAmendment.

invalidlybased uponthe prior judicialprecedentdisclaiminga governmenttracing

burden,and even its drafters declinedto endorse this precedent,only providinga

procedurefor thosecourts that haddone so.2000Adv.Comm.Notes Rule32.2

(“TheCommitteetakes no positionon the correctnessof those rulings.”).

Forfeituremoneyjudgmentswere createdby judges in the 1980s to relieve the

governmentof tracing incriminalforfeiturecases under the mistaken

understandingthat tracing was not requiredbecauseof the inpersonamnatureof

criminalforfeitures. See UnitedStatesv.Conner,752 F.2d566,577 (11thCir.


RegardingEsformes’constitutionalright—despitedicta to the contraryin

Moreover,the judicialforfeiturerule,Fed.R.Crim.P.32.2(a),appears to be

1985).But in a trilogyof cases over the last decade,the SupremeCourt has

55

reaffirmedthe governmentdoes,in fact,have a propertytracing burdenin

forfeiturecases.See Honeycutt,137 S.Ct.at 1633(citingKaleyv. UnitedStates,

571U.S.320,324 (2014));Luis v. UnitedStates,136S.Ct.1083,1095(2017)

(“the lawhas tracing rulesthat help courts implementthe kindof distinctionwe

require in this case”);accord,UnitedStates v. Ayika,873 F.3d460,472 (5thCir.

2016)(citingcases);cf.UnitedStates v. Elbeblawy,899F.3d925,940 (11thCir.

2018)(findingpost-Honeycuttjudicialforfeitureinsome circumstances).

See Rule32.2(b)(5).Esformesrespectfullysubmits therefore,that the Courtshould

considerthis issueen banc if it does not rejectthe judicialforfeiturein this case on

other grounds.See UnitedStates v. Waked Hatum,2020WL 4590542(11thCir.

Aug.11,2020).Indeed,havingboth a jury forfeitureand a judicialforfeiturein the

same case is an impermissibledouble jeopardyviolationunauthorizedby statute,

UnitedStates v. Bobb,577 F.3d1366,1317(11thCir.2009).Andthis $38 million

forfeiturejudgment also is an excessivefine,consideringthat it is 190times the

amountof moneythat was supposedlylaundered.See Alexanderv. UnitedStates,

509 U.S.544 (2017)(criminalforfeituresconstitutepunishment);see also United

States v. Bajakajian,524 U.S.321,339 (1998)(holdingthat a civilforfeiturethat


There is no reasonfor judicialforfeiturewhentracingis submittedto a jury.

was 30 times the amount of moneyat issue violatedthe EighthAmendment).

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forfeiturerulings,andremandwith instructionsfor an acquittal,dismissalof the

indictment,a newtrial,or at the very least a resentencing.

CONCLUSION

The Court should vacate Esformes’ convictions, reverse the restitution and

September 4, 2020

/s/ Laurie Webb DanielLaurie Webb DanielNicholas BoydHOLLAND & KNIGHT LLP1180 West Peachtree Street NWSuite 1800Atlanta, Georgia 30309404-817-8533

[email protected]@hklaw.com


57

Howard Srebnick

Jackie Perczek

BLACK,SREBNICK,

KORNSPAN& STUMPF,P.A.

201S. Biscayne Boulevard,Ste.1300

Miami,FL 33131

305-371-6421

[email protected]

[email protected]

Attorneys for Defendant-Appellant

PhilipEsformes

32(a)(7)(B)becauseit contains12,974words,excludingthe parts of the brief

exemptedby Fed.R.App.P.32(f).

32(a)(5)andthe type stylerequirementsof Fed.R.App.P.32(a)(6)becauseit has

been preparedin a proportionallyspaced typeface usingTimes New Roman14

pointfont.

1. This briefcomplieswith the type-volumelimitationof Fed.R.App.P.

2. This briefcomplieswith the typefacerequirementsof Fed.R.App.P.

September4,2020


STATEMENT OF COMPLIANCE

/s/ LaurieWebb Daniel

LaurieWebb Daniel

briefwith the Clerk of Courtusing the AppellateCM/ECFsystemandserved

copies of such filings via e-mail and first-classmailon the followingattorneysof

recordwho representAppellee/Defendantthe UnitedStates of America:

CERTIFICATE OF SERVICE

I hereby certify that on September 4, 2020, I filed a copy of the foregoing


Emily M.Smachetti

U.S.Attorney Service- Southern Florida

99 NE 4th Street,5th Floor

Miami,FL 33132-2111

Jeremy Raymond Sanders

U.S.Department of Justice

Criminal Division,Fraud Section

1400 New York Ave. NW,FL 4

Washington, DC 20005-2107

/s/ LaurieWebb Daniel

LaurieWebb Daniel

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