Laurie Webb Daniel
Nicholas Boyd
HOLLAND& KNIGHTLLP
1180West PeachtreeStreet NW
Suite 1800
Atlanta,GA 30309
404-817-8533
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
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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.
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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.
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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
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Signatureon NextPage
C-4of 5
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/s/ Laurie Webb Daniel
Laurie Webb Daniel
Nicholas Boyd
HOLLAND& KNIGHTLLP
1180 West Peachtree Street NW
Suite 1800
Atlanta,Georgia 30309
404-817-8533
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
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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
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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
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Oralargumentwouldaid the Court inits resolutionof all these issues.
iii
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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
iv
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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
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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
vii
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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
viii
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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
ix
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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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Page:17of 78
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
xi
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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
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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
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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.
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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
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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
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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
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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
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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
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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.
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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
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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-
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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
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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
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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,
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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
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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
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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
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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.
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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
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“[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
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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
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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
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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
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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
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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
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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
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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
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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
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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.”).
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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
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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
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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.”);
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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
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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).
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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
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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
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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
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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.
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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
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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
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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.”
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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”).
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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.
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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.
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“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
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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.
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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;
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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
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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
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InMedina,there was no evidencethat any treatmentwas medically
Likethe loss-basedsentencecalculation,the $5-millionrestitutionorder in
documentationof clinical judgment).
48
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.
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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,
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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
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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
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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
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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
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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.
Case: 19-14874 Date Filed:09/04/2020 Page: 74 of 78
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
Case: 19-14874 Date Filed:09/04/2020 Page: 75 of 78
There is no reasonfor judicialforfeiturewhentracingis submittedto a jury.
was 30 times the amount of moneyat issue violatedthe EighthAmendment).
56
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
Case: 19-14874 Date Filed:09/04/2020 Page: 76 of 78
57
Howard Srebnick
Jackie Perczek
BLACK,SREBNICK,
KORNSPAN& STUMPF,P.A.
201S. Biscayne Boulevard,Ste.1300
Miami,FL 33131
305-371-6421
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
Case: 19-14874 Date Filed:09/04/2020 Page: 77 of 78
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
Case: 19-14874 Date Filed:09/04/2020 Page: 78 of 78
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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