Posts in category: Blog

In an upside-down world where prosecutorial recommendations for Draconian “low end” Guidelines sentences have become acceptable outcomes in many districts, it was encouraging when the U.S. district court in Pensacola Florida granted a 54 month downward variance from a 78 month “low end” sentence request from the government. What was even more encouraging was that the court imposed that sentence after the client had exercised his Sixth Amendment right to trial by jury.

The client was an owner of a compounding pharmacy in Pensacola who had recently begun the pharmacy. A marketer with an impressive history in medical device sales and with established relationships with a cadre of highly regarded surgeons had approached the client about marketing the pharmacy’s specialty compounded medications to those surgeons. Evidence at trial revealed that, prior to ever meeting the client, the marketer had enlisted the physician assistant at one of the surgeon’s offices to forge the surgeon’s signature on prescriptions for compounded medications that were dispended by a separate pharmacy outside of Pensacola. Evidence at trial showed that marketer also paid the physician assistant kickbacks for forging those prescriptions and that the scheme continued at the client’s pharmacy. Nonetheless, the government presented no evidence that the client had any knowledge of the forged prescriptions or that the client had any knowledge that the marketer was paying the physician assistant kickbacks. Instead, at trial the governments theory of the healthcare fraud was that our client, through his pharmacy, dispensed compounded medications even though he knew that the surgeon had not physically seen these patients, and therefore, any compounded medications ordered by that physician were derived from an “illegitimate doctor patient relationship” which constituted participation in the previously initiated health care fraud conspiracy. Unfortunately (although, respectfully), on this novel theory, the jury rendered verdicts of guilty.

Despite the verdict, at sentencing, the court varied downward significantly. Among other reasons, the court concluded that the client was not a participant in the forged prescriptions component of the scheme and that there was no evidence that the client (even as the owner of the pharmacy) recruited anyone else into the scheme. Further, the court emphasized that the pharmacy continued a legitimate business and dispensed thousands of valid prescriptions to patients during the period of the charged conspiracy and for several years, long after the conspiracy ended. And, the court found that the conduct for which the client was convicted constituted aberrant conduct committed by an otherwise law-abiding citizen. After hearing testimony from the CPA for the pharmacy and its related entities, the court also noted that the client’s personal gain from the convicted conduct paled in comparison to the enormous loss amount that the PSI had attributed to the client at sentencing. Finally, the court found that the client’s character, history of good deeds, generosity, and civic contributions supported a variance.

There are at least two significant takeaways from the result in this case. First, notwithstanding the guilty verdict, this is the rare case where the client (in our view) would have potentially received a much higher sentence had he not proceeded to trial and had simply pled guilty. The trial and the sentencing were opportunities to vigorously represent the client, to expose the weaknesses in the government’s theory of the case, and to place each of the relevant facts (not just what the PSI says at a stipulated hearing) before the jury and the judge. Second, where applicable, in fraud cases, it is incumbent upon attorneys to underscore the substantial discrepancies between the loss amount and a client’s gain. To do so, attorneys should seriously consider introducing a CPA or other financial professional familiar with the client’s books and records.

The client was represented at trial by the Firm and all-star Pensacola attorney John Beroset. This was the second time in less than 6 months that the Firm and John Beroset achieved what we believe were favorable results for our clients.

The Firm, in coordination with attorney John Beroset, recently obtained an official declination of prosecution in an investigation into government contractor fraud related to contracts with the Air Force.

The government contract fraud investigation was focused on, more broadly, rooting out fraud perpetrated by contractors conducting business with the Air Force. In this instance, the client’s contract contemplated the performance of services, with the assistance of a very capable sub-contractor at the Air Force base following the devastation caused by Hurricane Michael in the Panhandle.

After the contract was performed and completed, the client was approached by law enforcement twice in connection with the government contractor fraud investigation, including by special agents from the Air Force and the Small Business Administration (SBA). And, when they did, the client agreed to submit to lengthy interviews — without an attorney — with the federal agents related to the government contractor fraud investigation.

At a certain point, a felony charge seemed unavoidable.

Nonetheless, after the client retained the Firm and Mr. Beroset, and after coordinating with counsel for the sub-contractor and submitting our version of the events including the salient facts and the relevant legal authorities to the prosecutor, the government took the unusual (sadly) and eminently reasonable step of deciding not to move forward with any recommendation for criminal prosecution.

The Firm regularly represents corporate executives, health care professionals, contractors, and businesses ensnared in fraud investigations.

Recently, the Feldman Firm’s Peru bribery case was mentioned in the  Global Investigations Review article GIR – Tensions rise over hiatus in case linked to Odebrecht investigation . The article focuses on the Firm’s representation of certain Peruvian nationals in a forfeiture action related to the global Odebrecht investigation. The complaint in that case, which is premised on foreign bribery violations, can be found here.

As detailed in the article, Mr. Feldman’s clients have been the subject of a seizure warrant, and now a civil forfeiture action, since 2017. Their assets were seized in 2017 in the Middle District of Florida. Almost two years later, in early 2019, the Government then filed a civil forfeiture complaint in the Eastern District of New York where the Odebrecht case was filed. Within weeks, the Firm filed several pre-trial motions. The Government then moved to stay the entire proceeding based on a related criminal investigation. The stay has been in effect since March of 2019. A year later, the Firm moved to lift the stay. The article summarizes the recent litigation surrounding the Firm’s efforts to lift the stay of the forfeiture action.

The Firm has substantial experience in forfeiture actions and the Firm has experience representing foreign nationals, especially foreign nationals in Brazil and Peru, in matters related to foreign or domestic bribery. Many of these investigations focus on the flow of funds between or through transnational accounts. The Firm has also witnessed an uptick in the use of forfeiture –instead of criminal prosecution — to seize assets in connection with foreign bribery investigations.

In the Firm’s view. the procedural protections related to forfeiture, especially civil forfeiture, should be reconsidered by the U.S. Supreme Court. The Firm looks forward to continuing to vigorously represent persons whose assets are seized by the government whether it be cash, a bank account, a brokerage account, or other assets, such as stocks or bonds.

The college bribery prosecution which has made splashy headlines now for several years and  the college bribery prosecution likely has caused more than a few uncomfortable moments between relatives or friends when asked “do you think they should be prosecuted” has just thrown us a 12 to 6 curve ball.

Recently, the defense filed motions to dismiss the indictment in the college bribery prosecution for government misconduct. More specifically, the motion alleges that, based on notes taken by Singer contemporaneous with meetings with the FBI and prosecutors, the FBI handlers of the lead informant, Singer, coerced or pressured Singer into lying on phone calls with the defendants about the nature of the payments (for example, were the payments going to be made to the college or to the coach himself). The defendants’ understanding of the nature of those payments, to whom they were made, and the intended purpose of the payments, are at the core of the prosecution’s college bribery and wire fraud allegations. In a very recent Order from Judge Horton, the judge took these allegations in Singer’s notes very seriously and entered an order requiring the government to file a response to what he considered “very disturbing.

The allegations of misconduct in the college bribery prosecution, if true, are significant for several reasons.

First, if Singer told the FBI and the prosecutors that Singer advised his clients to make donations to the program, and not to him personally, then there was no conduct which could be considered bribery prior to the use of Singer as an informant. Such conversations and any notes from proffers with the Government that included this information – that Singer had told the FBI that his clients’ understanding was that the payments were donations to collegiate programs — should have been disclosed to the defense as part of their obligations under Brady at the commencement of the case, not years later.

There is an interesting legal issue here that was not fully briefed because Singer’s attorney voluntarily produced his notes. If Singer had taken the notes which were included in the defense motion at the direction and on the advice of counsel, then the notes at a minimum deserve work product and attorney client privilege protection. Nonetheless, if those same noted – as appears to be the case –have the potential to exonerate, exculpate, or significantly undermine part of the government’s case then those notes should be considered Brady information and presumably, in this author’s view, the constitutional status of Brady should trump the attorney client protections guarding the sanctity of Singers’ notes.

Second, if Singer had initially told his clients one thing – the payments are donations to the program – but then, only after government intervention and script writing, had attempted to engage his clients in illegal conduct, then there is an open question as to whether this constitutes entrapment and whether the defense has a bona-fide entrapment defense because, under this scenario, the client is not predisposed to committing any illegal activity. To the contrary, the client has in their mind only engaged in legal activities. How many calls did Singer make to a specific client requesting that he or she engage in illegal conduct, what their response was, etc. How much pressure did the Government apply via Singer?

Third, assume the misconduct motion and the entrapment defense are out- the judge isn’t dismissing this case and he isn’t giving an entrapment instruction to the jury – well how about Singer? How can the Government put on their case and prove it beyond a reasonable doubt with the cross-examination material that the defense will now wield against Singer? Will they even call Singer? Singer made “controlled calls” to the defendants which means at least 1 agent was contemporaneously listening to and recording the calls with the defendant. In this scenario, the government could call the agent to testify as to a specific conversation and the government could introduce the transcripts of Singer through the agent. But, even if they tried that, any jury should immediately begin to question the credibility of this prosecution. Further, the defense could take advantage of Federal Rule of Evidence 806 since all of Singer’s statements (even if he is not there) are out of court statements that can be used. Indeed, under 806, Singer’s credibility may be attacked, and then supported, by any evidence that would be admissible for those purposes if Singer had testified as a witness. The court may admit evidence of the Singer’s inconsistent statement or conduct, regardless of when it occurred or whether Singer had an opportunity to explain or deny it.

Should be interesting to see how all of this develops. Stay tuned.   The Firm represents persons charged with or under investigation with federal crimes including federal bribery offenses. The Firm however has never represented anyone charged with federal bribery or wire fraud related to supposedly cheating on their SAT’s or paying a coach a fake donation to be admitted to a specific college. Nor does the Firm believe many, if any, cases like this not involving celebrities will surface before grand juries to consider and convert into indictments.