United States v. O'Brien
U.S. Court of Appeals for the First Circuit
United States v. O'Brien
Opinion
USCA1 Opinion
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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No. 93-1832
UNITED STATES OF AMERICA,
Appellee,
v.
KEVIN F. O'BRIEN,
Defendant, Appellant.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Richard L. Williams,* Senior U.S. District Judge]
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Before
Selya, Cyr and Boudin, Circuit Judges.
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Alan Chapman, with whom Chapman & Chapman was on brief, for
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appellant.
Timothy Q. Feeley, Assistant United States Attorney, with
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whom A. John Pappalardo, United States Attorney, was on brief,
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for the United States.
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February 7, 1994
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*Of the Eastern District of Virginia, sitting by designation.
SELYA, Circuit Judge. A jury convicted defendant-
SELYA, Circuit Judge.
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appellant Kevin F. O'Brien on two hundred ninety counts of
making, or causing to be made, false statements related to
applications for Medicare benefits, and one hundred thirty counts
of converting federal funds to his own behoof.1 After combing
the record, we uphold the verdict.
I. BACKGROUND
I. BACKGROUND
We examine the relevant events as a whole, marshalling
the evidence in the light most congenial to the prosecution's
theory of the case. See United States v. Ortiz, 966 F.2d 707,
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711 (1st Cir. 1992), cert. denied, 113 S. Ct. 1005 (1993); United
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States v. Maraj, 947 F.2d 520, 522 (1st Cir. 1991).
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Appellant was the president and sole shareholder of
O'Brien Ambulance, Inc. and its lineal descendant, O'Brien
Ambulance, Ltd.2 As president of the corporation, appellant
served as its chief executive and principal operating officer.
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1The statutes of conviction can be succinctly summarized.
One such statute, now repealed and replaced, at the time provided
in pertinent part that any Medicare vendor who "knowingly and
willfully makes or causes to be made any false statement or
representation of a material fact in any application for any
benefit or payment [under the Medicare program]" thereby commits
a felony. 42 U.S.C. 1395nn (1987) (repealed). A second
statute, still in force, provides in pertinent part that whoever
"knowingly converts to his own use or the use of another . . .
any voucher, money, or thing of value of the United States or of
any department or agency thereof" is guilty of a felony. 18
U.S.C. 641 (1988). The indictment with which we are concerned
invokes these statutes and also charges appellant as an aider and
abettor, see 18 U.S.C. 2 (1988).
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2Notwithstanding the shifting nomenclature, the entity
remained the same. Consequently, we refer to the firm,
regardless of which appellation claimed preeminence at any given
time, as "the corporation."
2
He, and he alone, possessed authority to sign company checks
during the period covered by the instant indictment, i.e., from
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March to August of 1987. During that period, appellant also
acted as the corporation's sole director.
The corporation ran a licensed ambulance service. It
regularly billed Medicare for ambulance services provided to
Medicare recipients, with the result that the federal Medicare
program accounted for a significant portion of corporate
revenues. Many of the corporation's payment requests sought
reimbursement for the transportation of Medicare recipients to
and from approved kidney dialysis treatments. During the period
covered by the indictment, the corporation, in order to maximize
the remuneration associated with such services, regularly
represented various Medicare recipients as bedridden when, in
fact, they were ambulatory; and it also regularly represented
trips for dialysis treatments to have been undertaken by
ambulance when, in fact, the patients had been transported by van
or wheelchair car.3 Corporate records were falsified to
camouflage these untruths. Subsequent investigation uncovered
the scheme, revealing that, in numerous instances, the
corporation's billing practices bore little relation to the
reality of events, and that the corporation had bilked the
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3Carriage by ambulance costs substantially more than
carriage by van or wheelchair car. Thus, the Medicare rules
restricted reimbursable ambulance transportation to cases
involving approved treatments for non-ambulatory patients, and,
even then, only if no alternate means of transportation could be
employed without endangering the patient's condition.
3
government out of well over $300,000.
Based on this, and other, evidence including evidence
that, in late 1986 and early 1987, the corporation had been
teetering on the brink of insolvency a federal grand jury
returned an indictment against appellant.4 Evidence presented
at trial showed that, during the six-month period in question,
the corporation routinely transported ambulatory dialysis
patients in vans or wheelchair cars (often as a group), but
nonetheless misrepresented these services in applying for
Medicare stipends, saying that they related to individualized
transportation of non-ambulatory patients via ambulance.
Anticipating appellant's eventual line of defense, the
government presented both live testimony and corporate records
(in the form, inter alia, of run slips, run logbooks, and
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documents related to Medicare benefit applications) illustrating
the pervasiveness of the criminal conduct. The government
showed, through the testimony of corporate employees (some of
whom were appellant's kith and kin), that appellant, in his
management role, exercised substantial control over the day-to-
day operations of the corporation; that, on occasion, he filled
in for the dispatcher and assumed other "line" responsibilities;
and that, in late 1986, the corporation altered its recordkeeping
practices in two significant respects, the net effect of which
was to make detection of the forthcoming fraud more difficult.
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4The indictment was later superseded. The final version of
the indictment contained some 435 counts.
4
Finally, the prosecution presented an expert witness who
identified appellant's handwriting in connection with ambulance
logbook entries, some of which involved the Medicare recipients
at issue.
As the prosecution had anticipated, appellant offered
little contradiction to charges that the corporation made
fraudulent representations in seeking Medicare payments and that
it unlawfully converted federal funds. Instead, appellant
pitched his defense on a relatively narrow ground, denying that
he, himself, knew of, or could be held criminally accountable
for, the corporation's peccadilloes.
At the close of the evidence, appellant moved for
judgment of acquittal, Fed. R. Crim. P. 29, principally on this
ground. The district court rejected the motion. The jury
convicted appellant on four hundred twenty counts (the other
fifteen counts in the superseding indictment having been dropped
before trial). This proceeding followed.
II. THE MERITS
II. THE MERITS
This is a rifle-shot appeal. Appellant advances only a
single assignment of error, claiming insufficiency of the
evidence. In reality, he aims his fire at an even smaller
target, for he effectively concedes that the government proved
the commission of the crimes. Refined to bare essence, then, his
appeal stands or falls on the simple proposition that the
government failed to prove his complicity in the scheme. We
consider his plaint.
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A. Standard of Review.
A. Standard of Review.
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The well-settled standard applicable to sufficiency-of-
the-evidence challenges requires that this court determine
whether, after assaying all the evidence in the light most
amiable to the government, and taking all reasonable inferences
in its favor, a rational factfinder could find, beyond a
reasonable doubt, that the prosecution successfully proved the
essential elements of the crime. See Ortiz, 966 F.2d at 711;
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Maraj, 947 F.2d at 522. In this process, a reviewing court must
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defer all credibility judgments to the jury. See United States
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v. David, 940 F.2d 722, 730 (1st Cir. 1991), cert. denied, 112 S.
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Ct. 2301 (1992); United States v. Echeverri, 982 F.2d 675, 677
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(1st Cir. 1993); United States v. Serrano, 870 F.2d 1, 5 (1st
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Cir. 1989).
Contrary to appellant's insinuation, the criminal law
does not place a special premium on direct evidence. As a
general matter, the prosecution's burden of proof can be
satisfied by either direct or circumstantial evidence, or by any
combination thereof. See Echeverri, 982 F.2d at 677; United
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States v. Victoria-Peguero, 920 F.2d 77, 86-87 (1st Cir.), cert.
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denied, 111 S. Ct. 2053 (1991). As long as the evidence taken in
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its entirety supports a judgment of conviction, it need not rule
out every other reasonable hypothesis of innocence. See
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Victoria-Peguero, 920 F.2d at 86-87.
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B. Discussion.
B. Discussion.
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Appellant submits that the prosecution introduced no
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direct evidence that he, himself, committed fraud, aided or
abetted another's fraud, or induced some third person to commit
fraud. We agree: the government produced nothing in the way of
a confession or any other single piece of evidence that, standing
alone, might irrefutably prove appellant's guilty knowledge. But
a court will not automatically invalidate a conviction merely
because the jury based its finding of scienter, and, hence, its
verdict, on circumstantial evidence alone. Guilty knowledge,
like specific intent, see, e.g., United States v. Desmarais, 938
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F.2d 347, 352 (1st Cir. 1991); United States v. Campa, 679 F.2d
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1006, 1010 (1st Cir. 1982), seldom can be established by direct
evidence. This principle has particular pertinence in respect to
fraud crimes which, by their very nature, often yield little in
the way of direct proof. Unless an accomplice turns, a miscreant
confesses, or a suspect is snared by his own rodomontade,
prosecutions for fraud must routinely be mounted on the basis of
indirect evidence.
This approach to proving guilty knowledge is neither
legally problematic nor even controversial. The law is long
since settled that the prosecution may prove its case without
direct evidence of a defendant's guilty knowledge so long as the
array of circumstantial evidence possesses sufficient persuasive
power. See Maraj, 947 F.2d at 523; United States v. Boylan, 898
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F.2d 230, 242 (1st Cir.), cert. denied, 498 U.S. 849 (1990);
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United States v. Mount, 896 F.2d 612, 615 (1st Cir. 1990); United
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States v. Thornley, 707 F.2d 622, 625 (1st Cir. 1983). Moreover,
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7
"[c]ircumstantial evidence tending to show guilty knowledge need
not compel a finding of such knowledge in order to sustain a
conviction; all that is necessary is that reasonable jurors could
be convinced beyond a reasonable doubt that the defendants had
guilty knowledge." United States v. Flaherty, 668 F.2d 566, 579
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(1st Cir. 1981); accord United States v. Kilcullen, 546 F.2d 435,
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443 (1st Cir. 1976) (collecting cases), cert. denied, 430 U.S.
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906 (1977). In this case, then, the pivotal issue is not whether
there is direct evidence of appellant's guilty knowledge.
Rather, the proper query hinges on whether a rational factfinder
reasonably could infer appellant's guilty knowledge and, hence,
his participation in the charged crimes, from the whole of the
evidence, bearing in mind the presumption of innocence and the
government's burden to prove essential facts beyond a reasonable
doubt. We believe this query merits an affirmative answer.
Here, the government proved the appellant held the
reins of corporate control and had hands-on involvement in the
operation of the business. There was testimony, for example,
that appellant, himself, spent long hours at the corporate
headquarters, ran the company, conducted management and staff
meetings, reviewed run logs and weekly schedules of driver
assignments and equipment utilization, sometimes assumed the role
of dispatcher, and enjoyed sole dominion over the corporation's
cash flow. Many of the transportation services described in the
fraudulent billings required special hours for drivers, which a
jury reasonably could infer affected payroll and appellant's
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domain unquestionably included payroll.
There was more. Appellant's name invariably appeared
on Medicare claim forms. He was intimately familiar with the
method and manner in which the corporate records were kept, and
those records were maintained under his ultimate control. The
jury had before it the handwriting evidence, chronicling
appellant's authorship of some fraudulent logbook entries, and
the evidence of abrupt changes in recordkeeping practices,
conducive to covering up the scheme. Finally, the corporation
was in dire financial straits, a fact which made more likely the
owner's involvement in the illegal enterprise through which the
corporation remained afloat. See United States v. McMahon, 938
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F.2d 1501, 1507 (1st Cir. 1991).
Appellant invites us to consider each of these pieces
of evidence in isolation; and he claims that, taken one by one,
each piece can be explained away in some innocent fashion. We
decline the invitation. The evidence in a criminal case should
be viewed in its totality, see, e.g., United States v. Bourjaily,
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483 U.S. 171, 179-80 (1987), for evidence particularly
circumstantial evidence often has an exponential effect. After
all, "[t]he sum of an evidentiary presentation may well be
greater than its constituent parts." Ortiz, 966 F.2d at 711. A
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beehive near a country lane tells a stranger very little about
the use to which the property is devoted. Yet, if there are
eighty or ninety beehives in a shed, who would doubt that he had
stumbled upon an apiary?
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Appellant also says that some witnesses contradicted
the inference hawked by the government, offering testimony that
tended to show appellant distanced himself from the day-to-day
operation of the ambulance service, confined his labors to sales
and payroll, delegated much responsibility, and attended the
workplace only sporadically. This argument lacks force, for it
asks us to usurp the jury's province. See Maraj, 947 F.2d at
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523; David, 940 F.2d at 730. "[W]hen the jury is presented with
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conflicting factual statements, the resolution of the conflict,
and any concomitant credibility calls, are uniquely within the
jury's province." Ortiz, 966 F.2d at 713; accord United States
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v. Rothrock, 806 F.2d 318, 321 (1st Cir. 1986). Therefore, a
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jury can freely choose to credit particular testimony while
discounting other testimony that arguably points in a different
direction. See United States v. Alvarez, 987 F.2d 77, 83 (1st
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Cir.), cert. denied, 114 S. Ct. 147 (1993).
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We note, too, that the element of guilty knowledge in a
criminal case may be supplied by inferences drawn from evidence
suggesting that a defendant deliberately blinded himself to what
would otherwise have been obvious. See, e.g., United States v.
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Richardson, ___ F.3d ___, ___ (1st Cir. 1994) [No. 92-2307, slip
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op. at 10-11]; United States v. St. Michael's Credit Union, 880
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F.2d 579, 584-85 (1st Cir. 1989) (collecting cases); United
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States v. Littlefield, 840 F.2d 143, 147 (1st Cir.), cert.
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denied, 488 U.S. 860 (1988); United States v. Picciandra, 788
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F.2d 39, 46 (1st Cir.), cert. denied, 479 U.S. 847 (1986). In
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10
this case, the stage was appropriately set for such an inference:
although appellant claimed a lack of knowledge, the facts, taken
in the light most hospitable to the government, see Ortiz, 966
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F.2d at 711, strongly suggested that, given the widespread nature
of the fraud and the importance to the corporation of the extra
revenues generated by it, only a conscious course of calculated
ignorance could have kept the company president from knowing the
truth. The trial court charged the jury on this principle, the
record supports the instruction, and appellant has not assigned
error to it. In itself, the resultant inference suffices to
validate the finding of guilty knowledge.
We will not paint the lily. Here, there was a
plenitude of evidence from which the jury rationally could have
inferred that appellant was a perpetrator of the crime, not an
innocent bystander. Indeed, when the extensive evidence showing
appellant's involvement in the corporation's day-to-day affairs
is coupled with the pervasiveness of the fraud and appellant's
powerful economic motive, it seems entirely reasonable to
conclude that appellant knew of, and participated in making,
false statements to procure Medicare funds to which the
corporation had no entitlement. This conclusion becomes
compelling when we recall that, in gauging witness credibility
and choosing from among competing inferences, jurors are entitled
to take full advantage of their collective experience and common
sense. See United States v. Vargas, 945 F.2d 426, 429 (1st Cir.
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1991); United States v. Smith, 680 F.2d 255, 260 (1st Cir. 1982),
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11
cert. denied, 459 U.S. 1110 (1983). There are limits to
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coincidence.
III. CONCLUSION
III. CONCLUSION
We need go no further.5 In this instance, the
convergence of several lines of circumstantial evidence formed a
river of proof sufficient to warrant the jury's finding. See
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Victoria-Peguero, 920 F.2d at 86-87. And because the evidence
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need only support the verdict, rather than compel a conviction,
see Echeverri, 982 F.2d at 678; Boylan, 898 F.2d at 243,
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appellant's assignment of error founders. In the last analysis,
courts ought not stubbornly insist that criminal juries disregard
the obvious. See United States v. Ingraham, 832 F.2d 229, 240
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(1st Cir. 1987), cert. denied, 486 U.S. 1009 (1988).
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Affirmed.
Affirmed.
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5Our determination that the evidence supports the verdict on
the "false statement" counts removes any need to consider the
specifics of the case in respect to the 130 counts charging
criminal conversion of public funds. As appellant owned the
corporation, the ill-gotten gains necessarily inured to his
benefit.
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Reference
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