 You're watching FJTN, the federal judicial television network. Two sisters from Pikeville, Tennessee were sentenced to federal prison Friday in order to make restitution of almost $1.14 million to healthcare insurance companies for fraud and money laundering. The SEC, in conjunction with federal law enforcement, continues to uncover more and more in an investigation of penny stock scams. Four people have already been convicted and more indictments are expected. It seems like every day we hear or read about an individual, business or government that has been victimized by a person or group of persons seeking to enrich themselves illegally. Studies have shown that an effect of white collar crime, which runs the gamut from simple embezzlement to complex securities fraud, is to deepen distrust within our society and across the globe. Fraudulent buildings cost Medicare and Medicaid hundreds of thousands of dollars each year. An Edison construction company pleaded guilty in federal court yesterday to paying off employees in exchange for their help in rigging contract bids. The owners of the company also... White collar defendants and offenders range from desperate employees to career swindlers, from individuals to corporations. Each crime and criminal can be more sophisticated than the last and all present significant challenges to the federal judiciary. Hello and welcome to the seventh installment of Special Needs Offenders. Today's program features the challenges and complexities surrounding the identification, investigation and supervision of defendants and offenders involved in complex white collar crime. Past Special Needs Offenders programs focused on the needs of the pretrial services and probation officers who investigate and supervise defendants and offenders. Realizing that good communication among all stakeholders is paramount to effective defendant and offender management. That audience widens today to include the bench, bar, and law enforcement. Yet, like its predecessors, this broadcast is only one of three elements in the Special Needs series. You may already have seen the Special Needs Offenders bulletin that introduces white collar offenders and defendants and provides tips for effective identification, investigation, and supervision. And hopefully your court unit is represented in the center-sponsored online conference, which further probes the issues raised in the bulletin and this two-hour program. Today's broadcast brings together stakeholders throughout the federal criminal justice system. Prosecutors, judges, and defense counsel, not to mention pretrial services and probation officers, openly discuss their roles and perspectives by examining one hypothetical case from pretrial investigation to probation and supervised release. So no matter what role you play in the judicial system, you'll find this edition of Special Needs Offenders engaging, informative, and helpful to your work with white collar crime. Now, let's join our moderator and panel as they discuss the aptly named case of United States v. Slick. A federal grand jury sitting in the Southern District of Good Place has handed down 120-count indictment alleging that several individuals and organizations have engaged in a plan over a five-year period to defraud Medicare. We're concerned with four of the co-defendants. Sandra Slick, Richard Moneymaker, Ready Care Incorporated, otherwise known as RCI, and at Subsidiary, Ready Care Health Services of Good Place Incorporated, otherwise known as RCHS. The two individual co-defendants have been arrested and have already been interviewed by pretrial services. Sandra Slick holds an MBA. She's 50 years old and divorced with two teenage children. Although a permanent legal resident of the U.S., she's a British subject born and raised in the Turks and Caicos Islands in the Caribbean. She was Chief Insurance Administrator for RCHS from 1995 to 2001, where her salary was $110,000 per year. She has assets of $500,000 and liabilities of $250,000. She travels with her children once each year to the Turks and Caicos Islands to visit extended family. Richard Moneymaker also holds an MBA and he's 46 years old, twice divorced, has one child attending a private liberal arts college and unlike Slick, he's a citizen of the United States. Moneymaker was Assistant Insurance Administrator for RCHS from 1995 to 2001, where he earned $90,000 per year. He has assets of $700,000 and liabilities of $300,000. Moneymaker suffers from chronic depression for which he takes medication. Now, as one might expect, the pretrial investigation produced additional information on the individual co-defendants. While Slick has no criminal record, in 1987 Moneymaker was indicted and arrested in the Northern District of Good Place on healthcare fraud charges. At that time, he'd been the sole sales representative for MetaHelp Incorporated, a supplier of durable medical equipment to Medicare recipients. The company, its owner, and three doctors were convicted. Moneymaker cooperated with the government which dismissed the charges against him. Aurora Miranda, you are our pretrial services officer in this case. In reality, how likely is it that you're going to get a lot of information from the cell block interview of Moneymaker and Slick? Well, Mark, it would depend what time the case agent would bring the defendant into the cell block. Hopefully, we would have at least a couple of hours to interview the defendant. Typically, with white collar defendants, they're very cooperative, they're very polite, but somewhat guarded. I think we would get a lot of personal information from them. They would let us know about their residents, family members, what their community ties are like. But it's pretty unlikely that we're going to get much financial information at this point. I wanted to ask you as a follow-up, what's the likelihood that defendants like Slick and Moneymaker would already be represented by counsel at this point? Most likely, they have already spoken to an attorney at some point. A lot of times, if they have, the attorney will be present with them at the cell block interview just to be sure that no boundaries are crossed. All right, so it is likely in this kind of case. Let me now turn to Barry Boss, our local criminal defense attorney here who's been called onto the scene. Barry, how are you going to advise either of these two at this early stage? Well, Mark, it's going to depend somewhat on whether we've spoken to the client before and not, of course. In this case, each both Moneymaker and Slick would have separate counsel, as would probably the cooperation. Good point. So with regard to assume that we had Moneymaker, hopefully we've been retained already, rule number one in criminal defense work. And then, assuming we had... Speaking of Moneymaker. No pun intended. We would have been sure to have long discussions with him so that we could understand exactly what issues are at stake. The basic goal when you go into pretrial services is we want to be as cooperative as possible. We want to get the client out on some kind of release with a minimal number of conditions. But at the same time, we have to keep our eye on the big picture, which is what's ultimately going to happen when it comes to trial and what's ultimately going to happen at sentencing. And sometimes, unfortunately, the clients are not as sophisticated, despite the fact they may have MBAs, they may be in business, they may be very intelligent, they're not sophisticated in how the system works. And they think, for example, that they just won't disclose some information that pretrial services is asking about because it's never going to come up, it's never going to be relevant, and they think they can perhaps get away with it. And it's our job to make sure that that doesn't happen. And sometimes, for the client's own good, because it's very early in the case, and we don't know, it's better to err on the side of not disclosing information. Because you're trying to strike that balance of enough information to get a favorable release decision, but also looking further down the road toward the trial. Exactly. We want to make sure we don't jeopardize the case. And with regard to the pretrial services officer, it's very, very important to me that we have a working professional relationship. So if Aurora is there, I want a word to know that I want to give her what she needs, and I want to make sure she understands, to the extent I can explain it to her, why we won't go down certain areas. Okay, let me stop you there and go back to Aurora, because Aurora, it's likely now, obviously, that you may not be getting anything beyond some of the most basic information, maybe a little bit more than that. So where are you going to go for the information, and what kind of information are you going to try to get? Well, Mark, pretrial services officers are notorious for being resourceful. They have to be. It's all well and good to get the information from the defendant, but it doesn't mean a whole lot if we don't verify that information and substantiate it for the court. We would go to family members and friends. We would go to employers, talk to them by telephone. We would go to the case agent and the U.S. Attorney. And, of course, databases. Those would be real important in these types of cases. Well, it just so happens, Officer Miranda, that we have our case agent here, Timothy Delaney from the FBI. What kinds of information are you going to want from Tim? Well, I'm going to ask Tim, since he's going to be probably the first person that I talked to, as much as I can about the defendant, what he knows about him, his date of birth, his address, employment information. I also want to know where and how he was arrested. Was there any particular situation that occurred during the arrest? And I'll probably ask him also about the offense. He's obviously one of the most knowledgeable about the offense and what the defendant's culpability is like, the loss of the money, that kind of thing. Agent Delaney, are you going to be able to help out? Yes, certainly. Hopefully, a large-scale investigation like this, we might have served many subpoenas, maybe done a search warrant. We probably have financial records to include bank accounts, investment accounts. It's a publicly traded company, so we've probably gotten SEC filings, corporate documents. They deal with Medicare, so we've probably gotten some of their cost reports to see what they're claiming. And being that the one individual is not a natural-born U.S. citizen, we probably have INS records and maybe some travel documents we could also share. Very good. Well, in the spirit of us all being one big happy family, we also happen to have our resident prosecutor here, Assistant U.S. Attorney Tom Zeno. Tom, how are you going to be able to help Aurora? In any way she wants. You want to know something about the defense? We'll be glad to tell you about it. And we'll add our discussions. Occasionally, we will have had discussions with defense counsel, so we'll have some tentative proposed agreement as to the conditions. We'll have all kinds of opinions that we would like to share with you, and we would be happy to do so. Satisfactory? Yes, I would probably ask you about if there's any other co-defendants involved, how culpable this guy is, what's his role? What was his role in this? How long did this go on? And of course, about the financial loss as well. Yes, and we'd be pleased, wouldn't we, Tim, to provide all this information? I'm sure Barry wouldn't mind. Would you be providing equally as much information to show this process? I love that spirit of togetherness. And Aurora, now you finally feel like this would enable you to have enough information to get a pretrial report to our presiding judge forester here. Yes, that would be a good start. That would enable him to make a comfortable release decision. Yes, I think so. Let me turn now to Tamara Fine, assistant U.S. attorney in the District of Maryland and chief advisor to the flu unit there. Tammy, tell us whether you have any concerns at this early stage, whether you would be involved at this early stage, what some of the trends are, that kind of thing. Well, in most flu units and sort of traditionally, the flu unit wasn't involved until after the conviction, but increasingly in some jurisdictions and in my jurisdiction as well, we're trying to get involved early in the prosecution and sometimes even pre-indictment. In this case, I would have probably been involved given the fact that this is a white collar crime and given the size of the loss. I would be very concerned particularly about Sandra Slick at this point. She has ties abroad, she has families abroad. My concern would be that if her assets are liquid, they are going to be moved offshore as soon as the indictment comes down. And so I would probably be talking to the pretrial services to attempt to get a suggested bond requirement that Sandra Slick, perhaps both of them, not transfer any monies offshore. Now, obviously, this is much more important if the assets are liquid, if it's a house. There's not much chance that that's going to be moved offshore. So your goal here is to just make sure nothing happens to those potential assets. That's absolutely true. I'm focused on the money and the collection potential in the case long-term. Very good. Judge Forrester, presiding judge in the case. What information about Slick and Moneymaker will be most helpful to you in making a release decision that you're comfortable with? Aurora's right. The time available to pretrial is short. And so I would want a pretrial officer first to not think in stereotypes. White collar crime defendants have the capability and some track record for being the most successful fugitives in our system. The second thing I would want is not a cookie-cutter approach. This case is an excellent example. It has edges. It has special features. And so in this case, the officer is going to pretty quickly see that, number one, we've got an amount of loss of $15 million. Where's that money? That's the most important piece, a single piece of information for the officer to give us. The second important thing is an understanding of how easy it is to travel to the Turks and Caicos. Simply taking somebody's passport away is really not any good with the countries that are close to us. So if you follow, we'll be able to tell you, you can get private transportation from West Palm Beach to the Bahamas. Most of the countries that are in our hemisphere let you in with driver's licenses, birth certificates, whatever. And so we need to focus on can we actually do anything to keep her from traveling to the Turks and Caicos? She's got a lot of money. She's got support structure. She knows how to travel. She's an extremely high risk of flight. If money maker resolves the issue of where is the money, where is the loss, the only red flag with him is he's done it before. There are old cases that say that this ought to be able to give the committing magistrate some judgment about a person's respect for the requirements of law. You probably can fashion release terms if the money is there for a man like money maker. Slick is the troublesome one and the focus needs to be on where is the money and what about the travel? Excellent. Let me ask Barry Boss just very briefly whether you have any reactions to anything that's been said thus far? Definitely on the defense that I feel a little outnumbered here. I think first, I'd be very concerned about TAMI being involved with pretrial services because pretrial services we view as an arm of the court and we don't think it's really appropriate for pretrial services to be out doing the government's bidding and the government's looking down the road to their ultimate forfeiture in the case and it would seem to me to be an inappropriate use of pretrial services although I certainly understand why TAMI would want that information. With regard to the judge's position I would certainly want to make sure that the judge understood and would be prepared to present on behalf of Ms. Slick all the reasons why she would not be traveling and those kinds of issues are the kinds of things we want to be proactive about and make sure that if you have concerns of pretrial services thinks well there's a chance this person is going to travel tell us what it is that we could do to assuage your fears because that's what we're there to do and we want to work with you so that we can provide you with that information. That neither Slick nor Money Maker is going to have available the money that is at issue here or certainly not all of it. Okay. I want to move on now to the next part of this segment which deals with the special bond conditions. Based on the information Aurora has obtained from her pretrial investigation do these individuals appear to be situational defendants, career defendants or something in between. I want to take a quick poll here before we move on to that next part of this segment. Let's start with Aurora and then move over to Tom. Mark, I would categorize these two as career defendants. I think one thing that you have to try to keep in mind is what is the motivation behind their actions? With career defendants they're usually very articulate. They're well informed. They control their anger and frustration very well. They tend to cause a lot of harm, financial harm. Their activity seems to be long-lived and they have a very lavish lifestyle. They know the niceness of it and that's why they like it. So it sounds like you're leaning toward the career side of things. Yes. Tom, quickly. Five years, $14 million. That's more than I'm going to make and my career is a public servant. I think they're career offenders. Paula? I would probably agree, although I can't take an official position on behalf of the Commission. Barry Boss? Mark, there's no such thing as career criminals. They're just people who have a lot of situational opportunities. I was thinking about just skipping over you, but... Judge Forrester? They certainly aren't situational offenders and we've all seen people that have a longer criminal history than these do, but I'd put them very close to career. Very good. Stan Pfeiffer? A lot of money. Five years. I do look at Slick as being more of a midway between the situational and career. The moneymaker, I think, is career. Okay. Paul O'Connor? Mr. Moneymaker, his traits are definitely leaning toward the career side with his prior background, prior criminal activity. With Ms. Slick, with the limited facts that we have in this scenario, I'd put her midway. I couldn't say she was strictly situational due to the scope and the longevity of this scheme. Okay. So I'd have to put her in the middle. All right. Tammy, fine. Given his prior history, I think Moneymaker is clearly career. Slick is a little more difficult to classify. As far as we know, this is her first run in with the law, but it is a fairly long-lived scheme. I would probably put her somewhere in the middle a bit closer to the career side. Okay. Ms. Rodriguez? I would classify both defendants as being career criminals. Moneymaker has a prior history, obviously, but in the case of Slick, she's been at it for a while. It's been a complex fraud case, and I would also classify her as a career criminal. And finally, Tim Delaney? Well, I would agree. A health care fraud scheme in particular, there's claim submissions, probably hundreds every day, for five years, thousands and thousands of claims. This wasn't a person walking into a bank with a gun and a stick-up one time. Right. So you're feeling pretty secure that they're both leaning at least toward that career category. Yes. Very good. All right. Now, Aurora puts together her pretrial report. It recommends the following special bond conditions for Slick and Moneymaker. Report to pretrial services as directed. Actively seek employment and provide proof of such to pretrial services. Provide pretrial services access to any requested financial information, including quarterly personal credit reports. No travel outside the Southern District of Good Place unless permitted by the court. In addition, Slick must surrender her passport and not obtain a new one during the proceedings. Moneymaker is to participate in a mental health program as directed by pretrial services. Aurora, tell us why these pretrial bond conditions are justified and why they're the least restrictive. Okay. There doesn't seem to be an element of danger present in this type of offense, or at least not with these two defendants, but there is a huge risk of non-appearance, as the judge mentioned. All of these conditions that you mentioned, Mark, would certainly minimize this risk as much as possible. Okay. Tom, sound reasonable to you? Well, what sounds really reasonable is if they were incarcerated. No way I'd know they'd be there every day of the trial. But I think we have to look at the least restrictive conditions. I would be concerned about having anyone's passport brought into the court and turned in. And I think, as the judge pointed out, we have people who are very fluid here, and I would be looking towards electronic bracelets or something like that. Okay, very good. Barry Boss, reactions? I'd actually be less concerned with electronic bracelets and more concerned with providing pretrial services with the requested financial information, particularly when I hear that the U.S. attorney is, from my perspective, using pretrial services somewhat of a stalking horse for their ultimate case. And so I would be very concerned. I'd ask the judge for some kind of protections if that condition were going to be imposed so that that information could not be shared with the government for purposes of the prosecution. Very good. Judge Forrester? This is a good example of a pre-senate's recommendation that was put together in a cookie cutter fashion. As I said a while ago, taking somebody's passport away if their support structure is in one of our close neighbors is an empty act. Here you've got somebody with dual citizenship. I would certainly look with favor upon a recommendation that they'd be electronically monitored and would allow that and would allow release only if the money or the loss was satisfactorily counted for. As to the point that Barry raised, I think that I would initially, unless he had some law to the country, I would initially take a position that the financial information was essential in questions of flight and I would try to cobble it together in some fashion to require the revelation or something that's truly embarrassing, but on the other hand, try to monitor or require the reporting of any asset transfers, sales, anything like that. I'm sure Barry could think of some novel and creative ways to help me monitor money-changing hands without necessarily making his clients convict themselves. Very good. Barry, we've got about 30 seconds before we go to our questions and answers, folks. If you have any comments or questions, please feel free to line up at the mics. I know we've got a fax coming in as well. Barry, any reactions to anything Judge Forrester has mentioned thus far? Just two points. The first is I don't want anybody to think that I can see that electronic monitoring is appropriate. I think that in this instance, the fact that somebody might flee is not, from our perspective, sufficient to impose a bracelet condition on them because everybody might flee. The question says they shouldn't have any proclivity to it. The fact that they are at risk doesn't mean that they are going to do it, and it seems to me that the statute requires more than that. And certainly, I would respond favorably to the judge's request for some input into how we could satisfy and assuage the court's concerns that these assets aren't going to be used to assist somebody in flight. Tom, briefly, any rebuttal? Yes, I hope we would be able to provide you with the excellent results of Tamara and Timothy's work, and we'd be able to tell the judge where all the assets were. They were being seized at that time with search warrants throughout the country. We have a... Thank you. We've got a fax here from Noreen Dona from the Central District of California. Question is this, any suggestions on how to obtain financial documents from a spouse who is reluctant to give information to the probation officer? Any takers? Aurora? I would say that you need to convey to the spouse the importance of retrieving this information from her that ultimately this information will depend on whether her husband or wife is going to be able to get out and the timely nature of that. So hopefully with that in mind, you might be able to get those documents that you're requesting. Stan Pfeiffer, any reactions? At the... At the trial stage, I think it'd be kind of hard to get some of the documents. You can go into data banks and find out some assets. But in terms of IRS records that I like to use and other documents, come to the precinct stage, I would probably approach the court for a court order to help get those documents. Paul O'Connor, any reactions? Nothing more. I don't know of any legal mechanisms at this point. I know from precinct stage to supervision stage we've resolved to the U.S. attorney's office for subpoenas and what have you for family members' records and what have you. But at the pretrial stage, I think you're in that tender balance at that point. Very good. Let me ask Barry whether you have any reactions to the obtaining of documents from spouses, particularly at the pretrial stage? It's a huge concern, obviously. The thing you have to be very careful about is to what extent are these documents being... simply for the determination of bond or are they being sought to aid in the prosecution and ultimately in the sentencing? And those are very, very different objectives. And if it's just going to be, as the judge said, to assure that they don't have the resources available for flight, then you can come to defense counsel in the first instance and say, what can you do to show us that they don't have the resources for flight and what can you do to assure us that they don't have the resources? I certainly would have huge concerns about giving over any documents at that point. At that point, we feel very much like we are way behind the 8-Ball because the government already has so much information about our clients. We want information coming to us. We don't want to be giving out information if we can help it. Very good. I see we've got another fax here. Let's take a look. This is from Jim Navarro. Except over on the probation side. Why are they considering the amount of losses? Pre-trial services monograph clearly states we are not to consider the nature and circumstances of the changes they are... We are not to consider the nature and circumstances of the charges. They are considered innocent. Please discuss. The monograph is wrong. Would you care to elaborate, Judge? I believe that the statute takes into account in some kinds of offenses the nature of the offense. Beyond that, what we focused on in this case is not so much the nature of the crime and the amount of the loss as the fact that it seems to be reasonably well established at this stage that there was a $15 million loss and with someone like Miss Slick who may have $7.5 million or the best part thereof, she has the motive to flee not to avoid necessarily the short sentence that she'll get but to be able to enjoy the fruits of her crime. She's got support structure outside of the country and it's pretty easy to get to that support structure. This is not like going to Beijing or Vienna or whatever. This is just going next door to the neighbor. Very good. Tom, I just wanted to ask whether you have any reactions to that? Yes, I'm completely in agreement. We're going to be looking for the assets. That's one of the reasons we're going to be sending out subpoenas. That's why we're going to bring Tammy in early. We're going to try and find what we can. I have found that a lot of criminal defendants avoid putting their money in CDs. They just don't seem to be investment-minded and so it's all over the place and if we can't account for a couple of million dollars that's enough reason for somebody to miss even the pleasure of Barry and I in a trial. Speaking of Barry, I want to give you equal time here. Well, I think that you have to have a serious risk that the person will flee. Again, I think it requires more than just having the assets available and I certainly think the monograph is right on that this isn't the point to be deciding whether the person is guilty or not. This is the point to be deciding whether they pose danger to the community or a serious risk of flight. Of course, the judge's point is well taken. You would want to look carefully, it's like because she does have resources and she has dual citizenship. But those things in and of themselves don't make her likely to flee. It just means if she were likely to flee she might be successful at doing it. Very good. When someone has a million dollars it makes it more likely that she would flee but I would like to ask you if you had a client that was looking at guidelines of life for life, do you think that the nature of the punishment might have something to do with the likelihood of death? Certainly, if somebody is looking at life I think that's something that one takes into account in terms of whether there's a risk of flight. I certainly don't disagree with you there, Your Honor. But I do think that almost everybody in the federal system is looking at a lot of time and for the white collar people sometimes five years is from their state of mind as significant as 20 years to some other people. And so I just, sometimes a year in prison to them whereas to other people who have done time in prison they seem to be much more willing to accept 10 or 15. Very good. As our resident pretrial services expert here, I at least wanted to give you the last word on this, Aurora. Thank you. Well, we did teach the monograph 114 that way but I do want to say that it's not as if we're using just the amount of loss exclusively. To find out what the amount of loss is just really to see how far we have to go into the investigation. How much information do we need to get from databases or from property records, that kind of thing. Very good. Okay. We are about at the end of this segment. We've reached the end of the pretrial services issues but before moving on we want to take a look at the learning principles that we've covered in this segment. The individual and organizational co-defendants have now pled guilty. Slick and money maker to three counts each and RCI and RCHS to one count each. Now, before we proceed any further with the case, let me tell you a little bit about our organizations. ReadyCare Incorporated, RCI is a publicly held corporation with offices and businesses throughout the United States. Its business interests include Medicare providers of home health services. RCI maintains at its headquarters an ethics and compliance office headed by an ethics officer with several staff members. The ethics officer's responsibilities include drafting and circulating to subsidiaries, memoranda regarding compliance with both the letter and spirit of governmental regulations. The office also provides periodic training to employees of subsidiaries on Medicare billing practices and other government procedures. ReadyCare Health Services of Good Place, Incorporated, RCHS is a wholly owned subsidiary of RCI and is a Medicare provider of home health services. RCHS subcontracts with nursing groups to provide services. Jody Dugud, an administrative assistant is the company's ethics and compliance liaison to RCI. Now, in this case the government's star witness against our four co-defendants was Jennifer Delegent. She was an assistant to Slick and Money Maker and in 1988 the FBI interviewed her, Slick and Money Maker about an investigation it had been conducting. The investigation began after the FBI received referrals from the state's Medicare administrator which was concerned about duplicate and overlapping billing by RCHS. Delegent told investigators how Slick and Money Maker had developed a scheme to receive an interest in any new nursing group that would refer Medicare patients to RCHS. They also created 40 such nursing groups themselves. Slick and Money Maker manipulated the process at RCHS to build thousands of fraudulent visits that either were never made or were made to patients they knew were unqualified. Delegent also told investigators of lawyers, CPAs and doctors as well as others who assisted Slick and Money Maker in furthering the scheme and that brings us to where we are now. Judge Forester in this kind of a case what are the key elements to a good pre-sentence report including both individual defendants and corporate defendants? The key to a good pre-sentence report in a white collar or fraud case is best arrived at by thinking a little bit about how the evidence would sound if it were tried. You've got people here who are alleged to have entered into a conspiracy but in fact the conspiracy was not in co-ed it was carried out. And so the key is looking for the little things that show involvement knowledge foreseeability and the evidence is in the details here. The grandeur of the report to which it shows the precise level of involvement of each of the individual defendants. And if you think about this as a corporation with a parent subsidiary relationship and you think about what you know about white collar crime cases where the usual defense is admitting as much as I possibly can and avoiding as much responsibility as I'm humanly able they're going to say, what was going on, I didn't realize it was that much I really didn't know we were doing all these people, I didn't know that these people weren't qualified and that's what goes on the sentencing hearing if a promotion officer had done a third job of really getting down into the details of what did these people know, what did they actually do what are the little tell-tale pieces of evidence that show that they were intimately involved in the daily operation. That's what's important about this case. White collar crime cases, it's essential that you understand the nature of the fraud making a false statement the government agency is pretty straight forward figuring out why it's a material false statement is pretty straight forward but by the time you get into a case involving hiding car titles and taking nation's bank or bank America now for $15 million that's pretty hard, how does this work? The promotion officer can't tell you the defense lawyer had to research for hours to understand what his client did that was wrong. Your responsibility is a promotion officer to get out there and do that. Now the other major issue in this case is the role in the offense and I particularly highlight the part about there being professionals involved you can't overlook the fact that while these people had an office and they had a staff they were also perhaps lining up doctors, lawyers, CPAs and that certainly plays in a big way to role in the offense those are the things I would look at Paula's got a good list of what you look at in the corporation and I'll defer to her superior knowledge about that. Very good let's stick with the individuals for a minute and Stan Pfeiffer reflect upon some of the things that Judge Forrester said and you're the pre- our pre-sentence investigator in this case what are you going to try to do for the judge? In addition to what the judge said in terms of illustrating the offense and their respective roles which is very important for the supervision officer to understand that to reduce risk issues I would want to try to convey to the judge maybe why these defendants engage in this was it for greed, was it for was one of the defendants out I would like to know how they were able to work this scam for five years but also engage doctors and professionals that have licensing and really is it going against their very nature to be engaged in this type of criminal conduct and also take a very hard look at their financial background and try to identify their assets and really clearly illustrate that for the court. Now let me turn to Paula O'Connor briefly here because since you and the judge are from the same district in Georgia and you used to do pre-sentence investigations in a prior life maybe you can enlighten us. My goal as the pre-sentence writer is to educate myself first about what has transpired that can be a monumental task in these difficult fraud cases by all means but I want to grasp the facts because a lot of times I understand that this is going to be the first full picture that the court gets really occurred because most of the cases are pleas. So that's what's important to me first. Also I want to act somewhat as an independent investigator to verify the facts not solely rely on what the U.S. Attorney's Office is telling me don't solely rely on what Defense Counsel has told me I want to feel that I have derived the information in an independent fashion and also important I want to find where that money went. I think that's going to be very important for a lot of respects because in these big cases restitution is usually not made before the pre-sentence phase and so we're going to do an in-depth review of the financials identifying assets if we identify any assets that we can immediately dispose of for payment towards the restitution that's something that needs to be put into court right away. Judge Forester, yes. I want to echo something that he said if you can't do anything else with your first fraud investigation what he said is essential and that is you be independent. Talk to Barry, talk to Tom talk to some of the people in the Medicare state agencies talk to some employees the independence of the United States probation officer is what keeps the integrity of the system. The other thing which I neglected to say is you may not go back and construct the amount of the loss with an independent view of the evidence but you need to know how to account for that if you get called into hearing if Barry is a good lawyer I'm sure he is if he gets a sense that the probation officer is clueless about how to build to the $15 million loss figure he'll take them on and tear them apart in some fashion you need to be prepared to say this is where that came from this is why I think it's reliable. Very good let me get Marcelo Rodriguez into this a little bit although Marcelo you are on the supervision side of things I want to try to put together that pre-sentence and supervision those two sides a little bit talk about how what we're talking about with the pre-sentence investigation could help you potentially as the supervision officer down the road. At the supervision stage now we will have the offender under supervision and it's extremely important to again document the assets and finances the individual has often times the offender has come out on the supervision and there's been changes in his personal life he may be he may be required to pay child support payments which becomes another issue to deal with as well during the course of the collection process but the key is for the PSI writer to collaborate with the supervision officer to ensure that supervision conditions special conditions are in place so we can have control of the offender's finances when he or she comes out during supervision so we can monitor that have control of the finances and eventually collect as much restitution as possible. Very good, before we move on to Paula Dessio Barry I just wanted to get a reaction from you about how you're going to counsel either one of these defendants at the pre-sentence stage and what's the interaction going to be like with the pre-sentence investigator. Mark thank you for calling on me it's hard to say. So you wanted to jump out of your chair there. This is such an important part of the process particularly where you have a client who has pleaded guilty and what I believe Paul said was so right on about you need a full picture and if I had one pet peeve with probation officers who I think for the most part are very good professional people is when it comes time to put together the offense they turn to the case they turn to the prosecutor but they put very little stock they may not even come to us to get our side of the story and so what's presented in the pre-sense report is the government's allegations in their broadest form taken as though they're fact and there may be very significant disputed issues and I think one of the problems with the pre-sentence processes sometimes even where you turn to defense attorneys the pre-sentence report there resolves the factual disputes for the judge where as I think it really should be the judge who should be resolving these the significant disputed facts and I think I would really like and I think I speak for the defense bar to see in the PSI is much more often the places where the prosecutor in the defense part ways and what are the bottom line facts that the judge really needs to decide whether the pre-trial is $5 million or whether the reasonably foreseeable loss is $5 million and in terms of how I would counsel a client in that process it's very similar to pre-trial services but the constraints in the context is different we want to be as cooperative as possible we want to provide as much information as possible but at the same time we've got to keep our eye on the fact that there are other issues here and we want to make sure that the client has more problems by saying things that may lead to more criminal culpability or may reveal additional losses that weren't previously calculated and so it's a case by case analysis but the bottom line is the two objectives we want to be as cooperative as possible and we want to minimize the client's exposure very good in the spirit of equal time I want to come to Tom Zeno and then go to Paula for the corporate issues I really don't know what Barry is worried about but it's very conservative when it comes to contacting the pre-sentence report writer I wait at least 60 seconds before I pick up the phone and call over and I also believe that the facts should be laid out so I'm going to lay out the interview reports and we're going to take all the information that Tim's put together and we're going to provide everything we legally can to the pre-sentence report writer and I think that will satisfy the judge just fine very good, well without further ado then let's move on to the other co-dependents here which are organizational co-dependents and first let's speak somewhat abstractly here Paula we know we've got ready care incorporated RCI that had in effect some type of compliance and ethics program talk about what constitutes an effective compliance program in terms of the requirements under the guidelines and that kind of thing and how that relates to our co-defendant RCI here keeping in mind that whether you have an effective compliance program is one of the factors that goes to an organization's culpability in determining the culpability score an organization can get a reduction in that score as well as there are many other factors that we haven't discussed here but bear mentioning is the size of the organization whether high level people are involved whether there was any effort of self reporting when you look at a compliance program there are seven criteria in the guidelines they are broad brush but they do have and they are not specific application specific but you have to extrapolate and ask what would have been reasonable for each defendant or each organization in the context of their organization at the time that the conduct or the misconduct was going on so one thing that I think when you ask what goes into a pre-sentence report and I haven't in my time looking at these since I've been commissioned and responsible for organizational defendants in these issues don't see a lot of discussion in the pre-sentence report of the seven criteria there may be a conclusion no points given but I think what could be there and if you had defense counsel for let's take the parent the defense counsel would be trying to present papers or submissions to the prosecutor possibly the probation officer depending on what stage it gets discussed as to what they had in place and why it met the seven criteria I would expect a probation officer or the judge might want to be seeing why a company that says it has some type of program still didn't fulfill the criteria for example were the procedures capable of reducing the prospect of criminal conduct did they have oversight by high level personnel who was in charge how did it work why doesn't the probation officer think that that was fulfilled in that instance the same way you do with other criteria in a pre-sentence report was their due diligence this is an interesting point when it comes to a money maker should the company have known about money makers past history well he was not convicted so he probably isn't on the listing by HHS of people who are precluded but could the company have found out about his past history should they have done a judgment call but those are the kinds of issues and I think there could be some in-depth assessment of that okay well Stan Pfeiffer you had an opportunity to examine the ethics and compliance program of RCI an effective compliance program no this was not effective here we have two primary defendants in charge and several doctors CPS that will probably charge down the road this has been going on for five years due good who has a unit and the compliance program has got to stop with the CEO it's got to be at the very top not delegated to some unit below the CEO and so there was not a good compliance program and obviously there was no reporting going on because the administrative assistant is a star witness in this case and provided the case agent and the government investigators with information so obviously she knew what was going on but never reported it so no there was not an effective compliance program okay in your opinion not an effective program no okay we've already covered several of the issues that I've got in my notes here so I wanted to sort of skip down a little bit so that we can get into the next segment of our next part of this segment and just go right to Judge Forrester now we've got plea agreements in this case and I wanted to ask Judge Forrester how does the existence of plea agreements or a plea agreement in a case correspond with the pre-sentence investigation and the court's decision making process if you as a United States probation officer get a case with a plea agreement in it what I would like for that to tell you is that you have to exercise extraordinary diligence in this case what I mean by that is this the court exists in a world where we are supposed to sentence like offenders alike it is traditional it is the traditional function of judges in the federal system to do the sentencing the minute you get into plea bargaining you have an ability to start treating similar defendants differently and you have a tendency to power to the executive branch where it's never been so your role where there is a plea bargain is to be sufficiently skeptical to test the truth and the justice of the plea bargain and I think there is a socializing thing that goes on you don't want to be thought to be uncool by Tom or Tim and so if this is the plea bargain I think it maybe tends to shade a little bit what the judge gets judges have different ideas about these things my basic approach is that I will certainly listen to the parties but the fact that there is a plea agreement that makes a recommendation to me carries somewhere between 1% and 3% weight if the reasons are good then I'm sold I've got an advocate or two advocates that have helped me see the light but the mere fact that Tom and Barry made the recommendation that's worth about that much if it's not supported by what's in the pre-sentence report very good I want to move now on to the sentences and talk a little bit about the special conditions that are levied here for both the individual and organizational defendants after some lengthy consideration of everything we've just discussed all four code defendants are sentenced Sandra Slick was sentenced to 60 months in prison and a three-year term of supervised release she was ordered to pay $15 million in restitution and the fine was waived due to an inability to pay Richard Moneymaker was sentenced to 36 months in prison and a three-year term of supervised release he was ordered to pay $15 million in restitution and his fine was also waived due to an inability to pay RCI was sentenced to a term of probation for five years they were ordered to pay a fine in the amount of $15 million and $15 million in restitution RCHS was ordered to pay a fine in the amount of $15 million and $15 million in restitution Slick and Moneymaker are also subject to the following special conditions upon entering supervised release each is prohibited from participating as an owner, employee shareholder, etc. in any organization whose primary business involves providing services reimbursed by programs sponsored by HHS Moneymaker shall be self-employed only with the consent of the probation officer each must disclose all finances through appropriate documentation and each must provide the probation officer with authority to obtain credit histories bank and brokerage account records tax records and all other relevant financial documents as for the organizations RCI is subject to the following special conditions of probation the organization shall develop and implement an ethics and compliance program a committee of the organization's board of directors shall meet at least semi-annually to effectuate, maintain and monitor adherence to the company's ethics and compliance program as part of the process, the compliance officer will report to the committee semi-annually regarding the status and performance of the program the ethics and compliance program shall remain under court supervision for the duration of the probation term and the organization shall submit to audits conducted by the probation officer and independent auditor at the probation officer's direction and the defendant's expense finally the organization shall permit the probation officer and independent auditor access to all books and records and I guess I should say now finally the organization shall notify the probation officer of any material adverse change in its business condition Judge Forrester back to you it comes to your attention that stands sentencing recommendations in fact conflict with a corresponding plea agreement how are you going to handle that well we're going to have the usual sentencing day hearing and depending on what is developed I'm going to apply the guidelines and if stands report reliably establishes a $15 million loss but Barry and Tom have recommended to me that the loss amount not exceed $5 million I'm going to find the loss amount is $15 million there are judges that are different there are judges who think that lawyers for the government and lawyers for the defense have a better view of what serves justice than sticking with the dumb guidelines excuse me Paula and when in doubt they will follow the lawyers who will not then appeal him or her and trusting members of the bar more than they trust social science probation officers as I share Paula knows I have had a practice for a long time of not taking a plea agreement that has a recommendation in it on any subject other than acceptance of responsibility everybody will say oh I bet you still benched the whole time I haven't tried a criminal case since last August I'm going to try one next Monday that's to tell you that I'm not trying any more cases and I don't know why maybe Tom and Barry can tell me why that works sometime when we're not on national television but the point is if you follow the guidelines that's what the congress wants you to do that's the law you took an oath to do and I feel like that's my first obligation and I expect my president writer to tell it like it is and I don't have any questions from our resident prosecutor here at USA Tom Zeno you and I have talked in the past about the differences and the types of plea bargains and the kinds of differences those might make I can say the first thing is I would be very disappointed if a pre-sentence report differed radically from the plea agreement because in that case it would show great question as to whether we had come to a proper agreement and the Department of Justice supports them a lot and we should be able to explain thoroughly and completely to a pre-sentence report writer why the agreement is justified if there is a difference then we're going to have to have a discussion about it and I would make my arguments to the judge and they may or may not be accepted as a general matter we're going to have a plea agreement where we're going to seek some agreement about whether there's a role in the offense basics as to what the loss were because it makes the system work more rapidly although I haven't been in front of you judge maybe I should try a new system I don't know there is one that I guess Barry and I were going to talk about a little bit called an 11E1C plea 11E1C is a plea that actually establishes the exact sentence which the court will impose and the court can either accept that sentence or reject the entire plea agreement those are very infrequent but if they're done again they'll be able to justify it so that everyone would understand usually that means there's been a departure and if there's a departure we have to explain why and why this sentence is justified Barry equal time well I certainly agree that 11E1C please do serve a very useful function in appropriate cases and whenever it's agreed upon it usually is because there is something very exceptional about the case which brings it outside the guidelines to get to the court to accept or reject it you know every judge has a different way of approaching it and the important thing for us is to know what that approach is and I certainly respect Judge Forrester's approach and I see why he goes down that road the fact of the matter is that if, as Tom said there's a significant difference in the pre-sentence report something is very very strange the information the probation officer is getting is predominantly from the government and from us and so if there is something that's very different there then we've missed something which seems to me to be very unlikely but I guess does happen ok now Judge Forrester wants to get back into the fray the sage of South Carolina Rusty Morris admitted when training every one of us probably of a third possibility and that is that the prosecutor simply swallowed it, swallowed the gun referring to a bank robbery case where he neglects to tell the judges that there was actually a gun being pointed to the teller I have supervised assisted U.S. attorneys sometimes they are afraid to go to trial sometimes they are afraid of their witnesses sometimes they are afraid of you they'll sell the farm out cheap sometime and that is another explanation for why there might be a mismatch on plea bargain is for that reason that I seek extra diligence I'm not trying to make anybody's life miserable when we had the Thornburg memorandum we had some pretty draconian sentences but we didn't have prosecutors taking pleas that couldn't be justified today we don't have the Thornburg memo and some measurable percentage of the plea bargains that I hear about are not justified and will be explained by some Rusty's rationale rather than the ones that you all suggest very good Barry, quick response I just wanted to ask the judge if you find most of the plea bargains are too lenient on defendants I don't accept plea recommendations and so what I'm telling you is anecdotal I will accept a plea recommendation on the guideline issue if it has to do with acceptance where I know what's going on in the case I find that the prosecutor has decided that a certain amount of dope or money wasn't foreseeable in a clearly questionable situation or that testimony that they gave Tim after arrest and after Miranda warning and before anybody struck a deal with them for protected testimony all of a sudden becomes protected testimony and beyond the reach of the question officer when he then culpates the defendant in truckloads of dope or millions of dollars worth of whatever so I have seen cases where I thought the government's position on sentencing was extreme I don't want to tell you that what I'm saying to you is it usually is where it's pretty obvious to an independent outsider that the facts are arguably very different from what's being recommended that I worry. We've got about a minute or so left before we get to the question and answer session but before we go there I certainly want to get some input from our resident AUSA chief advisor to the flu unit in her district time refined how would the U.S. how would the U.S. attorney flu unit react to the special conditions what's your role at this process what are the issues you're concerned about? Again our concern primarily is about making certain that there's money to collect a restitution order from and that the order instruction in a way that allows us to collect it so I would be looking at the pre-sentence report I'm particularly concerned in that regard to see that it has full information about the assets I saw one just within the last month that had a two and a half million dollar fraud and the total assets of the defendant were a TV and a VCR and I'm very suspicious of something like that they were a very expensive TV and a VCR it was an incredible home entertainment system I would also be working very closely with the criminal AUSA about how to what request to make of the court in terms of when things would be due it would be very important to me that any restitution order would be due immediately because if it's not due immediately then we may have to wait until the person is released and supervised release before we can start collecting and that may truly impede our ability to collect if there are assets in the meantime we don't want to give someone five years in prison to squirrel where there are assets before we can start collecting in that regard sometimes courts tend to choose to make it due immediately and then they also set a payment plan because in some circuits they're required to that's something that they can't delegate to the probation officer if that's the case we would ask Tom to ask the court that the payment plan be applicable to the unpaid balance of the restitution upon release and that would preserve our ability to find assets and collect against assets before the term of supervised release begins and that's quite important in terms of the end result of getting money to victims very good we now are into our question and answer session and we've received a couple of faxes from this first one is from the district of Maryland Greenbelt office and we have some of your colleagues in the studio audience here this is from Milton Gross from the district of Maryland let's see I want my question directed to the assistant U.S. attorney let's just say assistant U.S. attorneys and we'll see who it really applies to is there a standard amount that the U.S. attorney's office uses as grounds for an indictment and two if there is a plea agreement which stipulates to a loss what happens when U.S. probation comes up more than what that which was stipulated to Tom in terms of is there a standard amount I assume we're talking about do we have some internal guidance as to when we're going to decline a case as not having enough loss every office has got some internal guidance however it is really considered guidance there may be very important reasons for a particular case to be brought when it's a few thousand dollars more or below the guideline that we normally have but there's nothing nationally and there's nothing that's absolutely written in stone these are just guidance in terms of the kinds of cases we take if we had a stipulation as the amount of loss and the pre-sense report came in and had a higher number again I would be very concerned about why that had happened I would say that in our office we try to make an extreme effort to explain thoroughly why we come up with whatever amount of money as loss that we put in to the pre-sense report writer when we have our interview if there's a difference I'm afraid we would have to make our arguments for our side which would be that the government had figured it out correctly and probation office of course would have the opportunity to respond but as soon as I got the report I would be because we would have an opportunity to respond I would be back to the officer and asking the officer what the basis was and if there's something there that's been found during their independent investigation I would definitely take it into consideration I would be disappointed that we had missed it I can't imagine if Tim was on the case that we'd have that problem let me turn to our pre-sentence officer here, Stan Pfeiffer and ask whether you've been involved in that kind of a situation before just sort of what your reactions would be to anything that Thomas said or to the question typically the plea agreements that have been structured in the district of Nebraska have been very good there have been some binding agreements that have reduced loss I've still written the report commensurate with what I found out in my investigation at times it may be a situation that it's a provability issue maybe the witnesses is not very credible or maybe there's some information that was lacking at the time when the indictment was made and even up to the point of the change of plea and then at a later time some other information that cooperated and actually made a particular amount of loss was applicable at that point I would use it but I would really communicate with U.S. Attorney's Office and with the defense counsel as to where this information came from and I think it's the issue of communication just so that the attorneys aren't getting blindsided you know we don't want that to have a situation right and that's something that Barry's referred to in terms of communication with defense counsel as well I wanted to ask you what kind of information would you be able to get for example from our special agent here Tim Delaney from the FBI in case you weren't able to get the kind of information you were looking for either from the defendant or from defense counsel or even from the prosecutor is there something that you could get from the case agent typically in working with the prosecutors and the case agents it's always been very easy to work with them and very approachable I've always found that true with the teen years that I've been working with this job but in terms of the offense conduct I rely on getting specific information the case agent I don't want to recreate the will I mean the case agent has worked the case six months two years they've executed search warrants have been in homes but they know how the offense was committed they very intricate knowledge of it they know quite a bit about the offender and the information that we want to be able to get in our report and a lot of times we don't need the cooperation of the defendant because in Nebraska attorneys almost categorically decline or instruct their clients not to work with us so we ask no questions regarding the offense conduct or criminal history we get some background information so that's very common for us and with pre-trial information and information from the government we can get quite a bit and then we go into data banks and we can see what the neighbors are and interview them or interview family members so there's a lot of resources to access you know to get some information very good let me turn first to agent Delaney and ask you Tim what kinds of information or what are some ways in which particularly in this kind of a case you might be able to help the pre-settings investigator do his job especially in a Medicare case such as this it's a case in all 50 states you might come up with 50 different numbers because insurance submissions there's a build amount and a loud amount and then a paid amount and then if they're giving a service that they're up coding to a higher amount you have to subtract the value of the service that they gave so you can come up with it so many different ways what we've historically tried to do is sit down with the pre-trial service investigator take them into the room where we have the evidence open up the file cabinets and show them what we did to determine the loss and it's through the insurance claims submissions mostly the books and records if we've done a search we open them up and show them the general ledger and show them how we came up with the numbers that we did so it's a potential wealth of information that you'd be able to share with the PSI officer Judge Forrester I know you wanted to react to something that Stan had to say something that was said made me wonder the procedure in our district is that you and you get a pre-sentence report and you get to file written objections and then the probation officer gets to file a written response is that okay I find that where the good faith plea bargain situation that you've been describing occurs and Paul just missed it that that gets worked out at that stage and so I just want to make sure that was a more or less uniform practice very good we've got a couple minutes left in this segment I want to go back to Paula Desio to cover something that we had talked about in a prior conversation Paul and that was under what circumstances if any could could a parent organization like RCI pay the monetary penalties of its subsidiary and could it be ordered to do so? in this case I think they were both convicted of conspiracy it's a conspiracy to submit false claims and they have jointed several liability for that and for the restitution if a parent could choose to pay the fine for the subsidiary I don't think legally there's any impediment to it and the criminal process there might be some objection in terms of management and the shareholders concern is to whether it's a wise use of the company's money on the other hand if the subsidiary has gone bankrupt and I'm going to assume it has it's gone out of business somehow because there's no order of probation for it that it be on probation or institute of compliance program perhaps common for a lot of these small organizations that have a lot of criminal involvement to maybe fold up and cease operation so they certainly could pay that fine now whether they could be ordered to pay it I think that would because it's jointed several in this case I think that certainly would be the answer but if they were different offenses they may not be able to Barry very briefly I wonder whether you would have any reaction to that in terms of one paying the fine or one paying the restitution of the other just we've got about 30 seconds I don't think that from a defense perspective it's all going to be what the client wants to do and there are a variety of reasons why the client might want to do that or might not want to do it and I think it would just be very case specific I agree with everything Paula said okay good enough alright that's all the time we have for questions right now it's time to take a break but before we do so we'll leave you