Court Reverses Fraud Sentences Based on Faulty Loss Calculations

Defendants Zafar Mehmood and Badar Ahmadani ran several companies in Michigan that purported to provide home health services to home bound patients.  The United States, however, alleged they ran a complicated scheme to defraud Medicare.  A jury subsequently convicted both defendants of conspiracy to commit health-care fraud and of engaging a conspiracy to pay and receive kickbacks.  In addition, the jury convicted Mehmood of health-care fraud, conspiracy to commit money laundering, money laundering, and obstruction of justice.  After calculating the amount of loss for each defendant, the District Court sentenced both defendants to below-Guidelines sentences and ordered them to pay approximately $40 million in restitution.

On appeal, both Mehmood and Ahmadani challenged their convictions and sentences.  Although the Court found the District Court committed plain error by not following the procedures outlined in the Court Interpreters Act in finding that Mehmood waived his right to an interpreter during trial, it held the error did not require reversal since he presented no evidence he did not understand the proceedings or that the error otherwise affected the outcome of his trial.  The Court also dispensed with the defendants' remaining arguments against their convictions.

The Court, however, viewed the defendants' sentences differently.  In particular, Mehmood argued the district court erred in calculating his loss based on the full amount of gross billings submitted by his companies between 2006 and 2011—amounting to $47,219,535.47 -- even though he presented evidence that some of his billings were legitimate.   The district court concluded that since Mehmood made fraudulent representations to Medicare, it could consider all of his billings fraudulent and Mehmood could not offset any of the loss amount.  Citing precedent from the Eleventh Circuit and the Guidelines, the Court disagreed and held the district court erred by not first considering whether any of the medical services were legitimate before counting all of his claims as losses.  This error, the Court concluded, was not harmless, because it was a procedural.

The Court similarly reversed Ahmadani's sentence, albeit on different grounds.   On appeal, Ahmadani claimed the district court erred in assessing his total loss at $38,150,113.64 because it included Medicare claims submitted after he was no longer listed as a co-owner of one of Mehmood's companies.  The Court agreed, holding that the district court incorrectly relied upon Sixth Circuit precedent in United States v. Shannon and that it should have relied on USSG § 1B1.3(a)(1)(B) instead of § 1B1.3(a)(2).  Noting the district court failed to make a finding that Mehmood's conduct was reasonably foreseeable to Ahmadani, the Court concluded it committed plain error and remanded the matter for resentencing with an instruction to reconsider his sentence under USSG § 1B1.3(a)(1)(B).

This case is a good example of thorough defense advocacy.  Both defendants faced an uphill battle in challenging their loss calculations (Mehmood would have had to reduce his loss calculation by $15 million to reach the lower range); yet, they persisted in their challenges.  In the end, the process mattered as the Court found that the district court erred in calculating their loss figures.

The opinion is styled United States v. Mehmood, and you can find it here.