US v. Garcia-Pastrana

Filing 920091020

Opinion

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var WPFootnote1 = '* Of the Second Circuit, sitting by designation.\
'

var WPFootnote2 = 'At trial, José Nieves, AAA\'s Labor Relations manager labor,\
testified that SINOT was a Spanish acronym for "temporary\
disability insurance, occupational insurance."\
'

var WPFootnote3 = 'The collective bargaining agreement relevant to this appeal was\
in effect from 1998 until 2003. Afterwards, and as discussed\
below, the Union went on strike after negotiations broke down on a\
new collective bargaining agreement.\
'

var WPFootnote4 = 'The provision states:\
\
              The [AAA] shall grant the Union full leave with pay to\
the members of the executive central committee of the\
Union . . . . The Union shall reimburse said salaries\
including fringe benefits.\
'

var WPFootnote5 = 'The provision states:\
\
              The [AAA] agrees to contribute to the health insurance\
plan the following amounts for each Union member employee\
so that the employee, his spouse and dependent children\
under the age of 19 or, if they continue on as full-time\
students, up to the age of 23, may enjoy the following\
services: A) A family health insurance plan that includes\
hospitalization, surgery, and dispensary services B) a\
medicine payment plan, C) a dental plan, D) major\
medical, and E) eyeglasses.\
'

var WPFootnote6 = 'These provisions were in the collective bargaining agreement in\
effect at the time of the incorporation, and were carried over into\
the collective bargaining agreement at issue in this appeal.\
'

var WPFootnote7 = 'Specifically, the bylaws provided that "[t]he [AAA] shall send\
directly to the [Union] on or before the fifth (5th) day of each\
month the amount corresponding to the number of Union employees\
covered monthly by the plan as of the last day of the preceding\
month." In addition, José Nieves, the AAA\'s Labor Relations\
manager, testified that the collective bargaining agreement\
"established that [the payments] would be paid to Héctor René Lugo\
and [the Union]," but that the checks were "identified for health\
plan."\
'

var WPFootnote8 = 'The checks stated, below the name of the Union as payee,\
"Aportación Plan Médico," which was translated at trial as "health\
plan contribution."\
'

var WPFootnote9 = 'At trial the statute was translated as "fiduciarily\
responsible," although the official translation of the statute\
translates the words as "fiducially liable." See P.R. Laws Ann.\
tit. 26, § 1907 ("Fiduciary liability[:] Any director, officer or\
member of a health service[ ] organization who receives, collects,\
disburses or invests funds related to the activities of said\
organization, shall be fiducially liable for the funds received\
from the subscribers.").\
'

var WPFootnote10 = 'See P.R. Laws Ann. tit. 26, § 1903a(2) ("The Commissioner may\
examine and investigate [those organizations subject to its\
jurisdiction] with the purpose of determining their organization\
and solvency, as well as their compliance with the provisions of\
this Code."); id. § 1918 (setting forth required examinations of\
organizations subject to the OIC\'s oversight).\
'

var WPFootnote11 = 'See P.R. Laws Ann. tit. 26, § 1905(2)(a) ("A health services\
organization, before exercising . . . the power to contract\
administrative functions . . . shall furnish to the Commissioner\
the adequate information to justify the exercise of said powers.").\
'

var WPFootnote12 = 'The collective bargaining agreement provides:\
\
              The stipulation between [the Union] and the AAA dated\
October 1, 1991 (requiring that in the event of an\
operational deficit in the plan due to causes not\
attributable to illegal appropriation, malfeasance,\
misuse of funds or negligence of the plan manager), the\
parties shall meet to analyze and resolve the deficits\
(shall continue in effect with that review, except for\
the change of the fiscal year to natural year as required\
by [the Union]).\
'

var WPFootnote13 = 'The checks were:\
\
              1.  September 14, 2001 - $496,157.05\
              2.  September 26, 2001 - $555,535.65\
              3.  October 2, 2001    - $261,000.00\
              4.  October 3, 2001    - $1,142,199.25\
\
The checks totaled $2,454,891.95.\
'

var WPFootnote14 = 'Late in 2001, however, the Defendants directly deposited more\
than $3M of the contributions into the Union Account without first\
depositing the funds into the Plan Account.\
\
At the same time, the Defendants began making frequent transfers\
from the Union Account to the so-called Cultural Trips Account,\
which also belonged to the Union. For the next several years,\
García would receive regular payments from the Cultural Trips\
Account. All told, she received $209,379 from the account during\
the period when it contained diverted Health Plan funds. Like the\
payments she received from the Infrastructure and Union Accounts,\
she did not report any of the Cultural Trips payments in her tax\
returns.\
'

var WPFootnote15 = 'As discussed in more detail below, the balance sheets did not\
reflect all funds available to the Union, such as the SINOT\
contributions, but it did comprise the income the Union reported\
that it received.\
'

var WPFootnote16 = 'The 1999 certification, for example, states:\
\
              I certify that the Board of Directors of the UIA\'s Health\
Plan, Inc., has not officially met during the last two\
years. However, all of its members discuss and analyze\
the diversity of administrative issues of their\
incumbency on a daily basis. The reason for this being\
that the premiums of the UIA Health Plan, Inc. are paid\
entirely by the employer ([AAA]) and are subject to the\
negotiation of the Collective Bargaining Agreement.\
'

var WPFootnote17 = 'In fact, Rubén Luciano Guzmán ("Luciano"), the Health Plan\'s\
accountant, testified at trial that the Welfare Account effectively\
belonged to the Union because he never had access to it.\
'

var WPFootnote18 = 'See P.R. Laws Ann. tit. 26, § 1908(2)(a) ("Every health services\
organization shall register the rates to be used in any health care\
plan with the Commissioner before applying them in Puerto Rico.").\
'

var WPFootnote19 = 'After challenging the finding, the Defendants would later be\
fined for the violation in August 2003.\
'

var WPFootnote20 = 'Luciano would testify at trial that Carrasquillo told him that\
he opened the Welfare Account because the OIC had fined them for\
sending the Plan a "surplus" above $222 and that he wanted "to\
avoid further fines." Luciano further testified that he did not\
believe Carrasquillo because, to avoid fines, the Defendants either\
would have discontinued using unapproved rates or would have asked\
for a rate increase.\
'

var WPFootnote21 = 'In April 2004, Román retired as Union treasurer and was replaced\
by Víctor Cornier ("Cornier"). Román proceeded to receive $30,000\
from the Infrastructure, Union, and Administrative Accounts as an\
"[e]xtraordinary bonus for [his] years of service," although the\
maximum bonus authorized by the constitution was $1,000.\
'

var WPFootnote22 = 'This excluded the amounts that García had received from the\
Cultural Trips Account.\
'

var WPFootnote23 = 'The indictment also contained two forfeiture counts, Counts 141-42, that were later dismissed by the district court and are not at\
issue on appeal.\
'

var WPFootnote24 = 'For example, Counts 2-13 charged Lugo with embezzlement of\
"assets of the [Health Plan], a health care benefit program, as\
defined in Title 18, United States Code, Section 24," and listed\
twelve checks, including dates, check numbers, amounts, and the\
account the check came from (Infrastructure, Union, or\
Administration). The Counts were allocated as follows:\
\
Carrasquillo            Counts 14-25\
García                   Counts 26-36\
Román                    Counts 37-48\
Caraballo               Counts 49-60\
Andino                  Counts 61-72\
Martínez                 Counts 73-84\
Ramos                   Counts 85-96\
Vázquez                  Counts 97-108\
Urbina                  Counts 109-120\
Roldán                   Counts 121-132\
'

var WPFootnote25 = 'Of particular note, Counts 137 and 138 charged Lugo and Román\
with misapplying funds from the Old Health Plan (specifically,\
checks of $1,000 and $43,063) to purchase a "2003 Jaguar X-Type\
. . . for the personal use of defendant Lugo."\
'

var WPFootnote26 = 'Lugo separately argues that 18 U.S.C. § 669 is "void for\
vagueness" since it "d[oes] not make . . . reasonably clear that\
the compensation [he] received" was prohibited. Lugo claims that\
the Union\'s constitution, its collective bargaining agreement, and\
the Plan\'s bylaws all failed to give him "fair warning" that he\
could not take the payments that he did. His claim, however, is\
better understood as a sufficiency claim as to whether his conduct\
was "knowing and willing." We discuss that sufficiency claim in\
more detail below.\
'

var WPFootnote27 = 'The Defendants, in supplemental briefing, concede that their\
argument as to the character of the funds does not apply to Count\
1, the conspiracy to embezzle count, and Count 140, the money\
laundering count.\
'

var WPFootnote28 = 'The Defendants do not dispute that the Health Plan is a "health\
care benefit program" under § 669, which is defined broadly as:\
\
              [A]ny public or private plan or contract, affecting\
commerce, under which any medical benefit, item, or\
service is provided to any individual, and includes any\
individual or entity who is providing a medical benefit,\
item, or service for which payment may be made under the\
plan or contract.\
\
18 U.S.C. § 24(b) (defining a "health care benefit program" for\
purposes of § 669). The definition applies with equal force to the\
Old Health Plan, and thus to the misapplication counts (Counts 133-39) involving those funds. Accordingly, we reject Lugo and Román\'s\
contention otherwise.\
'

var WPFootnote29 = '18 U.S.C. § 641 provides, in pertinent part:\
\
              Whoever embezzles, steals, purloins, or knowingly\
converts to his use or the use of another, or without\
authority, sells, conveys or disposes of any record,\
voucher, money, or thing of value of the United States or\
of any department or agency thereof, or any property made\
or being made under contract for the United States or any\
department or agency thereof;\
              . . .\
              Shall be fined under this title or imprisoned not more\
than ten years, or both; but if the value of such\
property in the aggregate, combining amounts from all the\
counts for which the defendant is convicted in a single\
case, does not exceed the sum of $1,000, he shall be\
fined under this title or imprisoned not more than one\
year, or both.\
'

var WPFootnote30 = 'At least one circuit has noted that Section 669, and HIPAA\
generally, were "broad measures Congress enacted in its effort to\
\'combat waste, fraud, and abuse in health insurance and health care\
delivery.\'" Whited, 311 F.3d at 268 (citation omitted).\
'

var WPFootnote31 = 'These secondary sources do not cite any legislative history for\
this proposition, nor do the parties cite any.\
'

var WPFootnote32 = 'We note that Jackson differs from this case in two material\
respects. First, Jackson concerned whether a bare contractual\
obligation that had become due could be considered an "asset" for\
purposes of the ERISA theft statute. See Jackson, 524 F.3d at 544. \
In contrast, the funds here were not just contractual obligations,\
but actual checks that, on their face, were made out for the\
specific purpose of funding the Health Plan. Thus, at issue here\
are not contractual obligations but actual property. Second, the\
employer in Jackson owed no fiduciary duty to the beneficiaries of\
the unpaid contributions. See id. at 545 (rejecting claim that\
unpaid contributions were assets of the Plan because the defendant\
employers "were never fiduciaries of the Plan[]"). In contrast,\
upon receiving the checks, the Defendants in this case had a\
fiduciary duty to the Health Plan insofar as they were\
simultaneously on the Plan\'s board.\
\
We further note that the Defendants\' position has absurd\
consequences. Indeed, at oral argument, one judge on this panel\
noted that, under the Defendants\' position, the Defendants could\
not be convicted under § 669 if they had never deposited the Health\
Plan contributions into the Plan Account at all, and just\
immediately deposited the contributions into the Defendants\'\
personal bank accounts. Defense counsel responded that "it does\
not seem that I am arguing that."\
'

var WPFootnote33 = 'In fact, as noted in the background section above, from 1998 to\
2001 the total amount actually paid to the Defendants was similar\
in amount (or exceeded) the total amount of reported income for the\
Union.\
'

var WPFootnote34 = 'Like the Health Plan contributions at issue in this appeal, the\
Defendants were similarly constrained in their use of these other\
funds. In addition, the funds were similarly not reported in the\
Union\'s balance sheets. In essence, the Defendants argue that\
their convictions cannot stand because they were guilty of\
embezzling different funds.\
'

var WPFootnote35 = 'For example, one might funnel small values of embezzled funds\
through an account that contains mostly non-embezzled funds, such\
that embezzled funds never comprise a substantial portion of that\
account. Although we conclude in this case that the Infrastructure\
Account did contain mostly Health Plan funds, as a hypothetical\
matter, we find it difficult to believe that a defendant could\
avoid liability through such a scheme.\
'

var WPFootnote36 = 'The Defendants do not present this challenge as a separate basis\
for reversal, but as part and parcel of their claim that the\
evidence establishing their lack of authority was insufficient."\
'

var WPFootnote37 = 'It is unclear whether the Defendants challenged the willful\
blindness instruction as a separate ground for reversal. To the\
extent that they did, any such error was harmless because, as\
discussed below, the evidence was sufficient to support their\
direct knowledge of the scheme.\
'

var WPFootnote38 = 'We note that none of the challenges here involve a claim of\
structural error, which would not require a showing of prejudice. \
See United States v. Brandao, 539 F.3d 44, 58 (1st Cir. 2008)\
(defining structural errors as "constitutional errors that deprive\
the defendant of a fundamentally fair trial and thus may not be\
found harmless under Rule 52(a)\'s harmless error standard").\
'

var WPFootnote39 = 'García and Vázquez argue that the government argued in closing\
that commingling itself "made the receipt of all compensation by\
[the defendants] illegal." However, they cite no transcript page\
for that claim, and we cannot find any record of it.\
'

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