USA v. Oliver Nkuku

Filing

UNPUBLISHED OPINION FILED. [10-20832 Affirmed ] Judge: EHJ , Judge: PEH , Judge: JES Mandate pull date is 03/09/2012 for Appellant Oliver Nkuku [10-20832]

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IN THE UNITED STATES COURT OF APPEALS
United States Court of Appeals
FOR THE FIFTH CIRCUIT
Fifth Circuit

FILED
February 17, 2012

No. 10-20832

Lyle W. Cayce
Clerk

UNITED STATES OF AMERICA,
Plaintiff-Appellee
v.

OLIVER NKUKU,
Defendant-Appellant

Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:09-CR-425-1

Before JONES, Chief Judge, and HIGGINBOTHAM and SMITH, Circuit Judges.
PER CURIAM:*
Oliver Nkuku was convicted by a jury for conspiracy to commit Medicare
fraud and three counts of Medicare fraud. The court then sentenced Nkuku to
120 months in prison, departing upward from the guidelines. Nkuku now
appeals his conviction and sentence. We AFFIRM.
A.
Nkuku and his wife started KO Medical Supply, Inc., in the spring of 2006

*

Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.

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in Houston. Nkuku’s wife filed paperwork with Medicare to obtain a billing
number and listed Nkuku as a delegated official of KO.1 The application
represented that Nkuku had no adverse legal history although in fact he had
spent nine months in federal prison for conspiracy to commit mail fraud in 2000.
Based on this misinformation, Medicare issued KO Medical billing numbers, and
KO Medical used the numbers to bill for motorized wheelchairs and scooters.
These wheelchairs were allegedly being issued to Medicare beneficiaries as
replacements for equipment lost in the Gulf Coast hurricanes of the last decade.
While KO did in fact distribute the wheelchairs that it billed Medicare for, there
was substantial concern by the government that the beneficiaries had no medical
need for them.
The government investigated KO Medical and found that most of the
wheelchairs were billed with a “CR Modifier,” authorizing approval without the
usual doctor’s prescription and determination of medical necessity. The modifier
was meant as an emergency measure to facilitate replacing medically necessary
equipment damaged or lost because of weather catastrophes. Several witnesses
testified they received chairs from KO Medical that they neither requested nor
needed as replacements. While in operation, KO Medical billed Medicare
$1,136,493. The government estimated that 83% of the claims submitted by KO
were billed fraudulently under the CR Modifier.
The jury convicted Nkuku on all counts and the court sentenced him to 120
months in prison, three years of supervised release, and restitution in the
amount of $453,112.10.
1

Nkuku’s wife was acquitted on all counts at trial. Other than creating the company
she did not play a role in the fraud. She worked at Saks Fifth Avenue and was not involved
in the day-to-day operations of KO Medical.

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Nkuku appeals his conviction on the grounds that the district court
erroneously admitted testimony regarding neoprene orthotics observed during
an inspection at KO Medical, and the court erred by allowing him to be crossexamined about his assertion that he “paid his debt to society.” Nkuku also
challenges his sentence.
Evidentiary rulings are reviewed for an abuse of discretion where, as here,
the challenging party made timely objections at trial.

United States v.

Hernandez-Guevara, 162 F.3d 863, 869 (5th Cir. 1998). Even if there was an
error, this court is not required to disturb the conviction unless there is a
reasonable probability that the improperly admitted evidence contributed to the
conviction. United States v. Williams, 957 F.2d 1238, 1242 (5th Cir. 1992).
Mark Porter, an investigator with a Medicare contractor, conducted
several on-site inspections of KO Medical. He testified that he found only one
wheelchair in its inventory, which was odd considering the large volume of
business KO conducted. Porter also observed several boxes of neoprene orthotics
and stated that “Medicare stopped paying for all Neoprene orthotics in 2009 . . .
because of rampant fraud and abuse.”

Defense counsel objected to this

testimony. Overruling the objection, the court allowed Porter to give a brief
explanation why the orthotics were noteworthy. Porter responded that claims
involving orthotics were under review during 2009 because of fraudulent billing
for medically unnecessary and unreliable services. Because of the link between
orthotics and fraud, Porter made note of the inventory to pass on to the
appropriate law enforcement contacts. Following Porter’s testimony, the judge
instructed the jury that Nkuku was only on trial for what was included in the
indictment.

The government made no mention of orthotics in its closing

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arguments.
FED. R. EVID. 404(b) states that “[e]vidence of other crimes, wrongs, or acts
is not admissible to prove . . . character,” id., but the Rule does not prohibit
admission of “intrinsic background information.” United States v. Miranda,
248 F.3d 434, 440 (5th Cir. 2001). Evidence is intrinsic when the acts described
and the crime charged are “inextricably intertwined,” so that the testimony is
“necessary to provide coherence to the government’s case.” United States v.
Torres, 685 F.2d 921, 924 (5th Cir. 1982). “Intrinsic evidence is admissible to
‘complete the story of the crime by proving the immediate context of events in
time and place.’” United States v. Rice, 607 F.3d 133, 141 (5th Cir. 2010) (quoting
United States v. Coleman, 78 F.3d 154, 156 (5th Cir.1996)).
The testimony about the orthotics was a significant link in explaining why
KO was subjected to prepayment review by Medicare. During his investigation,
Porter discovered one wheelchair in KO’s inventory and no apparent repair
facilities for the devices. In contrast, KO had a substantial supply of neoprene
orthotics, a product that the government believed was frequently sold in
Medicare fraud schemes. Porter also found in his review of patient records that
most of the wheelchairs were being billed with the CR Modifier. The testimony
about the orthotics was among the audit facts intrinsic to raising Porter’s
suspicions about KO and leading to further investigation. The court did not
abuse its discretion in allowing this testimony.
Nkuku also criticizes the court’s allowing the government to cross-examine
Nkuku about whether he had actually “paid his debt to society.” Evidence of
Nkuku’s prior conviction for fraud was before the jury, and on direct
examination Nkuku’s counsel asked him if he had paid his debt to society for his

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past conviction, to which Nkuku replied that he had. On cross-examination, and
over an objection, the government asked if he had paid the restitution, to which
Nkuku said no. Nkuku claims that this exceeded the scope of evidence allowed
to impeach his character for truthfulness under FED. R. EVID. 609(a).
Rule 609(a) allows the impeachment of the accused’s character for
truthfulness by the admission of a prior conviction of a crime of dishonesty.
Generally, such impeachment “is limited to the number of convictions, the
nature of the crimes and the dates and times of the convictions.” United States
v. Gordon, 780 F.2d 1165, 1176 (5th Cir. 1986). However, “a cross-examiner
may go into anything in his cross-examination that was raised by his
opponent on direct examination.” United States v. Bray, 445 F.2d 178, 181 (5th
Cir. 1971) (approving cross-examination of defendant regarding his prior
criminal record). Here, Nkuku opened the door to broader questioning by
asserting that he had “paid his debt to society.” This choice of words, while not
incorrect if “paying one’s debt to society” is construed as serving one’s prison
sentence, was at least incomplete as he appeared to be suggesting that he takes
responsibility for his mistakes. It was not an abuse of discretion for the court to
allow the prosecutor to clarify that Nkuku had not paid the restitution he owed
from his prior conviction.
Nkuku argues that the court erred in determining the amount of intended
loss when calculating the sentence range, that the court abused its discretion by
upwardly departing from the guideline, and that the court erred by not stating
reasons for the sentence. The last claim was only fully briefed in Appellant’s

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rely brief and is waived.2 Yohey v. Collins, 985 F.2d 222, 225 (5th Cir. 1993).
“In reviewing the reasonableness of a defendant’s sentence, we ‘must first
ensure that the district court committed no significant procedural error, such as
failing to calculate (or improperly calculating) the Guidelines range.’” United
States v. Lige, 635 F.3d 668, 670 (5th Cir. 2011) (quoting United States v.
Cisneros–Gutierrez, 517 F.3d 751, 764 (5th Cir. 2008)). “The district court’s
‘interpretation or application of the Sentencing Guideline’ is reviewed de novo,
while its factual findings are reviewed for clear error.” Id. “[W]e must defer to
a factual finding as to the amount of loss, but must consider ‘de novo how the
court calculated the loss, because that is an application of the guidelines, which
is a question of law.’” Id. (quoting United States v. Harris, 597 F.3d 242, 250-51
(5th Cir. 2010)).
The first of the remaining issues is whether the district court erred by
calculating the “intended loss” for the purpose of guideline calculations. The
addendum to the pre-sentence report (“PSR”) found a total offense level of 30.
At sentencing, the government suggested that the offense level should be raised
to 32 by adding a two level enhancement for obstruction of justice, but the court
declined to apply the enhancement. The only other calculation that was in
dispute at the hearing was whether intended loss should be calculated at
$900,000 or $1,100,000. If the court accepted the lower number, then the offense

2

The one sentence reference without any citation to authority in the Summary of the
Argument section of the opening brief is not sufficient. See Sherrod v. Am. Airlines, Inc.,
132 F.3d 1112, 1119 n.5 (5th Cir. 1998) (finding that the party “waived review of these issues
by not briefing them in the Argument of [the] brief”).

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level should be 283 instead of 30.
In the Statement of Reasons the court indicated that it adopted the offense
level of 28. In making its sentencing pronouncement, the court said that it
“considered” the loss at both levels. Ultimately, the court imposed the sentence
without making clear at the hearing what intended loss value it was using to
calculate the guideline range. Considering that the amount of intended loss was
the only variable at issue at the sentencing hearing, it seems that the court used
the lower valuation of intended loss to arrive at the offense level of 28. Because
the guideline calculation was correct, even assuming the intended loss proffered
by the defense, we affirm the sentence.
The second issue is whether the district erred by departing upward from
the sentencing guidelines. We review upward departures from the guidelines for
an abuse of discretion. United States v. Zuniga-Peralta, 442 F.3d 345, 347 (5th
Cir. 2006). The judge gave the following reasons at sentencing: (1) Nkuku had
recently finished a sentence for a prior mail fraud conviction when he committed
the fraud at issue; (2) his second fraud attempt involved a higher intended loss
than the first; and (3) he involved his wife in his most recent fraud. As the court
noted, these factors indicated that Nkuku was “getting worse.” The guidelines
allow for an upward departure when the defendant’s criminal history category
“substantially under-represents the seriousness of the defendant’s criminal
history or the likelihood that the defendant will commit other crimes.” U.S.S.G.
§ 4A1.3(a)(1). Among the instances where the defendant’s criminal history may

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The guideline range provides for a 14 level enhancement for fraud involving an
intended loss of more than $400,000 but less than $1,000,000. The defense claims that
intended loss should only be $567,964.95 which would still qualify for the same 14 level
increase that is captured by a total offense level of 28.

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be under-represented are those in which the defendant’s prior conviction is
similar to the current offense. United States v. De Luna-Trujillo, 868 F.2d 122,
124-25 (5th Cir. 1989).
Furthermore, an upward departure by a district court is not an abuse of
discretion if the court’s reasons for departing (1) “advance the objectives set forth
in 18 U.S.C. § 3553(a)(2)” and (2) “are justified by the facts of the case.” See
United States v. Saldana, 427 F.3d 298, 310 (5th Cir. 2005). The court’s
remaining reasons, that he involved his wife and his crimes are escalating in
severity, both fall within § 3553(a)(2). The court was legitimately concerned
about the seriousness of the crime and that Nkuku was not deterred by a lighter
sentence. The district court did not abuse its discretion by departing upward
from the sentencing guidelines.
For these reasons, Nkuku’s conviction and sentence are AFFIRMED.

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