USA v. Michael Leman

Filing

Per Curiam OPINION filed : The conviction and restitution order are AFFIRMED. Decision not for publication. Damon J. Keith, Eric L. Clay, and David W. McKeague, Circuit Judges. [12-5958, 13-6092]

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NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
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FILED

Nos. 12-5958/13-6092

Jul 31, 2014

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
UNITED STATES OF AMERICA,

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Plaintiff-Appellee,
v.
MICHAEL LEMAN,
Defendant-Appellant.

BEFORE:

DEBORAH S. HUNT, Clerk

ON APPEAL FROM THE
UNITED STATES DISTRICT
COURT FOR THE EASTERN
DISTRICT OF KENTUCKY

KEITH, CLAY, and McKEAGUE, Circuit Judges.

PER CURIAM. Defendant Michael Leman appeals his conviction for conspiracy to
distribute oxycodone and methadone, in violation of 21 U.S.C. § 846; conspiracy to commit
money laundering, in violation of 18 U.S.C. § 1956(h); and the district court’s order of
restitution. After the jury convicted Leman on both counts, the district court sentenced Leman to
180 months of imprisonment and ordered him to pay $1,000,000 in “community restitution.”
We AFFIRM the conviction and restitution award.
I.
Between 2000 and 2007, Leman opened pain management clinics, known as “Urgent
Care” clinics, in several states. Urgent Care Services, Inc. (“Urgent Care”) was the parent
company of each of the separately incorporated clinics. The clinics were operated mostly as a
cash business, and funds from each clinic were funneled into the parent company’s main account
each week.

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In December 2004, Leman hired a former business associate, Stephen Lyon, to run the
“business side” of the clinics. Lyon reported patient numbers and revenue generated by each
clinic to Leman daily. Leman also met weekly with Lyon, his accountants, and sometimes other
management staff, to go over financial information for each of his business entities.
A. Philadelphia Clinic
In March 2005, Leman opened an Urgent Care clinic in Philadelphia. Leman hired Dr.
Claxton Crowder to work at the clinic. A week or two after the clinic opened, Leman sent Tonia
Snook, the receptionist at the Urgent Care location in Slidell, Louisiana, to Philadelphia. Snook
worked at the Philadelphia clinic from April 2005 until early July 2005, when she was replaced
by Destiny Smallwood.
Patients from Kentucky, some of whom had previously received prescriptions at the
Slidell Urgent Care, came to the Philadelphia clinic for pain medication. The Kentucky patients
traveled to the clinic in large groups, sometimes as many as 25 or 30 in a single day, despite the
fact that it was nearly a ten-hour drive each way. Patients from Kentucky were charged $500 in
cash for a monthly supply of medication, while local patients were only charged $200.
Dr. Crowder resigned after nearly three months on the job when a series of patients
presented him with identical MRIs. He refused to treat the patients and told Ms. Snook to refund
the patients their money. According to Snook, before Crowder left, she overheard a telephone
conversation between Leman and Crowder, in which Leman told Crowder to “Take the * * *
MRIs and write the prescriptions, or you won’t get paid.” [Transcript, RE 198, Page ID# 2293;
see Transcript, RE 200, Page ID# 2888-89 (Crowder remembered speaking with Leman or Lyon
after Snook handed him the phone, but not what the other person said).]

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In June 2005, Dr. Randy Weiss replaced Crowder as the Urgent Care physician in
Philadelphia. Weiss admitted that he was “taken aback” by the numerous patients from eastern
Kentucky who pressured him to give them large dosages of medication. [Id., Page ID# 2665-68;
see Transcript, RE 200, Page ID# 2739-41] However, he gave almost all of the patients
prescriptions for 40 mg tablets of methadone, which he conceded were “excessive amount[s].”
[Transcript, RE 199, Page ID# 2675-76]. Weiss did monitor patients for “doctor shopping” and
ultimately dismissed 28 patients for presenting fake MRIs. [RE # 146, Page ID 987-89]
When Leman visited the Philadelphia clinic about a year after Weiss started, Weiss told
Leman that he was “concerned about [the Kentucky patients] coming such a far distance, the
differential in money between the $500 and the $200 payments, and the amount of the narcotics
that they were receiving,” which seemed “very high.” [Id., Page ID# 2681.] Leman responded,
“You don’t really have to be concerned about what we’re doing here” because “[e]ither they’re
going to have to put every doctor who writes pain prescriptions in jail, and therefore nobody * *
* that needs pain medication will ever get it, or they’re going to have to back off.” [Id., Page
ID# 2682.] Leman assured Weiss that “they’re certainly going to back off.” [Id.] Leman further
asked Weiss, “[w]hat do you think they’re going to do, come all the way from Kentucky to get
you?” [Transcript, RE 200, Page ID# 2746.]
In August 2007, federal and state officers executed a search warrant at the Philadelphia
clinic. Weiss agreed to surrender his DEA registration and to cooperate with the authorities.
[Transcript, RE 199, Page ID# 2698-99; Transcript, RE 235, Page ID# 4085-86; see id., Page
ID# 4223-24 (without a DEA registration, a doctor cannot write prescriptions for controlled
substances).] At the officers’ request, Weiss called Lyon, who subsequently informed Leman
what had happened.

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B. Cincinnati Clinic
In May 2006, Leman opened a pain clinic in Cincinnati. With Leman’s approval, Lyon
hired Dr. Stan Naramore to work at the clinic. Naramore had previously been convicted of
murder in Kansas, but his conviction was later overturned. When Naramore met with Leman
and Lyon a few months after he started, Leman told Naramore that the other clinics prescribed
methadone, Percocet, and Xanax, and that there was “no reason to change.” [Transcript, RE 200,
Page ID# 2772-74, 2860.]

When Naramore questioned why patients were receiving both

methadone and Percocet, which were both Schedule II pain medications, Leman told him that if
he didn’t want to prescribe what the other clinics had been prescribing, they could certainly find
someone else who would. [Id., Page ID# 2773-75.] After his discussion with Leman, Naramore,
who “desperately needed a job,” prescribed methadone and Percocet to almost every patient.
[Transcript, RE 200, Page ID# 2775 (Naramore thought he would be fired if he “did not
prescribe those medications as [he] was instructed to prescribe them.”).]
Leman set the fee for patient visits to the Cincinnati clinic at $400, payable in cash only.
[Transcript, RE 200, Page ID# 2765.] Over 80% of the clinic’s patients were from Kentucky,
even though the clinic was a six- or seven-hour drive round trip from eastern Kentucky. [Id.,
Page ID# 2777-78; Transcript, RE 235, Page ID# 4165, 4181-4184.]

Some patients had

previously been seen at the Philadelphia Urgent Care, and some had been discharged from that
clinic before coming to Cincinnati. [Transcript, RE 200, Page ID# 2854.]
State authorities executed a search warrant at the Cincinnati clinic in June 2007. A few
days after the search, Naramore had a heart attack and underwent open heart surgery. When
Naramore spoke to Leman after the search, Leman said that a former U.S. Attorney had reviewed
the company’s policies, and “there was no problem, there was nothing to worry about, and he

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wanted [Naramore] to go right back and see patients again.” [Transcript, RE 200, Page ID#
2813-2814.] The clinic reopened a few weeks later. [Transcript, RE 199, Page ID# 2515, 2517
(patients “came back right away”).]
II.
A. The District Court Properly Declined to Strike Tonia Snook’s Testimony
Leman asserts that the district court committed reversible error when it declined to strike
the key government witness’s testimony, or at least require the government to recall her as part
of its case in chief when she allegedly perjured herself on the stand. We review this issue for
abuse of discretion. See United States v. Pierce, 62 F.3d 818, 833 (6th Cir. 1995).
This Court has repeatedly explained that “a conviction obtained by the knowing use of
perjured testimony is fundamentally unfair, and must be set aside if there is any reasonable
likelihood that the false testimony could have affected the judgment of the jury.” Byrd v.
Collins, 209 F.3d 486, 517 (6th Cir. 2000) (quoting Kyles v. Whitley, 514 U.S. 419, 433 n.7
(1995)). Leman concedes that the government did not knowingly present perjured testimony, but
argues only that “it knew it at the conclusion of its case.” [See Order, RE 160, Page ID# 1400]
To prove that a prosecutor’s failure to correct false testimony violated due process rights,
a defendant must demonstrate that “(1) the statement was actually false; (2) the statement was
material; and (3) the prosecution knew it was false.” Coe v. Bell, 161 F.3d 320, 343 (6th Cir.
1998) (quoting United States v. Lochmondy, 890 F.2d 817, 822 (6th Cir. 1989)). Leman argues
that Snook, the government’s key witness, clearly perjured herself on the stand. To the extent
that her testimony is merely inconsistent with that of other witnesses, he concedes that a question
of credibility is presented for the jury to decide. See, e.g., United States v. Chavis, 296 F.3d 450,

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455 (6th Cir. 2002). But to the extent her testimony is knowingly and materially false, and to the
extent that there is any reasonable likelihood that it could have affected the jury’s judgment, he
argues that its submission to the jury mandates a new trial. Kyles, 514 U.S. at 433 n.7; Byrd,
209 F.3d at 517. Snook was the prosecution’s lead witness and her testimony was critical to the
prosecution’s case; the materiality of her statements is not in question.

We analyze the

remaining elements of the Coe test separately below.
1) Leman has not proved that Snook’s statements were indisputably false.
Leman asserts that Snook made several fraudulent statements at trial, but has failed to
establish that they were indisputably false. See Coe, 161 F.3d at 343 (“mere inconsistencies” do
not show indisputable falsity).
The most significant of Leman’s accusations involves the alleged forgery of a
prescription in the name of Brenda Goble.1 Snook testified that she wrote Brenda Goble’s name
on the prescription, but that the rest of the prescription was in Dr. Michael Rowland’s
handwriting and that the signature was Dr. Rowland’s. Several days after Snook testified,
Leman’s counsel informed the court that he had compared Brenda Goble’s April 26, 2005,
prescription and progress report with a prescription and progress report for her father, Larry
Goble, and had discovered that the two sets of records were “identical with the exception of the
change of the name at the top.” [Transcript, RE 202, Page ID# 3326-27.] Leman’s counsel
explained that “what we feel happened is that Tonia Snook and Larry and Brenda * * * forged
these records” and moved to strike Snook’s “entire testimony.” [Id., Page ID# 3327-28.] The
court found that the records contained “identical * * * handwritten notations.” [Id., Page ID#
1

Snook admitted that she had forged two other prescriptions, but denied forging Dr.
Rowland’s signature on Goble’s prescription. [Transcript, RE 198, Page ID# 2317; see id., Page
ID# 2264.]
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3329-3330; see id. at 3329 (prosecutor agreed that documents were “obviously overlaid on each
other”).]
The court rejected Leman’s claim, however, concluding that it “sound[ed] like mostly a
concern that you didn’t get a chance to ask these questions because you didn’t recognize the
significance of documents in your possession,” and stated that defense counsel could recall
Snook and “ask her the questions you feel like you need to ask her in order to confront her in a
manner that the system provides in order to try to get at the truth.” [Id., Page ID# 3389.]
Because Leman’s counsel declined the court’s invitation to cross-examine Snook, Leman
cannot prove that the statements were indisputably false.

While he relies on a series of

compelling assumptions, these assumptions do not rise to the level of proof required for reversal
of the district court’s ruling. Because this Court is precluded from weighing the evidence,
considering witness credibility, or substituting its judgment for that of the jury, Chavis, 296 F.3d
at 455, Leman’s assumptions and inferences that “Dr. Rowland would have had no reason to
create a forgery,” and that “[b]ecause the prescription is a forgery, and because Snook’s story
makes no sense, the only conclusion is that Snook lied,” do not pass muster.
2) Did the prosecution know the statements were false?
Leman concedes that the government was unaware of Snook’s perjury before it presented
her as a witness but argues that it had an inherent responsibility to correct the perjured testimony
once it became aware of the perjury. See Giglio v. United States, 405 U.S. 150, 154-55 (1972);
Napue v. Illinois, 360 U.S. 264, 270 (1959). The government responds by citing a line of cases
that reject a due-process claim where both parties had access to the alleged perjury and “were in
equal positions to clarify [the witness’s] testimony.” Brooks v. Tennessee, 626 F.3d 878, 896
(6th Cir. 2010); United States v. Ward, 190 F.3d 483, 491 (6th Cir. 1999) (rejecting claim that

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government witness committed perjury where “the court gave the defendants several
opportunities to cross-examine and recross-examine the witnesses to bring any inconsistencies in
testimony to the attention of the jury”); see also Norris v. Schotten, 146 F.3d 314, 334–35
(6th Cir. 1998) (concluding that there is no Brady violation where the defense had in its
possession evidence that demonstrated the witness’s inconsistent statements, and remarking that
“there would be no need for a jury if trials did not contain such inconsistencies”).
Leman chose not to cross-examine Snook when given the opportunity to do so,
presumably as trial strategy, and therefore may not claim error on appeal. Moreover, Leman
presented his credibility claims to the jury and the district court instructed the jury that it could
consider Snook’s criminal conviction and evidence that she made a prior inconsistent statement
in evaluating her credibility. [Transcript, RE 203, Page ID# 3622-23.] Leman cannot show that
the prosecution knew Snook’s statements to be false; the district court correctly rejected his
claim.
B. The District Court’s Deliberate Ignorance Instruction Was Not an Abuse of
Discretion
Leman challenges the district court’s deliberate ignorance instruction to the jury, arguing
that the evidence presented at trial was insufficient to prove that Leman had either actual
knowledge or deliberate ignorance that the clinics were operating illegally.

We review

challenges to a district court’s jury instructions for abuse of discretion. United States v. Geisen,
612 F.3d 471, 485 (6th Cir. 2010). A trial court abuses its discretion if its instructions, taken as a
whole, are confusing, misleading or prejudicial. United States v. Harrod, 168 F.3d 887, 892 (6th
Cir. 1999).
A deliberate ignorance instruction seeks to prevent a defendant from avoiding conviction
by turning a blind eye to his obviously criminal conduct. Geisen, 612 F.3d at 486 (citing United
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States v. Gullett, 713 F.2d 1203, 1212 (6th Cir. 1983)). Naturally, a correctly worded deliberate
ignorance instruction, even when unsupported by the evidence, is harmless error if there is
sufficient evidence for a jury to find that the defendant had actual knowledge of the illegal
conduct. See United States v. Rayborn, 491 F.3d 513, 520-21 (6th Cir. 2007).
Here, the indictment charged Leman with conspiring with Lyon, Snook, Naramore,
Weiss, and others to knowingly and intentionally distribute oxycodone and methadone. [Second
Superseding Indictment, RE 123, Page ID# 491-492.] The district court’s deliberate ignorance
instruction mirrored the Sixth Circuit Pattern Criminal Jury Instruction 2.09:
No one can avoid responsibility for a crime by deliberately ignoring the obvious.
If you’re convinced that a defendant deliberately ignored a high probability that
drugs were being distributed illegally or money was being laundered, then you
may find that he knew that drugs were being distributed illegally or money was
being laundered.
But to find this, you must be convinced beyond a reasonable doubt that the
defendant was aware of the high probability that the drugs were being illegally
distributed or money was being laundered, and that the defendant deliberately
closed his eyes to what was obvious. Carelessness or negligence on his part is not
the same as knowledge, and it’s not enough to convict. Again, this, of course, is
all for you to decide.
[Transcript, RE 203, Page ID# 3610; see Sixth Circuit Pattern Criminal Jury Instruction 2.09
(virtually identical instruction).]
Leman essentially pleads indeliberate ignorance. He contends that: he owned several
businesses, including several urgent care clinics; that he hired Steve Lyon as COO (and later
CEO) to manage the clinics; and that the alleged wrongdoing only involved a small number of
patients among hundreds of active patients in only two locations. He further contends that the
clinics were providing a legitimate service to patients who were legitimately in pain, emphasizes

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that neither Lyon nor himself ever told any of the physicians how to practice medicine, and
argues that the clinics had effective checks in place to guard against patient fraud.
Unfortunately for Leman, the evidence belies his assertions—even assuming arguendo
that the jury completely discredited Snook’s testimony. That a large percentage of patients at
both the Philadelphia and Cincinnati clinics drove for hours in large groups from eastern
Kentucky and paid a higher cash price than local patients for prescription pain medications
suggests that they were “drug seekers” instead of legitimate patients. [Transcript, RE 199, Page
ID# 2643; see Transcript, RE 198, Page ID# 2398; Transcript, RE 199, Page ID# 2577, 2665-26,
2690-91; Transcript, RE 200, Page ID# 2777-78; Transcript, RE 235, Page ID# 4165, 4181-84.]
Lyon himself testified that Leman “had to know that anybody that was driving 12 hours a day,
passing up another six or seven states to go pay $500 cash to see a doctor, that that probably
didn’t pass the smell test.” [Transcript, RE 199, Page ID# 2503-04, 2532-34, 2577.]
Likewise, Dr. Weiss testified that he raised his concerns about the Kentucky patients and
the very high dosages of narcotics they were receiving with Leman, and that Leman responded
that Weiss did not “have to be concerned about what we’re doing here” because “[e]ither they’re
going to have to put every doctor who writes pain prescriptions in jail, and therefore nobody
* * * that needs pain medication will ever get it, or they’re going to have to back off.”
[Transcript, RE 199, Page ID# 2680-82.] Dr. Naramore also testified that Leman told him that
other clinics prescribed both methadone and Percocet, that there was “no reason to change”; and
that if he did not want to prescribe as the other clinics did, they could find someone else who
would. [Transcript, RE 200, Page ID# 2772-75, 2860.]
Leman’s attempts to legitimate his statements by arguing that they must be understood in
the context of a boss “consol[ing] a shaken professional” or that he was simply reassuring the

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doctors that they were using their “good faith medical judgment to prescribe pain medication to
chronic pain suffers” are hopelessly unavailing. The district court’s instruction could not have
been an abuse of discretion as the evidence suggests that Leman had actual knowledge of the
illegal conduct, and, at worst, was deliberately ignorant.
C. The District Court’s Money Laundering Instruction Did Not Constitute Reversible
Error.
Leman argues that the district court committed two reversible errors in its money
laundering instruction: 1) erring in its pronouncement of the instruction; and 2) refusing to
instruct the jury that “proceeds” means “profits.” Leman did not object to the instruction at the
time it was given. Therefore, our review is limited to plain error. United States v. Morrow,
977 F.2d 222, 226 (6th Cir. 1992). The plain-error doctrine governs those “circumstances in
which a miscarriage of justice would otherwise result.” United States v. Young, 470 U.S. 1, 15
(1985); Morrow, 977 F.2d at 226. “[P]lain error is an error that is clear or obvious, and if it
affects substantial rights, it may be noticed by an appellate court.” United States v. Oliver,
397 F.3d 369, 375 (6th Cir. 2004) (citing United States v. Barajas-Nunez, 91 F.3d 826, 830 (6th
Cir. 1996)) (internal quotation marks omitted).
We need not assess Leman’s second argument in any detail, as he concedes that his
interpretation is foreclosed by this Court’s decision in United States v. Kratt, 579 F.3d 558, 562
(6th Cir. 2009). As to Leman’s contention that the court erred in its pronouncement of the jury
instruction on the money laundering count, Leman is correct; the district court clearly erred in its
pronouncement of the jury instruction on the money laundering count.
The pattern jury instruction provides that “The Government does not have to prove the
defendant knew the property involved represented proceeds of a felony as long as he knew the
property involved represented proceeds of some form of unlawful activity.” Sixth Circuit Pattern
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Jury Instruction 11.01 (emphasis added). The district court errantly skipped one line of the
pattern jury instruction, however, when it stated: “The Government does not have to prove that
the defendant knew the property involved represented proceeds of some form of unlawful
activity.” [RE # 164, Page ID 1535.] The correct jury instruction required that the defendant
must have known that the property involved represented proceeds of some form of unlawful
activity; whether that unlawful activity was a misdemeanor or a felony was irrelevant. The Court
completely flipped the standard, however, by removing knowledge as a necessary element,
thereby potentially allowing the jury to convict Leman for lawful activity.
The question here is whether the error affected Leman’s substantial rights. “For an error
to have affected a defendant’s substantial rights, ‘[i]t must have affected the outcome of the
district court proceedings.’” United States v. Vasilakos, 508 F.3d 401, 412 (6th Cir. 2007)
(quoting United States v. Olano, 507 U.S. 725, 734 (1993)). We agree with the district court that
once the jury found that Leman knew that the clinics were distributing drugs illegally, it could
not rationally fail to find that he knew that the property involved in the financial transactions was
the proceeds of that unlawful activity. [See Memorandum Opinion and Order, RE 282, Page ID#
4670 (finding it “highly unlikely” that the jury would have found Leman guilty of “the predicate
offense, conspiracy to distribute oxycodone and methadone,” without also finding that he was
“guilty of the conspiracy to commit money laundering resulting from the distribution of those
controlled substances”).] Leman has not demonstrated that the court’s clear error in pronouncing
the jury instruction affected the jury’s verdict, and therefore, the court’s error is not reversible.
D. The District Court Did Not Err in Imposing Community Restitution.
Leman lastly asserts that the district court’s community restitution order violated
18 U.S.C. § 3663, by ordering him to pay $1 million without ordering a fine. Because Leman

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did not object to the restitution order at sentencing, this Court reviews his claim only for plain
error. United States v. Rozin, 664 F.3d 1052, 1066 (6th Cir. 2012).
Under 18 U.S.C. § 3663(c), a district court sentencing a defendant for a drug offense “in
which there is no identifiable victim” may order the defendant to pay community restitution,
“based on the amount of public harm caused by the offense,” to specified state entities. See
18 U.S.C. § 3663(c)(1), (c)(2)(A), (c)(3). Pursuant to this provision, the district court ordered
Leman to pay $1 million in community restitution. The court did not impose a separate fine.
Leman contends that the district court cannot impose a community restitution award that
exceeds the amount of the fine imposed. This argument is patently inconsistent with the plain
language of 18 U.S.C. § 3663(c)(2)(B), which provides that “[i]n no case shall the amount of
restitution ordered under this subsection exceed the amount of the fine which may be ordered for
the offense charged in the case.” (emphasis added). The maximum fine “which may be ordered”
for Leman’s drug conspiracy offense was $1 million, see 21 U.S.C. § 841(b)(1)(C), and the
community restitution ordered did not exceed that amount.
We AFFIRM both the conviction and the restitution order.

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