Yesterday, the Department of Justice announced that its U.S. Attorney’s Office in Manhattan (Southern District of New York) had filed an indictment charging 18 former NBA players and 1 of their spouses with federal crimes relating to the defrauding of the NBA players’ association HRA (health reimbursement account). In short, the alleged mastermind of the crime, Terrence Williams, allegedly recruited former players into his scheme. They allegedly created fake invoices for chiropractic, medical, and dental services that they did not in fact receive, and then submitted those invoices to the HRA for reimbursement for those phony services. The defendants are charged with violations of 18 U.S.C. § 1341 (wire fraud) and 18 U.S.C. § 1347 (health care fraud), and Terrence Williams also faces a charge of identity theft for bizarrely impersonating a health care plan administrator to try to shake down another player for his kickbacks under the scheme.
Of course some of these players may in fact be innocent. But you can expect the government’s case to be strong here. The prosecutors will probably be able to demonstrate that the medical/dental/chiropractic services detailed in these invoices submitted for reimbursement were not in fact provided. And the government almost certainly has the bank records, phone calls, emails, and text messages showing the transactions between Terrence Williams and the other participating defendants. There are probably several cooperating witnesses as well (i.e. former players who did not participate in the scheme though they were approached about it). So, most of these defendants – if not all of them – are likely to plead guilty. Indeed, the overwhelming majority of federal defendants do.
Sentencing at the federal level is an inexact science. There is no statutory minimum here, and sentencing judges will look to the federal Sentencing Guidelines for guidance. However, the sentences suggested by those Guidelines are merely advisory, and not mandatory or binding. In fraud cases, the biggest variable in the Guidelines calculation is the amount of loss (assuming these defendants mostly do not have criminal records already). The defendants will likely be in Criminal History Category I, on the left hand column of the sentencing table provided for by the Sentencing Guidelines. Their base offense levels for Wire Fraud/Health Care fraud would be six. See U.S.S.G. 2B1.1. But then, you would have to add an additional offense level for the amount of fraud. There is some debate about whether this number should reflect “actual loss” or “intended loss,” which would make a difference here as the intended loss (i.e. the amount of false invoices submitted) was $3.9 million overall, but the actual loss was $2.5 million overall. Theoretically, each member of the group could be held responsible for the entire $3.9 million, as they were co-conspirators in a group effort to defraud the HRA. However, normally, in fraud cases, defendants are held accountable, so to speak, for the amount of money they themselves were actually involved in stealing (though that is not always the case, it is a fuzzy question of foreseeability). Terrence Williams, however, as the mastermind of the scheme, would probably have to add at least 16 levels to his sentencing offense level, in light of his being in charge of the entire scheme. Additionally, “masterminds” or managers of criminal enterprises can have their sentencing levels increased by another four levels. Pleading guilty tends to get a defendant an overall three-level reduction in sentencing offense level, so Terrence Williams could find himself at a suggested Guidelines sentencing range of 57-71 months (offense level 25), or roughly 5-6 years in federal prison.
Many of the other defendants are likely to have sentencing guidelines ranges of less than a year, meaning that they will have good chances of receiving sentences of probation. Judges, in addition to the Sentencing Guidelines, also must take into consideration a variety of sentencing factors set forth in 18 U.S.C. § 3553(a). These factors include things like the history and characteristics of a defendant, and his educational and medical and rehabilitative needs, among other things. Generally, a judge must impose a sentence that is just and “sufficient, but not greater than necessary” to serve the purposes of criminal sentencing. All of these defendants, should they be convicted, will also be ordered to pay restitution and/or forfeit the profits that they received from the scheme, as well.
Defendants in these sorts of cases can sometimes argue that they were unaware of the illegality of their actions, but that argument is rarely viable or plausible. They might also allege that someone else submitted the false claims on their behalf without their permission. Most defendants, however, simply make the best cases that they can to get non-jail sentences with restitution (i.e. repayment) of the fraudulent profits. Some defendants also choose to act as cooperating witnesses against defendants or health care providers in return for leniency. These options must be discussed with an experienced attorney.
Matthew Galluzzo is a federal criminal defense attorney and former Manhattan prosecutor with experience defending people against federal charges of wire fraud and health care fraud. He is also a huge fan of the NBA and still plays in a weekly pickup game with middle-aged men.
If you or a loved one have been arrested or accused of the federal crime of wire fraud or health care fraud, give him a call to schedule an appointment.