Probation sentence vacated

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The Seventh Circuit on April 9 vacated yet another probation-only sentence given to a white collar criminal.

Krishnaswami Sriram pleaded guilty in federal court to health care fraud and tax fraud, admitting that he received substantial payments for fraudulent Medicare claims, estimated in the presentence report to be between $5 million and $10 million, and defrauding the government of more than $550,000 in income tax.

After a 13-day sentencing hearing, the district court imposed a sentence of five years probation, plus restitution of $1,258.

The government appealed, and the court of appeals reversed, in a decision by Judge Richard A. Posner.

The court concluded that the district court erred in two ways: underestimating the fraud “by at least a factor of a thousand”; and imposing a sentence “that would have been unreasonable even if his calculation of the loss had been defensible.”

The court cited numerous examples of why the calculated loss was too low: Sriram billed for more than 24 hours in a day, on 401 days; he billed for services performed on days when he was out of the country; and he billed for services performed on patients who had died before the services were allegedly rendered.

The court acknowledged that an exact calculation of the loss was impossible to come by. Nevertheless, the court found that, at a minimum, he defrauded Medicare of $1.4 million.

Turning to the sentence, the court noted that, even if $1,258 was the amount of loss, the guideline range would be 24 to 30 months in prison. At $1.4 million, it would be 78 to 97 months (under the guidelines in effect at the time of the sentencing).

The district court imposed a below-guideline sentence based on the following mitigating factors: the defendant was “chronically inept as a businessman”; the prosecution had been protracted; the government had violated the doctrine of Brady v. Maryland, 373 U.S. 83 (1963); the defendant had spent a great deal of money on his legal defense; and the prosecution had stigmatized him and might cause him to lose his medical license.

However, the court of appeals concluded that only the loss of the medical license was clearly an appropriate factor, and of the others, only the stigma was even arguably appropriate.

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Citing U.S. v. Repking, 467 F.3d 1091, 1096 (7th Cir. 2006), the court added that, even these considerations justified only a “limited” reduction.

Addressing other factors, the court concluded, “that a defendant spends heavily on lawyers is not a mitigating factor. It would not only encourage overspending; it would be double counting, since the pricier the lawyer that a defendant hires, the less likely he is to be convicted and given a long sentence.”

Turning to the Brady argument, the court wrote, “The Brady claim hovers on the border of cloud-cuckooland.”

Accordingly, the court reversed the sentence, and remanded for resentencing, emphasizing again that any loss estimate lower than $1.4 million would be error, warranting another reversal.

The court concluded, “The defendant committed fraud on a large scale and should be punished accordingly.”

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David Ziemer can be reached by email.