The opinion of the court was delivered by: Judge Blanche M. Manning
The defendants are charged with mail fraud for their alleged role in a scheme to bill insurance companies for staged accidents and unnecessary medical procedures. Two of the defendants, Rony Mikhail and Anthony Spitz, have filed numerous pre-trial motions, which the court discusses after a brief summary of the allegations in the indictment.
Defendant Anthony Spitz is a podiatrist. According to the indictment, Spitz's participation in the insurance scheme involved a number of accidents-some real and some staged-that began on June 5, 1997, and culminated with a final staged accident on January 26, 2000. During that period of time, Spitz and another defendant, medical doctor Morton Miller, allegedly processed fraudulent medical records for the "victims" of 21 accidents. For 18 of the 21 accidents, Spitz and Miller allegedly believed they were scheming in cahoots with a corrupt attorney, James L. Kent. However, Kent was an undercover FBI agent who was investigating Spitz and Miller. During the other three accidents, Spitz and Miller worked with defendant Rony Mikhail, who allegedly staged those three accidents. Mikhail and Kent never worked together.
On June 2, 2005, a grand jury indicted Spitz, Miller and Mikhail on five counts of mail fraud, all stemming from documents they allegedly mailed in June and August, 2000, in order to receive insurance proceeds for the January 26, 2000, "accident."
Motions to Strike Portions of the Indictment [60-1] & [70-1]
Spitz and Mikhail argue that those portions of the indictment that refer to Kent should be stricken as surplusage under Federal Rule of Criminal Procedure 7(d) because: (1) the conduct involving Kent occurred more than five years ago, the applicable statute of limitations period for mail fraud, see 18 U.S.C. § 3282(a); and (2) evidence of Spitz and Miller's interactions with Kent would be highly prejudicial to Mikhail, who never worked with Kent. They also ask that each instance of the word "staged" be stricken from the indictment because other allegations support the opposite conclusion-the conclusion that Spitz was unaware that accidents had been staged.
The defendants have been charged only with conduct that occurred June 2, 2000, or later, within the applicable five-year limitations period. However, that does not render conduct that occurred earlier irrelevant. Even conduct that is time-barred is relevant to show the existence of a scheme. See Article II Gun Shop, Inc. v. Gonzales, 441 F.3d 492, 496-97 (7th Cir. 2006) ("There is a distinction between acts that are prosecuted and acts that would be barred by the statute of limitations but are admissible to show that an act being prosecuted actually occurred.") An element of mail fraud is a "scheme or artifice to defraud," see 18 U.S.C. § 1341, and therefore evidence of the conduct that comprised that scheme is relevant, even if the conduct itself cannot be prosecuted because it is time-barred. See United States v. Pharis, 298 F.3d 228, 233 (3d Cir. 2002) (evidence of time-barred conduct was relevant because a "fraudulent scheme can span many years with the mailings occurring only at the end of the period.")
The question then becomes were Spitz and Miller's interactions with Kent part of the scheme that culminated with the June and August mailings? For Spitz the answer is yes. The fact that Spitz's method changed over time-that he worked with Kent on some occasions and with Mikhail on others-does not establish that there were multiple, distinct schemes. Id. ("By itself, changing the method used to commit a fraud does not inaugurate a new fraudulent scheme.") Therefore, Spitz's scheme spans the entire period of time recounted in the indictment, and his motion to strike from the indictment his interactions with Kent is denied.
In contrast, Mikhail's scheme was much more limited. Unlike Spitz and Miller, the indictment contains no allegation that Mikhail ever interacted with Kent, or that Mikhail was involved in any of the conduct that included Kent. Because Mikhail played no part in the interactions between Spitz, Miller, and Kent, evidence of those interactions have no bearing on what role Mikhail played. Therefore, the allegations about Kent (paragraphs 1(c) and paragraphs 7 - 34 of the indictment) are stricken from the indictment as against Mikhail. Mikhail has made no arguments about joinder or severance, and so the court will not address those issues.
Additionally, Spitz and Mikhail have requested that the word "staged" be stricken from the indictment. According to the indictment, on one occasion Kent warned Spitz that one "victim" had a pre-existing injury that was not the result of the claimed accident. According to the defendants, this allegation demonstrates that Spitz was unaware that the accident had been staged because, if he knew it had been staged, Kent would not have distinguished between the victims' phony and actual, pre-existing injuries.
The defendants' focus is misplaced. The issue is not whether Spitz knew the accidents were staged because a schemer is liable not only for known but also reasonably foreseeable acts intended to advance the scheme. See United States v. Gramer, 309 F.3d 972, 975-76 (7th Cir. 2002) (schemer is liable for both known and reasonably foreseeable conduct of others participating in the fraud). Rather, the only basis under Rule 7(d) to strike the word "staged" as surplusage would be that allegations that the accident were staged "are not relevant to the charge and are inflammatory and prejudicial," an exacting standard. United States v. Peters, 435 F. Supp. 746, 753 (7th Cir. 2006) (internal quotations and citations omitted). Under that standard, "staged" should not be stricken. While the defendants are correct that the government can prove that they schemed to submit fraudulent medical claims without also proving that the scheme included staging accidents, the government is nevertheless entitled to prove its case by whatever theory it can. Allegations that the accidents were staged are relevant to the government's theory and therefore will not be stricken.
In summary, the defendants' motions to strike portions of the indictment are granted in part and denied in part as follows: paragraphs 1(c) and 7 - 34 of the indictment are stricken as to defendant ...