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United States v. Wallace

July 10, 2007


The opinion of the court was delivered by: Murphy, Chief District Judge


Before the Court is a motion for new trial and a motion for judgment of acquittal filed by counsel for Defendants, Richard Wallace and Downstate Transportation, Inc. (Docs. 43, 45). The Government filed timely responses to the motions (Docs. 48-51), and Defendants filed a reply (Doc. 53). The Court will rule on the motions without a hearing.


On July 12, 2006, a federal grand jury indicted Defendants for one count of Health Care Fraud in violation of 18 U.S.C. §§ 1347 and 2, and seventeen counts of mail fraud, in violation of 18 U.S.C. §§ 1341 and 1342. Defendants operated a taxi service in Southern Illinois to transport Medicaid patients to and from non-emergency medical appointments throughout rural Southern Illinois. In a nutshell, the Government alleges that Defendants defrauded Medicaid by billing and receiving payment for mileage driven without a Medicaid recipient in the vehicle.

Defendants never disputed the allegedly fraudulent conduct. The only issue was whether their conduct was criminal. After trial, a jury found Defendants guilty on all counts.


A. Motion for New Trial

Defendants move for a new trial pursuant to Federal Rule of Criminal Procedure 33 because (1) the Government shifted the theory of intent to one which was unsupported by evidence, or alternatively (2) the evidence of "excess miles" was put before the jury in violation of Federal Rule of Evidence 404(b) and the Seventh Circuit's test for admitting evidence of other acts. Rule 33 allows a new trial "if the interest of justice so requires." FED. R. CRIM. P. 33. Such motions are disfavored, however, and they are properly granted only in the most extreme cases. See United States v. Linwood, 142 F.3d 418, 422 (7th Cir. 1998).

1. Shifting Theory of the Case

Defendants first argue that a new trial is appropriate because the Government shifted its theory of intent during the direct examination of its final witness, Agent Minden. Throughout the investigation and the trial, the Government focused on Defendants' billing for unloaded mileage, then introduced the issue of billing for excessive mileage during the examination of the final witness. Defendants emphasize that the exhibit used to demonstrate the alleged practice of billing for excessive miles was thrown together over the lunch hour. Additionally, Agent Minden testified to the billing of excessive mileage, but admitted that he was unfamiliar with the policies regarding the billing of excessive mileage. He also testified that he was not familiar with the procedures used to determine whether excessive mileage had been billed.

The Government argued at trial that the evidence and testimony tended to show an intent to defraud. Defendants argue that the Government misled defense counsel to believe that the Government's theory was that Defendants were guilty because they were charging for unloaded mileage. Furthermore, the excessive mileage theory of guilt lacked factual support because there was no evidence or testimony as to the standard and correct procedures for calculating excessive mileage.

The Court agrees with the Government that its theory of the case was consistent throughout and that the unloaded/excessive distinction is artificial. The theory was simply that Defendants were billing for unauthorized mileage. The evidence and testimony simply demonstrate that Defendants were not billing according to the method to which they stipulated and that the evidence tends to show that Defendants were not truthful with the Government and that they had the requisite intent to defraud.

In Siddiqi v. United States, the Second Circuit vacated a conviction on the grounds that the "defects in his conviction [were] so fundamental as to constitute a miscarriage of justice." 98 F.3d 1427, 1440 (2nd Cir. 1996). One of the defects identified was that the Government had shifted its theory of the case, which "enabled the government to obtain a conviction from the jury on a factual theory that was put forth for the first time in summation," and was later established had no foundation in fact. Id. at 1438. There, the Second Circuit stated that "[t]he shifting nature of the government's case . materially impeded the effective presentation of a defense during the trial by misleading defense counsel as to the government's theory of guilt. Id.

Defendants argue that the presentation of evidence of alleged billing for excessive mileage by the final Government witness is analogous to the presentation of a new factual theory in Siddiqi, which occurred in summation. In Siddiqi, however, the Government expressly repudiated its initial theory of guilt, which had been emphasized in the opening statement. Furthermore, the defendant in Siddiqi, with its motion for a new trial, presented ...

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