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United States v. Kielar

United States Court of Appeals, Seventh Circuit

June 29, 2015

UNITED STATES OF AMERICA, Plaintiff-Appellee,
v.
RONALD KIELAR, Defendant-Appellant

Argued, December 4, 2014

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:10-cr-00691-1 [#x7de] Robert M. Dow, Jr., Judge.

For UNITED STATES OF AMERICA, Plaintiff - Appellee: Brian Sully Wallach, Assistant U.S. Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Chicago, IL.

For RONALD KIELAR, Defendant - Appellant: Jacob W. Nelson, Thomas L. Shriner, Jr., Attorney, FOLEY & LARDNER LLP, Milwaukee, WI.

Before BAUER, RIPPLE, and SYKES, Circuit Judges.

OPINION

Page 734

Ripple, Circuit Judge.

Ronald Kielar was convicted in the United States District Court for the Northern District of Illinois on charges arising out of a scheme to defraud two health insurance companies by submitting fraudulent claims for the prescription drug Procrit. He now appeals his conviction, alleging several procedural and evidentiary errors. For the reasons set forth in this opinion, we affirm the judgment of the district court.

I

BACKGROUND

Ronald Kielar was a licensed pharmacist at the Cartagena Pharmacy in Chicago, Illinois. Many of Mr. Kielar's patients came from the medical practice of Dr. Camilo Barros, whose office was located in the same building as the Cartegena Pharmacy. Starting in November 2004, Mr.

Page 735

Kielar began defrauding two health insurance companies, Blue Cross and Blue Shield of Illinois (" BCBS" ) and United Food and Commercial Workers Union and Employers Midwest Health Benefit Fund (" UFCW" ), by submitting fraudulent claims for the prescription drug Procrit.[1] In particular, Mr. Kielar forged prescriptions for Procrit under Dr. Barros's name and then submitted those prescriptions to BCBS and UFCW for payment. He knew at the time that Procrit had neither been prescribed, nor provided, to any of the individuals under whose policies he sought reimbursement. His scheme continued over roughly six years and resulted in losses to BCBS and UFCW of approximately $1,678,549.

In August 2010, Mr. Kielar was indicted on five counts of health care fraud in violation of 18 U.S.C. § 1347. This indictment also contained a forfeiture allegation, pursuant to 18 U.S.C. § 982(a)(7), for any proceeds of Mr. Kielar's fraudulent scheme. This allegation specifically identified three of Mr. Kielar's properties as subject to forfeiture, including a property located at 12786 N.W. 75th Street, Parkland, Florida (the " Florida Property" ).

Later that month, the Government filed a notice of lis pendens for the Florida Property based on the indictment's forfeiture allegation. Shortly thereafter, Mr. Kielar filed a motion requesting permission to sell the Florida Property, stating that he needed the proceeds of the sale in order to pay his attorneys' legal fees. In its response, the Government stated that it did not object to the sale, provided that Mr. Kielar deposit the sale proceeds in an escrow account with the United States Marshals Service.

In October 2010, the district court granted Mr. Kielar's motion to release the lis pendens and allow for the sale of his Florida Property. Consistent with the Government's request, however, the court ordered that the proceeds of the sale be placed in an escrow account with the United States Marshals Service. Shortly after doing so, Mr. Kielar filed another motion asking the district court to vacate its earlier order and allow him to use the sale proceeds " for taxes, legal fees and other expenses." [2] After several rounds of briefing, the district court denied Mr. Kielar's request and, shortly thereafter, also denied his motion for reconsideration.

In March 2013, a grand jury returned a ten-count superseding indictment against Mr. Kielar, charging him with six counts of health care fraud, in violation of 18 U.S.C. § 1347; three counts of aggravated identify theft, in violation of 18 U.S.C. § 1028A(a)(1); and one count of using false records to impede a federal investigation, in violation of 18 U.S.C. § 1519. Like the initial indictment, the superseding indictment also contained a forfeiture allegation pursuant to 18 U.S.C. § 982(a)(7).

Following a week-long jury trial, Mr. Kielar was convicted on all charges.[3] He timely appealed.[4]

II

DISCUSSION

Mr. Kielar contends that the district court erred on three separate grounds: (1) by failing to hold an evidentiary hearing on

Page 736

his request to release his escrowed funds, (2) by limiting his cross-examination of Dr. Barros, a key government witness, and (3) by preventing him from calling Fernando Perez as a defense witness. We address these issues in turn.

A.

We begin with Mr. Kielar's contention that the district court erred by failing to hold an evidentiary hearing on his request to release his escrowed funds. Because this contention concerns the scope of Mr. Kielar's rights under the Due Process Clause, our review is de novo. United States v. Kirschenbaum, 156 F.3d 784, 792 (7th Cir. 1998).

1.

Mr. Kielar first requested that the district court release his escrowed funds in November 2010, shortly after the sale of his Florida Property. In particular, Mr. Kielar filed a motion asserting that the restraint on his access to those funds impeded his ability to pay his attorneys' legal fees in violation of his Sixth Amendment right to counsel. Notably, this motion contained neither documentary evidence nor specific factual allegations demonstrating Mr. Kielar's need for the sale proceeds to finance his defense.

The Government opposed the motion. It submitted that the restraint on Mr. Kielar's assets did not violate his Sixth Amendment right to counsel because he had not shown, " beyond the conclusory statements in his reply," a " bona fide need" for the assets.[5] The Government's brief also explained how it could trace the proceeds of Mr. Kielar's fraudulent scheme from the corporate bank account of the Cartegena Pharmacy to mortgage payments on the Florida Property.

In December 2010, the district court held a status hearing at which defense counsel stated that Mr. Kielar's motion " may require a more detailed hearing." [6] Counsel then requested that the district court allow for additional briefing on the issue. The district court granted the request.

In January 2011, Mr. Kielar submitted a brief in support of his November 2010 motion. Although the brief contained several legal arguments, the only allegations in the brief concerning Mr. Kielar's need for the funds to pay his legal fees were as follows:

Over the past four and a half months, Defendant Kielar has fallen behind in payments to his attorneys and is now in arrears for a sub-stantial sum. Defendant Kielar's inability to pay is due to the forfeiture ...

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