Decided: April 26, 2013
In this federal suit for forfeiture in rem against certain properties the government believed to be derived from health care fraud and involved in money laundering, the Fourth Circuit held that the United States District Court for the Eastern District of Virginia properly denied various motions by the claimants in interest, properly granted an evidentiary motion by the government, and properly rejected certain jury instructions proposed by the claimants. The Fourth Circuit thus upheld a jury finding that the properties were subject to civil forfeiture.
In April 2005, the Federal Bureau of Investigation (“FBI”) began investigating Dr. Mert Kivanc, a physician, for overprescribing controlled substances. In October 2006, the FBI uncovered evidence that Dr. Kivanc had conducted a health care fraud scheme involving the drug Remicade. An FBI forensic accountant traced $701,507 in fraudulent payments to Dr. Kivanc’s business account at Wachovia Bank. Dr. Kivanc fled the country for Turkey in November 2007. He was indicted for distributing and conspiring to distribute controlled substances in October 2010. Meanwhile, Dr. Kivanc’s parents, the claimants, bought a residential property in Fairfax, Virginia in 1993. In September 2005, Kivanc’s parents transferred the property to Dr. Kivanc. Dr. Kivanc began renovating the property in February 2007, but transferred the property back his parents in May 2007. However, Dr. Kivanc continued to pay for renovations until late October 2007: After the deed transferring the property to back to his parents was recorded, Dr. Kivanc paid about $430,000 for renovations from his Wachovia business account. Dr. Kivanc also wrote four checks to his dad between November 2006 and May 2007; one of these checks was traced to his bank account at PNC Bank, which was seized by the government in July 2011. On June 15, 2011, the government filed a complaint for forfeiture in rem against the residential property, claiming it was subject to forfeiture as property derived from health care fraud and involved in money laundering. Kivanc’s parents then filed a claim of interest for both properties. The jury issued a verdict in favor of the government, and claimants appealed.
On appeal, the parents argued that the district court erred on the following matters: Denying the claimants’ motion to dismiss based on the relevant statute of limitations; denying their motion to allow Turan Kivanc and Dr. Kivanc to testify remotely from Turkey, due to Turan’s health and Dr. Kivanc’s unwillingness to return to the United States; admitting certain hearsay statements against interest made by Dr. Kivanc but refusing to admit, under Federal Rule of Evidence 106, an affidavit filed by Dr. Kivanc and a letter he wrote to his attorney; rejecting the claimants’ proportionality instruction with regard to the money laundering issue, and rejecting the claimants’ theory of the case instruction; and denying claimants’ motion for judgment as a matter of law, on the grounds that the government failed to offer enough evidence that Dr. Kivanc committed health care fraud and money laundering. The Fourth Circuit rejected all of these arguments.
First, the court noted that the government had five years from the discovery of the alleged offense to initiate a suit. Though the FBI began investigating Dr. Kivanc for overprescribing controlled substances in April 2005—which fell outside the five-year statute—the government did not discover the Remicade fraud until October 18, 2006. Second, the court concluded that, due to conflicting expert analyses of Turan Kivanc’s ability to travel, the district court did not err in denying his parent’s motion for remote testimony; furthermore, to allow Dr. Kivanc to testify remotely would “make a mockery of our system of justice.” Third, the court ruled that the challenged statements against interest were properly admitted. Some of them were not actually hearsay, and the rest were corroborated by certain circumstances indicating trustworthiness: Dr. Kivanc made the statements while at his office discussing work-related matters with his employees, some of the statements involved Dr. Kivanc’s then-existing plans, and the statements exposed him to criminal liability. The court also ruled Federal Rule of Evidence 106 inapplicable to Dr. Kivanc’s affidavit and letter: While this Rule covers partially-produced writings or recorded statements, Dr. Kivanc’s documents involved witness testimony and conversations. Fourth, the court found the parents’ proportionality instruction a misstatement of the law as to money laundering, as legitimate funds commingled with funds involved with laundering money are also subject to forfeiture. Furthermore, the parents’ theory of the case also included an incorrect proportionality instruction, as well as the prejudicial assertion that “the [g]overnment has not met is burden on tracing the [PNC Bank] funds.” Lastly, the court concluded that the government proved, by a preponderance of the evidence, that “Dr. Kivanc knowingly and willfully committed or conspired to commit health care fraud,” and that he had the specific intent to conceal illegal acts through money laundering. Thus, the district court properly denied the parents’ motion for a judgment as a matter of law.
– Stephen Sutherland