United States v. Cynthia Harlan
714 F. App'x 220
| 4th Cir. | 2017Background
- Cynthia Harlan and Claude McRae (with Tyree Jones) were indicted for conspiracy to commit health-care fraud; Harlan faced additional counts including false statements, aggravated identity theft, and obstruction. Jones pleaded guilty; Harlan and McRae were tried jointly and convicted.
- Harlan was sentenced to 192 months, McRae to 88 months. Both appealed various rulings.
- At trial, the government introduced (1) an audit-results letter concerning suspected fraudulent billing by a predecessor company and (2) an expenditure chart showing McRae’s personal Las Vegas spending from company funds.
- Evidence showed McRae co-owned CC1 (and its predecessor), submitted a Medicaid application concealing a co-owner, received spreadsheets from Harlan detailing fraudulent billing splits, profited substantially, and produced incomplete records to investigators.
- At sentencing, the court attributed multi-million-dollar intended loss amounts to both defendants and applied enhancements (including abuse of trust for McRae); Harlan challenged attribution of $12,000,000 loss to her.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admission of audit-results letter (McRae) | Government: letter was intrinsic and/or admissible under Rule 404(b) for intent/knowledge | McRae: letter was prejudicial and he never saw it | Admitted—intrinsic to conspiracy; alternatively admissible under Rule 404(b); probative value not substantially outweighed by prejudice |
| Admission of expenditure chart (McRae) | Government: business-account spending on personal trips is evidence of fraud | McRae: chart was improper/excludable evidence | Even if admission erred, error harmless given other strong evidence of guilt |
| Sufficiency of evidence to convict (McRae) | Government: ample evidence of knowing participation, concealment, and profit | McRae: lacked proof he knowingly joined conspiracy; acted innocently | Conviction upheld—substantial evidence supported knowing participation and receipt of proceeds |
| Severance motion (Harlan) | Harlan: joint trial prejudiced her; sought separate trial under Rule 14 | Government: joint trial appropriate in conspiracy case; limiting instructions suffice | Denial affirmed—no abuse of discretion; new arguments on appeal fail plain-error review |
| Loss attribution at sentencing (Harlan) | Harlan: only actual loss should be used; she didn't intend to receive full billed amounts | Government: intended loss controls when greater; Harlan failed to rebut intent | Affirmed—court reasonably used intended loss and Harlan failed to rebut presumption of intent |
| Sentencing procedural/substantive reasonableness (McRae) | McRae: challenged loss calc, §3B1.3 abuse-of-trust enhancement, and lack of mitigating-role reduction; argued substantive disparity | Government: Guidelines properly calculated; enhancements supported; disparity explained by guilty plea of co-defendant | Sentence procedurally and substantively reasonable; challenges rejected |
Key Cases Cited
- United States v. Sterling, 860 F.3d 233 (4th Cir.) (admissibility and balancing under Rule 403/404(b))
- United States v. Otuya, 720 F.3d 183 (4th Cir.) (intrinsic evidence doctrine in conspiracy cases)
- Zafiro v. United States, 506 U.S. 534 (1993) (Rule 14 severance standard; limiting instructions often suffice)
- United States v. Wolf, 860 F.3d 175 (4th Cir.) (standard of review for sufficiency of evidence challenges)
- United States v. Perry, 757 F.3d 166 (4th Cir.) (substantial-evidence standard for affirming convictions)
- United States v. Louthian, 756 F.3d 295 (4th Cir.) (deference to jury credibility determinations)
- Gall v. United States, 552 U.S. 38 (2007) (abuse-of-discretion review for sentencing reasonableness)
- United States v. Stone, 866 F.3d 219 (4th Cir.) (loss-estimate and sentencing calculation principles)