United States v. Melvin Ada
700 F. App'x 689
| 9th Cir. | 2017Background
- Melvin G. Ada pleaded guilty to theft/embezzlement, health care fraud, and money laundering arising from his embezzlement of checks from Midwest Medical Supply Company (MMS).
- Ada opened and used bank accounts with names deceptively similar to MMS and manipulated financial records to deposit and transfer stolen MMS checks.
- Ada’s conduct forced a government hospital to close its peritoneal dialysis clinic for several months, causing patients to need more serious treatment.
- The District Court applied two-level "sophisticated means" enhancements to the theft/fraud and money-laundering counts, a two-level leadership enhancement to money laundering, and an upward departure (three levels) for disruption of government function and endangerment to public welfare.
- The District Court awarded MMS $132,565.08 in restitution; the Government conceded part of that award was unsupported and the Ninth Circuit remanded restitution for recalculation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Sophisticated means enhancement (theft/fraud) | Ada: enhancement improper; conduct not sufficiently complex | Government: deceptive accounts and record manipulation suffice | Affirmed: enhancement upheld |
| Sophisticated laundering enhancement | Ada: enhancement improper; no classic laundering mechanisms | Government: multiple deceptive accounts and transfers show sophistication | Affirmed: enhancement upheld |
| Leadership enhancement (money laundering) | Ada: no organizer/leader over others | Government: wife participated; Ada directed scheme | Affirmed: enhancement upheld |
| Upward departures for government disruption and public-welfare endangerment | Ada: impermissible double-counting | Government: separate harms—clinic closure and patient harm—justify departures | Affirmed: departures not an abuse of discretion |
| Restitution to MMS | Ada: award excessive; MMS didn’t prove all claimed loss caused by Ada | Government conceded MMS failed to prove CHC’s unpaid invoices were caused by Ada | Vacated and remanded for recalculation of restitution |
Key Cases Cited
- United States v. Tanke, 743 F.3d 1296 (9th Cir. 2014) (upholding sophisticated-means application in fraud contexts)
- United States v. Dota, 33 F.3d 1179 (9th Cir. 1994) (definition of a participant for leadership enhancements)
- United States v. Alonso, 48 F.3d 1536 (9th Cir. 1995) (standard for applying leadership enhancement)
- United States v. Sablan, 114 F.3d 913 (9th Cir. 1997) (discussing upward departures for government disruption)
- United States v. Swor, 728 F.3d 971 (9th Cir. 2013) (restitution requires proof that defendant caused the victim's loss)