United States v. Thurlee Belfrey
928 F.3d 746
| 8th Cir. | 2019Background
- Thurlee Belfrey controlled home-healthcare/PCA businesses reimbursed by Medicare/Medicaid and was criminally convicted in state court in 2003 for Medicaid fraud, leading to an administrative exclusion from Medicare/Medicaid.
- Despite the exclusion, Belfrey continued to operate and control at least one PCA business from ~2004–2013; Minnesota paid the business over $18 million and Belfrey personally profited over $4.3 million.
- From 2007–2013 Belfrey (with others) failed to pay over more than $4 million in withheld federal taxes; he pleaded guilty in federal court to conspiracy to defraud the United States (18 U.S.C. § 286) and to failure to account for/pay withheld taxes (26 U.S.C. § 7202/18 U.S.C. § 2).
- The PSR produced a Guidelines range of 151–180 months; the district court applied several enhancements and sentenced Belfrey to a downward-variant term of 96 months (concurrent with 60 months on the tax count), plus restitution and supervised release.
- Belfrey appealed, arguing procedural errors in Guidelines calculations (loss amount, role enhancement, double counting, sophisticated-means enhancement) and substantive unreasonableness of the 96‑month sentence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Loss amount under §2B1.1(b)(1)(K) | Belfrey: actual net loss should credit Medicaid for legitimate PCA services; loss should be ~Belfrey’s profit (~$4.35M) not $18.3M | Government/district court: actual loss = gross Medicaid payments after exclusion ($18.3M); district court used that figure | Court: even if lower loss were proper, any error was harmless because district court stated loss choice did not affect the 96‑month sentence; affirm. |
| §3B1.1(a) role enhancement (organizer/leader & extensive) | Belfrey: challenge to extent/five‑participant requirement | Government: offense lasted a decade, millions lost, use of many outsiders, corporate structures show extensive scheme | Court: enhancement proper—Belfrey conceded leadership and record supports that scheme was “otherwise extensive.” |
| Double counting re §2B1.1(b)(9)(C) for violating exclusion order | Belfrey: enhancement duplicates criminal‑history points tied to the state conviction that led to exclusion | Government: criminal history accounted for state conviction/probation, not the later exclusion‑violation conduct | Court: no impermissible double counting; different conduct/penalized aspects. |
| Sophisticated‑means enhancement §2B1.1(b)(10)(C) | Belfrey: scheme was simple—participation despite exclusion | Government: coordinated use of many bank accounts and entities, strawmen, funds funneled through 154 accounts and 38 entities | Court: factual finding not clearly erroneous; repetitive, coordinated concealment supports sophisticated‑means enhancement. |
| Substantive reasonableness of 96‑month variant | Belfrey: requested greater downward variance for motive, community service, business context, financial strain | Government/district court: seriousness, long duration, and need for deterrence/just punishment justify sentence | Court: no abuse of discretion; district court made individualized §3553(a) assessment and adequately considered arguments. |
Key Cases Cited
- United States v. Feemster, 572 F.3d 455 (8th Cir. 2009) (procedural/substantive framework for appellate review of sentences)
- United States v. Walker, 818 F.3d 416 (8th Cir. 2016) (net‑loss approach explanation for actual loss under §2B1.1)
- United States v. Hartstein, 500 F.3d 790 (8th Cir. 2007) (actual loss defined as difference between payments and recoveries plus foreseeable pecuniary harm)
- United States v. Musa, 830 F.3d 786 (8th Cir. 2016) (elements for §3B1.1 organizer/leader enhancement)
- United States v. Sethi, 702 F.3d 1076 (8th Cir. 2013) (‘‘otherwise extensive’’ may be shown by multi‑year, large‑loss schemes)
- United States v. Meadows, 866 F.3d 913 (8th Cir. 2017) (review standard and examples supporting sophisticated‑means enhancement)
- United States v. Clark, 780 F.3d 896 (8th Cir. 2015) (double‑counting analysis and when prohibited)
- United States v. Straw, 616 F.3d 737 (8th Cir. 2010) (harmless‑error application where district court states guideline error did not affect sentence)