United States v. Kelechi Ajoku

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA , No. 11-50230

Plaintiff-Appellee,

D.C. No.

v. 2:08-cr-01094-

WDK-5

KELECHI AJOKU , AKA Kelechi

Ajouku,

Defendant-Appellant. OPINION

Appeal from the United States District Court

for the Central District of California

William D. Keller, Senior District Judge, Presiding

Argued and Submitted

January 11, 2013—Pasadena, California

Filed June 3, 2013

Before: Alfred T. Goodwin, Michael Daly Hawkins,

and Kim McLane Wardlaw, Circuit Judges.

Opinion by Judge Hawkins

2 UNITED STATES V . AJOKU

SUMMARY*

Criminal Law

The panel affirmed a jury conviction of making false

statements relating to health care matters in violation of

18 U.S.C. § 1035.

Rejecting the defendant’s sufficiency-of-the-evidence

challenge, the panel reasoned: (1) a § 1035 violation requires

a finding that the “matter” involved a health benefit program,

not that the particular “statement” falsified or covered up

involved a health benefit program; (2) it was immaterial that

the defendant’s statements were made to California

investigators (rather than directly to federal authorities) in a

matter affecting the delivery of federal Medicare payments;

(3) there was sufficient evidence of materiality to Medicare;

(4) there was sufficient evidence of the defendant’s knowing

falsehood; and (5) there was sufficient evidence to find that

the defendant was aware the certified deliveries of devices

were not occurring and deliberately avoided the truth.

The panel held that whatever the merits of the defendant’s

contention that the jury could not return a guilty verdict under

a concealment theory without finding the defendant owed a

duty to disclose the truth, an issue that has never been decided

by this court, any error was not plain.

Holding that the district court did not err in instructing the

jury on “willfulness,” the panel applied to § 1035 the same

*

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

UNITED STATES V . AJOKU 3

definition used for the general false statements statute,

18 U.S.C. § 1001: willful “means no more than that the

forbidden act is done ‘deliberately and with knowledge.’”

Regarding materiality, the panel held that the district court’s

instruction properly limited the jury to considering whether

the defendant’s statements were capable of influencing a

decision or activity in a matter involving a health care benefit

program.

The panel rejected the defendant’s contention that the

district court admitted inflammatory and unduly prejudicial

evidence concerning the scope of the alleged billing fraud.

COUNSEL

Ethan A. Balogh (argued) and Jay A. Nelson, Coleman &

Balogh, San Francisco, California, for Defendant-Appellant.

Aaron M. May (argued), Assistant United States Attorney,

Andre Birotte Jr., United States Attorney, Robert E. Dugdale,

Assistant United States Attorney, Chief, Criminal Division,

Monica D. Mange, Assistant United States Attorney, United

States Attorney’s Office, Los Angeles, California, for

Plaintiff-Appellee.

OPINION

HAWKINS, Senior Circuit Judge:

Kelechi Ajoku (“Ajoku”), convicted of four counts of

making false statements relating to health care matters

(18 U.S.C. § 1035) and sentenced to thirteen months

4 UNITED STATES V . AJOKU

incarceration plus restitution, appeals, arguing the district

court erred by: (1) denying his motion for judgment of

acquittal on all counts because the government presented

insufficient evidence to support the convictions; (2) failing to

instruct the jury that a duty to disclose is an element of false

statements by concealment; (3) improperly instructing the

jury on the elements of willfulness and materiality; and (4)

admitting inflammatory and unduly prejudicial evidence

concerning the scope of the alleged billing fraud. He also

argues that the cumulative effect of these errors requires

reversal. We have jurisdiction pursuant to 28 U.S.C. § 1291

and affirm.

FACTS AND PROCEDURAL HISTORY

In 2005, Ajoku, a licensed vocational nurse, was offered

a job to serve as the “exemptee” for the Santos Medical

Supply Company (“Santos”) at a salary of $400 per month.

Under California regulations, an exemptee, acting like a

pharmacist, is responsible for maintaining and distributing

prescription medical devices for retailers like Santos. Cal.

Health & Safety Code §§ 111656.4–111656.5. Santos did not

require Ajoku, who was working 70–80 hours a week at two

other jobs, to actually perform the functions of exemptee as

a condition of compensation. Rather, Ajoku was required

only to complete paperwork and remain on call to come into

the business and answer questions if government inspectors

visited the facility.

Ajoku agreed to the arrangement and prepared an

application for his exemptee license. When his first exemptee

application was rejected due to insufficient information,

Ajoku supplemented the application by signing a backdated

employment contract and an affidavit that stated he would be

UNITED STATES V . AJOKU 5

present whenever prescription devices were dispensed and he

would have exclusive control over the items—facts Ajoku

knew to be false. After Ajoku received his license, he was

paid a $300 bonus, and put on the Santos payroll. Santos

immediately began to bill Medicare for device sales—

something it could not lawfully do without a state licensed

exemptee.

Although Ajoku was unaware that Santos was entirely

organized and executed to defraud Medicare by billing the

program for medical devices never delivered, Santos’s sham

transactions would not have been possible with a real

exemptee ensuring the prescription devices were distributed

in accordance with state regulations. Santos ultimately billed

Medicare for $2.9 million in fraudulent claims, for which it

was paid approximately $1.8 million.

Ajoku never performed the duties of an exemptee but

would visit Santos from time-to-time to complete paperwork

for the group. In 2005, Ajoku completed and signed multiple

training forms certifying to Medicare that he had delivered

and trained patients to use motorized wheelchairs even

though he had not done so. Ajoku renewed his exemptee

license annually from 2006 through 2008, each year

certifying to California that he was working as a proper

exemptee for Santos.

On April 16, 2008, a California Department of Public

Health inspector visited Santos and Ajoku was summoned to

answer his questions. Though Santos passed the inspection,

the investigator tipped off Medicare officials of possible

fraud at the company. On May 2, 2008, two agents of the

U.S. Department of Health and Human Services visited

Santos wearing hidden video and audio recorders. Ajoku was

6 UNITED STATES V . AJOKU

again called in to pose as an active exemptee for Santos.

Answering the agents’ questions, Ajoku asserted that he had

responsibility for storing and distributing the prescription

goods and training patients on their use. After a few minutes,

Ajoku ended the line of questioning by telling the agents he

had to go.

A federal grand jury subsequently returned an indictment

against Ajoku and other members of the Santos operation, the

final version of which alleged health care fraud, conspiracy

to commit health care fraud, and false statements. By the time

of trial, everyone but Ajoku had entered guilty pleas. The

government proceeded to trial on the false statement counts

(18 U.S.C. § 1035) and Ajoku was convicted on each count.

DISCUSSION

I. Sufficiency Challenges

We review de novo claims of insufficient evidence,

asking whether the evidence, viewed in the light most

favorable to the prosecutor, could allow “any rational trier of

fact” to find the essential elements of the crime beyond a

reasonable doubt. United States v. Nevils, 598 F.3d 1158,

1163–64 (9th Cir. 2010) (quoting Jackson v. Virginia,

443 U.S. 307, 319 (1979)) (emphasis omitted).

A. The Jurisdictional Element

There was sufficient evidence to convict Ajoku of making

a false statement relating to a health care benefit program for

his communication with California officials under 18 U.S.C.

§ 1035(a). That section provides:

UNITED STATES V . AJOKU 7

Whoever, in any matter involving a health

care benefit program, knowingly and

willfully—

(1) falsifies, conceals, or covers up by any

trick, scheme, or device a material fact; or

(2) makes any materially false, fictitious,

or fraudulent statements or representations, or

makes or uses any materially false writing or

document knowing the same to contain any

materially false, fictitious, or fraudulent

statement or entry,

in connection with the delivery of or

payment for health care [shall be punished

accordingly].

A plain reading of 18 U.S.C. § 1035(a) reveals that the

jury was required to find that the “matter” involved a health

benefit program, not that the particular “statement” falsified

or covered up involved a health benefit program. Id. The jury

was presented with evidence that Ajoku’s statements and

writings were made in connection with the delivery of and

Medicare payment for prescription devices because Santos

could not bill Medicare for devices without employing and

utilizing a qualified exemptee under California law.

We need not address the outer limit of whether a

statement “involv[es]” a health care program for the purposes

of § 1035 because there was sufficient evidence to determine

that Ajoku’s statements to California authorities were made

in a matter involving Medicare. While Ajoku made his

statements to California rather than federal authorities, we

8 UNITED STATES V . AJOKU

have held that false statements that are not made to federal

authorities but that concern matters of interest to the federal

government may fall within federal oversight. For example,

§ 1035 is substantially identical to 18 U.S.C. § 1001, which

sanctions anyone who “knowingly and willfully . . . makes

any materially false, fictitious, or fraudulent statement or

representation” concerning “any matter within the jurisdiction

of the executive, legislative, or judicial branch of the

Government of the United States . . . .” We have previously

held that § 1001 encompasses statements involving matters of

federal concern, even when those statements were made to

state investigators. See United States v. King, 660 F.3d 1071,

1081 (9th Cir. 2011), cert. denied, 132 S. Ct. 2740 (2012)

(holding that false statements made to an Idaho agricultural

inspector were sufficiently tied to federal interests to violate

§ 1001). We have also held that § 1001 encompasses false

documents that were never actually provided to any

governmental entity, so long as they were intended to be used

in a matter of federal concern. See United States v. Balk,

706 F.2d 1056, 1059 (9th Cir. 1983) (“Under section 1001,

the falsified documents did not have to be submitted to the

Navy; it is only necessary that their intended use be related to

a matter within the jurisdiction of the Navy.”). Given our

precedent, it is immaterial that Ajoku’s statements were made

to California investigators rather than directly to federal

authorities. Instead, it is sufficient for the purposes of § 1035

that the statements were made to state authorities in a matter

affecting the delivery of federal Medicare payments.

B. Materiality to Medicare of State Regulatory

Compliance

Ajoku was charged in count one with falsifying,

concealing, or covering up that Santos maintained and

UNITED STATES V . AJOKU 9

distributed syringes outside his presence and control. A

statement is material if it has “a natural tendency to influence,

or be capable of influencing, the decision of the

decisionmaking body to which it was addressed.” United

States v. Gaudin, 515 U.S. 506, 509 (1995) (quoting Kungys

v. United States, 485 U.S. 759, 770 (1988)). The jury heard

sufficient evidence that Ajoku’s statements and concealment

were addressed to Medicare. Among other things, Ajoku

concedes that some of his statements to investigators were

directed to Medicare. His other statements included his

application for the exemptee license, the annual renewals, and

his participation in a regulatory compliance inspection. This

license was sent to Medicare on four occasions. Further, there

was evidence that Ajoku’s statements and concealments had

the ability to influence Medicare: Medicare officials would

not have paid Santos’s billing claims had it been informed

that Ajoku was not exercising exemptee responsibility over

medical devices, like feeding syringes.

C. Proof of Knowing Falsehood

There was also sufficient evidence that Ajoku knowingly

provided false information to Medicare investigators in the

form of circumstantial evidence sufficient to establish both

actus reus and mens rea. See In re Khalil, 578 F.3d 1167,

1169 (9th Cir. 2009) (“Fraudulent intent may be inferred from

a pattern of behavior.”). For example, there was undisputed

evidence that: (1) Santos did not deliver enteral nutrition with

syringes; (2) Ajoku told the agents otherwise; and (3) Ajoku

was paid to take the title of exemptee without ever exercising

any of its duties. Ajoku took the position at trial that he

believed his statements to be true and that some of the

statements were true, if interpreted within the proper context.

However, required, as we are, to view the evidence in the

10 UNITED STATES V . AJOKU

light most favorable to the government, see Jackson, 443 U.S.

at 319, we cannot say that the record required “any rational

trier of fact” to choose Ajoku’s interpretation over that of the

government. Nevils, 598 F.3d at 1163–64.

D. Imputation of Knowledge to a Willfully Blind

Defendant

Ajoku argues that the jury was presented with insufficient

evidence to find that he falsely represented that the named

patients were supplied and trained on motorized wheelchairs

as charged in counts two through four of the trial indictment

because there was no evidence that he knew Santos did not

deliver the wheelchairs and delivered cheap motor scooters

instead.

While there is no evidence that Ajoku actually knew

about Santos’s scam, the doctrine of willful blindness imputes

knowledge to a “defendant who all but knew the truth—a

defendant who suspects a fact, realizes its high probability,

but refrains from obtaining final confirmation in order to be

able to deny knowledge if apprehended.” United States v.

Heredia, 483 F.3d 913, 928 (9th Cir. 2007) (internal

quotation marks and citations omitted). Ajoku signed forms

stating that he was the person who had delivered motorized

wheelchairs to the three named individuals and had trained

them on the use of the wheelchairs, knowing he had never

done any such thing. Ajoku may not have been told that

Santos failed to deliver wheelchairs to the patients, but he

certainly did know that he, the responsible technician, had not

delivered the wheelchairs, and he never asked who delivered

the wheelchairs instead of him.

UNITED STATES V . AJOKU 11

The jury thus had sufficient evidence to find that Ajoku

was aware the certified deliveries were not occurring and

deliberately avoided learning the truth. See id.

II. Duty to Disclose

Ajoku argues for the first time on appeal that the district

court erred in failing to instruct the jury that it could not

return a guilty verdict under a concealment theory without

finding Ajoku owed a duty to disclose the truth. In the

absence of a preserved objection, we apply plain error review

for the jury instruction claim and may reverse only if any

instructional error was clearly erroneous under current law.

See United States v. Olano, 507 U.S. 725, 734 (1993). Having

no clearly established law to guide its decision, any error in

omitting an element from the instruction was not plain. See

id. Whatever the merits of this contention, the issue has never

been decided by this court. Therefore, the error, if any, was

not plain.

III. Jury Instruction on Willfulness

The mens rea element of 18 U.S.C. § 1035 is “knowingly

and willfully.” The Supreme Court has described willfully as

“a word of many meanings whose construction is often

dependent on the context in which it appears.” Bryan v.

United States, 524 U.S. 184, 191 (1998) (internal quotation

marks and citation omitted).

In the context of false statement crimes, however,

willfulness simply means “deliberately and with knowledge,”

and does not require knowledge of unlawfulness. United

States v. Tatoyan, 474 F.3d 1174, 1182 (9th Cir. 2007) (citing

Browder v. United States, 312 U.S. 335, 341 (1941))

12 UNITED STATES V . AJOKU

(interpreting 18 U.S.C. § 1001); see also United States v.

Heuer, 4 F.3d 723, 732 (9th Cir. 1993) (same). This is

consistent with the “traditional rule,” recognized in Bryan

that ignorance of the law is no defense. 524 U.S. at 196.

18 U.S.C. § 1035 is a false statement crime substantively

identical to 18 U.S.C. § 1001, except that § 1035 is

jurisdictionally limited to matters involving a health care

benefit program and § 1001 is jurisdictionally limited to

matters within the jurisdiction of the executive, legislative, or

judicial branch of the United States government. Both statutes

use nearly identical language. While § 1035 sanctions anyone

who “knowingly and willfully . . .makes any materially false,

fictitious or fraudulent statements or representations,” § 1001

sanctions anyone who “knowingly and willfully . . .makes

any materially false, fictitious or fraudulent statement or

representation.” If this nearly identical language were not

enough, Congressional intent behind both statutes was also

similar; both statutes are intended to protect federal interests

from the harms of knowing and willful fraud and deception.1

Where two statutes use similar language and were enacted for

the same purpose, it is appropriate to interpret the language

of the statutes pari passu. See Northcross v. Bd. of Ed. of

Memphis City Sch., 412 U.S. 427, 428 (1973). This

interpretive rule “is a reflection of practical experience in the

1

T he current version of 18 U.S.C. § 1001 was enacted to “protect the

authorized functions of governmental departments and agencies from the

perversion which might result from . . . deceptive practices,” United States

v. Rodgers, 466 U.S. 475, 480 (1984) (quoting United States v. Gilliland,

312 U.S. 86, 93 (1941)). 18 U.S.C. § 1035 was enacted as part of Health

Insurance Portability and Accountability Act of 1996, legislation that was

intended in part to “combat waste, fraud and abuse in health insurance and

health care delivery . . . .” Pub. L. No. 104-91, tit. II, § 244(a), 110 Stat.

2017 (1996).

UNITED STATES V . AJOKU 13

interpretation of statutes: a legislative body generally uses a

particular word with a consistent meaning in a given context.”

Erlenbaugh v. United States, 409 U.S. 239, 243 (1972). We

therefore apply the same definition of willful used for the

general false statements statute to interpret willful in

18 U.S.C. § 1035: willful “means no more than that the

forbidden act is done ‘deliberately and with knowledge.’”

United States v. Carrier, 654 F.2d 559, 561 (9th Cir. 1981)

(quoting Hirsch v. INS, 308 F.2d 562, 567 (9th Cir. 1962))

(defining “willful” for purposes of 18 U.S.C. § 1001).

Accordingly, the prosecution was required only to show that

Ajoku’s statements were made deliberately and with

knowledge that the statements were untrue or the document

was false. Because the district court so instructed the jury, it

did not err.

IV. Jury Instruction on Materiality

Because Ajoku did object to the instructions on

materiality, we review de novo to determine whether the

instructions omitted or misstated an element of the crime. See

United States v. Knapp, 120 F.3d 928, 930 (9th Cir. 1997).

Ajoku contends that the jury instructions were vague and

overbroad because the district court failed to add the phrase

“involving a health care benefit program” to the jury

instruction on materiality. However, the same instruction

told the jurors that they could not convict Ajoku unless they

found that his statements were made in a matter “involving a

health care benefit program.” Though the court did not use

the “precise words” preferred by Ajoku, the instruction

properly limited the jury to considering whether Ajoku’s

statements were capable of influencing a decision or activity

in a matter involving a health care benefit program. See

United States v. Frega, 179 F.3d 793, 807 (9th Cir. 1999).

14 UNITED STATES V . AJOKU

V. Admission of Evidence Regarding the Scope of the

Fraud

Non-constitutional evidentiary decisions are reviewed for

abuse of discretion and reversal is appropriate only if the

error “more likely than not affected the verdict.” United

States v. Decoud, 456 F.3d 996, 1010 (9th Cir. 2006) (internal

quotation marks and citations omitted). The probative value

of the details of the Santos operation in determining whether

Ajoku’s statements involved and were material to Medicare

outweighed any prejudice. See Fed. R. Evid. 402. Ajoku

suggests no evidence that the government could have

presented to establish the elements absent the financial effect

of the fraud. See Old Chief v. United States, 519 U.S. 172,

186 (1997). While Ajoku was personally unaware of the

scope of the fraud, the details of the scheme were not so

viscerally abhorrent to the jurors as to preclude them from

viewing the rest of the case fairly. See United States v.

Merino-Balderrama, 146 F.3d 758, 762–63 (9th Cir. 1998)

(district court admission of child pornography with “graphic

sexual conduct” was error because of unduly prejudicial

effect of “inflammatory”evidence).

VI. Cumulative Error

There was sufficient evidence to support Ajoku’s

convictions, and no plain error or abuse of discretion in the

jury instructions or the admission of evidence. Because we

determine no error occurred, there is no cause to conduct a

review under the cumulative error doctrine. United States v.

Jeremiah, 493 F.3d 1042, 1047 (9th Cir. 2007).

AFFIRMED.