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United States v. Nguyen

United States District Court, D. Minnesota

August 9, 2017

United States of America, Plaintiff,
v.
Huy Ngoc Nguyen 1, Jerome Tarlve Doe 2, Napoleon Tutex Deah 3, Defendants.

          David Michael Maria and John Kokkinen, Assistant United States Attorneys, for Plaintiff.

          Daniel Scott for Defendant Huy Ngoc Nguyen.

          Robert Owens for Defendant Jerome Tarlve Doe.

          Shannon R. Elkins for Defendant Napoleon Tutex Deah.

          AMENDED REPORT AND RECOMMENDATION

          FRANKLIN L. NOEL UNITED STATES MAGISTRATE JUDGE

         THIS MATTER came before the undersigned United States Magistrate Judge on May 23, 2017, on Defendant Huy Ngoc Nguyen's motion to suppress search and seizure evidence (ECF No. 77); as well as Defendants Nguyen, Jerome Tarlve Doe, and Napolean Tutex Deah's collective motion to dismiss the Indictment (ECF No. 69). This matter was referred to the undersigned for Report and Recommendation pursuant to 28 U.S.C. § 636 and Local Rule 72.1. At the hearing, the Government entered two exhibits into evidence. See Exhibit and Witness List, ECF No. 83. For the reasons set forth below, Defendants' motions should be DENIED.

         A. The Indictment

         On December 20, 2016, a United States Grand Jury returned an indictment, charging Defendant Huy Ngoc Nguyen with making illegal kick-back payments to Defendants Jerome Tarlve Doe and Napoleon Tutex Deah, in a scheme to defraud automobile insurance companies by submitting claims and receiving reimbursements through his chiropractic clinics for chiropractic services that either were not medically necessary or were not rendered. Indictment, ECF No. 1. Defendants are charged with one count of conspiracy to commit health care fraud and one count of conspiracy to commit mail fraud, in violation of 18 U.S.C. § 1349. Id. at 18-21; see also 18 U.S.C. §§ 1341, 1347. The Indictment alleges that Nguyen, who is a chiropractor and the chief executive officer of Healthcare Chiropractic Clinic, Inc. (“Healthcare Chiropractic”), paid Doe and Deah, to recruit automobile accident victims to show up for medical appointments and continue receiving unnecessary chiropractic services. Id. ¶¶ 2-17. Defendants are also alleged to have paid some of these recruited patients directly to continue going to Nguyen's clinics for chiropractic treatments. Id. ¶ 12. Under this scheme, Defendants are accused of causing automobile insurance companies to have paid millions of dollars as a result of false and fraudulent reimbursement claims. Id. ¶ 17. Trial is scheduled to begin on October 16, 2017, before the Honorable Judge Michael J. Davis. Order, ECF No. 85.

         B. Motion to Suppress Search and Seizure Evidence (ECF No. 77)

         On December 14, 2015, the Honorable Magistrate Judge Becky Thorson signed two search warrants authorizing the search of Healthcare Chiropractic offices located in Minneapolis, Minnesota, and in Brooklyn Park, Minnesota. Gov't Exs. 1-2, ECF No. 83. Nguyen now moves to suppress any evidence obtained during searches pursuant to these warrants, contending that because the affidavits in support of the warrants rely on Minnesota Statute section 609.12[1] (“the Runner Statute”) and because the affiant failed to include reference to the August 19, 2014, Illinois Farmers Insurance Co. v. Mobile Diagnostic Imaging Order, see No. 13-cv-2820 PJS/TNL, 2014 WL 4104789, at *1 (D. Minn. Aug. 19, 2014), Magistrate Thorson did not know to disregard the allegations related to the Runner Statute in the affidavit. See Mot. to Suppress, ECF No. 77. If she had, Nguyen contends, Judge Thorson would have determined that the affidavit does not support a finding of probable cause. See Id. Nguyen also asserts that the warrants “cannot be saved by United States v. Leon, 468 U.S. 897, 915, 924 (1984)[, ] because no agent could have believed that his declaration on the reach of the mail fraud law could supply probable cause to support the issuance of a search warrant.” See Id. The Government argues that Illinois Farmers, “does not foreclose a federal prosecution for mail, wire, or health care fraud based on evidence that chiropractors made kickback payments to runners and then omitted, failed to disclose, or concealed that practice.” Gov't Opp'n Mem. 34, ECF No. 79. Additionally, the Government contends that the search warrant does not rely on violations of the Runner Statute as the basis for the fraud charges. Id. at 34-35.

         After reviewing the Order, the Court first observes that Illinois Farmers does not foreclose a federal prosecution under the facts alleged in the Indictment, nor does it prohibit a probable cause finding that evidence of a crime may be found based on the affidavits at issue in this case. See 2014 WL 4104789. Here, FBI Special Agent Jennifer Khan authored nearly identical affidavits in support of the search warrants to the Heathcare Chiropractic offices. ECF No. 83, Gov't Exs. 1-2. The affidavits include approximately seven pages outlining the ongoing joint investigation of the FBI and the Minnesota Department of Commerce Fraud Bureau into the suspected scheme and fraud. Id. Based on evidence collected from a confidential informant and an FBI confidential employee posing as a patient, Khan attested that she believed evidence of a fraud could be found in the Heathcare Chiropractic offices. Id.

         Assuming without deciding that the search warrants lacked probable cause, the Court concludes that the evidence is nonetheless admissible under the good-faith exception to the exclusionary rule as articulated in Leon. See 468 U.S. at 922; see also United States v. Clay, 646 F.3d 1124 (8th Cir. 2011) (“[T]he exclusionary rule should not be applied so as to bar the admission of evidence obtained by officers acting in reasonable reliance on a search warrant issued by a detached and neutral magistrate, even if that search warrant is later held to be invalid.” (citing Leon, 468 U.S. at 900)).

         The Eighth Circuit has outlined four situations where an officer's reliance on a warrant would be unreasonable: (1) the officer included information in the affidavit that he knew was false or would have known was false except for his reckless disregard of the truth; (2) the affidavit is so lacking in probable cause that it is objectively unreasonable for the officer to rely on it; (3) the judge failed to act in a neutral and detached manner; or (4) the warrant is so facially deficient that the officer cannot reasonably presume the warrant to be valid. See United States v. Phillips, 88 F.3d 582, 586 (8th Cir. 1996) (citing Leon, 468 U.S. at 922). None of these situations are applicable here. This is not a situation where the supporting affidavits were so devoid of factual support that it would be objectively unreasonable for a law enforcement officer to rely on it. Cf. United States v. Herron, 215 F.3d 812 (8th Cir. 2000) (concluding that the good-faith exception did not apply where the affidavit at issue contained no facts that the defendant was involved in marijuana activities or that such activities were occurring on the premises searched). The record does not support a finding that the officers' reliance on the warrants were unreasonable. See Leon, 468 U.S. at 922. Additionally, there is no evidence that Khan included false information in the warrant application, that Judge Thorson failed to act in a neutral manner, or that the warrants were so facially deficient it would be unreasonable for an officer to rely on them. Indeed, Nguyen does not argue that there are factual deficiencies in the affidavits, but only contends that Khan failed to include what he believes to be applicable law. Therefore, the motions to suppress evidence obtained pursuant to the search warrants authorizing the search of the Heathcare Chiropractic offices, must be denied. See id.

         C. Motion to ...


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