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United States v. Belfrey

United States District Court, D. Minnesota

August 15, 2017

United States of America, Plaintiff,
v.
Thurlee Belfrey 1, Roylee Belfrey 2, and Lanore Belfrey, a/k/a Lanore VanBuren, 3, Defendants.

          Robert M. Lewis, Assistant United States Attorney, United States Attorney's Office, Minneapolis, MN, on behalf of Plaintiff.

          Deborah K. Ellis, Esq., Ellis Law Office, St. Paul, MN, on behalf of Defendant Thurlee Belfrey.

          Kevin W. DeVore, Esq., Larson King, LLP, St. Paul, MN, on behalf of Defendant Roylee Belfrey.

          Glenn P. Bruder, Esq., Mitchell, Bruder & Johnson, Edina, MN, on behalf of Defendant Lanore Belfrey.

          MEMORANDUM OPINION AND ORDER

          ANN D. MONTGOMERY U.S. DISTRICT JUDGE

         I. INTRODUCTION

         This matter is before the undersigned United States District Judge for a ruling on Defendants Roylee Belfrey, Thurlee Belfrey, and Lanore Belfrey's (collectively, “Defendants”) Objections [Docket Nos. 221, 222, 223] to Magistrate Judge Tony N. Leung's July 5, 2017 Report and Recommendation [Docket Nos. 217, 218, 219] (“R&R”). In the R&R, Judge Leung recommends denying Thurlee Belfrey and Roylee Belfrey's Motions to Dismiss Count 1 [Docket Nos. 166, 181], denying Lanore Belfrey's Motion to Dismiss Counts 1 and 2 [Docket No. 178], and denying Lanore Belfrey's Motion to Suppress Statements, Admissions and Answers [Docket No. 173].[1] For the reasons set forth below, all of the Objections are overruled.

         II. BACKGROUND

         Defendants are charged in a multi-count indictment with conspiracy to commit health care and tax fraud. See generally Fourth Superseding Indictment [Docket No. 159]. The Fourth Superseding Indictment alleges that from 2001 to 2014, Defendants participated in a conspiracy to defraud the United States by concealing Thurlee Belfrey's involvement in the operations and management of a healthcare business that accepted money from the Medicare and Medicaid federal healthcare programs. Id. ¶¶ 9-10, 15-16. Thurlee Belfrey's involvement in the business was concealed because he was excluded by the Minnesota Department of Human Services (“DHS”) from participating in all federal healthcare programs after a felony conviction for Medicaid fraud in Minnesota state court. Id. ¶¶ 6, 8. The Fourth Superseding Indictment alleges that Defendants concealed Thurlee Belfrey's participation in the healthcare business by arranging for ownership of the business to be in the name of Thurlee Belfrey's wife, Lanore Belfrey. Id. ¶ 9, 16. Lanore Belfrey is also alleged to have: 1) falsely certified to the DHS that no persons with an ownership or control interest in the business and no agent or employee of the business had ever been convicted of a crime involving a Medicare or Medicaid program; 2) identified key employees of the business for background investigations, but intentionally withheld Thurlee Belfrey's name from DHS; and 3) signed IRS forms on behalf of the business even though Thurlee Belfrey controlled the business' operations. Id. ¶¶ 9, 26.

         In addition to concealing Thurlee Belfrey's involvement in the healthcare business, the Fourth Superseding Indictment also alleges Defendants “caused the submission of false and fraudulent claims . . . and the diversion of proceeds of the fraud” for the personal use and benefit of Defendants and others. Id. ¶¶ 10, 17. The healthcare business operated by Roylee and Thurlee Belfrey allegedly received millions of dollars from healthcare programs funded by the United States during the course of the conspiracy and scheme. Id. ¶ 10.

         Roylee and Thurlee Belfrey have filed Motions to Dismiss Count 1 of the Fourth Superseding Indictment, and Lanore Belfrey has filed a Motion to Dismiss Counts 1 and 2. Lanore Belfry has also filed a Motion to Suppress statements that she made to IRS agents who interviewed her in her home while law enforcement officers were executing a search of her residence. Judge Leung issued an R&R recommending that all of Defendants' motions be denied. All Defendants have filed Objections to the R&R.

         III. DISCUSSION

         A. Standard of Review

         A district judge may refer a defendant's motion to dismiss an indictment or motion to suppress evidence to a magistrate judge for recommendation. Fed. R. Crim. P. 59(b)(1). The district judge must make an independent, de novo determination of those portions of the report and recommendation to which a party objects. Fed. R. Crim. P. 59(b)(3); 28 U.S.C. § 636(b)(1)(C); D. Minn. L.R. 72.2(b). A district judge “may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge.” 28 U.S.C. § 636(b)(1)(C).

         B. Roylee and Thurlee Belfrey's Objections

         Roylee and Thurlee Belfrey both object to the recommendation to deny their Motions to Dismiss Count 1 of the Fourth Superseding Indictment. They contend that Count 1 fails to sufficiently allege an indictable offense. The legal ...


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