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United States v. Belfrey

United States Court of Appeals, Eighth Circuit

June 28, 2019

United States of America Plaintiff - Appellee
v.
Thurlee Belfrey Defendant-Appellant

          Submitted: February 15, 2019

          Appeal from United States District Court for the District of Minnesota - St. Paul

          Before LOKEN, COLLOTON, and KELLY, Circuit Judges.

          KELLY, CIRCUIT JUDGE.

         Thurlee Belfrey pleaded guilty to one count of conspiracy to defraud the United States and one count of failure truthfully to account for and pay over withheld taxes. The district court[1] varied below the United States Sentencing Guidelines range and sentenced him to 96 months of imprisonment. Belfrey challenges his sentence as procedurally and substantively unreasonable. Having carefully considered the issues, we affirm.

         I

         From 1994 until at least the end of 2013, Belfrey and his brother, Roylee Belfrey, controlled several home healthcare businesses providing personal care attendant (PCA) services. These PCA services are reimbursable by the Medicare and Medicaid programs funded jointly by the U.S. government and the state of Minnesota. Reimbursable PCA services include light housework, personal hygiene assistance, and food preparation.

         In 2000, the Minnesota Attorney General opened an investigation into fraudulent billing by one of Belfrey's companies. Criminal charges in state court followed, and in 2003 Belfrey pleaded guilty to felony-level fraud against the Medicaid program. He was sentenced to 60 days confinement and 20 years of supervised probation. The following year, the U.S. Department of Health and Human Services and the Minnesota Department of Human Services (DHS) ordered Belfrey's indefinite exclusion from participating in Medicare and Medicaid programs as a result of his conviction.

         Despite his exclusion, Belfrey continued to control at least one PCA business receiving government funds for almost a decade. Belfrey's unauthorized role within the company was extensive. He hired and fired employees; issued policies; directed the spending of money; controlled bank accounts; covertly directed communications with state agencies; and dealt with vendors, banks, and payroll processors. From the time of his exclusion until the end of 2013, the state of Minnesota paid Belfrey's business more than $18 million for PCA services. Belfrey's personal profit was more than $4.3 million.

         As part of his control of the company, Belfrey, along with his brother, who managed a separate healthcare entity, hired Kenneth Harycki, who would then assist the Belfrey brothers in committing tax fraud. Beginning in 2007, Harycki repeatedly prepared and filed tax forms falsely stating that the Belfreys' businesses were tax-compliant. In reality, between 2007 and 2013, the Belfreys failed to pay to the federal government more than $4 million in withheld taxes.

         In 2014, Belfrey and his brother were indicted on one count of conspiracy to defraud the federal government and one count of healthcare fraud. In February 2017, the fourth and final superseding indictment charged the Belfrey brothers and Belfrey's wife with 43 counts of conspiracy to defraud, tax fraud, and money laundering. Belfrey pleaded guilty to two counts: conspiracy to defraud the United States, in violation of 18 U.S.C. § 286, and failure truthfully to account for and pay over withheld taxes, in violation of 26 U.S.C. § 7202 and 18 U.S.C. § 2. The factual basis underlying Belfrey's conviction for conspiracy to defraud was his continued participation in a Medicare- and Medicaid-funded business despite his exclusion.

         At sentencing, the district court calculated a Guidelines range of 151 to 180 months of imprisonment-driven by Belfrey's conspiracy conviction-and sentenced him to 96 months for the conspiracy and 60 months for the tax offense, to be served concurrently. It also ordered three years of supervised release and restitution of $4, 592, 593.74 to the Internal Revenue Service (IRS) for the tax offense and $4, 351, 443.08 to the Minnesota DHS for the conspiracy, comprising the amount of Belfrey's personal profit derived from that offense. Belfrey appeals, challenging his sentence as procedurally and substantively unreasonable.

         II

         When reviewing a challenge to a sentence, we first ensure that the district court committed no procedural error, such as improperly calculating the Guidelines range. United States v. Feemster, 572 F.3d 455, 461 (8th Cir. 2009) (en banc). In so doing, we review the district court's factual findings for clear error and its application or interpretation of the Guidelines de novo. United States v. Petruk, 836 F.3d 974, 976 (8th Cir. 2016). If we find no procedural error, we then consider the substantive reasonableness of the sentence under an abuse-of-discretion standard. Feemster, 572 ...


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