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United States v. Hofstetter

United States District Court, E.D. Tennessee

October 28, 2019




         This criminal case is before the Court on what the Court is interpreting as a motion [Doc. 684] by defendant Sylvia Hofstetter to reconsider the Court's ruling on her motion in limine regarding prior bad acts [Doc. 585]. Defendant's motion in limine sought to exclude evidence of alleged thefts by defendant under Rules 402, 403, and 404(b) of the Federal Rules of Evidence [Id.]. The government responded in opposition [Doc. 624]. The Court orally denied defendant's motion at a pretrial conference [Doc. 641]. At that pretrial conference, the Court requested supplemental briefing on two other motions in limine [Docs. 587, 588]. Defendant subsequently filed what is styled as: Defendant's Post Hearing Brief in Response to the Government's Response to the Motion in Limine Regarding Hofstetter's Prior Bad Acts [Doc. 624], again urging the Court to find this evidence inadmissible under Rules 403 and 404(b). At a subsequent hearing, the Court stated that it interpreted defendant's filing to be a motion to reconsider and requested that the government file a response. The government responded [Doc. 700]. This issue is now ripe.

         I. Background

         This case arises out of the operation of pain management clinics by the Urgent Care & Surgery Center Enterprise (“UCSC”) in Hollywood, Florida and East Tennessee [Doc. 320, ¶¶ 8-11]. UCSC was allegedly organized and lead by Luca Sartini, Luigi Palma, and Benjamin Rodriquez [Id. ¶ 30]. The indictment alleges that Sartini, Palma, and Rodriguez employed defendant Sylvia Hofstetter at the Hollywood clinic in or about 2009 or early 2010. Defendant allegedly administered and managed the Hollywood clinic until in or about December 2010 [Id. ¶ 20, 54.22-24]. Defendant later moved to East Tennessee to administer and manage other UCSC clinics, specifically a clinic on Gallaher View Road in Knoxville and a clinic in Lenoir City (collectively, the Comprehensive Healthcare Systems (“CHCS”) clinics) [Id. ¶ 20, 54.22-24]. Defendant administered and managed the CHCS clinics from about May 2011 to about March 2015 [Id. ¶ 20].

         The indictment charges defendant Hofstetter with, among other offenses, a RICO conspiracy (Count One) [Doc. 320 ¶¶ 28-58], conspiracies to illegally distribute and dispense controlled substances (Counts Two and Four) [Id. ¶¶ 59-69, 72-80], and money laundering conspiracies (Counts Three and Five) [Id. ¶¶ 70-71, 81-82]. Count One alleges racketeering activities, including violations of federal drug trafficking and money laundering laws. The operation of the Hollywood clinic and the CHCS clinics is the subject of alleged overt acts in furtherance of the RICO conspiracy. Counts Two and Three relate to the operation of the CHCS clinics. Specifically, Count Three alleges defendant conspired to launder the proceeds of the conspiracy to distribute controlled substances at CHCS clinics alleged in Count Two.

         Defendant anticipates that the government may seek to introduce evidence through cooperating witnesses that defendant was fired from the Hollywood clinic by Sartini, Palma, and/or Rodriguez for allegedly stealing clinic funds and that defendant was allegedly stealing funds from CHCS clinics after moving to Tennessee [Doc. 585 p. 1]. The government confirmed that its anticipated evidence will show just that: “Indeed, she was fired as an employee of the Hollywood, Florida, pill mill for skimming cash from patient visits only to be rehired to start and run the pill mills in Tennessee” [Doc. 700 p. 1], and “defendant skimmed cash from the Tennessee pill mills” [Id. at 1-2].

         II. Analysis

         As the Court has noted, defendant again challenges the admissibility of evidence of her alleged thefts under Rules 404(b) and 403 of the Federal Rules of Evidence. The Court addresses the admissibility of this evidence under each rule in turn.

         a. Rule 404(b)

         Rule 404(b) prohibits the admission of evidence of a crime, wrong, or other act to prove a person's character to show that on a particular occasion, the person acted in conformity therewith. Fed.R.Evid. 404(b)(1). “But not all prior-acts evidence implicates Rule 404(b): ‘intrinsic acts' that are ‘part of a single criminal episode' or a ‘continuing pattern of illegal activity' are admissible notwithstanding Rule 404(b).” United States v. Chalmers, 554 Fed.Appx. 440, 449 (6th Cir. 2014) (citing United States v. Barnes, 49 F.3d 1144, 1149 (6th Cir. 1995)). Thus, in addressing defendant's challenge to the admissibility of this evidence under Rule 404(b), there is a threshold inquiry: Is the evidence intrinsic? The Court undertakes this inquiry first before turning to the Rule 404(b) analysis.

         1. Intrinsic Evidence

         The government argues that evidence of alleged thefts by defendant is intrinsic. It asserts that evidence of alleged thefts is “inextricably intertwined” with the charged conduct, specifically money laundering and conspiracy charges, and is admissible as “evidence of a single criminal episode” [Doc. 624 p. 3]. Defendant, alluding to this issue in what appears to be an argument that the evidence is extrinsic, asserts that the thefts are not alleged in the indictment or an element of any charged offense [Doc. 684].

         As the Sixth Circuit has noted, “[d]efinitions of so-called ‘intrinsic' . . . evidence abound.” Chalmers, 554 Fed.Appx. at 450 (comparing various definitions of “intrinsic evidence” used by the circuit court from the narrow, including evidence that is “part of a single criminal episode, ” to the broad, including evidence that is “a prelude to the offense charged” (quoting Barnes, 49 F.3d at 1149; United States v. Hardy, 228 F.3d 745, 748 (6th Cir. 2000))). At a minimum, the Sixth Circuit has noted, “intrinsic evidence requires a connection to the charged offense, ” United States v. Adams, 722 F.3d 788, 822 (6th Cir. 2013) (citing Barnes, 49 F.3d at 1149; United States v. Gonzalez, 501 F.3d 630, 640 (6th Cir. 2007)), but “[t]ypically, such evidence is a prelude to the charged offense, is directly probative of the charged offense, arises from the same events as the charged offense, forms an integral part of a witness's testimony, or completes the story of the charged offense.” Hardy, 228 F.3d at 748. “Conversely, evidence is considered extrinsic-and Rule 404(b) accordingly applies-if there is a lack of ‘temporal proximity, causal relationship, or spatial connections . . . between the other acts and the charged offense.'” Chalmers, 554 Fed.Appx. at 450-51 (quoting Hardy, 228 F.3d at 748-50).

         The Court first notes that defendant's argument does not reflect the Sixth Circuit's definitions of intrinsic evidence. Evidence need not be an element of a charged offense or alleged in the indictment to be intrinsic. Rather, ...

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