Back in July 2013, I wrote a post about two executives at a medical device company in Austin who had been indicted for health care fraud.
On June 2, 2014, after a four-week trial, the two men were found guilty by a jury in the Western District of Texas. The government’s press release stated:
After a four-week trial, a jury in the Western District of Texas found the former CEO, Michael Baker, 55, guilty of conspiracy to commit wire and securities fraud, wire fraud, securities fraud and false statements. Michael Gluk, 56, the former CFO, was found guilty of conspiracy to commit wire and securities fraud, wire fraud and securities fraud. Baker and Gluk were charged in a superseding indictment returned on April 1, 2014.
According to the government, the two men had masterminded an accounting scheme to inflate revenues by tens of millions of dollars and also made false statements about their actions.
Sentencing will be on August 29, 2104. Why was Mr. Baker detained after trial?
Perhaps of most interest, however, is that Mr. Baker was immediately remanded to custody. His lawyers requested that he be released pending sentencing. The government opposed the motion.
On June 10, the court denied the motion. Its order concluded that Mr. Baker had “failed to establish by clear and convincing evidence that he is not likely to flee.” Specifically the court explained that:
- He was found guilty on all 15 counts in the indictment
- He testified during trial but the verdict “serves as tacit evidence that the jury did not believe the defendant’s sworn testimony”
- He faces a maximum statutory punishment of 270 months and a high Guidelines range
- He had plenty of time to “get his affairs in order pending future imprisonment”
“Of particular concern” to the court was the fact that the government has not found a “significant portion of the proceeds generated by the elaborate fraud scheme.” To be specific, the government hasn’t found $15 million of the approximately $26.7 million that Mr. Baker received through the scheme.
“Equally disturbing” to the court was the fact that Mr. Baker moved $9 million to Switzerland shortly after he received notice of the SEC’s investigation of him, which was 70% of his liquid assets.
The court was blunt:
The jury did not believe the defendant’s explanations at trial. Similarly, the Court does not believe the defendant’s representations that he will appear in court as required.
Detention hearings don’t generally get much press. But to your client, they are a critical stage in the proceedings. Mr. Baker was free during the trial and presumably with family and friends during a difficult and stressful time. Now, he’s fairly certain to be behind bars for several years without a moment at home to prepare.