It is very rare for a defendant in a white collar criminal case to be detained pretrial.
The two primary factors under the Bail Reform Act are whether the defendant (1) is a danger to another person or to the community, or (2) is a risk of flight. 18 U.S.C. § 3142(e)(1) (detention permitted where no set of conditions “will reasonably assure the appearance of the person as required and the safety of any other person and the community”).
Usually, a white collar defendant isn’t much of a safety risk because the crimes are not violent ones. It’s more common that he may flee, but even that is a tough standard to meet when the defendant has a family or strong community ties in the jurisdiction.
A recent healthcare fraud case in the Southern District of Florida is helpful example of the type of extreme case in which the government may ask for pretrial detention.
In United States v. Esformes, the government indicted Philip Esformes in an alleged $1 billion Medicare fraud scheme. According to the government, Mr. Esformes
masterminded and executed sophisticated health care fraud and money laundering conspiracies through a network of skilled nursing facilities and assisting living facilities that he owned or operated.
The supposed conspiracies lasted for over a decade, even after Mr. Esformes had agreed to pay $15 million in a civil False Claims Act case against him.
The government seeks pretrial detention of Mr. Esformes. Given that white collar cases can take a year or more to get to trial, this is a harsh penalty. I wrote about a case last year in which the health care defendant was detained pending sentencing, but this was after a guilty verdict, so it was in a very different position than this case.
In support of the detention motion in Esformes, the government made several arguments:
First, the crimes with which Mr. Esformes is charged are serious, and he faces a “lengthy term of imprisonment” (up to a life term). He therefore “poses a substantial flight risk.” Also, because the charged offenses are so sophisticated, he “possesses a sophisticated ability to deceive authorities and conceal fraud.”
Second, Mr. Esformes is a flight risk because the government has recordings apparently showing that he considered assisting one of his co-conspirators flee the country. The government argues that these recordings demonstrate that “he would consider fleeing the country in light of the serious charges he now faces.”
Third, the government argues that its case is strong—citing evidence it will present from documents, from cooperating witnesses and from recorded conversations.
Fourth, Ms. Esformes has substantial financial resources. Attached to the motion is a financial statement showing at least $78 million in assets. (The attached financial statement includes unredacted social security numbers. Practice tip: you need to delete these. Usually the clerk’s office will reject a filing that includes SSNs.) This permits him to travel by private jet. Because he can do so, the government says it “would be unlikely to be able to prevent Defendant from leaving the country on a private jet.”
This strikes me as an odd position, given that even private jets must file passenger manifests showing the names of passengers. From the U.S. Customs and Border Protection website:
On November 18, 2008, U.S. Customs and order Protection published the Advance Information on Private Aircraft Arriving and Departing the United States final rule.
This rule requires private pilots or their designees to transmit electronically to CBP:
- Traveler manifest information for each individual traveling onboard the aircraft
- Notice of arrival information
- Notice of departure information
This data must be received by CBP no later than 60 minutes prior to departure for flights arriving in or departing from the United States.
The government’s argument ignores this key fact.
Perhaps the most interesting argument made by the government is that Mr. Esformes is a “substantial danger to the community—both physical and economic.” The “physical” argument is weak: that he preyed on “vulnerable beneficiaries” during the scheme, but the motion cites no physical harm to anyone. This is a stretch.
The government also argues that he is an “economic danger” to the community because of the widespread fraud. This also seems like a stretch. The statute is primarily aimed at preventing a crime of violence and ensuring the “safety” of the community, not stopping fraud through pretrial detention.
The government closes its brief by arguing:
Given the strong likelihood that Defendant would persist in his pattern of criminal activity to the detriment of the community, Defendant’s detention is necessary to ensure that he does not continue to use and endanger vulnerable Medicare beneficiaries in order to steal millions more from Medicare.
If I were a betting person, I’d bet that this motion is granted in part—ordering some sort of monitored home detention—even though it is incredibly rare to have pretrial detention in a white collar case. The government’s argument that he allegedly continued the conduct after settling with DOJ will not go over well with a judge, even if it is not exactly relevant under the statute.
One of the problems with detaining someone in a white collar case is the unique amount of help that a defendant needs to give his lawyers to understand the documents and the complex facts. Incarcerating Mr. Esformes will seriously hinder his defense. I would expect to see the defense brief emphasize this fact.
I decided to ask them to do so instead of waiting. The government will never do this of their own accord. https://wh.gov/iFnp9
[…] When Will the Government Ask for Pretrial Detention of a White Collar Defendant? Apparently, the key to SEO is posing a question in the title. (You can thank me later.) This was a fairly straightforward post about the factors that go into the pretrial detention decision. But I don’t mean to underplay it; this is a key decision point in the criminal justice system. It is immensely important to my clients and their families. […]
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