May 4, 2020 The Honorable Kenneth M. Karas United States Courthouse Southern District of New York 300 Quarropas Street White Plains, NY 10601
Re: United States v. Spina, 18 Cr. 625 (KMK)
Dear Judge Karas: The Government respectfully submits this memorandum in connection with the sentencing of James Spina, the defendant. For the reasons set forth below, the Government submits that a sentence of 120 months’ imprisonment–the applicable Sentencing Guidelines range–would be sufficient but not greater than necessary to achieve the aims of sentencing.
BACKGROUND I.
Offense Conduct
From in or about 2011 through in or about 2017, Dolson Avenue Medical (the “Practice” or “DAM”) provided a variety of pain management and rehabilitation services, including physical medicine and rehabilitation, chiropractic services, physical therapy, diagnostic testing, and acupuncture. The Practice primarily provided treatment services from its clinic located at 201 Dolson Avenue, Middletown, New York. The Practice’s billing office was located down the street, at 41-45 Dolson Avenue. In addition to DAM, at least nine other corporations billed from the 201 Dolson Avenue location during the relevant time period.
1
Those other corporations are: Middletown Chiropractic, d/b/a “ChiroCare”; Catskill Medical Care PC, d/b/a “Middletown Physical Therapy and Pain Management”; Middletown Physical Medicine & Rehabilitation, PC; Middletown Physical Therapy, PC, d/b/a “Physical Therapy of Orange County”; Physical Medicine and Diagnostic; Mid Hudson Acupuncture, PC; Advanced Oxy-Med Services; Orange County Neurology, PC; and Hudson Valley Chiropractic (collectively referred to as the Practice’s
1
The different corporations used variations of the 201 Dolson Avenue address by, for example, adding a suite number, or, in some instances, they used an adjacent address like 203 Dolson Avenue. Each of the above listed corporations, however, provided treatment from 201 Dolson Avenue.
United States District Courthouse 300 Quarropas Street White Plains, New York 10601
U.S. Department of Justice
United States Attorney Southern District of New York
3 the associated businesses); Ex. 5 (email from Grossman to Jay Spina discussing plans to “lease” employees from DAM to Dr. s corporation); Ex. 6 at p.9 (transcript of recording in which Dr. states, in substance and in part, he does not know how many employees are billed under his corporation). Further, Jay and Jeff Spina were the financial beneficiaries of the Practice and its associated businesses. Jay and Jeff Spina, however, went to great lengths to conceal their control and ownership of DAM and the associated businesses. In particular, Jay and Jeff Spina recruited medical doctors and other professionals to serve as the nominal owners of DAM and the associated businesses, when in reality, Jay and Jeff Spina, both doctors of chiropractic, were the true owners and operators of DAM and the associated businesses.
See, e.g.
, Ex. 7 (12/2/12 email from Grossman regarding setting up a new medical corporation). For example, in or about June 2017, Dr. , a medical doctor whom the Spinas had used as a nominal owner of DAM and Catskill Medical, died. Notwithstanding that had been ill for months and the Spinas had been discussing plans for what to do when he retired or passed away, at the time Dr. passed away, he was still the listed owner of both medical corporations.
See
Ex. 8 (6/16/17 email from Jay Spina to Dr. discussing setting up a new corporation to take over physical therapy billing once Dr. , the nominal owner of the physical therapy corporation and who was then ill, passed away); Ex. 9 (emails from Jay Spina to billing staff discussing setting up a new medical corporation for when/if Dr. retires or dies). Following his death, Jay and Jeff Spina panicked. In a June 29, 2017 email from Jeff Spina to Jay Spina and Grossman, Jeff wrote: I DON’T WANT TO BE IN FEAR, BUT I DO WANT TO LOOK FROM THE FAMILIES VIEWPOINT . . . TO THEM THE OFFICE IS AN ASSET. . . LET’S PROTECT OURSELVES SO WE CAN SURVIVE . . .BOOKKEEPING SHOULD BE DONE FROM THE VIEWPOINT OF SOMEONE ELSE LOOKING AT THINGS[.] WATCH WHAT GOES INTO THE ACCOUNTS[.] NO MORE PRODUCTION IN HIS CORP. . . . MAKE IT OWE MONEY INSTEAD OF SHOWING A PROFIT . . . Ex. 10 (all capitals in original);
see also
Ex. 11 (6/28/17 email from Jeff Spina to Jay and Grossman explaining that, in light of ’s death, they need to decrease services and monies in each corp. and warning them to “BEWARE AND PREPARE NOW”). Ultimately, to continue billing Insurance Providers after ’s death, Jay and Jeff Spina, along with Grossman, concocted a scheme to fraudulently transfer the medical businesses in name to Dr. Charles Bagley, another medical doctor who would act as a nominee. Specifically, they used blank stock transfer forms, backdated to sometime in late 2016, when had reduced his hours and became ill, and forged ’s signature onto the forms as the seller, to give the false appearance that had previously transferred the stock to Bagley before he died. Grossman then sent the fraudulent documents to daughter, thus enabling Jeff and Jay Spina to retain control over all of the funds in the corporate bank accounts and to continue billing under those corporations as well.
See
Ex. 12 (email from Grossman to Jay Spina asking him “to think about what you are asking me to do. . . .To notarize something a year later, is a crime.”); Ex. 13 (7/26/17 email from Grossman to Jay Spina attaching documents sent to ’s daughter and noting that the transfer forms do not, in fact, require a notary); Ex. 14 (7/26/17 email