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United States v. Espejo

United States Court of Appeals, Eighth Circuit

January 4, 2019

United States of America Plaintiff - Appellee
Lynn Alisa Espejo Defendant-Appellant

          Submitted: September 28, 2018

          Appeal from United States District Court for the Eastern District of Arkansas - Western Division

          Before COLLOTON, GRUENDER, and GRASZ, Circuit Judges.


         Lynn Alisa Espejo appeals her conviction for various crimes related to stealing funds from a medical practice while working as its bookkeeper, arguing that the district court erred by excluding potentially exculpatory evidence regarding the medical practice's destruction of financial records. We conclude that the district court[1] did not abuse its discretion in excluding the evidence.

         I. Background

         Espejo was the administrator for Practice Management Services Inc. ("PMSI"), a medical practice. As the administrator, Espejo was effectively responsible for managing the office. When PMSI changed presidents from Dr. Bruce Sanderson to Dr. Scott Brown in 2010, Brown discovered a debit card linked to PMSI's account which, along with several other issues, caused him to further investigate PMSI's finances. PMSI placed Espejo on administrative leave, and she subsequently resigned on October 1, 2010. The investigation ultimately revealed that Espejo had transferred some of PMSI's funds into her personal account.

         Many of PMSI's financial records that were part of the investigation into Espejo's use of funds are now missing. During the investigation into the funds in 2010, Espejo's attorney asked PMSI's counsel to retain all financial documents for the case. In February 2011, after You Shred-It visited PMSI for its periodic shredding of records, a PMSI employee discovered that all of the documents in storage were gone, including the Espejo documents stored in a locked cabinet. PMSI also failed to preserve Espejo's computer. Fortunately, off-site bank and credit card records reproduced the relevant transactions, and every testifying doctor besides Sanderson reproduced their settlement statements from PMSI for the relevant years. Sanderson reproduced only his 2010 settlement statements.

         In 2014, a grand jury indicted Espejo on fifteen counts of wire fraud, seven counts of money laundering, and four counts of filing false tax returns. Espejo moved to dismiss the indictment for, among other reasons, intentional destruction of evidence. The district court denied the motion to dismiss the indictment but, on the Government's motion, dismissed one of the counts of money laundering.

         In pretrial motions, the Government moved to exclude evidence and argument related to PMSI's destruction of financial documents. At trial, the district court excluded evidence related to the destruction of the records under Fed.R.Evid. 401, 402, and 403. The district court explained that it did not understand why the missing documents would be needed for a defense given the availability of credit card statements to show what Espejo purchased with the funds at issue. It also explained that there was no evidence the Government destroyed the documents. It further prohibited defense counsel from asking Sanderson about intentional destruction of his settlement statements, pending review of further evidence in the case.

         Espejo wanted the missing records to support her defense that Sanderson routed personal funds through PMSI's account in order to hide money from his wife. She conceded that she transferred $611, 099.04 from PMSI and a related entity to her personal bank account and that she maintained separate Quickbooks files to hide the transactions. She testified that Sanderson authorized these practices, asking her to purchase items for him and reimburse herself from PMSI's account, and occasionally allowing her to purchase gifts for her children with funds reimbursed from PMSI's account. She also conceded that she made a few personal purchases using the PMSI debit card, but she stated that those purchases involved mistaken use of the wrong card and that she reimbursed any such mistakes.

         Sanderson admitted he had routed personal transactions through PMSI's account, using checks directly from the account for purchases. He denied ever authorizing Espejo to use her personal account for purchases on his behalf.

         Some of the evidence indicated that Espejo transferred more funds to her account than Sanderson deposited in PMSI's account. Sanderson's 2010 statements showed that he deposited $4, 612.07 beyond what he owed PMSI between January 1 and September 9, 2010. Espejo took $210, 425.41 in funds from PMSI's account during the same time period. Her defense was that Sanderson had deposited extra funds in the account that had continually built up over time.

         Despite the missing records, the evidence at trial indicated that PMSI's account contained some extra funds with an unknown source. At the end of 2009, the account balance was $99, 259.27. There were six doctors in the practice at that time, each of whom contributed about $5, 000-6, 000 when they joined. Sanderson also testified that a previous member of the practice, Dr. Columbus Brown, was in arrears by "a big amount" to PMSI, indicating that the doctors' collective contributions alone could not account for the surplus in the account. The Government introduced evidence of other sources of income: a $14, 000 check from Memphis Pathology Lab that was not credited to any doctor, and a $41, 062.48 refund from McKesson Specialty Care ...

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