Case 3:15-cr BAS Document 188 Filed 07/31/17 PageID.891 Page 1 of 35

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1 Case :-cr-0-bas Document Filed 0// PageID. Page of MESEREAU LAW GROUP Thomas A. Mesereau, Jr., CSBN: 0 Santa Monica Blvd., Suite 00, Los Angeles, CA 00 Tel: () -0 Fax: () - mesereau@mesereaulaw.com LAW OFFICES OF SHARON APPELBAUM Sharon Appelbaum, Esq., CSBN: 0 Wilshire Blvd., th Floor, Santa Monica, CA 00 Tel: () -0 Fax: () 0- sharon@sharonappelbaumlaw.com Attorneys for Ronald Grusd, and California Imaging Network, and Willows Consulting UNITED STATED DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA UNITED STATES OF AMERICA, ) CASE NO. CR-BAS Plaintiff, ) ) DEFENDANTS MOTION vs. ) TO DISMISS THE SUPERSEDING ) INDICTMENT FOR VINDICTIVE ) PROSECUTION AND THE RONALD GRUSD, et al, ) APPEARANCE OF Defendants. ) VINDICTIVENESS ) ) DATE: August, ) TIME: :00pm TO THE HONORABLE JUDGE CYNTHIA BASHANT, TO LAURA E. DUFFY, UNITED STATES ATTORNEY FOR THE SOUTHERN DISTRICT OF CALIFORNIA, AND HER REPRESENTATIVES, AND COUNSEL FOR CO-DEFENDANTS: Please take notice that on August,, in the courtroom of the Honorable Judge Cynthia Bashant or as soon thereafter as may be heard, the defendants DR. RONALD GRUSD, CALIFORNIA IMAGING NETWORK MEDICAL GROUP, AND WILLOWS CONSULTING COMPANY, by and through counsel, Thomas A. Mesereau, Jr. and Sharon Appelbaum, Esq., will move the Court to dismiss the instant case for vindictive prosecution or alternatively, the appearance of vindictiveness and request a hearing on these issues. This motion is based on the memorandum of points and authorities and attached exhibits.

2 Case :-cr-0-bas Document Filed 0// PageID. Page of Dated: July, Santa Monica, CA Respectfully submitted, /s/ Sharon Appelbaum /s/ Sharon Appelbaum, Esq. LAW OFFICES OF SHARON APPELBAUM 0 Wilshire Blvd., th Floor Santa Monica, CA 00 Tel: () -0 Fax: () 0- sharon@sharonappelbaumlaw.com Thomas A. Mesereau, Jr. MESEREAU LAW GROUP 0 Santa Monica Blvd., Suite 00 Los Angeles, CA 00 Tel: () -0 Fax: () - mesereau@mesereaulaw.com Attorneys for Ronald Grusd, and California Imaging Network, and Willows Consulting

3 Case :-cr-0-bas Document Filed 0// PageID. Page of TABLE OF CONTENTS I. Introduction A. Charges and Theories in the Original Indictment. B. Related Indictments. C. Continuances, Plea Bargaining, and the Advice of Counsel Defense D. Charges and Theories in the Superseding Indictment... II. The Government Violated the Defendants Due Process Rights by Obtaining a Superseding Indictment as a Direct Response to Defendants Efforts to Prepare a Defense and Be Prepared for the Charges Against.. A. Standard Burden Shifting, if no presumption B. Initial Burden on the Defense Pretrial: Exercising Constitutional and Statutory Rights i. The Superseding Indictment s New Charges, Counts, Theories, Victims, and Monetary Allegations in a Complex Case Filed Months before Trial is a Clear Lack of Notice Violating Due Process Rights... ii. Exercising Procedural Rights a. The Superseding Indictment is the Government s Response to the Defendants Exercise of their Need for a Continuance.. b. The Superseding Indictment is the Government s Response to the Defendants Exercise of their Right to Prepare a Defense and Present Witnesses for Proper and Adequate Representation at Trial... c. The Superseding Indictment is the Government s Response to the Defendants Disagreement of the Terms of the Plea Offer d. The Superseding Indictment is the Government s Response to the Defendants Exercise of Their Right to a Jury Trial and to Confront Accusers... C. Burden Shifts to the Prosecution to Defend Against Allegations of Vindictive Prosecution. III. Presumption of Vindictiveness Attaches when Additional Charges Are Based on Same Conduct that Was the Subject of Original Indictment Factual Nucleus of Both Indictments the Same. A. Mistake is Not a Valid Justification for Increasing the Charges IV. Conclusion V. Declaration of Counsel. VI. Exhibits.

4 Case :-cr-0-bas Document Filed 0// PageID. Page of TABLE OF AUTHORITIES Cases Bisno v. United States, F.d ( th Cir. ) Blackledge v. Perry, U.S. ().... Bordenkircher v. Haves, U.S. ()..., North Carolina v. Pearce, U.S. ().. United States v. Burt, F.d (th Cir. 0).. United States v DeMarco, 0 F.d (th Cir. )., United States v. Garza-Juarez, F. d ( th Cir. ).. United States v. Goodwin, U.S. (). United States v. Griffin, F.d (th Cir. 0). United States v. Ruesga-Martinez, F.d (th Cir. )...,,, United States v. Spiesz, F.d ( th Cir. )..., Williamson v. United States, U.S. (0).. United States Constitution Fifth Amendment, Due Process Clause Sixth Amendment, Due Process Clause, Statutes Federal U.S.C. U.S.C. (a)() U.S.C. (a)() U.S.C., State California Business and Professions Code 0 California Insurance Code 0 th Circuit Criminal Jury Instructions Advice of Counsel.

5 Case :-cr-0-bas Document Filed 0// PageID. Page of I. INTRODUCTION A. Charges and Theories in the Original Indictment The Original Indictment in this case was filed on November,, and contained counts based on violations of state law brought into the federal sphere through the Travel Act. [Dkt. ]. A close reading of the Original Indictment illustrates that the Government asked the Grand Jury to charge a conspiracy that defendants had engaged in violations of state law that defrauded alleged patient victims by way of Honest Services Mail Fraud because of alleged kickbacks influencing the doctor s referrals. This count was made federal by way of the Travel Act in the way it was charged. The amount of alleged monetary fraud was in excess of $ million dollars for submission of claims for ancillary medical procedures. Original Indictment (n). The Original Indictment only charged count of substantive Honest Services Mail Fraud dealing with one alleged patient victim from March,, in Count. Original Indictment -. Counts - in the Original Indictment alleged violations of the Travel Act, alleging violations of California Labor Code sections.,., and, California Business and Professions Code section 0 and California Insurance Code section 0, citing acts that occurred on the dates of November,, November,, December,, March,, and April,. Original Indictment -0. None of these counts alleged that the defendants had engaged in a fraudulent scheme to obtain money or property that violated federal laws directly - the classic basis by which the Government usually charges mail and wire fraud. B. Related Indictments Importantly, on December, and December,, a state court Grand Jury was convened and defendant GRUSD and co-defendants were indicted in counts in San Diego County Case No. SCD. Many of the key witnesses for the federal case including Dr. Steven Rigler, Special Agent

6 Case :-cr-0-bas Document Filed 0// PageID. Page of Jeff Horner, and Department of Insurance Investigator Israel Garcia testified at that proceeding. During that proceeding Additionally, at that proceeding the names of Fermin Iglesias, Carlos Arguello, Julian Garcia were mentioned, but Jonathan Pena s name was not. In November, Julian Garcia was indicted on counts by the United States Attorney s Office for the Southern District of California by a federal Grand Jury. See Dkt -CR--BAS. Based on the docket numbers, it appears it was filed just before the Original Indictment on the instant case. None of the Defendants in the instant case were named or mentioned in that Indictment. In January, Fermin Iglesias and Carlos Arguello were indicted on counts by the United States Attorney s Office for the Southern District of California by a federal Grand Jury. See Dkt - CR0-BAS. Julian Garcia is named in that indictment as a co-conspirator. Interestingly enough, the language in that Indictment is striking similar to the language in the current Indictment, indicating that information was available and known to the federal Government at least months ago. In June, Jonathan Pena and others were indicted on counts by the United States Attorney s Office for the Southern District of California by a federal Grand Jury. See Dkt -CR-0-H. C. Continuances, Plea Bargaining, and the Advice of Counsel Defense On October,, a motion to substitute Thomas A. Mesereau, Jr. and Sharon Appelbaum as counsel for defendants, DR. RONALD GRUSD, CALIFORNIA IMAGING NETWORK MEDICAL GROUP, and WILLOWS CONSULTING COMPANY was granted. [Dkt 0]. A joint Motion to Continue Trial Date in the instant case was granted on November,. [Dkt. ]. In January, defense counsel asked the Government whether there would be any pre-trial offer in the instant case. In return, the Government invited the defense to a reverse proffer meeting wherein they would explain the evidence against the Defendants and possible terms and conditions of any plea offer. See Exhibit A.

7 Case :-cr-0-bas Document Filed 0// PageID. Page of On February,, a meeting was held at the United States Attorney s Office for the Southern District of California. A possible plea was discussed but without any direct discussion of the exact charges to plead to, sentence to be imposed, and monetary amount to be paid for restitution. On March,, defendants filed a Motion to Continue Trial Date predicated on the fact that it had taken some time to receive the discovery because of protective order issues. [Dkt ]. On March,, defense counsel revealed a document to the Government that defense counsel had reviewed in examining the efficacy of an advice of counsel defense in hopes it might be of use in mitigating the offer. See Exhibit A. On March,, Assistant United States Attorney Fred Sheppard sent an to the defense indicating that the documentation submitted by defense would not serve to mitigate the plea offer and that the offer would expire on March,. AUSA Sheppard also stated that the United States would not agree to any continuance beyond August,. See Exhibit A. On March,, the Government sent formal federal and state plea offer documents via to the defense which showed the charges that the defendants would ultimately have to plea to, possible sentences, but failed to include the actual or even estimated amount of restitution to be paid in the federal and state cases following a plea. The expiration date of March, remained. See Exhibit B. There was a phone conversation with a federal prosecutor to ascertain the amount of restitution that would have to be paid, but the prosecutor indicated she could not speak for the state prosecutors. That was unexpected since the federal authorities were handling negotiations for the state and federal authorities. The defense attempted to contact the state prosecutors, but were unable to reach them before the offer expired. See Exhibit C. The Government filed a motion in opposition to the Defendants motion to continue the trial date on April,, [Dkt. ], and the Defendants filed a Reply, [Dkt. ], on April,.

8 Case :-cr-0-bas Document Filed 0// PageID. Page of On April,, the Court vacated the trial date of June,, and granted a continuance to October,, due to the copious amounts of discovery produced by the Government and with the understanding that defense counsel would be engaged in trial in Santa Barbara between August, and the following - week period. In May, the Government turned over more discovery, approximately megabytes, of material to the defense. On July,, the Government turned over more discovery, approximately megabytes of materials to the defense. D. CHARGES AND THEORIES IN THE SUPERSEDING INDICTMENT On July,, the Government filed a Superseding Indictment containing counts. This Superseding Indictment comes (a) twenty () months after the Original Indictment had been obtained, (b) less than weeks before defense counsel was scheduled to start a trial in another jurisdiction of which the Government was aware, and (c) less than months before trial in this case was scheduled to begin. Significantly, the Superseding Indictment brings forth completely new theories. The conspiracy count removes all use of the Travel Act to bring in the alleged violations of state law. The Superseding Indictment alleges there was a conspiracy to commit Honest Services Mail Fraud, but under a different theory and now alleges that there were conspiracies to commit Honest Services Wire Fraud; and conspiracies to commit the classic theory of Mail Fraud, Wire Fraud, and Health Care Fraud. Superseding Indictment a-e. It also increases the monetary amount of the alleged fraud to $. million dollars. Superseding Indictment r.

9 Case :-cr-0-bas Document Filed 0// PageID. Page of Now, the Superseding Indictment charges the defendants with new counts of substantive Honest Services Mail Fraud, subsuming the one from the Original Indictment and adding new alleged patient victims. It adds a theory of violation of direct Health Care Fraud violations under section U.S.C. and charges this as both a new theory of conspiracy and as substantive violations. It discusses dates and allegations relating to the alleged patient victims mentioned under the newly added substantive Honest Services Mail Fraud charges. The Travel Act counts now exist under a different code sections U.S.C. (a)() and U.S.C. (a)() and no longer includes violations of California Business and Professions Code 0 and California Insurance Code section 0. Three () counts of money laundering have now been added in the Superseding Indictment including checks made to Line of Sight, allegedly run by a co-conspirator, and monetary transfer from a company owned by a defendant to a separate defendant. Lastly, the Superseding Indictment specifies the forfeiture it seeks which is defendant GRUSD s family home. II. THE GOVERNMENT VIOLATED THE DEFENDANTS DUE PROCESS RIGHTS BY OBTAINING A SUPERSEDING INDICTMENT IN RESPONSE TO DEFENDANTS EFFORTS TO (a) PREPARE A DEFENSE, (b) GAIN A CONTINUANCE, (c) DISAGREE WITH A PLEA BARGAIN AND (d) TO BE PREPARED FOR THE CHARGES AGAINST THEM AT TRIAL Defendants, DR. RONALD GRUSD, CALIFORNIA IMAGING NETWORK MEDICAL GROUP, AND WILLOWS CONSULTING COMPANY, by and through counsel, Thomas A. Mesereau, Jr. and Sharon Appelbaum, move to dismiss the Superseding Indictment on the basis of Vindictive Prosecution.

10 Case :-cr-0-bas Document Filed 0// PageID.00 Page of A. Standard if no Presumption in Place, Burden Shifting The Ninth Circuit explained in United States v. Spiesz, F.d (), that a claim for vindictive prosecution arises: when the government increases the severity of alleged charges in response to the exercise of constitutional or statutory rights. Blackledge v. Perry, U.S. (); North Carolina v. Pearce, U.S. (); United States v. Burt, F.d (th Cir. 0); United States v. Griffin, F.d (th Cir. 0), cert. denied U.S. ; United States v. DeMarco, 0 F.d (th Cir. ), cert. denied U.S.. It is generally held that vindictive prosecution is present where a defendant is reindicted or retried after the exercise of a procedural right. United States v. Burt, supra at. A dismissal will lie not only for actual vindictiveness, but also for the appearance of vindictiveness. United States v. Ruesga-Martinez, F.d (th Cir. ); United States v. Burt, supra; United States v. Griffin, supra. United States v. Spiesz, F.d at. In Blackledge v. Perry, U.S. (), even though there was absolutely no evidence of vindictiveness in the record, the Court held that it was constitutionally impermissible for the prosecution to bring the more serious charge against Perry after he had exercised his statutory right to appeal. Similarly, the Supreme Court had found previously in North Carolina v. Pearce, U.S. (), that due process requires that the reasons for imposing harsher sentences upon retrial must affirmatively appear so that an accused may be free, when taking an appeal, of any apprehension of subsequent retaliatory or vindictive sentencing because of his successful appeal. In the instant case, the Government filed a Superseding Indictment alleging more than times the original number of counts, more violations of law, different theories, different actors, different victims, and vastly different monetary amounts on July,. This Superseding Indictment was sought after a failed plea bargain attempt, after learning of the advice of counsel defense the defendants planned to use at trial, and after the defendants won their motion for a continuance past the date of August,. The Indictment was filed months before trial by the Government knowing at that time that defense counsel would be engaged in trial for part of those months.

11 Case :-cr-0-bas Document Filed 0// PageID.0 Page of B. Initial Burden of Proof for Vindictive Prosecution: Exercising Constitutional and Statutory Rights In pretrial situations, it is the defendant who alleges vindictiveness [who] has the burden of making the initial showing of an appearance of vindictiveness. United States v. Spiesz, F.d at (internal citations omitted). It is generally held that vindictive prosecution is present where a defendant is reindicted or retried after the exercise of a procedural right. United States v. Burt, at. In United States v. Ruesga-Martinez, F.d, 0 (th Cir. ), the Court found that a dismissal for vindictive prosecution is allowable even where actual vindictiveness does not exist, but that the appearance of vindictiveness does. i. The Superseding Indictment s New Charges, Counts, Theories, Victims, and Monetary Allegations in a Complex Case Filed Months before Trial is a Clear Lack of Notice Violating Due Process Rights A criminal defendant has the right to notice of the charges against him. The right to notice is grounded in the Constitution which states the accused shall enjoy the right to be informed of the nature and cause of the accusation. United States Constitution, Amend VI. The Superseding Information filed on July,, containing forty-five () counts filed twenty () months after the Original Indictment in a case declared complex and three () months before trial on the eight () count Indictment is prejudicial to the Defendants as they were not on notice of any of the additional charges, theories, victims, and allegations of wrongdoing. When the Government filed the Indictment, defense counsel was scheduled to begin a trial in a different jurisdiction on August, and be engaged in that trial for - weeks. That would have left only weeks to prepare for the new charges, theories, victims, and allegations of wrongdoing. The appearance of vindictiveness is palpable. ii. Exercising Procedural Rights The Supreme Court has long recognized that due process principles bar a prosecutor from seeking to punish a person because he has done plainly what the law allows. Bordenkircher v. Haves, U.S.

12 Case :-cr-0-bas Document Filed 0// PageID.0 Page of, (). Indeed, the Bordenkircher Court held that such a vindictive, retaliatory action is a due process violation of the most basic sort, and for an agent of the [government] to pursue a course of action whose objective is to penalize a person s reliance on [her] legal rights is patently unconstitutional. Id. (internal citations omitted). The Supreme Court has stated that the mere possibility of vindictive governmental action toward a criminal defendant to be such a serious taint upon a prosecution that it requires district courts in certain cases in which action detrimental to the defendant has been taken after exercise of a legal right... to presume an improper vindictive motive whenever there is at least a reasonable likelihood that the government s conduct was in retaliation for exercising a protected statutory or constitutional right. United States v. Goodwin, U.S., - () (internal citations omitted). The Defendants in this case have exercised their right to a jury trial, to confront their accusers, to present a defense and witnesses in their defense. a. The Superseding Indictment is the Government s Response to the Defendants Exercise of their Need for a Continuance A defendant s right to a speedy trial is defined by the United States Constitution and U.S.C.. The Defendants also have the opportunity to request a continuance if the ends of justice so require for them to have an adequate, proper, and effective defense at trial. This case was declared, previous to current counsel entering the case, a complex case for the purposes of U.S.C. (h)()(b)(ii). When current counsel came onto the case, the Original Indictment had been on file for months. A joint continuance was granted to give new counsel time to prepare and a trial date set for June,. Counsel received the discovery in early January, after litigation about the protective order, and by the end of February,, it was clear to defense counsel that due to the copious amounts of discovery and defense counsels trial schedule, a further continuance was needed and so the Defendants filed a Motion to Continue in early March.

13 Case :-cr-0-bas Document Filed 0// PageID.0 Page of The AUSAs made it known they would not consent to a continuance beyond August,. See Exhibit A. However, in April, the Court heard the arguments and granted a continuance until October,, to prepare for the counts in the Original Indictment. Then on July,, a count Superseding Indictment was filed by the Government. This Indictment contains new prosecutorial theories and additional counts many which could have been charged by the Government back in November. b. The Superseding Indictment is the Government s Response to the Defendants Exercise of Their Right to Prepare a Defense and Present Witnesses for Proper and Adequate Representation at Trial Under the United States Constitution, the accused has a procedural due process right to present a defense and to present witnesses in his defense. United States Constitution, Amend. V. Defense counsel has been forthright and made representations to the Government, verbally, in writing, and in court of its intent to present an Advice of Counsel defense, well in advance of when it is required by law to do so. Counsel had even sent paperwork to the Government to show in good faith that they had begun this process which is not an easy one. As the comment to Criminal Jury Instruction. states, A defendant who reasonably relies on the advice of counsel may not be convicted of a crime which involves willful and unlawful intent. Williamson v. United States, U.S., (0). Advice of counsel is not a separate and distinct defense but rather is a circumstance indicating good faith which the trier of fact is entitled to consider on the issue of intent. Bisno v. United States, F.d, (th Cir. ). Criminal Jury Instruction. (th Cir.). Knowing that defense counsel might be preparing this defense to the counts charged in the Original Indictment, going back into the Grand Jury chamber to present evidence on additional theories, victims, conspiracies, co-conspirators, that defense had not prepared for and would not be prepared for by trial seems to be a way to circumvent the trial preparation of the defendants.

14 Case :-cr-0-bas Document Filed 0// PageID.0 Page of c. The Superseding Indictment is the Government s Response to the Defendants Disagreement of the Terms of the Plea Offer Even if the Court finds that the Government at some point in time stated that they may re-indict the case if the offer was rejected, and the defense does not concede that this was ever communicated, the Defendants in this case did not knowingly, intelligently or voluntarily reject the Government s offer. See Bordenkircher v. Haynes, U.S. (). In Bordenkircher, the Supreme Court stated that in the give-and-take of plea bargaining, there is no such element of punishment or retaliation so long as the accused is free to accept or reject the prosecution s offer. Id. At. The case at bar holds a key distinction. Here, an amorphous plea offer was first made to the Defendants. Exact charges that the Defendants would plead to in both the federal and state cases were not explained to the defense until the end of March and the issue of how much restitution the Defendants would have to pay at both the federal and state levels were not ever reached. Then the offer expired. This is not a situation such as the Supreme Court had envisioned wherein the Government and the Defendants had equal bargaining power and the Defendants had the power to accept or reject the offer. The Defendants were never made aware of the exact amount of restitution that would be a consequence of such a plea and then the offer expired without ever being accepted or rejected by the Defendants. It expired because the Government said it did. This was an inherently unequal bargaining position since the parameters of the plea were never properly and fully laid out by the Government this re-entry into the Grand Jury appears to be retaliatory for the exercise of the known right for a continuance and to have a jury trial. d. The Superseding Indictment is the Government s Response to the Defendants Exercise of their Right to a Jury Trial and to Confront Accusers Under the United States Constitution, the accused has a procedural due process right to a jury trial and to confront his accusers. United States Constitution, Amend. VI. A jury trial and the right to

15 Case :-cr-0-bas Document Filed 0// PageID.0 Page of confront his accusers can be waived by the defendant if a plea agreement is entered between the Government and the defendant. Unless and until that right is waived, and it can only be waived by the defendant himself, the defendant holds that right. The Defendants in this case have made it clear that they are exercising that procedural right. C. Burden Shifts to The Prosecution to Defend Against Allegation of Vindictive Prosecution Once the defense makes a prima facie showing of actual vindictiveness after the exercise of a procedural right or a showing of the appearance of vindictiveness: The burden then shifts to the prosecution to prove that the increase in the severity of the charge did not result from any vindictive motive. It is said that these cases establish a prophylactic rule designed not only to relieve the defendant who has asserted his right from bearing the burden of uping the ante, but also to prevent chilling the exercise of such rights by other defendants who must make their choice under similar circumstances in the future. United States v. DeMarco, supra, at. United States v. Spiesz, F.d at (internal citations omitted). See also United States v. Ruesga- Martinez, F.d at (finding that Pearce and Blackledge establish, beyond doubt, that when the prosecution has occasion to reindict the accused because the accused has exercised some procedural right, the prosecution bears a heavy burden of proving that any increase in the severity of the alleged charges was not motivated by a vindictive motive. ) III. PRESUMPTION OF VINDICTIVENESS ATTACHES WHEN ADDITIONAL CHARGES ARE BASED ON SAME CONDUCT THAT WAS THE SUBJECT OF THE ORIGINAL INDICTMENT FACTUAL NUCLEUS OF BOTH INDICTMENTS THE SAME In United States v. Garza-Juarez, F.d, 0 ( th Cir. ), the Court found that a presumption of vindictiveness attaches when the additional charges are based on the same conduct that was the subject of the first indictment, when the same sovereign was involved, and most importantly, when the decision to file increased charges directly followed the assertion of a procedural right.

16 Case :-cr-0-bas Document Filed 0// PageID.0 Page of In United States vs. DeMarco, 0 F.d, ( th Cir. ), one of the points the court relied on when it dismissed the Indictment for prosecutorial vindictiveness was that the factual nucleus of both Indictments was the same. The Original Indictment the allegations hinged on the Travel Act since only violations of California state law were at issue. Importantly, the Travel Act is no longer referenced in Count One or the substantive Honest Services Mail Fraud counts and thus, has changed the Government s entire theory. However, the majority of the counts utilize the same dates, time periods, locations and actors. Under that prior theory, in the Original Indictment, the patients who were allegedly defrauded of honest services by their physicians because of the alleged kickbacks were the victims. By adding the Federal Health Care Fraud and substantive Wire Fraud and Mail Fraud allegations to the conspiracy, the insurance companies become alleged victims using the same evidence that the Government had at the time of the Original Indictment, although in a way that the defense had not prepared for trial. The information about the insurance companies involved was known to the Government because the corresponding state Indictment listed those entities and ancillary services at issue back in December and the AUSAa in the instant case were involved in the Indictment on the state case. Knowing all of this at the time, the Government did not choose to file any allegations that directly implicated federal law without the state statutes and Travel Act involvement. The new Indictment seems to be a smarter Indictment involving charges that could have been brought back in November since none of the dates of the alleged conduct extend beyond September. For example, Count, Honest Services Mail Fraud in the Original Indictment is now Count in the Superseding Indictment and is accompanied by mentioning other alleged patient victims. Superseding Indictment. Since Count and the date of March, exists in the middle of the time period of the other allegations, these counts could have been allegations, this could have been alleged at the time of the Original Indictment in November.

17 Case :-cr-0-bas Document Filed 0// PageID.0 Page of The new allegations of federal Health Care Fraud allegations track the exact language of the new Honest Services Mail Fraud charges in the Superseding Indictment. Counts are mirrored in Counts. Superseding Indictment ; -0. The Travel Act counts in the Superseding Indictment no longer rely on some of the California state laws apparently to allow the Government to present less evidence and prove fewer violations. Superseding Indictment -. Another example is that the Superseding Indictment states now that twenty () million dollars are the monetary amount of the fraud without any basis for that claim. One can only assume it involves alleged losses to the alleged insurer-victims, but as all parties know those claims were never paid and those allegations may only be attempted at best. Springing such a monetary change from the one million previously stated in the Original Indictment is an extreme change shortly before trial. This information must have been known to the Government in because it dealt with the same insurance companies that the state Government did, the reason for such a delay and the change shortly before trial gives the appearance of vindictiveness at the very least. The two Money Laundering Counts dealing with checks from WILLOWS CONSULTING to Line of Sight for Professional Services literally track the language of the Travel Act Counts - in the Original Indictment. These additional allegations are just an attempt to pile on because as Line of Sight was a defendant in the Original Indictment, these allegations could have been presented to a Grand Jury back in November. Yet, it was sprung on the defendants months before trial with lack of notice. A. Mistake is Not a Valid Justification for Increasing the Charges If a prosecutor has charged a case incorrectly or missed charges because of an oversight or inexperience, the Ninth Circuit has not found that this a valid justification for increasing the charges. United States v. Ruesga-Martinez, F. d, 0 (th Cir. ) (finding no merit to the

18 Case :-cr-0-bas Document Filed 0// PageID.0 Page of Government s argument that even though the facts were known prior to the first Indictment since it was handled by an inexperienced prosecutor at the time the Superseding Indictment should be allowed). Especially since in this case, the same prosecutors were involved in the state case and all the other related Indictments mentioned above in I.B. Knowing that, and that the information in the instant Indictment was known previous to the Original Indictment, there can be no mistake or oversight used as a reason here. Furthermore, the added forfeiture allegation of Defendant Grusd s family home is an extreme change where tracing of funds needs to be scrutinized for the sufficiency of this allegation and certainly appears as if the Government is punishing Defendant Grusd for the exercise of his rights since no new discovery has been turned over justifying this sudden addition. IV. CONCLUSION Wherefore, the Defendants respectfully ask the Court to dismiss the Superseding Indictment for vindictive prosecution and/ or the appearance of vindictive prosecution. The defendants have made a showing by prima facie evidence that the exercise of their constitutional and statutory rights triggered the Government to create this harsher count Superseding Indictment months after the Original Indictment was filed and shortly before trial on the count indictment was to begin. This is a direct violation of the due process rights of the Defendants. Alternatively, the court should strike all allegations in the Superseding Indictment that are allegations and counts that could have been brought much earlier than a few months before trial because they were known to the prosecution in. DATED: July, Santa Monica, CA Respectfully submitted, /s/ Sharon Appelbaum /s/ Sharon Appelbaum, Esq. LAW OFFICES OF SHARON APPELBAUM MESEREAU LAW GROUP Thomas A. Mesereau, Jr.

19 Case :-cr-0-bas Document Filed 0// PageID.0 Page of V. DECLARATION OF COUNSEL, SHARON APPELBAUM I, Sharon Appelbaum, state:. That the Original Indictment in this case was filed on November,.. That a Superseding Indictment in this case was filed on July,.. That a state indictment, San Diego case SCD, named DR. GRUSD as a defendant, among others included in the Original Indictment here, in counts and was filed after a Grand Jury proceeding which took place on December and,.. That many of the key witnesses for the federal Government in this case testified at the state Grand Jury proceeding and were named in that proceeding. That AUSA Fred Sheppard was present for at least some of the testimony at the state Grand Jury proceeding since he conducted the questioning of Dr. Steven Rigler.. That in November, Julian Garcia was the defendant named in a federal Indictment prosecuted by at least one of the same federal prosecutors as in the instant case.. That in January, Fermin Iglesias and Carlos Arguello were the named defendants in a federal Indictment prosecuted by at least one of the same federal prosecutors as in the instant case. That much of the language in that Indictment can be seen in the Superseding Indictment.. That in June, Jonathan Pena and others were the named defendants prosecuted by at least one of the same federal prosecutors as in the instant case.. That in October, Thomas A. Mesereau, Jr. and Sharon Appelbaum substituted into the case as counsel for Defendants Grusd, California Imaging Network, and Willows Consulting Company.. That defense counsel received from the Government a discovery of approximately a half a terabyte of data in January.. That counsel believes that it was in January, that the Government was asked whether there would be any pre-trial offer in the instant case. In return, the Government invited the defense to a meeting at their office.. That on February,, a meeting was held at the United States Attorney s Office for the Southern District of California. A possible plea was discussed but without any direct discussion of the exact charges to plead to, sentence to be imposed, and monetary amount to be paid for restitution.. That on March,, defendants filed a Motion to Continue Trial Date predicated on the fact that it had taken some time to receive the discovery because of protective order issues.

20 Case :-cr-0-bas Document Filed 0// PageID. Page of. That on March,, defense counsel revealed a document to the Government that defense counsel had reviewed in examining the efficacy of an advice of counsel defense in hopes it might mitigate the offer.. That on March,, Assistant United States Attorney Fred Sheppard sent an to the defense indicating that the plea offer extended to the defense would expire on March,. AUSA Sheppard also indicated that the United States would not agree to any continuance beyond August,.. That on March,, the Government sent formal federal and state plea offer documents via to the defense which showed the charges that the defendants would ultimately have to plea to, possible sentences, but failed to include the actual or even estimated amount of restitution to be paid in the federal and state cases following a plea. The expiration date of March, remained.. That on or about March,, there was a phone conversation between counsel and a federal prosecutor to ascertain the amount of restitution that would have to be paid, but the prosecutor indicated she could not speak for the state prosecutors.. That it had been represented to defense counsel that the federal authorities were handling negotiations for the state and federal authorities. Defense counsel then attempted to contact the state prosecutors, but were unable to reach them before the offer expired.. The Government filed a motion in opposition to the Defendants motion to continue the trial date on April,, and the Defendants filed a Reply, on April,.. That on April,, the Court vacated the trial date of June,, and granted a continuance to October,.. That in late May, the Government turned over an additional megabytes of data to the defense and an additional megabytes of data on July,, shortly filed by the Superseding Indictment.. That the Superseding Indictment contained counts against defendants, additional conspiracy theories, new theories of alleged violations, new charges and allegations of statutes broken, and new co-conspirators.. That the defense has been preparing and examining an advice of counsel defense against the Original count Indictment. That the advice of counsel defense needs to be re-examined and reviewed because of the new allegations and Superseding Indictment.. That counsel contacted counsel for Gonzalo Paredes and they are not opposed to this motion.. That a dismissal of the Superseding Indictment is necessary in light of the violation of the defendants due process rights. DATED: July, LAW OFFICES OF SHARON APPELBAUM /s/ Sharon Appelbaum /s/ Sharon Appelbaum, Esq

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