Use of a Means of Identification to Produce Another Means of Identification: U.S. v. Kalu, Fifth Circuit Court of Appeals, Filed August 30, 2019

In U.S. v. Kalu, the Fifth Circuit Court of Appeals affirmed the defendant’s two-level sentencing enhancement for “the use of a means of identification to produce another means of identification” and a two-level enhancement because the case involved ten or more victims.

The defendant pled guilty, without a negotiated plea agreement, to conspiracy to commit health care fraud. According to the Court’s opinion, Kalu and others paid doctors to certify fake Medicare beneficiaries as needing home health care and then billed Medicare over $3 million in fraudulent claims.

Kalu did not challenge his conviction or guidelines range apart from the two enhancements that raised his guidelines range by a total of four levels – he argued that 1) the offense did not involve the use of a means of identification to produce another means of identification, and 2) the offense did not involve more than ten victims because Medicare was the sole victim.

What is the Means of Identification Enhancement?

When a defendant pleads guilty or is convicted in federal court, their sentence is calculated based on a complex formula found in the Federal Sentencing Guidelines that includes the statutory penalty for the crime including any mandatory minimum or maximum sentences, their prior criminal history, the impact of the crime as determined by the dollar value assigned to the offense, any sentencing enhancements based on the facts of the case, and whether the court grants a downward departure.

Among the many sentencing enhancements is the “means of identification enhancement,” that increases the offense level by two if the defendant used “a means of identification to produce another means of identification.”

U.S.S.G. § 2B1.1(b)(11)(C)(i) Means of Identification Enhancement

Federal Sentencing Guideline 2B1.1(b)(11)(C)(i) imposes a two-level increase to the defendant’s offense level if the offense involved “the unauthorized transfer or use of any means of identification unlawfully to produce or obtain any other means of identification.”

It sounds like it is intended to prevent someone from obtaining multiple forms of fake identification – for example, forging a birth certificate and then using it to obtain a driver’s license. But it is interpreted much more broadly – when does the enhancement apply?

What is a Means of Identification?

The Guidelines define “means of identification” as “any name or number that may be used, alone or in conjunction with any other information, to identify a specific individual.”

The Guidelines also refer to the statutory definition of “means of identification” in 18 U.S.C. 1028(d)(7)), which says that “means of identification” includes any:

• Name, social security number, date of birth, official State or government issued driver’s license or identification number, alien registration number, government passport number, employer or taxpayer identification number;
• Unique biometric data, such as fingerprint, voice print, retina or iris image, or other unique physical representation;
• Unique electronic identification number, address, or routing code; or
• Telecommunication identifying information or access device (as defined in section 1029(e)).

Courts have found that “means of identification” can include:

• Social security numbers;
• Bank account numbers;
• Credit card numbers;
• Mortgage loan numbers;
• A person’s name;
• Telephone numbers; or
• Medicare or other insurance claim numbers like those used in this case.

It’s not enough just to use a fake “means of identification.” For the enhancement to apply, the means of identification must be used to “unlawfully… produce or obtain any other means of identification.”

To Produce or Obtain a Second Means of Identification

The Guidelines define “produce” as “[to] manufacture, design, alter, authenticate, duplicate, or assemble.”

In Kalu, the Court found that 1) using a Medicare beneficiaries name (a means of identification) to produce 2) fraudulent health care claims (another means of identification) is enough to trigger the two-level enhancement.

Other examples include:

• Using someone’s name and social security number to obtain a bank loan in that person’s name;
• Using someone’s name and social security number to receive social security benefits;
• Using someone’s name and social security number to file fraudulent applications for Federal Emergency Management Agency (FEMA) benefits; and
• Using someone else’s name to secure a lease agreement (the lease agreement is a form of identification according to the Second Circuit in S. v. Samet).

By contrast, courts have found that the use of a credit card to make a purchase does not trigger the enhancement – although the credit card number is a means of identification, the purchase itself is not.

Enhancement for Ten or More Victims

Kalu also argued that the District Court should not have applied the two-level enhancement for more than ten victims, because Medicare was the sole victim in his case.

The Court disagreed, noting that they have already decided the issue in United States v. Barson, 845 F.3d 159, 167 (5th Cir. 2016) – when a defendant uses Medicare beneficiaries’ information to obtain fraudulent benefits, each beneficiary whose information was used is a victim in the case:

Kalu does not dispute that his fraud offense involved 10 or more Medicare beneficiaries. Instead, he argues that the Medicare beneficiaries do not qualify as victims, insisting that Medicare is the only victim of his fraudulent scheme. As Kalu concedes, his argument is foreclosed by United States v. Barson, 845 F.3d 159, 167 (5th Cir. 2016) (holding “Medicare beneficiaries for whom [fraud] conspirators falsely claimed benefits [are] ‘victims’ under the guidelines”).

The Fifth Circuit affirmed Kalu’s sentence including each of the sentencing enhancements.

Federal Appellate Attorney in Columbia, SC

Elizabeth Franklin-Best is a federal white collar criminal defense and federal appeals lawyer located in Columbia, SC.

For more information, call us at (803) 331-3421 or send us an email to set up a consultation about your case.