Attorney: Feds Abusing Asset Forfeiture To Harass Business Owner | Eastern North Carolina Now

    Publisher's note: The author of this post is Dan Way, who is an Associate Editor for the Carolina Journal, John Hood Publisher.

Government seized more than $5 million cash and 40 vehicles from owner of medical transportation service


    The federal government committed a "massive violation of the Fourth and Fifth Amendments" by seizing nearly $5 million, 40 vehicles, and four properties of a Greensboro small business owner while also breaching laws and federal policies controlling civil asset forfeiture cases, then hiding court actions it filed against Roderick Jessup, court documents claim.

    Jessup, owner and founder of Gate City Transportation, which took hundreds of chronically ill patients to thousands of monthly doctor visits and medical treatments, has a hearing scheduled today in the U.S. District Court for the Middle District of North Carolina seeking return of his assets, seized more than a year ago under the controversial civil asset forfeiture statutes.

    Wrongly denying Jessup his "fundamental constitutional rights has destroyed Gate City as a business entity, rendered Mr. Jessup destitute ... and caused the termination of more than 50 Gate City employees," Robert Higdon, Jessup's attorney, wrote in a court pleading. The government also retroactively seized wages from more than a dozen employees after the payments had been deposited into their bank accounts.

    Government agents allege Jessup illegally received Medicaid reimbursement payments through improper billing codes. Jessup's lawyers say the agents calculated the overpayments "for a specific period in 2015 and extrapolated that the company had wrongly billed Medicaid an extraordinary $20,251,961.02 between January 1, 2011, and September 24, 2014."

    U.S. Department of Health and Human Services Special Agent Madeline Fillman, and IRS Special Agent Richard Dawson claimed that Jessup and Gate City were engaged in health care fraud, the filing of false claims for payment from the government, and money laundering.

    The government is seeking a stay on Jessup's motion to return his assets, which include four properties, Rolex watches, and diamond jewelry, to allow agents to investigate further. That investigation could take years, freezing his assets even though eventually he may face no indictment or criminal charges.

    Higdon claimed in court documents that Jessup's lawyers contacted federal prosecutors 15 times on 13 dates in 2015 for status updates on the investigation, whether any criminal charges would be filed, and if the necessary civil asset forfeiture complaint would be made allowing the government to keep the cash, vehicles, and possessions confiscated from Jessup.

    The government agents "provided only a bare bones analysis of [Jessup's] supposed offenses," according to the court documents, and Jessup was left without a legal remedy or framework to resolve his financial distress and the collapse of his business.

    Assistant U.S. attorneys claimed they had no updates, were uncertain how they were going to proceed, had not been briefed by investigators, and cut off communications with defense lawyers at the end of 2015, court papers show. In fact, however, the government had filed the asset forfeiture paperwork with the court in June 2015, and amended the complaint in November.

    Higdon claims in the court filings that neither Jessup nor his lawyers were served a legally mandated notice that prosecutors had filed a civil asset forfeiture complaint. It wasn't until April 1, when Jessup filed a motion with the court for the return of his property, that prosecutors informed his lawyers they had filed the required paperwork 10 months earlier.

    "The government has no explanation for the delay, and its actions appear to be calculated to gain a tactical advantage at the expense of [Jessup's] due process rights," Higdon wrote in court documents. He characterized that as "tactical ploys [that] epitomize the government's 'reckless disregard'" for Jessup's rights, preventing him from learning "that a proceeding had been initiated."

    "They simply needed more time for the investigation, which, after another 10 months, appears to be headed nowhere. Such manipulation of the rules should give the court serious concern," Higdon wrote. "There is no indication that the government has done anything to investigate or otherwise advance toward the resolution of this matter since the seizures in February and March of 2015."

    Federal rules of criminal procedure mandate "dismissal of an action without prejudice if a defendant is not served within 120 days after the complaint is filed," Higdon's motion states. Yet the government's first attempt to serve process occurred 417 days after one civil case was initiated, and 238 days after a second one was opened.

    "Rather than properly commence judicial forfeiture proceedings by serving process" on Jessup, Higdon's motion stated, and in spite of repeated engagements with Jessup's counsel, the government "sat on those documents, sat on [Jessup's] assets, and stonewalled the whole process. This clearly violates the policies of the IRS and the Department of Justice."

    Court documents filed by U.S. Attorney for the Middle District Rand Ripley show the IRS, U.S. Department of Health and Human Services, and the North Carolina Attorney General's Office and its Medicaid Investigations Division were among those investigating the case.

    A declaration from Dawson, the IRS special agent, said four real estate properties were seized based on probable cause that Gate City was "engaging in monetary transactions in property derived from specified unlawful activity."

    Dawson alleges Gate City was "transporting patients in wheelchair and passenger vans and billing Medicare and Medicaid as if the transports were in an ambulance; transporting patients to and from their medical appointments by van and upcoding Medicare and Medicaid claims as though Basic Life Support (BLS) services were conducted when in fact such services were not conducted; billing for ambulance transportation of patients to and from their medical appointments when patients could be transported by other means safely, as they could sit up in a wheelchair, stand, or ambulate."

    Gate City outsourced its billing to a third party service, and claims the outside billing agency did its coding.

    Gate City no longer was certified as a Medicare ambulance service, so it could not receive Medicaid reimbursement, according to Dawson's declaration.
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