United States of America v. Kevin Clay

RECOMMENDED FOR PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 25a0350p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
KEVIN CLAY,
Defendant-Appellant.
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Nos. 23-3923/24-3038
Appeal from the United States District Court for the Northern District of Ohio at Toledo.
No. 3:21-cr-00205-1—Jack Zouhary, District Judge.
Argued: January 29, 2025
Decided and Filed: December 19, 2025
Before: GILMAN, STRANCH, and LARSEN, Circuit Judges.
_________________
COUNSEL
ARGUED: Amy Mason Saharia, WILLIAMS & CONNOLLY, LLP, Washington, D.C., for
Appellant. Rebecca C. Lutzko, UNITED STATES ATTORNEY’S OFFICE, Cleveland, Ohio,
for Appellee. ON BRIEF: Amy Mason Saharia, Patrick J. Looby, Alexandra Nickerson,
WILLIAMS & CONNOLLY, LLP, Washington, D.C., for Appellant. Rebecca C. Lutzko, Jason
Manion, UNITED STATES ATTORNEY’S OFFICE, Cleveland, Ohio, for Appellee.
_________________
OPINION
_________________
PER CURIAM. Kevin Clay and his best friend founded Theramedical, a pharmaceutical
sales company that specialized in compounded prescriptions. But unlike other pharmaceutical
companies, Theramedical marketed its compounds to prospective patients, not doctors.
The pitch: the patient would receive a “commission”—a cut of the insurance reimbursement—
>

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for each prescription filled. To facilitate this payment scheme, Theramedical partnered with a
pharmacy that agreed to give Theramedical a portion of the insurance reimbursements.
Theramedical then heavily recruited potential patients, or “sales representatives,” from a local
employer, whose insurance plan covered the prescriptions. And Theramedical directed the
representatives to a doctor who readily doled out the prescriptions. Within just two years,
Theramedical made millions of dollars. To minimize his taxable income, Clay established a
public charity but treated its funds as if they were his own. Eventually, authorities caught wind
of Theramedical’s activities and indicted Clay, along with others. A jury convicted Clay of
conspiracy to commit healthcare fraud, healthcare fraud, and making a false statement to the
Internal Revenue Service (IRS). The district court sentenced him to 51 months’ imprisonment
and ordered him to pay nearly $7 million in restitution. Clay appeals. For the following reasons,
we AFFIRM in part, VACATE in part, and REMAND for further proceedings consistent with
this opinion.
I.
Clay and his close friend, Matthew Maluchnik, worked in the pharmaceutical sales
industry. In 2013, they heard of a business opportunity regarding compounded pain and scar
cream prescriptions. Unlike generic cream prescriptions, compounded prescriptions are custom-
made in a pharmacy. The two friends learned that some pharmacies were paying patients to have
their compounded prescriptions filled by the pharmacies. Sensing a lucrative opportunity, Clay
and Maluchnik decided to capitalize on it.
The two men first had to find a pharmacy that would work with them. Lemma
Gettachew, the owner of Central Rx Pharmacy in Cleveland, Ohio, agreed to a meeting. At the
meeting, Clay and Maluchnik proposed the following business structure: the two men would
establish a sales team specializing in compounded prescriptions; Central Rx would process the
prescriptions and bill the insurers for them; and Central Rx would give Clay and Maluchnik 30%
of the insurance reimbursement. The Central Rx owner agreed.
To test out the plan, Clay and Maluchnik each sought compounded prescriptions for
themselves and some friends. Maluchnik sought a compounded prescription from Dr. Suzette

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Huenefeld. She readily prescribed it. A month later, Maluchnik received a check from Central
Rx worth “at least $10,000” for his prescription and those that he had encouraged a few friends
to get. R. 91, Trial Tr., PageID 1223. Clay, meanwhile, went to a different doctor, and the
prescriptions he and a few others obtained garnered a check from Central Rx for more than
$14,000.
The two friends then set up a company called Theramedical, LLC, and started to recruit
“pharmaceutical reps.” Id. at 1229. Theramedical’s pharmaceutical representatives were
atypical. Rather than marketing pharmaceuticals to doctors, the representatives would receive
commissions for obtaining their own prescriptions. Clay and Maluchnik endorsed this business
model, encouraging representatives to get prescriptions for themselves and their family
members.
Clay and Maluchnik gave their representatives Central Rx prescription pads to help
ensure that the prescriptions would be processed through a pharmacy that would pay a
“commission”—i.e., a cut of the insurance reimbursement—for the prescription. Bringing a
prescription pad to a doctor’s appointment was contrary to industry practice. Missing out on a
commission, though, was costly: a single prescription could cost up to $15,000 per monthly
refill, roughly $4,500 of which went to Theramedical. A percentage of Theramedical’s take then
went to the “sales rep,” who was often the patient himself.
To ensure reimbursement, Clay and Maluchnik had to identify insurance plans that
covered compounded prescriptions. The local Jeep plant’s insurance covered them, and
Maluchnik’s aunt, Loni Peace, worked there. At Maluchnik’s prodding, Peace obtained a
compounded prescription, and a “commission,” for herself. She then started to recruit other Jeep
employees, letting them know they could make money by getting their own prescriptions.
Within a few months, Peace had “recruited so many people from Jeep” to get compounded
prescriptions. R. 91, Trial Tr., PageID 1237–38. Peace pocketed a cut of their commissions,
pulling in nearly $500,000 from her relationship with Theramedical.
Almost all the Jeep employees obtained their compounded prescriptions through Dr.
Huenefeld. And Dr. Huenefeld was not selective about writing them. One Jeep employee

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testified that he brought his wife and teenage son to his appointment with Dr. Huenefeld, and all
three walked out with prescriptions for compounded creams. He even obtained prescriptions for
his absent seven- and eleven-year-old children. Over the course of two years, this family
received over $22,000 in “commissions” for filling prescriptions that they never used.
That figure represents just a fraction of the millions of dollars that Fiat Chrysler, Jeep’s
parent company, spent on prescriptions prescribed by Dr. Huenefeld and processed by Central
Rx.1 Fiat Chrysler had a self-insured account with health insurer BlueCross BlueShield of
Michigan. Pursuant to this structure, BlueCross would pay Fiat Chrysler employees’ medical
claims and bill Fiat Chrysler for them. Fiat Chrysler would then pay BlueCross the entire
amount of the claim. So Fiat Chrysler footed the bill for the Central Rx prescriptions.
That bill was costly. Across a six-month period, Central Rx received $7.7 million in
reimbursements for prescriptions Jeep employees had obtained from Dr. Huenefeld. A portion
of these reimbursements went into Theramedical’s coffers, with Theramedical receiving more
than $1 million from Central Rx in the company’s highest-grossing months. Some of the money
trickled down to the pharmaceutical representatives. Clay and Maluchnik divided the rest
equally.
To ease the tax burden on the sizable income generated through this scheme, Clay set up
a foundation in late 2014. The Clay Foundation was ostensibly a nonprofit that provided
scholarships for aspiring college students, and Clay designated it a public charity. The
Foundation’s classification as a public charity came with federal tax benefits. See 26 U.S.C.
§ 170(b)(1)(A)(vi). For example, donations to a public charity are eligible for greater deductions
than those to a private foundation. But the public charity designation also came with
requirements. For instance, the Foundation needed to receive a third of its money from public
donations within five years of its establishment.
Clay treated the Foundation as a public charity only when it suited him. In 2014, he
donated $400,000 to the Foundation, saving himself $140,000 in taxes for that year. Clay’s tax
1Theramedical also worked through other pharmacies and doctors, but its business with Central Rx and Dr.
Huenefeld formed the basis of the charges against Clay.

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savings would have decreased by roughly $35,000 had the Foundation been private. Yet, despite
the public-charity designation, Clay used the Foundation’s funds for personal expenses. For
instance, he spent $40,000 on silver and gold bars that he purchased in his name and stored in his
bedroom. He also used the Foundation’s funds to make a gift to his friend, which, according to
an IRS agent, is “[a]bsolutely not” a charitable purpose. R. 83, Trial Tr., PageID 807. And Clay
failed to file tax returns to report the Foundation’s income. The IRS eventually revoked the
Foundation’s nonprofit status.
In April 2021, a grand jury indicted Clay on four counts. Count one was conspiracy to
commit healthcare fraud, in violation of 18 U.S.C. § 1349. Count two was healthcare fraud, in
violation of 18 U.S.C. §§ 1347 and 2. Counts three and four were making false statements to the
IRS, in violation of 26 U.S.C. § 7206(1); count three concerned Clay’s statement of his taxable
income in 2014, and count four concerned his designation of The Clay Foundation as a public
charity.
The government also charged Maluchnik, Peace, and Dr. Huenefeld in related cases. All
three pleaded guilty to healthcare fraud, and Maluchnik also pleaded guilty to two tax charges.
Clay, meanwhile, went to trial. The jury convicted him of counts one, two, and four, but
acquitted him of count three. The court sentenced Clay to concurrent terms of 51 months’
imprisonment for counts one and two, and 30 months’ imprisonment for count four. After
additional briefing, the court also ordered Clay to pay restitution that included $6,443,815.00 to
Fiat Chrysler and $403,481.46 to the IRS. Clay appeals his convictions and sentence, as well as
the restitution orders.
II.
A.
Clay contests two jury instructions. First, he challenges the instruction defining
“knowingly and willfully” in the healthcare fraud statute, 18 U.S.C. § 1347. Second, he
challenges the instruction that omissions and concealment could support a healthcare fraud
conviction in his case.

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Clay stipulated at trial to the instructions he now challenges, so the invited-error doctrine
is at play. See United States v. Sharpe, 996 F.2d 125, 129 (6th Cir. 1993). The doctrine
forecloses appellate review of a defendant-induced error unless “the interests of justice demand
otherwise.” United States v. Barrow, 118 F.3d 482, 491 (6th Cir. 1997). We have said that
review may be available when the government was equally to blame for the error and the
defendant claims a violation of his constitutional rights. United States v. Montgomery, 998 F.3d
693, 699 (6th Cir. 2021). But whether to entertain the challenge is “left largely to the discretion of the
appellate court.” Barrow, 118 F.3d at 491. And any review is limited to the search for “plain
error.” Montgomery, 998 F.3d at 698. Under that standard, Clay must show (1) an error, (2) that
is plain, (3) that affects his substantial rights, and (4) that “seriously affects the fairness,
integrity, or public reputation of judicial proceedings.” United States v. Olano, 507 U.S. 725,
732 (1993) (citation modified). “Satisfying all four prongs of the plain-error test ‘is difficult.’”
Greer v. United States, 593 U.S. 503, 508 (2021) (quoting Puckett v. United States, 556 U.S.
129, 135 (2009)). In the context of jury-instruction error, this standard “requires a finding that,
taken as a whole, the jury instructions were so clearly erroneous as to likely produce a grave
miscarriage of justice.” United States v. Robinson, 133 F. 4th 712, 721 (6th Cir. 2025) (citation
omitted). For the moment, we set aside passing judgment on Clay’s invitation of the
instructional errors and review under the plain error standard.
i.
Clay was convicted of “knowingly and willfully” committing healthcare fraud, in
violation of 18 U.S.C. § 1347.2 The jury instructions provided that “[a]n act is done ‘knowingly
and willfully’ if it is done voluntarily and intentionally, and not because of mistake or some other
innocent reason.” R. 65-1, Jury Instr., PageID 449. While this case was on appeal, we
determined that a similar instruction was incorrect. United States v. Singh, 147 F.4th 652 (6th
Cir. 2025). In Singh, we explained that a defendant acts “knowingly” when he has “knowledge
of the facts that constitute the offense.” Id. at 658. But “to establish a ‘willful’ violation of”
2Count one charged Clay with conspiracy to commit healthcare fraud. A conspiracy conviction entails a
finding that “the conspirators acted with ‘at least the degree of criminal intent necessary for the substantive offense’
that was the object of the conspiracy.” United States v. Trevino, 7 F.4th 414, 425 (6th Cir. 2021) (citation modified).
So Clay’s conviction under count one rises or falls with his conviction under count two.

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§ 1347, the Government must prove that the defendant acted with knowledge that his conduct
was unlawful,” id. (citation omitted), although the defendant need not know which particular
statute he violated, 18 U.S.C. § 1347(b). We assess whether an error is plain by looking to the
law at the time of appeal. Henderson v. United States, 568 U.S. 266, 269 (2013).
Even when an error is plain, the defendant still must show that the error affected his
substantial rights—that is, he must show “a reasonable probability that the error affected the
outcome of the trial.” United States v. Marcus, 560 U.S. 258, 262 (2010). On top of that, he
must show that the error “seriously affect[ed] the fairness, integrity, or public reputation of
judicial proceedings.” Olano, 507 U.S. at 732 (citation omitted).
First, substantial rights. Clay was prosecuted for healthcare fraud, in violation of § 1347,
and the jury was instructed on the three elements of that crime in succession. The court first
instructed that, to find Clay guilty, the jury had to find that Clay “knowingly and willfully
executed . . . a scheme to defraud a health care benefit program in connection with the payment
for health care benefits.” R. 65, Jury Instr., PageID 431. The jury was then told that this
“scheme” had to “relate[] to a material fact or include[] a material representation or concealment
of a material fact.” Id. And finally, the jury was told that it had to find that the “[d]efendant had
the intent to defraud.” Id. When these instructions are read in context, see Robinson, 133 F.4th
at 721(jury instructions must be read “as a whole” (citation omitted)), the jury was instructed that
Clay’s “intent to defraud” had to be linked to the “scheme to defraud a health care benefit
program in connection with the payment for health care benefits.”
The jury instructions defined an “intent to defraud” as an “intent to deceive or cheat for
the purpose of either causing a financial loss to another or bringing about financial gain to
oneself or another person.” R. 65-1, Jury Instr., PageID 450. And, in context, the instructions
and the proof adduced at trial made clear who the “object” of the intended deceit or cheating
was—the “health care benefit program,” that is, Fiat Chrysler’s employee health benefits plan.
So the question becomes whether Clay has shown a reasonable probability that a properly
instructed jury would have concluded that he did not know it was illegal to knowingly execute a

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“scheme to defraud” Fiat Chrysler’s employee health benefits plan “in connection with the
payment for healthcare benefits” with the intent to “deceive or cheat” Fiat Chrysler.
Much of Clay’s defense at trial consisted of the claim that he “never thought [the scheme]
was wrong.” R. 83, Trial Tr., PageID 898. Maluchnick testified similarly. In support, Clay
testified that when he worked at Pfizer, he earned a commission and that patients sometimes
received rebates for their prescriptions. Clay and Maluchnick also worked with Gettachew—a
licensed pharmacist. And Clay was not directly involved in the insurance-reimbursement
process.
But the government also presented evidence suggesting that Clay knew the scheme was
not above-board. Maluchnik contradicted Clay’s claims about how the pharmaceutical business
normally worked, testifying that in his “previous experience in pharmaceutical sales, there was
no reimbursement to patients for getting a prescription.” R. 91, Trial Tr., Page ID 1224. So to
“test” whether “these things were paying out so much and that we would actually get paid,” id. at
1223, both Clay and Maluchnik obtained for themselves a medically unnecessary prescription for
cream after a pro forma examination, id. at 1223–26. Clay and Maluchnik then used fictitious
names to recruit purported “sales associates” for the scheme. They made clear to the
“associates” that they could get paid for obtaining prescriptions for themselves, family, or
friends, and they steered them to a particular doctor (Huenefeld) and a particular pharmacy
(Central Rx). And, while Central Rx was willing to engage in the scheme, other pharmacies told
Clay and Maluchnik that they would not get involved because they were “not comfortable” with
representatives getting paid for their own prescriptions. Id. at 1256.
The panel finds it a close question whether, in light of the evidence presented, Clay has
shown “a reasonable probability that the error affected the outcome of the trial.” Marcus, 560
U.S. at 262. We need not resolve that issue, however, because, in the end, Clay has not shown a
“grave miscarriage of justice” or that any error “seriously affect[ed] the fairness, integrity or
public reputation of judicial proceedings.” Olano, 507 U.S. at 732 (citation omitted); United
States v. Robinson, 133 F.4th at 721–22; cf. United States v. Murray, 760 F. App’x 595, 598
(10th Cir. 2019) (“We conclude that, even assuming arguendo that [defendant] could prevail as
to the first three prongs of the plain-error standard, his challenge fails as to the fourth.”); United

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States v. Peterson, 136 F. App’x 183, 186 (10th Cir. 2005) (“[W]e need not decide whether he
has satisfied the third prong of the plain error test because, even if he has, he has not met the
fourth prong.”); United States v. Fuentes-Canales, 902 F.3d 468, 476–82 (5th Cir. 2018)
(assuming without deciding that the defendant had established the first three prongs of plain error
review but declining to exercise its discretion under prong four to fix the error).
Plain error’s fourth prong is “an independent criterion,” United States v. Andaverde-
Tinoco, 741 F.3d 509, 523 (5th Cir. 2013), that “places an exceptionally high burden on the
defendant,” United States v. Armenta-Arredondo, 169 F. App’x 529, 532 (10th Cir. 2006). As
the Supreme Court “indicated in Olano, this standard is not automatically satisfied [even] where
a plain error affects substantial rights because otherwise the discretion afforded by Rule 52(b)
would be illusory.” United States v. Rogers, 118 F.3d 466, 473 (6th Cir. 1997) (citation
omitted). Instead, “[e]rrors warranting fourth-prong correction are rare and egregious, such that
they would shock the conscience of the common man, serve as a powerful indictment against our
system of justice, or seriously call into question the competence or integrity of the district
judge.” United States v. Mendoza-Velasquez, 847 F.3d 209, 213 (5th Cir. 2017) (citation
omitted).
Here, we return to Clay’s invitation of the instructional error. We conclude that, in the
circumstances of this case, it weighs against exercising our discretion under the fourth prong. As
explained previously, Clay stipulated at trial to the instruction he now challenges. Generally, “it
is difficult to obtain review of invited errors . . . [b]ecause doing so interferes with our
adversarial system, which ‘is designed around the premise that parties know what is best for
them and are responsible for advancing the facts and arguments entitling them to relief.’” United
States v. Akridge, 62 F.4th 258, 264 (6th Cir. 2023) (quoting Castro v. United States, 540 U.S.
375, 386 (2003) (Scalia, J., concurring in part and concurring in the judgment)). That is,
“[h]aving induced the court to rely on a particular erroneous proposition of law or fact, a party in
the normal case may not at a later stage of the case use the error to set aside the immediate
consequences of the error.” Harvis v. Roadway Exp. Inc., 923 F.3d 59, 61 (6th Cir. 1991). Here,
where it is a close question whether Clay has shown an effect on his substantial rights, and where

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he affirmatively invited the instructional error, we are not convinced that this is the rare case of
“manifest injustice” warranting the exercise of our discretion under the fourth prong.
ii.
We next consider Clay’s challenge to the jury instructions on omissions and concealment.
Section 1347 criminalizes obtaining the money or property of a healthcare company “by means
of false or fraudulent pretenses, representations, or promises.” The trial court instructed the jury
that “false or fraudulent pretenses, representations, or promises” include “the knowing
concealment of material facts.” R. 65-1, Jury Instrs., PageID 449. The court also told the jury
that it could convict Clay if he “deliberately ignored a high probability that the reimbursed
claims for compounding creams were obtained by false or fraudulent . . . omissions.” Id. at 451.
Clay now says these instructions were plainly erroneous because they enabled a conviction based
on a fraudulent omission, even though he had no duty to disclose.
We need not decide whether the instructions were in error or whether Clay had a duty to
disclose. To prevail on plain error review, Clay must show that any error was “obvious or clear.”
United States v. Barnes, 822 F.3d 914, 924 (6th Cir. 2016) (citation omitted). And here, circuit
precedent makes any error far from obvious.
In United States v. Bertram, the defendants had billed insurers for outdated (and thus
medically unnecessary) urinalysis tests, and a jury convicted them of violating § 1347. 900 F.3d
743, 747 (6th Cir. 2018). This court upheld their convictions, explaining that the “knowing
concealment of material facts” “suffices to violate [§ 1347] because omissions of material fact
constitute a scheme to defraud.” Id. at 748. In reaching this conclusion, Bertram rejected the
defendants’ argument that, because they “did not omit any requested information,” the claims
weren’t fraudulent. Id. at 750. It “ma[de] no difference that the claim-reimbursement form”
didn’t specifically ask about the timeliness of the urinalysis tests, we reasoned, because
“[i]nsurers do not expect urinalysis tests to be completed a half year to nearly a full year after
they were ordered.” Id. Nowhere in Bertram did we mention a duty to disclose.
One can read Bertram in at least two ways. From one perspective, Bertram affirmed
fraud convictions under § 1347 based on the omission of material information, despite the

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defendants having no duty to disclose. We read Bertram just that way in United States v.
Montgomery, concluding that “a defendant can be guilty of fraud through the concealment of
material information in the absence of a positive legal duty to disclose that information.” 2022
WL 2284387, at *10 (6th Cir. June 23, 2022) (citing Bertram, 900 F.3d at 748–51)); see also
United States v. Colton, 231 F.3d 890, 900–01 (4th Cir. 2000) (holding that although the
existence of an independent disclosure duty “is relevant and an ingredient” in some fraud
prosecutions, such a duty is “not an essential in all such cases,” and noting that other circuits
follow the same rule (citation omitted)). From another perspective, Bertram reasoned that,
because the insurers didn’t expect to be billed for extremely delayed urinalysis tests, the
defendants implicitly had a duty to disclose that information. See 900 F.3d at 750 (explaining
that “the industry standard for urinalysis tests was seventy-two hours, yet [the defendants] waited
in some instances 100 times longer to run their tests”).
Whatever the correct interpretation of Bertram, the fact that this court has read it as
upholding fraud convictions under § 1347 based on knowing concealment of material
information absent a duty to disclose forecloses Clay’s only argument in support of a finding of
plain error. “Plain errors are limited to those . . . so rank that they should have been apparent to
the trial judge without objection.” United States v. Henning, 286 F.3d 914, 920 (6th Cir. 2002)
(citation omitted). A lack of binding precedent demonstrating the trial court’s error forecloses
relief. United States v. Al-Maliki, 787 F.3d 784, 794 (6th Cir. 2015). Given Bertram’s
ambiguity, along with this court’s subsequent characterization of it in Montgomery, the district
court’s instructions on knowing concealment and omissions cannot be characterized as “rank”
errors. Accordingly, the district court did not plainly err.
B.
Clay next challenges testimony by Agent Marciniak, the government’s case agent.
Marciniak testified as a lay witness, and her testimony spanned forty pages of trial transcript.
Clay argues that six bits of her testimony—none of which he objected to—were so blatantly
inadmissible that the district court plainly erred by not excluding them sua sponte. We disagree.

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Clay argues that Marciniak’s testimony transgressed numerous provisions of the Federal
Rules of Evidence. He primarily alleges that the testimony violated Rule 701 because it lacked a
foundation and wasn’t helpful. See Fed. R. Evid. 701(a)–(b) (limiting lay-witness opinion
testimony to testimony “rationally based on the witness’s perception” and “helpful to clearly
understanding” testimony or “determining a fact in issue”). He also asserts that most of the
testimony was separately inadmissible for violating other evidentiary rules, like Rules 401
(relevance), 403 (probative value substantially outweighed by prejudice), 404 (character
evidence), and 802 (hearsay).
Clay did not object to the testimony he now challenges, so we review under the plain
error standard. United States v. Young, 847 F.3d 328, 349 (6th Cir. 2017). Because “neither
party asked the district court to rule on the statements’ admissibility,” we do not ask whether the
court was wrong to “‘admit’ the evidence.” United States v. Stokes, 834 F. App’x 213, 217 (6th
Cir. 2020). Instead, the question for our review is whether the testimony was so plainly
inadmissible that the district court was “derelict” in failing to strike it or give a curative
instruction sua sponte. United States v. Ramamoorthy, 949 F.3d 955, 960 (6th Cir. 2020);
Stokes, 834 F. App’x at 217. Such cases are rare. See 1 Federal Criminal Appeals § 4:59 (July
2025). Even assuming that Marciniack’s statements were “improper and inadmissible, a district
court does not commit plain error merely because it fails to give curative instructions sua sponte
any time improper evidence comes out at trial.” United States v. Byers, 649 F.3d 197, 213 (4th
Cir. 2011). And the same must be said regarding a failure to spontaneously order testimony
stricken from the record. The decision to strike or to issue a curative instruction might
sometimes do “more harm than good by focusing the jurors on [testimony] that they otherwise
might have missed or construed as innocuous.” Id. (quoting United States v. Deandrade, 600
F.3d 115, 119–20 (2d Cir. 2010)). And district judges do not abuse their discretion by being
mindful of the fact that defense counsel may have chosen to forego an objection out of a desire to
“downplay” certain testimony. Id.; see also United States v. Copeland, 51 F.3d 611, 616 (6th
Cir. 1995) (finding no reversible error in the court’s failure to issue curative “instructions sua
sponte” where doing so would have “emphasized [harmful] testimony” and “deprived the
defense of its chosen trial strategy.”); Stokes, 834 F. App’x at 217 (finding no plain error when
“a curative instruction would have only highlighted” the contested statements).

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We need not decide whether the district court erred here, however, because Clay has not
shown an effect on his substantial rights. “[W]hen addressing plain error,” we must evaluate the
alleged error “against the entire record.” United States v. Young, 470 U.S. 1, 16 (1985).
Considered in context, Marciniak’s statements do not undermine the trial’s outcome. Nearly all
of Marciniak’s testimony overlapped with unchallenged testimony provided by other witnesses.
See United States v. Prather, 138 F.4th 963, 971 (6th Cir. 2025) (finding no violation of
substantial rights when the challenged testimony was cumulative of other testimony). As for the
remainder, Clay has not shown a “reasonable probability” that the evidence swayed the jury’s
verdict. Marcus, 560 U.S. at 262.
First consider Marciniak’s statements discussing how Maluchnik and Clay created a lot
of companies or “schemes” to “accumulate wealth.”3 On this topic, witnesses other than
Marciniak presented the following unchallenged testimony: Clay and Maluchnik each had “an
entrepreneurial spirit,” and the two talked about creating a business together “[f]rom the get-go.”
R. 83, Trial Tr., PageID 877, 879. The two friends had “a couple different things going on,”
including a catering company, music production company, and real estate venture. R. 91, Trial
Tr., PageID 1242. In fact, they owned six entities in 2014 and four in 2015. And Clay
considered starting another “lucrative business” after the compounded prescriptions “business”
dried up because, in his words, “you don’t really get in the business unless you want to make
money.” R. 83, Trial Tr., PageID 903.
These statements conveyed to the jury that Clay wished to run a profitable business and
that he pursued a variety of avenues to do so. Agent Marciniak’s similar statements on the
matter provided no substantively unique information. Her editorializing might have been
unnecessary. Clay objects, for example, to her describing Clay and Maluchnik as “big wannabe
successful business owners” and referring to their ventures as “schemes.” Appellant Br. at 46.
But we see no reasonable probability that these minor comments affected the jury’s verdict. The
3The particular statements were as follows: (1) “I learned through the investigation that Matt and Kevin
were best friends. They didn’t do anything separate and apart from each other. They were big wannabe successful
business owners. They created many different businesses, LLCs, to try and accumulate wealth,” R. 91, Trial Tr.,
PageID 1307; and (2) “Ultimately, once they realized that this compound cream scheme was being shut down
through the insurance company, always being a day late and dollar short, as I say, falling behind, they moved on to
the next scheme,” id. at 1308.

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jury heard far more damaging testimony about Clay’s business endeavors. For example,
Maluchnik, Clay’s business partner, testified that he had pleaded guilty to healthcare fraud
stemming from Theramedical’s business. Such incriminating testimony dwarfed any prejudicial
effect of Marciniak’s arguably disparaging descriptions.
For similar reasons, we are unpersuaded that Clay has shown prejudice from Marciniak’s
unflattering characterization of Clay’s various business endeavors. She described Clay and
Maluchnik as “always being a day late and dollar short,” so that when the insurance company
shut down their “compound cream scheme” they were on to the next scheme. R. 91, Trial Tr.,
Page ID 1308. And she explained that the “wellness” supplement Clay and Maluchnik sold was
“a resveratrol pill.” Id. at 1308–09. She then described the two men’s “joke” that “it’s a lot of
red wine. But they were told that that wouldn’t pay out because insurance companies were [not]
paying that for proactive wellness.” Id. Yet Clay himself offered testimony in a similar
vein: When the compounded prescriptions business “started to fall off,” he and Maluchnik
“immediately . . . start[ed] looking for other opportunities,” including urine testing. R. 83, Trial
Tr., PageID 902. But after getting it off the ground, they learned “it wasn’t as lucrative” because
“the company who was doing the billing for us couldn’t collect payment.” Id. at 903.
Marciniak’s comment that the two friends joked about the resveratrol pill being merely red wine
might have painted Clay in an unfavorable light. But there’s no reasonable probability that it
swayed the jury’s verdict—again, the government introduced much more incriminating evidence.
Clay next argues that he was harmed by Marciniak’s statements that Maluchnik and Clay
were “always together,” and may even have been “lovers.”4 These statements, he says,
“undermine[d] Clay’s defense that Maluchnik, not Clay, handled the day-to-day operations.”
Appellant Br. at 46. But many witnesses, other than Marciniak, testified to how close the two
men were. Maluchnik and Clay had been best friends since 2002 and were in each other’s
weddings. Clay used to attend Maluchnik’s family dinner on Sundays. The two friends lived
“50 to a hundred feet” apart and saw each other daily; indeed, law enforcement officials found
4The particular statement was: “[Maluchnik and Clay] went to the gym together. They went to breakfast
together. They went to lunch together. They went to dinner and drinks together. They went to the bank
together. . . . We were told—we know that they were always together. There was, like, accusations that they
actually were lovers at one point.” R. 91, Trial Tr., PageID 1311 (objection and stricken testimony omitted).

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Clay’s tax documents in Maluchnik’s apartment. R. 91, Trial Tr., PageID 1217. What’s more,
Clay and Maluchnik “[s]eemed like they had no secrets from each other” and were “living
parallel lives in some respects.” R. 82, Trial Tr., PageID 764. This uncontested testimony
conveyed to the jury how intertwined Clay’s and Maluchnik’s lives were. To be sure, no one
else testified that Clay and Maluchnik were rumored to be lovers. And Clay is right that
Marciniak’s speculations about his sexual relationships “ha[d] no place in [his] criminal trial.”
Appellant Br. at 47. Yet Marciniak’s stray comment of that nature was not so prejudicial as to
merit reversal. Clay argues that the government tried to emphasize the closeness of the two
men’s relationship in order to undermine his defense that Maluchnik, not he, closely oversaw
Theramedical’s operations. But a wealth of evidence painted the two men as inseparable; and
whether they were best friends or romantic partners would have little bearing on this defense.
Because other testimony conveyed just how close the two friends were, Marciniak’s testimony
on the matter did not affect Clay’s substantial rights. See Prather, 138 F.4th at 971.
Lastly, Marciniak’s commentary about Dr. Huenefeld’s drinking habits and patient base
was cumulative of other testimony.5 Maluchnik, for instance, testified that Dr. Huenefeld’s
office was a “small primary care practice” that had “little dogs running around” and was not “the
cleanest place,” likely “due to the drinking.” R. 91, Trial Tr., PageID 1225, 1242. He also
shared that Dr. Huenefeld once showed up to a dinner “already a little bit drunk” and “got so
drunk” that the wait staff almost kicked her out. Id. at 1225. And in unchallenged testimony,
Marciniak testified about a trial exhibit showing that Dr. Huenefeld “didn’t have a very large
patient base” prior to 2014. Id. at 1307. Marciniak’s contested commentary about Dr.
Huenefeld was not the sole avenue by which the jury learned of Huenefeld’s drinking habits and
small client base. So we are not persuaded that it affected the jury’s verdict.6 In sum, Clay has
5The particular statement was: “[Dr. Huenefeld’s] patient base was lacking, if you will. She didn’t really
have a large practice. She was floundering, as you’ve heard. She had a drinking problem. She just wasn’t a very
well-respected doctor. She didn’t have a lot of income as a physician.” R. 91, Trial Tr., PageID 1302.
6Clay does not explain how he was prejudiced by Marcianek’s statement that her interviews with numerous
Jeep employees “corroborate[d]” what the records revealed. R. 91, Trial Tr., PageID 1312. Regardless, we see no
prejudice. The records Marciniak referenced revealed a roughly 800% increase in visits by Jeep employees to Dr.
Huenefeld in 2014. That data itself is far more incriminating than Marciniak’s statement that her interviews with
Jeep employees corroborated it.

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not shown that he was prejudiced by the district court’s failure to strike these segments of
Marciniak’s testimony sua sponte.
C.
Clay next contests the restitution orders to Fiat Chrysler and the IRS. We give de novo
review to the scope of a restitution order, and we review the amount of restitution ordered under
the abuse of discretion standard. United States v. Sawyer, 825 F.3d 287, 291–92 (6th Cir. 2016).
i.
We begin with Fiat Chrysler’s restitution award. The PSR calculated a loss of
$7,159,795 to Fiat Chrysler. Clay argued below that this figure should have excluded medically
necessary prescriptions. At sentencing, the district court agreed, explaining there’s no “question
that there can be a legitimate use of creams . . . for patients with legitimate pain.” R. 115, Sent’g
Hr’g Tr., PageID 1651. Because the court found that some of the prescriptions were medically
necessary, it compared the number of prescriptions before and after the fraud and arrived at a
loss greater than $1.5 million but less than $3.5 million. When ordering restitution, however, the
court refused to exclude any medically necessary prescriptions, reasoning that payments
“procured by kickbacks, whether they are medically necessary or not[,] are subject to
restitution.” R. 111, Restitution Order, PageID 1604 (citation omitted). And because
Maluchnik’s plea agreement stipulated that he would pay 10% of the restitution amount, the
court ordered Clay to pay the remaining 90%—$6,443,815—pursuant to the Mandatory Victims
Restitution Act (MVRA), 18 U.S.C. § 3663A.
Clay challenges this order on two grounds. First, he continues to contest the inclusion of
medically necessary prescriptions in the restitution award. Second, he argues that the court’s
apportionment of restitution violated 18 U.S.C. § 3664(h). We address these challenges in turn.
Legitimacy of the Claims. Clay challenges the scope of the restitution order, saying that
it cannot encompass legitimate medical claims. We review such challenges de novo. See United
States v. Ricard, 922 F.3d 639, 658 (5th Cir. 2019); United States v. Bane, 720 F.3d 818, 827–28
(11th Cir. 2013); see also United States v. Jones, 641 F.3d 706, 713 (6th Cir. 2011) (reviewing

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de novo whether the restitution order could compensate losses stemming from acquitted
conduct); United States v. Gray, 121 F.4th 578, 586 (6th Cir. 2024) (reviewing de novo whether
the restitution order impermissibly included losses resulting from conduct not covered by the
indictment).
The district court erred when it included medically necessary prescriptions in the
restitution award. Both the MVRA and our restitution caselaw illustrate this. Consider first the
plain text of the MVRA. It provides that, if the defendant’s “offense result[ed] in damage to or
loss or destruction of property of a victim of the offense,” and “return of the property . . . is
impossible, impracticable, or inadequate,” the “order of restitution shall require that [the]
defendant . . . pay an amount equal to . . . the value of the property . . . less . . . the value . . . of
any part of the property that is returned.” 18 U.S.C. § 3663A(b)(1). Plainly, the MVRA is
concerned with restoring the victim to the status quo ante. Cf. Hughey v. United States, 495 U.S.
411, 416 (1990) (“[T]he ordinary meaning of ‘restitution’ is restoring someone to a position he
occupied before a particular event . . . .”). And regardless of fraudulent conduct, Fiat Chrysler’s
insurance would have covered medically necessary claims. So payment for such claims wasn’t a
loss caused by Clay’s conduct.
Section 3664, which governs the “[p]rocedure for issuance” of restitution, confirms that
restitution is concerned with the victim’s losses. It instructs that “the court shall order restitution
to each victim in the full amount of each victim’s losses,” 18 U.S.C. § 3664(f)(1)(A), and it
references the victim’s “loss” throughout, see, e.g., id. § 3664(e), (f)(1)(A), (h), (i). The MVRA
thus limits victim compensation to the loss suffered, which would not include medically
necessary prescriptions.
Our caselaw corroborates this. We have repeatedly recognized that courts can grant
restitution only for the actual loss the victim(s) suffered. See United States v. Fike, 140 F.4th
351, 357 (6th Cir. 2025) (“Restitution awards must reflect the victim’s ‘actual loss’ . . . .”
(citation omitted)); United States v. White, 492 F.3d 380, 418 (6th Cir. 2007) (stating that “a
restitution award may not exceed the ‘loss caused by the conduct underlying the offense’”
(quoting Hughey, 495 U.S. at 420)); United States v. Boring, 557 F.3d 707, 714 (6th Cir. 2009)
(noting that “the restitution award [must] be based on the amount of loss actually caused by the

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Nos. 23-3923/24-3038 United States v. Clay Page 18
defendant’s offense” (citation omitted)). To do otherwise would “provide a windfall for crime
victims,” Bane, 720 F.3d at 827 (citation omitted), in contravention of restitution’s purpose, see
Boring, 557 F.3d at 714.
Our cases calculating loss for sentencing purposes bolster the conclusion that medically
necessary claims are not a “loss” and thus cannot be included in a restitution order. In United
States v. Mehmood, another healthcare fraud case, we vacated the district court’s loss calculation
after the court reasoned that no claims were legitimate because Medicaid wouldn’t have paid
them had it known of the fraudulent scheme. 742 F. App’x 928, 940–41 (6th Cir. 2018). We
explained that, under the Guidelines, the “aggregate dollar amount of fraudulent bills submitted
to the Government health care program” was prima facie evidence of the intended loss amount.
Id. at 941 (citation modified). So “the value of any legitimate claims, if established, must be
offset against the aggregate billings.” Id.; see also United States v. Montgomery, 2022 WL
2284387, at *13) (6th Cir. June 23, 2022) (recognizing that “legitimate claims should be offset
‘if established’” (citation omitted)); United States v. Bryant, 849 F. App’x 565, 571–72 (6th Cir.
2021) (affirming the district court’s calculation of loss that “did not include legitimately billed
claims”). To be sure, Mehmood concerned sentencing, whereas this case concerns restitution.
But when it comes to actual losses, restitution figures and Guidelines-loss determinations are
usually the same.7 United States v. Dadyan, 76 F.4th 955, 959 (9th Cir. 2023); United States v.
Stein, 846 F.3d 1135, 1153 (11th Cir. 2017). And we see no reason why legitimate medical
claims, which don’t constitute actual losses under the Guidelines, would nevertheless be losses
for restitution purposes. Compare U.S.S.G. § 2B1.1(b)(1)(C)(i) (defining “actual loss” as “the
reasonably foreseeable pecuniary harm that resulted from the offense”), with United States v.
Carrasquillo-Vilches, 33 F.4th 36, 45 (1st Cir. 2022) (defining “[a]ctual loss” under the MVRA
as the “pecuniary harm that would not have occurred but for the defendant’s criminal activity”
(citation omitted)).
7Of course, differences in the language of the MVRA and Guidelines might result in different actual loss
calculations. See United States v. Agrawal, 97 F.4th 421, 442 (6th Cir. 2024) (observing that “a court’s calculation
of ‘loss’ under [the MVRA] need not match its calculation of ‘loss’ under the guideline”). And, in some instances,
the restitution figure may surpass the actual loss under the Guidelines. See United States v. Dadyan, 76 F.4th 955,
959–60 (9th Cir. 2023). But the government doesn’t point to any language in the MVRA that would warrant such
an outcome here.

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For these reasons, the district court should have separated legitimate from illegitimate
medical claims in calculating restitution. Its failure to do so warrants vacatur of the restitution
order to Fiat Chrysler.
Apportionment. Clay also challenges the district court’s apportionment of the Fiat
Chrysler restitution order. Clay argues that the order, which makes him solely liable for 90% of
the restitution to Fiat Chrysler, violates § 3664(h). Reviewing this claim de novo, see United
States v. Blanchard, 9 F.3d 22, 24 (6th Cir. 1993), we agree.
Section 3664(h) states that if more than one defendant has caused a victim’s loss, the
court “may make each defendant liable for payment of the full amount of restitution or may
apportion liability among the defendants to reflect the level of contribution to the victim’s loss
and economic circumstances of each defendant.” § 3664(h) (emphasis added). In other words,
the court can either (1) apply joint and several liability or (2) apportion liability among the
defendants based on their culpability and economic circumstances. United States v. Bailey, 973
F.3d 548, 576 (6th Cir. 2020); United States v. Bogart, 576 F.3d 565, 575 (6th Cir. 2009). The
district court chose apportionment. So § 3664(h) required the court to calculate Clay’s liability
based on his economic circumstances and contributions to Fiat Chrysler’s losses in comparison
to those of Maluchnik, Peace, and Huenefeld.
Despite this statutory obligation, the sole reason the district court gave for its
apportionment determination was that Maluchnik agreed to pay 10% of the restitution pursuant
to a plea agreement. The court didn’t consider Clay’s, Maluchnik’s, Peace’s, or Huenefeld’s
contribution to Fiat Chrysler’s losses. Nor did it consider the other defendants’ economic
circumstances. Though courts are “not required to use any particular formula for
apportionment,” United States v. Salas-Fernandez, 620 F.3d 45, 49 (1st Cir. 2010), they also
cannot ignore the statutory parameters of § 3664(h). Because the district court did, it erred.
The government resists this determination. It says that § 3664(f)(1)(A) requires the court
to order restitution to Fiat Chrysler “in the full amount” of its losses. Because Maluchnik’s plea
deal provided that he would pay 10% of restitution, the other 90% had to come from someone.
And that someone was Clay.

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Nos. 23-3923/24-3038 United States v. Clay Page 20
In support, the government cites United States v. Williams, 612 F.3d 500 (6th Cir. 2010).
There, the defendant challenged the restitution award because it was greater than the total loss
the government had identified at his codefendant’s prior sentencing. Id. at 510. He insisted that
estoppel prevented the government from seeking a greater restitution amount from him. Id. We
disagreed. Id. “[F]aced with choosing between a statutory obligation”—that the defendant fully
compensate the victims for their losses—and the equitable doctrine of estoppel, we concluded
that the “mandatory language of the MVRA trump[ed] the equitable policies underlying”
estoppel. Id. at 513.
Williams doesn’t help the government. Clay’s argument derives from the statute’s
language, not an equitable doctrine. And, if anything, Williams undermines the government’s
position. We observed there that “the MVRA applies regardless of any plea agreement” and,
unlike 18 U.S.C. § 3663, it “does not” permit the court to “order restitution in any criminal case
to the extent agreed to by the parties in a plea agreement.” Id. at 511–12 (citation omitted).
Because the court below allowed Maluchnik’s plea agreement to override § 3664(h)’s
imperatives, it erred even under Williams’ logic.
The government also posits that any error was harmless—beneficial, in fact—since the
court could have held Clay responsible for the full restitution amount. But we are not persuaded
that Clay suffered no harm. Even if the court had ordered Clay liable for the full amount, Clay
would have had a contribution claim against his codefendants for any amount that surpassed his
personal responsibility. See United States v. Yalincak, 30 F.4th 115, 123 (2d Cir. 2022); United
States v. Borino, 123 F.4th 233, 244 & n.4 (5th Cir. 2024). And the trial record indicates the
amount could be substantial: though Clay co-founded and co-owned Theramedical, Maluchnik,
Peace, and Huenefeld were highly active in recruiting “pharmaceutical reps” and enabling
fraudulent prescriptions.
The government further argues that, if we remand, the court will have no choice but to
impose a “hybrid” restitution order, which would make Clay fully liable anyway. But hybrid
orders are typically appropriate when “one defendant organizes a criminal scheme and enlists
numerous others to play limited roles.” Yalincak, 30 F.4th at 123. Under such orders, the most
culpable among the defendants is liable for the full amount of the loss, while the less culpable are

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Nos. 23-3923/24-3038 United States v. Clay Page 21
liable for only the losses they caused. Id. at 125. Though perhaps a hybrid restitution order
holding both Clay and Maluchnik fully liable would have comported with this structure, it’s hard
to see how a hybrid restitution order holding only Clay fully liable would be appropriate. A
hybrid restitution order still must abide by § 3664(h)’s command that liability be apportioned
among defendants according to their contributions to the victims’ losses. Id. at 124–26.
Requiring Clay to pay 100% of restitution under a hybrid restitution order, while Maluchnik pays
10% and Peace and Huenefeld pay nothing, would not abide by this requirement. We thus
disagree that any error was harmless.
ii.
Clay also contests the $403,481.46 restitution order to the IRS on two grounds.8
Unsubstantiated. To start, Clay argues that the entire restitution award to the IRS is
unsubstantiated. We review under the abuse of discretion standard. See Sawyer, 825 F.3d at
294.
Below, Clay objected to the PSR’s calculation of restitution to the IRS, arguing that trial
testimony supported a loss of only $35,000. The government thus had to prove the loss by a
preponderance of the evidence, Fike, 140 F.4th at 357, using evidence that had a “sufficient
indicia of reliability to support its probable accuracy,” Sawyer, 825 F.3d at 295 (citation
omitted).
The government failed to carry its burden. The PSR stated that the restitution award was
based on calculations provided by the IRS. In defending the award, the government simply
stated that it “believes the PSR calculations for IRS restitution are correct.” R. 105, Gov.
Restitution Br., PageID 1573. But neither the PSR nor the government explained how the IRS
arrived at its results. In essence, the restitution award derived from the IRS’s say-so. Relying on
a victim’s bare assertion of its loss is insufficient to support a restitution award. See United
States v. Waknine, 543 F.3d 546, 557 (9th Cir. 2008) (“[T]he district court erred by relying
8The court ordered restitution to the IRS as a condition of supervised release under 18 U.S.C.
§§ 3563(b)(2), 3583(d). The court’s restitution order nevertheless must “conform to the provisions of the [Victim
and Witness Protection Act (VWPA), see 18 U.S.C. § 3663].” United States v. Butler, 297 F.3d 505, 518 (6th Cir.
2002).

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Nos. 23-3923/24-3038 United States v. Clay Page 22
exclusively on the one-page loss summaries provided by the victims and in not requiring more
detailed explanations of the losses each victim suffered.”); United States v. Menza, 137 F.3d 533,
539 (7th Cir. 1998) (“[T]he government must provide the district court with more than just the
general invoices submitted by [the victims], ostensibly identifying the amount of their losses.”).
The court thus abused its discretion in awarding $403,481.46 in restitution to the IRS.
The government’s arguments to the contrary are unpersuasive. It first contends that Clay
didn’t dispute the accuracy of the restitution award when his PSR was being prepared. True,
Clay did not dispute the restitution calculation in his objections to the PSR. But he objected in
his sentencing memorandum, which he filed during the PSR’s preparation. And the district court
itself removed the restitution issue from the sentencing hearing, stating that “[r]estitution is a
discussion that we’re going to finalize and give counsel a chance to discuss . . . among
themselves.” R. 115, Sent’g Hr’g Tr., PageID 1683. “I’ll let you talk first with each other,” the
court added. Id. at 1687. Clay then raised his objection once again in his restitution brief. Clay
thus put the restitution amount in dispute. See Williams, 612 F.3d at 516–17; cf. United States v.
Pupo, 995 F.3d 23, 27, 29 n.5 (1st Cir. 2021); United States v. Hammond, 742 F.3d 880, 884 (9th
Cir. 2014).
Pointing to United States v. Small, 988 F.3d 241 (6th Cir. 2021), the government also
faults Clay for not providing evidence to contradict the IRS’s calculation of its loss. In Small,
the court explained that “[i]n assessing whether an issue is in dispute at sentencing, we generally
require a defendant to produce some evidence that calls the reliability or correctness of the
alleged facts into question.” Id. at 257 (citation modified). The defendant’s bare denial will not
suffice. Id. Here, however, Clay offered more than a bare denial. In his sentencing
memorandum, Clay argued that “[i]f not zero, the loss should be no more than $35,000.” R. 90,
PageID 1120. And he pointed to the testimony of the government’s IRS witness in support of his
assertion. Id.
In sum, Clay disputed the loss calculation, and the only justification ever provided for it
was the IRS’s word. A victim’s unadorned assertion of its loss does not satisfy the
preponderance-of-the-evidence standard. Thus, the district court abused its discretion in its
restitution order to the IRS.

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Acquitted Conduct. Clay also argues that the district court erred by basing a large portion
of the restitution order—$266,466—on conduct for which he was acquitted. We consider this
challenge to aid the proper resolution of this case on remand.
We review the legality of the district court’s restitution order de novo. See Jones, 641
F.3d at 713. For an offense that has “a scheme, conspiracy, or pattern of criminal activity” as
“an element,” the court “may order . . . restitution to any victim of such offense.” 18 U.S.C.
§ 3663(a)(1)–(2). A “victim” is “any person directly harmed by the defendant’s criminal
conduct in the course of the scheme, conspiracy, or pattern.” Id. § 3663(a)(2). A district court
may order restitution to a victim harmed by the defendant’s acquitted conduct if such conduct
was part of the “scheme, conspiracy, or pattern of criminal activity” for which the defendant was
convicted.9 See Jones, 641 F.3d at 714 (citation omitted). When, as here, the defendant goes to
trial, the indictment defines the scope of the “scheme, conspiracy, or pattern” of criminal
activity. Id.
Clay’s indictment reveals that his acquitted conduct was not part of the conspiracy or
scheme for which he was convicted. Count one charged Clay with conspiracy to commit
healthcare fraud “by causing healthcare insurance companies to issue reimbursements for
expensive medically unnecessary compounded medications, collecting a percentage of those
reimbursements[,] and failing to disclose to the insurance companies that ‘patients’ were being
paid for their own prescriptions.” R. 1, Indictment, PageID 3 (emphasis added). And count two
charged him with “execut[ing] and attempt[ing] to execute the above-described scheme and
artifice to defraud a health care benefit program.” Id. at 8 (emphasis added). Put simply, the
scheme was healthcare fraud; and the victims were healthcare companies and healthcare benefit
programs.
The jury acquitted Clay of count three. That count accused Clay of making a false
statement on a tax return. It didn’t mention healthcare fraud, healthcare companies, or healthcare
9For example, say a defendant faced several counts of healthcare fraud, but the jury convicted him of only
one count. The court may use the conduct underlying the acquitted charges to calculate restitution for a victim, so
long as the victim was harmed by the same scheme underlying the defendant’s healthcare fraud conviction and the
government proves the loss by a preponderance of the evidence. See Jones, 641 F.3d at 713–15; Fike, 140 F.4th at
357.

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Nos. 23-3923/24-3038 United States v. Clay Page 24
benefit programs, and it didn’t reference counts one or two. So the indictment doesn’t support
the conclusion that Clay’s acquitted conduct, which caused the IRS’s purported loss, was part of
the conspiracy or scheme for which Clay was convicted. The court thus erred in ordering
restitution to the IRS based on count three.
The government disputes this, arguing that Clay understated his income to the IRS with
the goal of “unlawfully enrich[ing]” himself, and that this goal was common to counts one and
two. Id. at 3. But restitution to victims that stems from conduct for which the defendant was not
convicted is permissible only “when the loss is attributable to the precise scheme that was an
element of the defendant’s convicted offense.” Jones, 641 F.3d at 714 (emphasis added). The
indictment did not indicate that the conspiracy and scheme underlying Clay’s two healthcare-
fraud-related charges encompassed lies about his taxable income. Cf. United States v. Kones, 77
F.3d 66, 71 (3d Cir. 1996) (“‘[V]ictim’ within the meaning of § 3663(a)(1) and (a)(2) does not
include a person who has experienced no harm arising from the criminal conduct that gives rise
to the offense of conviction.”). Put simply, the IRS was not a victim of Clay’s healthcare fraud
conspiracy or scheme, so Clay’s acquitted conduct with respect to the IRS could not be a basis
for restitution.
D.
Finally, Clay challenges the district court’s application of a four-level sentencing
enhancement for his leadership role in the fraudulent scheme. Section 3B1.1 of the Sentencing
Guidelines imposes a four-level leadership enhancement “[i]f the defendant was an organizer or
leader of a criminal activity that involved five or more participants or was otherwise extensive.”
U.S.S.G. § 3B1.1(a). To qualify as a leader or organizer, the defendant must have “exert[ed]
control over at least one participant in a supervisory, managerial, leadership, or organizational
capacity.” United States v. Gort-Didonato, 109 F.3d 318, 321 (6th Cir. 1997). A “participant” is
one “who is criminally responsible for the commission of the offense, but need not have been
convicted.” U.S.S.G. § 3B1.1 cmt. n.1.
Generally, “[w]e review the district court’s legal conclusion that a person is an organizer
or leader under § 3B1.1 deferentially, and its factual findings for clear error.” United States v.

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House, 872 F.3d 748, 751 (6th Cir. 2017) (citation modified). Clay, however, argues that
deferential review doesn’t apply because the district court made no factual findings to justify the
enhancement. And according to Clay, when a district court doesn’t provide a factual basis for
applying a sentencing enhancement, we conduct de novo review to determine whether the
enhancement is applicable or whether we must remand for further fact finding. See United States
v. Caseslorente, 220 F.3d 727, 734 (6th Cir. 2000). The government, however, insists that our
review should be deferential because, although Clay challenged the issue in his sentencing
memorandum, he failed to reassert the challenge during sentencing and the district court
appropriately adopted the PSR when applying the leadership enhancement. We find the record
in this case sufficiently unclear, as to both issue preservation and the factual basis for the
enhancement, that a remand is warranted.
Clay initially contested the leadership enhancement in his sentencing memorandum. But
at the sentencing hearing, the district court adopted the PSR (which recommended applying the
enhancement) and stated that it had “discussed with counsel several of those objections [in
Clay’s sentencing memorandum] that would affect the guidelines range. And after consulting
with the group, I have decided to amend the guidelines range.” R. 115, Sent’g Hr’g Tr., PageID
1647. Nonetheless, the court later asked the government to explain why the court should apply
the leadership enhancement. The government offered an explanation, but the court never
commented on the government’s arguments or otherwise explained why it applied the
enhancement. It’s not clear then whether the district court was relying on the government’s
argument or the PSR to support the enhancement. Given this confusion and the fact that a
remand is already necessary for the court to reconsider the restitution award, we remand for the
district court to reconsider or explain the factual basis for the leadership enhancement.
Clay asks us to go a step further—he requests that we vacate the enhancement on the
ground that the record fails to support it. See United States v. Vandeberg, 201 F.3d 805, 811 (6th
Cir. 2000). We decline to decide whether the record does or does not support the leadership
enhancement. Instead, we leave the question for the district court on remand, which is in a better
position to decide in the first instance. See Buford v. United States, 532 U.S. 59, 64 (2001).

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Nos. 23-3923/24-3038 United States v. Clay Page 26
* * *
For the foregoing reasons, we AFFIRM in part, VACATE in part, and REMAND for
further proceedings consistent with this opinion.

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