United States of America v. Maruthi Manney

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 06-4631
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
MARUTHI MANNEY,
Defendant - Appellant.
No. 06-4632
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
LAKSHMI MANNEY,
Defendant - Appellant.
Appeals from the United States District Court for the District of
Maryland, at Greenbelt. Deborah K. Chasanow, District Judge.
(8:04-cr-00560-DKC-1; 8:04-cr-00560-DKC-2)
Submitted: August 27, 2007 Decided: September 5, 2007
Before WILKINSON, TRAXLER, and DUNCAN, Circuit Judges.

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Affirmed by unpublished per curiam opinion.
William C. Brennan, Jr., BRENNAN, SULLIVAN & MCKENNA, LLP,
Greenbelt, Maryland; Robert C. Bonsib, MARCUS & BONSIB, Greenbelt,
Maryland, for Appellants. Rod J. Rosenstein, United States
Attorney, Bryan E. Foreman, Assistant United States Attorney,
Greenbelt, Maryland, for Appellee.
Unpublished opinions are not binding precedent in this circuit.

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PER CURIAM:
Dr. Maruthi Manney was convicted by a jury of wire fraud
in violation of 18 U.S.C.A. § 1343 (West 2000 & Supp. 2007)(Count
One) and of eight counts of mail fraud in violation of 18 U.S.C.A.
§ 1341 (West 2000 & Supp. 2007) (Counts Two through Nine). His
wife, Lakshmi Manney, was convicted on Counts Two through Nine and
acquitted on Count One. The district court sentenced Maruthi
Manney to thirty-six months’ imprisonment and Lakshmi Manney to
twenty-one months’ imprisonment. It imposed three-year terms of
supervised release for both the Manneys and ordered both to pay
$605,932.71 in restitution. In these consolidated appeals, the
Manneys challenge (I) the district court’s denial of their motion
for continuance of the trial date, and (II) the district court’s
denial of their motion for a new trial.
The charges arose from the Manneys’ ownership and
fraudulent operation of SAI Plus, a health care benefits
administration company located in Rockville, Maryland. With
respect to Count One, the Government’s evidence demonstrated that
Maruthi Manney used a wire communication in furtherance of a scheme
to defraud First Odyssey Resource Management (“Odyssey”), a
professional employer organization. Maruthi Manney represented
that SAI Plus would provide a fully-insured employee group health
plan that would pay routine claims to health care providers within
four weeks of receipt. Odyssey paid SAI Plus premiums for the

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months of August, September and October 1999, until employees began
to recognize that certain health claims were not being paid. In
fact, SAI Plus was never a licensed insurance company and failed to
provide Odyssey with a fully-insured health plan.
With respect to Counts Two through Nine, the Government’s
evidence demonstrated that Maruthi and Lakshmi Manney used the
mail in furtherance of a scheme to defraud Troup Independent School
District, Sundown Ranch, Dusty Rhodes Ford, All Seasons Sash and
Door, Brock Independent School District, Pine Tree Independent
School District, Waskom Independent School District, and Gulf Coast
Transport, Inc. Maruthi Manney represented that SAI Plus would act
as Third Party Administrator (“TPA”) for these entities, providing
a variety of services including payment of routine claims to health
care providers within four weeks of receipt, and maintenance of
stop-loss insurance on behalf of each individual/entity. Based on
these representations, each of the entities enrolled and paid
premiums to SAI Plus.
In fact, SAI Plus was never licensed as a TPA in Texas.
By November 1999, the groups began to notice that certain claims
were not being paid. SAI Plus employees testified that, at the
instruction of the Manneys, claims were continually processed but
an increasing volume of checks were printed and placed in a file
cabinet rather than mailed to the payee. At times, after a
particular employer group or its broker complained repeatedly, the

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1The 4902 unmailed checks related to other employer groups,
and were not limited to the eight entities named in the
indictment.
2The uncontested evidence at trial demonstrated that no stop-
loss claims were presented to SAI Plus during the periods when
there was no coverage, therefore, these lapses did not result in
actual loss to any of the employer groups.
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unmailed checks for that group would be sent. In November 2000,
Federal agents executed a search warrant on the SAI Plus office,
and seized 4902 printed but unmailed health insurance claim
checks.1
The Government’s evidence also demonstrated that for each
of the entities named in Counts Two through Nine, stop-loss
insurance coverage was not in place on the effective date of their
health plan. Each of the stop-loss policies became effective
between three and eight months late. In addition, stop-loss
coverage for several of the entities lapsed for three to five
months during the pendency of the health plan because SAI Plus
failed to pay the premium to the stop-loss insurance carrier.2 The
Government’s evidence also indicated a mismanagement of funds.
I.
We review a district court’s denial of a motion for a
continuance for an abuse of discretion. United States v. Williams,
445 F.3d 724, 738 (4th Cir.), cert. denied, 127 S. Ct. 314 (2006).
An abuse of discretion in this context is “‘an unreasoning and

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arbitrary insistence upon expeditiousness in the face of a
justifiable request for delay’” and violates a defendant’s Sixth
Amendment right to counsel. Id. at 739 (quoting Morris v. Slappy,
461 U.S. 1, 11-12 (1983)). In order to prove an infringement of
the right to effective assistance of counsel, however, “the
defendant must show that the error specifically prejudiced [his]
case in order to prevail.” Id. (internal quotation marks and
citation omitted).
A party’s substantial delay is also relevant to our
review of the denial of a motion for continuance. See United
States v. Badwan, 624 F.2d 1228, 1231 (4th Cir. 1980). “The later
that a motion for a continuance is made, the more likely it is made
for dilatory tactics; hence, it is less likely that the district
court arbitrarily denied the continuance.” United States v.
LaRouche, 896 F.2d 815, 824 (4th Cir. 1990).
The Manneys’ trial lawyers were both appointed in June
2005. Discovery in this case included over 200 boxes of documents
seized from SAI Plus. Despite having filed multiple pre-trial
motions, counsel did not even mention a continuance until the pre-
trial motions hearing just eleven days before trial. A review of
the transcript reveals that the Manneys’ attorneys were actually
seeking to discover what evidence (witnesses and exhibits) the
Government intended to introduce at trial. Only when it appeared
they may not prevail did counsel begin to argue for a continuance.

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3Appellants contend that trial counsel did not fully
appreciate how much time they would need to access and review the
electronic records that the Government had produced to them. This
undermines the Manneys’ argument because the test for abuse of
discretion in denying a continuance “depends mainly on the reasons
presented to the district judge at the time the request is denied.”
LaRouche, 896 F.2d at 823. The district court cannot be
accountable for information that the parties did not present to it.
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In view of the timing of this oral motion, the district court may
have concluded that it was merely a dilatory tactic. See LaRouche,
896 F.2d at 823 (“the district court alone has the opportunity to
assess the candidness of the movant’s request”).
In addition, as the hearing progressed, counsel received
concessions from the Government that ultimately mitigated their
stated need for a continuance of the trial date. 3 At the district
court’s urging, the Government disclosed the categories of
documents it intended to introduce as trial exhibits, and that its
witnesses and exhibits would be confined to the nine entities named
in the indictment as well as a few others. The Government also
gave defense counsel its demonstrative exhibit summarizing the
evidence to be introduced regarding the Manneys’ various bank
accounts, as well as an index describing the contents of each of
the 204 boxes of SAI Plus documents. After considering the nature
of the documents produced, and in light of the Government’s
narrowing of the issues, the district court determined that a
continuance was not necessary and denied the motion.

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We find that this was not an abuse of discretion. See
United States v. Stewart, 256 F.3d 231, 244-46 (4th Cir. 2001). In
LaRouche, the district court denied a continuance despite the fact
that counsel had only thirty-four days to review “voluminous
documents” and to prepare for a four-week trial on a thirteen-count
mail fraud indictment. LaRouche, 896 F.2d at 822. We affirmed the
denial, in part, based on counsel’s eighteen-day delay in
requesting a continuance, and because defense counsels’ pre-trial
submissions demonstrated familiarity with the case. Id. at 824.
Similarly, the Manneys’ numerous pretrial filings and significant
delay in requesting a continuance, in conjunction with the
narrowing of issues more than a week before trial, indicate that
the denial of a continuance was not an abuse of discretion.
Moreover, even if the district court did abuse its
discretion in denying the motion for continuance, the Manneys have
not demonstrated that the denial “specifically prejudiced” their
case. LaRouche, 896 F.2d at 823. Rather than articulating
specific errors of counsel resulting in actual prejudice,
Appellants contend that under the circumstances faced by trial
counsel, “the likelihood that any lawyer, even a fully competent
one, could provide effective assistance is so small that a
presumption of prejudice is appropriate without inquiry into the
actual conduct of the trial.” Appellants’ Brief at 14 (citing

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United States v. Cronic, 466 U.S. 648, 659 (1984); Glover v. Miro,
262 F.3d 268, 275 (4th Cir. 2001)).
In Cronic, the Supreme Court held that while it is
normally inappropriate to presume ineffective assistance of counsel
without an inquiry into whether a defendant was actually prejudiced
by counsel’s performance at trial, circumstances may sometimes be
so egregious as to warrant a presumption of prejudice. Cronic, 466
U.S. at 659-60. The Court noted, however, that the presumption of
prejudice does not arise in every case in which counsel belatedly
begins representation of a defendant. See Morris v. Slappy, 461
U.S. 1 (1983); Avery v. Alabama, 308 U.S. 444 (1940).
In fact, the Court refused to adopt the presumption in
the case before it, even though Cronic’s counsel had been appointed
just twenty-five days before the trial and was a young real estate
lawyer with no criminal law experience who had never previously
tried a case before a jury. Cronic, 466 U.S. at 663-66. The Court
rejected the argument that a presumption of prejudice followed from
the fact that the Government had years to review the relevant
documents while defense counsel had only twenty-five days. Id. at
664-65. There, as in this case, “the time devoted by the
Government to the assembly, organization, and summarization of
thousands of written records . . . unquestionably simplified the
work of defense counsel in identifying and understanding the basic
character of defendants’ scheme.” Id. The Court also recognized

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that, like here, where the underlying facts are not in dispute, the
time was more than sufficient to consider “whether those facts
justify an inference of criminal intent.” Id. at 664-65.
We find that the circumstances of this case do not
warrant a presumption of prejudice. The Manneys’ trial counsel
accepted their appointments with full knowledge of the trial date,
and with ten and twelve weeks respectively, to prepare. There is
no suggestion that the attorneys were inexperienced or otherwise
ill-suited to defend these criminal charges. While the case
involved a significant volume of documents, the Government
described its evidence in advance of trial, simplifying the work of
defense counsel. We have declined to presume prejudice under
circumstances more trying than these. See Stewart, 256 F.3d at
246; Griffin v. Aiken, 775 F.2d 1226, 1229-30 (4th Cir. 1985); see
also United States v. Gaither, 527 F.2d 456, 457-58 (4th Cir.
1975).
II.
Federal Rule of Criminal Procedure 33(a) permits the
trial court to grant a motion for a new trial “if the interest of
justice so requires.” A district court “‘should exercise its
discretion to grant a new trial sparingly,’ and . . . should do so
‘only when the evidence weighs heavily against the verdict.’”
United States v. Perry, 335 F.3d 316, 320 (4th Cir. 2003) (quoting

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United States v. Wilson, 118 F.3d 228, 237 (4th Cir. 1997)
(internal quotation marks omitted)). We review the denial of a
Rule 33 motion for abuse of discretion. United States v. Adam, 70
F.3d 776, 779 (4th Cir. 1995). Under this standard, we “‘may not
substitute [our] judgment for that of the district court; rather,
we must determine whether the court’s exercise of discretion,
considering the law and the facts, was arbitrary or capricious.’”
United States v. Fulcher, 250 F.3d 244, 249 (4th Cir. 2001)
(quoting United States v. Mason, 52 F.3d 1286, 1289 (4th Cir.
1995)).
In order to warrant a new trial based on newly discovered
evidence, a defendant must show that: (1) the evidence is newly
discovered; (2) the defendant used due diligence; (3) the evidence
is not merely cumulative or impeaching; (4) the evidence is
material; and (5) the evidence would probably result in an
acquittal at a new trial. United States v. Lofton, 233 F.3d 313
(4th Cir. 2000). Unless the defendant demonstrates all five of
these factors, the motion should be denied. United States v.
Chavis, 880 F.2d 788, 793 (4th Cir. 1989).
The district court found that the proffered testimony of
Kola and Kumar failed to satisfy at least four of the five factors
of this test. These findings are entitled to great weight on
appeal. See United States v. Johnson, 487 F.2d 1278, 1279 (4th
Cir. 1973) (district court’s findings “properly drew upon the

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knowledge and observations gained by having presided at the
original trial”).
Kola’s and Kumar’s testimony that the Manneys infused
personal funds into SAI Plus when necessary is merely cumulative of
what the jury heard from Maruthi Manney. Their testimony that a
substantial number of medical claims were actually paid is both
immaterial and cumulative; the Government did not advance a theory
that no claims were paid, and numerous Government witnesses
testified about claims that were, in fact, paid. Kola’s testimony
about the effect of the search warrant on the continued viability
of SAI Plus is also cumulative and not material to the charges in
the indictment. Kumar’s testimony that he was “unaware of any
regular or ongoing problem with the payment of medical claims” is
immaterial and contradicts the testimony of Maruthi Manney.
The only material, non-cumulative testimony comes from
Kola, relating his familiarity with the day-to-day accounting at
SAI Plus. He states that he “could have contradicted the
government’s allegations which suggested that large amounts of
money were not handled properly and were not used to pay claims for
medical services.” In light of the Government’s evidence at trial,
we find that the district court did not abuse its discretion in
concluding that this testimony would not likely result in an

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4Notably, Kola’s affidavit, signed in New Zealand, does not
indicate why he failed to testify on behalf of the Manneys during
their first trial, nor does it include any statement that Kola is
willing to return to the United States to testify in the event of
a new trial.
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acquittal.4 Even if a jury could find Kola’s testimony more
credible than that of the FBI’s financial analyst, such testimony
would not diminish the impact of the Government’s undisputed
evidence regarding drawers full of unmailed checks as well as stop-
loss insurance failures. The accounting was only a small part of
the picture created by the Government’s evidence.
In support of their demand for a new trial, Appellants’
remaining grounds, in essence, amount to an argument that the
Manneys’ trial attorneys were ineffective. Appellants bemoan the
lack of a defense expert in forensic accounting and insurance, but
the record indicates that trial counsel did not seek leave to hire
any experts. Appellants purport to demonstrate the false testimony
of a Government witness regarding the signatures on the Dallas
General insurance policy, but do so based on documents that were in
possession of trial counsel. They also rely on allegedly
misleading testimony regarding payment of Odyssey claims at a time
when Odyssey had ceased to pay premiums, as well as alleged errors
by the FBI financial analyst, but such testimony was subject to
cross-examination at trial.
“Although generally not raised in the district court nor
preserved for review on appeal, ineffective assistance claims

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asserted in motions under Rule 33 — and ruled on by the district
court — may be considered on direct appeal.” United States v.
Russell, 221 F.3d 615, 619 (4th Cir. 2000). Here, the district
court correctly declined to rule on whether trial counsel was
actually ineffective because the Manneys failed to offer any
statement or testimony from those attorneys. Without hearing from
trial counsel about the tactical decisions confronted, a court
cannot make a reasoned judgment as to whether or not representation
was ineffectual. See United States v. DeFusco, 949 F.2d 114, 120-
21 (4th Cir. 1991). Moreover, the district court was “not
persuaded that any competent attorney would have done more than
they did.” For the reasons already discussed, we find that this
was not an abuse of discretion.
We therefore affirm the Manneys’ convictions. We
dispense with oral argument because the facts and legal contentions
are adequately presented in the materials before the court and
argument would not aid the decisional process.
AFFIRMED

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