The federal appeals court based in Denver agreed on Monday that jurors heard sufficient evidence to convict a doctor of fraudulently obtaining COVID-19 aid from the government and spending it on himself, not on his medical practice headquartered in Colorado Springs.

Francis Joseph, the founder of Springs Medical Associates, argued prosecutors failed to prove he acted with the required mental state to embezzle more than a quarter million dollars through federal pandemic relief programs in 2020. Instead, he believed he was protecting the funds from his company’s chief operating officer, who he suspected of malfeasance.

But a three-judge panel of the U.S. Court of Appeals for the 10th Circuit saw things differently, determining Joseph’s false representations, his attempts to “disguise” the financial transactions, and his ultimate use of the money for child support, legal expenses and adult entertainment sites were robust evidence of his guilt.

“This court concludes the record is replete with direct and circumstantial evidence that Joseph intended to commit fraud through his relief program application,” wrote Senior Judge Michael R. Murphy in the July 29 opinion.

Jurors heard that Joseph founded and operated Springs Medical Associates until the end of January 2020, when Joseph executed an agreement to install a chief operating officer who had exclusive hiring and firing authority, plus management of the company’s bank accounts.

At the outset of the COVID-19 pandemic, Joseph submitted multiple applications to obtain federal aid. He applied for money through the Accelerated and Advance Payment Program (AAP), which sped up Medicare payments to healthcare providers, and the Paycheck Protection Program (PPP), which was intended to keep workers on payrolls in the wake of the pandemic’s substantial disruption.

Joseph applied for both sets of aid without authorization from the chief operating officer. He moved approximately $90,000 in AAP funds to his daughter’s bank account and was denied $500,000 in PPP money because Springs Medical Associates had already applied.

Once the company found out about Joseph’s transfer of funds, he responded: “It’s my effing money and I will do with it what I want.” In mid-April, the chief operating officer fired Joseph. A month later, Joseph came to the office and attempted to fire the chief operating officer, prompting multiple people to call the police.

In June, after Joseph’s firing, he again applied for a PPP loan on behalf of Springs Medical Associates, this time successfully obtaining $179,000.

The following year, a federal grand jury indicted him on four counts related to the fraudulent applications for COVID aid. After a January 2023 trial, jurors convicted him on two counts. He received a sentence of 2.5 years in prison and was ordered to pay $266,716 in restitution.

Joseph appealed, arguing there was insufficient proof that he knowingly, willfully or intentionally committed a crime because his clandestine applications for aid were due to a genuine fear of the chief operating officer’s own alleged malfeasance. 

“What makes this case very different from a number of other COVID-related fraud cases that are currently percolating through the federal courts right now is that the events here indisputably occurred in the context of a very acrimonious business dispute,” his attorney, Elizabeth A. Franklin-Best, told the 10th Circuit panel during oral arguments this year. She added this was not a case “where the borrower secures the loans and buys luxury goods or takes extravagant vacations, or they’re alleging fake businesses or fake employees.”

“Well, porn sites?” responded Judge Carolyn B. McHugh.

“That is a relatively minor piece of it,” said Franklin-Best.

“Is child support a minor piece of it?” interjected Murphy.

Judge Joel M. Carson III wondered whether Joseph was arguing he was “forced into” committing fraud because of his personal conflict with the chief operating officer. Franklin-Best responded that jurors should have been able to hear more about the conflict within Springs Medical Associates to better assess Joseph’s state of mind.

The panel was unconvinced. It also found Joseph’s first, unsuccessful PPP application could be used as a factor in his sentencing because federal guidelines explicitly account for intended fraud, as well.

The panel did determine U.S. District Court Senior Judge Raymond P. Moore mistakenly allowed a prosecution witness to testify about the movement of funds through various bank accounts without being deemed an expert. However, the appellate judges believed the error did not affect the outcome of the trial.

The case is United States v. Joseph.