U.S. v. Shermetaro
| Decision Date | 16 June 1980 |
| Docket Number | No. 79-5148,79-5148 |
| Parties | 80-2 USTC P 9589 UNITED STATES of America, Plaintiff-Appellee, v. Charles SHERMETARO, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Sharon-Lee Edwards (Court-Appointed), George Edwards, Detroit, Mich., for defendant-appellant.
James K. Robinson, U. S. Atty., Michael C. Leibson, Asst. U. S. Atty., Detroit, Mich., for plaintiff-appellee.
Before KEITH and JONES, Circuit Judges, and PHILLIPS, Senior Circuit Judge.
The conviction of five Detroit osteopathic physicians for receiving kickbacks in connection with the federal Medicare and Medicaid programs has been affirmed by this court in United States v. Tapert, et al., 625 F.2d 111 (6th Cir. 1980). The kickbacks were found to have been paid by Titan Laboratories or its affiliates, including Associated Physicians Services Company. Reference is made to the opinion of this court in Tapert for pertinent details.
In the present case appellant Charles Shermetaro was found guilty by a jury and convicted of conspiring to defraud the United States by obstructing and hindering the Internal Revenue Service in its lawful duty to ascertain, compute, assess and collect federal income taxes owed by Titan Laboratories in violation of 18 U.S.C. § 371. 1 Then Chief District Judge Cornelia G. Kennedy, now a judge of this court, sentenced Shermetaro to imprisonment of one year and a day.
Appellant urges reversal on two grounds:
1. The Government failed to establish sufficient evidence of defendant's specific intent to defraud the United States by obstructing the Internal Revenue Service in its duty to ascertain and collect taxes of Titan Laboratories; and (2) the indictment failed to charge an offense under 18 U.S.C. § 371 in that § 371 was not intended to cover conspiracies involving violations of Internal Revenue laws or conspiracies to defraud the Internal Revenue Service.
On the record in this case, we find both of these contentions to be without merit and affirm the conviction.
The indictment made the following charges with respect to Shermetaro:
At all times pertinent to this Indictment:
1. The United States Department of the Treasury through the Internal Revenue Service (IRS) is the federal agency having responsibility pursuant to federal law for the ascertainment, computation, assessment and collection of the federal income tax.
2. IRS form 941 entitled "Employers Quarterly Federal Tax Return" was required to have been filed quarterly by an employer who has employees subject to the federal employee tax withholding system. This form was required to contain the names of all such employees who were actually employed during the quarterly period involved.
3. IRS form 1120 entitled "U. S. Corporation Income Tax Return" was the form which corporations were required to use when filing their federal corporate income tax returns.
4. A "medical laboratory" was a private business organized for purposes including that of conducting examinations of blood and other bodily substances at the request of physicians and other professionals who treated individual patients.
5. The term "Laboratory business" as used herein, means the practice of drawing blood and other bodily fluid specimens which are taken from medical patients at a medical clinic or doctor's office and then transmitted to a medical laboratory for analysis.
6. It was illegal and unethical under state and federal laws and regulations as well as private rules of ethics for physicians, for a doctor to receive a rebate, kick-back, gratuity or thing of value in return for the doctor referring his laboratory business to a particular laboratory.
7. Under federal laws and regulations it was illegal for any provider of services reimbursed under the federal medicare or medicaid programs to accept or for a laboratory to pay a rebate, kick-back, gratuity or thing of value in return for a provider of medical services referring his laboratory business to a particular medical laboratory.
8. The federal "medicaid" program was created to assist participating states in providing medical services, including medical laboratory services, to families with dependent children and to aged, blind and totally disabled individuals whose incomes and resources were insufficient to meet the costs of necessary medical services.
9. The federal "medicare" program was created to provide health insurance for the aged, including insurance for medical laboratory services.
10. Media Technology, Inc., was a plastics manufacturing firm incorporated and owned by John Leeming and Henry Ellis.
11. Titan Laboratories, Inc. (hereinafter referred to as Titan Lab) was a medical laboratory incorporated in March 1974, funded in large part with money from Media Technology, Inc. Titan Lab was owned initially by John Leeming, Henry Ellis and others. Titan Lab's primary places of business prior to May, 1976, were in the cities of Detroit, Southfield and Royal Oak, Michigan.
12. Sanford Hoskow, beginning in approximately January, 1976 worked first as a salesman and then as a vice-president, director and salesman for Titan Lab.
13. Charles Shermetaro, beginning in approximately March 1975 until approximately July 1975 worked as a salesman, a director of operations and as a corporate vice-president to Titan Lab.
19. Associated Physicians Services Co. (hereinafter "Associated Physicians") was formed in July 1976 as an assumed named of Charles Shermetaro. Associated Physicians Services Co. operated out of Titan Lab.
THE GRAND JURY FURTHER CHARGES:
COUNT ONE
1. That from on or about January 1, 1974, up to and including December 31, 1977, in the Eastern District of Michigan, and elsewhere, JOHN LEEMING, HENRY ELLIS, and CHARLES SHERMETARO defendants herein, unlawfully, wilfully and knowingly did combine, conspire, confederate and agree together with each other and with persons known and unknown to the grand jury, to defraud the United States, the United States Department of Treasury, and the Internal Revenue Service by obstructing and hindering the Department of the Treasury and the Internal Revenue Service in its lawful duty to ascertain, compute, assess and collect federal income taxes of certain entities including but not limited to Titan Laboratories, Inc., . . .
2. It was a further part of said conspiracy that defendants JOHN LEEMING, HENRY ELLIS, CHARLES SHERMETARO, . . . would and did agree to falsify the books and records of Titan Lab which were the basis for preparation of various documents required to be submitted to IRS including . . . IRS form 1120 and further, that defendants agreed to falsify such records in order to conceal and cover-up various payments made as kick-backs to doctors and medical clinics which submitted blood specimens for analysis to Titan Lab 3. It was further part of this conspiracy that payments were recorded on the books of Titan Lab as wages of Titan Lab employees when in fact such payments were not for Titan Lab employees but were made to employees of doctors for the benefit of doctors employing those persons and as a kickback for the blood specimens submitted to Titan Lab for analysis by those doctors.
4. It was a further part of said conspiracy that payments of money to doctors who submitted blood specimens to Titan Labs for analysis were entered in the books of Titan Lab as consulting fees to doctors when in fact those payments were kickbacks paid to doctors in return for their submission of blood specimens to Titan Lab for analysis.
6. It was a further part of said conspiracy that kickbacks to doctors who submitted blood specimens to Titan Lab for analysis were entered in the books and records of Titan Lab as commission payments to Associated Physicians Services Company, . . . which entities were established only for the purpose of passing kickbacks from Titan Lab to doctors.
8. It was a further part of said conspiracy that John Leeming, Henry Ellis, Charles Shermetaro did establish Associated Physicians for the purpose of negotiating and paying kickbacks to doctors doing business with Titan Lab.
9. It was a further part of said conspiracy that the following roles were carried out by individuals in regard to Associated Physicians.
a. John Leeming did organize and direct the activities of Associated Physicians and its relationship to Titan Lab.
b. Henry Ellis signed checks drawn on the bank account of Titan Labs payable to Associated Physicians.
c. Charles Shermetaro operated Associated Physicians and negotiated kickback arrangements with doctors on behalf of Titan Lab and delivered kickbacks to doctors.
10. It was a further part of said conspiracy that Associated Physicians negotiated kickbacks to doctors in return for submission of blood specimens to Titan Lab, which said kickback payments were in the following forms.
a. Checks drawn on the account of Associated Physicians and delivered to doctors on a regular basis.
b. Payments of the wages of employees in doctors offices by means of checks drawn on the bank accounts of Titan Lab and Associated Physicians.
11. It was a further part of said conspiracy that kickback payments negotiated by Associated Physicians resulted in the following fraudulent entries being made in the books and records of Titan Lab:
a. Checks written to Associated Physicians were entered as commission.
12. It was a further part of said conspiracy that John Leeming, Henry Ellis, and Charles Shermetaro did negotiate and deliver or cause to be delivered kickbacks to doctors doing business with Titan Lab.
13. It was a further part of said conspiracy that said kickback payments referred to in paragraph 12, above, were falsely recorded in the books, records, and IRS Forms of Titan Lab as commissions, directors fees, consulting fees, rent, and wages.
25. It was a further part of said conspiracy that defendant ...
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