Gariepy v. United States

• Decision Date: 09 March 1955
• Docket Number: No. 12061.,12061.
• Citation: 220 F.2d 252
• Parties: Louis J. GARIEPY, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

220 F.2d 252 (1955)

Louis J. GARIEPY, Appellant, v. UNITED STATES of America, Appellee.

No. 12061.

United States Court of Appeals, Sixth Circuit.

March 9, 1955.

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James E. Haggerty, Harry M. Nayer, Detroit, Mich. (Harry Cohen, Edward P. Echlin, Detroit, Mich., on the brief), for appellant.

George E. Woods, Detroit, Mich., William A. Barnett, Chicago, Ill., Regional Office Int. Rev. Dept. (Fred W. Kaess, Detroit, Mich., John D. Kiley, Regional Counsel, Chicago, Ill., on the brief), for appellee.

Before MARTIN, McALLISTER and STEWART, Circuit Judges.

MARTIN, Circuit Judge.

Appellant, Louis J. Gariepy, a Detroit doctor specializing in surgery and enjoying a lucrative practice, was convicted by jury verdict on two counts of an indictment charging him with violation of section 145(b) of the Internal Revenue Code, 26 U.S.C.A. § 145(b). He was sentenced to four years' imprisonment on each of the two counts, the sentences to run concurrently, and was fined $5,000 on each count. His office nurse and confidential financial secretary, Marie L. Loechner, who had been jointly indicted with him, was acquitted by the verdict of the jury.

Before returning its verdict, the jury inquired as to whether it "could return a verdict of guilty as to one of the defendants and make a recommendation of mercy." The judge replied affirmatively, but told the jurors that the recommendation would not be binding upon the court. He assured them, however, that their recommendation would be given "full consideration in any consequences that may follow." When subsequently pronouncing sentence on appellant, the judge stated that he had considered the probation report and, "chiefly," the recommendation of mercy made by the trial jury. He asserted that the evidence of guilt of the appellant was overwhelming, and that had the jurors failed to return a verdict of guilty they would have violated their oaths and simply would have pardoned the defendant. He said that appellant had had a fair trial and that his rights had been properly protected, "both by eminent and able counsel and also by the court."

The court was impelled to find that appellant had committed perjury, inasmuch as he knew that he had understated his income; that the doctor had wilfully thrown obstacles in the way of the investigating officers over a long period of time; that he had deliberately destroyed his records and thereby prevented the revelation of the extra sums of money which he had received; and that he had done this after the revenue officers had visited his offices for the purpose of examining his records. The judge considered that he would be recreant in his duty if he failed to impose a sentence which the facts required — not only because the defendant was a man of high reputation in his community, but also because of the example set for people of no influence who would be brought before the criminal bar of the court.

The income tax returns of Dr. Gariepy for the respective years involved — 1945 and 1946 — were not signed by him, but had been prepared by his employee, the Rex Beasaw Income Tax Service, from information obtained from the co-defendant, Marie Loechner, who had secured the data in the defendant's office and from the so-called Rex "black books" which were daily record books of receipts and disbursements. The entry of income had been regularly made by Mrs. Lucille Baldinger, receptionist and bookkeeper for the doctor during 1945 and until August of 1946. Disbursements had been entered in these books by Miss Loechner. Payments for major surgery, however, had been deliberately omitted from the "black books" during 1945 and partially during 1946, although, in the latter year, some surgical fees had been entered. The appellant had directed the transmission of the information furnished the Rex Beasaw Service. The record discloses that he was informed as to the system of bookkeeping employed in his office and kept in touch with his business records.

Mrs. Baldinger testified that appellant would "glance" at her entries in the black books and that on one occasion when he observed that the entry of a surgical charge had been made in one of these books had said: "That should be on the account sheet and filed in the closet." The witness testified further that she would either place the account sheets on Dr. Gariepy's desk with the mail, or would take them into his office and show them to him. These were the yellow account sheets on which surgical charges were entered. They were kept, so she said, in a filing cabinet in a closet of the front office. The surgical cases and the non-surgical cases were handled in an entirely different manner, the record of surgical cases being placed in the closet at the end of each day. The open account sheets were kept in the top section of the cabinet and the closed accounts in the bottom section.

Both Dr. Gariepy and Miss Loechner had informed Mrs. Baldinger of the payment of surgical fees so that she could make appropriate entries on the account sheets kept in the closet. Mrs. Baldinger testified that at the end of each day, she would put into a large envelope all the checks and cash received by her during that day, with a notation of the total amount, and would give the envelope to Dr. Gariepy before he left the office. Dr. Gariepy stated that he turned over these receipts to his wife, who made the bank deposits. When she was out of town, a long-time associate of his in the x-ray department would substitute for her in making the deposits.

Revenue Agent Price testified that, when the government investigation began, he was told by Dr. Gariepy that his entire set of books consisted of the "black books" and a commercial check book. When he questioned Dr. Gariepy about his accounts receivable, the doctor stated that he destroyed the record of an account when it was paid; and that he did not maintain an accounts receivable ledger, or duplicate receipts. The revenue agent was shown a sample of the yellow cards upon which patients' accounts are kept, but was told by the doctor that, because the medical history of the patients appeared on the cards, they could not be made available to the agent. When the doctor was informed that it would be necessary to inspect the hospital records in order to determine his income, he admitted that he had duplicate receipts and suggested that these be used by the investigators for that purpose. Shortly thereafter, he stated that he could not furnish the receipt books because they had been destroyed. He explained that Special Agent Kitchen, who was not investigating his returns, had telephoned him concerning the tax liability of his brother; and that the agent informed him that his appellant's income tax had been closed and that it was, therefore, unnecessary that the doctor preserve these records. Special Agent Kitchen denied that he had made any such statement to Dr. Gariepy.

The most convincing evidence of Dr. Gariepy's guilt was that, after he knew his income tax returns were being investigated, he deliberately removed from the closet in his office the yellow sheet records of his paid surgical fees and transferred them to the attic of his home. He admitted that he had personally transported them in suitcases at intervals and had permitted them to be destroyed while his house was being cleaned and redecorated. The jury obviously did not believe his rather incredible excuse for destroying important records — that a revenue agent who was not even working on his case had told him that the case against him was closed.

Numerous patients of Dr. Gariepy were called as government witnesses and testified that, during 1945 and 1946, they had made payments to the doctor, or to his nurse or other representatives, for professional services in various amounts from $50 to $500. Most of these patients had receipts or cancelled checks in support of their testimony. The inference is plain, therefore, that payments made to the doctor for professional services to these patients had not come from and were not made by insurance companies listed on Exhibits 112 and 113, which were made up by the revenue agents from information in the insurance record books kept by Miss Loechner.

Revenue Agent Philpott testified that, upon examination of the black books, he had found no reference to the payments which the patients claimed to have made. He swore that in numerous instances he found an entry, "NC," in the receipt column of a patient who testified that he, or she, had paid the doctor. Dr. Gariepy explained that the entry "NC" meant that no charge had been made. The witness, Philpott, testified further that an examination of the duplicate receipt book covering the period from August 3 to August 21, 1945, showed fourteen duplicate receipts ranging in amount from $27 to $250. These had not been recorded in the black books. He found four items, corresponding in date with the date of receipts, carrying the entry "NC" following the respective names of the patients.

Another government witness testified that he had computed the additional income revealed by testimony of patients and found that Dr. Gariepy's unreported income amounted to $18,255 for 1945 and $11,733 for 1946. From this, he calculated that the doctor's tax had been understated on his 1945 return by $13,605.85 and, on his 1946 return, by $5,025.88.

After hearing the testimony of the income tax examiners, co-defendant Loechner changed her story from that originally told by her to the government examiners and also from that told to the examiners by Dr. Gariepy and his then attorney. She testified that she took the total of the black books, the total of the yellow sheets less the Michigan Medical Service total, and submitted this information, along with the information from Form 1099 sent by the Michigan Medical Service, to the Beasaw office; and that she used the insurance memorandum books from which Exhibits 112 and 113 were compiled in...