People v. Universal Pub. Transp., Inc.

• Decision Date: 23 May 2012
• Docket Number: No. 1–07–3303.,1–07–3303.
• Citation: 362 Ill.Dec. 730,974 N.E.2d 251
• Parties: The PEOPLE of the State of Illinois, Plaintiff–Appellee, v. UNIVERSAL PUBLIC TRANSPORTATION, INC., Defendant–Appellant.
• Court: United States Appellate Court of Illinois

974 N.E.2d 251

362 Ill.Dec. 730

The PEOPLE of the State of Illinois, Plaintiff–Appellee,

v.UNIVERSAL PUBLIC TRANSPORTATION, INC., Defendant–Appellant.

No. 1–07–3303.

Appellate Court of Illinois,

First District, Third Division.

May 23, 2012.

Delgado, Adam, Robertson & Tiernan, P.C., Chicago (Robert Robertson, of counsel), for appellant.

Lisa Madigan, Attorney General, Chicago (Michael A. Scodro, Solicitor General, and Michael M. Glick and Karl R. Triebel, Assistant Attorneys General, of counsel), for the People.

OPINION

Justice NEVILLE delivered the judgment of the court, with opinion.

[362 Ill.Dec. 733]¶ 1 Our supreme court directed us to vacate the judgment we filed in this case on March 31, 2010, and to reconsider the case in light of People v. Gutman, 2011 IL 110338, 355 Ill.Dec. 207, 959 N.E.2d 621. We now vacate the earlier judgment and substitute this opinion in its place. People v. Universal Public Transportation, Inc., 401 Ill.App.3d 179, 340 Ill.Dec. 366, 928 N.E.2d 85 (2010), appeal denied,––– Ill.2d ––––, 355 Ill.Dec. 681, 960 N.E.2d 563 (2012).

¶ 2 Following a bench trial, the trial court found the defendant, Universal Public Transportation, Inc. (UPT), guilty of vendor fraud (305 ILCS 5/8A–3 (West 2000)), theft (720 ILCS 5/16–1 (West 2000)), and money laundering (720 ILCS 5/29B–1 (West 2000)). The court sentenced UPT to one-year conditional discharge and ordered it to pay $2,966,187.38 in restitution and $200,000 in fines. On appeal, UPT presents the following issues for our review: (1) whether the State proved UPT guilty beyond a reasonable doubt of vendor fraud, theft and money laundering; (2) whether UPT's convictions were legally inconsistent with the acquittal of UPT's owner on the same charges; (3) whether the trial court erred in admitting financial records from the Illinois Department of Public Aid (Department) as businessrecords; and (4) whether the trial court erred in ordering UPT to pay in restitution the total amount the State paid to UPT, without any offset for the value of the services that UPT provided to the State.

¶ 3 On the initial appeal, we affirmed the convictions for vendor fraud and theft, but we reversed the conviction for money laundering and remanded for reconsideration of the sentence, including restitution. Our supreme court, in Gutman, rejected the interpretation of the money laundering statute that we relied on in our earlier decision in this case. Upon reconsideration in light of Gutman, we find that the State proved UPT's de facto officers committed vendor fraud, theft and money laundering in the course of their work on behalf of UPT, and therefore the evidence supports the convictions of UPT for all three crimes. Because the de facto officers, and not the nominal owner of UPT, controlled UPT, the acquittal of the nominal owner does not conflict with the convictions of UPT for the crimes charged. UPT waived review of the issue concerning business records. The trial court should have considered the value of the services UPT provided in determining the amount of restitution UPT owed to the State. Therefore, we affirm UPT's convictions, vacate the order for restitution, and remand for reassessment of restitution.

¶ 4 BACKGROUND

¶ 5 Ilya Lubenskiy met Irit Gutman in 1993 when they worked for A.K. Medical Transportation Company (A.K.). In 1995, Lubenskiy and Gutman opened Egra Medical Transportation, which provided transportation for public aid recipients who needed help to get to their medical appointments. Recipients called the public aid office to ask for transportation, and if the recipient had an up-to-date medical record and doctor's approval, the public aid office would schedule the transportation with a medical transportation company, like UPT. The public aid office would then complete a prior approval form. The prior approval form consisted of two copies—a white copy and a yellow copy. The public aid office kept the white copy for its records and the medical transportation provider received the yellow copy.

¶ 6 The form included a number used to indicate the category of service the medical transportation company provided to the public aid recipient. Providing transportation to a wheelchair-bound recipient had a different code from providing transportation to an ambulatory recipient. The code for the wheelchair-bound recipient triggered a higher level of compensation to the transportation provider. The form also included space for the transportation provider to indicate the distance of the trip. The medical transportation company received greater compensation for longer trips.

¶ 7 In 1999, the public aid office sent Egra a prior approval form with an incorrect code. The code indicated that the recipient could walk, but UPT actually had to transport the recipient in a wheelchair. Gutman protested the use of the wrong code. The person from the public aid office instructed Gutman to delete the incorrect code and insert the correct code. Gutman and Lubenskiy, for Egra, began to make similar changes on other prior approval forms, and Egra ordered blank prior approval forms. In order to increase payments to Egra, Gutman and Lubenskiy altered destinations, changed the categories of service, and increased the number of miles traveled as shown on the forms. Egra billed the public aid office for the work shown on the forms, with false information about destinations and categories of service. the public aid office paid some of the bills before discovering the fraud.

¶ 8 In December 1999, Lubenskiy and Gutman agreed to a permanent ban preventing them from participating in the Medicare program, all other federal healthcare programs, and the Illinois Medical Assistance Program. Under the terms of the agreement, Lubenskiy and Gutman could not directly or indirectly own 5% or more of a corporate vendor or provider, they could not order goods or services from a provider, and they could not render goods or services as an employee of a vendor.

¶ 9 Rather than sell Egra's assets, Lubenskiy and Gutman decided to defy the ban by trying to continue to operate Egra covertly. They chose to rename the company and find a third partner to pose as the sole owner of the newly named company. In December 2000, Lubenskiy and Gutman agreed to give Mike Tishel one-third of the company and a salary, and Tishel agreed to pose as the sole owner of the company. Lubenskiy, Gutman and Tishel named the new company UPT.

¶ 10 UPT began doing business on January 16, 2001. Except for the name change, the business remained the same: it had the same vehicles, the same drivers, the same employees and the same office space as Egra. From January 16, 2001, until February 2002, UPT billed the State of Illinois approximately $6 million and the State paid UPT almost $3 million. In February 2002, Lubenskiy and Gutman sold the business to Arik Amzaleg and Tishel for $600,000.

¶ 11 On January 20, 2004, prosecutors charged UPT, Gutman, Tishel and Lubenskiy with vendor fraud, theft, and money laundering. On November 3, 2004, Lubenskiy entered into a plea agreement with the State, agreeing to plead guilty to vendor fraud and to testify against Gutman, Tishel, and UPT in exchange for dismissal of charges of theft and money laundering and a reduced sentence for vendor fraud. On April 25, 2005, Gutman filed a motion for severance, and the trial court granted the motion and held simultaneous bench trials that involved Gutman, Tishel, and UPT.

¶ 12 The State's Case

¶ 13 Lubenskiy testified that he kept UPT's books, and Gutman managed the business and talked with the public aid office on UPT's behalf, using an alias. UPT, like Egra, submitted false bills to the State. Lubenskiy admitted that on prior approval forms he sent to the State on UPT's behalf, he changed service categories, changed trip destinations, overstated mileages and increased the number of trips billed, all to make services more expensive.

¶ 14 On cross-examination, Lubenskiy testified that Tishel did not know about the false billings. Specifically, Lubenskiy explained that Tishel ran a legitimate business out of the UPT office location while Lubenskiy ran a second business from a second office. Lubenskiy could not guess what percentage of the bills sent to the State accurately reflected services UPT provided.

¶ 15 Alla Denisenkio, an employee of UPT, testified that she took orders for transportation services and relayed the orders to other employees, who helped provide the requested services. Denisenkio swore that she never created false billings.

¶ 16 Robert Kramer, of the Department, testified that the public aid office could not locate all of UPT's prior approval forms. Kramer presented in court a box that contained some of UPT's prior approval forms that the public aid office retained. Kramer testified that the Department kept the contents of the box in the regular course of business.

¶ 17 An investigator for the Illinois State Police found that on many of its prior approval forms, UPT overstated the mileage between the service recipients' homes and their destinations for medical services. The investigator testified that he compiled the information into an investigative report and gave the report to Virma Rodriguez, an auditor for the Illinois State Police and the Department.

¶ 18 Rodriguez testified that she and the Department's data control manager compared the prior approval forms Kramer found with the bills UPT submitted to the Department from January 2001 to February 2002. If the recipient's name, identification number or service date from the Department's copy of the prior approval form did not match the information from UPT's bill, Rodriguez considered the billing false. Rodriguez testified that of the $71,280.40 UPT billed the State of Illinois on the forms she reviewed, $67,798.18 came from false billings.

¶ 19 Rodriguez also compared mileages claimed on some of UPT's bills with proper mileages for the requested transportation...