The People Of The State Of Ill. v. Universal Pub. Transp. Inc

• Decision Date: 31 March 2010
• Docket Number: No. 1-07-3303.,1-07-3303.
• Parties: The PEOPLE of the State of Illinois, Plaintiff-Appellee,v.UNIVERSAL PUBLIC TRANSPORTATION, INC., Defendant-Appellant.
• Court: United States Appellate Court of Illinois

401 Ill.App.3d 179

928 N.E.2d 85

340 Ill.Dec. 366

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, Fourth Division.

March 31, 2010.

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Lisa Madigan, Attorney General of Illinois (Michael A. Scodro, Michael M. Glick, Karl R. Triebel, of counsel), for Plaintiff-Appellee.

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

Justice NEVILLE delivered the opinion of the court:

The defendant, Universal Public Transportation, Inc. (UPT), was convicted, following a bench trial, 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)). UPT was sentenced to one-year conditional discharge and ordered 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 UPT was proved guilty beyond a reasonable doubt of vendor fraud, money laundering, and theft; (2) whether UPT's convictions must be reversed as legally inconsistent where the trial court acquitted the individual owner of the same charges; (3) whether the trial court erred in admitting financial records from the Illinois Department of Public Aid as business records; and (4) whether the trial court erred in ordering UPT to pay $2,966,187.38 in restitution. For the following reasons, we affirm UPT's convictions for vendor fraud and theft, vacate UPT's conviction for money laundering, vacate the order for fines and restitution, and remand for a new trial and resentencing.

BACKGROUND

On January 20, 2004, UPT, Irit Gutman, Mike Tishel, and Ilya Lubenskiy were each charged with vendor fraud, theft, and money laundering. On November 3, 2004, Lubenskiy entered into a plea agreement with the State and pled guilty to vendor fraud in exchange for his testimony against Gutman, Tishel, and UPT. 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.

The State's Case

Lubenskiy testified that he pled guilty to forgery and mail fraud in federal court in 2003 and pled guilty in 2004 in the instant case and agreed to testify truthfully for the State. Lubenskiy explained the “prior approval system” used by the State of Illinois for the Medicaid program from the late 1990s until June 2001. Specifically, Lubenskiy testified that recipients in need of transportation to medical services called the local public aid office and requested transportation. The public aid office called a transportation company, informed the transportation company when and where the transportation company was supposed to provide the service, and the transportation company provided the service. A few months later, the public aid office would send the transportation company a copy of the prior approval number. The transportation company would submit a bill and be paid for its services.

Lubenskiy met Gutman in 1993 when they worked for A.K. Medical Transportation Company (A.K.). In 1995, he and Gutman opened Egra Medical Transportation. Gutman spoke with the recipients and the public aid office, and Lubenskiy performed the bookkeeping. By 1999, Lubenskiy and Gutman co-owned additional companies, all of which were located in the same office space.

In February or March of 1999, Gutman told Lubenskiy that the public aid office had sent her a prior approval form with an incorrect code. The person from the public aid office instructed Gutman to delete the incorrect code and insert the correct code. Gutman suggested that they make changes on other prior approval forms. Gutman also suggested that they order blank prior approval forms and rewrite the forms. In order to increase their payments, she suggested that they alter the destination, change the category of service, or increase the number of miles traveled. Finally, at Gutman's suggestion, Lubenskiy sent bills with altered destinations and modified categories of service to the public aid office for which they were eventually paid.

Lubenskiy identified exhibit 129 as the December 1, 1999, agreement between Lubenskiy, Gutman, and the federal government in which he and Gutman agreed to be permanently barred from participating in the Medicare program, all other federal healthcare programs, and the Illinois Medical Assistance Program. After they signed the agreement, Lubenskiy told Gutman that they had to sell the companies because their accounts were frozen as a result of their agreement. Gutman suggested that they rename the company and find a third partner. In December 2000, Lubenskiy and Gutman met with Tishel. Gutman offered Tishel 50% of the company and explained that she and Lubenskiy would run the company and Tishel would receive a salary. Lubenskiy testified that because he and Gutman were barred from participating in the Medicaid programs, Tishel was supposed to appear as the sole owner of the company. According to Lubenskiy, Tishel said it would only be fair if he owned a third, rather than half, of the company.

UPT began doing business on January 16, 2001. Except for the name change, the business remained the same: they had the same vehicles, the same drivers, the same employees and the same office space. Gutman continued to talk with the public aid office, using an alias; Lubenskiy continued to perform the bookkeeping; and Tishel signed and deposited checks received from the public aid office into a bank account on which only Tishel and his son were the authorized signatories.

Lubenskiy further testified that money was transferred from the UPT business account to Tishel's personal account and from Tishel's personal account to Gutman's account. The money issued to Gutman's account was used to purchase single-family homes that were put in Gutman's name. However, Lubenskiy testified that he did not receive half of the property as agreed. Lubenskiy identified exhibit 130 as a trustee's deed dated January 29, 1998, for property in Galena owned by him and Gutman. Lubenskiy identified exhibit 131 as a quitclaim deed dated May 10, 2000, bearing his and Gutman's names transferring the Galena property to Gutman's son. Lubenskiy explained that they were attempting to hide the property. Lubenskiy identified exhibit 132 as a mortgage for $224,000 on the Galena property recorded on February 26, 2001. Lubenskiy identified exhibit 53 as a check from the title company dated February 26, 2001, in the amount of $216,720.50. Lubenskiy identified exhibit 54 as a deposit ticket for the UPT account in the amount of $216,720.50.

Lubenskiy further testified that he and Gutman purchased cars with funds from UPT. Lubenskiy identified exhibit 61 as an invoice for a Mercedes owned by him and Gutman and used by Gutman. Lubenskiy identified exhibit 62 as a receipt dated March 13, 2002, for another Mercedes owned by Gutman and Ezra Entertainment that he used. Lubenskiy testified that from January 16, 2001, until February 2002, UPT billed the State of Illinois approximately $6 million and received approximately $3 million. Finally, Lubenskiy testified that they eventually sold the business to Arik Amzaleg and Tishel for $600,000, but they only received $400,000.

On cross-examination, Lubenskiy testified that Tishel did not know about the false billings. Specifically, Lubenskiy explained that a legitimate business was being run out of the UPT office location while Lubenskiy ran a second business from a second office that billed public aid. From the second office, Lubenskiy billed the State of Illinois approximately $6 million and received approximately $3 million.

Robert Kramer testified that he is employed by the Illinois Department of Health and Human Services, which was formally known as the Illinois Department of Public Aid. In 2001, he supervised the employees who arranged medical transportation. Kramer explained that a recipient would call the public aid office and ask for transportation to a medical appointment. 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. 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 their records and the medical transportation provider received the yellow copy. The public aid office kept the white copies in file cabinets and boxes. At some point, the police requested UPT's proper approval forms. The public aid office was unable to locate all of UPT's files. Kramer identified exhibit 133 as a box containing some of UPT's prior approval forms that the public aid office was able to find. Kramer testified that the contents of exhibit 133 were kept in the regular course of business.

Nicholas Cozzolino testified that he is an investigator for the Illinois State Police. In April 2006, he conducted an investigation of UPT. Using the directions provided in Mapquest, he drove the routes most frequently billed by UPT. He identified exhibits 81 through 128 ¹ as the routes he drove and the corresponding mileage he recorded. Investigator Cozzolino 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 Illinois Department of Public Aid.

Alla Denisenkio testified that she has known Lubenskiy and Gutman since 1999, when she worked for Ezra. She has also worked for other medical transportation companies owned by Lubenskiy and Gutman, including Tamid Medical Transportation, A.K., Purple Heart, and Etza. In January 2001, when the company changed its name to UPT, everything in the business remained the same except that...