People v. Universal Public Transportation, Inc.

ILLINOIS OFFICIAL REPORTS

Appellate Court

People v. Universal Public Transportation, Inc., 2012 IL App (1st) 073303-B

Appellate Court THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee, v.

Caption UNIVERSAL PUBLIC TRANSPORTATION, INC., Defendant-

Appellant.

District & No. First District, Third Division

Docket No. 1-07-3303

Filed May 23, 2012

Held In the prosecution of defendant corporation for the fraudulent billing of

(Note: This syllabus the State of Illinois for transporting public aid recipients to medical

constitutes no part of appointments, the State proved that the corporation’s de facto officers

the opinion of the court committed vendor fraud, theft and money laundering and the evidence

but has been prepared supported the corporation’s convictions for those crimes, the

by the Reporter of corporation’s convictions did not conflict with the acquittal of the

Decisions for the nominal owner of the corporation for the same charges, and the admission

convenience of the of certain exhibits as business records was not an abuse of discretion;

reader.)

however, the restitution order was reversed and the cause was remanded

to establish an appropriate amount for restitution, since the trial court

failed to consider the value of the services defendant rendered in ordering

restitution.

Decision Under Appeal from the Circuit Court of Cook County, No. 04-CR-2262; the

Review Hon. James B. Linn, Judge, presiding.

Judgment Affirmed in part and reversed in part; cause remanded.

Counsel on Delgado, Adam, Robertson & Tiernan, P.C., of Chicago (Robert

Appeal Robertson, of counsel), for appellant.

Lisa Madigan, Attorney General, of Chicago (Michael A. Scodro,

Solicitor General, and Michael M. Glick and Karl R. Triebel, Assistant

Attorneys General, of counsel), for the People.

Panel JUSTICE NEVILLE delivered the judgment of the court, with opinion.

Justices Salone and Sterba concurred in the judgment and opinion.

OPINION

¶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. We now

vacate the earlier judgment and substitute this opinion in its place. People v. Universal

Public Transportation, Inc., 401 Ill. App. 3d 179 (2010), appeal denied, No. 110326 (Jan.

25, 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 business records; 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

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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

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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.

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¶ 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 to and from certain addresses from January 2001 until

February 2002. Rodriguez found that the State paid UPT $235,106.01 for trips that should

have cost the State $67,769.70.

¶ 20 Arik Amzaleg, who bought a 50% interest in UPT on February 27, 2002, estimated that

UPT’s legitimate billings averaged about $70,000 or $100,000 per month.

¶ 21 The Department’s data control manager testified that from January 1, 2001, until

February 28, 2002, the State paid UPT $2,966,187.38.

¶ 22 The trial court read Tishel’s bond hearing testimony into the record. When asked at the

bond rehearing if he was the owner of UPT, Tishel responded, “I was the only one on paper.

God what they did to me.” Tishel said Gutman effectively owned the business.

¶ 23 UPT’s Case

¶ 24 Meir Rothstein testified that he was a real estate agent and brokered businesses. Rothstein

went to UPT on a daily basis and saw Tishel run the business. During this time, he never saw

Lubenskiy at UPT. Lubenskiy was not involved in the negotiations for the purchase of UPT.

Rothstein testified that he has known Tishel for approximately 22 years and that Tishel has

a reputation for being a man of his word.

¶ 25 Moshe Tishel, codefendant Tishel’s son, testified that he was responsible for maintaining

the company vehicles when his father owned UPT. Moshe testified that there was no

kickback scheme. Finally, Moshe testified that the only contact he had with Lubenskiy was

when Lubenskiy leased a vehicle to UPT.

¶ 26 Trial Court’s Findings

¶ 27 On April 19, 2007, the trial court dismissed the charges against Tishel, but found UPT

guilty of vendor fraud, theft and money laundering. The trial court found that UPT came into

existence for one reason: to allow Lubenskiy and Gutman to continue in a business endeavor

after the federal government barred them from engaging in that business. Lubenskiy and

Gutman needed a front man for UPT, and Tishel “agreed to be the straw man for them

knowing that they were barred from doing business.” The trial court further found that

Lubenskiy and Gutman prevailed upon Tishel to put the business in his name, but the State

failed to prove that Tishel took part in the irregularities that took place at UPT.

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¶ 28 Posttrial Motions

¶ 29 On May 16, 2007, UPT made a motion to vacate the findings of guilt. On June 11, 2007,

UPT filed a supplemental motion for reconsideration or, in the alternative, a new trial. On

June 12, 2007, at a hearing on the motions, the court reiterated its finding that Gutman and

Lubenskiy acted as the de facto officers of UPT. The court added that treating Tishel as the

sole officer would “stand everything on its head.” On July 24, 2007, the court denied the

posttrial motions and ordered UPT to pay restitution of $2,966,187.38, and fines of

$200,000.

¶ 30 On August 21, 2007, UPT filed a motion to reconsider or modify the sentence. On

October 23, 2007, the trial court denied UPT’s motion to reconsider or modify its sentence,

amended the sentence to include a one-year conditional discharge, and affirmed its June 24,

2007, order directing UPT to pay restitution of $2,966,187.38 and fines of $200,000. Finally,

on November 20, 2007, UPT filed a notice of appeal.

¶ 31 ANALYSIS

¶ 32 Sufficiency of the Evidence

¶ 33 UPT contends that the State failed to prove it guilty of vendor fraud, theft and money

laundering beyond a reasonable doubt. A reviewing court, when reviewing the sufficiency

of the evidence, must determine “ ‘ “whether, after viewing the evidence in the light most

favorable to the prosecution, any rational trier of fact could have found the essential elements

of the crime beyond a reasonable doubt.” (Emphasis in original.)’ ” People v. Cardamone,

232 Ill. 2d 504, 511 (2009) (quoting People v. Bush, 214 Ill. 2d 318, 326 (2005), quoting

Jackson v. Virginia, 443 U.S. 307, 319 (1979)); People v. Collins, 106 Ill. 2d 237, 261

(1985). A reviewing court must also allow all reasonable inferences from the record in favor

of the prosecution. Cardamone, 232 Ill. 2d at 511 (quoting Bush, 214 Ill. 2d at 326, citing

People v. Cunningham, 212 Ill. 2d 274, 280 (2004)). A reviewing court will not substitute

its judgment for that of the trier of fact. People v. Sutherland, 223 Ill. 2d 187, 242 (2006)

(citing People v. Collins, 214 Ill. 2d 206, 217 (2005)). The trier of fact must determine the

witnesses’ credibility, decide how much weight to give each witness’s testimony, resolve

conflicts in the evidence, and draw reasonable inferences from the testimony. Sutherland,

223 Ill. 2d at 242 (citing People v. Milka, 211 Ill. 2d 150, 178 (2004), and People v. Evans,

209 Ill. 2d 194, 211 (2004)). We will reverse a trier of fact’s findings and credibility

determinations only if they are against the manifest weight of the evidence. People v.

Richardson, 234 Ill. 2d 233, 251 (2009) (citing People v. Slater, 228 Ill. 2d 137, 149 (2008),

and In re Christopher K., 217 Ill. 2d 348, 373 (2005)).

¶ 34 UPT argues that we should reverse the convictions because the State’s case against it

depended on the inherently incredible testimony of Lubenskiy. However, the trier of fact

knew of Lubenskiy’s admitted participation in the illegal activities in this case, but the trier

of fact found Lubenskiy credible. This court finds no adequate grounds for disturbing the trial

court’s assessment of Lubenskiy’s credibility. See Sutherland, 223 Ill. 2d at 242 (citing

Collins, 214 Ill. 2d at 217).

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¶ 35 Next, UPT contends that the State failed to prove all of the elements needed to support

a conviction of a corporation for the crimes charged. A corporation can act only through its

agents. People v. Bohne, 312 Ill. App. 3d 705, 708 (2000). Section 5-4 of the Criminal Code

of 1961 (Criminal Code) explains that the State may prosecute a corporation for the

commission of an offense if: (1) a high managerial agent, (2) acting within the scope of his

or her employment, and (3) in behalf of the corporation, (4) authorized, requested,

commanded, or performed the offense. 720 ILCS 5/5-4(a)(2) (West 2000). Section 5-4(c)(2)

of the Criminal Code defines a “high managerial agent” as “an officer of the corporation, or

any other agent who has a position of comparable authority for the formulation of corporate

policy or the supervision of subordinate employees in a managerial capacity.” 720 ILCS 5/5-

4(c)(2) (West 2000).

¶ 36 We take judicial notice of Gutman’s convictions for vendor fraud, theft and money

laundering, and of our supreme court’s decision affirming those convictions on appeal.

Gutman, 2011 IL 110338, ¶ 46. Also, Lubenskiy pled guilty to vendor fraud in connection

with the inflated bills he submitted to the State of Illinois on behalf of UPT. If Gutman and

Lubenskiy served as high managerial agents of UPT, and they acted within the scope of their

employment and on behalf of UPT when they committed the crimes of vendor fraud, theft

and money laundering, then the convictions of UPT for those crimes must also stand. See

720 ILCS 5/5-4(a)(2) (West 2000). UPT argues that the State failed to prove (1) that Gutman

and Lubenskiy served as high managerial agents of UPT, (2) that Gutman and Lubenskiy

acted within the scope of their employment with UPT, and (3) that Gutman and Lubenskiy

acted on behalf of UPT when they committed their crimes.

¶ 37 The trial court found that Gutman and Lubenskiy served as de facto officers of UPT. We

will not reverse the trial court’s findings of fact unless the manifest weight of the evidence

requires contrary findings. Richardson, 234 Ill. 2d at 251 (citing Slater, 228 Ill. 2d at 149,

and In re Christopher K., 217 Ill. 2d at 373). The evidence established that: (1) Gutman and

Lubenskiy owned and operated Egra; (2) after accepting a ban from operating Egra and from

participating in any medical transportation provider, Lubenskiy and Gutman offered Tishel

part of the company and explained that they would run the company and Tishel would

receive a salary; (3) except for the name change from Egra to UPT, the business remained

the same, with the same vehicles, the same drivers, the same employees and officers

performing the same duties in the same office space; and (4) Gutman continued to manage

the business and to talk with the public aid office as a representative of UPT and Lubenskiy

continued to perform the bookkeeping for UPT. We find that the evidence supports the trial

court’s conclusion that Gutman and Lubenskiy acted as the de facto officers of UPT,

effectively controlling its operations, just as they served as the officers and owners of Egra.

See Richardson, 234 Ill. 2d at 251 (citing Slater, 228 Ill. 2d at 149, and In re Christopher K.,

217 Ill. 2d at 373).

¶ 38 Next, we must determine whether the evidence supports the finding that Gutman and

Lubenskiy were acting within the scope of their employment for UPT when Gutman

committed the offenses of vendor fraud, theft and money laundering, and Lubenskiy

committed the offense of vendor fraud. 720 ILCS 5/5-4(a)(2) (West 2000). An employee acts

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within the scope of his or her employment when he (1) performs acts of the kind his

employer hired him to perform, (2) intending, at least in part, to serve the employer, (3) while

working within “ ‘authorized time and space limits.’ ” Restatement (Second) of Agency

§ 228(1)(b) (1958), quoted in Bagent v. Blessing Care Corp., 224 Ill. 2d 154, 164 (2007).

The evidence presented at trial established that: (1) Gutman and Lubenskiy formed UPT for

the purpose of falsely billing the State of Illinois and obtaining excessive payments for

UPT’s services; (2) that Gutman managed the business and spoke for UPT with the public

aid office and the recipients; (3) that Lubenskiy kept UPT’s books and submitted bills to the

State of Illinois in the name of UPT; and (4) that Gutman and Lubenskiy submitted bills to

the State of Illinois on behalf of UPT for $6 million and UPT received $3 million, which

exceeded the amount the State should have paid UPT for its services. The actions of Gutman

and Lubenskiy accorded with the kinds of acts UPT meant for them to perform, and their acts

served the purpose for which they created UPT. Therefore, we hold that the State presented

sufficient evidence to establish that Gutman and Lubenskiy acted within the scope of their

employment for UPT from January 16, 2001, until February 2002, when they committed

vendor fraud, theft and money laundering. 720 ILCS 5/5-4(a)(2) (West 2000).

¶ 39 Next, we must determine whether the evidence supports the finding that Gutman and

Lubenskiy also acted on behalf of UPT when Gutman committed the offenses of vendor

fraud, theft and money laundering and Lubenskiy committed the offense of vendor fraud. 720

ILCS 5/5-4(a)(2) (West 2000). The evidence presented at trial established that Gutman and

Lubenskiy billed the State of Illinois in UPT’s name for approximately $6 million and UPT

received $3 million, due to the acts of Gutman and Lubenskiy between January 16, 2001, and

February 2002. Therefore, Gutman and Lubenskiy also acted in behalf of UPT, furthering its

business interests, when they committed vendor fraud, theft and money laundering. See

Milton v. Illinois Bell Telephone Co., 101 Ill. App. 3d 75, 79-80 (1981). Thus, under section

5-4 of the Criminal Code, the State proved that UPT committed the offenses of vendor fraud,

theft, and money laundering. 720 ILCS 5/5-4(a)(2) (West 2000).

¶ 40 In conclusion, because we have found that Gutman and Lubenskiy were high managerial

agents of UPT, acting within the scope of their employment, and acting on behalf of the

corporation when Gutman committed the offenses of vendor fraud, theft and money

laundering and Lubenskiy committed the offense of vendor fraud, we hold that the trial court

did not err when it found UPT guilty of the offenses of vendor fraud, theft and money

laundering, the same offenses committed by its high managerial agents. 720 ILCS 5/5-4(a)(2)

(West 2000); see also Bohne, 312 Ill. App. 3d at 708.

¶ 41 Legally Inconsistent Verdicts

¶ 42 UPT argues that the trial court entered legally inconsistent verdicts when it found UPT

guilty of vendor fraud and theft but acquitted Tishel of the same offenses. We disagree. UPT

bases its argument on the assumption that only Tishel served as a high managerial agent of

UPT, because UPT listed Tishel as its sole owner. However, the evidence supports the trial

court’s finding that UPT also acted through its de facto officers, Gutman and Lubenskiy.

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¶ 43 UPT cites People v. O’Neil, 194 Ill. App. 3d 79 (1990), in support of its position. In

O’Neil, the court found all of the three individual defendants guilty of the murder of a

coworker, and the court found two corporate defendants guilty of the involuntary

manslaughter of the same coworker. O’Neil, 194 Ill. App. 3d at 80-81. On appeal, the

defendants argued that the judgments for murder and involuntary manslaughter conflicted

because the offense of murder requires a knowing and intentional act while reckless conduct

does not. O’Neil, 194 Ill. App. 3d at 84. The defendants further argued that both convictions

arose from the same acts of the individual defendants. O’Neil, 194 Ill. App. 3d at 84. The

O’Neil court held that the judgments rendered for the offenses were legally inconsistent

because the court used the same conduct to support both findings of guilt, but the offenses

had mutually exclusive mental states. O’Neil, 194 Ill. App. 3d at 96.

¶ 44 Here, the court convicted UPT and its high managerial agents of the same offenses. In

this case, unlike O’Neil, the trial court attributed the same mental state to the corporation and

its officers. O’Neil does not require reversal here. Therefore, we hold that the trial court did

not enter legally inconsistent verdicts when it acquitted Tishel and convicted UPT of vendor

fraud, theft and money laundering based on the actions of UPT’s high managerial agents,

Gutman and Lubenskiy.

¶ 45 Financial Records Admitted Under the Business Records Exception

¶ 46 Next, UPT contends that the trial court erred in admitting financial records under the

business records exception because the prosecution laid an insufficient foundation for their

admission and the State destroyed the bulk of the relevant underlying records.

¶ 47 Section 115-5(a) of the Code of Criminal Procedure of 1963, commonly referred to as

the business records exception to the hearsay rule, provides that “[a]ny writing or record ***

made as a memorandum or record of any act, transaction, occurrence, or event, shall be

admissible as evidence of such act, transaction, occurrence, or event, if made in regular

course of any business, and if it was the regular course of such business to make such

memorandum or record at the time of such act, transaction, occurrence, or event or within

a reasonable time thereafter.” 725 ILCS 5/115-5(a) (West 2006). Section 115-5(c)(2) of the

Code of Criminal Procedure of 1963 further provides that “[n]o writing or record made in

the regular course of any business shall become admissible as evidence *** if *** [s]uch

writing or record has been made by anyone during an investigation of an alleged offense or

during any investigation relating to pending or anticipated litigation of any kind.” 725 ILCS

5/115-5(c)(2) (West 2006); see also People v. McClanahan, 191 Ill. 2d 127, 133 (2000). The

trial court may admit into evidence summaries of voluminous documents where the

underlying data upon which the proponent bases the summary satisfies the ordinary business

exception, and the trier of fact cannot conveniently examine the contents of the voluminous

writings in court. People v. Wiesneske, 234 Ill. App. 3d 29, 41 (1992).

¶ 48 The party seeking to admit a purported business record into evidence must lay an

adequate foundation for the business record, including “a showing that the record was made

as a memorandum or record of the act; the record was made in the regular course of business;

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and that it was the regular course of the business to make such a record at the time of the act

or within a reasonable time thereafter.” People v. Morrow, 256 Ill. App. 3d 392, 397 (1993)

(citing People v. Tsombanidis, 235 Ill. App. 3d 823, 835 (1992)). “In the case of computer-

generated records, a proper foundation additionally requires a showing that: standard

equipment was used; the particular computer generates accurate records when used

appropriately; the computer was used appropriately; and the sources of the information, the

method of recording utilized, and the time of preparation indicate that the record is

trustworthy and should be admitted into evidence.” Morrow, 256 Ill. App. 3d at 397 (citing

Riley v. Jones Brothers Construction Co., 198 Ill. App. 3d 822, 829 (1990), and Michael H.

Graham, Cleary & Graham’s Handbook of Illinois Evidence § 803.10, at 654-55 (5th ed.

1990)). Opposing counsel may object if the evidence presented fails to support introduction

of the evidence being offered or lacks a sufficient foundation. See Michael H. Graham,

Cleary & Graham’s Handbook of Illinois Evidence § 611.18, at 546 (7th ed. 1999). “Like

other evidentiary rulings, the determination of whether or not business records are admissible

is within the sound discretion of the trial judge, and such determinations will not be reversed

absent an abuse of discretion.” Morrow, 256 Ill. App. 3d at 396 (citing Tsombanidis, 235 Ill.

App. 3d at 833, and People v. Boclair, 129 Ill. 2d 458, 476-77 (1989)).

¶ 49 In support of its claim that it preserved this issue for review, UPT refers to the pages in

the record where it generally objected to the admission of unspecified exhibits in the record.

But apart from that reference, UPT (1) fails to cite to the pages in the record where the State

introduced the exhibits UPT now seeks to challenge; (2) fails to cite to the pages in the

record where witnesses identified and discussed the exhibits; (3) fails to cite to the pages in

the record where witnesses allegedly testified that they prepared the exhibits solely for

litigation purposes; and (4) fails to cite to the pages in the record where UPT allegedly

objected to the admission of the exhibits on the basis of an improper foundation. Because

UPT failed to cite to the pages in the record where the witnesses discussed the exhibits and

where UPT made its objections, this court cannot determine whether the State laid a proper

foundation for the exhibits. We cannot determine: (1) whether the exhibits qualify as

business records, made as memoranda or records of transactions; (2) whether the exhibits

qualify as business records made in the regular course of business; and (3) whether the

exhibits qualify as business records created in the regular course of the business at the time

of the acts recorded or within a reasonable time thereafter. See Morrow, 256 Ill. App. 3d at

397 (citing Tsombanidis, 235 Ill. App. 3d at 835). Similarly, because UPT failed to cite to

the pages in the record where the witnesses discussed the exhibits, this court cannot

determine whether the State laid proper foundations for the computer records. We cannot

determine: (1) whether the Department used standard computer equipment; (2) whether the

computer generated accurate records when used appropriately; and (3) whether the

Department used the computer appropriately. Therefore, we cannot tell whether the trial

court should have found the records trustworthy and admissible. See Morrow, 256 Ill. App.

3d at 397 (citing Riley, 198 Ill. App. 3d at 829).

¶ 50 Supreme Court Rule 341(h)(7) provides that the appellant’s brief shall include an

argument containing the appellant’s contentions, the reasons therefor, citation of the

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authorities, and the pages of the record on which the appellant relies. Ill. S. Ct. R. 341(h)(7)

(eff. July 1, 2008). Supreme Court Rule 341(h)(7) further provides that parties waive any

points not argued. Ill. S. Ct. R. 341(h)(7) (eff. July 1, 2008). We find that, by failing to cite

to the pages in the record relied upon in support of the contentions in its brief as required by

Rule 341(h)(7), UPT forfeited its argument that the trial court erred when it admitted various

exhibits pursuant to the business records exception. Ill. S. Ct. R. 341(h)(6), (h)(7) (eff. July

1, 2008). “A reviewing court is entitled to have issues clearly defined with pertinent authority

cited and cohesive arguments presented [citation], and it is not a repository into which an

appellant may foist the burden of argument and research [citation]; it is neither the function

nor the obligation of this court to act as an advocate or search the record for error [citation].”

Obert v. Saville, 253 Ill. App. 3d 677, 682 (1993). Also, we must presume that the trial court

judge would not have admitted the exhibits if the State had not laid proper foundations for

them, because “[w]e ordinarily presume that the trial judge knows and follows the law unless

the record indicates otherwise.” People v. Gaultney, 174 Ill. 2d 410, 420 (1996) (citing

People v. Terrell, 132 Ill. 2d 178, 219 (1989)). Accordingly, we hold that UPT has not shown

that the trial court abused its discretion when it admitted the exhibits that the defendant

complains about in this appeal.

¶ 51 Restitution

¶ 52 Finally, UPT contends that the trial court erred in ordering it to pay $2,966,187.38 in

restitution. Specifically, UPT contends that the trial court erred when it failed to require the

State to prove the actual amount of loss and failed to reduce the restitution by the value of

the legitimate services UPT provided. We review the trial court’s restitution order for abuse

of discretion. People v. Stites, 344 Ill. App. 3d 1123 (2003).

¶ 53 Section 5-5-6 of the Unified Code of Corrections provides:

“If the court determines that an order directing the offender to make restitution is

appropriate, the offender may be sentenced to make restitution. *** If the offender is

sentenced to make restitution the Court shall determine the restitution as hereinafter set

forth:

(a) At the sentence hearing, the court shall determine *** whether the defendant

should be required to make restitution in cash, for out-of-pocket expenses, damages,

losses, or injuries found to have been proximately caused by the conduct of the

defendant ***.

(b) In fixing the amount of restitution to be paid in cash, the court shall allow

credit for property returned in kind, for property damages ordered to be repaired by

the defendant, and for property ordered to be restored by the defendant; and after

granting the credit, the court shall assess the actual out-of-pocket expenses, losses,

damages, and injuries suffered by the victim named in the charge and any other

victims who may also have suffered out-of-pocket expenses, losses, damages, and

injuries proximately caused by the same criminal conduct of the defendant ***.” 730

ILCS 5/5-5-6 (West 2000).

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¶ 54 The State candidly admits that it has found no case in which the court interpreted this

section of the Code in a similar context. UPT compares this case to People v. Jones, 145 Ill.

App. 3d 835 (1986), in which the trial court ordered the defendant to pay restitution for

criminal damage to a car, without considering the scrap value of the car the defendant

damaged. The appellate court reversed for the trial court to reduce the amount of restitution

by the value of the scrap. We agree with the State that the fact that UPT, as a front for

Gutman and Lubenskiy, could not legally receive any compensation from the State for

medical transport services makes this case distinguishable from Jones. Like the parties, we

found no useful legislative history for section 5-5-6.

¶ 55 We seek guidance from cases from other jurisdictions, and especially from federal cases

interpreting the Mandatory Victims Restitution Act of 1996 (18 U.S.C. § 3663(a) (2006)).

In United States v. Maurello, 76 F.3d 1304 (3d Cir. 1996), the defendant provided legal

services to several persons despite his lack of an attorney’s license. The court held that the

defendant did not need to pay restitution of the legal fees he received from persons he served

satisfactorily. Maurello, 76 F.3d at 1311-12. Other courts followed Maurello and formulated

the general rule that courts ordering restitution from one who fraudulently offers professional

services should allow a credit against the restitution for the value of the services the

unlicensed person performed. See Van Zanen v. Qwest Wireless, L.L.C., 522 F.3d 1127, 1131

(10th Cir. 2008).

¶ 56 The United States Court of Appeals for the Seventh Circuit applied the principle

espoused in Maurello to United States v. Vivit, 214 F.3d 908 (7th Cir. 2000), a case in which

a medical service provider fraudulently overbilled the government for services. The Vivit

court held:

“ ‘[I]n calculating loss, the district court should give credit for any legitimate services

rendered to the victims.’ [United States v. Sayakhom, 186 F.3d 928, 946 (9th Cir. 1999)].

*** [I]n frauds where the item misrepresented has some value, the value of this item

should be netted against the price offered to determine the amount of loss. While we have

traditionally applied this netting theory in the fraudulent sale of goods, [citation], we

have also applied this theory to the fraudulent misrepresentation of other items of value,

when some value has actually been transferred. [Citation.] Despite the government’s

contention that the overwhelming majority of Vivit’s billing was based on unperformed

or unnecessary services, the evidence presented demonstrates that Vivit did perform

some legitimate medical services. For this reason, we calculate the amount of loss

suffered by the insurers by netting the total costs submitted by Vivit, minus the legitimate

medical services that he provided.” Vivit, 214 F.3d at 915.

¶ 57 The amount of harm resulting from a defendant’s fraud affects both the length of the

defendant’s sentence and the amount of restitution ordered. In response to Maurello, the

United States Sentencing Commission added a note to the sentencing guidelines to state:

“In a case involving a scheme in which *** services were fraudulently rendered to the

victim by persons falsely posing as licensed professionals *** loss shall include the

amount paid for the property, services or goods transferred, rendered, or misrepresented,

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with no credit provided for the value of those items or services.” United States

Sentencing Guidelines Manual § 2B1.1, Commentary, Application Note 3(F)(v) (Nov.

1, 2011).

Section 2B1.1 applies only to the calculation of loss for purposes of determining the length

of a defendant’s sentence. The Sentencing Commission added no similar comment to the

guidelines on restitution. United States Sentencing Guidelines Manual § 5E1.1 (Nov. 1,

2001); see United States v. Allen, 529 F.3d 390, 396 (7th Cir. 2008). Since the Sentencing

Commission added the note about loss calculation for sentencing purposes, most federal

courts have continued to offset the value of any services performed against the payments

illegally received for purposes of calculating restitution. See Allen, 529 F.3d at 396-97;

United States v. Bryant, 655 F.3d 232, 254 (3d Cir. 2011); but see United States v. Hunter,

618 F.3d 1062, 1064-66 (9th Cir. 2010). Finally, we note the court held in United States v.

Dokich, 614 F.3d 314, 320 (7th Cir. 2010), “in the context of restitution awards, the

government’s evidence of actual loss must deduct any financial benefit realized by victims

of the fraud.”

¶ 58 We found only one federal case since the change in the sentencing guidelines that

disallowed an offset against the loss for services performed. In Hunter, Northstar Borough

hired Hunter to work as a nurse after she mailed to Northstar false documents reflecting

fictitious nursing credentials. The trial court ordered her to pay in restitution all of the wages

Northstar and the Department of Labor paid her, without any deduction for the services

Hunter actually performed. The Ninth Circuit affirmed, holding:

“Both Northstar Borough and the Department of Labor were directly and proximately

harmed by Hunter’s mail fraud because they paid for the services of a licensed nurse that

were never received. ***

*** Northstar and the Department of Labor paid for nursing services that Hunter was

not qualified to perform, and so did not get what they paid for.” Hunter, 618 F.3d at

1064-65.

¶ 59 Here, the State paid UPT for transporting public aid recipients in need of assistance to

their medical service providers. The testimony of the State’s witnesses shows that UPT

provided the necessary services the State sought for a number of persons in need of medical

services. Lubenskiy, Tishel and Denisenkio all testified that Tishel ran UPT as a legitimate

business, providing transportation services to public aid recipients. In accord with Allen,

Dokich, and Vivit, we find that in calculating the amount of restitution, the trial court should

have allowed UPT a credit for the legitimate services it provided to the State.

¶ 60 For the burden of proof, we adopt the reasoning of the court in United States v.

Sheinbaum, 136 F.3d 443, 448 (5th Cir. 1998), where the court said:

“Logically, the burden of proving an offset should lie with the defendant. The statute

allocates the various burdens of proof among the parties who are best able to satisfy those

burdens and who have the strongest incentive to litigate the particular issues involved.

*** [T]he defendant should know the value of any compensation he has already provided

to the victim in civil proceedings, so the burden should fall on him to argue for a

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reduction in his restitution order by that amount.”

See also United States v. Elson, 577 F.3d 713, 734 (6th Cir. 2009); Bryant, 655 F.3d at 254.

We suggest that United States v. Austin, 54 F.3d 394, 402 (7th Cir. 1995), which permits the

use of sampling to estimate the total loss a defendant caused, may provide some useful

guidance for determining the proper amount of restitution.

¶ 61 CONCLUSION

¶ 62 The State proved that UPT’s de facto officers, Lubenskiy and Gutman, 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 those three crimes. The convictions of UPT

on the basis of the acts of its de facto officers does not conflict with the acquittal of UPT’s

nominal owner for the same charges. UPT failed to show that the trial court abused its

discretion when it admitted certain exhibits into evidence as business records. The trial court

should have considered the value of the services UPT rendered when it ordered UPT to pay

restitution. Accordingly, we affirm the convictions, reverse the restitution order and remand

for further proceedings to establish an appropriate amount of restitution.

¶ 63 Affirmed in part and reversed in part; cause remanded.

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