Petition — Smith v. United States

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Supreme Court

Cited ‘tates

OCTOBER TERM, 1975

@5-145]

CASE NO.

OAKLEY G. SMITH,

Petitioner,

v8.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

PAUL A. LOUIS, ESQ.

PHILIP T. WEINSTEIN, ESQ.

1600 Alfred I. duPont Building

Miami, Florida 33131

Attorneys for Petitioner

EES

MIAMI REVIEW — 371-4853 — 377-3721

INDEX

EE a

Jurisdiction -~ssevennsoneneunaeenvesnenenasnsemsnisnennsenenvesnennnene ae

I ka

I. WHETHER THE DEFENDANT MAY

BE CHARGED “AT THE DISCRETION OF

THE PROSECUTION” WITH VIOLATION

OF A GENERAL FELONY FALSE CLAIM

STATUTE WHERE THE PARTICULAR

ACTS SPECIFIED IN THE INDICTMENT

ARE A MISDEMEANOR UNDER THE

LATER PROVISIONS OF THE SOCIAL

SECURITY ACT.

Il. WHETHER A DEFENDANT MAY

LAWFULLY BE CONVICTED OF MAKING

A FALSE STATEMENT WHEN THAT

WHICH THE GOVERNMENT CONTENDS

WAS FALSE WAS ACCURATE AND IN

COMPLETE ACCORD WITH THE IN-

STRUCTIONS OF THE GOVERNMENTAL

AGENCY TO WHICH IT WAS SUBMITTED.

II Ill

INDEX (cont.) CITATIONS

Page | Case Page

Statutes Involved 4 Achilli v. United States,

Sy I MI aetccictndbincesicen’s mee .. 22,28

Bell v. United States,

Statement of the Case mA 5 349US. 81 ee | 96

Berra v. United States,

Reasons for Allowance of the Writ ; 12 851 U.S. 181 (1956) | . 21, 23

Bincon v. United States,

Conclusion a thy EW eh inc. ; 33 352 U.S. 1028 : — ‘ sninineiinteniepet 22

Costello v. United States,

I 0 ad, tesa 22

Appendix

D. Ginsberg & Sons, Inc. v. Popkin,

Opinion of the Fifth Circuit —< | as aa. 16

Fifth Circuit Judgment App. 30 Kepner v. United States,

I a caletial 16

Opinion and Order Denying Rehearing __..... App. 32

MacE voy Co. v. United States,

Medicare and Medicaid Guide, {6490 _..__.. App. 31 | SE 17

SSA Form 1562, Schedule A La Patterson v. Lamb,

IES IIIT = sic ccdsadasehiaieaentneiaiielalaniabeniedanniovonain 32

Newsweek, Dec. 1, 1975, pp. 113-14 _._. App. 37

Affidavits of James Kaufman and Ronald

Zupa App. 42

CITATIONS (cont.)

Case

Sansone v. United States,

380 U.S. 343

Smith v. United States,

523 F.2d 771 (5th Cir. 1975)

Shelton v. United States,

165 F.2d 241 (D.C. Cir. 1947)

United States v. Cacioppo,

517 F.2d 22 (8th Cir. 1975)

United States v. Carey,

475 F.2d 1019 (9th Cir. 1975)

United States v. Chase,

135 U.S. 255

United States v. Gilliland,

312 U.S. 86

United States v. Katz,

455 F.2d 496 (5th Cir. 1972) cert. den., 408

U.S. 923 reh. den., 409 U.S. 899

United States v. Robinson,

142 F.2d 431 (8th Cir. 1944)

Youakim v, Miller,

_—____ U.S. _____ 44 L.W. 467 (3/31/76) _.

Page

. 13, 26

CITATIONS (cont.)

Page

CONSTITUTION, STATUTES AND REGULATIONS

Fifth Amendment, Due Process Clause _....___ .

18 USC $1001... ___... ae 4, 13, 20,

28 USC §1254(1) _-

42 USC $408(c) a |

Internal Revenue Code of 1939, §145(b) .

Internal Revenue Code of 1939, $3616(a) —......

Rev. Stat. §5438 _ .

Act of March 4, 1909, 35 Stat. 1075

Act of August 13, 1935, 49 Stat. 620, 625

Act of August 28, 1958, 75 Stat. 1034 000

Act of October 30, 1972, 86 Stat. 1359

Ne a nenasemnemenenenes

20 CFR §405.427 - rr ie

23, 26

13, 26

21, 22

CITATIONS (cont.) in the

rae Supreme Court

MISCELLANEOUS of the

Brief of the United States in United States v. Smith, G { v &S

523 F.2d 771 (5th Cir. 1975) 26, 30 nite tates

, ; October Term, 1975

1 CCH, Medicare and Medicaid Guide, 95568 29

1 CCH, Medicare and Medicaid Guide, "5676-5720 29

1 CCH, Medicare and Medicaid Guide, 16490 29 CASE NO.

1 CCH, Medicare and Medicaid Guide, 6515 29

OAKLEY G. SMITH,

Newsweek, December 1, 1975, pp. 113-14 26 Petitioner,

v8.

1958 U.S. Code, Congressional and Administrative

news, p 4508 : me UNITED STATES OF AMERICA,

Respondent.

1972 U.S. Code, Congressiona] and Administrative

News, p. 5007 25

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Petitioner, Oakley G. Smith, prays that a writ of cer-

tiorari issue to review the judgment of the United States

Court of Appeals for the Fifth Circuit entered on 17 No-

vember 1975.

OPINIONS BELOW

The opinion of the Fifth Circuit is reported at 523

F.2d 771 and is reproduced at pages 1-29 of the attached

appendix.' The opinion-order of the Fifth Circuit denying

rehearing (A 32) is reported at____ F.2d ___.

JURISDICTION

The Fifth Circuit’s judgment was entered on 17 No-

vember 1975 (A 30). Rehearing and rehearing en banc

were denied on 13 February 1976 (A 32).

On 1 March 1976 this Court entered an order extend-

ing the time for filing a petition for writ of certiorari to

and including 13 April 1976.

Jurisdiction to review the Fifth Circuit judgment by

writ of certiorari is conferred on this Court by Title 28,

USC § 1254(1).

"Hereafter, all references to the attached appendix will be desig-

— by the symbol “A”. All emphasis is ours unless otherwise indi-

cated.

QUESTIONS PRESENTED FOR REVIEW

WHETHER THE DEFENDANT MAY. BE

CHARGED “AT THE DISCRETION OF THE

PROSECUTION” WITH VIOLATION OF A

GENERAL FELONY FALSE CLAIMS STAT-

UTE WHERE THE PARTICULAR ACTS

SPECIFIED IN THE INDICTMENT ARE A

MISDEMEANOR UNDER THE LATER PRO-

VISIONS OF THE SOCIAL SECURITY ACT.

WHETHER A DEFENDANT MAY LAW-

FULLY BE CONVICTED OF MAKING A

FALSE STATEMENT WHEN THAT WHICH

THE GOVERNMENT CONTENDS WAS

FALSE WAS ACCURATE AND IN COM-

PLETE ACCORD WITH THE INSTRUCTIONS

OF THE GOVERNMENTAL AGENCY TO

WHICH IT WAS SUBMITTED.

STATUTES INVOLVED

The statutory provisions involved are Title 18, USC

$1001, and Title 42, USC §408(c). Title 18, USC §1001

provides:

Whoever, in any matter within the jurisdiction

of any department or agency of the United

States knowingly and willfully falsifies, conceals

or covers up by any trick, scheme, or device a

material fact, or makes any false, fictitious or

fraudulent statements or representations, or

makes or uses any false writing or document

knowing the same to contain any false, fictitious

or fraudulent statement or entry, shall be fined

not more than $10,000 or imprisoned not more

than five years, or both.

Title 42, USC §408(c) provides:

Whoever —

any false statement or representation of a ma-

terial fact for use in determining rights to

payment under this subchapter;

* * *

shall be guilty of a misdemeanor and upon con-

viction thereof shall be fined not more than

$1,000 or imprisoned for not more than one year,

or both.

STATEMENT OF THE CASE

The provedural background of the case and the facts

pertinent to this certiorari proceeding are set forth in the

opinion of the Fifth Circuit, which affirmed the conviction

of Petitioner Oakley G. Smith. While we do not necessarily

agree with several of the factual conclusions of the court

below, nevertheless they are assumed arguendo to be cor-

rect for the purpose of this petition. The opinion states:

Oakley G. Smith was charged in a nine count in-

dictment with having violated three federal statutes,

one count relating to each offense for each of three

successive years. Counts One through Three alleged

appellant had, in violation of Title 18, U.S.C. Section

1001, made false statements as to a material niatter

within the jurisdiction of the United States Depart-

ment of Health, Education and Welfare; Counts Four

through Six charged him with making and subscrib-

ing to false income tax returns for an exempt organi-

zation, Palm Springs General Hospital, in violation of

Title 26, U.S.C. Section 7206; and Counts Seven

through Nine charged him with willfully attempting

to evade personal income tax, contrary to the provi-

sions of Title 26, U.S.C. Section 7201. Appellant was

found guilty, following a jury trial, on Count Three,

willfully making false statements in a matter within

the jurisdiction of H.E.W. in the fiscal year 1971. He

was found not guilty on the other eight counts. Post-

trial motions for judgment of acquittal (renewing

motions made at the close of the government’s case

and again at the close of the evidence), for new trial

and in an arrest of judgment were denied; judgment

of conviction and sentence followed. Smith appeals

from the judgment and sentence.

(523 F.2d at 773; A. 7-8)

* 7 7

Count Three of the indictment reads:

That on or about the 21st day of January, 1972, in

the Southern District of Florida,

OAKLEY G. SMITH,

the defendant herein, willfully and knowingly did

make and cause to be made false, fictitious and fraud-

ulent statements and representations as to material

facts in a matter within the jurisdiction of the United

States Department of Health, Education and Welfare,

in that cost reports, Social Security Administration

Forms 1563, 1562, and 1992, for the fiscal year end-

ing June 30, 1971, were submitted to Blue Cross of

Florida, an agent and fiscal intermediary of the

United States Department of Health, Education and

Welfare, wherein OAKLEY G. SMITH stated and

represented that the expenses and costs set forth in

Forms 1563, 1562, and 1992, were costs reimbursable

under Title 18, Social Security Act, as amended, for

the operation of Palm Springs General Hospital, Inc.

of Hialeah, Florida. Whereas, in truth and fact, as he

then well knew, the expenses and costs set forth in

Forms 1563, 1562, and 1992, were not reimbursable

costs but included purchases and expenditures which

were false and fraudulently represented to be costs

for the operation of Palm Springs General Hospital,

Inc. of Hialeah, Florida.

All in violation of Title 18, United States Code,

Section 1001.

(523 F.2d at 778; A. 19-20)

The appellant, Oakley G. Smith, was president and

chairman of the Board of Trustees of Palm Springs

General Hospital at Hialeah, Florida (PSGH, or the

hospital). PSGH was a non-profit tax-exempt institu-

tion, which participates as a “provider” hospital in

the Medicare program. Medicare is a program of the

United States Department of Health, Education and

Welfare (HEW), more specifically, the Social Secur-

ity Administration. Blue Cross had a contract to

administer the program for HEW. In order to be

reimbursed by HEW for health care rendered to medi-

care patients, PSGH must file cost reports with Blue

Cross annually, listing all expenses incurred in ren-

dering patient care for that year. The amount due the

hospital annually from HEW is determined by multi-

plying these total health care expenses by the percent-

age of Medicare patient days to total patient days for

that year. Appellant, as chief hospital administrator,

was responsible for the filing of PSGH cost reports

with Blue Cross, and did so annually. These cost re-

ports, Forms 1563, 1562 and 1992 for fiscal year 1971

are the claimed false statements as to material fact

forming the basis for Count Three of the indictment.

(523 F.2d at 774; A. 10)

The second transaction relied on by the government

as reflecting non-reimbursable costs, those which were

not legitimate hospital expenses, but nonetheless so

reported to Blue Cross, involved the inter-relationship

between Smith, his nephew Gregory Robinson, and

ee an TT

International Computer Sharing, Inc. (ICS). ICS was

formed in March 1968, by Aspee Irani, a member of

the PSGH Board of Trustees. In April 1968, PSGH

entered into a contract with ICS to provide it with

computer services. At this time Irani gave away his

stock in ICS, but remained, for a salary, in a consult-

ant status, It is doubtful that Irani ever lost control

of ICS. The computers which ICS installed in the

hospital were leased by it from IBM through another

Irani concern, Irani and Associates, a consulting and

engineering firm. During the time period in question,

the PSGH account constituted ninety-five percent of

ICS’s business.

In the fall of 1968 several events took place, of

which the order was in conflict in the trial testimony.

Raynes, an IBM systems engineer, testified he pro-

vided to ICS and PSGH two computer programs only

recently obtained by IBM. These programs, not yet

in the IBM library, and not then in use within the

Miami area, suited the hospital’s needs. It was at that

time IBM’s policy to provide these programs without

charge to concerns which leased their equipment from

IBM. Raynes testified that when he delivered the pro-

grams to PSGH, the hospital did not have computer

programs to perform the functions of the ones he

delivered.

In October of 1968 ICS began paying Gregory Rob-

inson, nineteen year old nephew of appellant, $2,600

per month for computer programs he allegedly sold to

ICS, two of which performed the same functions as

the ones delivered by Raynes. He was paid, in all,

$67,000. The payments were completed in December,

1970, six months into the fiscal year 1971, which

ended June 30, 1971. The evidence established that the

programs Raynes delivered and the ones sold by Rob-

inson are one and the same. Irani testified that the

computer programs in question were bought from

Robinson three or four months before they were de-

livered by Raynes from IBM, and that Robinson stated

he had gotten them “from a friend”. Raynes’ testi-

mony thus conflicts with that of Irani both as to the

time periods involved and as to the order of events.

Appellant testified Robinson had approached him in

September 1968, about selling the programs, and that

he had directed him to Irani of ICS. Irani testified

that the person he had given the ownership of ICS to

had instructed him to check out Robinson’s programs,

that he had, and that he found them to fulfill the hos-

pital’s needs. Irani delivered checks from ICS, made

out to Robinson, to the front desk at PSGH. Smith

often cashed these checks, frequently endorsing Robin-

son’s name on them.

(523 F.2d at 776-77; A. 14-16)

A few further facts are necessary in connection with

the correctness of the Medicare form signed by Petitioner

Smith, as it relates to the ICS transaction and the propriety

of admission of all of the ICS evidence.

The day before trial began, defense counsel complained

that the Government had not complied with the pre-trial

discovery orders in supplying adequate information about

an alleged $67,000 “kick-back” in connection with the hos-

pital’s computer service contract. The following colloquy

resulted in an order for more particulars to enable de-

fendant to prepare for trial:

THE COURT: So your position is that Mr.

Smith in fact received $67,000.00 kick-back

through the avenue of payments to his nephew by

the computer?

MR. McCULLEY: Right.

MR. WEINSTEIN: He is accused of filing a

false medicare report, we would like to know

where that is supposed to be included on these

very thick cost report figures, why it is supposed

to be an offense.

In the first place we have serious doubts as to

whether the court will admit it, whether it follows

the rules of evidence where it is a payment from a

fourth person to a fifth person.

THE COURT: Kick-backs very seldom go di-

rectly back to the individual. That does not have

anything to do with the evidence.

MR. WEINSTEIN: They have to lay a founda-

tion though, your Honor. "

THE COURT: We will get to the evidentiary

problem later but let us not begin to try the

matter.

I think what you really want to know is where

does that fit into the allegations in this indict-

ment, what bearing if any does that have upon

the particular matter in the essential elements of

proof for the charge itself.

Is that what you are talking about now?

MR. WEINSTEIN: Specifically where it is on

the form, whatpage (sic), what line.

THE COURT: As to the forms?

MR. McCULLEY: It is included in certain costs

on this cost reimbursable matter and we can

specify —J thought the indictment would — no,

it does not.

THE'COURT: Can you provide them with the

information that the (sic) the seek so as to—

MR. McCULLEY: The specific line and

schedule, yes, sir, your Honor.

THE COURT: So you can relate these monies

to the particular line and schedule on the form

that you provided?

MR. McCULLEY: Will you do it, then?

THE COURT: Will you, Mr. McCulley, do it?

MR. McCULLEY: We will do it within an

hour. We do not have the auditor though.

THE COURT: You can do it before five o’clock

today?

The “Government’s Supplement Bill of Par-

ticulars Re. Counts I, II, and III”, was hand-

delivered to defense counsel on 5 February. The

following information was provided to describe

the alleged false statement in connection with the

ICS transaction (A. 35):

“Location of payments from Palm Springs Gen-

eral Hospital, Inc. of Hialeah to International

Computer Sharing.

A. SSA Forin 1562, Schedule A, line 1, Col. 2

entitled‘ Administration and other”

3) In FYE 6-30-71 the above figure is

$1,394,245.00 and included therein are payments

to International Computer Sharing.”

Defense counsel vehemently objected to all the evidence

concerning International Computer Sharing.

REASONS FOR ALLOWANCE OF THE WRIT

THE HOLDING OF THE COURT OF AP-

PEALS THAT THE DEFENDANT COULD BE

CHARGED “AT THE DISCRETION OF THE

PROSECUTION” WITH VIOLATION OF A

GENERAL FELONY FALSE CLAIMS STAT-

UTE WHERE THE PARTICULAR ACTS

SPECIFIED IN THE INDICTMENT ARE A

MISDEMEANOR UNDER THE LATER PRO-

VISIONS OF THE SOCIAL SECURITY ACT

IS IN CONFLICT WITH APPLICABLE DECI-

SIONS OF THS COURT AND AT LEAST TWO

DECISIONS OF THE COURTS OF APPEALS

ON THE SAME POINT.

ALTERNATIVELY, THIS HOLDING PRE-

SENTS AN IMPORTANT QUESTION OF

FEDERAL LAW WHICH HAS NOT BEEN,

BUT SHOULD BE, SETTLED BY THIS

COURT.

The defendant was convicted of a felony under Count

III of the indictment for making a false statement to the

government on a Medicare report in violation of 18 USC

$1001, the general false claims statute. This particular

offense is covered more specifically by a more recently

enacted statute, 42 USC §408(c), which provides for

punishment as a misdemeanor making “any false statement

or representation of a material fact for use in determin-

ing rights to payment” under the Social Security Act.’

Defendant moved to dismiss Count III and, at the time of

argument on the motion for judgment of acquittal, specifi-

cally brought to the attention of the trial court that the

conduct charged could be the misdemeanor specified in

Section 408(c). The contention was renewed by the motion

for judgment of acquittal made at the close of all of the

evidence and also after the verdict. All of these motions

were denied by the trial court. In rejecting the defendant’s

claim of error, the court below stated (523 F.2d at 780;

A 23-24):

It is established in the jurisprudence of this Circuit

that, in a situation of overlapping offenses, prosecu-

tion may be brought under either statute at the dis-

cretion of the prosecution. United States v. Chak-

makis, 5 Cir. 1971, 449 F.2d 315, 316. The inter-rela-

tionship of the identical statutes here in question was

considered in Chakmakis. A doctor had been convicted

of violating Title 18, Section 1001, for filing fraudu-

lent applications for payment under provisions of the

2The government uses Section 408(c) in order to prosecute false

statements under the Medicare program when it chooses this route,

United States v. Cacioppo, 517 F.2d 22 (8th Cir. 1975), and has even

rosecuted under both Section 408(c) and Section 1001 in the same

édicare case. United States v. Katz, 455 F.2d 496 (Sth Cir. 1972),

cert.den. 108 U.S. 923, reh.den., 409 U.S. 899.

Social Security Act. He argued on appeal that he

should have been charged under the more recently

enacted misdemeanor provision, Title 42, U.S.C. Sec-

tion 402(c) (sic). We stated:

“(I]t is quite clear that the enactment of the

later section did not repeal the former and that

the facts of the alleged offense fell within the

terms of either statute. Hence, the prosecution

could have béen brought under either, at the dis-

cretion of the prosecutor. Bartlett v. United

States, 10 Cir., 1948, 166 F.2d 920, 926; Hopkins

v. United States, 9 Cir., 1969, 414 F.2d 464; Ehr-

lich v. United States, 5 Cir., 1956, 238 F.2d 481,

485; United States v. Cox, 5 Cir., 1965, 342 F.2d

167, 171, cert. denied [sub nom.] Cox v. Hau-

berg, 381 U.S. 935, 85 S.Ct. 1767, 14 L.Ed.2d

700.” Ibid. at 316.

Accord, United States v. Fournier, 5 Cir. 1973, 483

F.2d 68; United States v. Brown, 9 Cir, 1973, 482

F.2d 1359, 1360. Binding precedent puts an end to

this claim of error.

While the cases cited by the Court of Appeals do sup-

port this statement of law, we submit that it is contrary to

the applicable decisions of this Court. In the alternative,

we submit that this point has never been squarely settled

by this Court; that it is a basic and important question of

federal law; that it will continue to re-occur until and

unless settled; and that the constitutionally correct de-

cision is contrary to that reached by the Court of Appeals

in this case and in the other cases relied upon for prece-

dent.

We assume for the purpose of this argument that the

Court of Appeals’ reference to “overlapping offenses”

means offenses whose elements are identical and not those

situations where one offense contains one or more elements

which differ from or are not contained within the other

offense’.

Our research indicates that the Court first considered

the problem in a criminal context in the 1890 case of

United States v. Chase, 135 U.S. 255, 10 S.Ct. 756, a

prosecution under early postal obscenity statutes. On certi-

fied questions arising from motions in arrest of judg-

ment, this Court held that the particularization in the

statute of non-mailable matter prevented conviction for

mailing matter which would otherwise have been encom-

passed within the generality of the statute. In so deciding,

this Court said:

It is an old and familiar rule that “where

there is, in the same statute, a particular enact-

ment, and also a general one, which, in its most

comprehensive sense, would include what is em-

braced in the former, the particular enactment

must be operative, and the general enactment

must be taken to affect only such cases within its

general language as are not within the provisions

of the particular enactment.” Pretty v. Solly,

26 Beav. 610, per Romilly, M. R.; State v. Com-

missioners, 37 N. J. Law, 228. This rule applies

wherever an act contains general provisions and

also special ones upon a subject which, standing

alone, the general provisions would include. 135

U.S. at 260

3See, Sansone v. United States, 380 U.S. 343, 85 S.Ct.1004 (1965)

The same principle formed the basis of decision in Kepner

v. United States, 195 U.S. 100, 24 S.Ct. 797 (1904).

Later, this Court made clear that the words “same

statute” could also be synonymous with “statutory

scheme”. Thus, in D. Ginsberg & Sons, Inc. v. Popkin,

285 U.S, 204, 52 S.Ct. 322, interpreting a specific prohibi-

tion against body arrest in the bankruptcy statutes, the

Court said:

In view of the general exemption of bankrupts

from arrest under section 9a and the carefully

guarded exception made by section 9b as to those

about to leave the district to avoid examination,

there is no support for petitioner’s contention

that the general language of section 2(15) is a

limitation upon section 9(b) or grants additional

authority in respect of arrests of bankrupts. Gen-

eral language of a statutory provision, although

broad enough to include it, will not be held to

apply to a matter specifically dealt with in an-

other part of the same enactment. United States

v. Chase, 135 U.S. 255, 260, 10 S.Ct. 756, 34

L.Ed. 117. Specific terms prevail over the general

in the same or another statute which otherwise

might be controlling. Kepner v. United States,

195 U.S. 100, 125, 24 S.Ct. 797, 49 L.Ed. 114,

1 Ann. Cas. 655; In re Hassenbusch (C.C.A.) 108

F. 35, 38; United States ex rel. Kelley v. Peters

(D.C.) 166 F. 613, 615. The construction con-

tended for would violate the cardinal rule that, if

possible, effect shall be given to every clause and

part of a statute. Washington Market Co, v.

Hoffman, 101 U.S. 112, 115, 25 L.Ed. 782; Ex

parte Public Bank, 278 U.S. 101, 104, 49 S.Ct.

43, 73 L.Ed. 202. 285 U.S. at 207-208.

See also, MacEvoy Co. v. United States, 322 U.S. 102, 64

S.Ct. 890 (1944) (application of rule to civil cases).

In the case of United States v. Robinson, 142 F.2d

431 (8th Cir. 1944), the Court had occasion to consider a

10-year sentence imposed under a statute generally pun-

ishing the larceny of government property. The defend-

ant argued that the most he could be sentenced for this

particular act was the 3-year penalty for “stealing a prop-

erty belonging to the Post Office Department”. The Eighth

Circuit granted arrest of judgment and ordered re-

sentencing under the particular statute calling for the

lesser penalty. In so deciding, the Court said (142 F.2d

at 432):

So that, although the larceny of any property

of the United States in general may be punished

by ten years imprisonment, it is forbidden to

impose more than three years for larceny of that

particular United States property which belongs

to the Post Office Department. Elementally, the

special stands against the general. That is, where

there is a law against any stealing, and another

and different law against stealing some particu-

lar thing, the two laws do not invalidate each

other by conflict, but the courts treat the law

against stealing the particular thing as present-

ing an exception to the law against stealing

things in general. They enforce the exception.

The special mandate of section 190, forbidding

“more than three years” imprisonment for

larceny of the particular property that is Post

Office property, must therefore prevail over the

ten year term permitted for larceny of United

States property in general.

“It is an old and familiar rule that ‘where there

is, in the same statute, a particular enactment,

and also a general one, which, in its most com-

prehensive sense, would include what is embraced

in the former, the particular enactment must be

operative, and the general enactment must be

taken to affect only such cases within its general

language as are not within the provisions of the

particular enactment.’ ”’ United States v. Chase,

135 U.S. 255, loc.cit. 260, 10 S.Ct. 756, 757, 34

L.Ed. 117.

Or as stated in the briefer modern way:

“General language of a statutory provision,

although broad enough to include it, will not be

held to apply to a matter specifically dealt with

in another part of the same enactment.” Gins-

berg & Sons v. Popkin, 285 U.S. 204, loc.cit. 208,

52 S.Ct. 322, 323, 76 L.Ed. 704.

In United States v. Zenith Radio Corp., D.C.

Ill., 12 F.2d 614, the court said at page 618:

“It is elementary that where there is, in an act,

a specific provision relating to a particular sub-

ject, that provision must govern in respect to the

subject as against general provisions in the act,

although the latter, standing alone, would be

broad enough to include the subject to which the

more particular provision relates. Endlich, Inter-

pretation of Statutes, § 216; Swiss National In-

surance Co. v. Miller, 53 App.D.C. 173, 289 F.

571, 576; Washington v. Miller, 235 U.S, 422,

428, 35 S.Ct. 119, 59 L.Ed. 295; U.S. v. Nix, 189

U.S. 199, 205, 23 S.Ct. 495, 47 L.Ed. 775; Town-

send v. Little, 109 U.S, 504, 519, 3 S.Ct. 357, 27

L.Ed. 1012. This rule is particularly applicable

to criminal statutes in which the specific provi-

sions relating to particular subjects carry smaller

penalties than the general provision.”

We find no evidence that the Robinson case has ever

been overruled or superseded and, therefore, it is neces-

sarily in conflict with the concept of “prosecutorial dis-

cretion” approved in the case at bar.

Another decision which we submit conflicts squarely

in principle with “prosecutorial discretion” is Shelton v.

United States, 165 F.2d 241 (D.C.Cir. 1947). The facts of

that case seem to us strikingly analogous to those in the

case at bar. Shelton had been convicted of a felony under

the general perjury statute prevailing in the District of

Columbia. The particular act constituting the perjury was

a false statement in an application for a duplicate auto-

mobile title certificate. There was also a specific District

of Columbia provision relating to “* * * a false statement

with respect to liens in an application for certificate * * *”

which was made a misdemeanor. In reversing the convic-

tion, the Court of Appeals said (165 F.2d at 244):

We think that the above-quoted provisions of

Sections 6 and 14 of the Lien Act apply to appli-

cations for duplicate certificates just as do the

provisions of all the other sections of the Act.

The foregoing being true, the next question is

wl.ether the defendant’s false oath as to liens may

be presecuted and punished under the general per-

jury statute. It is clearly within the statutory

definition of perjury in that statute, quoted

above. But there can be no question about the

general rule that, absent extraordinary results of

such construction, a specific later statute, rather

than an earlier general one, applies to a given

transaction described by both acts; i. e., generally

by the earlier act and specifically by the later.

. * ce

The offense thus described in the Lien Act is

a particular kind of perjury. Congress has pro-

vided a specific penalty, and a specific prosecutor,

for the sort of perjury which consists of a false

oath as to liens on an application for a certificate

of title on a motor vehicle; and has designated

that offense as one against the District of Colum-

bia. The courts cannot ignore those provisions.

In spite of the assertions to the contrary by some of

the courts of appeal* counsel for petitioner believe that this

principle has never been passed upon by this Court since

Chase.

*Some of the courts of appeals have cited United States v. Gilliland,

312 U.S, 86, 61 S.Ct.518 (1941) as authority for a rule of prosecutorial

discretion. As we read that decision this Court held only that certain

provisions of the “Hot Oil Act” which were not shown to be overlapping

did not repeal the predecesor section to 18 U.S.C. 1001, and that there

was no evidence of Congressional intent to cover the general false state-

ment conduct by the particular provisions of that statute.

Berra v. United States, 351 U.S. 131, 76 S.Ct. 685

(1956), was an appeal from an income tax conviction

under the Internal Revenue Code of 1939. Under that code,

there were overlapping statutes relating to the act of will-

fully filing a false and fraudulent return with intent to

evade tax, viz., §145(b), a felony section and §3616(a),

an earlier enacted misdemeanor section. Berra contended

that he should have been entitled to a lesser included of-

fense instruction, a contention this Court rejected because

it found no element present in one section not present in

the other. In dissenting, Justice Black said that the Court

should have, on its own motion, remanded the case for

resentencing under the misdemeanor section (a contention

not made by the defendant in that case). He thought so

because he believed there was a constitutional abhorrence

of the concept of “prosecutorial discretion’’.°

‘“The Government admits here and the Court assumes that filing

a false and fraudulent income tax return is both a misdemeanor under

§ 3616(a) and a felony under § 145(b). The Government argues that

the action of the trial judge must be upheld because “the Government

may choose to invoke either applicable law,” and “the prosecution may

be for a felony even though the Government could have elected to prose-

cute for a misdemeanor.” Election by the Government of course means

election by a prosecuting attorney or the Attorney General. I object to

any such interpretation of §§ 145 and 3616. I think we should construe

these sections so as not to place control over the liberty of citizens in

the unreviewable discretion of one individual—a result which seems to

me to be wholly incompatible with our system of justice. Since Congress

has specifically made the conduct charged in the indictment a misde-

meanor, I would not permit prosecution for a felony under the broad

language of § 145(b). Criminal statutes, which forfeit life, liberty or

property, should be construed narrowly, not broadly.

Here, however, under the Court’s opinion and the Government’s

argument. two statutes proscribe identical conduct and no ‘different

proof’ was required to convict petitioner of the felony than would have

been required to convict him of the misdemeanor. The Government’s

whole argument rests on the stark premise that Congress has left to the

(Footnote Continued on Next Page)

Following the publication of Justice Black’s dissent,

numerous challenges were made to convictions of defend-

ants under the old felony section on indictments charging

the filing of a false income tax return. Costello v. United

States, cert. granted, 352 U.S. 988; Achilli v. United

States, 353 U.S. 373 and Binion v. United States and Cos-

tello v. United States (bail application) , 352 U.S. 1028.

In Achilli, the Court decided the question insofar as

it involved tax evasion convictions under the 1939 Code;

it held that the felony provisions prevailed. It reached this

conclusion, however, only by finding that the misdemeanor

($3616(a)) had been repealed by implication.

The evolution of those sections makes clear that

by the time the unconfined language of §3179

became $3616(a) of the 1939 Code, its scope had

been shrunk by a series of specific enactments

that had the potency of implied repeals. Due re-

gard for appropriate statutory constructions calls

for such a conclusion in order to harmonize an

(Footnote Continued from Preced ng Page)

district attorney or the Attorney General the power to say whether the

judge and jury must punish identical conduct as 2 felony or as a mis-

demeanor.

A basic principle of our criminal law is that the Government only

prosecutes people for crimes under statutes passed by Congress which

fairly and clearly define the conduct made criminal and the punish-

ment which can be administered. This basic principle is flouted if either

of these statutes can be selected as the controlling law at the whim of

the prosecuting attorney or the Attorney General. ‘For, the very idea

that one man may be compelled to hold his life, or the means of living,

or any material right essential to the enjoyment of life, at the mere

will of another, seems to be intolerable in any country where freedom

prevails, as being the essence of slavery itself.’ Yick Wo v Hopkins,

113 US 356, 370, 30 L ed 220, 226 6 S Ct 1064.” 351 U.S. at 138-139.

earlier, generalized statute with later ad hoc en-

actments expressly directed to the collection of

income taxes. 353 U.S. at 379.

We submit that the courts of appeal have overlooked that

the opinion in Achilli implied recognition and approval by

this Court of the principle set forth in Justice Black’s dis-

sent in Berra. If this Court had believed—as squarely held

by the court of appeals in this case—that the prosecution

could be brought under either section at the discretion

(or whim) of the prosecutor, then there would have been

no reason or justification whatever for this Court’s expen-

diture of judicial labor to find implied repeal of the mis-

demeanor section, nor would the law have had to suffer

the embarrasment of finding dozens of people in jail under

a section which this Court said had been repealed long

before. Rather, this Court would have said merely that the

government had the power to prosecute offenders under

either sectiorf at its discretion.

In the case at bar, certain facts are beyond argument:

1) The section under which the petitioner was con-

victed, 18 U.S.C. §1001, is the general false claim

statute, which existed in one form or another since

shortly after the Civil War. The present statute

derives directly from an Act of March 4, 1909,

¢.321 $35, 85 Stat. 1075, which was itself derived

from earlier law—RS $5438.

2) The Social Security Act, and its misdemeanor pen-

alty provision, was enacted on August 13, 1935.°

649 Stat. 620, 625. It was amended many times thereafter, although

the substance has not been changed.

We have been unable to find any legislative history

which pinpoints the intent of Congress in enacting the false

statement section of the Social Security Act, nor the vari-

ous extensions and expansions thereafter; however, we

Suggest that it is most reasonable to assume that, at the

time of the first enactment, and continually thereafter,

Congress was well aware of the general felony false claim

statute,’ and intended that a false Social Security claim

should be punished less severely than a false claim gen-

erally.* Otherwise, one can find no purpose to be served

by the misdemeanor section.

The offense of which the petitioner was convicted is

alleged to have taken place on January 21, 1972. At that

same time, Congress was working on a revision of the

Social Security law, including the penal sections which

were, in fact, enacted as Public Law 92-603, effective

October 30, 1972, 86 Stat. 1359. A brief statement in the

Committee Reports does give some clue to the intent of

Congress, not only with respect to the penalty provision,

but precisely the kind of conduct that it was supposed to

cover:

“Penalty for fraudulent acts under medicare and

medicaid.

7In 1935, the section was 18 U.S.C. § 80.

‘The August 28, 1958 amendment, 75 Stat. 1034, for the first time

explicitly stated that a person making a false statement in various kinds

of claims under the Social Security Act “shall be guilty of a misde-

meanor.” This appears to be the first time Congress particularlized such

offenses as “misdemeanors”. The House and Senate reports state only

that the purpose of the amendment was to clarify and bring up-to-date

the penalty provisions. 1958 U.S. Code Congressional and Administra-

tive News, 4282.

Present penalty provisions [i.e., those existing

in January of 1972] relating to the making of

a false statement or representation of a

material fact in any application for medicare

payments would be broadened to include the

soliciting, offering, or acceptance of kickbacks or

bribes, including the rebating of a portion of a

fee or a charge for a patient referral, by pro-

viders of health care services. The penalty for

such acts would be imprisonment up to one year,

a fine of $10,000, or both. Similar penalty provi-

sions would apply under medicaid.

Anyone who knowingly and willfully makes, or

induces the making of, a false statement of mate-

rial fact with respect to the conditions and opera-

tion of a health care facility or home health

agency in order to secure medicare or medicaid

certification of the facility or agency, would be

guilty of a misdemeanor punishable by up to 6

months’ imprisonment, a fine of not more than

$2,000, or both.” 1972 U.S. Code, Congressional

& Administrative News, p. 5007.

Thus considered, we have no less than the statement of

Congress itself that the particular conduct for which the

Petitioner was convicted of a felony, was intended by that

body to be a misdemeanor.

We respectfully suggest that this is an important

unsettled question as to which there are conflicts between

the circuits and in which, perhaps more important, the

Court of Appeals has wrongly construed the applicable

decisions of this Court.?

If in the case of overlapping statutes'’—as opposed

to lesser included offenses—the vast difference in conse-

quences (disbarment, loss of civil rights, length of sentence

and probation, etc.) between conviction of felony and mis-

demeanor are to be left not to the law, or to the courts, but

to the discretion of the prosecutor,'' then this Court should

say so. On the other hand, if law and not human discretion

is paramount, then this Court should rectify the constitu-

tional error existing in the decision below.

°We also suggest that a-correct statement of the rule of this Court

may be found in Bell vs. United States, 349 U.S. 81, 75 S.Ct. 620

(1955), where in deciding whether a particular act constituted single

or multiple offenses, this Court said:

“When Congress leaves to the Judiciary the task of imputing

to Congress an undeclared will, the ambiguity should be re-

solved in favor of lenity. And this not out of any sentimental

consideration, or for want of sympathy with the purpose of

Congress in proscribing evil or anti-social conduct. It may

fairly be said to be a presupposition of our law to resolve

doubts in the enforcement of a penal code against the impo-

sition of a harsher punishment.” 349 U.S. at 83.

Apparently the government was more concerned with the naked

concept of prosecutorial discretion in the case at bar than was the

Court of Appeals itself. Thus, the government argued in the alternative

that a different proof was required for conviction under 18 USC

§1001 than for conviction of the specifically described misdemeanor

(government's brief p. 29) and that it had assumed and carried “the

extra burden of proof”. The Court of Appeals did not pass upon this

contention, but had it agreed, the decision would have been contrary

to that of the Eighth Circuit in United States v. Cacioppo, 517 F.2d

22 (8th Cir. 1975) which holds that the misdemeanor, 42 USC §408(c),

implies that the act be done “knowingly and willfully” and also con-

trary to United States v. Carey, 475 F.2d 1019 (9th Cir. 1975), which

holds that section 408(c) is not a lesser included offense within

section 1001.

"Some abuses of prosecutorial discretion were described recently

in Newsweek, December 1, 1975, pages 113-14 (A 37).

AFFIRMANCE OF A CONVICTION FOR

MAKING A FALSE STATEMENT WHEN

THAT WHICH THE GOVERNMENT CON-

TENDS WAS FALSE WAS ACCURATE AND

IN COMPLETE ACCORD WITH THE

INSTRUCTIONS OF THE GOVERNMENTAL

AGENCY TO WHICH IT WAS SUBMITTED

IS A DEPRIVATION OF DUE PROCESS OF

LAW.

AN IMPORTANT QUESTION OF INTER-

PRETATION OF THE MEDICARE REGU-

LATIONS IS PRESENTED WHERE THE

COURT BELOW REQUIRED INFORMATION

ON A MEDICARE FORM AT TOTAL VARI-

ANCE WITH SOCIAL SECURITY ADMIN-

ISTRATION INSTRUCTIONS.

When the government filed its “Supplement Bill of

Particulars”, it bound itself to the position that the false

statement it accused Petitioner of making in connection

with the ICS transaction was located on Social Security

Administration Form 1562, Schedule A, Line 1, Column 2

(A. 35); in effect, the government said that the figure

there stated—$1,394,245—was deliberately incorrect and

that it should have been $15,600 less. $15,600 is the amount

paid by ICS to Petitioner’s nephew during the hospital’s

fiscal year 1971. (523 F.2d at 777, n.13; A. 15).

The interpretation of the court below as to how a Medi-

care cost report must be filled in, as well as that of the

Department of Justice, is completely at variance with the

instructions of the Social Security Administration for prep-

aration of a cost report and the application of these in-

structions by Medicare auditors. Petitioner was convicted

for signing a Medicare report which was prepared, at least

as to the specific figure the government contends was

erroneous and fraudulent, completely in accord with the

requirements of the Social Security Administraton. Wheth-

er or not any other figures on the Medicare reports were

in error, the one the government focused on in its prose-

cution was correct.

Schedule A of Social Security Administration form

1562 contains six columns (A. 35). There is no dispute

that “Schedule A, line 1, column 2 is the place for showing

direct expenses of the hospital, other than salary, as shown

in the hospital’s books”, and the court below specifically

so found (523 F.2d at 779). This is the Social Security

Administration’s instruction for completing a cost report

(1 CCH, Medicare and Medicaid Guide, 16490; A. 31).”

Column 5 of Schedule A is for adjustments to expenses

which are made on Schedule A-5. Schedule A-5 includes

adjustments to remove expenses which are specifically

unallowable under the Medicare Program (1 CCH, Medi-

care and Medicaid Guide, 6515). Column 6 on Schedule A

represents the adjusted expenses, and this is the figure

used for Medicare reimbursement purposes. The Social

Security Administration has detailed regulations and

guidelines for adjusting out expenses which are not allow-

able under Medicare, including payments to so-called “re-

lated organizations” and kickbacks or rebates to hospital

officials (20 CFR $$405.425, .427; 1 CCH, Medicare and

Medicaid Guide, 15676-5720, 5568).

The Fifth Circuit thought that the $1,394,245 figure

was wrong and would support a criminal conviction be-

cause it was fraudulent;' the Justice Department took the

position the figure was erroneous because part of it alleg-

120n direct examination, the director of Blue Cross of Florida’s

Provider Reimbursements testified that when cost reports are audited,

the auditors make sure that the information reported in the Provider's

books and records is the same information that is on the cost report.

13523 F.2d at 779-80: “The figure purports to be hospital expenses.

The amount falsely included is not a hospital’s expense, even though

shown in the hospital’s books as such. In other words, appellant’s per-

sonal building costs and diaper service expense as well as the ICS

transaction were incorrectly shown as expense on the hospital’s books.

They were therefore necessarily incorrectly represented in the total

figure of $1,394,245. The figure was indeed false, as the supplemental

bill of particulars asserted.”

edly was returned to Petitioner Smith;'* Medicare auditors

decided that the figure was too high because it included

payments to a related organization.'’ Assuming the auditor

was correct, there was nothing wrong with the $1,394,245

figure and an adjusting entry should have been made in

column 5, Schedule A to remove the unallowable costs.

Assuming the Department of Justice was correct, the fig-

ure in Schedule A, line 1, column 2 would still be the same,

and an adjustment would be made in column 5 to eliminate

any rebates or kickbacks. The point is that the hospital

was required to put down on Schedule A, line 1, column 2

exactly the figure which its own books contained, and it

did that. If not all of those costs were allowable under the

Medicare program, the unallowable portion should have

been removed by adjusting entries in column 5.

The prosecutors and the appellate court did not under-

stand how the Medicare cost reimbursement system works

and how a cost report is required to be prepared. The fig-

ure $1,394,245 on SSA Form 1562, Schedule A, line 1, col-

umn 2 which the government contended was a Section 1001

false statement was not false at all. It was the expense

shown by the hospital’s books, including the amounts actu-

ally paid by the hospital to ICS. If part of the payments

to ICS were in fact not reimbursable under the Medicare

14] : ca a .

sail or mane 14 of its brief in the Fifth Circuit, the Justice Depart-

“The government did not contend below, and is not contend-

ing here, that the computer service costs included on the cost

report were false because they were made to a related organi-

zation. They were false because part of them were returnd

to defendant.”

Blue Cross Auditor Joseph Birdsong specifically testified that a

portion of the computer cost was disallowed because the hospital and

ICS were related organizations, and not because of any contention that

Petitioner actually received any of the money.

program, the system established by the Social Security

Administration required that an adjusting entry be made

to remove the unallowable portion in column 5 of Schedule

A. But Petitioner was not accused of: (i) making an error

in column 5; (ii) not making a proper adjustment in col-

umn 5; or (iii) of falsely stating the amount used for

reimbursement in column 6. The prosecutors, trial court,

and ~ourt of appeals united in convicting Petitioner of

something which is no crime at all. Had the hospital’s

cost report contained a figure other than the $1,394,245

shown on its books, it would have been erroneous."

Under the system of cost reporting established by the

Social Security Administration, Form 1562, Schedule A

starts out with the actual expenses of a hospital as shown

on the hospital’s books. Detailed bookkeeping standards

have not been imposed by the federal government, except

with respect to the kind of documentation of expenses

which is maintained, The Social Security Administration

has providéton its cost reporting forms specific places to

adjust out of the expenses shown on the hospital’s books

any costs which are not reimbursable under Medicare. The

appellate court in effect has established federal standards

for hospital bookkeeping, and requires that every hospital

maintain its books so that no kickbacks, allegedly fraudu-

lent, or other unallowable costs show up on the books—as

opposed to the “bottom line” figures on the cost report

\6Because of the complexity of the requirements for completing a

cost report, Petitioner submitted affidavits of experts on the subject to

the trial court in support of post trial motions (A.42-49) and also

relied upon them in the appellate court, all to no avail. (The $13,000

figure discussed in these affidavits should have been the $15,600 figure

used in the opinion in the court below, but this makes no difference

for purposes of this discussion.)

used for reimbursement. The interpretation given the cost

reporting system by the Fifth Circuit is at variance with

administrative requirements,’ and will result in a great

deal more federal regulation than was intended by Con-

gress and those who administer the Medicare system.

The court interpretations of the requirements for com-

pleting a Medicare cost report at variance from those of

the government agency to which the report was submitted

deprived the Petitioner of due process of law, as did the

requirement that he defend the case based upon evidence

at variance from the bill of particulars which set forth his

alleged false statement.

See, Patterson v. Lamb, 329 U.S. 539; Youakim v. Miller,

U.S. ___, 44 L.W. 1467 (3/31/76), and cases cited therein.

CONCLUSION

For the reasons set forth herein, it is respectfully

urged that this Petition for Writ of Certiorari should be

granted.

Respectfully submitted,

PAUL A. LOUIS, ESQ.

1600 Alfred I. duPont Building

Miami, Florida 33131

PHILIP T. WEINSTEIN, ESQ.

812 Ainsley Building

Miami, Florida

WILLIAM A. MEADOWS, ESQ.

6101 S.W. 76 Street

South Miami, Florida

Attorneys for Petitioner

APPENDIX

United States Court of Appeals,

Fifth Circuit.

No. 74-2343

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

OAKLEY G. SMITH,

Defendant-Appellant.

Nov. 17, 1975

The United States District Court for the Southern

District of Florida, at Miami, Joe Eaton, J., found de-

fendant, the president of a hospital and the chairman of

its board of trustees, guilty of willfully making false state-

ments as to a material matter within the jurisdiction of

the United States Department of Health, Education and

Welfare, and he appealed. The Court of Appeals, Simp-

son, Circuit Judge, held that defendant was properly in-

dicted by a validly constituted grand jury; that he re-

ceived a fair trial at which sufficient evidence was pre-

sented to warrant the jury’s lawfully returning its verdict

of guilty; that the verdicts rendered were not reversibly

inconsistent, even though defendant was acquitted on

eight other counts; and that defendant presented no evi-

dence to establish that he was the target of invidious

prosecutorial discrimination.

Affirmed.

App. 2

1. Fraud—68.10(2)

As used in federal statute which prohibits, inter alia,

the knowing and willful misrepresentation of a material

fact within the jurisdiction of a federal department or

agency, the term “knowingly,” requires only that the de-

fendant acted with knowledge, and the term “willfully”

means that the defendant acted deliberately and with

knowledge. 18 U.S.C.A. § 1001.

See publication Words and Phrases for other judicial

constructions and definitions.

2. Criminal Law —1144.13(3)

On the appeal of a conviction, the Court of Appeals

examines the sufficiency of the evidence in light most

favorable to the government in substantiation of the

charge.

3. Criminal Law —552(3)

On the appeal of a conviction in a case based on cir-

cumstantial evidence, the responsibility of a Court of

Appeals is to determine whether reasonable minds could

conclude that the evidence presented at trial was incon-

sistent with the hypothesis of the accused’s innocence.

4. Crimina] Law —1159.2(7)

It is for the jury to determine the guilt or innocence

of a defendant; an appellate court should not interfere

unless it concludes that the jury must necessarily have had

a reasonable doubt.

App. 3

5. Criminal Law —556

Government is not to be held accountable for the

testimony of each of its witnesses.

6. Criminal Law —549

Testimony need not be received “in a vacuum.”

7. Fraud —69(1)

In prosecution for willfully making a false statement

as to a material matter within the jurisdiction of a federal

department or agency, the defense of reliance on expert

advice, to be effective, must establish good faith reliance

on the expert coupled with full disclosure to the expert.

18 U.S.C.A. § 1001.

8. Fraud 69(5)

In prosecution of hospital’s president for willfully

making false statements as to a material matter within

the jurisdiction of the United States Department of Health,

Education and Welfare, the evidence as to each of three

financial transactions sufficed for the jury to find that

defendant had knowledge that his persona] expenses and

those not of the hospital were included within the general

hospital accounts as transcribd to medicare forms signed

by him. Social Security Act, § 1801 et seq., 42 U.S.C.A.

§ 1395 et seq.; 18 U.S.C.A. § 1001.

App. 4

9. Indictment and Information —60, 71.2(4)

To ensure that an indictment is legally sufficient, it

must allege essential elements of the offense so as to in-

form the defendant of the charges he must meet and it

must be at least specific enough that a verdict under it

will protect the defendant from double jeopardy.

10. Indictment and Information —55

Validity of an indictment is determined by practical,

not technical, considerations.

11. Indictment and Information —71.4(4)

Indictment charging hospital president with willfully

making false statements as to a material matter within

the jurisdiction of the United States Department of Health,

Education and Welfare was not so vague as to fail to

inform defendant of the nature of the charges he had to

me t in order properly to prepare a defense, where it

stated the location of the false statements and the theory

under which the Government would argue them to be false,

particularly where the defense sought by motion and re-

ceived extensive bills of particulars which detailed the

underlying fraudulent acts. Social Security Act, § 1801 et

seq., 42 U.S.C.A. § 1395 et seq.; 18 U.S.C.A. § 1001.

12. Fraud —69(2)

In prosecution of hospital president on charge of will-

fully making false statements as to a material matter

within jurisdiction of the United States Department of

Health, Education and Welfare, no fatal variance existed

App. 5

between the allegations and proof in the case. Social Secu-

rity Act, § 1801 et seq., 42 U.S.C.A. § 1395 et seq.; 18

U.S.C.A. § 1001.

13. Criminal Law —29

In a situation of overlapping offenses, prosecution

may be brought under either statute at the discretion of

the prosecutor.

14. Constitutional Law —257

Hospital president, who was charged with the felony

of willfully making false statements as to a material mat-

ter within the jurisdiction of the United States Depart-

ment of Health, Education and Welfare, was not denied

due process by reason of the fact that the Government could

have elected to prosecute him under overlapping misde-

meanor statute. Social Security Act, §§ 202(c), 208, 208(c),

42 U.S.C.A. §§ 402(c), 408, 408(c) ; 18 U.S.C.A. § 1001.

15. Grand Jury —2\%

Grand jury which returned indictment was not un-

constitutionally composed even though it was drawn from

a jury wheel filled in December of 1968, and even though,

at the time of the indictment, the wheel was four years

and four months old, despite contention that young adults

and Cuban Americans were thereby excluded.

16. Criminal] Law —878(4)

Consistency in the verdict is not a requirement for

conviction in courts of the United Staies.

App. 6

17. Criminal Law —569

Since medicare form mistakes are not, without more,

criminal acts, defendant hospital president, who was in-

dicted for willfully making false statements as to a mate-

rial matter within the jurisdiction of the United States

Department of Health, Education and Welfare, failed to

show that he was the subject of an illegal discriminatory

prosecution. Social Security Act, § 1801 et seq., 42 U.S.C.A.

§ 1395 et seq.; 18 U.S.C.A. §1001.

18. District and Prosecuting Attorneys —8

Decision of whether or not to prosecute in any given

instance must be left to the discretion of the prosecutor,

and such discretion has been curbed by the judiciary only

in those instances where impermissible motives may be

attributed to the prosecution, such as bad faith, race, reli-

gion, or a desire to prevent the exercise of the defendant’s

constitutional rights.

Paul A. Louis, William A. Meadows, Jr., Philip T.

Weinstein, Miami, Fla., for defendant-appellant.

Ronald Rose, Gary L. Betz, Sp. Attys., Dept. of Jus-

tice, liami, Fla., Thaddeus B. Hodgdon, Crim. Div., App.

Section, Dept. of Justice, Washington, D.C. for plaintiff-

appellee.

Appeal from the United States District Court for the

Southern District of Florida.

App. 7

Before BELL, DYER and SIMPSON, Circuit Judges.

SIMPSON, Circuit Judge:

Oakley G. Smith was charged in a nine count indict-

ment with having violated three federal statutes, one count

relating to each offense for each of three successive years.

Counts One through Three alleged appellant had, in viola-

tion of Title 18, U.S.C. Section 1001, made false state-

ments as to a material matter within the jurisdiction of

the United States Department of Health, Education and

Welfare; Counts Four through Six charged him with

making and subscribing to false income tax returns for an

exempt organization, Palm Springs General Hospital, in

violation of Title 26, U.S.C. Section 7206; and Counts

Seven through Nine charged him with willfully attempting

to evade personal income tax, contrary to the provisions of

Title 26, U.S.C. Section 7201.' Appellant was found guilty,

following a jury trial, on Count Three, willfully making

false statements in a matter within the jurisdiction of

H.E.W. in the fiscal year 1971.2 He was found not guilty

on the other eight counts. Post-trial motions for judgment

of acquittal (renewing motions made at the close of the

'The time periods involved did not precisely overlap for each crime

charged, due to different fiscal years. Thus the Section 1001 violations

were for Medicare fiscal years ending June 30, 1969 through 1971. The

tax years of Palm Springs ended September 30, 1969, 1970 and 1971.

Smith’s personal income tax returns were filed on a calendar year basis,

the tax years involved ending December 31, 1969, 1970 and 1971.

2Title 18, Section 1001, provides:

Whoever, in any matter within the jurisdiction of any depart-

ment or agency of the United States knowingly and willfully falsi

fies, conceals or covers up by any trick, scheme, or device a mate-

rial fact, or makes any false, fictitious or fraudulent statements or

representations, or makes or uses any false writing or document

knowing the same to contain any false, fictitious or fraudulent

statement or entry, shall be fined not more than $10,000 or impris-

oned not more than five years, or both.

App. 8

government’s case and again at the close of the evidence),

for new trial and in an arrest of judgment were denied;

judgment of conviction and sentence’ followed. Smith ap-

peals from the judgment and sentence.

Appellant urges reversal] of his conviction on several

grounds: (1) that the trial judge erred in not granting

defendant’s motions for acquittal because the evidence

was insufficient to support the verdict; (2) that Count

Three of the indictment should have been dismissed as be-

ing vague and indefinite, and that the proof was at vari-

ance with the false statement alleged; (3) that the appel-

lant was denied due process by the prosecution’s charging

him with a felony in that the conduct for which he is

charged is more specifically proscribed by a misdemeanor

statute; (4) that the grand jury which returned the in-

dictment was unconstitutionally composed; (5) that the

jury’s verdict was inconsistent, and (6) that the appellant

was the target of discriminatory prosecution. Our exam-

ination of the record in light of the points raised by ap-

pellant convinces us that for the reasons cited herein they

are without substance. We affirm.

[1] The primary contentions pressed upon us by the

appellant are questions relating to the sufficiency of the

evidence. Section 1001 requires the “knowing and willful”

misrepresentation of a material fact within the jurisdic-

tion of any department or agency of the United States.

“Knowingly” as used in Section 1001 requires only that

the defendant acted “with knowledge”. United States v.

Mekjian, 5 Cir. 1975, 505 F.2d 1320, 1324; McBride v.

'The sentence was to three years confinement and a fine of $7500.

with six months only uf confinement, the balance probated under the

split sentence provision of Title 18, U.S.C. Section 3651.

App. 9

United States, 5 Cir. 1955, 225 F.2d 249. “Willfully”

means the defendant acted “deliberately and with knowl-

edge”. United States v. Mekjian, supra; United States v.

Parten, 5 Cir. 1972, 462 F.2d 430; McBride v. United

States, supra. Appellant contends the evidence in this case

is insufficient to support the jury’s finding of the requisite

mens rea. This requires a detailed recitation of the facts

of the case, as shown by the evidence.

I. SUFFICIENCY OF THE EVIDENCE

[2-4] We examine the sufficiency of the evidence in

the light most favorable to the government in substantia-

tion of the charge. Glasser v. United States, 1942, 315

U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680, 704; United

States v. Warner, 5 Cir. 1971, 441 F.2d 821, 825; Jones

v. United States, 5 Cir. 1968, 391 F.2d 273, 274. “All

reasonable inferences and credibility choices as will sup-

port the jury’s verdict of guilty must be made”. United

States v. Black, 5 Cir. 1974, 497 F.2d 1039, 1041. Our

responsibility in a case based upon circumstantial evidence

is to determine whether reasonable minds could conclude

that the evidence presented at trial is inconsistent with the

hypothesis of the accused’s innocence. United States v.

Black, supra; United States v. Amato, 5 Cir. 1974, 495

F.2d 545; United States v. Edwards, 5 Cir. 1974, 488 F.2d

1154; United States v. Fontenot, 5 Cir. 1973, 483 F.2d

315, 321; United States v. Warner, supra. It is for the

jury to determine the guilt or innocence of a defendant; an

appellate court should not interfere unless it concludes

that the jury must necessarily have had a reasonable

doubt. United States v. Black, supra; United States v.

App. 10

Fontenot, supra; United States v. Warner, supra. These

principles guide us in our consideration of the facts as

established by the evidence.

The appellant, Oakley G. Smith, was president and

chairman of the Board of Trustees of Palm Springs Gen-

eral Hospital at Hialeah, Florida (PSGH, or the hospital).

PSGH was a non-profit tax-exempt institution, which

participates as a “provider” hospital in the Medicare pro-

gram. Medicare is a program of the United States Depart-

ment of Health, Education and Welfare (HEW), more

specifically, the Social Security Administration.’ Blue

Cross had a contract to administer the program for HEW.°

In order to be reimbursed by HEW for health care ren-

dered to medicare patients, PSGH must file cost reports

with Blue Cross annually, listing all expenses incurred in

rendering patient care for that year. The amount due the

hospital annually from HEW is determined by multiply-

ing these total health care expenses by the percentage of

Medicare patient days to total patient days for that year.

Appellant, as chief hospital administrator, was responsible

for the filing of PSGH cost reports with Blue Cross, and

did so annually. These cost reports, Forms 1563, 1562 and

1992 for fiscal] year 1971 are the claimed false statements

as to material fact forming the basis for Count Three of

the indictment.

Testimony established that Smith knew the general

method by which the Medicare reimbursement program

worked, and had in fact been instrumental in bringing the

program to the hospital. Smith made it a practice to retain

complete financial control of the hospital. The jury had

*Title 42, 17.S.C. Section 1395 et seq. (1970).

*Blue Cross of Florida, Inc., is a private insurance carrier.

App. 11

testimony before it which indicated that Smith knew that

any distortion in the hospital’s books would cause a corre-

sponding distortion of the Medicare reports. The critical

question of proof in this case is therefore the extent of

Smith’s knowledge that improper costs were included in

the hospital’s books as reported to Medicare.

The prosecution, at trial, focused its proof on three

highly irregular transactions, each of which was reflected

in the hospital’s total costs as reported to Blue Cross. Two

of these expenses are argued by appellant to have been the

result of a “mistake” on the part of Smith or that of

hospital employees. The other expense is characterized by

Smith as reflecting a legitimate hospital expense. We hold

here that the jury had evidence before it justifying a find-

ing that each transaction was not a legitimate patient care

expense, or mistake, but was instead the result of an in-

tentional act on Smith’s part.®

In October 1968, appellant began the remodeling of

his home on Miami Beach. He hired an employee of the

hospital to be foreman of the work and to order supplies

through the hospital.’ Arango, a government witness, the

comptroller of the hospital, testified that early in 1969 he

noticed invoices coming to the hospital with Smith’s Miami

‘Although determining that sufficient evidence was present for the

jury to find appellant knew improper costs to be reflected in the Medi-

care forms with respect to each transaction alleged, we nevertheless

note that if there had been sufficient evidence to prove mens rea in

connection with any or either of the improper evpenses alleged, suffi-

cient basis would exist for affirmance of the conviction. Crain v. United

States, 1896, 162 U.S. 625, 636, 16 S.Ct. 952, 955, 40 L.Ed. 1097,

1100; United States v. Edmondson, 5 Cir. 1969, 410 F.2d 670, 673 n. 6,

cert. denied, 396 U.S. 966, 90 S.Ct. 444, 24 L.Ed.2d 430.

7By ordering supplies through the hospital Smith could take advan-

tage of discounts and wholesale prices available to PSGH which he

would not otherwise be able to obtain.

App. 12

Beach home shown as the delivery address of the goods.

When he inquired as to these invoices Smith told him to pay

them, but to “segregate” those expenses from other hospi-

tal costs. Arango did not separate out the Smith remodel-

ing invoices, and they were charged to the hospital ac-

counts as ordinary expenses. Checks to pay these, and all

hospital expenses, together with the respective invoices,‘

were taken to Smith to sign, in accordance with appellant’s

practice of signing all the general account checks of the

hospital, in order to keep tight control over the various

expenses. At the top right corner of the checks was a

“stub” portion indicating the account to which expenses

were charged by number, and sometimes by name also.

Smith signed checks which paid for his home remodeling,

as well as those for all other hospital expenses.

The establishment of an open end loan from the hos-

pital to Smith is argued as an explanation for the errone-

ous expensing of appellant’s personal costs to the hospital

accounts. There was apparently mention of a loan as early

as Arango’s confrontation of Smith with the invoices in

the incident described above. The minutes of two of the

Board of Trustees’ meetings contained authorization for

a loan to Smith. The government, however, presented evi-

dence which showed the minutes to be unreliable.’ The

hospital had at various times made loans to hospital em-

ployees, loans which were properly reflected in the books

*In some instances, the delivery address of invoices for goods used

in the remodeling of Smith’s home was “scratched” out.

*l.e. Mr. Raymond Woody, a Trustee at that time. is recorded as

present on February 19, 1970, the date Smith’s loan was allegedly

authorized to be increased, although he was not present at that meeting.

Throughout the minutes of the Trustees’ meetings he is recorded as

present and taking part, yet he testified to having attended only two

meetings, one in 1967, and one in 1973.

App. 13

and not charged to the general hospital accounts reported

to Blue Cross. The account books of the hospital did not

reflect a loan to Smith until September of 1972, by which

time the auditor for Blue Cross had discovered that the

remodeling costs of Smith’s home had been carried on the

hospital books as reimbursable expenses, and raised this

issue with Arango. Two witnesses, one an accountant with

PSGH who handled accounts receivable, the other an ac-

countant who assisted an independent CPA with auditing

the hospital’s books, both employed between the time the

loan was originally said to have been made and September

1972, testified they were not aware of any loan.

[5,6] The home remodeling costs of appellant were

reflected for a two and one half year period in the general

hospital expenses as reported to Blue Cross. Arango’s

testimony that Smith told him to “segregate” the home

remodeling invoices from the others, four months or so

after the start of the remodeling project, in no way com-

pelled the jury to discount the import of the other evidence.

The government is not to be held accountable for the testi-

mony of each of its witnesses. United States v. Gordon,

5 Cir. 1969, 410 F.2d 1121. It is not necessary that testi-

mony be received “in a vacuum”. See Cohen v. United

States, 5 Cir. 1966, 363 F.2d 321, 327. Loans to other

employees during this time period were properly identified

on the PSGH books. Auditors from the Internal Revenue

Service and Blue Cross were not told of the existence of

any loan to Smith during this entire time period, despite

extensive and almost constant audits, until after they had

independently discovered the irregularity. Members of the

hospital staff “in a position to know” were unaware of a

loan. Forman, a CPA and the hospital’s external auditor,

App. 14

did not know of the existence of a loan, nor did his assist-

ants. The Board of Trustees’ minutes argued by appellant

to show the existence of a loan are not convincing, since

they were proven to be incorrect in several particulars.

Additionally, because of both his position as head of the

hospital, and his family ties, the appellant was in a posi-

tion to control the Board of Trustees.'® From the evidence

presented the jury had an ample basis for concluding that

appellant knew full well that the remodeing expenses for

his home were listed on the hospital’s account books as

general hospital expenses.

The second transaction relied on by the government

as reflecting non-reimbursable costs, those which were not

legitimate hospital expenses, but nonetheless so reported

to Blue Cross, involved the inter-relationship between

Smith, his nephew Gregory Robinson, and International

Computer Sharing, Inc. (ICS). ICS was formed in March

1968, by Aspee Irani, a member of the PSGH Board of

Trustees. In April 1968, PSGH entered into a contract with

ICS to provide it with computer services. At this time

Irani gave away his stock in ICS, but remained for a salary,

in a consultant status. It is doubtful that Irani ever lost

control of ICS. The computers which ICS installed in the

hospital were leased by it from IBM through another Irani

concern, Irani and Associates, a consulting and engineer-

‘The Board of Trustees of PSGH between 1968 and 1971 con-

sisted of the appellant, Oakley Smith, his wife, Patricia Smith; his

nephew, William Robinson; Raymond Woody, who attended no meetings

during the years invo: ed (although often listed as present and partici-

pating) ; Edward Santamaria, who resigned in September 1968, shortly

before the loan is asserted to have been taken out; and lastly Aspee

Irani, a person deeply involved in a second transaction to be discussed

infra.

—

a eee ee ee een as

App. 15

ing firm.'' During the time period in question, the PSGH

account constituted ninety-five percent of ICS’s business.

In the fall of 1968 several events took place, of which

the order was in conflict in the trial testimony. Raynes,

an IBM systems engineer, testified he provided to ICS

and PSGH two computer programs only recently obtained

by IBM. These programs, not yet in the IBM library, and

not then in use within the Miami area, suited the hospital’s

needs. It was at that time IBM’s policy to provide these

programs without charge to concerns which leased their

equipment from IBM. Raynes testified that when he de-

livered the programs to PSGH, the hospital did not have

computer programs to perform the functions of the ones

he delivered.

In October of 1968 ICS began paying Gregory Rob-

inson, nineteen year old nephew of appellant $2,600 per

month for computer programs he allegedly sold to ICS,

two of which performed the same functions as the ones

delivered by Raynes.'? He was paid, in all, $67,000. The

payments were completed in December 1970, six months

into the fiscal year 1971'* which ended June 30, 1971.

The evidence established that the programs Raynes de-

livered and the ones sold by Robinson are one and the

same. Irani testified that the computer programs in ques-

Still another Irani concern, Irani and Castanon, an “architectural

and design” corporation, designed PSGH.

'2The programs in question are an “accounts receivable” program

and a “patient billing” program. There was some testimony that three

programs had been sold ICS by Robinson, but neither the identity, nor

the existence, of the third program was ever established.

13$15,600 or $2,600 per month for six months, is the amount of

money paid to Robinson during the hospital’s fiscal year 1971, and the

amount reflected in the medicare reports.

App. 16

tion were bought from Robinson three or four months

before they were delivered by Raynes from IBM, and that

Robinson stated he had gotten them “from a friend”.

Raynes’ testimony thus conflicts with that of Irani both

as to the time periods involved and as to the order of events.

Appellant testified Robinson had approached him in

September 1968, about selling the programs, and that he

had directed him to Irani of ICS. Irani testified that the

person he had given the ownership of ICS to had instructed

him to check out Robinson’s programs, that he had, and

that he found them to fulfill the hospital’s needs. Irani

delivered checks from ICS, made out to Robinson, to the

front desk at PSGH. Smith often cashed these checks,

frequently endorsing Robinson’s name on them.

It was the government’s contention that not all the

money the hospital paid ICS, reflected on the Medicare

report, was a legitimate hospital expense, because that

money necessarily included the fraudulent ICS—Robinson

transaction.'* The jury had before it ample evidence sup-

porting the correctness of this contention.

The jury heard testimony from which it could conclude

that ICS was paying Robinson for programs acquired free

from IBM through Raynes. Smith was shown to know of

the ICS-Robinson arrangement. In fact he testified that

Robinson approached him about the deal. He personally

cashed Robinson’s checks, so whether or not Robinson

1#The trial judge instructed the jury that this was not a kick back

case:

“T]he Government’s position is that Mr. Smith knew what

the full amount paid to the computer service was not, in fact, for

the computer service for patient care, not that Mr. Smith was get-

ting any money out of that .. .”

App. 17

ultimately received the money, it was clear that Smith

knew the amount involved and was aware of the identity

of the participants. Smith knew also that in excess of 25%

of the amount PSGH paid ICS for computer services

eventually was reflected in the checks to Robinson. Weigh-

ing the surrounding circumstances, the money involved,

the business connections and arrangements of the parties,

the kinship and close financial relationship between Smith

and Robinson, the direct and circumstantial evidence before

the jury warranted a conclusion that Smith knew of the

fraud inherent in the payments to Robinson, and therefore

knew that not all the money paid ICS was a legitimate

expense of the hospital as he knew it was reported to Blue

Cross.

_ The third action by the appellant relied upon by the

government as unlawfully reflected by the medicare cost

reports is a home delivery diaper service received by Smith

and paid for by the hospital from November 1970, through

June 1971. Appellant urges that the diaper service was

intended to be handled as an employee’s fringe benefit. It

was not charged to the fringe benefit account, however,

but was paid for through the commercial linen account, a

cost set forth in the Medicare total operating expenses

form. No other employees had access to a diaper service

as a fringe benefit. These checks, to pay for the service,

were signed by appellant in the manner of all the other

hospital expense checks already mentioned.

Whatever appellant’s original intent, the diaper serv-

ice was not handled as a fringe benefit on the hospital

books. The jury possessed sufficient evidence to determine

that Smith, because of his practice of signing all checks

to keep tight control of hospital costs, knew that the diaper

App. 18

service was being charged to commercial accounts of the

hospital, and that he therefore had knowledge that the

Medicare reports contained false information as to the

diaper service expenses.

(7, 8] It is no defense for appellant to assert, as he

does, that he relied upon the expert advice of his CPA,

Forman, before he signed the Blue Cross forms in ques-

tion. The reliance defense, to be effective, must establish

good faith reliance on an expert coupled with full disclosure

to that expert. Bursten v. United States, 5 Cir. 1968, 395

F.2d 976; United States v. Cox, 6 Cir. 1965, 348 F.2d 294;

United States v. Baldwin, 7 Cir. 1962, 307 F.2d 577, cert.

denied, 1963, 371 U.S. 947, 83 S.Ct. 501, 9 L.Ed.2d 497.

The evidence as to each of these financial transactions suf-

ficed for the jury to find Smith had knowledge that his

personal expenses and those not of the hospital were in-

cluded within the general hospital accounts as transcribed

to the Medicare forms. Claimed negligence on the part of

his CPA in failing to discover these irregularities is irrele-

vant. Smith’s reliance could not be in good faith if he had

knowledge contrary to the conclusions of his CPA. The fact

that material is not intentionally hidden fails to meet the

requirement that it be fully disclosed. The reliance defense

serves the purpose of negating intent to commit an offense.

It will not avail as a means of shifting criminal responsi-

bility.

Il. THE INDICTMENT

[9] We next consider whether the indictment under

which appellant was convicted was deficient in the particu-

lars urged by the appellant. To ensure that an indictment

is legally sufficient, it must allege the essential elements

App. 19

of the offense so as to inform the defendant of the charges

he must meet, and it must be at least specific enough that

a verdict under it will protect the defendant from double

jeopardy. Russell v. United States, 1962, 369 U.S. 749, 763,

82 S.Ct. 1038, 1047, 8 L.Ed.2d 240, 250; United States v.

Mekjian, 5 Cir. 1975, 505 F.2d 1320, 1324.

Count Three of the indictment reads:

That on or about the 21st day of January, 1972, in

the Southern District of Florida,

OAKLEY G. SMITH,

the defendant herein, willfully and knowingly did

make and cause to be made false, ficticious and fraud-

ulent statements and representations as to material

facts in a matter within the jurisdiction of the United

States Departmeut of Health, Education and Welfare,

in that cost reports, Social Security Administration

Forms 1563, 1562, and 1992, for the fiscal year end-

ing June 30, 1971, were submitted to Blue Cross of

Florida, an agent and fiscal intermediary of the

United States Department of Health, Education and

Welfare, wherein OAKLEY G. SMITH stated and

represented that the expenses and costs set forth in

Forms 1563, 1562, and 1992, were costs reimbursable

under Title 18, Social Security Act, as amended, for

the operation of Palm Springs General Hospital, Inc.

of Hialeah, Florida. Whereas, in truth and fact, as he

then well knew, the expenses and costs set forth in

Forms 1563, 1562, and 1992, were not reimbursable

costs but included purchases and expenditures which

App. 20

were false and fraudulently represented to be costs

for the operation of Palm Springs General Hospital,

Inc. of Hialeah, Florida.

All in violation of Title 18, United States Code,

Section 1001.

{10,11} It is not seriously urged by the appellant

that the indictment is so vague that he could be in danger

of further prosecution placing him in double jeopardy. The

indictment alleges the elements of the offense charged.’

Appellant’s argument on this point centers in his conten-

tion that the indictment was so vague that it failed to

inform him of the nature of the charges he must meet in

order properly to prepare a defense. This argument will

not withstand critical analysis in the light of the record.

While the actual offense involved was the promulgation of

the false medicare forms, as properly stated in the indict-

ment, the substantive acts, or underlying frauds, were the

improper expensing of (a) the costs of the house remodel-

'SThe elements necessary to allege a violation of Title 18, U.S.C.,

Section 1001 are:

(1) a false statement (see, e. g., United States v. Kraus, 5 Cir. -

1975, 507 F.2d 113) ;

(2) made “knowingly and willfully” (United States v. Mekjian,

5 Cir. 1975, 505 F.2d 1320; McBride v. United States, 5 Cir.

1955, 225 F.2d 249),

(3) of a material fact (United States v. McGough, 5 Cir. 1975,

510 F.2d 598; Rolland v. United States, 5 Cir. 1953, 200 F.2d

678),

(4) relating to “matter within the jurisdiction of any department

or agency of the United States.” (Bryson v. United States,

1969, 396 U.S, 64, 90 S.Ct. 355, 24 L.Ed.2d 264; United

States v. Bramblett, 1955, 348 U.S. 503, 75 S.Ct. 504, 99 L.Ed.

494).

The latter case contains a helpful history of the development of

Section 1001.

ee ee

stench sm ea, Wp

Sa NN a ides

App. 21

ing, (b) the ICS transaction, and (c) the diaper service,

to general hospital accounts, Appellant, doing little more

than articulating a conclusion, argues that the complexity

of the medicare forms, together with the vagueness of the

indictment, made it impossible for defendant to prepare a

defense. This argument is without merit. “[T]he validity

of an indictment is determined by practical, not technical

considerations”. United States v. Miller, 5 Cir. 1974, 491

F.2d 638, 649, cert. denied, 1975, 419 U.S. 970, 95 S.Ct.

236, 42 L.Ed.2d 186, citing United States ex rei. Harris v.

Illinois, 7 Cir. 1972, 457 F.2d 191, 197, cert. denied, 1972,

409 U.S. 860, 93 S.Ct. 147, 34 L.Ed.2d 106; United States

v. Miranda, 5 Cir. 1974, 494 F.2d 783; Robbins v. United

States, 10 Cir. 1973, 476 F.2d 26, 30; United States v.

Missler, 4 Cir. 1967, 414 F.2d 1293, 1297. The indictment

stated the location of the false statements, and the theory

under which the government would argue them to be false.

More importantly, the defense sought by motion and re-

ceived extensive bills of particulars which detailed the

underlying fraudulent acts already discussed. This was a

typical case requiring identification of the transactions

relied upon to permit the defendant to prepare for trial.

These particulars were supplied by the prosecution. See,

in this connection, Rosen v. United States, 1896, 161 U.S.

29, 16 S.Ct. 434, 40 L.Ed. 606; United States v. Salazar,

2 Cir. 1973, 485 F.2d 1272, cert. denied, 1974, 415 U.S.

985, 94 S.Ct. 1579, 39 L.Ed.2d 882; Hickman v. United

States, 5 Cir. 1969, 406 F.2d 414, cert. denied, 1969, 394

U.S. 960, 89 S.Ct. 1309, 22 L.Ed.2d 561; Van Liew v.

United States, 5 Cir. 1969, 321 F.2d 664. The trial tran-

script demonstrates throughout that the defense was aware

of the nature of the transactions relied upon to prove the

offense alleged.

App. 22

[12] Appellant also argues that there was fatal vari-

ance between the allegations and the proof in this case. He

argues that the supplemental bill of particulars, requested

by the defense prior to trial, identifying the ICS transac-

tion as appearing on Social Security Administration form

1562, schedule A, line 1, column 2, varied from the proof.

Not so. Schedule A, line 1, column 2, is the place for show-

ing direct expenses of the hospital, other than salary, as

shown in the hospital’s books. In the report filed, this

amount was shown as $1,394,245. Appellant urges that

even if the $1,394,245 figure is inclusive of the fraudulent

transactions, it is correct because it accurately reflects the

books, and the false statement would appear in a later

“adjustment” column. This is specious. The figure purports

to be hospital expenses. The amount falsely included is not

a hospital’s expense, even though shown in the hospital’s

books as such, In other words, appellant’s personal build-

ing costs and diaper service expense as well as the ICS

transaction were incorrectly shown as expense on the hos-

pital’s books. They were therefore necessarily incorrectly

represented in the total figure of $1,394,245. The figure

was indeed false, as the supplemental bi!l of particulars

asserted.

The thrust of the indictment and the bills of particu-

lars was that “purchases and expenditures that were false

and fraudulently represented to be costs for the operation

of {the hospital]” were included in the Medicare forms.

Appellant, because of the many figures and the complexity

of the forms argues he could not know which if any of the

figures was false. He does not argue in this respect that

the forms were correct, just that he could not know where

they were wrong. He labors here under a misapprehension.

It is not necessary that Smith have known which line was

ey ee ee

eee A eR al

App. 23

incorrect when he approved the forms, nor that he be able

to properly fill out the forms himself. He is not charged

with a mistake, but with an intentional act. It suffices that

he understood the forms necessarily to include expenses

which were not those of the hospital, and that a percentage

of the amount claimed would be reimbursed erroneously to

the hospital from HEW. This is what the indictment and

the bills of particulars alleged, and what the government

proof showed.

III. DUE PROCESS VIOLATION IN ,

PROSECUTION UNDER

SECTION 1001

[13,14] Appellant next contends that the govern-

ment was required to prosecute Smith’s offense under Title

42, U.S.C. Section 408(c),'° a misdemeanor statute rather

than under the false statement statute, Title 18, U.S.C.

Section 1001, for a felony. It is established in the juris-

prudence of this Circuit that, in a situation of overlapping

offenses, prosecution may be brought under either statute

at the discretion of the prosecution. United States v. Chak-

makis, 5 Cir. 1971, 449 F.2d 315, 316. The inter-relation-

ship of the identical statutes here in question was con-

sidered in Chakmakis. A doctor had been convicted of

violating Title 18, Section 1001, for filing fraudulent ap-

plications for payment under provisions of the Social

Security Act. He argued on appeal that he should have

been charged under the more recently enacted misdemeanor

provision, Title 42, U.S.C. Section 408(c). We stated:

The Social Security Act, Title 42, U.S.C., Section 408 provides

Whoever—(c) at any time makes or causes to be made any false

statement or representation of a material fact for use in determin-

ing rights to payment under this subchapter; . . . shall be guilty

of a misdemeanor .. .

App. 24

“(I]t is quite clear that the enactment of the later

section di' not repeal the former and that the facts

of the all zed offense fell within the terms of either

statute. .Ience, the prosecution could have been

brought under either, at the discretion of the prosecu-

tor. Bartlett v. United States, 10 Cir., 1948, 166 F.2d

920, 926; Hopkins v. United States, 9 Cir., 1969, 414

F.2d 464; Ehrlich v. United States, 5 Cir., 1956, 238

F.2d 481, 485; United States v. Cox, 5 Cir., 1965, 342

F.2d 167, 171, cert. denied [sub nom.] Cox v. Hau-

berg, 381 U.S. 935, 85 S.Ct. 1767, 14 L.Ed.2d 700.”

Ibid. at 316.

Accord, United States v. Fournier, 5 Cir. 1973, 483 F.2d

68; United States v. Brown, 9 Cir. 1973, 482 F.2d 1359,

1360. Binding precedent puts an end to this claim of error.

IV. COMPOSITION OF THE GRAND JURY

[15] The grand jury which indicted appellant had

been drawn from a jury wheel filled in December 1968."’

'7The jury plan for the Southern District of Florida, promulgated

pursuant to the Jury Selection Act of 1968, Title 28, U.S.C., Section

1861 et seq., was for the wheel of the district to be emptied and refilled

from the list of registered voters at specified five year intervals. The

jury which indicted appellant was empaneled in April, 1973, four years

and four months into the five year plan. The Jury Selection Act was

amended in April, 1972, to provide that jury wheels must be emptied

and refilled at intervals of not more than four years, and that a new

wheel must be made up by Sept. 1, 1973. Provision was made, however,

that:

“(b) Nothing in this Act shall affect the composition or preclude

the service of any jury empaneled on or before the date on which

the qualified jury wheel from which the jurors’ names were drawn

is refilled in compliance with the provisions of section 3 [28 U.S.C.

§ 1863].”

The indicting grand jury was thus empaneled according to the

applicable provisions of the Jury Selection Act, and its composition was

statutorily valid.

Nee ee

App. 25

At the time of the indictment of Smith, the wheel was four

years four months old. Appellant argues that the young

and the Cuban Americans of the Miami, Florida, area were

unconstitutionally excluded from the grand jury which

indicted him, requiring a reversa! of his conviction. Again,

binding precedent of this Circuit is to the contrary. We

have recently had occasion to consider this same argument,

and have found no substance in similar attacks on similarly

constituted grand juries. United States v. Gooding, 5 Cir.

1973, 473 F.2d 425; United States v. Hill, 5 Cir. 1974, 500

F.2d 733. “The defendant complains that the failure to add

to the master jury wheel the names of newly registered

voters since 1968 or 1969 occasioned the systematic exclu-

sion of certain ‘cognizable groups,’ namely young adults

between the ages of 21 and 25 years and newly arrived

Latin Americans. This argument falls short under previous

decisions of this Court. [citations omitted].” Hill, supra,

at 738. The Hill court found further support for its deci-

sion in Hamling v. United States, 1974, 418 U.S. 87, 94

S.Ct. 2887, 41 L.Ed.2d 590, There, faced with the argu-

ment that the young had been excluded from the grand

jury which had indicted Hamling because of a four year

period between the filling of a jury wheel and the subse-

quent empaneling of the indicting grand jury, the Supreme

Court stated:

‘| U|nless we were to require the daily refilling of the

jury wheel, Congress may necessarily conclude that

some periodic delay in updating the wheel is reason-

able to permit the orderly administration of justice.

[Citing as examples United States v. Pentado, 5 Cir.

1972, 463 F.2d 355, (three year delay) ; United States

v. Gooding, 5 Cir. 1973, 473 F.2d 425, (three year four

month delay), and United States v. Kuhn,.5 Cir. 1971,

App. 26 °

441 F.2d 179, (five year delay).] Invariably of course,

as time goes on, the jury wheel will be more and more

out of date, especially near the end of the statutorily

prescribed time period for updating the wheel. But if

the jury wheel is not discriminatory when completely

updated at the time of each refilling, a prohibited

‘purposeful discrimination’ does not arise near the end

of the period simply because the young and other per-

sons have belatedly become eligible for jury service by

becoming registered voters. Whitus v. Georgia, 385

U.S. 545, 551, 87 S.Ct. 643, 647, 17 L.Ed.2d 599

(1967) ; see Avery v. Georgia, 345 U.S. 559, 73 S.Ct.

891, 97 L.Ed. 1244 (1953); Alexander v. Louisiana,

405 U.S. 625, 92 S.Ct. 1221, 31 L.Ed.2d 536 (1972).”

418 U.S. at 138, 94 S.Ct. at 2918, 41 L.Ed.2d at 632. Al-

though Hamling involved solely the question of exclusion

of the young, two of the three Fifth Circuit cases cited by

the Court dealt not only with the young, but also with

Cuban American citizens being excluded from jury service

by virtue of the age of the jury wheel. See United States v.

Pentado, 5 Cir. 1972, 463 F.2d 355, and United States v.

Gooding, 5 Cir. 1973, 473 F.2d 425. There is here no basis

for the allegation that the jury wheel was unconstitution-

ally constituted.

Appellant relies on United States v. deAlba Conrado,

5 Cir. 1973, 481 F.2d 1266, in which this Court remanded

for hearing to determine if a cognizable ethnic group, Latin

Americans, was systematically excluded from the chal-

lenged jury. deAlba Conrado is inapposite since it involved

consideration of the procedures under which petit juries

were selected from a jury list. The challenge was not ad-

dressed to the list, nor to the names in the wheel, but to

App. 27

the method by which juries were selected from it. Smith’s

challenge here is to the names in the wheel itself. Hill,

Gooding and Pentado, supra, completely foreclose such an

attack.

V. INCONSISTENCY OF THE VERDICT

[16] Appellant also argues that his acquittal on

eight charges, and particularly the two prior Section 1001

counts (Counts One and Two) of the indictment is so in-

consistent with his conviction on the remaining Section

1001 count, Count Three, as to require reversal. This at-

tack is without legal foundation. No explanation is re-

quired, but if one were needed, a plausible explanation for

this claimed inconsistency is that conviction under Section

1001 requires the willful communication of false informa-

tion to the government, and that the jury did not impute

this knowledge to Smith as to the earlier Section 1001

counts, the proof being based—as it was—on a pattern of

irregular acts. Such speculation must remain academic in

any event. Consistency in a verdict has never been a re-

quirement for a conviction in courts of the United States.

Dunn v. United States, 1932, 284 U.S. 390, 52 S.Ct. 189,

76 L.Ed. 356. See also, Hamling v. United States, 1974,

418 U.S. 87, 94 S.Ct. 2887, 41 L.Ed.2d 590. This rule has

been often applied by our prior decisions. See, e. g., United

States v. Guajardo, 5 Cir. 1975, 508 F.2d 1093, 1096;

United States v. Kohlmann, 5 Cir. 1974, 491 F.2d 1250,

1253; United States v. Cantu, 5 Cir. 1972, 469 F.2d 679,

680."

18As to the continued validity of Dunn, despite some criticism of

the reasoning therein of Mr. Justice Holmes, see United States v. Greene,

7 Cir. 1974, 497 F.2d 1968, 1085-86.

App. 28

VI. DISCRIMINATORY PROSECUTION?

[17,18] Finally appellant urges us to hold that he

was the subject of an illegally discriminatory prosecution.

We find no support in the record for this charge. The basis

of appellant’s prosecution was an intentional criminal act

of filing a knowingly false statement. Medicare form mis-

takes, which, as the appellant contends, the evidence showed

to be commonly made by other hospitals, are not, without

more, criminal acts. Moreover, the decision of whether or

not to prosecute in any given instance must be left to the

discretion of the prosecutor. S.:nith v. United States, 5 Cir.

1967, 375 F.2d 243, 247, cert. denied, 1967, 389 U.S. 841,

88 S.Ct. 76, 19 L.Ed.2d 106; United States v. Cox, 5 Cir.

1965, 342 F.2d 167, 171, cert. denied, 1965 sub nom., Cox

v. Hauberg, 381 U.S. 935, 85 S.Ct. 1767, 14 L.Ed.2d 700.

This discretion has been curbed by the judiciary only in

those instances where impermissible motives may be at-

tributed to the prosecution, such as bad faith, race, religion,

or a desire to prevent the exercise of the defendant’s con-

stitutional rights. United States v. Berrios, 2 Cir. 1974,

501 F.2d 1207, 1211. See, United States v. Oaks, 9 Cir.

1975, 508 F.2d 1403; United States v. Swanson, 8 Cir.

1975, 509 F.2d 1205. No such motive has been shown in

this case.

App. 29

VII. CONCLUSION

We find Oakley Smith to have been properly indicted

for a violation of Title 18, U.S.C. Section 1001, by a validly

constituted grand jury. He received a fair trial at which

sufficient evidence was presented to warrant the jury’s

lawfully returning its verdict of guilty as to Count Three

of the indictment. The verdicts rendered were not revers-

ibly inconsistent. The appellant presented no evidence that

he was the target of “invidious” prosecutorial discrimina-

tion. The conviction is in all respects

Affirmed.

App. 30

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

October Term, 1974

No. 74-2343

D. C. Docket No. 73-714-CR-JE

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

versus

OAKLEY G. SMITH,

Defendant-Appellant.

Appeal from the United States District Court for the

Southern District of Florida

Before BELL, DYER and SIMPSON, Circuit Judges.

JUDGMENT

This cause came on to be heard on the transcript of

the record from the United States District Court for the

Southern District of Florida, and was argued by counsel;

ON CONSIDERATION WHEREOF, It is now here

ordered and adjudged by this Court that the judgment of

the said District Court in this cause be, and the same is

hereby, affirmed.

November 17, 1975

Issued as Mandate:

App. 31

1 CCH—MEDICARE AND MEDICAID GUIDE

[7 6490] SSA-1562 Schedule A—Reclassification of Trial

Balance of Expenses (Prov. Reimb. Man., Part

I, § 2322.2) -

This schedule provides for listing the trial balance of

direct expenses as shown by the hospital’s general books

as follows:

A. Column 1, Salaries

B. Column 2, Other Expenses

C. Column 3, Total Expenses

D. Column 4 provides for the reclassification of data

appearing in Columns 1, 2 and 8 for the purpose of effect-

ing proper cost distribution. Schedules A-1, A-2, A-3 and

A-4 support such reclassifications.

E. Column 5 reflects adjustments to expenses made

on Schedule A-6.

F. Column 6 represents the adjusted expenses to be

entered on Worksheet B and apportioned to the patient

care cost centers involved, For periods before July 1, 1969,

enter on line 35 the 2 percent allowance as computed on

form SSA-1563A. This allowance should be combined with

administrative and general expense upon transfer to Work-

sheet B. See § 2822.19 [1 6565] and §§ 1100ff. [5729 et

seq.] for further instructions.

When salaries (Column 1) are used as the base for

distributing costs on Worksheet B, such salaries should

reflect the reclassifications made on Schedule A-1 through

Schedule A-4.

App. 32

United States Court of Appeals,

Fifth Circuit.

No. 74-2343.

UNITED STATES of America,

Plaintiff-Appellee,

Oakley G. SMITH,

Defendant-Appellant.

Feb. 13, 1976.

Appeal from the United States District Court for the

Southern District of Florida, Joe Eaton, Judge.

ON PETITION FOR REHEARING AND

PETITION FOR REHEARING EN BANC

(Opinion November 17, 1975, 5 Cir.

1975, 523 F.2d 771)

Before BELL, DYER and SIMPSON, Circuit Judges.

PER CURIAM:

While not affecting our holding in any way, the fol-

lowing corrections are made in our original opinion, 523

F.2d 771, in the interest of accuracy:

(a) The words “75 days” are substituted in lieu of

the language “six months’, line 2, note 3, page

773 of 523 F.2d.

App. 33

(b) The second and third complete sentences, lines

4-10, page 780 of 523 F.2d, reading:

“In other words, appellant’s personal building

costs and diaper service expense as well as the

ICS transaction were incorrectly shown as ex-

pense on the hospital’s books. They were therefore

necessarily incorrectly represented in the total

figure of $1,394,245.”

are withdrawn and the following language is sub-

stituted therefor:

“In other words, the ICS transaction was incor-

rectly shown as expense on the hospital’s books.

It was therefore necessarily incorrectly repre-

sented in the total figure of $1,394,245.”

Our original opinion, 523 F.2d 771, is in all other

respects adhered to.

The Petition for Rehearing is denied and no member

of this panel nor Judge in regular active service on the

Court having requested that the Court be polled on rehear-

ing en banc, (Rule 35 Federal Rules of Appellate Proce-

dure; Local Fifth Circuit Rule 12) the Petition for Rehear-

ing En Banc is denied.

App. 35

PROVIDER NO.

10-0050

RECLASSIFICATION OF TRIAL BALANCE OF EXPENSES

Penis27—-]-70

thru 6-30-71

Schedule $

: TRIAL BALANCE RE- ADJUSTMENTS '

| TRIAL BALANCE OF DIRECT EXPENSES wer —— etn gaa St yaa :

a — SALAPICS OTHER TOTAL : “erat , thee Sch 4.5) ented sammemtd

‘ 1 3 5 6

‘ 1 ‘Adtiristratien and General $ 312 ,.c99 7 7. 394 245 5 1Q7 | 5410 hT TRE $ ( 352.88 De 242

it 2 Emnicvee Health & Felfare Bene. nee $73

3: Disrary — Raw Foed —-183, 771 183, 771) a ree 394 165,394 7

4 ISie-acy = Other Eupease 133,433 34,028 Tt _ _ 167,461 167.46} }_167,4617°

- 4 phess@reria 41,310 5 ,925 2] WxXEY 61 TI ( 45, 61 2 ST. 4 -Q-

CUHiesekeeping 117,638 35.376 | 153,0147 153,014 153,0147_

7 phteecry and Liven ap s 68 , 602 68,602 4 68 602 68 602 T

S .*ti:nrenance of Personnel }

Fi Speration ef Piom 87,361 204,048 291,409 +|_291,409 | \6,825)]| 284, 5847

1G ‘“fartiesanace of Flane \ | ;

S) iNarsing Service 821.513 | 68,912 890,425 14. 890,425 | 890, 4257!)

t2 »Nassing Scnool i

13 “fec:ca!-Surgical Exrense ‘ Ce

P 14 ‘intern-Residen: Service 78,239 10. Q 49 g 8 25o5 88.288 88.2007

. 15 'Oxveen Theracy 39 453 18 3 963 58 +28 8.446 / 5 2. HT

*¢ **sdien. Susslies and Excease 37,3 373 | 75, WOKE 113,1 i3, 158 ( as eh) at ») 109-483

mee 31,426 162,438 213,8645 213,864 | 28)7}_ 205,7367 ,

» iS “ecicai Recerds 34.121 { 10,303 G4 484rT 4G 484 ( 4 395)T 40,0897 “4

. 19 ‘Social Sseviee |

2¢ “Ore:ating Rooms 159,845 64,459 224, 304T 224,304 _$S 304 T_

21 Delivery Rooms 1

ees 20,186 18.856 29,0427 29,042 "29,0427

eer 115.571 106.711 222-2982 222.282 222282

$l Latersters 145,229 - 182. 3. 329 | 327,5587' 327,558 327,558

Binod Pank 22,408 | 22 408 7% 22 408 22,408 }

26 (AxrnkCaerdiology Winz 169 ,093 20.936, 190,029 74) 190,029 190,029 x)

2 Prisca! Thess9y 35.653 [3.559 39.212 T 39212 39-2127

~ : zr Service |

>) Execeency Service 43,556 11,735 55,2911 55,291 55,2917

3} Ce>: ecraticn—Buildings, ete. . 148 , 047 7 148 ,047 » A

82 -Derreciarion—Mosable Ecuieme as 7 = : - 96. ah l- 96.851 96.861 7°

33 tnterest Expense | -Q- -

eS Expenses ¢2,403.999. $2, 526" 7837 33, 7302836 — WTS 407 6. $s ( 274,572) $4,956 .264%_;

3$ 12% Ailowance (Column 6) (A) eet ty x hen ih: I prrcorroregs Mein ae es Pachee . oi Spee ws.9.-1% -U-

“Sr I Toss! Sion Baprases | Seeger geee ea aaa rg Sere 18 4,956,204:

*NOTE: Treasfe: the amounts os lines 1 threuch 36. Column 6, above, to Colums 1, Torksreer B.

‘i hospital practice provides for comSining certain of the abeve amounts this will be acceptable. The prevailing b2sis for allocatien fo: + center in which combined should Se used.

rote SSA.}=°% ‘9-901 (A. Show

temptation on Form SSA-15G3A

ee oe ere Gen

fee een Cae wo a ye ey

App. 37

EXCERPT FROM NEWSWEEK,

DECEMBER 1, 1975

JUSTICE

HOW TO GET YOUR MAN

Though law-enforcement officials have labored for

decades to break the power of organized-crime syndicates

in the U.S., the results for the most part have been dis-

appointing. The criminals corrupt judges, bribe policemen

and terrorize or kill hostile witnesses. Perhaps even more

important is the ease with which they can hire the most

expensive legal talent to take full advantage of every loop-

hole the laws allow to elude prosecution.

But in the past few years, fueled in part by funds

from the Law Enforcement Assistance Administration

created by Congress in 1968, Federal, state and local prose-

cutors have been organizing special task forces to combat

the estimated $60 billion-a-year business that organized

crime represents. In the process, the prosecutors have come

up with a host of interesting techniques, stratagems and

legal maneuvers designed to see that they derive at least

as much advantage from legal loopholes as the criminals

do. In brief, what the prosecutors have done is decide that

if they cannot convict a major crime figure of murder, say,

or extortion, the next best thing to do with him is try to

convict him of perjury, bribery or some lesser offense—

much as mobster-murderer Al Capone was finally sent to

prison for income-tax evasion 44 years ago.

Inevitably, certain of the prosecutors’ current prac-

tices have caused concern among some civil libertarians.

In two jurisdictions, judges have recently lashed out at the

App. 38

prosecutors for exceeding their authority. Nevertheless,

most of the lawmen are persuaded that their new action-

in-concert is paying off. Last December, 46 state and local

prosecutors met in Houston, Texas, for an “Advanced

Organized Crime Seminar,” sponsored by the National

College of District Attorneys and paid for by the LEAA.

Newsweek has obtained a transcript of their discussions,

which affords a candid and revealing view of how effec-

tively they seem to have been able to turn the laws to their

own advantage.

Terrorism: Justice Department tax expert James H.

Jeffries III, for example, recommended trapping gangsters

with a “paper chain” of arcane Federal statutes. “The

Federal system,” Jeffries said, “is a veritable Christmas

shopping catalog of bad things to do to bad people.”’ Robert

Ozer, the flamboyant chief of the U.S. Organized Crime

Strike Force in Detroit, spoke enthusiastically of “investi-

gation by terrorism.” He meant, among other things,

swamping crime figures with subpoenas. Baltimore Judge

Charles E. Moylan Jr. talked on the often misunderstood

subject of grand juries. Strict evidentiary rules do not

apply to grand-jury testimony, and jurors can be as hostile

as they please. “The prosecutor,” said Moylan with a touch

of hyperbole, ‘can violate or burn the Bill of Rights seven

days out of seven and bring the fruits of unconstitutional

activity to a grand jury. No court in the country has the

power to look behind what the grand jury considers or why

it acts as it does.”

The use of the grand jury for harassment was a favo-

rite weapon of the Johnson and Nixon administrations

against antiwar protestors and other radicals. By granting

immunity to a particular witness, thus stripping him of his

i en ee ee ee

App. 39

privilege against self-incrimination, a prosecutor can force

the witness to talk about other people—or face a contempt

citation. “In the hands of a competent prosecutor, there

are few better tools,” said New Jersey lawyer and former

prosecutor Martin G. Holleran. “. . . Through what other

means can you put hoodlums and gangsters into prison

without convicting them of a crime? Think of that.”

To illustrate, Holleran cited the case of a man he de-

scribed as “the chief mobster in New Jersey.” (The name

is deleted from the transcript, but he clearly meant Gerardo

Catena, reputed boss of the Jersey branch of the Genovese

crime family.) Brought before a state investigation com-

mission, Catena refused to answer a single question, or

give his name and address, (“I know where he lives,” Hol-

leran noted. “He lives around the corner from me.”) For

refusing to testify, Catena was cited for civil contempt

and jailed for five years. He was finally released last

August when the New Jersey Supreme Court ruled that

Catena’s confinement had lost its “coercive” power.

Most of the prosecutors agreed that their best single

weapon is the wiretap—‘there is no device as good,” said

Michael Marcus, a Los Angeles deputy district attorney.

Marcus conceded that the public was skittish about the

invasion of privacy inherent in wiretaps. But he also re-

minded his audience that lawmen have harsher legal weap-

ons available. “It is our responsibility,” Marcus said, “to

inform the public that we now have the right to delve

deeper into an individual’s personal life through a search

warrant than can be done through a wiretap.”

Taps: The speakers were at considerable pains to

emphasize how meticulous prosecutors must be in their use

App. 40

of taps—identifying precisely each circumstance and each

individual to be spied on when obtaining a court’s permis-

sion. But they also recommended shopping for amenable

judges. One lecturer said that the U.S. Second Circuit,

based in New York, “appears to be the most liberal circuit

in terms of allowing questionable or potentially excessive

eavesdropping practices.” Clifford Fishman, a New York

State narcotics prosecutor, advised how to co-opt judges.

“If you can convince your judge to become a member of

the investigative team,” said Fishman, “if you can invite

him down to the plant... then essentially you have gotten

his approval of everything you are doing.”

As it proceeded, the seminar offered prosecutors a

kind of “Dear Abby” list of solutions to their problems.

Problem: Courts will not let you use wiretaps. Solu-

tion: Use “pen registers,” devices attached to a telephone

line that do not intercept messages but do identify the

number being called. Or, bug prisoners’ cells. Or, place a

public telephone in the prisoners’ area of a jail and have

police officers stroll by to eavesdrop. Some jurisdictions

specifically permit the monitoring of prisoners’ phone calls

and conversations.

Problem: Police undercover cars, often Chevrolets

with an antenna, are easily spotted. Solution: Confiscate

flashily decorated Thunderbirds or Cadillacs captured from

drug pushers—the sort popularly known as “pimpmobiles”

—and use those in the inner city.

Problem: Men in hock to criminal loan sharks are

afraid to tell the police. Solution: Advertise in the women’s

pages of newspapers. Women will call in about their hus-

bands’ problems.

‘ned

po re

App. 41

Problem: Some local policemen are known to be in

the pay of criminals and cannot be trusted. Solution: Keep

them in the dark until they are needed to make arrests. In

New Jersey, a special anti-crime unit called in local police

at 7:30 a.m. for a raid that was not actually scheduled

unti! 3 p.m. The police were kept locked up in an armory,

without even access to a telephone, which could be used to

tip off criminals. Breakfast and lunch were brought in,

the caterers were locked up. The raid went off smoothly

and netted 58 arrests and an estimated $180,000 in cash.

It is known as “the catered raid.”

However difficult the prosecutors’ lot, judges some-

times find their methods too much to stomach. In Detroit

recently, strike-force chief Ozer, who successfully prose-

cuted former Michigan Governor and state Supreme Court

Justice John Swainson, heard some harsh words from U.S.

Judge Fred Kaess. “You don’t run the courts or the grand

jury,” Kaess barked in open court. “You work for them.”

The chief complaint against organized-crime units

seems to be that they are able legally to do almost anything

they want—to whomever they select as a target. Some offi-

cials of the National College of District Attorneys, dis-

turbed by this thought, are dubious about their continued

sponsorship of the crime seminars. But they also recognize

that fighting organized crime requires extraordinary meth-

ods. The question they now are asking themselves is

whether the results they are getting justify the means.

—JERROLD K. FOOTLICK with JON LOWELL in

Detroit and ANTHONY MARRO in WASHINGTON

App. 42

[R. 314]

UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT

OF FLORIDA

No. 73-714-CR-JE

UNITED STATES OF AMERICA

Plaintiff,

VS.

OAKLEY G. SMITH,

Defendant.

AFFIDAVIT OF JAMES KAUFMAN

STATE OF FLORIDA )

) SS

COUNTY OF DADE )

BEFORE ME, the undersigned authority personally

appeared JAMES KAUFMAN, who after being duly sworn

deposed and said as follows:

1. My name is James Kaufman. I am a certified

public accountant licensed by the State of Florida. My pro-

fessional qualifications and experience are set forth at

length in the trial transcript in the captioned case.

2. This affidavit was prepared for my signature by

Mr. Paul Siegel, of the firm of Sinclair, Louis & Siegel.

Mr. Siegel informed me that the purpose of this affidavit

is to try to assist the federal court in understanding some

App. 43

of the intricacies in filling out an SSA Form 1562, and

that the affidavit would be given to the Honorable Joe

Eaton, United States District Judge, at or prior to a hear-

ing in the Oakley G. Smith case scheduled for 15 April

1974.

3. Mr. Siegel asked me to assume, for the purpose

of this affidavit, that the following facts are true, although

he stated that the defendant did not necessarily admit the

truth of any or all of these facts:

a. That during fiscal 1971 Palm Springs General

Hospital paid amounts varying from $10,739.06 to

$15,739.06 per month to International Computer Shar-

ing, Inc., and these payments are shown on the hospi-

tal’s books.

b. That during the period between 1 July 1970

and 30 June 1971, International Computer Sharing,

Inc. [R. 315] paid to Gregory Robinson the sum of

$13,000 in the form of five monthly checks for $2,600

a piece. Mr. Robinson is the nephew of the defendant

Oakley G. Smith.

ec. That Mr. Robinson performed no services or

gave nothing of value to International Computer Shar-

ing, Inc. in exchange for this money.

d. As defined in the Medicare Regulations, Inter-

national Computer Sharing, Inc. is an organization

related to Palm Springs General Hospital, Inc. of

Hialeah.

App. 44

4. Using the foregoing assumptions, Mr. Siegel re-

quested that I carefully examine each of the following

statements for accuracy, and I find each to be accurate:

a. On Schedule A of its form 1562, under the sec-

tion “trial balance of direct expenses”, columns 1, 2,

and 3, the hospital was required to put down the costs

reflected on its books, whether or not these costs were

related to patient care or reimbursable under the

medicare program.

b. The hospital was required to put down in the

first three columns of Schedule A on form 1562 the

amounts of money paid by it to International Com-

puter Sharing, Inc., even if some of these costs were

not related to patient care and this fact was known

to the hospital officials. Specifically, even if the hos-

pital officials who prepared and caused to be submit-

ted the form 1562 knew that $13,000 was paid by

International Computer Sharing, Inc. to Gregory Rob-

inson for no services, it was proper to include the

amounts actually paid by the hospital to International

Computer Sharing, Inc. in columns 1, 2, and 3.

c. Adjustments to the trial balance of direct ex-

penses on Schedule A of form 1562 are made in col-

umns 5 and 6 in order to remove from the costs set

forth in the first three columns any not related to

patient care or otherwise not reimbursable under med-

icare. Assuming that International Computer Sharing,

Inc. is a related organization, adjustments should have

been included on Schedule A-5 and columns 5 and 6

of Schedule A in order to remove the profit of Inter-

national Computer Sharing, Inc.

App. 45

d. If the $13,000 was paid by International Com-

puter Sharing. Inc. to Gregory Robinson in fiscal 1971,

that sum would properly be included under [R. 316]

administration and general on Schedule A column 2

of form 1562 where the sum of $1,394,245 is set forth,

but should have been the subject of an adjusting entry

on Schedule A-5 and columns 5 and 6 of Schedule A

in order to remove it from the net expenses for cost

apportionment.

FURTHER AFFIANT SAYETH NOT.

/s/ James Kaufman

James Kaufman

SWORN TO AND SUBSCRIBED before me this 15th

day of April 1974.

/s/ Elizabeth Lorenzo Infante

Notary Public, State of Florida

at Large

My Commission Expires Mar. 30, 1976.

Bonded Thru General Insurance Underwriters.

App. 46

[R. 317]

[TITLE OMITTED]

AFFIDAVIT OF RONALD ZUPA

[Filed April 29, 1974]

STATE OF FLORIDA )

) SS

COUNTY OF DADE )

BEFORE ME, the undersigned authority personally

appeared RONALD ZUPA, who after being duly sworn

deposed and said as follows:

1. My name is Ronald Zupa. I am a Senior Staff

Auditor with Kaufman & Rossin, Certified Public Account-

ants. In my prior employment with Touche-Ross & Com-

pany I had extensive hospital auditing experience, specifi-

cally auditing Cedars of Lebanon Hospital, Palmetto Gen-

eral, James Archer Smith Hospital. I also had two years of

experience auditing hospitals for a medicare subcontractor.

I have had extensive involvement with the preparation and

a aereview of SSA Forms 1562.

2. This affidavit was prepared for my signature by

Mr. Paul Siegel, of the firm of Sinclair, Louis & Siegel.

Mr. Siegel informed me that the purpose of this affidavit

is to try to assist the federal court in understanding some

of the intricacies in filling out an SSA Form 1562, and

that the affidavit would be given to the Honorable Joe

Eaton, United States District Judge, at or prior to a hear-

ing in the Oakley G. Smith case scheduled for 15 April

1974.

App. 47

3. Mr. Siege! asked me to assume, for the purpose of

this affidavit, that the following facts are true, although

he stated that the defendant did not necessarily admit the

truth of any or all of these facts:

a. That during fiscal 1971 Palm Springs General

Hospital paid amounts varying from $10,739.06 to

$15,739.06 per month to International Computer Shar-

ing, Inc., and these payments are shown on the hospi-

tal’s books.

[R. 318] b. That during the period between 1 July 1970

and 30 June 1971, International Computer Sharing,

Ine. paid to Gregory Robinson the sum of $13,000 in

the form of five monthly checks for $2,600 a piece. Mr.

——- is the nephew of the defendant Oakley G.

mith.

c. That Mr. Robinson performed no services or

gave nothing of value to Internationa] Computer Shar-

ing, Ine. in exchange for this money.

d. As defined in the Medicare Regulations, Inter-

national Computer Sharing, Ine is an organization

related to Palm Springs General Hospital, Inc. of

Hialeah.

4. Using the foregoing assumptions, Mr. Siegel re-

quested that I carefully examine each of the following

statemerits for aceuracy, and I find each to be aceurate:

a. Om Schedule A of its form 1562, under the sec-

tion “trial balance of direet expenses”, columns 1, 2,

ame 3, the hospital was required to put down the costs

App. 48

reflected on its books, whether or not these costs were

related to patient care or reimbursable under the medi-

care program.

b. The hospital was required to put down in the

first three columns of Schedule A on form 1562 the

amounts of money paid by it to International Com-

puter Sharing, Inc., even if some of these costs were

not related to patient care and this fact was known

to the hospital! officials. Specifically, even if the hospi-

tal officials who prepared and caused to be submitted

the form 1562 knew that $13,000 was paid by Inter-

national Computer Sharing, Inc. to Gregory Robinson

for no services, it was proper to include the amounts

actually paid by the hospital to International Com-

puter Sharing, Inc. in columns 1, 2, and 3.

ce. Adjustments to the trial balance of direct ex-

penses on Schedule A of form 1562 are made in col-

umns 5 and 6 in order to remove from the costs set

forth in the first three columns any not related to

patient care or otherwise not reimbursable under medi-

care. Assuming that International Computer Sharing,

Inc. is a related organization, adjustments should have

been included on Schedule A-5 and columns 5 and 6

of Schedule A in order to remove the profit of Inter-

national Computer Sharing, Inc.

[R.319] d. If the $13,000 was paid by International

Computer Sharing, Inc. to Gregory Robinson in fiscal

1971, that sum would properly be included under ad-

ministration and general on Schedule A column 2 of

form 1562 where the sum of $1,394,245 is set forth,

but should have been the subject of an adjusting entry

App. 49

on Schedule A-5 and columns 5 and 6 of Schedule A

in order to remove it from the net expenses for cost

apportionment.

FURTHER AFFIANT SAYETH NOT.

/s/ Ronald Zupa

RONALD ZUPA |

SWORN TO AND SUBSCRIBED before me this 15

day of April 1974.

/s/ Elizabeth Lorenzo Infante

Notary Public, State of Florida _

at Large

My Commission Expires: March 30, 1976.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.