By Terrie Morgan-Besecker (Staff Writer)
A Scranton physician indicted on charges he conspired with his wife to illegally structure bank withdrawals is suffering from terminal cancer and did not do anything to warrant action taken by prosecutors, the couple’s attorney said Wednesday.
Attorney Christopher Powell said Dr. Leroy Pelicci and his wife, Ann, legally earned the $431,500 at issue. He blasted the U.S. attorney’s office for seeking the indictment, saying it’s the first time he’s aware federal prosecutors ever took such an action without evidence the funds involved were tied to another crime.
“This is not usually a standalone crime. â¦ There are 152 reported cases. In every one of those, the charges were connected to some other crime,” he said. “All the money was legally earned . . . A dying man ought to be able to do what he wants with money that he’s earned.”
The indictment alleges Dr. Pelicci, owner of the Pelicci Pain Center in Scranton, and his wife made 49 separate withdrawals, most of which were for $9,000, from January to July 2012 so they could evade regulations that require banks to report any transaction of $10,000 or more to the Internal Revenue Service.
Such transactions are illegal under a federal statute that’s designed to protect against money laundering, a crime that involves transferring illegally earned money to make it appear as though it was legitimately earned.
The indictment says the couple made the structured withdrawals after they were advised in May 2011 that the pain center’s billing records were “under review’ by state agencies. It does not identify the agencies or detail the nature of the review.
Mr. Powell denied there is any active investigation into the pain center. He said the center’s billing practices were questioned in the early 1990s by Blue Cross/Blue Shield, which disputed the diagnostic codes Dr. Pelicci used for certain services. That led to an “attempt” at a criminal investigation, but nothing ever came out of that probe.
“It was an internal investigation by Blue Cross/Blue Shield, who challenged the doctor on the codes,” Mr. Powell said. “It never went anywhere. â¦ The codes are subject to interpretation.”
Mr. Powell said the money in question was transferred from a single mutual fund account into several banks accounts. The couple made the series of withdrawals because they wanted to have cash on hand, in part because of Dr. Pelicci’s illness. He said he does not know why they chose $9,000 increments, but he does not believe they intentionally tried to evade reporting requirements as they did not even know a law existed regarding that matter.
Advised of Mr. Powell’s comments, U.S. Attorney Peter J. Smith said the indictment does not say there is a current investigation. It indicates there was an investigation going on in May 2011. Mr. Smith said he could not provide any further details of the outcome of that probe or identify the agencies involved. He noted the charges filed do not require the money involved in the structuring to have been illegally obtained.
Mr. Powell also criticized the government for seeking a warrant, filed the same day as the indictment, to seize and/or freeze $431,500 in a bank account held by Mrs. Pelicci. He said such an action is rare, particularly because there is no “victim” in this case.
“When you seize money it’s usually to protect it to give it to a victim. There is no victim. There was an error if (prosecutors) are right, but there is no victim,” he said. “In this case, they’re seizing $400,000 from a sick man. It’s ridiculous.”
Mr. Smith said he considers the government to be the victim in the case. Prosecutors took action they believe is necessary in order to protect the funds.
“Given the nature of the charges, our conclusion was (the seizure warrant) was reasonable,” he said.