United States v. Louis J. Cella, Jr., Stephen R. Evans, Theodore Schiffman, Defendants

This appeal stems from the conviction of the three above named defendants on certain criminal counts arising from their participation in a scheme to misappropriate the funds and facilities of two proprietary hospitals in order to use the monies to sponsor the political campaigns of various local and state politicians and also for the personal purposes of two of the defendants. Given vast amount of materials on appeal (5,791 pages in the record and 328 pages of briefs) and the many points raised in the briefs, a lengthy but unavoidable exposition of the facts is required.

I. FACTS.

A. Background.

Mission Community Hospital, Inc. (“Mission Hospital”), which commenced operations in 1971, and Mercy General Hospital, Inc. (“Mercy Hospital”), which opened in 1973, are proprietary hospitals located in Southern California. Both were organized and managed as corporations. The stock of each corporation was owned by a partnership — respectively the Mission Viejo Medical Company (“Mission partnership”) and the Bristol General Hospital Company (“Mercy partnership”). Corporate and partnership income tax returns were filed during the relevant years herein. Both hospitals had agreements with…