ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, March 6, 1996 TAG: 9603060071
SECTION: VIRGINIA PAGE: C1 EDITION: METRO
SOURCE: SANDRA BROWN KELLY STAFF WRITER
A Blacksburg orthopedic surgeon is to report to prison this month for cheating the federal government out of $2.6 million in taxes over the past 10 years.
Dr. Salvatore Barranco, a partner in Montgomery County Orthopedic Associates, was sentenced to 27 months in prison.
Barranco and a former partner, Dr. Eugene Strelka of Moneta, were among 200 clients that a New York accounting firm helped avoid as much as $24 million in taxes, according to the Internal Revenue Service.
Abrams Associates set up fake companies and recorded donations to bogus charities, skimming 10 percent of the money saved in taxes and kicking back 90 percent to clients, the IRS said. The scheme spanned 20 years.
Bogus bank accounts were tailored to the businesses or professions of the clients, said the U.S. Attorney's Office in New York. For example, the firm opened accounts in names such as ``Virginia Medical'' and ``Dr. Shuman Fu'' for clients who were medical doctors.
``This case represents the greed of a group of well-educated and prosperous individuals,'' said Peter Farrell, chief of the criminal division of the IRS.
Barranco pleaded guilty to tax evasion in May and was sentenced Feb. 13 in federal court in New York. In addition to the 27 months in prison, Barranco was given two years' probation and also is liable for the unpaid taxes, said his attorney, S.D. Roberts Moore of Roanoke.
``Suffice it to say that many years ago these people approached Dr. Barranco, and he made a terrible mistake,'' Moore said. ``Undoubtedly he will be spending the rest of his life - after he gets out of jail - paying this debt back.''
Barranco, who is in his 50s, took a leave of absence from his practice, resigned his hospital privileges and surrendered his medical license in preparation for prison, but hopes to return to medicine when he gets out, Moore said.
U.S. District Judge John S. Martin, who sentenced Barranco, recommended that the doctor be allowed to get his medical license back as soon as he gets out of prison.
``He has paid a high enough price. There is no reason, in my view, to pay a higher price through continued loss of his license,'' Martin said, according to transcripts of the hearing.
Among the charges against Barranco and Strelka are that they conspired to conceal disability insurance payments received by Strelka.
In 1986, Strelka made an out-of-court settlement in a $25 million lawsuit against what then was Montgomery County Hospital and Hospital Corporation of America, which owned the hospital. Strelka claimed that inadequate conditions in the hospital's operating room led to an accident that left him paralyzed from the waist down.
Strelka contended in his suit that he injured his back lifting a patient who had developed complications during surgery.
He pleaded guilty in June 1994 to conspiracy and tax evasion. The IRS claims he avoided more than $900,000 in taxes. Marshall Mundy, the Roanoke lawyer representing Strelka, did not return calls this week.
However, Strelka, who also is in his 50s, has not been sentenced and likely will testify against another former partner, Dr. Eugene Trimarchi, when Trimarchi's trial begins July 1, said Vincent Briccetti, the White Plains, N.Y., lawyer representing Trimarchi.
Trimarchi, who is in his 70s, still works part time as an anesthesiologist at a Williamson, W.Va., hospital. He is accused of avoiding $1.8 million in taxes.
``His defense is going to be that he relied on the advice of this accounting firm for 20 years'' before the tax scheme began, Briccetti said. His client thought Abrams Associates was recommending a legitimate tax shelter, he said.
Briccetti also said that, presumably, Trimarchi recommended Abrams to Barranco and Strelka.
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