1 15-2307-cv United States v. Saavedra UNITED STATES COURT OF APPEALS FOR THE SECO ND CIRCUIT SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DA TABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL. At a stated term of the United States Cour t of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courth ouse, 40 Foley Square, in the City of New York, on the 6 th day of September, two thousand sixteen. PRESENT: JON O. NEWMAN, RALPH K. WINTER, REENA RAGGI, Circuit Judges

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---------------------------- ---------------------------- ----------------- UNITED STATES OF AMERICA, Intervenor-Plaintiff-Appellee , UNITED STATES OF AMERICA EX REL. JOHN DOE and THE STATE OF NEW YO RK EX REL. JOHN DOE, Plaintiffs , v. No. 15-2307-cv ALEX SAAVEDRA, Intervenor-Defendant-Appellant , SHOMARI GREENE, ALAN KATZ, TAGEWATEE CHANDARPAUL, MITC HELL MCCLINTON, Intervenor-Defendants , STRUCTURED EMPLOYMENT ECONOMIC DEVELOPMENT CORPORATION, Defendant

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* The Clerk of Court is directed to amend the caption as set forth above.2 ---------------------------- ---------------------------- ----------------- APPEARING FOR APPELLANT: BETTINA SCHEIN, ESQ. (Alan Samuel Futerfas, Matthew C. McCann, Law Offices of Alan S. Futerfas, New York, New York, on the brief ), New York, New York.

APPEARING FOR APPELLEE: JENNIFER ELLEN BLAIN, Assistant United States Attorney (Christopher Connolly, Assistant United States Attorney, on the brief ), for Preet Bharara, United States Attorney for the Southern District of New York, New York, New York. Appeal from a judgment of the United St ates District Court for the Southern

District of New York (Alvin K. Hellerstein, Judge ). UPON DUE CONSIDERATION, IT IS HEREBY ORDERE D, ADJUDGED, AND DECREED that the judgment entere d on June 18, 2015, is AFFIRMED. Following a jury trial, defe ndant Alex Saavedra, former director of two career centers run by non-profit Structured Eco nomic Employment Development Corporation (“SEEDCO”), was found liable for violatin g the False Claims Act (“FCA”), see 31 U.S.C. § 3729(a)(1)(A), (a)(1)(B), by causing fals e claims to be made to the New York City Division of Sma ll Business Services (“SBS”), resu lting in the payment of federal funds. On appeal, he challe nges (1) the sufficiency of th e evidence; (2) the district court’s (a) jury instructions and (b) denial of readback requests; and (3) the award of $39,000 in damages, see id. § 3729(a)(1), and $143,000 in civil penalties, see id. § 3729(a); 28 C.F.R. § 85. 3(a)(9). We assume the parties’ familiarity with the facts and record of prior proceedings, which we refere nce only as necessary to explain our decision

to affirm.3 1. Evidentiary Sufficiency Saavedra argues that, in the absenc e of direct proof that quarterly payment-authorization memoranda submitted by SBS’s third-party auditor contained false job-placement data, the government fa iled to adduce sufficien t evidence that he caused SEEDCO to present any false “claim” or material record. Because Saavedra did not renew his previously denied motion for judg ment as a matter of law pursuant to Fed. R. Civ. P. 50(b), however, he forfeited any challenge to the evid entiary basis for the jury’s verdict on appeal. See Ortiz v. Jordan , 562 U.S. 180, 189 (201 1) (“Absent such a motion, we have repeatedly held, an appe llate court is ‘powerless’ to review the sufficiency of the ev idence after trial.” (quoting Un itherm Food Sys., Inc. v. Swift-Eckrich, Inc., 546 U.S. 394, 405 (2006))); Jacques v. DiMarzio, Inc., 386 F.3d 192, 199–200 (2d Cir. 2004). 1 Accordingly, we may reach hi s sufficiency challenge only “to prevent a manifest injustice,” which is presen t “in cases where a jury’s verdict is wholly without legal support.” Jacques v. DiMa rzio, Inc., 386 F.3d at 199 (brackets and internal quotation marks omitted). This is not such a case. Assuming, arguendo, that SBS’s quarte rly internal calculation—and not SEEDCO’s entry of false data into the WorkSource1 system—constituted the relevant

1 No different conclusion is warranted by Saavedra’s single-sentence statement in the parties’ joint May 20, 2015 letter subm itted “to present their respective positions regarding assessing the mandatory civil pena lty pursuant to 31 U.S.C. § 3729(a)(1).” D.A. 1015; see id. at 1021 (“ We respectfully submit that the government has not proven that one false claim was submitted for paym ent to the United States.”). The Federal Rules clearly provide that “[a] request for a court order must be made by motion,” which must, inter alia, “state the relief sought.” Fe d. R. Civ. P. 7(b)(1)(C) (emphasis added); see also Fed. R. Civ. P. 50(b ) (authorizing movant to file “renewed [postverdict] motion for judgment as a matter of law” (emphasis added)).4 “claim,” as Saavedra contends, the contracts in troduced into evidence plainly established that SBS would calculate SEEDCO’s perfo rmance payment on the basis of not only statistical sampling by the auditor, Charney Research, but also the total number of placements SEEDCO claimed. Thus, the mo re job placements SEEDCO claimed, the more federal funds it was potentially entitle d to receive, regardless of Charney’s sampling results. 2 Moreover, the jury reasonably could have interpreted—through a former SBS Deputy Commissioner’s testimony—an internal SBS email as indicating that 401 false placements had been in cluded in a roster sent to and validated by Charney. See D.A. 264–65; see also id . at 859–61 (reflecting Octobe r 2012 email request for SBS staff to “amend the performance calc[ulations ]” based on “Seedco false placements” for January to March 2011 period). The former Deputy Commissioner, Angie Kamath, also discussed a New York City Department of Investigation (“DOI”) report concluding that

SEEDCO’s falsification “was done in a way that would have passed the Charney

validation methods.” Id. at 289. In f act, Kamath testified that SBS itself had

2 Saavedra cannot urge otherw ise by speculating that, even if some false placements were claimed, “by operation of the Charney Research validation process,” the percent validated “would be decreased.” Appellant ’s Reply Br. 8. Unless Charney validated 100% of SEEDCO’s claimed placements—or fewer than 50%, in which case SEEDCO would receive no performance payment—th e contract’s terms meant that SEEDCO always would be paid for more placements than were verifi ed. See D.A. 835 (indicating that SEEDCO would receive 100% paymen t where Charney validated 75–100% of placements, and 75% payment where Charne y validated 50–74%). In any event, Charney did not actually verify every placem ent claimed on SEEDCO’s roster; rather, it relied on a randomly selected representative sa mple to obtain statistically significant results. See, e.g., id. at 516 (discussing 5% error-margin target). Thus, the record establishes that SBS paid S EEDCO for placements that we re not individually validated.5 discovered at least one false placement that had “passed through” th e validation process, and that SBS had paid SEEDCO for th at false placement. Id. at 292. Further, the jury heard testimony from (1 ) the SEEDCO employee responsible for entering intake data, who stated that she fa lsified job placement in formation “50 percent of the time,” P.A. 74; (2) Saavedra’s direct re port, who stated that, during the majority of his tenure, SEEDCO never met placement targ ets without using false placement data, see id. at 2, 62–63; and (3 ) Saavedra’s administrative assist ant, who stated that Saavedra personally directed her to enter false placemen t data into WorkSource1, see D.A. 164–66. On sufficiency review, we must assume that the ju ry credited these witnesses. See Cash v. Cty. of Erie, 654 F.3d 324, 338 (2d Cir. 2011). The totality of this evidence precludes a conclusion that the jury’s preponderance finding was “wholly without legal support.” Jacques v. DiMarzio, Inc., 386 F.3d at 199 (internal quotation marks omitted). Indeed , the record eviden ce is sufficiently compelling that, even if Saav edra had not forfeited his suffi ciency claim, it would fail upon de novo review in any event. Cf. Ze no v. Pine Plains Cent . Sch. Dist., 702 F.3d 655, 664 (2d Cir. 2012) (stating that reviewing cour t will reverse denial of Rule 50 motion if, drawing all inferences in favor of —and reviewing all evidence in light most favorable to—plaintiff, no reason able juror could have retu rned verdict for plaintiff). 2. Jury Instructions

a. Definition of “Claim”

Saavedra faults the district court for i ssuing the generic instruction on the meaning of “claim” for FCA purposes even though it had previously concluded that: (1) whether6 the claim was SEEDCO’s entry of false da ta (as the government urged) or SBS’s quarterly internal calculation (as Saavedra maintained) was “an i ssue of law” for the court to decide, D.A. 585; an d (2) the relevant claim here was the quarterly calculation, not the entry of false data, see, e.g., id. at 605 (“There is a difference between a record and a claim. The claim is the request. If the custom under the contract is to ask for payment quarterly, then that is the request and that’s the claim.”). Saavedra contends that, by refusing to instruct th e jury that only th e quarterly calculation was an FCA claim, as the defense requested, see id. at 583–84, the court erroneously permitted the jury to find him liable under the gove rnment’s data-entry theory , which the court itself had rejected as a matter of law. We need not decide whether, upon de novo review, the challenged instruction—which, as Saaved ra concedes, accurately tr acked the language of the statute—“misled the jury about the correct legal standard” or otherwise “inadequately informed [the jury] of the controlling law.” Crigger v. Fahnestock & Co., 443 F.3d 230, 235 (2d Cir. 2006) (internal qu otation marks omitted); see United States v. Alfisi, 308 F.3d 144, 150 (2d Cir. 2002) (“Where a district court’s jury instructions accurately track the language and meanin g of the relevant statute, we generally will not find error.”). 3

3 The court instructed: A claim is “any request or demand for money or property made to a contractor, grantee or other recipient if the money or property is to be spent or used on the Government’s behalf or to advance a Government program or interest, and if the United States government provid ed any portion of the money or property requeste d or demanded or will reimburse the7 A new trial would be re quired only if, “considering the in struction as a whole, the cited errors were not harmless, but in fact pr ejudiced the objecting party.” Crigger v. Fahnestock & Co., 443 F.3d at 235 (interna l quotation marks omitted). Assuming, arguendo, that Saavedra can demonstrate char ging error, he cannot show the requisite prejudice in light of the ab ove-described evidence, which showed that, regardless of Charney’s validation results, each falsel y claimed placement increased SEEDCO’s potential performance payment under the contra ct’s methodology, thereby causing the presentation of false claims. Indeed, the g overnment argued in summation that, for this reason alone, “whether you view the claim as coming through WorkSource1 or whether you view it as some sort of compilation of those placements [in the authorization memoranda], it amounts to the sa me thing.” D.A. 665. Accordingly, even if the jury had been instructed that only the quarterly SBS calculation—and not the individual data entries—could constitute an FCA claim, there is no basis to conclude here that it would

have rendered a different verdict. See Town send v. Benjamin Enters ., Inc., 679 F.3d 41, 56 (2d Cir. 2012) (stating that error is harmless “when we ar e persuaded it did not influence the jury’s verdict” (i nternal quotation marks omitted)).

contractor, grantee, or other re cipient for any portion of the money or property requ ested or demanded.” P.A. 107 (quoting 31 U. S.C. § 3729(b)(2)).8 Thus, if there was any error in the district court’s FCA claim inst ruction, that error

was harmless. 4 b. Relevance of Charney Research Saavedra argues that the district court’ s unsolicited instruction regarding Charney Research impermissibly usurped the jury’s ro le as factfinder because it suggested that

such evidence had “no factual import.” Appellant’s Reply 20. 5 We are not persuaded. Insofar as “correct application” of the FC A “requires that the focus in each case be upon the specific conduct of the person from whom the Government seeks to collect the statutory forfeitures,” United States v. Bo rnstein, 423 U.S. 303, 312 (1976), the challenged instruction was cons istent with Supreme Court precedent. See id. at 312–13 (“The statute . . . does not penalize [a subc ontractor] for what [the contractor who ultimately submitted the claim] did. It penalizes [the s ubcontractor] for what it did.” (emphasis added)). The district court, therefore, did not mislead the jury as to the correct legal standard or otherwise inadequa tely inform it of controlling law by stating

4 We, therefore, need not deci de whether—as the government insists—Saavedra failed to preserve this challenge by agreeing to the instruction.

5 The challenged instruction stated: There was testimony in the case that [SBS] contracted with Charney Research to verify th e job placement data submitted by SEEDCO. The fact that a th ird-party verification service was utilized does not by the mere fact of its use change the issues that you have to deci de regarding Mr. Saavedra’s liability. The question is if he knowingly presented or caused to be presented one or more false claims for payment to [SBS] with funds that u ltimately came from the United States. P.A. 108–09.9 that use of a third-party valida tion service did not “by the mere fact of its use change the issues” the jury had to d ecide regarding Saavedra’s liability. P.A. 109 (emphasis added); see Crigger v. Fahnest ock & Co., 443 F.3d at 235. Nor did the district court suggest, as Saavedra contends, that testim ony regarding Charney had “no bearing on the issues in the case.” Appellant’s Repl y Br. 20 (emphasis a dded). Rather, the instruction clearly explained th at Charney’s role did not ne cessarily affect Saavedra’s FCA liability. This properly left the jury to decide whether Char ney’s involvement, in fact, had such an effect. See, e.g., Britt v. Garcia, 457 F.3d 264, 272 (2d Cir. 2006) (noting “fundamental proposition” that jury is presumed to follow instructions (internal quotation marks omitted)). Accordingly, we reject Saavedra’s cha llenge to this instruction as meritless. 3. Readback Request

Saavedra contends that he is entitled to a new trial because the district court improperly refused to read back to the ju ry the entire deposition testimony of William Harper, the qui tam relator and SEEDCO employee who uncovered the fraudulent

scheme. 6 Although we have stated “a clear pref erence for readbacks whenever they are requested by a deliberating jury,” United Stat es v. Escotto, 121 F. 3d 81, 84 (2d Cir. 1997), “[a] trial court’s refusal to allow re ad-backs of testimony in response to jury requests during deliberations is within its broad discretion,” United States v. Salameh,

6 While Saavedra also challe nges the court’s refusal to provide the jury with DOI investigator Chanterelle Sung’s entire testim ony, we decline to consider the argument, which he asserts only in a footnote in his op ening brief. See Deutsche Bank Nat’l Tr. Co. v. Quicken Loans Inc., 810 F. 3d 861, 867 n.7 (2d Cir. 2015).10 152 F.3d 88, 133 (2d Cir. 1998). We identif y no abuse of that di scretion here because the district court did not categorically refu se to read back Harper’s testimony. Cf. United States v. Criollo, 962 F.2d 241, 244 (2d Cir. 1992) (reversing conviction based on blanket readback prohibition). Rather, the c ourt explained—in response to a request to rehear all testimony by Harper and DOI report drafter Chan terelle Sung, as well as

Saavedra’s entire cross-examin ation—that “[t]he purpose of the trial is to give you all

this evidence. If there is some thing specific that you can’t recall or that you’re debating about, let me know what that specific item is and we’ll send th at back to you. We are not sending back globs of tes timony, okay?” D.A. 680. We cannot conclude that this response fell “outside the range of permissible

decisions” available to the district court. Schaeffler v. United St ates, 806 F.3d 34, 40 (2d Cir. 2015); see United States v. Escotto, 121 F.3d at 84 (ins tructing courts to consider “jurors’ need to review the evidence before r eaching a verdict . . . ag ainst the difficulty in locating the specific testimony requested, the possibility of undue emphasis on any portion of the testimony, and the possibility of undue delay”). While Saavedra insists that Harper’s testimony was “central,” A ppellant’s Reply Br. 24, the argument is undermined not only by the jury’s failure to request further information before rendering its verdict later that day, but also by the district court’s repeated observations that portions of Harper’s testimony read into the record by the defense were redundant. Cf. United States v. Parker, 903 F.2d 91, 101 (2 d Cir. 1990) (observing trial judge is best positioned “to sense whether the ju ry is able to proceed prope rly with its deliberations,”11 and has “considerable discretion” in determ ining response to communications indicating juror confusion). 7 Accordingly, we identify no abuse of disc retion in the district court’s handling of the jury’s request for Harper’s testimony. 4. Damages and Penalties a. Damages

Saavedra maintains th at the jury’s $13,000 damage aw ard should be offset by the more than $1.7 million the governme nt has already recovered from settling

codefendants. 8 The argument fails because “a nonsettling defendant is entitled to a credit of the settlement amount against any ju dgment obtained by the plaintiff against the nonsettling defendant” only when the settle ment and judgment represent “common damages.” Singer v. Olympia Brewing Co., 878 F.2d 596, 600 (2d Cir. 1989). As the district court correctly observed, the jury ’s damages award and prior settlement amounts are not “common damages” insofar as the jury’s determination here reflected the extent to which only Saavedra’s fals e claims or statements damaged the government. See D.A. 1033; see also P.A. 119 (instructing jury that “[y]ou are not judging the government’s case against any other party”). Accordingl y, Saavedra is not entitled to credit the government’s recovery from other defendants against his individual FCA liability. See

7 Defense counsel’s offer to provide the ju ry with transcripts warrants no different conclusion. See, e.g., United States v. Escotto, 121 F.3d at 84 (recognizing “possibility of undue emphasis on transcripts sent in lieu of readbacks” and, t hus, according district court same broad discretion in refusing transcript request).

8 The district court ultimately ordered Saaved ra to pay $39,000 in damages pursuant to 31 U.S.C. § 3729(a)(1), which pr ovides for treble damages.12 United States v. Bornstein, 42 3 U.S. at 312 (reasoning that FCA “penalizes a person for his own acts, not for the acts of someone else”). That the government originally sought to hold Saavedra liable for $540,409.97 in damages—the full amount of SEEDCO perfo rmance payments at issue—does not warrant a different conclusion. Where, as here, the defendant fraudulently caused payments to be made “for pa rticipating in programs desi gned to benefit third-parties rather than the government its elf and the government received nothing of tangible value from the defendant . . . the government has entir ely lost its opportunity to award the grant money to a recipient who would have used the money as the government intended.” United States ex rel. Feldman v. van Gorp , 697 F.3d 78, 88 (2d Cir. 2012) (emphasis added). Under these circumstances, the govern ment is entitled to damages “equal to the full amount of grants awarded to the defendan ts based on their false statements.” Id.

Because SEEDCO had been awarded a to tal of $5.4 million in 2011 alone, the government was entitled to r ecover at least that amount fo r the fraud caused by Saavedra

and his codefendants between Ja nuary and August of that y ear. Thus, even if the two amounts represent common damages, Saavedra cannot offset the $13,000 jury award against the government’s mo re-than-$1.7 million r ecovery because the government has not yet been made “completely whole for the money taken from it by fraud.” Id. at 87 (internal quotation marks omitted). We, therefore, reject Saavedra’s damages challenge as meritless.13 b. Penalties

Saavedra faults the district court for (1) imposing civil pena lties for each false statement the jury found and (2) applying the maximum $11,000 pena lty per statement. See 31 U.S.C. § 3729(a); 28 C.F.R. § 85.3 (a)(9). Neither challenge has merit. Contrary to Saavedra’s a ssertion, nothing in the statute requires the court to impose penalties based on the number of fals e claims under § 3729(a)(1)(A), instead of

the number of false statem ents under § 3729(a)(1)(B). 9 Indeed, the Supreme Court has observed that the FCA “reaches beyond ‘claim s’ which might legally be enforced, to all fraudulent attempts to cause th e Government to pay out sums of money.” United States v. Neifert-White Co., 390 U.S. 228, 233 (1968); see also Unite d States ex rel. Schwedt v. Planning Research Corp., 59 F.3d 196, 199 (D .C. Cir. 1995) (“Each individual false claim or statement triggers the statute’s civ il penalty.” (emphasis ad ded)). Accordingly, § 3729(a)(1)(B) imposes liability “for the commi ssion of acts which cause false claims to be presented,” United States v. Bornstein, 423 U.S. at 312 (e mphasis added); accord

United States ex rel. Kreindl er & Kreindler v. United Tech s. Corp., 985 F.2d 1148, 1157 (2d Cir. 1993), regardless of th e number of false claims that result, see United States v. Bornstein, 423 U.S. at 312 (holding subcontractor liable only for number of false shipments it made, and not for number of fr audulent invoices ultimately submitted by

9 Because neither Vermont Ag ency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765, 787–88 (2000) (recognizing qui tam relator standing but holding that FCA liability does not extend to state entities), nor United Stat es ex rel. Eisenstein v. City of New York, 540 F.3d 94, 95–96 (2d Cir. 2008) (d iscussing qui tam relator’s deadline to file notice of app eal in FCA case where United St ates declined to intervene), aff’d, 556 U.S. 928 (2009), addressed this question, Saavedra’s reliance thereon is misplaced.14 contractor). The district court, therefore, correctly assessed civil penalties for each of the 13 false statements the ju ry found Saavedra personally to have made. Insofar as Saavedra asserted throughout this litigation that the quart erly SBS calculations—and not

SEEDCO’s false data entries—constituted the relevant FCA claims, this determination properly punished Saavedra “solely for [his] own wrongful acts” in causing these claims

to be made. United States v. Zan Mach. Co., 803 F. Supp. 620, 625 (E.D.N.Y. 1992) (citing United States v. Bornstein, 423 U.S. 303).

The district court also acted within its discretion in imposing the maximum statutory penalty of $11,000 for each of Saavedra’s false stat ements. See SEC v. DiBella, 587 F.3d 553, 572 & n.13 (2d Cir. 2009) (reflecting standard of review). Saavedra cannot urge otherwis e by challenging the court’s reliance on the press release issued by defense counsel follo wing the jury’s verdict. Saav edra’s claim to have been “gratified” by a result reflecting “a very significant vindication” manifests a gross misunderstanding of the jury’s verdict and a disturbing refu sal to accept responsibility, D.A. 1030, both of which the district cour t properly took into account. See United States v. Saavedra, No. 11 Civ. 6425, 2015 WL 7621481, at *2 (S.D .N.Y. June 16, 2015) (citing BMY–Combat Sys. Div. of Harsco Corp. v. United St ates, 44 Fed. Cl. 141, 151 (1998)). While Saavedra challenges the court’s failure to consider his “lifetime of work on behalf of the less fortunate,” Appellant’s Br. 57, the court was entitled to weigh this history against trial evidence demonstrating not only that Saavedra instructed his own assistant to falsify data, but also that he supervised two SEEDCO centers wherein data

falsification was a routine and “deliberat e method of doing business” from at least15 August 2009 through October 2011, D.A. 1041—a far longer period than that which the jury considered in awardi ng damages. See, e.g., SEC v. Rosenthal, 426 F. App’x 1, 2 (2d Cir. 2011) (approving district court’s im position of civil penaltie s after considering, inter alia, egregiousness of defendant’s co nduct, degree of defendant’s scienter, and whether conduct was isolated or recurrent). In this context, we identif y no abuse of discretion in th e district court’s imposition of the maximum per-violation statutory penalty for each of Saavedra ’s false statements.

5. Conclusion

We have considered Saavedra’s remainin g arguments and conclude that they are without merit. Accordingly, the di strict court’s judgment is AFFIRMED.

FOR THE COURT: CATHERINE O’HAGAN WOLF E, Clerk of Court