Source: https://law.justia.com/cases/federal/appellate-courts/F2/772/765/250096/
Timestamp: 2019-01-16 18:28:46
Document Index: 635507053

Matched Legal Cases: ['§ 371', '§ 1341', '§ 371', '§ 1341', '§ 371', 'art:\n18', '§ 371', '§ 1341', '§ 371', '§ 371', '§ 1001', '§ 1005', '§ 1010', '§ 1014', '§ 1020']

United States of America, Plaintiff-appellee, v. William M. Conover and Anthony R. Tanner, Defendants-appellants, 772 F.2d 765 (11th Cir. 1985) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Eleventh Circuit › 1985 › United States of America, Plaintiff-appellee, v. William M. Conover and Anthony R. Tanner, Defendant...
United States of America, Plaintiff-appellee, v. William M. Conover and Anthony R. Tanner, Defendants-appellants, 772 F.2d 765 (11th Cir. 1985)
US Court of Appeals for the Eleventh Circuit - 772 F.2d 765 (11th Cir. 1985)
Before HILL and ANDERSON, Circuit Judges, and GARZA* , Senior Circuit Judge.
A jury convicted William M. Conover and Anthony R. Tanner of conspiring to defraud the United States in violation of 18 U.S.C. § 371, and committing various acts of mail fraud in connection with the conspiracy in violation of 18 U.S.C. § 1341. Conover and Tanner have appealed, arguing that the district court abused its discretion in refusing to investigate allegations of juror misconduct; that the conspiracy count of the indictment failed to charge a crime against the United States; that the evidence is insufficient to support the mail fraud convictions; and that the district court made various evidentiary rulings which warrant reversal. We affirm the convictions.
Tanner and Conover were first indicted in June 1983. The six week trial that followed resulted in a hung jury, and a mistrial was declared. Tanner and Conover were subsequently reindicted on a five count indictment. Count I alleged that Tanner and Conover had conspired to defraud the United States in violation of 18 U.S.C. § 371; counts II through V alleged separate instances of mail fraud in violation of 18 U.S.C. § 1341. Conover was convicted on all counts. Tanner was convicted on counts I, II, IV, and V. Two motions for new trial based on allegations of jury misconduct were filed; both were denied.
The decision to investigate allegations of jury misconduct rests within the sound discretion of the district court. See U.S. v. Darby, 744 F.2d 1508, 1540 (11th Cir. 1984). " [T]here is no per se rule requiring an inquiry in every instance." Id. (quoting U.S. v. Barshov, 733 F.2d 842, 851 (11th Cir. 1984)). When an evidentiary hearing is conducted, the inquiry is limited to determining "whether extraneous prejudicial information was improperly brought to the jury's attention or whether any outside influence was improperly brought to bear upon any juror." See FED.R.EVID. 606(b). The affidavit supporting appellants' motion for new trial does not allege that prejudicial information was brought to the jury's attention. Similarly, it does not allege that any outside influence was brought to bear upon any juror. Even if the allegations of substance abuse were true, there is no "adequate showing of extrinsic influence to overcome the presumption of jury impartiality." Barshov, 733 F.2d at 851. Thus, the district court was under no duty to investigate the allegations, and did not abuse its discretion in refusing to conduct an evidentiary hearing.
Count I of the indictment charged appellants with violating 18 U.S.C. § 371. Section 371 provides in relevant part:
18 U.S.C. § 371 (emphasis added). The Supreme Court has construed section 371 as reaching "any conspiracy for the purpose of impairing, obstructing, or defeating the lawful function of any department of government." Dennis v. United States, 384 U.S. 855, 861, 86 S. Ct. 1840, 1844, 16 L. Ed. 2d 973 (1966). The Court has also explained what types of fraud are contemplated by the statute:
Hammerschmidt v. United States, 265 U.S. 182, 188, 44 S. Ct. 511, 512, 68 L. Ed. 968 (1924).
Appellants suggest that these transactions showed, at the most, violations of Seminole's conflict of interest policy, not the existence of a conspiracy to defraud the REA. We reject appellants' contention that the indictment failed to charge a crime under section 371. There is no requirement in the statute, or in the cases construing the statute, that the object of the conspiracy must be to cause a financial loss to an agency of the government. United States v. Burgin, 621 F.2d 1352, 1356 (5th Cir. 1980); United States v. Anderson, 579 F.2d 455, 458 (8th Cir.), cert. denied, 439 U.S. 980, 99 S. Ct. 567, 58 L. Ed. 2d 651 (1978). Nor is there any requirement that the indictment charge a knowing violation of an agency's rules, regulations, or procedures. The statute is designed "to protect the integrity of the United States and its agencies, programs, and policies." Burgin, 621 F.2d at 1356. Moreover, " [t]he United States has a fundamental interest in the manner in which projects receiving its aid are conducted. This interest is not limited strictly to accounting for United States Government funds invested in the project, but extends to seeing that the entire project is administered honestly and efficiently and without corruption and waste." United States v. Hay, 527 F.2d 990, 998 (10th Cir. 1975), cert. denied, 425 U.S. 935, 96 S. Ct. 1666, 48 L. Ed. 2d 176 (1976) (citing United States v. Thompson, 366 F.2d 167 (6th Cir. 1966), cert. denied, 386 U.S. 945, 87 S. Ct. 980, 17 L. Ed. 2d 875 (1967)). It is undisputed that the money used to construct the power plant was borrowed from the Federal Financing Bank, which is an agency of the United States Treasury; nor is it disputed that the loan was guaranteed by the REA, which is also an agency of the federal government. The evidence supports the conclusion that Tanner and Conover engaged in collusive and dishonest business practices. This constituted a fraud on the United States under section 371.
Appellants next contend that the evidence is insufficient to support their convictions2 on the mail fraud violations alleged in counts II through V. The mail fraud statute, 18 U.S.C. § 1341, prohibits the use of the mails for the purpose of executing any scheme or artifice to defraud. The indictment charged that appellants used the mails for the purposes of (1) defrauding "the United States by impeding, impairing, obstructing and defeating the lawful function of the [REA] in its administration and enforcement of its guaranteed loan program;" and (2) defrauding Seminole "of its right to have its process and procedures for the procurement of materials, equipment and services run honestly and free from deceit...."
Appellants argue that the convictions on counts II through V can be upheld only if the evidence establishes that they used the mails in effectuating a scheme to defraud Seminole. This is so, appellants contend, because the indictment did not charge, and the evidence did not establish, a violation of 18 U.S.C. § 371. We have already rejected this proposition. Thus, we need not reach the question of whether the evidence establishes the use of the mails for the purpose of effectuating a scheme to defraud Seminole. The convictions can be affirmed if the evidence establishes the use of the mails in effectuating a scheme to defraud the United States by "impeding, impairing, obstructing and defeating the lawful function of the [REA] in its administration and enforcement of its guaranteed loan program" as charged in counts II through V. In other words, the mail fraud convictions should be affirmed if the evidence establishes the use of the mails in connection with the section 371 violation alleged in count I.
Appellants do not contend that the mailings referred to in counts II through V did not occur. Nor is it argued that these mailings were not made in connection with the transactions which support their convictions on count I of the indictment. In order for the mail fraud convictions to stand, it must be shown that the use of the mail played an "integral" role in the scheme. See United States v. Bosby, 675 F.2d 1174, 1183 (11th Cir. 1982) (citing United States v. Bethea, 672 F.2d 407, 410 (5th Cir. 1982)). The government contends that the mailings played an integral role in the scheme by tending to create an "aura of legitamacy," see Bosby, 675 F.2d at 1183, around the transactions. We agree. Consequently, we affirm Conover's convictions on counts II through V, and Tanner's convictions on counts II, IV, and V.
Appellants' last contention concerns the testimony of Donald Gilbert, a private investigator who had been hired to investigate the relation between Tanner and Conover. The district court permitted Gilbert to testify that after making his investigation, he concluded that there was "collusion" between Conover and Tanner. In light of the context in which this statement was made, the length of the trial, and the other evidence supporting the conclusion that there was collusion between Tanner and Conover, we conclude that the error, if any, in the admission of this testimony was harmless. See Fed. R. Crim. P. 52(a).
Although I do not believe 18 U.S.C. § 371 should be construed to penalize the conspiracy proved in this case, I concur in the judgment of the court because this panel is bound by the decision of the Fifth Circuit in United States v. Burgin, 621 F.2d 1352 (5th Cir.), cert. denied, 449 U.S. 1015, 101 S. Ct. 574, 66 L. Ed. 2d 474 (1980), which is inconsistent with the views I express below.
It has long been the case that the prosecution need not show any monetary or property loss to the federal government to sustain a conviction for conspiracy to defraud the United States under section 371. Haas v. Henkel, 216 U.S. 462, 479, 30 S. Ct. 249, 253, 54 L. Ed. 569 (1910). In Hammerschmidt v. United States, 265 U.S. 182, 44 S. Ct. 511, 68 L. Ed. 968 (1924), the Supreme Court announced that to prove a violation of section 371, " [i]t is not necessary that the government shall be subjected to property or pecuniary loss by the fraud, but only that its legitimate official action and purpose shall be defeated by misrepresentation, chicane, or the overreaching of those charged with carrying out the governmental intention." 265 U.S. at 188, 44 S. Ct. at 512. More recently, the Court reiterated that the statutory language reaches "any conspiracy for the purpose of impairing, obstructing, or defeating the lawful function of any department of government." Dennis v. United States, 384 U.S. 855, 861, 86 S. Ct. 1840, 16 L. Ed. 2d 973 (1966) (quoting Haas v. Henkel, 216 U.S. at 479, 30 S. Ct. at 254). No Supreme Court decision has upheld a conviction under section 371, however, where the defendants neither defrauded the federal government of its funds or property nor interfered with United States government officials or their agents performing an official function of the federal government.
According to the court's opinion in Burgin, " [t]he indictment in this case charged overreaching of an agent of the United States by a public official having a financial quid pro quo interest in a federally financed contract." 621 F.2d at 1357. Of course, where a state or private party is simply acting as an agent of the United States government in the implementation of a truly federal program, a fraud upon the agent may constitute a fraud upon the United States. But in my view, the courts should not generally find such an agency relationship in the absence of compelling evidence that the state or private party was in fact defrauded while acting as a mere agent of the federal government performing a constitutionally legitimate and duly authorized function of the federal government, rather than as a non-federal entity receiving some form of federal assistance. Complete ownership or control of a nominally private entity by the federal government might serve as evidence of such a relationship. See United States v. Walter, 263 U.S. 15, 18, 44 S. Ct. 10, 11, 68 L. Ed. 137 (1923) (holding statute reached conspiracy to defraud the United States Emergency Fleet Corp., of which the United States owned 100% of the stock, where "the contemplated fraud upon the corporation if successful would have resulted directly in a pecuniary loss to the United States, and even more immediately would have impaired the efficiency of its very important instrument"). Extensive federal regulation of the state or private entity's activities on behalf of the federal government would also tend to support a conviction under section 371 for committing a fraud most directly upon a private party, but indirectly upon the federal government as well. See United States v. Gold, 743 F.2d 800 (11th Cir. 1984), cert. denied, --- U.S. ----, 105 S. Ct. 1196, 84 L. Ed. 2d 341 (1985), (upholding conviction for defrauding the United States in violation of section 371 by conspiring to file false Medicare claims with private intermediary that received, adjudicated and paid such claims under contract with federal government agency). Federal government assistance, however, accompanied by only a modicum of federal supervision of the non-federal entity's activities, seems patently insufficient to render a fraud upon that entity a fraud upon the United States.
By artful lawyering, one might easily blur the distinction between the United States government and those receiving its support beyond clear recognition. Courts must always remain mindful, however, of the admonition that penal statutes are to be strictly construed, a rule that is "perhaps not much less old than construction itself." United States v. Wiltberger, 18 U.S. (5 Wheat.) 76, 95, 5 L. Ed. 37 (1820) (Marshall, C.J.). That well-known rule of construction is but a corollary to the comparably venerable "void for vagueness" doctrine of constitutional law. " [A] statute which either forbids or requires the doing of an act in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application, violates the first essential of due process of law." Connally v. General Construction Co., 269 U.S. 385, 391, 46 S. Ct. 126, 127, 70 L. Ed. 322 (1926). See generally Goldstein, Conspiracy to Defraud the United States, 68 Yale L.J. 405, 441-48 (1959). Thus it is essential that section 371 "plainly and unmistakably" proscribe the conduct of defendants before they are punished for its violation. See United States v. Gradwell, 243 U.S. 476, 485, 37 S. Ct. 407, 410, 61 L. Ed. 857 (1917); United States v. Porter, 591 F.2d 1048, 1055 (5th Cir. 1979). Courts may necessarily find it difficult to formulate and apply a definition of "defraud," as that term is used in section 371, that men and women "of common intelligence" will easily understand. See Goldstein, supra, at 443. "The United States," however, is a term that need not be so broadly and mysteriously defined.
Appellants have defrauded Seminole Electric. Seminole Electric is neither an agency of the federal government nor its representative performing a duly authorized federal governmental function. Rather, under the Rural Electrification Act Congress has deliberately avoided undertaking the construction of rural power plants as a federal government enterprise. I have little doubt that Congress has an interest in "seeing that the entire project [receiving its aid] is administered honestly and efficiently and without corruption and waste." United States v. Hay, 527 F.2d 990, 998 (10th Cir. 1975), cert. denied, 425 U.S. 935, 96 S. Ct. 1666, 48 L. Ed. 2d 176 (1976). But in section 371 Congress obviously did not criminalize every conspiracy with the intent or effect of thwarting that objective. Congress has demonstrated well its ability to utilize the criminal law to protect its far-flung financial and other interests in nonfederal programs or entities.1 Because it has not done so here, section 371 should not be construed to reach appellants' acts.
Chapter 47 of Title 18 of the United States Code, concerning fraud and false statements, provides a wide variety of examples. A general provision penalizes the knowing and willful making or use of false, fictitious or otherwise fraudulent statements "in any matter within the jurisdiction of any department or agency of the United States." 18 U.S.C. § 1001 (1982). Other federal statutes are more specific. It is a federal crime for any person to make "any false entry in any book, report, or statement of [any Federal Reserve bank, member bank, national bank or Federal Deposit Insurance Corporation (F.D.I.C.) insured bank] with intent to injure or defraud such bank, or any other company, body politic or corporate, or any individual person." 18 U.S.C. § 1005 (1982). Another section criminalizes the making or passing of statements known to be false "for the purpose of obtaining any loan or advance of credit from any person, partnership, association, or corporation with the intent that such loan or advance of credit shall be offered to or accepted by the Department of Housing and Urban Development for insurance, or for the purpose of obtaining any extension or renewal of any loan, advance of credit, or mortgage insured by such Department." 18 U.S.C. § 1010 (1982). Federal law prescribes criminal penalties for knowingly making false statements for the purpose of influencing various actions of F.D.I.C. or Federal Savings and Loan Insurance Corporation insured institutions, 18 U.S.C. § 1014 (1982), and for knowingly making false statements "with respect to the character, quality, quantity, or cost of any work performed or to be performed, or materials furnished or to be furnished, in connection with the construction of any highway or related project approved by the Secretary of Transportation." 18 U.S.C. § 1020 (1982)