Opinion ID: 714125
Heading Depth: 3
Heading Rank: 2

Heading: False Statements (counts 7, 10-11 (Ross only) and 12-15 (both Ross and Collori))

Text: 51 In order to convict a defendant of making false statements in violation of 18 U.S.C. § 1001, the government must prove: (1) that the defendant made a statement (or that the defendant concealed facts that he had a duty to disclose); (2) that the statement was false; (3) that the statement was material; (4) that the statement was made knowingly and willfully; and (5) that the statement concerned a matter within the jurisdiction of a federal department or agency. Brantley, 786 F.2d at 1326; United States v. Petullo, 709 F.2d 1178, 1180 (7th Cir.1983). 52 Collori argues only that the government failed to prove his intend to defraud. However, as discussed above in our treatment of the mail and wire fraud counts, the record contains ample evidence from which a reasonable jury could have found Collori's intent to defraud beyond a reasonable doubt. 53 Ross's contentions are more numerous, yet no more compelling. Ross was charged with making essentially three different types of false statements, and he offers specific arguments for each of the types. 54 In the first category, charged in counts 7 and 10, Ross was accused of making false statements to AICS. Count 7 concerned Ross's sending of the Springman comfort letter to AICS in order to conceal Miller, Cooper's withdrawal of its opinion letter. Count 10 addressed Ross's subsequent submission to AICS of a falsified financial statement. Ross raises two challenges to the sufficiency of the government's evidence on these counts. 55 First, Ross argues that his statements to AICS did not concern a matter within the jurisdiction of the DOE because their submission was not required by a federal statute and because they were not submitted directly to a federal department or agency (AICS was a private accrediting association). Ross cites to the Supreme Court's language in Bryson v. United States that [a] statutory basis for an agency's request for information provides jurisdiction enough to punish fraudulent statements under § 1001. 396 U.S. 64, 70-71, 90 S.Ct. 355, 359, 24 L.Ed.2d 264 (1969). But the Bryson holding provides little support for Ross's argument. In Bryson, the Court faced the issue of whether false statements in a statutorily mandated disclosure can constitute a violation of § 1001 even if the disclosure statute is later determined to be constitutionally invalid. The Court held that a statute (even an invalid one) requiring disclosure was sufficient, not necessary, for the application of § 1001. Id. The Court's holding does not limit the application of § 1001 to false statements submitted directly to a department or agency, nor to disclosures that are statutorily mandated. In fact, the Bryson Court directed that  'jurisdiction' should not be given a narrow or technical meaning for purposes of § 1001. Id. This court has held that [t]he term 'jurisdiction' merely incorporates Congress' intent that the statute apply whenever false statements would result in the perversion of the authorized functions of a federal department or agency. United States v. Stanford, 589 F.2d 285, 297 (7th Cir.1978). 56 Contrary to Ross's argument, the law is clear that for a statement to concern a matter within the jurisdiction of a federal department or agency, it need not be submitted directly to that federal department or agency. United States v. Brack, 747 F.2d 1142, 1151 (7th Cir.1984), cert. denied, 469 U.S. 1216, 105 S.Ct. 1193, 84 L.Ed.2d 339 (1985); Petullo, 709 F.2d at 1180. See also United States v. Davis, 8 F.3d 923, 929 (2d Cir.1993); United States v. Wright, 988 F.2d 1036, 1038 (10th Cir.1993); United States v. Herring, 916 F.2d 1543, 1547 (11th Cir.1990), cert. denied, 500 U.S. 946, 111 S.Ct. 2248, 114 L.Ed.2d 488 (1991); United States v. Popow, 821 F.2d 483, 486 (8th Cir.1987). For a statement to fall within a federal agency's jurisdiction, it suffices to show that the deception of a private company affected a federal agency because of that agency's responsibility to ensure that its funds are properly spent. Brack, 747 F.2d at 1151. 57 This court has repeatedly found the submission of fraudulent statements to a private (or nonfederal government) entity to be within the jurisdiction of a federal agency where the agency has given funding to the entity and the fraudulent statements cause the entity to utilize these funds improperly. Id.; United States v. Hamilton, 726 F.2d 317, 321 (7th Cir.1984); Petullo, 709 F.2d at 1180; Stanford, 589 F.2d at 297-98. In these cases, the jurisdictional nexus between the agency and the entity for purposes of § 1001 stems from the agency's ultimate duty to safeguard the proper spending of federal funds. Although the DOE's funds in this case did not pass through AICS on the way to ISC, this case presents a situation analogous to the cases cited above because of AICS's integral part in the DOE's decision making concerning the distribution of federal funds. Here, the administration of financial aid program disbursals falls squarely within the regulatory authority of the DOE. The DOE made program participation dependent upon accreditation by an association such as AICS, and as a result the DOE significantly relied upon these associations' audits and appraisals when making decisions about the disbursement of federal funds. Ross knew that the DOE based much of its program eligibility determinations upon the AICS accreditation, and he deliberately made false statements to the AICS for the express purpose of continuing ISC's eligibility for Pell Grant and GSL monies. We find this evidence clearly sufficient to demonstrate that Ross made false statements concerning a matter within the jurisdiction of the DOE. 58 Secondly, Ross argues that the government failed to demonstrate that the Springman comfort letter and the false financial statements were material. A false statement is considered material where it has a natural tendency to influence, or is capable of influencing, the decision of the federal agency to which it is directed. Gaudin, --- U.S. at ----, 115 S.Ct. at 2313; United States v. Malsom, 779 F.2d 1228, 1235 (7th Cir.1985); Brack, 747 F.2d at 1147. The government adduced evidence that both the comfort letter and the false financial statements had the primary purpose and effect of lulling AICS into believing that ISC merited its continued accreditation. Given that AICS accreditation was a DOE prerequisite to financial aid program participation, the false statements had a natural tendency and capability of influencing the DOE's decision concerning ISC's eligibility. Clearly the government presented ample evidence from which a rational factfinder could find Ross's false statements to be material beyond a reasonable doubt. 59 In the second category of false statement, charged in counts 12-15, Ross (as well as Collori) was convicted for causing false cash transaction reports to be filed with the DOE. These false reports overstated ISC's cash on hand, concealing the fact that ISC Pell Grant funds had been withdrawn and used improperly. Ross puts forth two arguments that the government failed to prove the cash transaction reports were false. First, Ross contends once again that there was no evidence of falsity because all evidence produced at trial had been procured through criminal investigations rather than from a federal civil audit. As we explained above in conjunction with the scheme to defraud element of the mail and wire fraud counts, this argument has no merit. Secondly, Ross argues that the government's methodology for calculating cash on hand was incorrect. His argument is essentially that if one calculates the funds his way, rather than as the government did, the cash transaction reports were completely accurate. Again, however, it is not the function of this court to reweigh the evidence at trial. The government offered evidence that Ross had caused false cash request forms to be filed, with cash on hand stated at absurdly low levels, in order to receive larger amounts of Pell Grant funds from the DOE; that Ross had withdrawn Pell Grant funds for his personal use; and that Ross had caused student withdrawal vouchers to be backdated in order to conceal his own improper withdrawals. Given this evidence, a rational jury could certainly reject Ross's arguments concerning the methodology for calculating cash on hand and find that false cash transaction reports had been filed, with overstated cash-on-hand levels, in an attempt to further conceal the improper withdrawals. 60 In the third type of false statement, which was charged in count 11, Ross was convicted of causing the altered cash reconciliation spreadsheet to be given to Special Agent Livengood during his inspection. For this count, Ross maintains that none of the four elements of § 1001 have been demonstrated. With respect to falsity and intent, Ross argues that, as with the cash transaction reports, the government's methodology for demonstrating the spreadsheet's falsity was flawed. As a result, Ross insists the government proved neither that the spreadsheet was false nor that it was submitted with an intent to deceive the DOE. Once again, however, Ross mistakes the role of this court in reviewing for insufficiency of the evidence. It is enough that there was ample evidence for a rational jury to reject Ross's arguments at trial and agree with the government's assessments. 61 Ross makes two arguments concerning the materiality of the false spreadsheet. First, he contends the false spreadsheet was not material because there existed no statutory duty to submit it. However, as this court has previously held, the fact [t]hat a statement was not required to be made to the agency does not make the statement any less material. United States v. Dick, 744 F.2d 546, 553 (7th Cir.1984). Secondly, Ross argues that the spreadsheet was not material because neither Special Agent Livengood nor the DOE actually relied on it. Yet, [u]nder section 1001 a false statement may be material even though the agency did not rely on it and was not influenced by it. Id. The government need only have proved that the spreadsheet submitted to Livengood had the natural tendency or capability to influence a decision of the DOE--a showing that was clearly made here. 62 Finally, Ross argues that the spreadsheet did not concern a matter within the jurisdiction of the DOE because ISC had no statutory duty to submit it. As we explained in connection with Ross's false statements to AICS, however, the application of § 1001 is not limited to false statements submitted directly to a department or agency, nor to disclosures that are statutorily mandated. There is ample evidence here that the spreadsheet concerned a matter within the official regulatory authority of the DOE. 63