Opinion ID: 2967427
Heading Depth: 2
Heading Rank: 4

Heading: Highway Fraud Convictions

Text: Appellants also assert that their convictions for highway fraud under 18 U.S.C.A. § 1020 must be reversed because the government failed to prove that they acted willfully, failed to establish that the relevant highway projects were approved by the Secretary of Transportation or a properly authorized delegee of the Secretary, and failed to prove that the false invoices were made in connection with the construction of a highway project. We address each claim in turn.
We begin with Appellants’ contention that willfulness is an essential element of a § 1020 conviction which the government failed to establish. The district court refused Appellants’ proffered charge to this effect, instructing the jury instead that it must find that the Appellants made false statements knowingly. The highway fraud provision, 18 U.S.C.A. § 1020, provides in pertinent part that [w]hoever . . . knowingly makes any false statement, 30 UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES false representation, false report, or false claim with respect to the . . . cost of any work performed or to be performed . . . in connection with the construction of any highway or related project approved by the Secretary of Transportation . . . [s]hall be fined under this title or imprisoned not more than five years, or both. Id. (emphasis added). Thus, the language of the statute requires that a false statement be made knowingly in order to convict, but includes no element of willfulness. Appellants acknowledge as much. However, they contend that we should read an element of willfulness into the statute, primarily because the Federal Highway Administration (FHWA), in federal regulation 23 C.F.R. § 633, subpt. C, App. ¶ 5 (1999), has done so. The FHWA is charged with authorizing federal-aid highway projects. Under Subpart C of the regulation, highway construction contracts under the direct supervision of the FHWA must incorporate a form containing various labor standards provisions set forth in its Appendix A. This form, in turn, includes a provision which reminds contractors that they should perform their functions as carefully, thoroughly, and honestly as possible, and advises contractors that [w]illful falsification, distortion, or misrepresentation with respect to any facts related to the project is a violation of Federal law. Id. Based upon this, Appellants assert that we should defer to the FHWA’s interpretation of § 1020 and also read into § 1020 an element of willfulness. We decline to do so. For reasons unknown to us, the FHWA requires that the language in its direct construction contracts notify contractors that willfully false statements are a violation of federal law. However, even were we to determine that this reference in the Appendix fairly represents an agency’s interpretation of the statute as requiring willfulness in order to convict a contractor of highway project fraud (which we do not), we would owe that interpretation no deference. The text of the statute is unambiguous on this point and the FHWA is not charged with nor granted the authority to interpret or implement § 1020. Consequently, the department’s regulation has no effect on how we must interpret the statute. See e.g., Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43 (1984). In summary, we decline to read an element of willfulness into the UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES 31 4 plain and unambiguous text of § 1020. The government was not required to prove willfulness to convict Appellants under 18 U.S.C.A. § 1020 and, accordingly, the district court did not err in refusing Appellants’ proposed instruction to the contrary.
We next turn to Appellants’ assertion that the government failed to prove that the false claims were submitted in connection with a highway or related project approved by the Secretary of Transportation, 18 U.S.C.A. § 1020, or a properly-authorized delegee of the Secretary, see 49 U.S.C.A. § 322(b) (West 1997) (providing that the Secretary of Transportation may delegate, and authorize successive delegations of, duties and powers of the Secretary to an officer or employee of the Department and that an officer may in turn delegate, and authorize successive delegations of, duties and powers of the officer to another officer or employee of the Department). Appellants assert that their convictions must be reversed because there is no evidence that the Secretary delegated his duty to approve the projects in this case to a natural person. See Halverson v. Slater, 129 F.3d 180, 185-86 (D.C. Cir. 1997) (holding that the Secretary may only delegate the powers and duties of the office to a natural person, not to an administration or entity other than a natural person). However, at trial, Mr. John Grounds testified that he had been employed by the FHWA for 27 years and had been the financial manager with the FHWA office in Richmond, Virginia, for the past 10 4 Appellants also rely upon a single district court case involving alleged highway fraud under § 1020, in which the court posed the pertinent question for the jury as whether the government has proved beyond a reasonable doubt that that particular defendant has . . . knowingly and willfully by a false statement defrauded the government of the United States with a specific intent and purpose of accomplishing a fraud against the United States. United States v. Molin, 244 F. Supp. 1015, 1017 (D. Mass. 1965) (emphasis added). The Molin case, however, is comprised of nothing more than the court’s publication of its jury charge in a § 1020 case which also for unexplained reasons wrote a willfulness requirement into the unambiguous text of § 1020. For the reasons stated, we find this to be improper. 32 UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES years. He testified that he was authorized on behalf of the Secretary of Transportation to commit the federal funds to pay VDOT for highway projects. There was no evidence presented to dispute Grounds’ testimony that he was authorized to approve the relevant highway projects for federal funding. And, Appellants did not challenge at trial his testimony in this regard. Accordingly, we conclude that there was sufficient evidence to support the jury’s determination that the false claims submitted by Appellants were submitted in connection with highway projects approved by an authorized delegee of the Secretary of Transportation.
Finally, Appellants contend that we should reverse their highway fraud convictions because the government failed to prove that the false statements were made in connection with the construction of [a] highway or related project. 18 U.S.C.A. § 1020. We disagree. The highway fraud provision, in separate paragraphs, criminalizes the making of false statements in connection with highway projects submitted for approval to the Secretary and highway projects approved by the Secretary: Whoever . . . knowingly makes any false statement, false representation, or false report as to the character, quality, quantity, or cost of the material used or to be used, or the quantity or quality of the work performed or to be performed, or the costs thereof in connection with the submission of plans, maps, specifications, contracts, or costs of construction of any highway or related project submitted for approval to the Secretary of Transportation; or Whoever knowingly makes any false statement, false representation, false report, or false claim 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; UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES 33 18 U.S.C.A. § 1020 (emphasis added), is guilty of highway project fraud. Appellants were indicted under the second paragraph of § 1020 for their submission of false invoices in connection with the construction of highway projects already approved by the Secretary’s delegee. Appellants assert, however, that the second paragraph is only applicable to activities associated with actual construction of the highway, and not to preliminary engineering contracts such as that performed by PDS. In other words, Appellants assert that their convictions must be reversed because the second paragraph does not apply to the preliminary engineering work they performed. We do not read the second paragraph of § 1020 so narrowly. The first paragraph of § 1020 pertains to false statement[s], false representation[s], or false report[s] made in connection with the submission of plans, maps, specifications, contracts, or costs of construction of any highway or related project submitted for approval to the Secretary of Transportation, whereas the second paragraph of § 1020 pertains to false statement[s], false representation[s], false report[s], or false claim[s] made in connection with the construction of any highway or related project approved by the Secretary of Transportation. Id. (emphasis added). Contrary to Appellants’ proffered interpretation, we do not read the two paragraphs as seeking to distinguish between types of contracts (preliminary engineering contracts for a construction project as opposed to contracts for actual construction), but rather as seeking to distinguish between statements made in connection with a highway or related project submitted for approval and statements (including claims) made in connection with a highway or related project already approved. Under Appellants’ strained reading, their services, although performed in connection with an approved highway project, would fall within a gap between the two paragraphs. No such gap exists. Although in the nature of preliminary engineering work, the work of Appellants was furnished in connection with the construction of a highway project approved by the Secretary of Transportation through an authorized delegee.