Opinion ID: 2999182
Heading Depth: 2
Heading Rank: 1

Heading: Sufficiency of Indictment and Evidence

Text: Moore raises a number of arguments on appeal, all concerning her conviction. First, she claims that the superseding indictment fails to allege facts that constitute an offense under § 1001, because it does not allege facts that “demonstrate that Moore . . . had a duty to disclose” her familial relationships. This court reviews the sufficiency of an indictment de novo. United States v. Webster, 125 F.3d 1024, 1029 (7th Cir. 1997). An indictment, according to Federal Rule of Criminal Procedure 7(c)(1), “must be a plain, concise, and definite written statement of the essential facts constituting the offense charged.” An indictment is sufficient if it “first, contains the elements of the offense charged and fairly informs a defendant of the charge against which he must defend, and, second, enables him to plead an acquittal or conviction in bar of future prosecutions for the same offense.” Webster, 125 F.3d at 1029 (quoting Hamling v. United States, 418 U.S. 87, 117 (1974)). We have identified five elements of a “false statements” charge under § 1001(a)(2), which, stated more generally, also apply to a scheme to conceal a material fact prohibited by § 1001(a)(1): (1) the defendant must make a statement, or have a duty to disclose the information; (2) the statement must be false, or there must be acts amounting to concealment; (3) the statement or concealed facts must be material; (4) the person must make the state- 8 No. 04-2989 ment or conceal the facts knowingly and willfully; and (5) the statement or concealed information must concern a matter within the jurisdiction of a federal department or agency. See United States v. Ross, 77 F.3d 1525, 154344 (7th Cir. 1996). Moore argues that the superseding indictment failed to meet several of these elements: first, that she had a duty to disclose; second, that she committed an affirmative act of concealment; and third, that the information she was concealing was material. We are not persuaded by her position. The opening paragraph of the superseding indictment charged that Moore, with Cameron and Allen, “knowingly and willfully planned and executed a scheme to conceal a material fact, which they had a duty to disclose” (emphasis added). The indictment goes on to charge that the material fact in question was that “members of the immediate family of Rosa Cameron were receiving a financial benefit from Williamsburg Heights Community Block Club Association while it was being funded, in significant part, by Community Development Block Grants (CDBG) funded by the United States Department of Housing and Urban Development (HUD) and awarded by the Common Council of the City of Milwaukee.” Finally, the indictment specifically charged that as part of the scheme “Moore, then serving as executive director of Williamsburg Heights, sent a letter to the City of Milwaukee Community Development Block Grants in response to an inquiry over whether Roberta Allen was a daughter of Rosa Cameron who was working for Williamsburg Heights,” and that the letter from Moore falsely “stated that Roberta Allen had stopped working at Williamsburg Heights on March 15, 2001.” We could go on, but this is enough to show that the indictment adequately charges the crime. Whether Moore’s actions met these allegations, including whether she indeed had a duty to disclose, is another matter relating more to the sufficiency of the evidence to convict, to which we now turn. No. 04-2989 9 Moore spends most of her time arguing that she had no duty to disclose her relationship with Cameron, attempting to draw a line between the prohibited conflict itself and the information she was required to disclose. When we review the sufficiency of the evidence, we ask “only if, after viewing all of the evidence in a light most favorable to the government, and drawing all reasonable inferences therefrom, . . . a rational trier of fact could not have found the essential elements of the crime, beyond a reasonable doubt.” United States v. Rivera, 825 F.2d 152, 158-59 (7th Cir. 1987) (citing Jackson v. Virginia, 443 U.S. 307, 319 (1979)). The government accuses Moore of characterizing the scheme too narrowly. In its view, the material fact that she had a duty to disclose was that members of Cameron’s family were receiving financial benefits from WH while it was being funded by HUD block grants. Thus, the government argues, Moore had a duty to disclose not only her own relationship to Cameron, but also the fact that she, Allen, and Bennett were receiving financial benefits in the form of paychecks from WH. This duty arose both when Moore signed contracts on WH’s behalf and in the course of her communications with City officials who were investigating the conflict-of-interest problem. Our starting point in considering this argument is the language of the contracts that WH signed with the City. Importantly, these are essentially form contracts, the content of which was dictated by HUD and the terms of the block grant program. Thus, these particular contracts are the functional equivalent of any other government form. The contract covering the period from January 1, 2001, through December 31, 2001, which Moore herself signed, is typical. Article XXI of that contract is entitled “Conflict of Interest (pursuant to 24 CFR 570.611, 24 CFR 85.36 and OMB Circular A-110).” Subsections A and B specify that no officer, employee, or agent of the City (A) or member of the governing body of the locality (B) shall have any financial 10 No. 04-2989 interest, direct or indirect, in the contract. Subsection C reads as follows: Interest of Contractor and Employees. The CONTRACTOR covenants that no person described in Article XXI, A and B above, who presently exercises any functions or responsibilities in connection with the Contract has any financial interest, direct or indirect, in this Contract. The CONTRACTOR further covenants that he/she presently has no interest and shall not acquire any interest, direct or indirect, which would conflict in any manner or degree with the performance of his/her services hereunder. The CONTRACTOR further covenants that in the performance of this Contract no person having any conflicting interest shall be employed. An interest on the part of the CONTRACTOR or his/her employees must be disclosed to the CITY. . . . (emphasis added). The subsection that immediately follows replicates HUD’s conflict-of-interest regulation for CDBG grants, 24 C.F.R. § 570.611, which makes clear that among the prohibited conflicts are those in which an elected official obtains a financial interest or benefit from a CDBGfunded activity either for herself or her immediate family. While it may have been possible theoretically to cross the “t’s” and dot the “i’s” more perfectly in this language, its import is unmistakeable: conflicts of interest must be disclosed to the City, and one type of conflict arises when an elected official or the immediate family of an elected official benefits financially from the CDBG grant. The evidence before the jury easily permitted it to conclude that Moore, who signed this contract to obtain HUD block grant funds, knew what the standards were and deliberately avoided disclosing the conflict to the City, even when she was asked directly about it. Indeed, even if Moore did not—as she argues—read the contract and thus was ignorant for a time of her legal obligation, the continued inquiries from City No. 04-2989 11 officials about the relationships between WH, Cameron, and Allen and the concerns expressed by City officials about conflicts of interest repeatedly triggered a duty to disclose. Once the City explicitly asked for the information, the failure to respond honestly is something far greater than a failure to volunteer information. The jury was entitled to conclude that Moore continued not only to withhold obviously material information from the City but affirmatively to lie. Although Moore argues that United States v. Gimbel, 830 F.2d 621 (7th Cir. 1987), requires us to hold that a § 1001 violation cannot be based on a failure to comply with instructions on a government form that was not itself promulgated in accordance with § 553 of the Administrative Procedure Act, we do not read Gimbel so broadly. In Gimbel, the central question was whether the defendant’s bank had a duty under the Currency and Foreign Transactions Reporting Act, 31 U.S.C. §§ 5311-22, to “aggregate all transactions by one customer on one day,” 830 F.2d at 625, and then to report those aggregates. Neither the Act nor the regulations imposed such a duty; the only reference to aggregation was contained in a form, which we found was insufficient to impose the duty to aggregate on the bank. In the absence of a duty to aggregate, the bank also had no duty to report aggregates. In Gimbel, therefore, the problem was that the underlying substantive duty (there, aggregation) was based only on a form. In Moore’s case, in contrast, the underlying duty to avoid conflicts of interest comes directly from regulations duly promulgated and codified in the Code of Federal Regulations. Those regulations are replicated in the form contract that the City used, and the contract spelled out the duty to disclose. Nothing in Gimbel suggests that forms or form contracts cannot perform this modest but important function. The contracts before us required WH to disclose to the City any conflicting interest on the part of WH or any of 12 No. 04-2989 its employees; Article XVIII also required WH to furnish to the City “such statements, records, reports, data and information as the CITY may request pertaining to matters covered by this Contract.” Because this contractual duty was expressly tied to the properly promulgated federal regulations governing the CDBG program, and the City was required to adopt forms that satisfied HUD, we conclude that the duty to disclose fell within the scope of § 1001. We note as well that Moore continued to stonewall the City and on occasion to lie long after she signed the contracts. Even if she had the right to remain silent, she did not have the right affirmatively to mislead City officials or to lie about which family members were or were not on WH’s payroll. See, e.g., Ross, 77 F.3d at 1546 (upholding a § 1001 false statements conviction where Ross lied to the government by submitting a false spreadsheet even where Ross had no duty to submit the information in the first place). The Eleventh Circuit came to a conclusion consistent with ours in United States v. Calhoon, 97 F.3d 518 (11th Cir. 1996), an analogous case that dealt with the Medi- care program. Hospital employee Calhoon told the truth, but not the whole truth, on certain Medicare reimbursement forms. He argued that the law permitted him to claim reimbursement for costs that might in the end be nonreimbursable, and thus that doing so could not be a false statement. The Eleventh Circuit took a more nuanced approach in rejecting his position: While it is true that a provider may submit claims for costs it knows to be presumptively nonreimbursable, it must do so openly and honestly, describing them accurately while challenging the presumption and seeking reimbursement. Nothing less is required if the Medicare reimbursement system is not to be turned into a cat and mouse game in which clever providers could, with impunity, practice fraud on the government. No. 04-2989 13 Id. at 529. See also United States v. Cisneros, 26 F. Supp. 2d 24, 42 (D.D.C. 1998) (“Since Cisneros responded to the questions, he had a duty to include all information necessary to make his statements truthful.”). As with the Medicare system, the HUD block grant system could not operate if the federal government were unable to rely on recipients such as the City of Milwaukee to discover whether subrecipients like WH had conflicts of interest or violated other HUD regulations. Moore did far more than simply remain silent in the face of an alleged duty to disclose. She told affirmative falsehoods to the City about the timing of her sister’s employment at WH; at one point, she lied about Allen’s relationship to Cameron; and she deliberately concealed the obviously important fact that she too was Cameron’s daughter. The federal regulations, which Moore had acknowledged in the form contract, expressly forbade these dealings, and Moore had promised to follow those regulations and to furnish relevant information to the City in the governing contracts. The district court correctly refused to dismiss the indictment, and it correctly found that the evidence showed a duty to disclose based firmly in HUD’s statutory program.