Opinion ID: 220729
Heading Depth: 1
Heading Rank: 3

Heading: Was the evidence sufficient?

Text: We now turn to Parisi's contentions that the evidence failed, in several key respects, to sufficiently support the jury's verdict. We review a sufficiency claim de novo, drawing all reasonable inferences in favor of the verdict to determine whether a rational jury could find each element of the crime beyond a reasonable doubt. United States v. Scott, 564 F.3d 34, 39 (1st Cir.2009).
Parisi challenges the sufficiency of the evidence supporting his conviction under count one, for conspiracy to misapply government property in violation of 18 U.S.C. § 666(a)(1)(A), and to misapply the funds and assets of a health care program, in violation of 18 U.S.C. § 669. [12] To prove its case, the government had to show beyond a reasonable doubt that (1) a conspiracy existed; (2) the defendant knew of and voluntarily participated in the conspiracy; and (3) there was an overt act in furtherance of the conspiracy. United States v. Munoz-Franco, 487 F.3d 25, 45 (1st Cir.2007). Parisi challenges his conspiracy conviction under heading (1). Parisi argues that a conspiracy consists of an agreement between two or more individuals to disregard or disobey the law, United States v. Drougas, 748 F.2d 8, 15 (1st Cir.1984), and that simply doing what his employer asked of him was insufficient to establish such an agreement. The question is thus whether the evidence was sufficient to allow a rational jury to conclude, beyond a reasonable doubt, that Parisi and Newell came to an agreement to disregard or disobey §§ 666(a)(1)(A) and 669, i.e., the statutes prohibiting the misapplication of government funds generally and the funds and assets of a health care benefit program specifically. We have noted in similar circumstances that [a] formal agreement [between co-conspirators] is not required; rather `[t]he agreement may be shown by a concert of action, all the parties working together understandingly, with a single design for the accomplishment of a common purpose.' Munoz-Franco, 487 F.3d at 45-46 (internal citation omitted) (quoting Am. Tobacco Co. v. United States, 147 F.2d 93, 107 (6th Cir.1944)). In that case, employees of a bank and a development company were convicted for conspiring under 18 U.S.C. § 371 to commit bank fraud, misapply bank funds and make false entries in the books and records of the bank. Id. at 45. We dismissed their sufficiency of the evidence challenge, noting that the two bank officials directly supervised and worked closely with the developer's loans, that the developer and his employee submitted many certifications for work not yet completed, that one of the bank officials repeatedly approved those certifications, that the same bank official met frequently with the developer's employee regarding the status of their business ventures, and that the bank officials failed to disclose material information to the bank's Board of Directors. We held that this was sufficient to allow a jury to infer an agreement among the four defendants to defraud the bank. Id. at 46. The nature of the evidence in this case is similar. The evidence presented at trial showed, for instance, that Newell channeled money from the accounts of various federally funded programs into non-approved uses. These interfund transfers were recorded as loans, and while some were ultimately repaid, others were not. Some of these expenditures went toward paying payroll and general assistance, as well as the salaries of ghost employees, individuals who either no longer worked at the various grant-funded programs, or did not work for the time claimed. Parisi signed off on financial status reports filed with the federal agencies that were funding the programs, certifying that the money was spent in accordance with the grant's terms. Parisi was well aware that the grant money could not be used indiscriminately; indeed, he was repeatedly told as much by the fund administrators themselves. Nevertheless, Parisi continued to divert federal grant funds, including funds provided by SAMHSA intended for the Tribe's health center, to payroll and tribal government expenses. Parisi promised bookkeepers at these federally-funded programs that the ghost employees would be removed from payroll, but that did not happen. Similarly, Parisi assured the manager of the Tribe's health center (funded by federal SAMHSA grants) that the diverted funds would be repaid, although very little ultimately was. This conduct persisted for a period of nearly three years. The evidence presented against Parisi was sufficient to establish that even if there was no express agreement with Newell, nonetheless there was an implied or tacit agreement. Newell ordered that federal funds be misapplied and Parisi saw that they were. This was the requisite concert of action evincing a common purpose. See Munoz-Franco, 487 F.3d at 45-46. We will not disturb the jury's verdict as to count one. [13]
Parisi next contends that he was improperly convicted under count five, which alleged that he made a materially false statement with regard to how $215,599.43 of a SAMHSA grant intended for the Tribe's Wonahkik substance abuse and HIV prevention programs was spent. Parisi signed and submitted a financial status report with HHS claiming this amount was spent in accordance with grant purposes. In reality, $129,044.67 was spent to pay ghost employeesDennis Tomah, Sr., Dana Newell, and John Stevenswho did not work for those programs during the relevant time period. Parisi's claims on appeal are, first, that the government's evidence did not prove that his submission was knowing[] and willful[] as required by 18 U.S.C. § 1001(a)(2) and, second, that the form was in any case not material as it was improperly filled out. [14] To establish a violation of 18 U.S.C. § 1001, the government must prove that the defendant knowingly and willfully made or used a false writing or document, in relation to a matter within the jurisdiction of the United States government, with knowledge of its falsity. United States v. McGauley, 279 F.3d 62, 69 (1st Cir.2002). Willfulness . . . means nothing more in this context than that the defendant knew that his statement was false when he made it or . . . consciously disregarded or averted his eyes from its likely falsity. United States v. Gonsalves, 435 F.3d 64, 72 (1st Cir.2006). Parisi contends that the government produced no evidence showing that he knew that Tomah, Newell and Stevens had not worked in the Wonahkik program during the specified time. The form referenced a period of time prior to Parisi's employment at the reservation, and the jury acquitted Parisi of actually misapplying those particular funds (count three). An examination of the trial transcript reveals the following: at trial, Faye Socobasin (the tribal bookkeeper who actually filled out the form that Parisi later signed) was asked by the prosecutor if she had conversed with either Parisi or Newell about the inappropriate use of the funds. She said she had, and the prosecutor continued, so you did have a conversation with Robert Newell about this? to which she replied, Yes. The prosecutor then asked if she discussed the matter with Parisi, and she replied that with Jim Parisi, Iwhat I can remember is I just did the 269 [the financial status report] and told him that it had to be signed. The prosecutor then went on to establish that Parisi in fact signed the 269 form. Three days later, Linda Lewey, the Tribe's federal grant compliance officer, testified that Parisi was present at two meetings during which the issue of what to do about the unused money in the SAMHSA grant was discussed. The first meeting was apparently in December of 2003, when the decision was taken to request permission from HHS to roll over the unused money into the next fiscal year's budget. Lewey appears not to have been questioned as to what, specifically, transpired at the second meeting. As before, the prosecutor moved immediately to discuss whether Parisi had in fact signed off on the fraudulent financial reports. The most specific testimony on the issue of Parisi's knowledge of the falsehoods contained in the 269 form appears to have been provided by Roger Paul, the Wonahkik program coordinator. The prosecutor asked Paul whether he ever discussed payment of non-program employees with Parisi. His reply was: I don't remember that issue exactly. There were many occasions I spoke to Mr. Parisi, and there was one occasion I spoke to Mr. Parisi about the finances, and I remember Mr. Parisi saying, well, that's what Governor Newell wants done, and that's why we're doing it this way. However, this statement is ambiguous in at least two key respects. First, Paul testified only that he discussed finances with Parisi. And, second, it is unclear when Paul had this conversation with Parisi. Even if Paul's testimony is sufficient to show that Parisi knew of the unauthorized use of SAMHSA funds, if the revelation occurred after the false 269 form had already been filed, it would shed little light on the crucial question of whether Parisi knew the form to be false at the time of filing. The evidence the government amassed as to Parisi's guilt on count five clearly establishes that Parisi signed the 269 form, and that the 269 form misrepresented that certain expenses were properly charged to the SAMHSA grant. However, the evidence as to whether Parisi at this point knew that the information he was filing was materially incorrectthat Tomah, Newell and Stevens had not worked for Wonahkik in FY 2003appears to be skimpy at best. The time period in question was prior to Parisi's employment with the Tribe, and we see no reason to believe that he knew, within a few months of his arrival, where every tribal member had worked in the previous fiscal year. Conversely, of course, the inference of knowledge becomes increasingly pressing as Parisi became more and more deeply involved with, and received warning after warning about, Newell's on-going financial tomfoolery. Perhaps one could conclude from the evidence presented that it was possible that Parisi knew the 269 form to contain false statements. But we do not see how a reasonable person could view the evidence as establishing such knowledge beyond a reasonable doubt. Accordingly, we find that the evidence was not sufficient to convict Parisi under count 5. [15]
Parisi was convicted of counts 12-15, which assert that Parisi filed fraudulent claims for reimbursement to SAMHSA officials in the fiscal year ending on September 30, 2005, in violation of 18 U.S.C. § 287. [16] Parisi challenges his convictions on these counts because he claims that the government failed to prove that the forms at issue were material. They were not material, Parisi claims, because one of themthe form underlying count 12was returned to him because it was not in a format in which [HHS] was willing to review it, and because the government did not pay the claims listed on the forms underlying counts 13-15. The plain language of § 287 makes no mention of materiality as an element of the offense. Parisi argues that we should nevertheless read materiality into the statute, as the Eighth and Fourth Circuits have done. See United States v. Adler, 623 F.2d 1287, 1291 n. 5 (8th Cir.1980); United States v. Snider, 502 F.2d 645, 652 n. 12 (4th Cir.1974). In contrast, the Fifth, Ninth, Tenth and Second Circuits have held that § 287 does not require proof of the materiality of the false statement. See United States v. Upton, 91 F.3d 677, 685 (5th Cir.1996); United States v. Taylor, 66 F.3d 254, 255 (9th Cir.1995); United States v. Parsons, 967 F.2d 452, 455 (10th Cir. 1992); United States v. Elkin, 731 F.2d 1005, 1009-10 (2d Cir.1984), overruled on other grounds by United States v. Ali, 68 F.3d 1468 (2d Cir.1995). Finally, the Third Circuit has split the difference and concluded that materiality sometimes is, and sometimes is not, an element under § 287. See United States v. Saybolt, 577 F.3d 195, 200 (3d Cir.2009). This case does not require us to express a view as to whether materiality is an element under 18 U.S.C. § 287. This is because Parisi's claim cannot succeed either way. As we have noted in other statutory contexts, a statement need not actually deceive to qualify as material. Rather, materiality requires only that the fraud in question have a natural tendency to influence, or be capable of affecting or influencing, a government function. The alleged concealment or misrepresentation need not have influenced the actions of the Government agency, and the Government agents need not have been actually deceived. United States v. Corsino, 812 F.2d 26, 30 (1st Cir.1987) (citing United States v. Markham, 537 F.2d 187, 196 (5th Cir.1976)); see also United States v. Moran, 393 F.3d 1, 13 (1st Cir.2004). [17] It is thus clear that Parisi's claims would be unavailing even were we to read materiality into § 287. The forms Parisi submitted were expressly designed to cause the SAMHSA administrators to pay on claims that were not authorized by the terms of the SAMHSA grant. Although the 270 form at issue in count twelve was returned to Parisi because it was improperly formatted, it contained the substance of the relevant false claims, which substance was re-submitted several days later in the correct format. [18] As our precedent on materiality makes clear, that SAMHSA administrators were not ultimately deceived into paying out on the fraudulent claims at issue in counts 12-15 does not bear on the materiality of the fraudulent misrepresentations. Corsino, 812 F.2d at 30. For these reasons, the evidence was sufficient to show that the misrepresentations contained on the forms underlying counts 12-15 were material. [19]
Finally, Parisi attacks his conviction under counts 1, 8, 9, 11, 29 and 30 on the grounds that the government failed to prove the necessary criminal intent of acting willfully. The relevant statutes are §§ 666(a)(1)(A) and 669; the former alleges that Parisi intentionally misapplie[d] property, whereas the latter alleges that he knowingly and willfully embezzled, stole or converted the assets of a health care benefit program. Parisi insists that he had no motive to disobey or disregard the law, as he gained no benefit from the transfers. Parisi's argument is that in order to obtain a conviction under either of these statutes, the government needed to show that he acted willfully, meaning that the government had to show that he acted with an illicit motive. See Bryan v. United States, 524 U.S. 184, 192 n. 12, 118 S.Ct. 1939, 141 L.Ed.2d 197 (1998) (explaining that the term willful in a criminal statute generally means an act done with a bad purpose.). Parisi supports his contention by suggesting that when allegedly fraudulent acts are not themselves wrongful, then the government must additionally show illicit motive. See Fed. Deposit Ins. Corp. v. Elder Care Servs., 82 F.3d 524, 527 (1st Cir.1996) (noting that [n]ormally, a party suggesting fraud or bad faith is expected to point to the misconduct (lies, rigged account books, self-dealing by a fiduciary) that reflects the bad faith or constitutes the fraud, but acknowledging that on some occasions the inference of fraud or bad faith might be compelled by the combination of motive and outcome.). There appears to be scant law on the necessary mens rea under either §§ 666(a)(1)(A) or 669, and we do not attempt here to define the precise criminal intent required by these statutes. In particular, we do not express any view as to whether the government is required to prove a self-interested motive under either § 666(a)(1)(A) or § 669. It is sufficient for our purposes to note that, even if Parisi's argument were correct, the evidence presented was sufficient to support a finding of illicit motive. After all, Parisi evidently did have a motive to disobey or disregard the law, and derived a very concrete benefit from doing so: continued employment with the Tribe. Although not the direct beneficiary of the financial maneuvers he executed on Newell's behalf, Parisi benefitted indirectly by avoiding the fate of others who protested and subsequently found themselves out of a job. Thus, even if proof of an illicit motive or personal benefit was requiredan issue we do not resolve todaythe existence of such a motive or benefit was supportable from the facts. We discern no error in the jury's verdicts on this score.