Opinion ID: 679963
Heading Depth: 2
Heading Rank: 5

Heading: 18 U.S.C. Sec. 1001 (Counts I & II)

Text: 46 As mentioned above, Rooney's convictions on Counts I and II stem from the allegedly improper submission of a receipt for soft cost expenditures. Briefly, one of Rooney's submissions to the FmHA to justify his initial soft cost advance of $37,593.55 included a receipt for approximately $11,000 for services provided by Monahan Abstract Corporation (Monahan) associated with the closing costs of acquiring the real estate for the project. Part of these costs went toward the payment of taxes and satisfaction of the existing mortgage on the entire seventy acres of Rooney's property, encumbrances that had to be removed before Rooney could close the deal on the two acre site of the project. Rooney received a receipt from Monahan specifically listing the individual costs from Monahan for Title Insurance, Title Closing, Including Taxes and Payoff, but he thereafter requested a substitute receipt from Monahan that limited the listing of costs to Title Insurance, Survey and Closing Costs. It was this latter receipt that Rooney submitted to the FmHA. 47 The government's theory at trial was that Rooney requested the additional receipt because he knew that he could not properly claim reimbursement for the taxes and mortgage payoff of the entire property. A government witness testified that allowing such reimbursements would defeat the purpose of the contribution requirement. Rooney's response to the jury was multifaceted: nowhere is such a policy in writing; the FmHA's own form, which specifically excludes certain soft costs, makes no mention that prior taxes and satisfaction of an existing mortgage are disallowable; no evidence was presented to establish that Rooney was aware of such a policy even if one did exist; these costs were in fact necessary for the deal to close; and finally, no evidence existed that he was out to cheat the FmHA since his contribution of the two acres valued by the FmHA at $60,000 was well in excess of the FmHA capital requirement and remains so even after subtracting the disputed amount in the Monahan receipt. 48 According to 18 U.S.C. Sec. 1001, 49 Whoever, in any matter with the jurisdiction of any department or agency of the United States knowingly and willfully falsifies, conceals or covers up by any trick, scheme, or device a material fact, or makes any false, fictitious or fraudulent statements or representations, or makes or uses any false writing or document knowing the same to contain any false, fictitious or fraudulent statement or entry, shall be fined not more than $10,000 or imprisoned not more than five years, or both. 50 18 U.S.C. Sec. 1001. 51 Based on submission of the second Monahan receipt, Rooney was charged with concealing a material fact (Count I) and submitting a false statement (Count II). It is well established that [Sec. 1001] encompasses within its proscription two distinct offenses, concealment of a material fact and false representations. The objective of both offenses may be the same, to create or foster on the part of a Government agency a misapprehension of the true state of affairs. What must be proved to establish each offense, however, differs significantly. False representations, like common law perjury, require proof of actual falsity; concealment requires proof of wilful nondisclosure by means of a 'trick, scheme, or device.'  United States v. Diogo, 320 F.2d 898, 902 (2d Cir.1963) (citations omitted). See also United States v. Yermian, 468 U.S. 63, 69, 104 S.Ct. 2936, 2939-40, 82 L.Ed.2d 53 (1984) (pointing out that Sec. 1001's false representations component [o]n its face ... requires that the Government prove that false statements were made knowingly and willfully); United States v. Swaim, 757 F.2d 1530, 1533 (5th Cir.) (listing the elements of a concealment count as (1) knowingly and willfully; (2) concealing and covering up by trick, scheme or device; (3) a material fact; (4) in any matter within the jurisdiction of a department or agency of the United States), cert. denied, 474 U.S. 825, 106 S.Ct. 81, 88 L.Ed.2d 66 (1985). 52 When an appellate court reverses some but not all counts of a multicount conviction, the court must determine if prejudicial spillover from evidence introduced in support of the reversed count requires the remaining convictions to be upset. When confronted with a problem of taint, we must consider whether the presence of the [invalidated] count had any spillover effect sufficiently prejudicial to call for reversal of the remaining counts. United States v. Ivic, 700 F.2d 51, 65 (2d Cir.1983); see also United States v. Jones, 16 F.3d 487, 493 (2d Cir.1994) (stating that [p]rejudicial spillover from evidence used to obtain a conviction subsequently reversed on appeal may constitute compelling prejudice that requires overturning remaining counts). 53 In evaluating a claim of prejudicial spillover of evidence from an invalidated count, courts look to several factors in determining whether the totality of the circumstances requires reversal of some or all of the remaining counts. First, we examine whether the evidence on the reversed count would have tended to incite or arouse the jury into convicting the defendant on the remaining counts. See Ivic, 700 F.2d at 65 (considering whether evidence had a decidedly pejorative connotation that was of the sort to arouse the jury); United States v. Friedman, 854 F.2d 535, 582 (2d Cir.1988) (pointing out that evidence on the reversed count was hardly 'inflammatory' ). 54 Second, it is appropriate to look to the similarities and differences between the evidence on the reversed count and the remaining counts. Courts have concluded that where the reversed and the remaining counts arise out of similar facts, and the evidence introduced would have been admissible as to both, the defendant has suffered no prejudice. See United States v. Bailey, 859 F.2d 1265, 1273 n. 1 (7th Cir.1988) ([A]ll of the indictment's charges were similar in character and arose from the same overall scheme [and] most, if not all, of the evidence admitted on [the reversed counts] would have been admitted even absent those counts.), cert. denied, 488 U.S. 1010, 109 S.Ct. 796, 102 L.Ed.2d 787 (1989); United States v. Odom, 858 F.2d 664, 666-67 (11th Cir.1988) (Both sets of counts were premised on essentially the same facts. As a result, evidence relevant and admissible as to one set was equally relevant and admissible as to the other. Any 'spillover' which may have occurred therefore was not prejudicial.); United States v. Townsley, 843 F.2d 1070, 1081 (8th Cir.1988) (same), vac'd in part on other grounds, 856 F.2d 1189 (8th Cir.1988) (en banc), cert. dismissed, 499 U.S. 944, 111 S.Ct. 1406, 113 L.Ed.2d 461 (1991). The absence of prejudicial spillover can also be found where the evidence on the reversed and remaining counts are completely dissimilar, thus permitting the inference that the jurors were able to keep the evidence separate in their minds. See United States v. Pelullo, 14 F.3d 881, 898 (3d Cir.1994) (If the evidence was distinct, it is likely that there was no prejudicial spillover effect and no need to reverse the verdict on all counts.). 55 While these two lines of cases appear at first blush to be contradictory, they are in fact consistent. When the reversed and remaining counts arise from an identical fact pattern and all evidence introduced on the reversed count would have been admissible anyway, a defendant will have a difficult time establishing prejudice. Likewise, when the reversed and remaining counts arise from completely distinct fact patterns and the evidence can be easily compartmentalized, we normally will have undiminished faith that a jury has followed the court's instructions and has evaluated each count on the specific evidence attributed to it. It is only in those cases in which evidence is introduced on the invalidated count that would otherwise be inadmissible on the remaining counts, and this evidence is presented in such a manner that tends to indicate that the jury probably utilized this evidence in reaching a verdict on the remaining counts, that spillover prejudice is likely to occur. 56 Finally, as is routine when examining potential prejudice in any criminal case, it is appropriate to look to the strength of the government's case on the counts in question. See, e.g., United States v. Gjurashaj, 706 F.2d 395, 400 (2d Cir.1983) (reviewing the strength of the government's evidence on the remaining counts in rejecting a claim of prejudicial spillover from invalidated count). Now-Chief Judge Newman's discussion of this matter in United States v. Guiliano, 644 F.2d 85, 88-89 (2d Cir.1981), is instructive. In that case, after reversing two counts of a conviction, we evaluated whether a third count could stand. In ordering a new trial on the third count, Judge Newman explained that, although legally sufficient evidence existed to support the conviction, the potential for prejudicial spillover was high because improper evidence was admitted and because the evidence [on the remaining count] was barely sufficient to permit an inference of the disputed element of knowledge. Id. at 89. 57 In light of our precedents, we believe that the totality of the circumstances presented here require that Rooney's conviction on Counts I and II be vacated. First, we believe that the prosecution's depiction of Rooney vis-a-vis his dealings with Houghtaling had a decidedly pejorative connotation that was of the sort to arouse the jury. Ivic, 700 F.2d at 65. Referring to Rooney's solicitation to Houghtaling, which formed the basis of Count III but was unrelated to Counts I and II, the prosecution characterized Rooney to the jury in the following manner: 58 Mr. Rooney was trying to take advantage of people who were less able to control their own destiny than he was, and he should be found guilty of the offenses charged. 59 Further, most if not all of the evidence introduced in support of Count III was irrelevant and inadmissible as to Counts I and II. Yet, while the evidence on the Sec. 666 count and the two Sec. 1001 counts was distinct, and the jury would normally be expected to compartmentalize it, the prosecution encouraged the jury to consider the evidence on Count III as bearing on Rooney's culpability on Counts I and II. During the government's jury summation, the prosecutor recounted numerous aspects of the recorded conversations between Rooney and Houghtaling in an attempt to establish Rooney's guilt as to Count III. Curiously, the prosecutor proceeded to use part of this conversation to fortify the government's case on Counts I and II as well: 60 If there is any question about whether Mr. Rooney knew that the mortgage payoff and taxes were not reimbursable soft costs, take a close look at page 22 of the transcript, ... where Mr. Rooney says, No lender is going to give us money to build on someone else's land. 61 In the portion of the transcript to which the prosecutor refers, however, Rooney was not referring to anything relating to the Monahan receipt. Instead, Rooney was only discussing the potential location of additional housing units and the fact that these units would have to be on the site of the project because otherwise no lender is going to give us money to build on somebody else's land. However, the statement upon which the prosecutor relies to support Rooney's culpability on Counts I and II would never had been before the jury if not for the presence of Count III. This explicit invocation of evidence pertaining only to Count III and otherwise inadmissible on Counts I and II to bolster the government's case on these counts undermines our confidence that the jury adequately separated the two occurrences. 62 As for the strength of the case against Rooney on Counts I and II, we note that the jury certainly could have inferred from the circumstantial evidence presented that Rooney knowingly submitted a false statement or that he concealed the true state of affairs: the jury heard testimony that Rooney specifically requested a second receipt from Monahan that left out itemized references to taxes and mortgage payoff, and further that no reasonable real estate developer would have believed that FmHA soft cost expenditures could be properly used to payoff encumbrances on land not dedicated to a FmHA project. However, Rooney correctly points out that the government, quite understandably perhaps, failed to produce any direct evidence that Rooney actually knew that reimbursement of such soft cost expenditures was improper or that he knowingly intended to evade such a policy. The government was hampered by the fact that it could point to no specific written policy prohibiting the use of soft cost outlays for such purposes. The FmHA's own form lists various transactional and financial costs associated with closing, including an allowance for other costs necessary to closing the FmHA loan, such that a jury might have credited Rooney's defense that he submitted these costs in good faith. Thus, while the jury could quite permissibly have convicted Rooney of knowingly attempting to conceal material facts from or submitting a false statement to the FmHA, a jury could also have a reasonable doubt that Rooney indeed knew that his submitted costs were impermissible and thus had no intent to deceive the FmHA or conceal the true state of affairs. 63 In light of the government's pejorative depiction of Rooney based on the Count III evidence and the use of Count III evidence otherwise inadmissible to support his conviction on Counts I and II, combined with the view that the government's case on Counts I and II was not overwhelming, we are unable to conclude that Rooney's conviction on the two Sec. 1001 counts did not result from a spillover from the case against him on Count III. We therefore vacate the judgment of conviction on Counts I and II and remand for a new trial should the government choose to proceed further on those counts.