Opinion ID: 556608
Heading Depth: 3
Heading Rank: 2

Heading: Liability Under 18 U.S.C. Sec. 1001

Text: 56 For making false statements on the Forms 13D and 14D-1 filed with the SEC, Bilzerian was charged with violating the general false statements statute, 18 U.S.C. Sec. 1001, rather than the more specific securities law provisions. He contends that the government's prosecution under Sec. 1001 was an unprecedented attempt to impose criminal penalties without complying with the specific requirements for criminal prosecution under the 1934 Act. Section 1001 provides: 57 Whoever, in any matter within 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. 58 18 U.S.C. Sec. 1001 (1988). The statute was designed to protect the authorized functions of governmental departments and agencies from the perversion which might result from the deceptive practices described. United States v. Gilliland, 312 U.S. 86, 93, 61 S.Ct. 518, 522, 85 L.Ed. 598 (1941); see also United States v. Fitzgibbon, 619 F.2d 874, 877-78 (10th Cir.1980) (describing legislative history). To support a conviction under Sec. 1001, the government must establish that the defendant (1) knowingly and willfully (2) made a statement (3) in relation to a matter within the jurisdiction of a department or agency of the United States, (4) with knowledge that it was false or fictitious and fraudulent. See United States v. Silva, 715 F.2d 43, 49 (2d Cir.1983). Under our decisions, materiality of the statement is not an element of the offense. See United States v. Elkin, 731 F.2d 1005, 1009 (2d Cir.), cert. denied, 469 U.S. 822, 105 S.Ct. 97, 83 L.Ed.2d 43 (1984); United States v. Silver, 235 F.2d 375, 377 (2d Cir.), cert. denied, 352 U.S. 880, 77 S.Ct. 102, 1 L.Ed.2d 80 (1956). 59 Defendant asserts that it was Congress' purpose to have criminal prosecutions, for misstatements in informational reports filed with the SEC, brought under Sec. 32(a) of the Exchange Act, 15 U.S.C. Sec. 78ff, a specific enforcement provision setting forth criminal penalties for willful violations of the securities laws and the applicable rules and regulations. Unlike the false statements statute, Sec. 32(a) requires proof of materiality and contains a provision that imprisonment will not be imposed on a defendant who was ignorant of the substance of the rule. In pertinent part it provides:Any person who willfully violates any provision of this chapter ... or any rule or regulation thereunder the violation of which is made unlawful or the observance of which is required ... or any person who willfully and knowingly makes, or causes to be made, any statement in any application, report, or document required to be filed ... which statement was false or misleading with respect to any material fact, shall upon conviction be fined not more than $1,000,000, or imprisoned not more than 10 years, or both ...; but no person shall be subject to imprisonment under this section for the violation of any rule or regulation if he proves that he had no knowledge of such rule or regulation. 60 15 U.S.C. Sec. 78ff (1988). 61 It is settled law that when an act violates more than one criminal statute, the Government may prosecute under either so long as it does not discriminate against any class of defendants. United States v. Batchelder, 442 U.S. 114, 123-24, 99 S.Ct. 2198, 2204, 60 L.Ed.2d 755 (1979). Prosecution has additionally been permitted under Sec. 1001 despite the existence of other overlapping and more specific false statement statutes. United States v. Gordon, 548 F.2d 743, 744 (8th Cir.1977); see also, e.g., United States v. Grotke, 702 F.2d 49, 54 (2d Cir.1983) (Sec. 1001 applicable despite more specific currency reporting statute.). 62 Defendant argues that in the case of alleged misstatements or omissions in informational reports filed under the Exchange Act, Congress planned that Sec. 32(a) and not Sec. 1001 control. At the time Sec. 1001 was enacted--only 12 days after the Exchange Act was passed--it provided harsher penalties than Sec. 32(a), though the requirements for conviction under Sec. 1001 were less stringent. Nonetheless, proximity of the enactments without more does not suggest that the application of the false statements statute was to be limited by the just-enacted securities laws. Absent more explicit indicia of Congressional purpose to foreclose the use of Sec. 1001, the general rule that criminal statutes may overlap controls. The fact that less proof is required for conviction under Sec. 1001 does not amount--as defendant alleges--to overriding the requirements of Sec. 32(a). 63 Defendant also asserts that statements made on Schedules 13D and 14D-1 are not matters within the jurisdiction of the SEC because with respect to these statements the SEC is merely a repository of information and does not act upon the statements. It is his view that Sec. 1001 is appropriate only for misstatements or omissions (1) made during an active governmental inquiry or (2) that formed the basis for some sort of governmental action. 64 The Supreme Court has stressed that the term jurisdiction in Sec. 1001 should be broadly construed. An agency has jurisdiction within the meaning of the statute when it has authority to act upon the information. See United States v. Rodgers, 466 U.S. 475, 479-80, 104 S.Ct. 1942, 1946, 80 L.Ed.2d 492 (1984); United States v. Adler, 380 F.2d 917, 922 (2d Cir.), cert. denied, 389 U.S. 1006, 88 S.Ct. 561, 19 L.Ed.2d 602 (1967). A statutory basis for an agency's request for information provides jurisdiction enough to punish fraudulent statements under Sec. 1001. Bryson v. United States, 396 U.S. 64, 71, 90 S.Ct. 355, 359, 24 L.Ed.2d 264 (1969). 65 A statutory basis for the SEC's request for information exists because the Exchange Act requires the documents at issue to be filed with it. 15 U.S.C. Secs. 78m(d), 78n(d) (1988). This executive agency is authorized to regulate the content of the documents and to investigate and prosecute violations of law based on the filings. 15 U.S.C. Secs. 78m(d), 78u (1988); see United States v. Fields, 592 F.2d 638, 649 (2d Cir.1978) (filing prospectus which concealed material facts with SEC stated a claim under Sec. 1001), cert. denied, 442 U.S. 917, 99 S.Ct. 2838, 61 L.Ed.2d 284 (1979); United States v. Kuna, 760 F.2d 813, 820 (7th Cir.1985) (sustaining conviction under Sec. 1001 for false statement on broker-dealer registration); United States v. Di Fonzo, 603 F.2d 1260, 1263-64 (7th Cir.1979) (documents submitted to SEC in course of investigation within its jurisdiction), cert. denied, 444 U.S. 1018, 100 S.Ct. 672, 62 L.Ed.2d 648 (1980); see also United States v. Hansen, 772 F.2d 940, 943-44 (D.C.Cir.1985) (the term jurisdiction in Sec. 1001 embraces the authority to conduct an official inquiry), cert. denied, 475 U.S. 1045, 106 S.Ct. 1262, 89 L.Ed.2d 571 (1986); United States v. Diaz, 690 F.2d 1352, 1357 (11th Cir.1982) (grant of authority rather than its exercise determines jurisdiction). 66 Although the SEC may not act on every Schedule 13D, the filing of a false statement may interfere with its investigatory and enforcement function, including its determination whether or not to investigate a transaction. The securities laws are designed to make accurate information available to the investing public; the SEC's authority to regulate disclosure required under those laws brings the securities filings at issue within its jurisdiction for purposes of Sec. 1001. 67 Further, defendant makes a venue objection, stating the alleged violation occurred in Washington D.C., where the document was filed, and that the drafting of the document was mere preparation for the offense, not part of it. See United States v. Beech-Nut Nutrition Corp., 871 F.2d 1181, 1190 (2d Cir.), cert. denied, --- U.S. ----, 110 S.Ct. 324, 107 L.Ed.2d 314 (1989). We disagree. The documents were prepared and signed--i.e. made--within the Southern District of New York, and thus venue was properly laid there. See United States v. Mendel, 746 F.2d 155, 165 (2d Cir.1984) (venue under Sec. 1001 lies either where documents were prepared or filed), cert. denied, 469 U.S. 1213, 105 S.Ct. 1184, 84 L.Ed.2d 331 (1985).