Court Opinion

ID: 1025218
Source: CourtListenerOpinion
Date Created: 2013-07-05 06:46:15.063745+00
Date Added: 2024-06-11T12:27:44.135028
License: Public Domain

UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT

                             No. 07-4106

UNITED STATES OF AMERICA,

                Plaintiff - Appellee,

          v.

ROBERT E. GRAHAM,

                Defendant - Appellant,

          and

STATE OF WEST VIRGINIA,

                Party-in-Interest.

                             No. 07-4332

UNITED STATES OF AMERICA,

                Plaintiff - Appellee,

          v.

ROBERT E. GRAHAM,

                Defendant - Appellant,

          and

STATE OF WEST VIRGINIA,

                Party-in-Interest.
Appeals from the United States District Court for the Southern
District of West Virginia, at Beckley.   David A. Faber, Chief
District Judge. (5:06-cr-00025)

Argued:   December 5, 2007               Decided:   March 13, 2008

Before MICHAEL and GREGORY, Circuit Judges, and John Preston
BAILEY, United States District Judge for the Northern District of
West Virginia, sitting by designation.

Reversed by unpublished per curiam opinion.

ARGUED: Michael Warren Carey, CAREY, SCOTT & DOUGLAS, P.L.L.C.,
Charleston, West Virginia, for Appellant. Hunter P. Smith, Jr.,
Assistant United States Attorney, OFFICE OF THE UNITED STATES
ATTORNEY, Charleston, West Virginia, for Appellee. ON BRIEF: John
A. Kessler, CAREY, SCOTT & DOUGLAS, P.L.L.C., Charleston, West
Virginia, for Appellant.      Charles T. Miller, United States
Attorney, Charleston, West Virginia, for Appellee.

Unpublished opinions are not binding precedent in this circuit.

                                2
PER CURIAM:

     After    a   bench   trial,   the   appellant,    Robert   E.   Graham

(“Graham”) was convicted of stealing $31,129 from his employer, the

Council on Aging, Inc. (“COA”), an agency receiving federal funds,

in violation of 18 U.S.C. § 666(a)(1)(A).1             Graham appeals the

district   court’s   judgment,     contending   that   (1)   there   is   not

substantial evidence to support his conviction, (2) the district

court clearly erred in considering conduct for which Graham was

acquitted as “relevant conduct” for sentencing purposes, and (3)

the district court improperly ordered forfeiture. After a thorough

review of the evidence, we reverse Graham’s conviction.

     1
      (a) Whoever, if the circumstance described in subsection (b)
of this section exists--

(1) being an agent of an organization, or of a State, local, or
Indian tribal government, or any agency thereof--

(A) embezzles, steals, obtains by fraud, or otherwise without
authority knowingly converts to the use of any person other than
the rightful owner or intentionally misapplies, property that--
(I) is valued at $5,000 or more, and
(ii) is owned by, or is under the care, custody, or control of such
organization, government, or agency...

shall be fined under this title, imprisoned not more than 10 years,
or both.

       (b) The circumstance referred to in subsection (a) of this
section is that the organization, government, or agency receives in
any one year period, benefits in excess in $10,000 under a Federal
program involving a grant, contract, subsidy, loan, guarantee,
insurance, or other form of Federal assistance.

                                     3
                                      I.

     The facts underlying this dispute are undisputed.              For over

two decades, Graham was the Executive Director of two nonprofit

organizations, COA and All Care Home and Community Services, Inc.,

(“All Care”).    The organizations worked together to identify and

provide    services   reimbursed      by   state   and   federal    programs,

including Medicaid, to qualified recipients. Both COA and All Care

shared the same Board of Directors (“the Board”).             Prior to the

Board’s quarterly meetings, Graham would send each board member a

packet of documents that included an agenda for the meeting, the

minutes from the previous board meeting, check registers, program

reports and “Director’s Notes.”            Graham wrote the “Director’s

Notes” and the minutes from each meeting.2

     Until 2001, Graham did not have a written contract with either

COA or All Care.         This changed in December 2001, when Graham

provided   the   Board   with   two   essentially    identical     employment

contracts for himself, one for each agency (“twin contracts”). The

Board president signed both contracts.         For purposes of this case,

the relevant provision in each of the twin contracts concerned

Graham’s sick leave:

     SICK LEAVE/PERSONAL BUSINESS:       From the date of
     employment sometime around May 1975 till the termination
     of employment, Employee shall be entitled to one day per
     month of accumulating Sick Leave, beginning on the first

     2
      Occasionally, there was another person at the meeting who
would take minutes as well.

                                       4
      date of Employee’s employment.       Sick leave may be
      accumulated and carried over from year to year. Sick
      leave benefits may be converted into cash compensation if
      used for illnesses or upon the termination of this
      contract.

(J.A. 955, 961.)        In March 2002, Graham prepared an amended

contract     between   himself   and   COA    that   consolidated    the   twin

contracts into one.      The Board president signed the consolidated

contract.      In essence, the terms of the consolidated contract

provided Graham with the same cumulative benefits he received under

the   twin   contract   framework.         For   example,   the   consolidated

contract combined Graham’s salaries and sick leave from the twin

contracts.     The sick leave provision in the consolidated contract,

like the previous twin contracts, only allowed Graham to cash out

his sick leave under two circumstances:              illness or termination.

(J.A. 977.)

      In preparation for the January 27, 2003, Board meeting, Graham

sent out “Director’s Notes” in which he wrote, in part:

      I am requesting to buy out some of my sick leave. It
      shows in the books as an accrual.   I can already but
      [sic] out my vacation.

(J.A. 1001.)     The minutes from that Board meeting stated that the

Board unanimously approved Graham’s request to “buy accrued leave.”

(J.A. 1003.)      On the same day, Graham cashed out 1200 hours of

accrued sick leave which totaled $106,728 (gross) and $56,953.16

(net).   (J.A.    1005-1110.)

                                       5
     Subsequently, Graham’s Director’s Notes for the next two board

meetings   on   March   27,    2003,   and   May   14,   2003,   included   the

following identical request to continue buying out his accrued

leave:

     I am requesting permission to continuing [sic] buying out
     my vacation/annual and sick leave. It shows in the books
     as an accrual. I can already but [sic] out my vacation.

(J.A. 1012; 1019.)      In the Director’s Notes for the May 14, 2003,

meeting, Graham also added the following line to his request:

“This is the same as the notice from the last Board meeting.”

(J.A. 1019.)      The Board approved both requests.                Unlike his

previous cash outs in January, Graham did not cash out accrued sick

leave immediately after either of these Board meetings.              However,

on June 18, 2003, Graham filed two written requests to cash out a

total of 250 hours of accrued sick leave.                (J.A. 1308.)       Both

requests were approved by the Treasurer of the Board, Hazel Lusk

(Lusk). Subsequently, Lusk approved three more requests for Graham

to cash out additional accrued sick leave on the following dates:

July 29, 2003 (350 hours), January 14, 2004 (250 hours), February

10, 2004 (100 hours).         (J.A. 1308.)    The total amount of accrued

sick leave Graham cashed out in 2003 and 2004 was $191,221.81

(gross) and $107,788.56 (net).         (J.A. 1308.)

     Beginning in January 2003, federal authorities launched an

investigation into COA’s business operations.            By March 2003, West

Virginia authorities commenced their own investigation into COA.

                                       6
On March 10, 2004, while West Virginia authorities were in COA’s

office reviewing records, the Board called an emergency meeting

during which Graham’s consolidated contract was revoked although

the Board offered Graham continuing employment under revised terms.

During the meeting, the Board also ordered Graham to repay all the

sick leave he cashed out in 2003.   The Board did not demand that

Graham pay back the sick leave Graham cashed out in 2004.   On March

11, 2004, Graham repaid COA the net proceeds of the sick leave he

cashed out in 2003 and on March 26, 2004, he repaid COA the net

proceeds of the sick leave he cashed out in 2004.

     On July 18, 2006, a federal grand jury returned a second

superceding 39 count indictment against Graham. After pleading not

guilty to all of the charges and waiving his right to a jury trial,

Graham’s bench trial commenced on July 24, 2006.      On August 30,

2006, the district court found Graham guilty of Count 14 of the

Second Superceding Indictment, which charged Graham with stealing

$31,129 from COA in 2004 by cashing out his sick leave in violation

of his employment contract and 18 U.S.C. § 666.     In addition, the

district court ordered Graham to forfeit $31,129 as proceeds

traceable to the 18 U.S.C. § 666 violation.     The district court

acquitted Graham on the remaining 38 counts.3

     3
      It is worth noting that Count 13 mirrored Count 14, except
that it concerned Graham’s allegedly improper cash outs of accrued
sick leave in 2003. However, because the district court found that
Graham had only violated the consolidated contract by cashing out
his leave in June and July 2003, but not in January 2003, the

                                7
     The   Pre-Sentencing        Report       (PSR)   concluded      that    Graham’s

offense level was 16.            Included in that calculation was a +2

adjustment     because    Graham     abused      a    position      of    trust   that

“facilitated    the     commission      or    concealment”     of    his    crime.4

U.S.S.G.   §   3B1.3.      The    PSR     stated      that   this    provision    was

applicable because the Board “rubber stamped” all of Graham’s

decisions (J.A. 1312) and Graham took advantage of the Board’s

trust in order to facilitate his criminal conduct.                       Since Graham

had no criminal history points, he was placed in Criminal History

Category I.     Based on a total adjusted offense level of 16 and a

Criminal History Category of I, the advisory guideline sentence for

Graham equaled 21-27 months.

     The district court adopted the PSR’s finding and sentenced

Graham to 24 months imprisonment, a three year term of supervised

release, and fined him $10,000.               In addition, the district court

ordered Graham to forfeit $31,129.                 Graham timely appealed the

district court’s judgment.

district court found him not guilty as to that count.
     4
      Despite Graham’s objection to the application of a two point
enhancement for abuse of trust, the district court found that
because of the Board’s vulnerability and the fact that Graham
effectively controlled the Board, the two point adjustment was
proper. In addition, Graham objected to the loss calculation in
the PSR because it included payments in 2003 for which he was
acquitted. The district court denied Graham’s objection, finding
that since the payments Graham received in June and July 2003 were
obtained without Board approval, those incidents were properly
included as relevant conduct for purposes of sentencing.

                                          8
                                         II.

     In determining whether sufficient evidence exists to support

a conviction, the appropriate inquiry is whether, taking the

evidence   in   the     light   most    favorable   to   the   Government,   any

reasonable trier of fact could have found the defendant guilty

beyond a reasonable doubt.             See e.g., U.S. v. Newsome, 322 F.3d

328, 333 (4th Cir. 2003) (“The standard governing our review is

whether    there   is    substantial      evidence,   taking    the   view   most

favorable to the Government, to support [the jury verdict] and we

have defined substantial evidence, in the context of a criminal

action, as that evidence which a reasonable finder of fact could

accept as adequate and sufficient to support a conclusion of a

defendant’s guilt beyond a reasonable doubt.”             (internal citations

and quotation marks omitted.))            We now apply this standard to the

facts in this case.

     In its memorandum order, the district court found Graham

guilty of Count 14 because:

     . . . the conclusion is inescapable that Graham cashed in
     the sick leave without the approval of his board, knowing
     he needed board approval, thereby effectively stealing
     the money or converting it to his own use.       From the
     evidence taken at trial it is clear that defendant, an
     employee, took this money from COA without having any
     board approval whatsoever.      These transactions each
     constituted major changes of the sort that required board
     approval. The fact that Graham sought board approval for
     the earlier cash outs of sick leave is compelling
     evidence that he knew such approval was required. Graham
     cavalierly disregarded the board and treated large
     amounts of COA’s money as if it were his own, diverting

                                          9
     it to his personal use and to the detriment of those whom
     COA and All-Care were created and funded to serve.

(J.A. 156.) The district court’s holding was motivated by the fact

that on three prior occasions Graham sought the Board’s approval to

cash out accrued sick leave.     As a result, the district court

reasoned that Graham knew that he needed board approval for each

instance he cashed out accrued sick leave since the cash outs were

impermissible under the terms of the consolidated contract.

     The Government argues that there is substantial evidence to

support the district court’s decision.    The Government contends

that the evidence at trial demonstrates that Graham took advantage

of a Board that was comprised of elderly, disabled, and uneducated

men and women who rubber stamped all of his decisions.           The

Government argues that Graham should have explicitly informed the

Board about how much sick leave he was actually going to cash out

and made certain that the Board understood that his request was

inconsistent with the terms of his contract.5

     5
      In support of its argument, the Government also cites to
evidence that the district court did not rely on, including the
fact that Graham used some of the sick leave cash out money to buy
things for his girlfriend. In addition, the Government contends
that cashing out accrued sick leave was inconsistent with the
written policy of COA and that Graham only reimbursed COA after the
media began publishing stories about Graham’s contract with COA.
While these facts may demonstrate that Graham is not eligible for
the priesthood, they are irrelevant so far as the district court’s
determination of guilt is concerned.       As the district court
concluded:

     The events leading to this indictment are improper and
     outrageous and cannot be condoned by the court. Graham

                                10
      In order to convict Graham under 18 U.S.C. § 666, the district

court had to find, beyond a reasonable doubt, that Graham knowingly

stole funds from COA.          On this critical matter, we believe both the

district court and the Government reached the wrong conclusion.

Quite simply, Graham’s cash outs in June and July of 2003 and

January and February of 2004 were not contrary to the authority

given to him by the Board.          The Board repeatedly authorized Graham

to   buy   out   his    accrued     sick      leave    and    did    not   place   any

restrictions on the amount of accrued sick leave he could cash out

or the timing of these cash outs.                As such, the timing and amount

of   the   accrued     leave    cash   outs      are   clearly      insufficient   for

purposes of establishing Graham’s intent to steal funds from COA.

      In   addition,     the     Board’s    actions        during    the   March   2004

emergency meeting provide strong circumstantial evidence that it

did not believe Graham violated any Board directives or that he

attempted to bamboozle the Board in order to bilk COA out of

hundreds of thousands of dollars.                    While the Board did reduce

Graham’s    salary     and     benefits,        it   did   not   ask   for   Graham’s

     failed miserably to fulfill his duties as a public
     servant, engaging in conduct that squandered public
     resources and adopting a life-style that reflected
     discredit upon COA and All-Care, their directors and
     employees. Bad conduct in and of itself, however, does
     not equal criminal conduct. To convict a defendant of a
     crime, the Government must establish beyond a reasonable
     doubt by competent evidence each and every element of
     each and every crime charged.
(J.A. 912.)

                                           11
resignation.    In fact, Graham’s salary and benefits were not

reduced as a punitive measure, but rather at the behest of Graham

in order to quell the media maelstrom that had overwhelmed the

organization.   (J.A. 1044.)    As the Board stated in its summary of

the emergency meeting:

     “[t]he Directors of the [COA] are very proud of the
     success and growth of the [COA] and believe that Robert
     E. Graham has worked diligently and on behalf of the
     [COA] for over 25 years and has brought success to the
     [COA] and regrets that the press has not emphasized such
     accomplishments.”

(J.A. 1044.)

                                  III.

     In summary, the salient facts in the instant case, taken in

the light most favorable to the Government are as follows:       Graham

received the Board’s permission to cash out an indeterminate amount

of his accrued sick leave.     There was nothing in any of the Board’s

decisions that placed any limitations on when and how much accrued

sick leave Graham could cash out.        According to COA’s independent

audit, the gross value of Graham’s accrued sick leave as of

September 30, 2002, was $241,167.        (J.A. 1087.)   The total gross

amount of sick leave Graham cashed out in 2003 and 2004 was

$191,221.81, an amount that he conceivably could have cashed out in

January 2003 without violating any of the Board’s decisions.

     Based on these facts, a reasonable trier of fact could not

find, beyond a reasonable doubt, that Graham knowingly stole any

                                   12
money from COA.     Graham’s consolidated contract with COA entitled

him to cash out his accrued sick leave upon his termination or due

to illness; however, the Board’s decisions in January, March, and

May of 2003 resulted in a de facto amendment that overrode these

restrictions.     In essence, the Board gave Graham the ability to

cash out his accrued sick leave early without any limitation as to

the amount of accrued sick leave he could cash out or a specific

time period when such cash outs had to occur.

     In addition, the evidence in the record clearly rebuts any

accusation   that   Graham   was   trying   to   hide   his   cash   outs   in

June/July 2003 and January/February 2004 - Graham filled out the

proper leave forms to cash out his accrued sick leave on each

occasion and the Board’s treasurer approved the forms and signed

the checks. The record is replete with minutes, notes, checks, and

records of Graham’s transactions, all of which were open to review

by COA’s independent auditors and COA’s Fiscal Officer.6             Indeed,

the fact that Graham continued to cash out accrued sick leave after

January 2003, the point at which the federal investigation into COA

commenced, provides striking evidence that Graham did not knowingly

steal any money from COA.

     While we recognize that the amount of money cashed out by

Graham is substantial, that issue is ultimately irrelevant because

     6
      In fact, at one point, COA’s Fiscal Officer questioned
Graham’s cash outs, and Graham accurately told her that the Board
had approved the cash outs.

                                    13
Graham had properly accrued all of that sick leave money during his

tenure at COA and All Care.      The pertinent question is whether the

Board authorized him to cash out his sick leave in June/July 2003

and   January/February   2004.     We    answer   this   question    in   the

affirmative because on this record it is undisputed that the Board

repeatedly authorized Graham to cash out his accrued sick leave

without any limitations.

                                   IV.

      Based on the reasoning above, we reverse Graham’s conviction

and sentence and remand to the district court to enter a judgment

of not guilty as to Count 14 of the Second Superceding Indictment.7

                                                                    REVERSED

      7
      Because we are reversing Graham’s conviction,                  it    is
unnecessary to address Graham’s remaining contentions.

                                    14