Court Opinion

ID: 3158703
Source: CourtListenerOpinion
Date Created: 2015-11-30 20:01:10.424312+00
Date Added: 2024-06-11T12:01:14.709843
License: Public Domain

Case: 15-10454   Date Filed: 11/30/2015   Page: 1 of 13

                                                           [DO NOT PUBLISH]

              IN THE UNITED STATES COURT OF APPEALS

                       FOR THE ELEVENTH CIRCUIT
                         ________________________

                               No. 15-10454
                           Non-Argument Calendar
                         ________________________

                    D.C. Docket No. 1:12-cv-00102-RS-GRJ

UNITED STATES OF AMERICA,

                                                                 Plaintiff-Appellee

                                    versus

SAMIM ANGHAIE,
SOUSAN ANGHAIE,
Individually,
d.b.a. New Era Technology Inc.,

                                                         Defendants-Appellants,

NEW ERA TECHNOLOGY INC.,

                                                                        Defendant.

                         ________________________

                  Appeal from the United States District Court
                      for the Northern District of Florida
                        ________________________

                              (November 30, 2015)
              Case: 15-10454     Date Filed: 11/30/2015    Page: 2 of 13

Before HULL, MARTIN, and ROSENBAUM, Circuit Judges.

PER CURIAM:

      Samim Anghaie and Sousan Anghaie appeal the district court’s final

summary judgment against them in a False Claims Act (FCA) case brought by the

United States. Samim Anghaie is a former University of Florida professor. The

government alleged that he and his wife Sousan made false statements to win four

contracts for research funding through grant programs administered by NASA and

the United States Air Force. The Anghaies were convicted of criminal charges

based on the same allegations. The government then filed this civil lawsuit to

recover damages and civil penalties. The district court took judicial notice of the

record from the criminal case and awarded $2,746,631.37 in damages (three times

the amount the government paid through the four contracts) plus a civil penalty of

$231,000 ($11,000 for each of twenty-one false claims).

      The Anghaies make four claims on appeal. First, they claim two of the

counts in the complaint are time-barred. Second, they claim summary judgment

was not appropriate on the issue of liability. Third, they claim the district court

made mistakes in calculating damages. And fourth, they claim the district court

imposed an excessive fine. After careful review of the record and the parties’

briefs, we vacate the two counts challenged as time-barred but otherwise affirm.

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                                          I.

      The Anghaies first claim that two of the counts in this case are barred by the

statute of limitations. The FCA provides that no civil action may be brought after

the later of either six years from the date of the violation or three years from when

the government should have known of the violation. 31 U.S.C. § 3731. We

review de novo a district court’s application of a statute of limitations. Berman v.

Blount Parrish & Co., 525 F.3d 1057, 1058 (11th Cir. 2008).

      Counts 2 and 3 involve payments made in January and April 2006. The

complaint was filed on May 11, 2012. The government has disclaimed its initial

opposition to the Anghaies’ statute of limitations argument in light of the Supreme

Court’s recent decision in Kellogg Brown & Root Servs., Inc. v United States ex

rel. Carter, __ U.S. at __, 135 S. Ct. 1970 (2015), which held that the Wartime

Suspension of Limitations Act, 18 U.S.C. § 3287, does not apply to civil actions

brought under the FCA. Counts 2 and 3 are barred by the statute of limitations, so

the Anghaies prevail on this claim.

                                          II.

      The Anghaies next argue the district court should not have granted summary

judgment on the issue of liability because some of the FCA counts in this case

correspond to fraud counts on which they were acquitted in the criminal trial. For

the remaining FCA counts, the Anghaies point to evidence of their alleged

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misstatements as constituting disputed issues of material fact. We review a grant

of summary judgment de novo, drawing all inferences in the light most favorable

to the non-moving party. Palm Beach Golf Ctr.–Boca, Inc. v. John G. Sarris,

D.D.S., P.A., 781 F.3d 1245, 1253 (11th Cir. 2015). Summary judgment is

appropriate when there is no genuine issue of material fact and the moving party is

entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a).

      Section 3279(a)(1) of the FCA authorizes a civil penalty plus treble damages

for anyone who either (A) knowingly presents a false claim for payment to the

government, (B) knowingly makes a false record that is material to a false claim

for payment, or (C) conspires to violate either (A) or (B). 31 U.S.C.

§ 3729(a)(1)(A)–(C). The term “knowingly” does not require specific intent to

defraud, only knowledge of the false information or deliberate ignorance or

reckless disregard of its falsity. 31 U.S.C. § 3729(b)(1). The FCA further provides

that “a final judgment rendered in favor of the United States in any criminal

proceeding charging fraud or false statements . . . shall estop the defendant from

denying the essential elements of the offense” in any civil FCA action that involves

the same transaction. 31 U.S.C. § 3731(e). The district court relied on this last

provision to find that the Anghaie’s criminal convictions estopped them from

disputing liability for twelve of the counts alleged here and went to find no genuine

issues of material fact for the remaining counts. We agree.

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      The Anghaies were convicted of wire fraud for making materially false

statements in proposals for three contracts, as well as in the progress reports for

one of these three. For a fourth contract, the jury convicted them only as to false

claims in the final report. The trial judge told the jury that these charges required

proof beyond a reasonable doubt that the Anghaies “devised or participated in a

scheme to obtain money . . . based on false pretenses, representations, or promises .

. . about a material fact.” The Anghaies were also convicted of conspiring to

defraud the government. These convictions required proof beyond a reasonable

doubt that the Anghaies agreed to accomplish an unlawful plan; that they knew the

unlawful purpose of the plan and joined willfully; that they engaged in at least one

of the charged overt acts; and that they knowingly committed that act with the

purpose of accomplishing some object of the conspiracy. Based on their

convictions, the Anghaies are estopped from denying either that they conspired to

defraud the government or that they knowingly made false claims.

      The record from the criminal case further shows that the Anghaies’ false

statements were material to the government deciding to pay false claims. First, all

the fraud charges required the jury to find beyond a reasonable doubt that “the

false pretenses, representations, or promises were about a material fact.” And the

jury heard much evidence tying the Anghaies’ false statements to decisions to

award money. For example, Bryan Palaszewski testified that he recommended

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approving a contract based on the Anghaies’ false statements about the principal

investigator on the project, the existence of a laboratory assistant, and the absence

of subcontractors. Carol Cobbs gave similar testimony about two other contracts.

      Even though for one contract the Anghaies were convicted of lying only in

the final report, the record still shows that the Anghaies’ false claims were material

to them getting paid on this contract. For example, the proposal for this contract

listed as the principal investigator someone who never worked on that contract.

Mitat Birkan testified that it would “have been a problem” if he knew this earlier.

He also testified that he would not have approved payments if he had known that

research in the final report for this contract “had been taken wholly from a doctoral

dissertation written in 1997 by one of Dr. Anghaie’s students.”

      The Anghaies claim that there remain specific disputed material facts related

to whether their misrepresentations were material. They argue there are disputed

facts about (1) whether the sentencing court rejected the summary of the core

offense conduct in the Presentence Investigation Report (PSI) when it sustained

some of the Anghaies’ objections; (2) whether Angelo Ferrari was inaccurately

represented as a principal investigator; (3) whether Birkan considered Ferrari’s role

important in recommending a contract; (4) whether the Anghaies had permission to

use research performed by an unrelated researcher; and (5) whether invoices were

required for any of the contracts. The Anghaies also reference vast swaths of the

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trial record for the blanket assertion that “each of the testimonial excerpts cited by

the government as ‘fact’ was put in dispute at the criminal trial.”

      None of these arguments raises a genuine issue of material fact. First, the

sentencing court adopted the PSI’s summary of the core offense conduct. Second,

the record from the criminal trial reflects that Ferrari was listed for a contract he

never worked on. Third, Birkan testified that he considered Ferrari’s identity

important when he recommended approving this contract. Fourth, the Anghaies’

permission to use another researcher’s work was separate from the question of

whether they made a false statement by including this work in their reports without

attribution. And fifth, the issue was whether the Anghaies made false statements in

their proposals and reports, not whether invoices were required.

      Neither these nor any of the Anghaies’ other factual points raise a genuine

issue of material fact. This being the case, and because the Anghaies were

convicted of conspiracy and fraud for making material misrepresentations as to

each of the four contracts at issue, the district court did not err in granting

summary judgment on the issue of liability.

                                           III.

      The Anghaies next argue that the district court erred in assessing damages

for the full amount of the research contracts. They emphasize that the sentencing

court in their criminal case stated that “no actual loss to the victims has been

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established” and that the Anghaies “provided valuable innovative research” to the

government. We review a district court’s award of statutory damages for abuse of

discretion. See Adiel v. Chase Fed. Sav. & Loan Ass’n, 810 F.2d 1051, 1054–55

(11th Cir. 1987). We review the district court’s findings of fact for clear error.

Travelers Property Cas. Co. v. Moore, 763 F.3d 1265, 1268 (11th Cir. 2014).

      The Anghaies argue that the damages award conflicts with findings about

restitution made in connection with their criminal sentences. But “[a]n order of

restitution is not a judicial determination of damages.” United States v. Barnette,

10 F.3d 1553, 1556 (11th Cir. 1994). The two remedies serve different purposes

and are calculated in different ways. Restitution is “an equitable remedy” granted

“only to the extent that justice between the parties requires.” Id. (quotation

omitted). “Damages measure the amount of compensable loss a victim has

suffered.” Id. Also, restitution is calculated based on factors such as a defendant’s

financial resources, financial needs, and earning abilities. See 18 U.S.C. §

3663(a)(1)(B)(i). In a damages action the sole question is whether the defendant

wrongfully caused the loss. Even when a sentencing court does not impose

restitution because a criminal fraud defendant did not intend or cause any loss, the

defendant still may have caused damages as defined by the FCA.

      In this case, the district court here did not abuse its discretion in assessing

damages for all the money the Anghaies earned through their false claims. There

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is “no set formula for determining the government’s actual damages” for an FCA

claim. United States v. Killough, 848 F.2d 1523, 1532 (11th Cir. 1988).

Generally, the measure is “the difference between what the government actually

paid on the fraudulent claim and what it would have paid had there been fair, open

and competitive bidding.” Id. A defendant may also be liable for intangible harm:

in Killough we held that kickbacks paid in exchange for government contracts

caused a “diminution in the public’s confidence in the government,” even if the

defendants may have won the contracts anyway as the lowest bidder. Id.

      The contracts at issue were awarded through the Small Business Innovation

Research (SBIR) and Small Business Technology Transfer (STRR) programs. The

statute establishing these programs provides that “[i]t is the policy of the Congress

that assistance be given to small-business concerns to enable them to undertake

and to obtain the benefits of research and development in order to maintain and

strengthen the competitive free enterprise system and the national economy.” 15

U.S.C. § 638(a). The government does not own the research it subsidizes through

these programs or share in the profits from commercial applications. Instead,

Congress expected beneficiaries to expand their research through privately funded

sources after performing research for the government. 15 U.S.C. § 638(e).

      This Court has never identified the precise benefit to government agencies of

the SBIR and STTR programs. The district court therefore looked to two out-of-

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circuit decisions. The first also involved charges that a company lied when

applying for an SBIR grant. See United States ex rel. Longhi v. United States, 575

F.3d 458, 461–62 (5th Cir. 2009). The Fifth Circuit explained that the purpose of a

research grant is to “award money to eligible deserving small businesses.” Id. at

473. Because the company’s fraud deprived the government of this benefit and the

government received no tangible benefit from these contracts, that court affirmed

damages based on the full amount of the contracts. See id.

      The district court also looked to United States v. Sci. Applications Int’l

Corp., 626 F.3d 1257 (D.C. Cir. 2010), which involved allegations that a company

made false statements to the Nuclear Regulatory Commission. Id. at 1263. The

district court had awarded the government damages in the full amount of the

payments made to the company. Id. at 1264. The D.C. Circuit held that “the

government will sometimes be able to recover the full value of payments made to

the defendant, but only where the government proves that it received no value from

the product delivered.” Id. at 1279. Remanding on the damages calculation, it

noted that “where the defendant fraudulently sought payments for participating in

programs designed to benefit third-parties rather than the government itself, the

government can easily establish that it received nothing of value from the

defendant and that all payments made are therefore recoverable as damages.” Id.

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      The district court did not abuse its discretion by calculating damages based

on the entire amount the government paid to the Anghaies. The evidence shows

that the government would not have paid the Anghaies at all but for their fraud.

Therefore, the difference between what the government paid and what it would

have paid in open, fair, and competitive bidding was the full amount of the contract

payments. Although this loss amount must be offset by any benefit conferred to

government, the district court did not err in finding that the government received

no benefit. The purpose of SBIR and STTR funding is to “assist small-business

concerns to obtain the benefits of research and development performed under

Government contracts or at Government expense.” 15 U.S.C. § 638(a), (b)(2).

The Anghaies lied about why they deserved this funding. Their fraud deprived the

government of the benefit of funding deserving and eligible research. The

government is entitled to damages for this harm.

      In any event, the Anghaies do not claim they provided any tangible or

calculable benefit. Instead, they claim they owe no damages because the

sentencing court said the “value in this case is difficult to quantify, but it does

appear that the defendants delivered cutting-edge innovative ideas.” Again,

findings about restitution do not dictate whether the evidence supports damages for

intangible harm. And the statement that the “value in this case is difficult to

quantify” actually highlights the intangible nature of any benefit the Anghaies

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might have conferred. The sentencing court even recognized that the Anghaies

“were not entitled to receive” the funding and that “there is a loss but the amount

cannot be determined.” It further specified that this loss was “not a pecuniary loss”

but rather a loss of “opportunit[ies] to enter into SBIR and STTR contracts with

qualified small businesses.”

       In light of its findings that the government received no tangible benefit and

suffered a clear intangible harm, the district court did not abuse its discretion by

imposing damages based on the full amount the government paid the Anghaies.1

                                              IV.

       Finally, the Anghaies claim that the district court imposed excessive civil

penalties. The FCA authorizes civil penalties between $5,500 and $11,000 per

false claim. 2 The district court imposed an $11,000 penalty for each of the 21 false

claims in the complaint. The Anghaies argue that this $231,000 total penalty “is

‘infinite’ times more than the actual loss,” which they claim is zero. They suggest

that this disproportionate fine may even violate the Eighth Amendment. The

government responds that its damages were more than $900,000. We have already

explained how the district court calculation reached an acceptable damages

       1
         That said, we expect the damage award will be lower once the payments identified in
the time-barred counts are subtracted on remand.
       2
        The FCA provides for penalties of $5,000 to $10,000. 31 U.S.C. § 3729. These
amounts have been adjusted for inflation to $5,500 to $11,000. See 28 C.F.R. § 85.3(a)(9).
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amount. The district court did not abuse its discretion by imposing a statutorily

authorized fine that amounts to less than a third of that amount.3

                                                   V.

          We affirm the district court’s judgment as to count 1 and counts 4 through

22. The record from the Anghaies’ criminal case supports the district court’s

holding that that the Anghaies violated the FCA for each of those payments. Once

the district court established liability, it did not abuse its discretion by calculating

damages based on the total amount paid to the Anghaies for these counts. Because

counts 2 and 3 are time-barred, we vacate the judgment as to these counts and

remand for a recalculation of damages and penalties consistent with this opinion

and the concession by the government.

          AFFIRMED in part, VACATED and REMANDED in part.

3
    Again, we refer to the fines associated with the counts that aren’t time-barred.
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