U.S. v. Merklinger, 93-5362

• Decision Date: 03 February 1994
• Docket Number: No. 93-5362,93-5362
• Citation: 16 F.3d 670
• Parties: 39 Cont.Cas.Fed. (CCH) P 76,622, 1994 Fed.App. 32P UNITED STATES of America, Plaintiff-Appellee, v. Alex G. MERKLINGER, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 670

16 F.3d 670

39 Cont.Cas.Fed. (CCH) P 76,622, 1994 Fed.App. 32P

UNITED STATES of America, Plaintiff-Appellee, v. Alex G. MERKLINGER, Defendant-Appellant.

No. 93-5362.

United States Court of Appeals Sixth Circuit.

Argued Dec. 10, 1993.

Decided Feb. 3, 1994.

Dan Newsom, Asst. U.S. Atty. (briefed), Jennifer L. Webber (argued), Office of the U.S. Atty., Memphis, TN, and Daniel A. Clancy, Asst. U.S. Atty., Office of the U.S. Atty., Jackson, TN, for plaintiff-appellee.

Patrick F. Martin (briefed) and Rayna Hardee Bomar (argued), Hardee & Martin, Jackson, TN, for defendant-appellant.

Before: JONES, Circuit Judge; BROWN, Senior Circuit Judge; and WEBER, District Judge. ^*

NATHANIEL R. JONES, Circuit Judge.

Defendant-Appellant Alex G. Merklinger appeals his conviction on seven counts of various acts of fraud and false statements. We find that the trial court erred in construing the statute that was at issue in one count, and that the evidence was insufficient to support a conviction on several other counts. However, we affirm the jury verdict on the remaining counts. This disposition does not affect Merklinger's sentence, and so we remand only in order for the lower court to revise its Entry of Judgment in accordance with this decision.

I. Facts

At the outset, a brief description of bonding requirements for bidding on government projects is in order. A contractor submitting a bid on a government project is usually required to post a performance bond, which guarantees that the work will be completed at the bid price. Similarly, once a contract has been awarded, the contractor is usually required to post a payment bond, which guarantees that all bills for labor, materials, and equipment will be paid. These bonds are issued by a surety in return for a percentage fee. Because the surety fee is included as part of the contractor's bid, the surety fee is actually paid by the government.

In this case, according to two written statements signed by Defendant: (1) between September 1987 and April 1988, Defendant signed approximately one hundred "Affidavit of Individual Surety" forms that contained fraudulent asset figures that vastly inflated Defendant's net worth, for the purpose of inducing various government agencies to accept him as surety on government contracts; and (2) on January 4, 1989, knowing that he lacked any ability to pay $2 million, Defendant signed a letter of credit for $2 million, addressed to the officer in charge of construction at the Naval Facilities Engineering Command in Pearl Harbor, Hawaii, for the purpose of qualifying as a surety on a government funded project.

Defendant was indicted in February 1992, on eight counts. Counts 1, 3, 5, and 6 charged Defendant with mail fraud and aiding and abetting mail fraud in violation of 18 U.S.C. Secs. 1341, 2. Counts 2 and 4 charged him with wire fraud and aiding and abetting wire fraud in violation of 18 U.S.C. Secs. 1343, 2. Count 7 charged him with making false statements, and aiding and abetting the making of false statements, to an agency of the United States in violation of 18 U.S.C. Secs. 1001, 2. Count 8 charged him with falsely making guarantee, and aiding and abetting the false making of guarantee, pertaining to bond to an officer of the United States in violation of 18 U.S.C. Secs. 494, 2.

Trial was held in December 1992. The evidence indicated that Defendant attempted to become surety for several projects, and succeeded at becoming surety for at least one project. ¹ Defendant testified that, although he signed the two incriminating written statements, they were not true. The jury found Defendant guilty on all counts. The trial court found that the offense charged in Count 7 was a lesser included offense of that charged in Count 8, so it acquitted Defendant of Count 7. The court sentenced Defendant to 37 months on each of the remaining counts, to run concurrently, and to be followed by three years of supervised release, and fined him $6,000. This appeal followed.

II. Discussion

A.

Defendant asked the trial court to instruct the jury that forgery was an element of Sec. 494, and the court declined to do so. Defendant contends on appeal that this was an error, and that 18 U.S.C. Sec. 494, the statute that gave rise to Count 8, requires an element of forgery. ² The question presented is one of statutory interpretation, which we review de novo. United States v. Brown, 915 F.2d 219, 223 (6th Cir.1990) ("A district court engages in statutory construction as a matter of law, and we review its conclusions de novo."). We agree with Defendant that Sec. 494 requires an element of forgery, and that the trial court erred as a matter of law.

Section 494 criminalizes the acts of false making, altering, forging, or counterfeiting for the purpose of defrauding the United States. In the present case, no one accuses Defendant of altering, forging, or counterfeiting. Rather, in oral argument, the prosecutor suggested that Defendant's false statements to the government fall within the scope of the term, "falsely makes," as used in Sec. 494. However, the government's implication--that the term, "falsely makes," applies to false statements in a genuinely executed document--betrays a misunderstanding of the historic use of this term. At English common law, the term, "false making," was used as an elucidation of the concept of forgery, and the two terms have been substantially synonymous for centuries. See, e.g., 2 East, Pleas of the Crown, 852 (1803) ("Forgery at common law denotes a false making"); 1 Hawkins, Pleas of the Crown, c. 70, Sec. 2, at 182-83 (1762); 4 Blackstone, Commentaries 247-48 (Christian ed. 1809). See generally Gilbert v. United States, 370 U.S. 650, 655-57, 82 S.Ct. 1399, 1402-03, 8 L.Ed.2d 750 (1962) (explaining English common law understanding of "forgery"); Moskal v. United States, 498 U.S. 103, 121-26, 111 S.Ct. 461, 472-74, 112 L.Ed.2d 449 (1990) (Scalia, J., dissenting) (reviewing the use of the term, "falsely made," in law dictionaries, statutes, caselaw, and scholarly commentaries, all of which establish that the term is an essential element of forgery, and does not embrace false contents of a genuinely executed document). The Gilbert Court noted that federal courts have tended to follow the English common law understanding of forgery when construing the word "forge" under federal statutes. 370 U.S. at 658, 82 S.Ct. at 1403-04. As stated in United States v. Wentworth, 11 F. 52, 55 (D.N.H.1882):

To falsely make an affidavit is one thing; to make a false affidavit is another. A person may falsely make an affidavit, every sentence of which may be true in fact. Or he may make an affidavit, every sentence of which shall be false. It is the "false making" which the statute makes an offence, and this is forgery as described in all the elementary books.

See also Greathouse v. United States, 170 F.2d 512, 514 (4th Cir.1948) ("The words, 'falsely made, forged, altered, or counterfeited' in the collocation in which they appeared are ejusdem generis and are usually employed to denounce the crime of forgery. Indeed it may be said that when used in an association of this kind the words 'falsely made' and 'forged' are substantially synonymous.").

Once one understands that the term "falsely makes" is synonymous with forgery, it becomes clear that there is no language in Sec. 494 that applies to false statements in a genuinely executed document. See, e.g., United States ex rel. Starr v. Mulligan, 59 F.2d 200, 202 (2d Cir.1932) (stating that in all of the cases construing former 18 U.S.C. Sec. 72, the predecessor to Sec. 494, "the fraud was perpetrated by means of forgery. We think it clear that [Sec. 72] must be so limited."); compare Sec. 494 (criminalizing the act of falsely making statements in order to defraud the United States) with 18 U.S.C. Sec. 1001 (criminalizing the act of making false statements to the United States). ³ But see Moskal, 498 U.S. at 106-18, 111 S.Ct. at 464- 70 (holding that, as used in 18 U.S.C. Sec. 2314, the term "falsely made" applies to genuinely executed securities containing false or incorrect information). ⁴

The parties in the present case did not discuss the traditional distinction between falsely making a statement, and making a false statement, and they apparently overlooked Mulligan. Instead, Defendant relied on United States v. Wright, 704 F.Supp. 613, 614 (D.Md.1989), which held that Sec. 494 is not applicable to documents that were not forged. The government cited to another district court case, United States v. Gowdy, 37 F. 332 (E.D.S.C.1889), which came to the opposite conclusion. Rather than choosing between two contradictory district court cases, the trial court in the present case decided instead to rely on United States v. Staats, 49 U.S. (8 How.) 41, 12 L.Ed. 979 (1850).

In Staats, the Supreme Court construed a predecessor statute to 18 U.S.C. Sec. 495, which contained much, but not all, of the language used in Sec. 494 and its predecessors. ⁵ The Court held that "[t]he instruments referred to in the first part of the section, the false making or forging of which, with the intent stated, is made an offence, probably are forged instruments in a strict technical sense." Id. (8 How.) at 46. However, the Court reasoned that the third clause of the statute--the one pertaining to "transmission or presentation of deeds or other writings to an officer of the government"--had a much broader scope:

The deeds and other writings mentioned are not connected with those in the preceding paragraph, as would have been natural, and almost of course, if intended to describe similar instruments.... The clause, therefore, may well be regarded as providing for a distinct and independent offence,--one essential to the protection of the government against fraudulent claims.

Id. (8 How.) at 47. Thus, the third clause of the statute applied to genuine instruments containing false statements, as well as to...