U.S. v. Jackson-Randolph

• Decision Date: 22 February 2002
• Docket Number: No. 00-1073.,00-1073.
• Citation: 282 F.3d 369
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Marie Antoinette JACKSON-RANDOLPH, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 369

282 F.3d 369

UNITED STATES of America, Plaintiff-Appellee, v. Marie Antoinette JACKSON-RANDOLPH, Defendant-Appellant.

No. 00-1073.

United States Court of Appeals, Sixth Circuit.

Argued: October 24, 2001.

Decided and Filed: February 22, 2002.

Rehearing and Suggestion for Rehearing En Banc Denied: May 2, 2002.

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Craig A. Weier (argued and briefed), Jacqueline M. Hotz, Patricia G. Gaedeke, Office of the IJ.S. Atty., Detroit, MI, for Plaintiff-Appellee.

Neil H. Fink (argued and briefed), Law Offices of Neil H. Fink, Birmingham, MI, Carole M. Stanyar (briefed), Detroit, MI, for Defendant-Appellant.

Before BOGGS and GILMAN, Circuit Judges; QUIST, District Judge.^*

OPINION

QUIST, District Judge.

Marie Antoinette Jackson-Randolph appeals her conviction for conspiracy to commit program fraud and mail fraud, in violation of 18 U.S.C. § 371; program fraud, in violation of 42 U.S.C. § 1760(g); mail fraud, in violation of 18 U.S.C. § 1341; embezzlement/conversion of $5,000 or more from a program receiving federal funds, in violation of 18 U.S.C. § 666; and money laundering, in violation of 18 U.S.C. § 1956(a)(1)(B)(i). For the following reasons, we affirm Jackson-Randolph's conviction and the majority of her sentence, but remand to the district court for further findings on Jackson-Randolph's ability to pay a fine.

I

Defendant-appellant, Marie Antoinette Jackson-Randolph, was the founder and president of MAJCO, Inc., a nonprofit corporation that operated a private school and several day-care centers in Detroit, Michigan. MAJCO participated in the United States Department of Agriculture's Child Care Food Program ("CCFP"), administered by the Michigan Department of Education ("MDOE"), through which MAJCO received federal funds for serving meals to economically disadvantaged children. Each month, MAJCO would receive reimbursement for the costs of meals served to eligible children. Reimbursement was based on either the number and type of meals served (i.e., breakfast, lunch, dinner, or snack) and the recipient's family size and income, or the costs actually expended in administering the food program, whichever was less. MAJCO received its CCFP payment in advance pursuant to a program designed to pay food costs before they were incurred. MAJCO submitted the same claim forms as used in the standard program but received payment for the projected claim amount beforehand based upon estimates from its average monthly payment. The actual claims were sent in at the end of the month, and any difference between the estimated and actual costs was made up the next month.

Program participants were not required to submit supporting documentation such as meal count sheets or food program receipts with their monthly claim forms, but the MDOE would audit participants once every two years. MAJCO was audited in June 1990 and May 1993. In an audit, MDOE officials reviewed the claim forms submitted and compared them with the daily meal count sheets recorded at the "point of service" each day for the meals served to each child. They would also observe on-site delivery service of the meal, record-keeping procedures, sanitation, and capacity. Notice of the time and place of the inspection was usually given to MAJCO.

Jackson-Randolph was intimately involved in MAJCO's daily operations. She controlled the checking accounts and made all final decisions on personnel, finances, and other business matters. As landlord, she owned the properties at which the centers operated and received rent payments from MAJCO. Jackson-Randolph visited the centers on a regular basis, often interacting with the children and giving instructions to the staff. She even taught an English class at the school. For the food program, Jackson-Randolph reviewed and signed each claim submitted to the MDOE. She was the contact person for the CCFP and received notification of the times and places of the audits of MAJCO's centers. She personally oversaw MAJCO's preparation for the audits.

Between 1988 and 1993, MAJCO sought and received reimbursement for meals it never served by submitting false claims to the MDOE that inflated the number of meals served and the costs of the food program. These inflated claims submissions were reviewed in the audit and required documentary support. For example, program participants like MAJCO were required to keep a daily tally of meals served on a meal count sheet completed at the point of service. The list contained the names of children served and what meals they received. MAJCO workers testified that they were often given meal count sheets with numerous pages of names of children who did not attend and did not receive meals. Sometimes, blank meal count sheets containing monthly figures were distributed, and the employees were instructed to fill in the blank pages to match the total claimed at the bottom of the sheet. Before an impending audit, MAJCO would hold "cram" sessions, often working late into the night. Employees would create documents supporting MAJCO's food program claims, including meal count sheets, attendance records, family size and income forms, and program receipts and invoices. Employees took names out of the phone book and used lists of Jackson-Randolph's college students' names to put into the records. Employees completed family size and income forms and forged parent signatures. Finally, on the day of the administrative review, Jackson-Randolph would order the transfer of children from one center to the site of the audit to give the appearance of increased attendance as claimed by MAJCO on its submissions.

Jackson-Randolph's explanation for all this activity was that they were simply attempting to re-create MAJCO's poorly kept records on how many children received meals. She asserted that parents often forgot or refused to fill out the family size and income forms required by the program. Her defense to the government's accusation of fraud was that the record-keeping requirements were overwhelming, MAJCO's staff had extreme difficulties maintaining accurate records, and the claims were often estimated by employees. Jackson-Randolph claimed that the transfer of children from one site to another during audits was meant to avoid sanctions for overcapacity.

At trial, the government estimated that MAJCO received between $13.5 and $15.5 million more than it was entitled during this period. This amount was calculated based upon witness testimony of how many children actually attended each center, the centers' roll books, and immunization records in the nurse's office. Jackson-Randolph claimed that the roll books, only half of which were recovered and used, were inaccurate because parents often failed to sign in their children and some roll books did not include drop-ins.

To embezzle and launder the excess money taken through the CCFP, Jackson-Randolph would have MAJCO pay false invoices of a vendor, Allen Cohen, who would deposit the checks and return the money to Jackson-Randolph in cash or checks payable to her personally. These invoices were also used to substantiate the food program costs submitted to the MDOE. Based upon bank records over the course of the indictment period, MAJCO issued checks to Berkley Foods, an operating name of Cohen, totaling $2,032,579. Checks totaling $1,264,073 were drawn on various Cohen accounts and deposited into Jackson-Randolph's personal accounts. In addition, Jackson-Randolph had MAJCO purchase cashier's checks payable to Berkley Foods and would later deposit them into her personal accounts with the notation "not for purposes intended." She would also submit copies of those same cashier's checks to her accountant and assert that she paid for the checks with her own funds, thus inflating her "officer loan" account. Jackson-Randolph claimed that she often personally loaned money to MAJCO and sometimes did not document the loans and that the deposits covered those loans. Finally, Jackson-Randolph had her father, brother, and housekeeper placed on the MAJCO payroll even though they were not employed by MAJCO. They received a total of $154,064, issued in biweekly checks. Jackson-Randolph claimed that these payments offset the loans she made to MAJCO.

Jackson-Randolph was convicted on several counts of program and mail fraud, embezzlement, and money laundering. She was sentenced to 60 months in prison on counts 1 through 15, and 108 months on counts 16 through 63, and ordered to pay $13.5 million in restitution and a $10 million fine. On appeal, she alleges that: (1) the district court abused its discretion in admitting evidence of her personal spending habits, (2) the district court erred in excluding evidence showing that MAJCO employees estimated CCFP costs, (3) the district court abused its discretion in excluding evidence regarding a government witness's failure to file an income tax return, (4) the prosecutor deprived the defendant of a fair trial by speaking to a government witness during a break in the trial, (5) the district court abused its discretion in admitting summary evidence regarding the amount of money that Jackson-Randolph allegedly overbilled the CCFP, (6) the district court erred in ordering $13.5 million in restitution and a $10 million fine, and (7) the district court clearly erred in making the factual findings that it relied upon in enhancing her sentence for obstruction of justice.

We review all of the district court's evidentiary rulings for abuse of discretion. Trepel v. Roadway Express, Inc., 194 F.3d 708, 716-17 (6th Cir.1999)(citing Gen. Elec. Co. v. Joiner, 522 U.S. 136, 141, 118 S.Ct. 512, 517, 139 L.Ed.2d 508 (1997)). We reject Jackson-Randolph's first five claims and her seventh claim, but remand the district court's decision to impose a $10 million fine for further findings on Jackson-Randolph's ability to pay such a fine in addition to the $13.5 million in...