Gonzales v. United States

• Decision Date: 28 January 1961
• Docket Number: No. 6468.,6468.
• Citation: 286 F.2d 118
• Parties: Leo C. GONZALES, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

286 F.2d 118 (1960)

Leo C. GONZALES, Appellant, v. UNITED STATES of America, Appellee.

No. 6468.

United States Court of Appeals Tenth Circuit.

December 31, 1960.

Rehearing Denied January 28, 1961.

COPYRIGHT MATERIAL OMITTED

Henry A. Kiker, Jr., of Smith, Kiker & Kitts, Albuquerque, N. M., for appellant.

Ruth C. Streeter, Asst. U. S. Atty., Albuquerque, N. M. (James A. Borland, U. S. Atty., Albuquerque, N. M., with her on the brief), for appellee.

Before BRATTON, PICKETT and BREITENSTEIN, Circuit Judges.

PICKETT, Circuit Judge.

Gonzales was indicted on five counts for making false statements to the Rural Electrification Administration,¹ an agency of the United States. The false statements alleged to have been made were in written communications and reports to the R.E.A., relating to the property and finances of the Kit Carson Electric Cooperative, Inc., a corporation under contract for financing with the R.E.A. The crime for which Gonzales was indicted is described in 18 U.S.C.A. § 1001, as follows:

"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."

The first clause of the statute specifically requires that the falsification described therein shall be as to a material fact, but that requirement is not included in the portion of the section under which the indictment in this case is brought. The authorities are in disagreement as to whether the falsification referred to in the second clause must be as to a material fact.²

We are of the opinion that the better reasoned rule, supported by the weight of authority, is that Congress intended that materiality should be an essential element of the offenses defined in Section 1001. We are in accord with the court's statement in Freidus v. United States, 96 U.S.App.D.C. 133, 223 F.2d 598, 601, which is as follows:

"One portion of § 1001 refers to willfully and knowingly falsifying, concealing or covering up `a material fact.\' On the other hand, the part here involved, without expressly mentioning materiality prohibits `any false, fictitious or fraudulent statements or representations.\' We think, however, that this highly penal statute must be construed as requiring a material falsification. The legislative purpose strongly implies that only material false statements were contemplated, i. e. statements that could affect or influence the exercise of a governmental function. That purpose, as expressed by the Supreme Court in United States v. Gilliland 312 U.S. 86, 61 S.Ct. 518, 85 L.Ed. 598, was `to protect the authorized functions of governmental departments and agencies from the perversion which might result from the deceptive practices described\' No perversion of a governmental function could possibly result from a false statement that was incapable of affecting or influencing such function. And the greater weight of authority in the federal courts supports the view that materiality is an essential element of the offense described by § 1001." (Footnotes omitted.)

The indictment in the instant case charged the offense in the words of the statute, without an allegation that the false statements were material to the inquiry. When the words of a statute do not fully, directly and expressly set forth all of the essential elements constituting the offense described, allegations in the words of the statute are insufficient, but allegations of fact which show materiality will suffice. Meer v. United States, 10 Cir., 235 F.2d 65.

The "Rural Electrification Administration" was created with power, among other things, to make loans of federal funds in the several states and territories, for rural electrification and for the furnishing of electric energy to persons in rural areas who were not receiving central station service. It was authorized to make loans to local non-profit cooperative corporations such as the Kit Carson Electric Cooperative, Inc., of which Gonzales was the manager, and to take as security for the loan the property of the cooperative. 7 U.S.C.A. § 901 et seq.

The indictment alleges that Gonzales, while manager of the cooperative which was under contract for financing with the R.E.A.,³ knowingly and willfully made representations in a matter within the jurisdiction of the R.E.A. in financial and statistical reports concerning the assets of the cooperative and concerning different items of cash and other assets belonging to the cooperative, knowing the statements to be false.⁴ Although the word "material" is not used in any of the counts of the indictment, we have no doubt but that the alleged facts show that each statement was material to the R.E.A.

The court instructed the jury that: "* * * any matter that reflects upon the solvency, upon the assets, upon the payment of accounts, upon the cash on hand would constitute material matters in law, matters about which the Rural Electrification Administration would have a right to inquire and have a right to have true and correct information, and I further instruct you that it is not the law that the Rural Electrification would have to be influenced by the false representations. * * *"

The defendant objected to this instruction and requested that a proffered instruction be given. The court stated: "I will give your instructions if you want them given. I thought I had covered them." The Clerk was then directed by the Court to read to the jury defendant's offered instructions,⁵ one of which stated:

"You are instructed that, before you would be warranted in finding the defendant, Leo C. Gonzales guilty of any one of the counts in the indictment, it would be necessary for you to find that any false or fraudulent representation made by him to the Rural Electrification Administration was a material representation, that is, a representation or misrepresentation which influenced or was capable of influencing the Rural Electrification Administration in making a determination that it was required to make or in the performance of one of the authorized functions of that administration. * *"

In determining whether a false statement is material, the test is whether it "has a natural tendency to influence, or was capable of influencing, the decision of the tribunal in making a determination required to be made." Weinstock v. United States, 97 U.S.App.D.C. 365, 231 F.2d 699, 701, and cases cited. This standard was quoted with approval and adopted by this Court in Travis v. United States, 10 Cir., 269 F.2d 928, 937, certiorari granted 363 U.S. 801, 80 S.Ct. 1235, 4 L.Ed.2d 1146. It is quite clear from the record that the trial court accepted defendant's statement of the rule in an offered instruction and intended to instruct the jury accordingly. However, the instructions as given orally did not state that in order for the alleged false statements to be material, it was necessary that they have a natural tendency to influence or be capable of influencing the decision of the government agency. When it was called to the court's attention that there was an omission of defendant's offered instruction on this subject, it was immediately corrected, at the request of the defendant. To be material, it is not necessary, as the jury was instructed orally by the court, that the false representation or statement actually influence the action of the government agency having jurisdiction. Sells v. United States, 10 Cir., 262 F.2d 815, certiorari denied 360 U.S. 913, 79 S.Ct. 1298, 3 L.Ed.2d 1262.

It is contended that this latter instruction is directly in conflict with that previously given by the court. Where two instructions are given which are in direct conflict with...