U.S. v. Gil

• Decision Date: 17 July 2002
• Docket Number: Docket No. 01-1489.
• Citation: 297 F.3d 93
• Parties: UNITED STATES of America, Appellee, v. John GIL, Defendant-Appellant.
• Court: U.S. Court of Appeals — Second Circuit

297 F.3d 93

UNITED STATES of America, Appellee, v. John GIL, Defendant-Appellant.

Docket No. 01-1489.

United States Court of Appeals, Second Circuit.

Argued: April 17, 2002.

Decided: July 17, 2002.

COPYRIGHT MATERIAL OMITTED

Ioana Petrou, Assistant United States Attorney, Brooklyn, N.Y. (Alan Vinegrad, United States Attorney for the Eastern District of New York, David C. James, Catherine Youssef, Assistant United States Attorneys, on the brief), for Appellee.

Herald Price Fahringer, Lipsitz, Green, Fahringer, Roll, Salisbury & Cambria, LLP, New York City (Erica T. Dubno; Thomas F. Liotti, Law Offices of Thomas F. Liotti, on the brief), for Appellant.

Before OAKES, JACOBS, and CALABRESI, Circuit Judges.

JACOBS, Circuit Judge.

John Gil appeals the judgment of the United States District Court for the Eastern District of New York (Dearie, J.), convicting him, after a jury trial, on a variety of mail fraud counts arising out of his submission of inflated invoices on a contract for heating, ventilation and air conditioning work at offices of the New York City Off-Track Betting Corporation ("OTB").¹

It was uncontested that Gil procured from his subcontractors false and inflated invoices, submitted them to OTB for payment, and received payment. The defense was that the inflated subcontractor invoices were authorized by a side agreement — negotiated at a meeting attended by Gil and his lawyer, with OTB's general counsel, and two OTB Directors of Facilities — and that the overpayments were intended to compensate Gil for work he performed outside of the contract, including Gil's drawing of plans that (under the contract) should have been prepared in advance by OTB employees or consultants.

Gil appeals chiefly on the ground that the government violated its duty under Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963), to timely deliver to the defense an internal OTB memorandum. The internal OTB memorandum reflects an agreement by OTB officials to pay Gil in a manner that deviated from the written contract terms; confirms that Gil was doing extra-contractual work for OTB; and references a meeting in the office of OTB's general counsel that may or may not be the one at which Gil claims to have received authorization for the disputed billings.

We conclude that the internal OTB memorandum constituted Brady material that was suppressed by the government, and that Gil suffered prejudice as a result. We therefore vacate the judgment on all counts of conviction and remand for a new trial, should the government decide to reprosecute.

BACKGROUND

I

Gil was president and sole shareholder of John Gil Construction, Inc., a company specializing in heating, ventilation and air conditioning ("HVAC"). In 1996 and 1997, Gil successfully bid on contracts with OTB (collectively, "the Contract") to renovate and install HVAC in approximately twenty-five OTB offices. Because the scope of the work required at each OTB office was for some reason not definitely known at the outset, the Contract provided for payment on a "time and material" basis, i.e., Gil was to be paid a percentage of profit above the actual cost of the labor and materials. Pursuant to Gil's bid package, he was entitled to a 32% mark-up on labor; pursuant to the Contract, Gil was entitled to a 12% mark-up on materials. The Contract provided that Gil would be given the specifications and design plans of the offices.

Gil was authorized by the Contract to hire subcontractors. Gil paid the subcontractors directly and then submitted the subcontractor invoices to OTB for reimbursement, along with a cover sheet attesting that the subcontractor invoices were accurate. The Contract did not provide for a mark-up on subcontractor bills, but OTB witnesses testified that Gil was nevertheless authorized to collect on them a 12% mark-up.

In 1998, a broad investigation was begun into irregularities in the operations of OTB as an agency. In the course of that investigation, it was found that Gil had been submitting inflated subcontractor invoices for reimbursement. On February 3, 2000, a grand jury handed down an indictment charging Gil with one count of conspiracy to commit mail fraud in violation of 18 U.S.C. § 371, and twelve counts of substantive mail fraud in violation of 18 U.S.C. § 1341. By superseding indictment dated October 5, 2000, he was charged with the additional offenses of conspiring to engage in and engaging in monetary transactions in monies derived from mail fraud in violation of 18 U.S.C. §§ 1956(h) and 1957(a), (b).²

Trial began as scheduled on Monday, January 22, 2001. One or two business days before trial, the government turned over two boxes of documents containing "3500 material." See 18 U.S.C. § 3500.

Among these papers was the memorandum at issue in this appeal. It is written by OTB contract manager Linda Bradford to OTB general counsel Steven Sloan, and recounts a conversation between Bradford and Gil on January 28, 1997, relating to payment for so-called "expediting" services that Gil had subcontracted (hereinafter the "Bradford memo" or the "memo"). Such expediters are hired by contractors chiefly to obtain permits; their service is purely labor, and requires no materials. As the memo reflected, Gil was charging (or passing through to) OTB a 12% mark-up on the expediters' services, which seemed wrong to Bradford because no mark-up on subcontracting was authorized by Contract, and in any event because expediters rendered services only (no materials) and the 12% mark-up ordinarily applied to materials only. According to the memo, Bradford challenged the mark-up as unauthorized, Gil told her it was authorized by Sloan, and Stephen Dorfman (a facilities director at OTB) confirmed the authorization.

Gil contends that the memo references the meeting, attended by Gil, his lawyer Taylor Walker, Sloan, and OTB facilities directors Dorfman and Neftali "Tony" Lozano, at which the inflated billings were authorized as a means of compensating Gil for the extra-contractual work of drawing the plans that (per contract) were to have been furnished in advance by OTB. (The prosecution's theory was that no such meeting occurred.) The prosecution argues that the memo reflects a meeting at which Gil was authorized to collect from OTB a 12% premium on (uninflated) bills paid by him to his subcontractors — an arrangement to which prosecution witnesses testified and as to which no criminal offense is charged — and that it does not reflect any authorization to inflate the subcontractors' bills to which that 12% premium was added.

Considered without the spin of either party, the memo reflects: [1] that a meeting took place in Sloan's office and was attended by at least some of the people who (according to Gil) attended the meeting at which the inflated billings were authorized; [2] that Gil was authorized to charge a 12% mark-up; [3] that Bradford (strangely) thought that the 12% was being passed through to the subcontractors themselves; and [4] that Gil (as he testified) was doing extra-contractual engineering services (although he lacked the requisite paper qualifications) and was being compensated for those services by some kind of bill inflation, an irregular arrangement that deviated from the bid parameters and that for some reason was condoned by the general counsel.

The defense claims that the Bradford memo was turned over on the Friday before trial; the government claims that it was turned over the Thursday before trial. In any event, the defense did not discover the Bradford memo until after the trial was over.

II

Four subcontractors testified (as Gil conceded) that at his request they submitted to him two sets of invoices: one accurate set for which they received payment, and a second inflated set. An OTB contract administrator named Jason Podob testified that Gil was paid the amounts reflected in the inflated invoices plus the uncontested 12% mark-up applied to subcontractors.

Initially, OTB facilities director Dorfman categorically denied that he ever authorized Gil to submit inflated subcontractor invoices, and said he was unaware that anyone else had done so. Later, when asked whether he agreed to have Gil's costs included in the subcontractor bills, Dorfman hedged: "I don't recall agreeing to that."

OTB facilities director Lozano testified that the only work Gil was asked to do that Lozano considered extra-contractual was to hire an engineering firm to do drawings for one particular OTB office. Lozano instructed Gil to include this sum (approximately $5000) in his hours for his services at that location.

Gil's entire defense was that he was authorized to obtain payment for his extra-contractual work by submitting inflated subcontractor invoices (on which he was then entitled to the 12% materials mark-up), and therefore he did not deceive or defraud OTB. He testified that: [1] a substantial amount of predicate work that (per the Contract) should have been prepared in advance by OTB employees or consultants (including drawings and plans) had not been done; and [2] when he raised the problem with Lozano, who was directly in charge of the renovations, Lozano told Gil, "Listen, I don't have any plans for when this place was built, but ... figure it out, get it done, and make it happen."

According to Gil, he reached an agreement with OTB officials to do the extra work, and accordingly prepared architectural or engineering drawings for many of the offices, did designs for sheet-metal fabrication and office layouts, took measurements and made the necessary load calculations and dunnage.³

It is undisputed that Gil submitted at least one invoice to OTB's accounting office for the extra-contractual work, labeled as such, but the invoice was rejected as unauthorized under the Contract. Gil claims that Dorfman and Lozano assured him that though he could not be paid for extra-contractual work under the Contract, "to make life easier we'll...