United States v. Thompson

Decision Date15 September 1966
Docket NumberNo. 16832.,16832.
Citation366 F.2d 167
PartiesUNITED STATES of America, Plaintiff-Appellee, v. Charles Taylor THOMPSON, William Edward Tanner and James Benjamin Campbell, Defendants-Appellants.
CourtU.S. Court of Appeals — Sixth Circuit

William E. Badgett, Knoxville, Tenn., for Thompson and Tanner, Tom Taylor, Athens, Tenn., on the brief.

W. P. Boone Dougherty, Knoxville, Tenn., for Campbell.

Charles J. Gearhiser, Asst. U. S. Atty., Chattanooga, Tenn., for appellee, J. H. Reddy, U. S. Atty., Chattanooga, Tenn., on the brief.

Before O'SULLIVAN and PHILLIPS, Circuit Judges, and CECIL, Senior Circuit Judge.

PHILLIPS, Circuit Judge.

Appellants, who were members of the County Council of McMinn County, Tennessee, were found guilty by a jury of violating the general conspiracy statute, 18 U.S.C. § 371. The prosecution grew out of the solicitation and receipt by appellants of a $6,000 kickback from the architects on a county hospital project under the Hill-Burton Act, 42 U.S.C. § 291 et seq. Each of the three appellants was sentenced by the district judge, the Honorable Frank W. Wilson, to a prison term of one year. A fourth defendant was found not guilty and a fifth alleged co-conspirator was not indicted.

The one-count indictment in part charged that defendants, in violation of the conspiracy statute, did:

"* * * unlawfully, wilfully and knowingly conspire, confederate and agree among themselves and with each other and with other persons to the Grand Jury unknown, to defraud the United States of America, in particular the Department of Health, Education and Welfare, a Department of the United States, of its right to have its program for the construction of the McMinn County Hospital, McMinn County, Tennessee, pursuant to the provisions of the Hill-Burton Act, 42 U.S.C. 291, et seq., as amended, administered honestly, fairly and free from corruption, deceit, trickery, dishonesty and kickbacks.
"7. It was a part of said conspiracy that defendants would cause the Hospital Committee, McMinn County Council, McMinn County, Tennessee, which they dominated and controlled, to employ the firm of Galloway and Guthrey to perform the architectural services required in the construction of the McMinn County Hospital, at a fee representing 6% of the cost of construction.
"8. It was a further part of the said conspiracy that defendants would and did request and solicit a 1% kickback payment from the firm of Galloway and Guthrey.
"9. It was a further part of the said conspiracy that defendants, subsequent to the commitment of funds to the McMinn County Hospital by the Department of Health, Education and Welfare, would and did, on June 4, 1964, induce George H. Galloway and Charles E. Guthrey, doing business as Galloway and Guthrey to kick back and pay to defendants $6000 from the fees paid to Galloway and Guthrey pursuant to the aforesaid employment contract. * * *"

Appellants had been members of the nine-member County Council, the governing body for the local county government, for several years prior to their arrest on June 4, 1964. A preliminary application was filed with the Director, Division of Hospital Services, Tennessee Department of Public Health, on April 24, 1962, seeking federal assistance under the Hill-Burton program, in the construction of a county hospital. Appellants served as members of the Hospital Committee and constituted the majority of this five-member committee. Appellant Thompson was chairman of the committee.

Under the federally sponsored Hill-Burton program, the United States contributes 52 per cent of the construction cost of certain hospitals and other medical facilities, while the local sponsor, in this case McMinn County, contributes 48 per cent.

Local officials were notified by letter under date of October 5, 1962, that federal funds in the amount of $468,000.00 had been set aside under the Hill-Burton Act for construction of the proposed hospital.

The architectural firm of Galloway and Guthrey had performed services for McMinn County on previous occasions. The partners in this firm, George Galloway and Charles E. Guthrey, were the chief Government witnesses. They testified that beginning on December 18, 1962, the appellants and others sought a kickback on the hospital project in return for Galloway and Guthrey being given the architectural contract for the proposed hospital; that they informed FBI agents of these facts on December 20, 1962; that appellants met with them on numerous occasions in 1963, both before and after the contract for the hospital was awarded on February 12, 1963; and that further meetings were held between them and the appellants in 1964 which culminated with the meeting on June 4, 1964, at the Knoxville airport at which time George Galloway delivered the sum of $6,000.00 to appellant Campbell.

I.

The first contention of appellants is that the district court erred in overruling their motion to dismiss the indictment, the motion for judgment of acquittal made at the conclusion of the Government's proof and appellants' motion for judgment of acquittal made at the conclusion of all proof. The principal argument is that, under the facts in this case, appellants have not violated the general conspiracy statute and have not committed a crime against the United States.

18 U.S.C. Section 371 provides:

"If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined * * * or imprisoned * * *"

In Dennis v. United States, 384 U.S. 855, 859, 86 S.Ct. 1840, 1844, 16 L.Ed. 2d 973, the Supreme Court, in interpreting this statute, said:

"It has long been established that this statutory language is not confined to fraud as that term has been defined in the common law. It reaches `any conspiracy for the purpose of impairing, obstructing or defeating the lawful function of any department of government,\' Haas v. Henkel, 216 U.S. 462, 479 30 S.Ct. 249, 54 L.Ed. 569, quoted in United States v. Johnson, 383 U.S. 169, 172 86 S.Ct. 749, 751, 15 L.Ed.2d 681."

In Hammerschmidt v. United States, 265 U.S. 182, 44 S.Ct. 511, 68 L.Ed. 968, in reversing a conviction for conspiracy to defraud the United States, the court, speaking through Chief Justice Taft, stated:

"To conspire to defraud the United States means primarily to cheat the government out of property or money, but it also means to interfere with or obstruct one of its lawful governmental functions by deceit, craft or trickery, or at least by means that are dishonest. It is not necessary that the government shall be subjected to property or pecuniary loss by the fraud, but only that its legitimate official action and purpose shall be defeated by misrepresentation, chicane or the overreaching of those charged with carrying out the governmental intention." 265 U.S. at 188, 44 S.Ct. at 512.

In Haas v. Henkel, 216 U.S. 462, 30 S. Ct. 249, 54 L.Ed. 569, the indictments charged a conspiracy by several defendants to cause the Bureau of Statistics for the Department of Agriculture to issue false cotton reports. In upholding the conviction, the Court said:

"These counts do not expressly charge that the conspiracy included any direct pecuniary loss to the United States, but, as it is averred that the acquiring of the information and its intelligent computation, with deductions, comparisons, and explanations involved great expense, it is clear that practices of this kind would deprive these reports of most of their value to the public, and degrade the department in general estimation, and that there would be a real financial loss. But it is not essential that such a conspiracy shall contemplate a financial loss or that one shall result. The statute is broad enough in its terms to include any conspiracy for the purpose of impairing, obstructing, or defeating the lawful function of any department of government. Assuming, as we have, for it has not been challenged, that this statistical side of the Department of Agriculture is the exercise of a function within the purview of the Constitution, it must follow that any conspiracy which is calculated to obstruct or impair its efficiency and destroy the value of its operations and reports as fair, impartial, and reasonably accurate, would be to defraud the United States by depriving it of its lawful right and duty of promulgating or diffusing the information so officially acquired in the way and at the time required by law or departmental regulation. That it is not essential to charge or prove an actual financial or property loss to make a case under the statute has been more than once ruled. Hyde v. Shine, 199 U.S. 62, 81 25 S.Ct. 760, 50 L.Ed. 90; United States v. Keitel, 211 U.S. 370, 394 29 S.Ct. 123, 53 L.Ed. 230; Curley v. United States 1 Cir. 130 Fed.Rep. 1; McGregor v. United States 4 Cir. 134 Fed.Rep. 195". 216 U.S. 479, 480, 30 S.Ct. 253.

In Glasser v. United States, 315 U.S. 60, 62 S.Ct. 457, 86 L.Ed. 680, rehearing denied, 315 U.S. 827, 62 S.Ct. 629, 86 L. Ed. 1222, in affirming in part and reversing in part a conviction for conspiracy, the Court stated that "The indictment charges that the United States was defrauded by depriving it of its lawful governmental functions by dishonest means; it is settled that this is a `defrauding' within the meaning of § 37 now § 371 of the Criminal Code." 315 U.S. at 66, 62 S.Ct. at 463.

In Lutwak v. United States, 344 U.S. 604, 73 S.Ct. 481, 97 L.Ed. 593, rehearing denied, 345 U.S. 919, 73 S.Ct. 726, 97 L.Ed. 1352, the Court affirmed the convictions of defendants charged with conspiracy "`to defraud the United States of and concerning its governmental function and right of administering' the immigration laws and the Immigration and Naturalization Service, by obtaining the illegal entry into this country of three aliens as...

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