U.S. v. Milkiewicz

Decision Date06 December 2006
Docket NumberNo. 06-1192.,06-1192.
Citation470 F.3d 390
PartiesUNITED STATES, Appellee, v. Steven A. MILKIEWICZ, Defendant, Appellant.
CourtU.S. Court of Appeals — First Circuit

Terrance J. McCarthy for appellant.

Paul G. Levenson, Assistant United States Attorney, with whom Michael J. Sullivan, United States Attorney, was on brief, for appellee.

Before TORRUELLA, LYNCH and LIPEZ, Circuit Judges.

LIPEZ, Circuit Judge.

This case requires us to consider two unsettled issues in First Circuit law: the proper use of the various evidentiary rules governing the introduction of document summaries at trial, and the applicability of the constitutional rule set out in United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005), to orders of restitution. The appellant, Steven A. Milkiewicz, was convicted of defrauding the United States District Court for the District of Massachusetts ("USDC") through a scheme in which he—collaborating with a court administrator—sold office supplies to the USDC at inflated prices and billed it for quantities of products in excess of what he delivered.1

Appellant claims that he is entitled to a new trial because the district court improperly allowed the jury to consider two sets of summary charts, one depicting the allegedly fraudulent sales transactions and the other showing discrepancies in his income tax reporting. He also claims the district court's restitution order, which was based on its own factual findings, violated his Sixth Amendment rights under the principles set out in Booker. Finding neither evidentiary nor constitutional error, we affirm appellant's conviction and sentence.

I.
A. Factual Background

We summarize the facts as the jury could have found them, drawing all inferences in the light most consistent with the jury's verdict. See United States v. Charles, 456 F.3d 249, 251 (1st Cir.2006). Between February 1997 and June 2002, appellant Milkiewicz and Timothy Schroeder, the Procurement Officer for the Clerk of the USDC, used various techniques to ensure that Milkiewicz would win the USDC's purchasing contracts and have the ability to overcharge for the products provided.2 For example, to avoid the USDC requirement that procuring officials obtain at least three competitive bids for the purchase of goods or services over $2,500, appellant—with Schroeder's complicity— sometimes submitted bids from each of his two separate companies. The third bid at times was forged, and at least once came from a sham entity created by Schroeder. By eliminating competition, appellant not only was assured that he would be given the business but also was able to charge more and thereby elicit fraudulently inflated profits.

On other occasions, appellant's collaboration with Schroeder allowed him to charge the USDC for items he never delivered. This conduct occurred repeatedly with respect to purchases of large amounts of paper and toner cartridges used for photocopiers and computer printers. In one such transaction, appellant billed the USDC $21,570 ($35.95 per carton) for 600 cartons of copier paper but arranged to deliver only 400 cartons. The illicit gains from this purchase included not only the money he received for the undelivered paper ($7,190), but also a fraudulent mark-up of about $4,000 that he was able to obtain thanks in part to cooperation from his supplier, who regularly submitted inflated competitive bids at appellant's request.3

The evidence also showed that, during the years at issue, appellant understated his taxable income and gave his tax preparer false information about his gross receipts and business expenses. The government used the evidence of his illicit transactions to prove that he had earned income in excess of what he reported and that he had spent less than he stated to purchase inventory from his suppliers.

In December 2004, Milkiewicz was charged in an indictment with one count of conspiracy to defraud the United States, in violation of 18 U.S.C. § 371; eight counts of presenting to the United States false claims for payment, in violation of 18 U.S.C. § 287;4 one count of bribery of a public official, in violation of 18 U.S.C. § 201; and five counts of filing false tax returns, in violation of 26 U.S.C. § 7206(1). At the conclusion of an eight-day trial, a jury convicted him on all counts except the bribery charge and one of the false tax return charges. He subsequently was sentenced to a 41-month term of imprisonment and ordered to pay restitution in the sum of $196,796.63, the latter a joint and several obligation with his co-defendant, Schroeder.5

B. The Disputed Summary Charts

The evidence introduced at trial included several thousand pages of financial records offered by the government to prove specific transactions consistent with a more general description of the scheme that Schroeder provided in his testimony. Among these documents were approximately 600 pages of USDC records, including vouchers and invoices that showed purchases from appellant's two companies. Another substantial set of documents contained business records, including purchase orders and invoices, from more than twenty vendors whom appellant allegedly used as suppliers for the products he sold to the USDC. These suppliers were identified by IRS investigators who had examined appellant's bank activity. The records were offered into evidence, by stipulation, through affidavits from the various keepers of records.

Toward the end of its case, the government called an IRS agent, Jonathan Wlodyka, to testify about a series of charts that summarized the information contained in these voluminous financial documents. Two sets of charts are at issue in this case—what we shall call the "Transactions Set" and the "Tax Set." The Transactions Set summarizes data from the records that the government offered as evidence of the fraudulent transactions with the USDC. The Tax Set summarizes documents related to the tax charges.

The Transactions Set consists of three relevant charts: Exhibits 1, 1a and 1b. Exhibit 1a summarizes data from the USDC records reflecting purchases from appellant. Exhibit 1b summarizes data from the roughly 1,300 pages of authenticating affidavits and vendor business records depicting appellant's purchases from suppliers. Also included in that batch of records were copies of checks from appellant to the vendors, which the government offered to supplement incomplete vendor records. The checks were used to prove appellant's purchases when vendors could not produce invoices documenting those purchases.

Exhibit 1 juxtaposes the information in the 1a and 1b charts, providing a comparison in chronological order between what appellant sold to the USDC and what he purchased from his vendors. The calculated differences are listed in columns labeled "Price Difference" and "Quantity Difference." The "Price Difference" column shows the disparity between what appellant charged the USDC for specific items on particular dates and what he allegedly paid suppliers for those goods. The government presented evidence suggesting that, if Milkiewicz and Schroeder had not manipulated the competitive bid process, some of Milkiewicz's suppliers would have sold their products directly to the government at prices far below what Milkiewicz charged. The "Quantity Difference" column contains figures showing an amount appellant billed to the USDC where records show no corresponding purchase from a vendor. In some instances, the chart showed that appellant purchased fewer goods than he sold to the USDC, and for which he received payment, and at other times it showed no purchase at all of items for which the USDC had paid. In the rows involving alleged non-deliveries, the spaces in columns labeled "Quantity Purchased" and "Price Paid Per Unit" are blank.6

The government asserts that the "obvious inference" to be drawn from the flow of money and product depicted in Exhibit 1 is that appellant realized illicit profits both by charging prices in excess of what would have been paid in a legitimate bid process and by charging for some goods that he never delivered—either providing a lesser quantity than ordered or by not delivering an order at all. In closing argument, the prosecutor urged the jury to infer just that, and he emphasized in particular that where the charts were blank— i.e., where there was no evidence that Milkiewicz purchased an item from suppliers—he never delivered the item to the USDC.

The Tax Set similarly consists of three charts: Exhibits 2, 2a and 2b. Exhibit 2a lists the checks the government viewed as evidence of the "gross receipts" of appellant's office supply business in each of the years 1997 through 2001. Documents supporting the data were in evidence, including records of hundreds of payments from the USDC.7 Exhibit 2b summarizes the documentary evidence of appellant's purchases from his suppliers, or, in tax terms, his "cost of goods sold." Exhibit 2 compares the figures appellant reported on his tax returns in the categories of "gross income" and "cost of goods sold" with the data developed in the investigation, as summarized in Exhibits 2a and 2b. Exhibit 2 also calculates, for each of the five years, the additional tax due based on the information compiled in the chart.8

Appellant's counsel initially objected only to admission of the charts as independent evidence, consenting to their use as demonstrative jury aids, or "chalks." He later opposed the court's decision to allow the jury to have the charts during their deliberations, arguing that the summaries impermissibly shifted the burden of proof to appellant. Counsel asserted that the blank spaces on Exhibit 1—which indicated that the government had found no evidence that appellant purchased certain supplies for which he charged the government—"cannot help but lead jurors to say, Well, how come the defendant is not filling those gaps." The court rejected this...

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