U.S. v. Green

• Citation: 592 F.3d 1057
• Decision Date: 22 January 2010
• Docket Number: No. 08-10149.,08-10149.
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Judy GREEN, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

592 F.3d 1057

UNITED STATES of America, Plaintiff-Appellee, v. Judy GREEN, Defendant-Appellant.

No. 08-10149.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted October 5, 2009.

Filed January 22, 2010.

Phillip H. Stillman, Cardiff, CA, for the defendant-appellant.

Adam D. Hirsh, Antitrust Division, U.S. Department of Justice, Washington, DC, for the plaintiff-appellee.

Appeal from the United States District Court for the Northern District of California, William H. Alsup, District Judge, Presiding. D.C. No. CR-05-0208-WHA.

Before: PAMELA ANN RYMER and A. WALLACE TASHIMA, Circuit Judges, and LYNN S. ADELMAN,^* District Judge.

TASHIMA, Circuit Judge:

Depending on whose version of this case you hear, defendant Judy Green is either a dedicated public schoolteacher who spent the years before her conviction working to help impoverished schools across the country, or the mastermind of a massive fraudulent scheme that bilked the federal government out of almost $60 million. The government takes the latter view, and charged Green with defrauding E-Rate, a Federal Communications Commission ("FCC") program that funds technology projects at schools and libraries. Green insists the former is true, maintaining that she is guilty of nothing more than helping schools maximize their federal funding by exploiting loopholes in the E-Rate rules and regulations. A jury eventually convicted Green of all twenty-two counts brought against her: eleven counts of wire fraud (18 U.S.C. § 1343), nine counts of bid rigging (15 U.S.C. § 1), one count of conspiracy to commit bid rigging (15 U.S.C. § 1), and one count of conspiracy to commit wire and mail fraud (18 U.S.C. § 371). Because we conclude that Green's actions amounted to fraud on the federal government, we affirm her conviction.

BACKGROUND

I. The E-Rate Program

At the center of this case is a part of the FCC's Universal Service program, known as the Schools and Libraries program, or E-Rate for short. Funded by a Universal Service fee placed on telecommunications providers (and generally passed along to consumers), the Universal Service program is designed to promote telecommunications access for low-income, rural, high-cost, or otherwise underserved communities. See 47 U.S.C. § 254. As its official name implies, E-Rate uses its portion of Universal Service funding to finance telecommunications projects at school and libraries.

The Schools and Libraries Division ("SLD") of the Universal Service Administrative Company ("USAC")¹ is charged with distributing E-Rate's annual budget of $2.25 billion. SLD accepts applications from schools for technology projects and subsidizes those projects on a sliding scale—from 20 percent to 90 percent of a project's cost—determined by the percentage of the school's students that participate in the National School Lunch Program. 47 C.F.R. § 54.505. SLD is required to give funding priority to applications for the provision of "telecommunications services, voice mail, and Internet access." 47 C.F.R. § 54.507(g)(1). The most economically disadvantaged schools have priority for the remainder of the funds. Id.

As with any sizeable program, E-Rate is governed by a complicated and, at times, less than clear set of rules and regulations. Two program rules are particularly relevant to this case. First, SLD has detailed rules governing what equipment and services may be purchased with E-Rate funds. In general terms, SLD will subsidize the purchase and installation of equipment needed to establish a school's connectivity. Enduser devices that are needed to actually make use of that connectivity, such as computers, telephones, or fax machines, are not eligible for a subsidy by SLD. In E-Rate jargon, these categories are referred to as "eligible" and "ineligible" equipment, respectively.

Second, because E-Rate only subsidizes a portion of the cost of eligible equipment and services, a school must have the ability to cover the remaining balance of an E-Rate project's costs. Thus, the school must be able to obtain any ineligible equipment that is necessary to make use of the project. The school must also have the wherewithal to cover its co-pay, that portion of the project's cost that will not be covered by the E-Rate subsidy.

When a school wants to apply for E-Rate funds, it must first fill out an FCC form, identifying the technology project for which it seeks funding. The school provides this form to SLD, which posts it on a website to solicit bids from vendors. After the bidding is complete, the school selects the winning bid. Based upon its chosen bid, the school submits a detailed application for E-Rate funding to SLD, specifying the equipment and services to be purchased from each vendor. The application requires the school to set out the total cost of the project, the amount of eligible and ineligible equipment included in that cost, the E-Rate subsidy rate for which the school qualifies, and finally, based on the above information, the ultimate amount of funding the school seeks from SLD.

SLD reviews this detailed application to ensure that it is in compliance with E-Rate regulations. Occasionally, SLD conducts a follow-up review and asks a school to provide more information about its application. Once it has completed its review, SLD either approves or denies the school's funding request.

II. The Fraudulent Scheme

Green first learned of E-Rate in the 1990s, after spending more than thirty years as a public school teacher in New York City and Los Angeles. She saw an opportunity in the E-Rate program and, in 1998, left teaching to set up a consulting business to help guide schools and school districts through E-Rate's byzantine application process. Green marketed her services to the poorest of schools; almost all of her clients were eligible for the maximum 90 percent E-Rate subsidy.

According to the evidence introduced at trial, much of which was undisputed, Green obtained most of her clients by approaching school administrators at conferences held by the National Alliance of Black School Educators. At these conferences, Green, or one of her co-schemers, promised to help school districts obtain E-Rate funding for significant technology projects. Even better, they promised that the schools would be forgiven their 10 percent co-pay, and that the contractors would donate to the school districts thousands of dollars in "bonus" equipment—equipment, such as end-user equipment, that was ineligible for E-Rate funds. Needless to say, a number of school districts leapt on board.

Once hired as a consultant, Green helped her clients design their technology projects and filled out the SLD forms to solicit project bids from vendors. At the same time, Green approached potential contractors to assemble a team capable of performing the projects to her specifications. Green decided what services and equipment the contractors would supply, dictated the "bonus" items the contractors were required to provide at no charge (to the school), and informed the contractors that the schools would not be paying their share of the projects' costs. The contractors then submitted bids based upon Green's specifications.

After receiving the bids, the school districts chose Green's pre-selected contractors to implement their technology projects. Because Green had arranged the bids in advance, her chosen contractors had inflated their bids to cover the costs of the "bonus" equipment and services Green required them to provide. One witness, for example, testified that the bid Green arranged, and that his school district ultimately selected, was three to four times higher than the other bids that the school district received.

Finally, when the school districts submitted their funding requests to SLD, Green took steps to ensure that SLD would not ask questions about the projects. If SLD did ask questions, Green took steps to ensure that it would be provided with answers that minimized the chances it would follow up with further review. For example, Green wrote equipment lists to hide the fact that potentially ineligible equipment was included within the projects' scopes. She instructed the school districts to tell SLD that they planned on paying their share of the projects' costs, even though they did not. And she altered school budget information to show that the schools could afford their co-pays.

Green's conduct was eventually discovered by USAC. She was later indicted in a twenty-two count indictment. The first twenty counts charged Green with wire fraud and bid rigging in connection with completed E-Rate projects at eleven school districts across the country.² The final two counts were conspiracy counts based upon uncompleted technology projects at an additional fifteen school districts.

Following a nineteen-day trial, a jury convicted Green of all charges against her. The district court sentenced her to a ninety-month term of imprisonment. This appeal followed.

DISCUSSION

Green challenges her conviction, as well as her ninety-month sentence. We affirm.

I. Wire Fraud Convictions

Green's overarching contention on appeal is that her actions were not fraudulent because they were not prohibited by the rules and regulations that governed the E-Rate program during the time period charged in the indictment. Specifically, Green raises three challenges to her wire fraud convictions, all of which are variations on this common theme: (1) the E-Rate rules and regulations were so poorly set out during the relevant time period that her conviction violated her due process right to fair warning that her conduct was criminal; (2) her convictions relied on regulations that took effect after the conduct charged in the indictment, violating the Ex Post Facto Clause of the Constitution; and (3) the district court's instructions erroneously gave the jury unfettered discretion to decide the legal question of which regulations were in effect during Green's purported...