U.S. v. Baker, 79-5470

• Citation: 626 F.2d 512
• Decision Date: 26 September 1980
• Docket Number: No. 79-5470,79-5470
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Lourice BAKER and Lena Marie Knowlton, Defendants-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 512

626 F.2d 512

UNITED STATES of America, Plaintiff-Appellee, v. Lourice BAKER and Lena Marie Knowlton, Defendants-Appellants.

No. 79-5470.

United States Court of Appeals Fifth Circuit.

Sept. 26, 1980.

Charles W. Tessmer, Bentley C. Kelly, III, Dallas, Tex., for defendants-appellants.

Kenneth J. Mighell, U. S. Atty., Fort Worth, Tex., Dan C. Guthrie, Jr., Asst. U. S. Atty., Dallas, Tex., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of Texas.

Before GOLDBERG, TATE and SAM D. JOHNSON, Circuit Judges.

GOLDBERG, Circuit Judge.

We are faced today with a lacuna in the midst of a somewhat dense federal law. The statutory language provides little guidance, and we have no helpful legislative history to aid us in filling the gap. Our task, then, is to read the collective mind of the 1948 Congress. Without a (very large) psychiatrist's couch, this task is difficult indeed.

I. Factual Background

Appellants Lourice Baker and Lena Marie Knowlton were part-time employees of the Housing Authority of the City of Dallas ("DHA"), hired to help train DHA security guards. ¹ DHA was the recipient of $3,500,000 from the United States Department of Housing and Urban Development ("HUD") to improve conditions at low-income housing projects operated by DHA. On a quarterly basis, DHA was required to report to HUD the ways in which the federal money was being spent. ²

Baker and Knowlton were convicted under 18 U.S.C. § 1001 ³ of submitting to DHA false time sheets which claimed pay for hours not actually worked. The questions presented on appeal are whether the evidence at trial was sufficient to sustain a finding that the false statements made by appellants were material, and whether the trial court properly instructed the jury with regard to defendants' theory of the case. We answer both questions in the affirmative, and we affirm.

II. Materiality

As Judge Gewin noted in United States v. Lange, 528 F.2d 1280 (5th Cir. 1976), "(p)roof of five elements is essential to sustain a conviction under the false statement proscription of § 1001: (1) a statement, (2) falsity, (3) materiality, (4) specific intent, and (5) agency jurisdiction." Id. at 1287; see United States v. Clearfield, 358 F.Supp. 564, 574 (E.D.Pa.1973). In the case at hand, appellants Baker and Knowlton challenge the trial court's finding ⁴ of the third of these elements, and argue that the false statements made were not material because they could not affect any decision of HUD, the federal agency involved. Since the federal funds had already been appropriated at the time the false statements were made, and since Baker and Knowlton were paid not by HUD but by the DHA, appellants suggest that HUD could not have been influenced by the submission of false time sheets.

The purpose of the materiality requirement of 18 U.S.C. § 1001 is "to exclude 'trivial' falsehoods from the purview of the statute." United States v. Beer, 518 F.2d 168, 170-71 (5th Cir. 1975). Statements which lack "the capacity to influence a determination required to be made" are too "trivial" to violate the statute. Id. at 172; see United States v. Liechenstein, 610 F.2d 1272, 1278 (5th Cir. 1980); United States v. Guthartz, 573 F.2d 225, 228 (5th Cir.), cert. denied, 439 U.S. 864, 99 S.Ct. 187, 58 L.Ed.2d 173 (1978); United States v. Krause, 507 F.2d 113, 118 (5th Cir. 1975). While the requirement of materiality explicitly applies only to the first clause of § 1001, "courts have inferred a judge-made limitation of materiality" on the second ("false statements") clause as well. See Liechenstein, supra, 610 F.2d at 1278. In addition, it is well-settled that the false statement need not be made directly to a federal agency to sustain a § 1001 conviction as long as federal funds are involved. ⁵ See, e. g., United States v. Hooper, 596 F.2d 219 (7th Cir. 1979); United States v. Johnson, 596 F.2d 842 (9th Cir. 1979); United States v. Candella, 487 F.2d 1223 (2d Cir. 1973), cert. denied, 415 U.S. 977, 94 S.Ct. 1563, 39 L.Ed.2d 872 (1974); United States v. Kraude, 467 F.2d 37 (9th Cir.), cert. denied, 409 U.S. 1076, 93 S.Ct. 684, 34 L.Ed.2d 664 (1972); United States v. Waters, 457 F.2d 805 (3d Cir. 1972) (per curiam).

In the case at hand, the statements made by appellants resulted in their each receiving substantial wages to which they were not entitled. The performance of the program was hindered since the federal funds were exhausted more swiftly than they would otherwise have been. In addition, the quarterly DHA reports required by HUD evidence the fact that the federal agency had "the ultimate authority to see that the federal funds (were) properly spent." See Stanford, supra, at 297. See generally note 5 supra. The false statements were thus material in that they had a substantial effect on the federal funds forwarded by HUD, on the performance of the DHA project, and on the pay received by the appellants. The determination affected by the statements, see Beer, supra, 518 F.2d at 172; Liechenstein, supra, 610 F.2d at 1278, was the determination of how much pay each appellant should receive.

III. Jury Instructions

A more troubling issue raised by this appeal is whether the government must prove that a defendant knew of the federal agency's involvement in order to sustain a conviction under 18 U.S.C. § 1001. In other words, when the false statements are made to some organization which has received federal funds but which is not itself a federal agency, must a defendant have known of the federal involvement in order to be convicted in federal court? Appellants contend that the trial court committed reversible error by refusing to instruct the jury that a defendant's knowledge of federal involvement is an essential element of a § 1001 conviction. Although the statutory language is far from clear on this matter, we believe that Congress intended no such requirement.

While past courts have analyzed the issue of defendant's knowledge of federal involvement in terms of whether the matter was "within the jurisdiction of a federal agency . . .," see Stanford, supra, 589 F.2d at 297; Ebeling v. United States, 248 F.2d 429, 434-35 (8th Cir.), cert. denied, 355 U.S. 907, 78 S.Ct. 334, 2 L.Ed.2d 261 (1957), we prefer to couch the issue in terms of the "knowingly and willfully" requirement of the statute. ⁶ It is clear that in order to sustain a § 1001 conviction the government must prove that the defendant knowingly made a false statement with intent to deceive. See Liechenstein, supra, 610 F.2d at 1276-77; Lange, supra, 528 F.2d at 1288. It is quite unclear, however, whether the defendant must also know that his statement was material, i. e., that it was capable of influencing a federal agency. The statute can be read to require knowledge of falsity alone, but it can also be read to require knowledge of materiality, and hence knowledge of federal involvement. ⁷ Our task, then, is to use the policy and purposes of the law in an effort to determine what Congress meant by its words.

18 U.S.C. § 1001 is designed to protect federal funds and functions from fraudulent interference. In furthering these purposes, it is irrelevant whether defendant knew that his intentionally false statements might eventually influence a federal agency. Moreover, the requirement that defendant intend to deceive by making a statement which he knows is false serves to insure against punishing one who has committed no culpable act. While we reassert this strict requirement of specific intent, we decline to extend it to require proof of defendant's knowledge of federal involvement. In other words, we hold that proof of defendant's knowledge that a federal agency was involved in the matter is not an essential element of a § 1001 conviction. See United States v. Lewis, 587 F.2d 854, 857 (6th Cir. 1978) (per curiam).

Our holding today in no way alters the essential elements of a § 1001 conviction as noted in United States v. Lange, supra ; the government must still prove that a false, material statement was made with specific intent to deceive within the jurisdiction of a department or agency of the federal government. Id. at 1287; see Clearfield, supra, 358 F.Supp. at 574. We merely inject some meaning into a statutory vacuum by declining to read into the law the proposed requirement of defendant's knowledge of federal involvement.

Appellants also contend that the court erred in refusing to tailor its instructions to fit appellants' defense that the false time records were the result of mistake, accident and inadvertence. Although the requested instructions were not granted, the instructions delivered by the court adequately apprised the jury of appellants' defensive theory. The jury was told that appellants could only be convicted if the evidence demonstrated beyond a reasonable doubt that they each acted "knowingly and willfully." Trial Transcript at 1134. "An act is done 'knowingly,' " the judge's charge went on to note, "if done voluntarily and intentionally, and not because of mistake or accident or other innocent reason." Trial Transcript at 1135. Finally, the jury was told that the "knowingly and willfully" requirement excluded false statements made by "inadvertance, mistake, carelessness or for any other innocent reason." Trial Transcript at 1136. The jury charge in its entirety made clear the substance of appellants' correctly requested instructions, as required by United States v. Cook, 586 F.2d 572, 579 (5th Cir. 1978), cert. denied, 442 U.S. 909, 99 S.Ct. 2821, 61 L.Ed.2d 274 (1979); see United States v. Bush, 599 F.2d 72, 75 (5th Cir. 1979).

IV. Conclusion ⁸

We have decided today that the target at which defendant aims his false statements is not conclusively relevant to materiality or specific intent. Appellants may not have intended to hit the federal bullseye in this case, but this alone does not require their acquittal. The statutory target may be narrowed by...