U.S. v. Barker Steel Co., Inc.

• Decision Date: 09 October 1992
• Docket Number: No. 92-1536,92-1536
• Citation: 985 F.2d 1123
• Parties: UNITED STATES, Appellant, v. BARKER STEEL CO., INC., and Robert B. Brack, Defendants, Appellees. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 1123

985 F.2d 1123

61 USLW 2563

UNITED STATES, Appellant, v. BARKER STEEL CO., INC., and Robert B. Brack, Defendants, Appellees.

No. 92-1536.

United States Court of Appeals First Circuit.

Heard Oct. 9, 1992.

Decided Feb. 19, 1993.

Peter A. Mullin, Asst. U.S. Atty., with whom A. John Pappalardo, U.S. Atty., and Andrew E. Lauterback, Sp. Asst. U.S. Atty., Boston, MA, were on brief, for appellant.

Paul F. Ware, Jr., with whom John C. Englander, Jeremy Sternberg, and Goodwin, Procter & Hoar, Earle C. Cooley, and Cooley, Manion, Moore & Jones, Boston, MA, were on brief, for defendants, appellees.

Before CYR, Circuit Judge, BOWNES, Senior Circuit Judge, and FUSTE, ^* District Judge.

BOWNES, Senior Circuit Judge.

The government appeals the dismissal of an Information which charged the defendants, Barker Steel Co., Inc. and Robert B. Brack, with engaging in a conspiracy to defraud the United States in violation of 18 U.S.C. § 371. The Information alleged that the defendants fraudulently obtained Minority Business Enterprise and Disadvantaged Business Enterprise (MBE) "set aside" contracts. The district court found that the Information was insufficient to sustain the charges and dismissed it. ¹ For the reasons that follow, we reverse and remand for trial.

I. Standard of Review

On appeal from the dismissal of an information, we take the factual allegations in the information as true, and we must reverse the dismissal if we find that, as a matter of law, the information sufficiently sets forth the elements of the offense charged. United States v. Torkington, 812 F.2d 1347, 1354 (11th Cir.1987). We read an information as a whole and we construe the allegations in a practical sense, with all necessary implications. ² United States v. Cincotta, 689 F.2d 238, 242 (1st Cir.), cert. denied sub nom., Zero v. United States, 459 U.S. 991, 103 S.Ct. 347, 74 L.Ed.2d 387 (1982); United States v. Cadillac Overall Supply Co., 568 F.2d 1078, 1082 (5th Cir.), cert. denied, 437 U.S. 903, 98 S.Ct. 3088, 57 L.Ed.2d 1133 (1978). Questions of law, including the lower court's interpretation of a statute, are reviewed de novo. United States v. M.I.M., 932 F.2d 1016, 1019 (1st Cir.1991).

An information should be "a plain, concise and definite written statement of the essential facts constituting the offense charged." Fed.R.Crim.P. 7(c)(1). An information is sufficient if it "first, contains the elements of the offense charged and fairly informs a defendant of the charge against which he must defend, and, second, enables him to plead an acquittal or conviction in bar of future prosecutions for the same offense." Hamling v. United States, 418 U.S. 87, 117, 94 S.Ct. 2887, 2907, 41 L.Ed.2d 590 (1974); accord Russell v. United States, 369 U.S. 749, 763-64, 82 S.Ct. 1038, 1046-47, 8 L.Ed.2d 240 (1962); United States v. Penagaricano-Soler, 911 F.2d 833, 839 (1st Cir.1990). An information is sufficient when allegations are made in the language of the statute as long as the core facts of the criminality charged are also included. Russell 369 U.S. at 764, 82 S.Ct. at 1047; Penagaricano-Soler, 911 F.2d at 839-40; United States v. Allard, 864 F.2d 248, 250 (1st Cir.1989) ("The test for sufficiency, therefore is not whether, in hindsight, the indictment or information could have been more complete, ... but rather whether it fairly identifies and describes the offense." (citations omitted)). Therefore, we examine the Information as a whole to determine whether it sufficiently charges the offense proscribed by the conspiracy statute.

II. The Information

To begin, we summarize the key allegations of the Information. The government's allegations concerning the defendants' conspiracy to defraud the United States focus on the MBE programs of several federal agencies, the U.S. Department of Transportation (DOT), the Environmental Protection Agency (EPA), and the General Services Administration (GSA). These federal agencies intended the MBE programs to "support[ ] the fullest possible participation of firms owned and controlled by certain racial minorities and women in the construction programs funded and assisted by these departments and agencies." Information at p 6. To that end, the MBE programs required that recipients of funds from federal agencies establish goals or set aside a percentage of federal funds received for contracts to certified MBE businesses. Information at p 7.

Federal agencies with MBE programs rely upon state and local governments to certify applicants as qualified minority businesses. Information at p 9. To qualify for MBE certification, at least fifty-one percent of the ownership of the enterprise must be by certain minority groups, and the minority owners must also control the daily operations of the business. Information at p 6. To implement the MBE program, the entity receiving federal agency funding hires general contractors to perform the work, who in turn award subcontracts to certified MBEs to meet the percentage goal for the project. For subcontract work to qualify for MBE goals or set aside contracts, the MBE certified firm must perform a "commercially useful function in the execution of the project by actually performing, managing and supervising the work involved." Information at p 10. For materials and supplies to qualify, the MBE certified firm must "either produce the goods from raw materials or substantially alter the goods before reselling them." Information at p 10.

The Information alleges that from about October, 1982, until at least July, 1986, Barker Steel Company (Barker) and its president, director and majority stockholder, Robert B. Brack (Brack), conspired with others to use Rusco Steel Company (Rusco) as a front company to win MBE set aside contracts for Barker. Information at p 13. Barker was a Massachusetts corporation which furnished fabricated steel reinforcing bars (re-bars) and other products to the construction industry throughout New England. Barker was never a certified MBE. Information at pp 1, 11. Rusco, located in Rhode Island, had been certified as an MBE in several states before the scheme with the defendants began. Information at pp 3, 15.

The steel re-bar industry includes two distinct functions: fabricators and erectors. Firms which operate as fabricators "cut and bend the re-bars to meet the specifications of a particular construction project and then deliver the re-bars to the construction site." Information at p 5. The industry term for the work done by fabricators is "furnish" work. Id. Firms known as erectors "place the fabricated re-bars within the forms, at the job site, prior to the pouring of the concrete." Information at p 5. Erector firms do "erection" work. Id.

In October, 1982, Barker agreed with Rusco that Barker would finance a new division of Rusco for erecting steel re-bar, "erection" work. Information at pp 5, 16. In exchange, Rusco would allow Barker to market its steel products through Rusco for re-bar "furnish" contracts to take advantage of Rusco's MBE certification. Information at pp 13, 16. Prior to 1982, Rusco had operated as a broker of steel re-bar but had not fabricated re-bar or erected re-bar. Information at p 15. Beginning in 1982, Barker employees managed all aspects of the fabrication, sales and shipping of steel re-bar and other products in its own name and in Rusco's name when contracts required MBE certification. Information at pp 16, 19, 20. Barker employees and Brack exercised substantial control over Rusco throughout this period. Information at pp 22, 25. In 1985, the defendants merged a subsidiary company into Rusco, to deceive state MBE certifying agencies about Rusco's eligibility for MBE certification. Information at pp 25, 43.

As part of the scheme, Rusco submitted documentation to various state and local agencies for the purpose of obtaining or maintaining certification as an MBE. Information at pp 32, 26, 41, 47. The documents submitted by Rusco contained false, misleading and fraudulent statements as well as material omissions. Id. The Information concludes that as a result of the conspiracy, more than $5 million in federally funded and federally assisted construction contracts were improperly credited toward MBE goals when the contracts actually benefitted Barker, which was not an MBE firm. Information at p 15. The conspiracy, according to the Information, impeded, impaired, obstructed and defeated the implementation, execution and administration of the MBE programs of DOT, EPA and GSA. Information at p 12.

III. Discussion

The district court dismissed the Information on the grounds that: (1) it failed to allege a violation by the defendants of any MBE program statute; (2) it did not clearly state a violation by the defendants of a duty owed to the federal government, and (3) it failed to allege direct contact with federal agencies. The defendants contend that because the MBE program does not impose criminal penalties or any obligations upon them, they were not fairly warned that the conduct alleged in the Information could give rise to criminal charges. In further support of the dismissal of the Information, the defendants add that their alleged conduct was not fraud because it did not deprive the federal government of any money or property. The government counters that the Information properly and sufficiently alleged that the defendants conspired to defraud the federal government in violation of 18 U.S.C. § 371.

A. Legal Sufficiency of the Information

The Information charges that the defendants conspired with others to defraud the United States in violation of 18 U.S.C. § 371. The pertinent language of § 371 provides as follows:

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 not more than...