Hughes v. U.S.
| Decision Date | 21 May 1990 |
| Docket Number | 87-4069 and 87-4125,Nos. 87-4052,s. 87-4052 |
| Citation | 899 F.2d 1495 |
| Court | U.S. Court of Appeals — Sixth Circuit |
| Parties | 133 L.R.R.M. (BNA) 3086, 66 A.F.T.R.2d 90-5716, 91-1 USTC P 50,022, 115 Lab.Cas. P 10,189 Martin J. HUGHES, Plaintiff-Appellant/Cross-Appellee (87-4052 & 87-4125), v. UNITED STATES of America, Defendant-Appellee/Cross-Appellant. UNITED STATES of America, Respondent (87-4069), v. Martin J. HUGHES, Petitioner. |
Percy Squire, Marshall L. Lerner, Jerry O. Allen and Catherine A. Ballard, Columbus, Ohio, for appellant.
John J. Siegel and Christian Stickan, Asst. U.S. Atty., Cleveland, Ohio, and Merritt C. Deitz, Jr. (Hughes), Sebree, Ky., for appellee.
Michael P. Butler, Asst. Pros. Atty., Cleveland, Ohio, for amicus curiae.
Before BOGGS and NORRIS, Circuit Judges, and ENGEL, Senior Circuit Judge.
Defendant, Martin J. Hughes, appeals from his conviction on twelve counts of a thirty-seven-count indictment charging him with various federal criminal offenses. The government also appeals the district court's decisions acquitting defendant on two of the counts and reducing his conviction to a lesser included offense on another count. For the reasons stated below, we affirm the district court's judgment in part and reverse in part.
On May 6, 1986, the grand jury issued a thirty-seven-count indictment against defendant, a district vice-president for the Communications Workers of America, AFL-CIO ("CWA"), charging him with mail fraud, embezzlement, falsification of union records, aiding and assisting in the filing of false W-2 and W-3 forms with the Internal Revenue Service ("IRS"), and with making false statements to the United States through the submission of falsified labor reporting documents. The government alleged that defendant submitted to the CWA International office expense vouchers that falsely claimed reimbursement for mileage and meal expenses for union employees. The government alleged that defendant received nearly $400,000 in reimbursement funds from the CWA International and used those funds to make political contributions and to pay salaries at the United Telephone Credit Union ("UTCU").
Specifically, the government charged defendant in Counts 1 through 6 and Counts 19 through 23 with mail fraud, in violation of 18 U.S.C. Sec. 1341. Counts 7 through 12 and Counts 24 through 28 charged defendant with embezzlement, in violation of 29 U.S.C. Sec. 501(c). Counts 13 through 18 and Counts 29 through 32 charged defendant with falsification of union records, in violation of 29 U.S.C. Sec. 439(c). Counts 33 through 35 charged defendant with aiding and assisting in the filing of false W-2 and W-3 forms to the IRS, in violation of 26 U.S.C. Sec. 7206(2). Finally, Counts 36 and 37 charged defendant with making false statements to the United States through the submission of false labor reporting documents, in violation of 18 U.S.C. Sec. 1001.
The case proceeded to trial on July 1, 1987. Before the case was sent to the jury, the district court dismissed Counts 1 through 12 and Counts 19 through 28, the mail fraud and embezzlement charges. After the case had been submitted to the jury, the court dismissed Count 35, one of the tax charges, because of a typographical mistake in the indictment. The jury returned guilty verdicts on each of the remaining counts.
Defendant then moved for acquittal on Counts 33, 34, 36, and 37. The court acquitted defendant of the felony charges in Counts 36 and 37, finding as a matter of law that false statements made by defendant were not material. The court also reduced defendant's conviction of a felony under 26 U.S.C. Sec. 7206(2) to the lesser included misdemeanor under 26 U.S.C. Sec. 7204 in Count 33. The court refused to reduce the felony conviction under section 7206(2) in Count 34.
Defendant was sentenced to two years' probation and fined $10,000.
The government appeals the district court's action in acquitting defendant on Counts 36 and 37, and reducing the felony conviction on Count 33.
Defendant appeals the district court's decisions denying his motions for acquittal on Count 34, for recusal, for mistrial, and to dismiss the entire indictment in light of the holding in McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987).
The government contends that the district court erred in acquitting defendant on the felony charges under 18 U.S.C. Sec. 1001 in Counts 36 and 37, when it concluded as a matter of law that false statements made by defendant were not material.
Section 1001 is a general prohibition against falsifying information given to government agencies, and provides:
Whoever, in any matter within the jurisdiction of any department or agency of the United States knowingly and willfully falsifies, conceals or covers up by any trick, scheme, or device a material fact, or makes any false, fictitious, or fraudulent statements or representations, or makes or uses any false writing or document knowing the same to contain any false, fictitious or fraudulent statement or entry, shall be fined not more than $10,000 or imprisoned not more than five years, or both.
Although the statute explicitly mentions materiality only in the first clause, courts have read such a requirement into the second clause as well "in order to exclude trivial falsehoods from the purview of the statute." United States v. Abadi, 706 F.2d 178, 180 (6th Cir.), cert. denied, 464 U.S. 821, 104 S.Ct. 86, 78 L.Ed.2d 95 (1983). Under section 1001, a false statement to a federal agency is material even if it does not actually influence a decision of the agency, so long as it has a natural tendency to influence or is capable of influencing a decision of the agency. United States v. Chandler, 752 F.2d 1148, 1151 (6th Cir.1985).
However, materiality "is not an element of the offense that must be proved beyond a reasonable doubt but a 'judicially imposed limitation to ensure the reasonable application of the statute.' " Chandler, 752 F.2d at 1151 (quoting Abadi, 706 F.2d at 180 n. 2). Accordingly, "materiality is a question of law for the court to decide." United States v. Keefer, 799 F.2d 1115, 1126 (6th Cir.1986). "A materiality determination is subject to complete review on appeal and is not controlled by the clearly erroneous standard." Chandler, 752 F.2d at 1151.
In this case, the jury found that the defendant made false statements to the Department of Labor when he caused the CWA to file false LM-2 reports. These are the annual reports that unions are required to file disclosing, among other things, the salary and expenses of each employee who receives more than $10,000 during the year. See 29 U.S.C. Sec. 431(b)(3). Evidence demonstrated that the LM-2 reports filed by the CWA for 1982 and 1983 contained false entries showing Gay Griffith, the manager of UTCU, as a CWA employee who received $7,995 in 1982 and $10,540 in 1983 as reimbursement for expenses. In fact, these amounts were paid to Griffith as salary and were generated by the false expense vouchers filed with the CWA at the direction of defendant.
The district court found that the false statements were not material. The district court took into consideration that the total amount paid to Griffith was correctly stated, that the misstated amounts were small in relation to the union's total expenses, and the testimony of a labor department official that the chief purpose for requiring these figures was to call attention to persons who were being paid by more than one union and to "adequately describe" the total amount the union paid to each employee. The court also relied upon the fact that the false statements had no effect on any determinations by the Department of Labor, even though the court also noted that the government need not prove such an effect to sustain a conviction under section 1001. Finally, the court considered the fact that Congress had also included in the Labor Management Reporting and Disclosure Act a prohibition against making material false representations in documents required by the Act, but provided that a violation would be punished as a misdemeanor, rather than a felony. 29 U.S.C. Sec. 439. The court acknowledged that the United States Supreme Court, in United States v. Batchelder, 442 U.S. 114, 99 S.Ct. 2198, 60 L.Ed.2d 755 (1979), held that if two separate laws cover certain criminal activity, the government may prosecute under either law. However, the district court felt that the existence of a misdemeanor statute covering the making of false statements to the Department of Labor was relevant in determining the issue of materiality.
The district court erred in concluding that the false statements were immaterial. The statements were clearly of the type capable of influencing the Department of Labor's information-gathering and regulatory decision-making process. Since Congress specifically required a union to disclose the amounts it disburses in salary and reimbursement expenses for each employee who receives over $10,000, and the LM-2 form provided by the Department of Labor requires the union to separately list the amounts given to an employee for salary and for reimbursed expenses, it follows that a false reporting of information specifically required to be disclosed is material.
The fact that the misstated amounts are relatively small when compared with total union expenditures is not particularly relevant to the issue of materiality. Instead, the relevant inquiry is whether the false information is of the type that is capable of influencing a decision of an agency, as opposed to an examination of the magnitude of the falsehood. See United States v. Norris, 749 F.2d 1116, 1121-22 (4th Cir.1984) (), cert. denied, ...
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