U.S. v. Abu-Shawish

• Decision Date: 01 November 2007
• Docket Number: No. 06-1459.,06-1459.
• Citation: U.S. v. Abu-Shawish, 507 F.3d 550 (7th Cir. 2007)
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Mhammad ABU-SHAWISH, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

507 F.3d 550

UNITED STATES of America, Plaintiff-Appellee, v. Mhammad ABU-SHAWISH, Defendant-Appellant.

No. 06-1459.

United States Court of Appeals, Seventh Circuit.

Argued September 6, 2007.

Decided November 1, 2007.

Steven M. Biskupic (argued), Office of the United States Attorney, Milwaukee, WI, for Plaintiff-Appellee.

Richard H. Parsons, Jonathan E. Hawley, Kent V. Anderson (argued), Office of the Federal Public Defender, Peoria, IL, for Defendant-Appellant.

Before FLAUM, MANION, and KANNE, Circuit Judges.

FLAUM, Circuit Judge.

Mhammad Abu-Shawish appeals his conviction after a trial by jury. The jury found Abu-Shawish guilty of federal program fraud in violation of 18 U.S.C. § 666(a)(1)(A). He challenges the sufficiency of the indictment and the sufficiency of the evidence on the grounds that the government did not allege in the indictment or prove at trial that he was an agent of the organization that he defrauded, or that he defrauded the organization for which he was an agent. For the reasons stated herein, we vacate the conviction and remand the case for further proceedings consistent with this opinion.

I. Background

Each year, the City of Milwaukee receives over twenty million dollars of federal money from the United States Department of Housing and Urban Development. The City then makes the funds available to community groups through a development block grant program. These groups submit grant applications to the City sketching out their plans to develop the community in a particular way. The grant applications are reviewed by the block grant program's evaluation committee and city council representatives, and once an application is accepted, the federal funds are disbursed to the relevant community group. The community group then uses the funds to fully research and develop their community development proposal, and in some cases begin effectuating the proposal.

This is precisely what Abu-Shawish, as founder and executive director of Arabian Fest/American Festival, Inc. ("Arabian Fest"), a Milwaukee-based non-profit community organization, set out to do. Initially, Abu-Shawish approached Milwaukee Alderman Bob Donovan with the idea of bringing businesses to Muskego Avenue, a commercial strip near Arabian Fest headquarters. Following Alderman Donovan's advice, in April 2001, Abu-Shawish sent a letter to the City of Milwaukee Community Block Grant Administration Office on behalf of Arabian Fest seeking a $100,000 grant to research and create a development plan for Muskego Avenue.¹ In June 2001, Juanita Hawkins, who ran the block grant program, sent Abu-Shawish a letter notifying him that the City had approved his request in the amount of a $75,000 grant.

Over the next few months, Abu-Shawish claims to have performed a number of tasks in order to further his proposal, including supervising his staff, working on crime reduction in the Muskego Avenue area, speaking with local merchants, conducting traffic counts, and constructing a database of Arabian Fest vendors to talk about relocating to the Muskego Avenue area. Throughout the project, he presented expense records to the City to justify the receipt of funds, as well as an advance for future expenses. The following table presents the dates when federal funds were disbursed to Arabian Fest,² the amounts disbursed, and (to the extent that the record has established it) where the money was spent:

---------------------------------------------------------
                       Date of Amount How funds
                disbursement disbursed were spent3
                ---------------------------------------------------------
                  January 16, 2002    $4,477.37   Record does not
                                                  comment
                ---------------------------------------------------------
                  January 17, 2002     $31,707    Abu-Shawish took
                                      (advance)   $6,707 in cash and
                                                  used the remainder
                                                  to pay Arabian Fest
                                                  operating expenses
                                                  (including wages)
                ---------------------------------------------------------
                   March 5, 2002       $32,097    Abu-Shawish transferred
                                                  $10,000 to a
                                                  personal business
                                                  account, and then
                                                  took $6,000 in cash
                ---------------------------------------------------------
                     May 9, 2002      $4,301.34   Record does not
                                                  comment
                ---------------------------------------------------------
                    July 26, 2002     $2,416.87   Record does not
                                                  comment
                ---------------------------------------------------------
                

A City of Milwaukee audit later showed that Abu-Shawish accounted for the checks to cash and the transfer to the personal bank account as wages for himself. On May 16, 2002, Abu-Shawish submitted Arabian Fest's Muskego Avenue Redevelopment Plan to Ms. Hawkins.

This case drew the attention of the authorities because Arabian Fest's redevelopment plan was substantially plagiarized from a report submitted by Randy Roth, another member of the Milwaukee community. Roth was a consultant in Milwaukee who specialized in urban development plans. In March 2001, Alderman Donovan approached Roth and asked him to work on a redevelopment plan for the Muskego Avenue corridor. The plan was sponsored by Milwaukee Alliance, a neighborhood group affiliated with Donovan. Because Donovan was connected to Milwaukee Alliance, Roth was able to utilize some of its employees to assist him with the project. Two of those employees were cousins, Angela and Lisa Sanfilippo. What Roth did not realize was that Donovan also sent Angela and Lisa to assist Abu-Shawish as he drew up his plan for Muskego Avenue. While Roth did not have any formal business relations with Abu-Shawish, Donovan privately instructed Angela to bring AbuShawish the finished product from Roth.

The development plan that Abu-Shawish submitted to the Milwaukee Community Development Block Grant Division was essentially identical to the plan drawn up by Roth. In fact, Arabian Fest's plan was identical except for the following minor differences: the cover was changed; references to "Milwaukee Alliance" were replaced with "Arabian Fest"; the font size was changed; and parts of Roth's plan were omitted.

Because the City of Milwaukee essentially paid money for a report that Abu-Shawish never actually wrote, he was charged on October 2, 2003 in a criminal complaint alleging federal program fraud violations under 18 U.S.C. § 666(a)(1)(A). After the government severed and dismissed certain ancillary charges, the one remaining § 666 count was tried to a jury on June 27, 2005.⁴ On June 29, 2005, the jury returned a verdict of guilty. Abu-Shawish was subsequently sentenced to three years' imprisonment and $76,100 in fines.

II. Discussion

Abu-Shawish argues that the superseding indictment did not properly charge him with a violation of 18 U.S.C. § 666(a)(1)(A). Under ordinary circumstances, the sufficiency of an indictment presents a question of law, which is reviewed de novo. United States v. Aldaco, 201 F.3d 979, 982 (7th Cir.2000). However, in this case, the challenge to the sufficiency of the indictment was not raised before the district court. As a result, the challenge is reviewed for plain error. United States v. Davis, 471 F.3d 783, 790 (7th Cir.2006). Plain error requires a finding (1) that there is error, (2) that is plain, and (3) that affects substantial rights; the court may then exercise discretion to correct such error if it seriously affects the fairness, integrity, or public reputation of judicial proceedings. United States v. Prude, 489 F.3d 873, 880 (7th Cir.2007). An indictment is legally valid if it: "(1) states all the elements of the crime charged; (2) informs the defendant of the nature of the charge, enabling the defendant to prepare a defense; and (3) enables the defendant to plead the judgment as a bar to later prosecution of the same offense." United States v. Allender, 62 F.3d 909, 914 (7th Cir.1995).

Abu-Shawish was charged with violating 18 U.S.C. § 666(a)(1)(A), which prohibits theft from organizations receiving funds under federal assistance programs. The statute provides as follows:

(a) Whoever, if the circumstance described in subsection (b) of this section exists—

(1) being an agent of an organization, or of a State, local, or Indian tribal government, or any agency thereof—

(A) embezzles, steals, obtains by fraud, or otherwise without authority knowingly converts to the use of any person other than the rightful owner or intentionally misapplies, property that—

(i) is valued at $5,000 or more, and

(ii) is owned by, or is under the care, custody, or control of such organization, government, or agency; ...

(b) The circumstance referred to in subsection (a) of this section is that the organization, government, or agency receives, in any one year period, benefits in excess of $10,000 under a Federal program involving a grant, contract, subsidy, loan, guarantee, insurance, or other form of Federal assistance.

18 U.S.C. § 666(a), (b).

The government claims that to prove that an individual has violated this section of the criminal code, it merely has to demonstrate that: (1) the defendant was an agent of an organization; (2) in a one-year period, the organization received in excess of $10,000 in federal funds under the grants, contracts, subsidies, loans, or some other form of federal assistance; (3) the defendant embezzled, stole, obtained by fraud, converted to another, or intentionally misapplied money or property; (4) the money or property was under the care, custody or control of the organization; and (5) the money or property had a value of $5,000 or more. Consistent with this view of the statute, the Fourth Superseding Indictment-A charges as follows:

2. During the...