U.S. v. Brantley, 84-2131

• Citation: 786 F.2d 1322
• Decision Date: 18 March 1986
• Docket Number: No. 84-2131,84-2131
• Parties: 20 Fed. R. Evid. Serv. 302 UNITED STATES of America, Plaintiff-Appellee, v. Robert L. BRANTLEY, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 1322

786 F.2d 1322

20 Fed. R. Evid. Serv. 302

UNITED STATES of America, Plaintiff-Appellee, v. Robert L. BRANTLEY, Defendant-Appellant.

No. 84-2131.

United States Court of Appeals, Seventh Circuit.

Argued June 12, 1985.

Decided March 18, 1986.

William T. Huyck, Chicago, Ill., for defendant-appellant.

James R. Ferguson, Asst. U.S. Atty., Anton R. Valukus, U.S. Atty., Chicago, Ill., for plaintiff-appellee.

Before BAUER and FLAUM, Circuit Judges, and GRANT, Senior District Judge. ^*

GRANT, Senior District Judge.

Defendant-Appellant challenges his conviction by a jury on six counts involving a conspiracy to commit fraud against a federally funded youth program. An indictment charged defendant-appellant and co-defendant, Mosley, who was tried separately and whose appeal, No. 84-2228, was heard on the same day as the instant appeal, with one count of conspiring to commit fraud against the United States, in violation of 18 U.S.C. Sec. 371, and one count of transporting a fraudulently obtained security in interstate commerce, in violation of 18 U.S.C. Sec. 2314. The indictment charged defendant-appellant separately with four counts of knowingly causing a false statement to be made in a matter within the jurisdiction of the United States in violation of 18 U.S.C. Secs. 1001 and 2. We affirm his conviction.

Facts

Defendant-Appellant, Brantley, and two other individuals founded a community youth organization in Chicago known as Afro Youth Community [hereinafter referred to as AYC]. Brantley and his co-founders designed AYC to serve as a diagnostic residential center for difficult-to-place teenage boys. AYC sought funding from the Illinois Department of Children and Family Services, and that Department approved a funding proposal in April 1976. AYC leased an old mansion for its residential center and other property for office space.

After AYC received that funding, Brantley became AYC's President and Executive Director. Brantley's friend and co-defendant, Mosley, a Detroit attorney, became the Chairman of AYC's Board and served as its legal consultant. Mosley also owned the property that AYC rented.

Brantley and the other AYC founders purchased furniture on credit from Wieboldt's Department Store, a Chicago retailer, for use in the residential center. During the first year of operation, AYC experienced destruction and defacing of the furniture by the organization's teenage wards. While discussing the renewal of the contract between the Illinois Department of Children and Family Services and AYC, the Department and AYC touched upon the financial advantages of leasing rather than purchasing furniture for the residential center. Brantley and Mosley raised the leasing option with the other AYC Board members, and Mosley indicated that he would investigate various leasing firms and find a suitable candidate.

A few months later, Mosley recommended that AYC lease its furniture from National Furniture and Equipment Leasing Company [hereinafter referred to as National Furniture]. Mosley reported that National Furniture had agreed to purchase all of AYC's furniture and equipment and to lease it back to AYC. In addition, National Furniture would reimburse AYC for payments that AYC was making to Wieboldt's Department Store for the furniture and to the Hyde Park Bank for automobile loans. The Board of Directors adopted Mosley's recommendation and Mosley executed the necessary documents with National Furniture.

Unknown to the AYC Board, Mosley had created National Furniture in July 1977 when he traveled to the home of his aunt, Ruby Alexander, in Collierville, Tennessee. Alexander agreed to assist Mosley in setting up a new business which Mosley said would help their family. Mosley drafted the legal documents for the business giving Alexander's farm as the business address. He opened a business checking account at a Collierville Bank listing Alexander and himself as the authorized signators. At Mosley's request, Alexander signed various documents and correspondence related to the AYC-National Furniture leasing agreement. Over the course of the leasing arrangement, Mosley mailed unsigned checks, drawn on the National Furniture account, to Alexander, who signed the checks and mailed them to Chicago or back to Mosley. From a discussion which took place at Mosley's wedding in Detroit in 1977, Brantley became aware of Mosley's involvement in National Furniture.

National Furniture had no warehouse, no inventory nor any sales force. It received all of its income from AYC, except for an item of some $3,000. Between September 1977, when AYC began leasing its furniture and equipment from National Furniture, and February 1980, the month that AYC lost its Department of Children and Family Services contract, AYC paid National Furniture a total of $74,341.73 for the leasing of furniture, equipment and automobiles which AYC had originally purchased for $15,968.80. Despite the money paid to National Furniture, the residential center remained inadequately furnished and in great need of replacement furniture.

Of the funds received, National Furniture reimbursed AYC for AYC's payments to Wieboldt's Department Store and Hyde Park Bank in the amount of $13,477.40. National Furniture paid Mosley $33,911.18 and Damon, Inc. a consulting firm owned by Brantley, $20,232.50. Brantley contended that the payment to Damon, Inc. was for consulting work done as research on a special wood in Ghana, Africa, and he confirmed that consulting arrangement in a June 1977 letter to Mosley. The letter gave Brantley's business address as 625 North Michigan Avenue, an address which Brantley did not occupy until July 1979.

Counts 1 and 2 of the indictment set forth the charges involving the furniture leasing fraud. Counts 4 through 7 charged Brantley with inducing four AYC employees to lie on application forms to obtain on-the-job training funds.

In 1978, the Chicago Alliance of Business [hereinafter referred to as CAB], a non-profit organization designed to provide employment and training to economically-disadvantaged residents of Chicago, administered an on-the-job training program. Under the program, the CAB used CETA funds ¹ to reimburse employers 50% of their expenses in training unemployed or disadvantaged applicants.

CAB issued its own guidelines for eligibility based upon regulations promulgated by the Secretary of Labor. Those guidelines required an applicant to have been unemployed for seven days. The Secretary of Labor's regulations allowed on-the-job training to "be used to upgrade present employees into occupations requiring higher skills." 29 C.F.R. Sec. 95.33(d)(ii). The regulations also required that a person be, among other things, "economically disadvantaged, unemployed, or underemployed...." Id. Sec. 95.32(a).

Application to the on-the-job training program involved completion of a work history and application form and a personal interview with a CAB representative. In determining eligibility, the CAB relied solely on the answers provided by the applicant.

In October 1978, Brantley met with a group of AYC employees and told them to apply for the on-the-job training funds. He instructed the employees to represent to CAB that they were unemployed and interested in working for AYC. When one of the employees objected to falsifying the application, Brantley answered, "Either you lie or you lose your job." Transcript at 29; see id. at 77, 197. Four employees complied with Brantley's instruction, and their applications underlie the charges in Counts 4 through 7 of the indictment.

After a jury found Brantley guilty as charged in Counts 1, 2, 4, 5, 6 and 7 of the indictment, the trial court sentenced him to twenty-six months' incarceration on Counts 1, 2 and 4, to run concurrently. Brantley received five years' probation on the three remaining counts, to run consecutively. As a condition of the probation, the trial court ordered Brantley to make restitution in the amount of $50,000. Brantley appeals.

Issues

Brantley raises four issues on appeal:

I. Whether the Government failed to prove the materiality of the false statements made on the CAB applications;

II. Whether the trial court ought to have submitted the issue of materiality to the jury;

III. Whether the trial court erred by admitting evidence of matters not charged in the indictment; and,

IV. Whether the Government improperly referred to "other acts" evidence during closing argument?

_____

I. Whether the Government failed to prove materiality of the false statements made on the CAB applications?

The federal false statement statute, 18 U.S.C. Sec. 1001, imposes criminal penalties on one who (1) makes a statement that (2) was false, (3) was material, (4) was made knowingly and willfully, and (5) was made in a matter "within the jurisdiction of any department or agency of the United States."

United States v. Petullo, 709 F.2d 1178, 1180 (7th Cir.1983) (citations omitted) (footnotes omitted). Materiality constitutes an essential element of a charge brought under 18 U.S.C. Sec. 1001. United States v. Bailey, 734 F.2d 296, 305 (7th Cir.) (citations omitted), cert. denied, --- U.S. ----, 105 S.Ct. 327, 83 L.Ed.2d 263 (1984). "[T]he test for materiality is whether the false statement has a tendency to influence or is capable of influencing a federal agency." United States v. Brack, 747 F.2d 1142, 1147 (7th Cir.1984) (citing United States v. DiFonzo, 603 F.2d 1260, 1266 (7th Cir.1979), cert. denied, 444 U.S. 1018, 100 S.Ct. 672, 62 L.Ed.2d 648 (1980)), cert. denied, --- U.S. ----, 105 S.Ct. 1193, 84 L.Ed.2d 339 (1985). The term "jurisdiction" in section 1001 has a broad meaning and "false statements need not be submitted directly to a government agency, provided that ... the agency retains ultimate authority to see that federal funds are disbursed properly." United States v. Dick, 744 F.2d 546, 554 (7th Cir.1984) (citations omitted); Brack, 747 F.2d at 1151; Petullo, 709 F.2d at 1180.

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