U.S. v. Brown

• Decision Date: 22 August 1984
• Docket Number: Nos. 83-2004,83-2104,s. 83-2004
• Citation: 742 F.2d 363
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. William C. BROWN, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 363

742 F.2d 363

UNITED STATES of America, Plaintiff-Appellee, v. William C. BROWN, Defendant-Appellant.

Nos. 83-2004, 83-2104.

United States Court of Appeals, Seventh Circuit.

Argued March 30, 1984.

Decided Aug. 22, 1984.

Nikki M. Zollar, Chicago, Ill., for defendant-appellant.

Ted S. Helwig, Asst. U.S. Atty., Dan K. Webb--U.S. Atty., Chicago, Ill., for plaintiff-appellee.

Before ESCHBACH and POSNER, Circuit Judges and SWYGERT, Senior Circuit Judge.

ESCHBACH, Circuit Judge.

The appellant, William Brown, was charged with six counts of willfully misapplying or embezzling Comprehensive Employment and Training Act ("CETA") funds, 18 U.S.C. Sec. 665, and six counts of making material false statements in a matter within the jurisdiction of a federal agency, 18 U.S.C. Sec. 1001. One of the Sec. 665 and one of the Sec. 1001 counts were dropped before the bench trial in this case, and the appellant was convicted on the remaining counts. ¹

On appeal, Brown challenges the sufficiency of the evidence on all of the counts and the denial of his post-trial motions relating to the adequacy of his representation and to the government's alleged failure to disclose exculpatory material specifically requested by Brown. We have reviewed the appellant's claims, find them to be without merit, and accordingly affirm the judgments of conviction.

I.

During 1981, the Archdiocese of Chicago conducted two programs to provide training and employment for economically-disadvantaged youths. Both programs were funded by the United States Department of Labor, which allocated CETA funds to the programs pursuant to contracts with the City of Chicago. The Archdiocese implemented its programs through various community groups which were invited to participate. In January or February, 1981, Brown contacted the Archdiocese and indicated that he wanted to open a CETA work site at the Glacier Center, which he operated. As it had with approximately 100 other work sites involved in its programs, the Archdiocese entered into a "work-site agreement" with Brown, specifying the location of the site, the type of work the participants would perform, the work-site supervisor, and the number of young people to be involved.

Work-site supervisors had the primary responsibility for implementing and monitoring the CETA-funded programs. They managed the activities at the site, solicited and supervised participants, monitored the scheduled activities, kept and reported time records for payroll purposes, and distributed paychecks. Because there are extensive eligibility requirements for participation in CETA-funded programs, the Archdiocese gave each work-site supervisor, including Brown, a training session concerning the documentation required to authorize a young person to participate. Once the participant's eligibility was documented and his participation approved by both the Archdiocese and the City of Chicago, he was certified to begin work in the program.

During the summer of 1981, Brown, as the Glacier center work-site supervisor, submitted a number of time sheets that falsely claimed that individuals who had been certified to participate in the program had worked a number of hours at the Center. Accordingly, the Archdiocese issued paychecks to these individuals based on the hours claimed on the time sheets and sent them to Brown for distribution. Brown subsequently forged the names of the payees and cashed the checks.

At trial, four of the persons in whose names Brown received paychecks testified that they had never worked at the Center. A fifth person had worked at the Center for four weeks, but had been paid for only two of those weeks. It was established that Brown had submitted time sheets indicating that each of these individuals had worked various hours at the Center, when in fact they had not. Brown admitted these facts but claimed that he had distributed the proceeds from the paychecks to other eligible but uncertified young people that he had substituted in the places of the certified workers whose names appeared on the time sheets. He claimed that the substituted workers had actually worked the hours indicated on the sheets. Brown could not remember the names of any of these substituted workers, and none testified at trial.

After the bench trial in his case was concluded, Brown filed a pro se motion for a new trial, asserting that his court-appointed counsel had inadequately represented him. Brown also retained new counsel, who filed a separate motion for a new trial which alleged that the government had violated the rule of Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963), by failing to disclose an allegedly exculpatory interview with the mother of a substituted worker. The district court denied both motions without a hearing.

II.

A. Section 665

To obtain a conviction under Sec. 665, the government must prove (1) that the accused was an officer, director, agent, or employee of an agency receiving financial assistance under CETA; and (2) that the accused embezzled, willfully misapplied, stole, or obtained by fraud "moneys, funds, assets or property that are the subject of a grant or contract of assistance." United States v. Coleman, 590 F.2d 228, 230 (7th Cir.1978). The appellant urges that the government's proof of the second of these elements fails because the government did not show what, if anything, the appellant did with the money he received when he cashed the Archdiocese paychecks. Relying on United States v. Overbay, 444 F.Supp. 259 (E.D.Tenn.1977), Brown argues that proof of what was actually done with the money is essential to the government's case.

The indictment in Overbay charged that the defendant "willfully and knowingly embezzled and obtained by fraud" money in the form of checks, and that she thereafter forged the names of the payees on the checks and "converted [the proceeds] to her own use." United States v. Overbay, 444 F.Supp. 256, 257 (E.D.Tenn.1977) (companion case challenging only sufficiency of indictment). At trial, the defendant, who directed a CETA-funded program, testified that she had indeed cashed checks made payable to others, but that she had distributed the proceeds to other children in the program in accordance with the program's goals. After a jury was unable to return a verdict, the trial court directed a verdict of acquittal. The court noted that the prosecution's proof did not conform to the allegations in the indictment because there was no proof that Overbay had converted the funds to her own use. On the contrary, the court expressly credited Overbay's testimony about the use of the funds. The court stated:

[I]t was essential that there have been probative evidence presented as to [the] means [used to embezzle the funds] as alleged in the indictment: this included evidence not only that she received the proceeds of the manpower checks but that she then " * * * converted the proceeds to her own use, well knowing that she was not entitled thereto. * * * "

Overbay, 444 F.Supp. at 262 (emphasis added). Contrary to Brown's assertions, Overbay does not stand for the proposition that proof of conversion to the defendant's use is essential to every conviction under Sec. 665. ² It merely applies the well-settled rule that the proof presented in a criminal trial must conform to the allegations in the indictment. The indictment here did not charge that Brown converted the funds to his own use.

Moreover, the indictment in this case charged more than embezzlement; it also charged willful misapplication of funds. In United States v. Tamargo, 637 F.2d 346 (5th Cir.), cert. denied, 454 U.S. 824, 102 S.Ct. 112, 70 L.Ed.2d 98 (1981), the court approved the trial court's use of a jury instruction that stated that "misapplication of funds" for purposes of Sec. 665 meant the conversion of funds to the defendant's own use or the use of another. Id. at 350.

The statute's prohibition of "misapplication of funds" seems particularly appropriate in light of the programs that Sec. 665 is designed to protect. Under the CETA program, the federal government disbursed large amounts of money to the states to be used for the training and education of economically-disadvantaged young people. See generally 29 U.S.C. Secs. 801-992 (repealed October 13, 1982). The necessity of controls over those who ultimately obtain money under the CETA program is self-evident: only if the state recipients could assure that the funds actually benefitted those for whom the programs were designed could CETA's goals be fulfilled. Accordingly, several levels of approval were required before an individual was deemed certified to participate in the Archdiocese programs. The work-site supervisor could not certify someone as eligible for CETA participation, although applications often originated with the supervisors and they were responsible for obtaining the necessary documents from applicants. ³ When work-site supervisors such as Brown make ad hoc decisions about eligibility, the controls designed to assure that only qualified individuals, receive government funds are subverted. We hold, therefore, that the conversion of CETA funds for the use of uncertified workers when the defendant knows of their uncertified status is a willful misapplication of funds for purposes of Sec. 665.

B. Section 1001

In order for a false statement to be actionable under Sec. 1001, it must be "material"--that is, it must have a "natural tendency to influence, or [be] capable of influencing, the decision of the [government agency] in making a determination required to be made." 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). Relying on United States v. Radetsky, 535 F.2d 556 (10th Cir.), cert. denied, 429 U.S. 820, 97 S.Ct. 68, 50 L.Ed.2d 81 (1976), Brown argues that, in order to prove his statements were capable of influencing the Archdiocese to issue...