U.S. v. Burton

• Decision Date: 05 May 1989
• Docket Number: No. 88-7347,88-7347
• Citation: 871 F.2d 1566
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Robert M. BURTON, Peter Balogun, Defendants-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1566

871 F.2d 1566

UNITED STATES of America, Plaintiff-Appellee, v. Robert M. BURTON, Peter Balogun, Defendants-Appellants.

No. 88-7347.

United States Court of Appeals, Eleventh Circuit.

May 5, 1989.

Ira De Ment, Roianne Houlton Frith, William Terry Travis, George L. Beck, Jr., P.C., Montgomery, Ala., Fred D. Gray, Tuskegee, Ala., for defendants-appellants.

Charles R. Niven, Asst. U.S. Atty., George L. Beck, Jr., Montgomery, Ala., for plaintiff-appellee.

Appeal from the United States District Court for the Middle District of Alabama.

Before JOHNSON, HATCHETT and COX, Circuit Judges.

PER CURIAM:

In a five-count indictment, Defendants Balogun and Burton were charged with one count of embezzlement and four counts of conspiracy to embezzle in violation of 18 U.S.C. Secs. 641 and 371 (1982). Following a jury trial, each was convicted on the embezzlement count and on one count of conspiracy to embezzle. This appeal followed, and we affirm.

I. BACKGROUND

Macon County Community Action Committee (MCCAC) is a community action agency located in Macon County, Alabama, that was organized in 1965 under the auspices of Health Education and Welfare and Office of Economic Opportunity and pursuant to the Community Development Act, 42 U.S.C. Secs. 5301-20 (1982 & Supp. II 1984). It functions as an "umbrella" agency, overseeing and promoting various federal- and state-funded programs for underprivileged individuals. At all times in question, Balogun served as Executive Director of MCCAC and Burton served as its Property Officer.

One of the programs administered by MCCAC was Head Start, an early childhood intervention program that was established to provide comprehensive medical, nutritional, educational, dental, and social services to low income families. The Head Start program received 80% of its funding from the federal government and 20% from state and local governments and private sources. Federal funds were provided on the condition that they only be expended for purposes consistent with the goals of Head Start.

Concurrently with its administration of Head Start, MCCAC directed numerous other non-profit, federally-subsidized social programs. In the mid-1970s, it became apparent that federal funding for those programs might not be available indefinitely. In fact, through the Economic Opportunity Act, 42 U.S.C. Secs. 2701-2996k (1982 & Supp. II 1984), Congress explicitly encouraged community action agencies to establish community development committees--non-profit subsidiaries that could explore and cultivate local economic opportunities. The community development committees, moreover, were authorized to purchase for-profit businesses. Ultimately, it was hoped, profits generated by those businesses could be used to supplement and, eventually, to supplant federal funding for programs managed by community action agencies.

To insure a steady supply of funds for its programs, MCCAC established a wholly-owned subsidiary, the MCCAC Community Development Corporation (MCCDC) which, in turn, formed a for-profit, wholly-owned subsidiary, the MCCAC Economic Development Corporation (MCEDC). MCEDC was authorized to purchase for-profit businesses for the purpose of establishing a private source of funding for MCCAC-administered programs.

In 1978, MCEDC purchased two for-profit concerns, Babco Service Station (Babco) and G's Restaurant (G's). By 1981, it had become apparent that the establishment of MCEDC and purchases of Babco and G's disastrously had failed to satisfy the objective of raising funds for MCCAC-administered programs. Dreams of plentiful profits turned to nightmares of cash shortages as the businesses began to require significant infusions of cash to stay afloat.

To satisfy obligations of Babco and G's, MCCAC's management implemented an interagency loan plan pursuant to which certain employees of MCCDC, MCEDC, Babco, and G's submitted requisition requests to MCCAC for loans to cover operating expenses. Funds were taken from various MCCAC accounts, including the Head Start account, to cover the loans. As Executive Director of MCCAC, Balogun was responsible for authorizing all such disbursements.

As early as July 1981, the Department of Health and Human Services (HHS) became aware of the fact that interagency loans were being made from the Head Start account to various MCCAC concerns. By September 1981, MCCAC was informed that the use of federal Head Start funds for such purposes was strictly prohibited since the loans were not intended to fulfill permissible objectives of the Head Start program. Additionally, MCCAC was ordered to restore all missing funds to the Head Start account. HHS' reprimand went unheeded as the practice of interagency loans continued undaunted.

By October 1982, Babco and G's were on a "cash basis" with most creditors, making it necessary for all payments to be made in cash or its equivalent. When bills came due, requisition requests were sent to MCCAC. Then, checks were written on various MCCAC accounts, including the Head Start account, and made payable to the order of Robert Burton. Presumably, Burton would cash the checks and use the proceeds therefrom to pay the creditors.

Rather than phase-out the for-profit element of the MCCAC, the MCEDC, in January, 1983, purchased a third for-profit concern Tuskegee Wholesale Grocery (Wholesale), in an effort to raise funds for MCCAC-administered programs. Unfortunately, ownership of Wholesale exacerbated, rather than alleviated, the cash-flow problems of the MCEDC, and the interagency loans continued.

Ultimately, the Head Start loans were sufficient only to sustain, and not to resuscitate, the failing businesses. In 1985, federal funding for the Head Start program was revoked as a consequence of the repeated interagency loan abuses. Shortly thereafter, MCEDC, Babco, G's, and Wholesale went bankrupt.

Balogun and Burton were indicted in 1987 for embezzlement and conspiracy to embezzle in connection with the interagency loan activities. Following trial, Balogun and Burton were convicted on one count of embezzlement and on one count of conspiracy to embezzle.

II. DISCUSSION

On appeal, appellants present four major claims of error. First, appellants claim that the evidence was insufficient to support their convictions and that they, therefore, are entitled to judgments of acquittal. Second, appellants contend that the district court committed reversible error when it, over timely objection, allowed an F.B.I. agent to testify as to the nonexistence of a cashier's check. Third, appellants strenuously argue that the district court abused its discretion when it failed to grant a new trial on the basis of newly discovered evidence. Finally, appellants argue that the district court erred when it failed to grant appellants' motion to dismiss on the basis that the indictment contained duplicitous counts which rendered the indictment invalid. The issues presented are discussed seriatim.

A. Insufficiency of the Evidence

In assessing an allegation that a jury verdict is insufficiently supported by the evidence, this court must construe the evidence in the light most favorable to the government. See Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680 (1942); United States v. Miller, 693 F.2d 1051, 1053 (11th Cir.1982). The verdict will be upheld if "a reasonable trier of fact could find the evidence establishes guilt beyond a reasonable doubt." United States v. Bell, 678 F.2d 547, 549 (5th Cir. Unit B 1982), aff'd on other grounds, 462 U.S. 356, 103 S.Ct. 2398, 76 L.Ed.2d 638 (1983).

1. Embezzlement

Section 641, 18 U.S.C., makes it a federal crime or offense for anyone to embezzle any money or property belonging to the United States having a value of more than $100. ¹ To support a conviction for embezzlement under 18 U.S.C. Sec. 641 (1982), the government must prove the following: (1) that the money or property described in the indictment belonged to the United States or an agency thereof and had a value in excess of $100 at the time alleged; (2) that the property lawfully came into the possession or care of the defendant, and the defendant fraudulently appropriated the money or property to his own use or the use of others; and (3) that the defendant did so knowingly and willfully with the intent either temporarily or permanently to deprive the owner of the use of the money or property so taken. See United States v. Bailey, 734 F.2d 296, 303 (7th Cir.1984), cert. denied, 469 U.S. 931, 105 S.Ct. 327, 83 L.Ed.2d 263 (1985). See also United States v. Shackleford, 777 F.2d 1141 (6th Cir.1985) cert. denied, 476 U.S. 1119, 106 S.Ct. 1981, 90 L.Ed.2d 663 (1986); United States v. Waroneck, 582 F.2d 1158 (7th Cir.1978).

In the present case, count four of the indictment charged Balogun and Burton with willfully, knowingly, and without authority embezzling and converting to their own use and the use of others "moneys [sic] of the United States Department of Health and Human Services and other agencies of the United States in the amount of approximately Five Thousand Dollars ($5000)." Evidence introduced by the government showed that on April 14, 1983, a $5000 check, signed by Balogun and Burton, was issued on the MCCAC-CDC Membership Drive Fund account to the order of Burton. The testimony at trial and the requisition request pursuant to which the check was written indicated that the check proceeds were to be used for the payment of MCEDC's payroll taxes, an impermissible use of the involved federal funds. Further evidence showed that Burton cashed the check at the drive-through window of the Alabama Exchange Bank. Burton testified that after cashing the check, he purchased either a cashier's check or a money order to send to the I.R.S. for the payment of MCEDC's payroll taxes; however, he could not recall where he purchased the check or money order, and no evidence was introduced indicating that a check or money order had been...