U.S. v. Coleman

• Decision Date: 02 April 1979
• Docket Number: No. 77-1844,77-1844
• Citation: 590 F.2d 228
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Nathaniel COLEMAN, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 228

590 F.2d 228

UNITED STATES of America, Plaintiff-Appellee, v. Nathaniel COLEMAN, Defendant-Appellant.

No. 77-1844.

United States Court of Appeals, Seventh Circuit.

Argued Sept. 11, 1978.

Decided Dec. 18, 1978.

Certiorari Denied April 2, 1979.

See 99 S.Ct. 1786.

P. Scott Neville, Jr., Chicago, Ill., for defendant-appellant.

Richard A. Hanning, Asst. U. S. Atty., Hammond, Ind., for plaintiff-appellee.

Before FAIRCHILD, Chief Judge, NICHOLS, Associate Judge ^*, and WOOD, Circuit Judge.

FAIRCHILD, Chief Judge.

Appellant Coleman was convicted of an offense defined by 18 U.S.C. § 665. ¹

Count I of the indictment charged that:

" . . . Coleman, being the assistant director of the General Services Department of the City of Gary, Indiana, an agency receiving financial assistance under the Comprehensive Employment and Training Act of 1973, did embezzle, wilfully misapply, steal and obtain by fraud for his own personal use and enrichment for political purposes, moneys, funds, assets and property which were the subject of a grant under said Act, to wit: the services of employees participating in the Adult Work Experience Program of the Gary Manpower Administration, a prime sponsor under the Comprehensive Employment and Training Act of 1973 which services were of a value of . . . $4,500 . . . ."

Defendant moved for dismissal, asserting among other things that services of employees are not "moneys, funds, assets, or property" under 18 U.S.C. § 665. The district court denied the motion, concluding that the word "property" is broad enough to encompass services, and that the theft, embezzlement or misapplication of "services" paid for by funds supplied under a CETA grant is an offense described in § 665.

Count I was tried, with a verdict of guilty, the only other count being dismissed before trial.

The proof reflected the theory of Count I, that a city employee's use for private benefit of the services of trainees, under a CETA program, compensated out of CETA funds, amounted to embezzlement or willful misapplication of property which was the subject of the CETA grant.

The evidence established that a special crew of five men, paid with CETA funds, was assigned by Gary Manpower (an agency of the City) to the General Services Department of the City, of which Coleman was Assistant Director. Despite limitations imposed upon use of such employees by statute and regulations ² precluding their use for political purposes and personal enrichment, Coleman directed the crew to construct political signs for the mayoral primary campaign, and to perform various tasks in his construction business and otherwise for private benefit. ³

To obtain a conviction under § 665 the government must prove two elements:

(1) that the accused was an officer, director, agent or employee of, or connected in any capacity with an agency receiving financial assistance under CETA;

(2) that the accused embezzled, willfully misapplied, stole, or obtained by fraud "moneys, funds, assets, or property which are the subject of a grant or contract of assistance."

Defendant appears to argue that under the arrangements for the CETA grant, ⁴ Gary Manpower, rather than the City of Gary, was the "agency receiving financial assistance" under CETA, and that defendant, a city employee attached to a different department of the City, did not fulfill element (1) above. It may well be argued that the City itself was the "agency receiving financial assistance" under CETA, so that any employee of the City fulfills element (1). Even if a narrower view be taken, that Gary Manpower was the "agency," there was an agreement that the City's General Services Department would use some of the trainees, and defendant was Assistant Director of that Department. We think that defendant had sufficient responsibility for participation in the program so that he would be deemed "connected in any capacity" with Gary Manpower for the purpose of § 665.

Defendant further argues that services of persons compensated out of grant money are not "property . . . the subject of a grant," and that misappropriation of such services is not theft, embezzlement, or willful misapplication of such property.

The decision of the Ninth Circuit in Chappell v. United States, 270 F.2d 274, 276-78 (1959) provides some support for defendant's contention that § 665 should be construed narrowly and according to the more traditional meanings of its terms. In Chappell an Air Force sergeant was charged with converting to his own use the services of an airman in painting, during duty hours, property of the sergeant. The statute there considered provided a penalty for one who "knowingly converts to his use . . . any record, voucher, money, or thing of value of the United States . . . or any property made or being made under contract for the United States." Applying strict construction, the court decided that the services misappropriated were not a thing of value subject to conversion.

The Third Circuit has recently suggested that Chappell had been too narrowly decided, although in the present case the court found a technical larceny and thus did not need to reach a broader interpretation of § 641. United States v. Di Gilio, 538 F.2d 972, 978 (3d Cir. 1976). These cases under § 641 are the closest cited to the situation at hand.

Whatever the proper interpretation of § 641, we have a different statute before us. Congress was entrusting large sums to non-federal agencies to accomplish the purposes of CETA. A principal purpose was providing paying jobs to trainees. In § 665 Congress was exerting its power to protect these funds from misuse at the hands of employees of these agencies. Concededly as to tangible property the protection extended to that which was purchased by the funds as well as the funds themselves. Much of the funds, however, were expected to be spent to compensate people for services; the programs are intended to generate jobs. Recognizing that the term "property" is protean, capable of assuming varied meanings depending on context, and that the criminal law does not of necessity adopt the most restrictive meaning as the "literal terms," there is no reason to suppose that Congress intended to withhold protection from...