U.S. v. Cornier-Ortiz

• Citation: 361 F.3d 29
• Decision Date: 17 March 2004
• Docket Number: No. 03-1022.,03-1022.
• Parties: UNITED STATES of America, Appellee, v. Edwin Rafael CORNIER-ORTIZ, Defendant, Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

361 F.3d 29

UNITED STATES of America, Appellee, v. Edwin Rafael CORNIER-ORTIZ, Defendant, Appellant.

No. 03-1022.

United States Court of Appeals, First Circuit.

Heard January 5, 2004.

Decided March 17, 2004.

COPYRIGHT MATERIAL OMITTED

Maritza Gonzalez de Miranda, Assistant United States Attorney, with whom H.S. Garcia, United States Attorney, Sonia I. Torres, Assistant United States Attorney, and Thomas F. Klumper, Assistant United States Attorney, were on brief, for appellee.

David W. Roman, with whom Brown & Ubarri was on brief, for appellant.

Before LYNCH, Circuit Judge, CAMPBELL, Senior Circuit Judge, and LIPEZ, Circuit Judge.

LYNCH, Circuit Judge.

This public corruption case from Puerto Rico resulted in the conviction, for misuse of federal housing monies from 1996 to 2001, of the sole defendant, Edwin Rafael Cornier-Ortiz. Cornier was the general manager, sequentially, of two private for-profit management corporations, CORA and ERCO. Cornier worked with others — including a HUD division director, a contract employee of the Puerto Rico Public Housing Authority, and their relatives — to divert United States Department of Housing and Urban Development ("HUD") funds that were meant for the administration of low-income housing projects in Puerto Rico. The schemes alleged involved fraud, kickbacks, sham contracts, ghost employees, and conflicts of interest. Others involved were convicted under separate indictments.

Cornier claimed to be an innocent victim caught in the corrupt schemes of others. He was sentenced to fifty-two months in prison and three years of supervised release, and sentenced to pay restitution of $136,056.00 to HUD. Cornier appeals both his conviction, on insufficiency of evidence grounds, and his sentence requiring restitution. We affirm the conviction, but vacate part of the restitution order.

I.

Cornier was indicted on eight counts, all related to misuse of federal housing funding. Cornier pled not guilty. After an eight-day jury trial on the first seven counts, he was convicted on six of those seven counts: aiding and abetting the theft or misapplication of federal funds in violation of 18 U.S.C. §§ 666(a)(1)(A) and (2) (Count One); conspiring to defraud the United States by violating 18 U.S.C. § 666, in violation of 18 U.S.C. § 371 (Count Three); aiding and abetting the theft or misapplication of federal funds in violation of 18 U.S.C. §§ 666(a)(1)(A) and (2) (via a different scheme than the scheme implicated by Count One) (Count Four); aiding and abetting extortion in violation of 18 U.S.C. §§ 1951(a) and (b) (Count Five); money laundering in violation of 18 U.S.C. §§ 1956(a)(1)(B)(i) and (2) (Count Six); and conspiracy to commit money laundering in violation of 18 U.S.C. § 1956(h) (Count Seven). He was acquitted on Count Two, which charged him with aiding and abetting the solicitation and acceptance of a kickback in violation of 41 U.S.C. §§ 51, 53, and 54.

Essentially, Count One involved a scheme in which Cornier, as general manager of CORA, hired the brother of a housing authority employee to prepare and submit vouchers for federal CGP funds and then lied about the nature of the brother's employment to the CORA board. The work — both preparing vouchers for submission to the housing authority and the underlying modernization work evidenced by the vouchers — appears to have been done. The preparation of the vouchers, however, was done by the housing authority employee, who also approved the payment of the vouchers when they were submitted to the housing authority, and not by the brother. As to this scheme, Cornier says that no real harm was done.

Counts Three through Seven involved a later scheme with Cornier's next company, ERCO. ERCO employed at an excessive salary the half-brother of a HUD official. The brother did little work, but he received a handsome salary of $15,000 a month, kept $4,000 of it, and passed along the remaining $11,000 to the HUD official. As to this scheme, Cornier claims that he was forced into feeding the greed of the HUD official, was himself a victim of the official's extortion, and was entitled to judgment in his favor. There is no claim of trial error, only that the evidence was insufficient.

At sentencing, the district court addressed Count Eight, which charged Cornier with forfeiture of assets related to the offenses in the other counts, and ordered Cornier to pay restitution in the amount of $136,056.00 to HUD. Of that amount, $61,804.80 was connected with the Count One conviction. Cornier now appeals his convictions and the order to pay restitution as to Count One.

II.

A. Sufficiency of the Evidence

Cornier argues that the district court erred in denying his Rule 29 motions for judgment of acquittal as to all six offenses. We review the denial of Rule 29 motions de novo. United States v. Zenon-Rodriguez, 289 F.3d 28, 32 (1st Cir.2002); United States v. Ayala Ayala, 289 F.3d 16, 21 (1st Cir.2002). Our review of the sufficiency of the evidence requires us to ask "whether, after viewing the evidence in the light most favorable to the prosecution any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979) (emphasis omitted); United States v. Casas, 356 F.3d 104, 126 (1st Cir.2004) ("We draw all reasonable evidentiary inferences in harmony with the verdict and resolve all issues of credibility in the light most favorable to the government."); United States v. Henderson, 320 F.3d 92, 102 (1st Cir.2003).

Some background facts about the funding of public housing projects in Puerto Rico are necessary to understand the schemes involved in this case. HUD allocates federal monies to Puerto Rico for the administration of low-income public housing projects. Most of that federal funding is allocated to cover the costs of managing and operating the housing projects. A different portion of the federal funding is allocated to pay for periodic modernization of the housing projects. HUD disburses this modernization funding based in part on a Comprehensive Grant Program ("CGP"), so the funds are called CGP funds. The Puerto Rico Public Housing Administration ("PRPHA") receives the federal funds from HUD and is charged with administering the Commonwealth's public housing projects. Pursuant to a 1992 agreement between the government of Puerto Rico and HUD, management of the low-income housing projects in Puerto Rico is done by private management agencies. Such agencies submit bid proposals to PRPHA, and the proposals are then evaluated by a PRPHA bid board. A private management agency that has been awarded a management contract by PRPHA is paid a management fee under the contract using federal funds from HUD. In addition, the private management agency may submit requests to PRPHA for CGP funding in connection with the documented expenses of modernizing and improving its assigned housing projects.

1. Count One

Under Count One,¹ violation of 18 U.S.C. § 666, the government had to prove beyond a reasonable doubt: (1) that Cornier was "an agent of an organization, or of a State, local, or Indian tribal government, or any agency thereof"; (2) that Cornier embezzled, stole, obtained by fraud, knowingly converted, or intentionally misapplied property that is "valued at $5,000 or more" from "such organization, government, or agency"; and (3) that such "organization, government, or agency receives, in any one year period, [federal assistance] in excess of $10,000." 18 U.S.C. § 666.

Cornier raises no issue about the first or third prongs. He argues only that the second prong was not satisfied because his actions fit within a statutory exception. Under § 666(c), "bona fide salary, wages, fees, or other compensation paid, or expenses paid or reimbursed, in the usual course of business" are exempted from the statute's coverage. § 666(c); see United States v. Mills, 140 F.3d 630, 633 (6th Cir.1998) ("[B]ona fide salaries, wages, fees, and other compensation either received by or promised by § 666 defendants fall within the scope of the subsection (c) exception"). Subsection (c) was added to the statute in 1986, and the only reference to it in the legislative history states that it "amends 18 U.S.C. § 666 to avoid its possible application to acceptable business practices." H.R.Rep. No. 99-797, at 30 (1986), reprinted in 1986 U.S.C.C.A.N. 6138, 6153.

The facts pertaining to Count One, recounted in the light most favorable to the prosecution, are as follows. CORA Management Group, Inc. was a for-profit private management agency. Cornier, a former PRPHA employee, was the general manager and a shareholder of CORA. Among other things, he was in charge of administering bids for contracting services and obtaining CGP funding for CORA. In July 1995, CORA was awarded a contract with the PRPHA to manage and maintain certain low-income housing projects. Under the contract, CORA received federal funds from PRPHA; PRPHA received those funds from HUD. CORA received federal assistance in excess of $10,000 during each of the years 1996-1998 in connection with its management of the housing projects.

Rubin Monroig, a contract employee at PRPHA, approached Cornier in 1995 and informed him that CORA was not requesting from PRPHA any CGP funds. CORA was, of course, receiving a management fee from PRPHA to operate the housing projects. That management fee was paid by PRPHA using federal funds from HUD. But CORA was also entitled to request CGP funds in order to make physical improvements to the public housing projects it operated and in order to improve its management of those projects.² Unlike the management fee, which was established under the contract, the disbursement of CGP funds was left to the discretion of PRPHA. Like the management fee, the original source of the CGP money disbursed by PRPHA was HUD. Rubin Monroig told Cornier that his brother, ...