U.S. v. Diggs
| Decision Date | 30 January 1980 |
| Docket Number | No. 78-2327,78-2327 |
| Citation | 198 U.S.App.D.C. 255,613 F.2d 988 |
| Parties | , 5 Fed. R. Evid. Serv. 35 UNITED STATES of America v. Charles C. DIGGS, Jr., Appellant. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Bernard J. Carl, Washington, D.C., a member of the bar of the Supreme Court of Virginia, pro hac vice, with whom David Povich, Robert Barnett, and Robert Watkins, Washington, D.C., were on the brief, for appellant.
Peter E. George, Asst. U.S. Atty., Washington, D.C., with whom Earl J. Silbert, U.S. Atty., John A. Terry, John T. Kotelly, and Eric B. Marcy, Asst. U.S. Attys., Washington, D.C., were on the brief, for appellee.
Before LEVENTHAL and WILKEY, Circuit Judges and OBERDORFER, * United States District Judge for the District of Columbia.
Opinion for the Court filed by Circuit Judge WILKEY.
The defendant Charles C. Diggs, Jr., United States Congressman for the 13th District of Michigan, appeals from a conviction on eleven counts of mail fraud, under 18 U.S.C. § 1341, 1 and eighteen counts of making false statements to a United States agency, under 18 U.S.C. § 1001, 2 following a jury trial before Judge Oliver Gasch of the United States District Court. 3 The defendant was sentenced to concurrent terms of incarceration of three years on each count.
The indictment alleged that between 1 July 1973 and 2 March 1977 the defendant devised a scheme to defraud the United States by misapplying funds allotted for the compensation of congressional employees. 4 On this appeal, the defendant does not challenge the sufficiency of the evidence but contends rather that he lacked the requisite intent to defraud and that he acted within the bounds of his discretion to set the duties and salaries of his congressional employees. For the reasons discussed herein, we reject the defendant's arguments and affirm his conviction on each of the twenty-nine counts.
At different periods from October 1973 to January 1977, three of defendant Diggs' congressional employees Jean G. Stultz, Felix R. Matlock, and Ofield Dukes paid out of the salary allotted to them from the congressional clerk-hire allowance various personal, business, or official expenses of the defendant. That these payments were made is not contested by the defendant; thus a detailed itemization of each of the transactions need not detain us. What is disputed by the defendant are the questions of whether the clerk-hire allowance could be used to defray his congressional expenses 5 and whether the employees' expenditures were made at his direction.
Congressman Diggs hired Jean G. Stultz in 1972 as a legislative assistant and in the following year promoted her to his personal secretary and staff office manager. In October 1973 Diggs placed Mrs. Stultz on both his personal staff and committee staff payrolls, for which she received two monthly salary checks of approximately $800 and $1,200. 6 Although Stultz deposited both paychecks into her own checking account, she allocated the $1,200 monthly check to obligations of the defendant either personal or congressional ones. 7 In August 1974 defendant removed Stultz from his personal staff payroll and substantially increased the salary she received from the committee staff payroll "almost to a figure to cover the total amount that (she previously received) in the two checks." 8 From this increase in salary, Stultz continued to pay the defendant's personal and congressional creditors on a regular basis. 9
Mrs. Stultz testified that in March or April 1976 she informed the defendant that she "no longer wanted to be a part of (it)." 10 Her gross annual salary was reduced in April 1976 from $37,355.00 to $22,700.00. 11 The decrease in salary was accompanied by no change in duties.
One fact of importance on this appeal is whether the defendant's bills were paid "at the direction of Congressman Diggs," as Mrs. Stultz testified, 12 or on Mrs. Stultz's own volition, as the defendant contends. Mrs. Stultz testified that the defendant approached her with the notion that her salary be increased in order to pay certain of his bills, and that the scheme, after some initial objection on her part, 13 was then set into motion: each month she would make a listing of all of the defendant's accounts, she and the defendant would review this list, and the defendant then would direct her as to which bills were to be paid from the inflated portion of her salary. 14 After this decision was reached, Stultz purchased either money orders or cashier's checks, placed the defendant's name on these instruments, and mailed them to the defendant's creditors. 15 Defendant Diggs, on the other hand, denied increasing Mrs. Stultz's salary for the purpose of paying his bills, and he also denied directing her to make these payments. He testified instead that Mrs. Stultz "expressed a willingness" to discharge his obligations.
Felix R. Matlock, one of the defendant's field representatives in Detroit, also paid expenses of the Congressman from his salary. The bulk of these expenditures were made over an eighteen-month period from September 1975 to January 1977. 16 With one minor exception, 17 all of these were congressionally related and most were in some way related to the operations of the defendant's district offices in Detroit. 18 Corresponding with that time period, the defendant significantly increased Matlock's salary: Matlock's annual gross salary jumped from $14,500.00 in July 1975 to $35,000.00 in September 1975, and to as much as $39,600.00 by the end of 1976. 19
Again, the dispute does not center on whether the defendant authorized the increases in Matlock's salary or whether Matlock actually paid the defendant's district office expenses, but whether the two events were part and parcel of the same scheme, perpetrated by the defendant. Mrs. Stultz testified that Matlock's salary was increased in order to pay the defendant's district office expenses, while the defendant denied adjusting Matlock's salary for this purpose. Both Matlock and Stultz testified that on the defendant's instructions, Mrs. Stultz advised Matlock which bills were to be paid. 20 Consistent with and in confirmation of this, Matlock also asserted that he received orders from the defendant personally following Mrs. Stultz's resignation in August 1976. Diggs, on the other hand, claimed that he did not instruct Matlock either directly or indirectly on which bills were to be paid.
In December 1976 Matlock stopped making payments toward the defendant's official expenses. 21 In the following month, the defendant reduced Matlock's gross annual salary from $39,600.00 to $20,000.00 with no apparent change in duties. 22
Ofield Dukes, hired in April 1973 as a consultant, paid official expenses of the defendant at various times from June 1973 through January 1976. 23 Dukes testified that he received instructions on which bills to pay from Mrs. Stultz and that he was reimbursed for these expenditures through increases in his salary. His base pay of $12,000.00 was raised to as much as $37,300.00 in November 1975, and finally dropped back to $12,000.00 in February 1976, when Dukes ceased to discharge the defendant's obligations. 24
Finally, the indictment alleges that Jeralee Richmond and George Johnson performed no congressionally related work while they were compensated from the congressional payroll. Defendant placed Jeralee Richmond on the congressional payroll in July 1974 at a salary of $8,500.00. She was employed at the House of Diggs' Funeral Home in Detroit as a bookkeeper, and she was also expected to deal with problems of constituents who came to the funeral home. Richmond testified that while on the House rolls from July 1974 to August 1976, approximately twenty percent of her time was apportioned to handling constituents' problems and eighty percent to bookkeeping matters of the funeral home. 25 The defendant did not dispute her testimony. At no time during this period did Mrs. Richmond receive any compensation from the House of Diggs: her entire salary derived from the congressional clerk-hire funds. 26
George Johnson, a certified public accountant in Detroit, was the defendant's personal accountant and the accountant for the House of Diggs. From July 1973 to December 1974, Johnson received compensation from the congressional clerk-hire allowance. While on the House payroll, Johnson continued to render accounting services to the defendant personally and to the House of Diggs. Defendant does not dispute that fact, asserting, however, that Johnson also aided him in his official capacity. Defendant testified that he hired Johnson as an adviser to draw upon Johnson's "knowledge and expertise and involvement in the community with respect to black economic development projects." 27 Johnson testified, on the other hand, that he did no "financial or accounting work for Congress" and that he had doubts about receiving compensation from the clerk-hire funds. 28 As a result, Johnson quit the congressional payroll in December 1974. 29
The scheme to defraud set forth in the indictment has two subparts: (1) the allegation that the defendant "inflated the salaries of Jean G. Stultz, Felix R. Matlock and Ofield Dukes in order to pay for various personal, business and House of Representatives' expenses of defendant Diggs," and (2) the allegation that the defendant placed on the House of Representatives' payroll Jeralee Richmond and George Johnson "who performed no work for the House of Representatives." 30 We will consider first that part of the alleged scheme to defraud involving the increases in the salaries of Matlock, Stultz, and Dukes.
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