U.S. v. Foulks, 89-3643

• Decision Date: 08 June 1990
• Docket Number: No. 89-3643,89-3643
• Citation: 905 F.2d 928
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Curtis FOULKS, Jr., Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 928

905 F.2d 928

UNITED STATES of America, Plaintiff-Appellee, v. Curtis FOULKS, Jr., Defendant-Appellant.

No. 89-3643.

United States Court of Appeals Sixth Circuit.

Argued Jan. 25, 1990.

Decided June 8, 1990.

Catherine H. Killam (argued), Office of U.S. Atty., Toledo, Ohio, for plaintiff-appellee.

Alan Scott Fisher, Toledo, Ohio, E. Winther McCroom (argued), Breckenridge & McCroom, Youngstown, Ohio, for defendant-appellant.

Before MARTIN and BOGGS, Circuit Judges, and PECK, Senior Circuit Judge.

BOYCE F. MARTIN, Jr., Circuit Judge.

Curtis Foulks, Jr., appeals his conviction and sentence imposed for embezzlement from the Toledo, Ohio Salvation Army's federally funded food and shelter program. We affirm.

Foulks was the Director of Community Services for the Toledo branch of the Salvation Army. Part of his duties included management of the emergency food and shelter program, including the procurement of food for distribution under the program. The emergency food program was administered by local service agencies, but was funded by the Federal Emergency Management Agency, which placed limits upon how the money could be spent, required certain record keeping and accounting procedures, and retained a reversionary interest in the funds. One of the limitations placed upon the local recipient agencies' use of the funds was that they could be spent only for "procurement costs." This limitation prohibited any employee or volunteer of a recipient agency from receiving any kind of benefit from the agencies' allotment.

After the Salvation Army received funds from the federal agency, those funds went into special accounts set up by the Salvation Army. Checks were then written against these accounts to buy food for the emergency program. Though the only person authorized by the Salvation Army to write checks was the Area Coordinator, the record shows that Foulks had virtually complete control over the purchasing of food for the emergency program.

On at least six separate occasions, Foulks directed that checks be drawn for the purchase of food for the emergency program. The first five checks charged in the indictment were made out to Yurika Foods. Unknown to anyone at the Salvation Army, Foulks was a Yurika Foods distributor, buying the food at wholesale prices and selling it back to the Salvation Army at a profit.

The first check, in the amount of $8,960.36, was deposited by Foulks in his personal checking account. He used $6,902.90 to buy food and kept the difference for himself. He deposited the second and third checks in an account he opened in the name "Yurika Foods, Curtis Foulks, Jr., Distributor," over which he had exclusive control. The movement of funds in and out of this account was tracked, revealing that the account balance was reduced to $23.30, with no evidence of a Yurika Foods purchase to satisfy the orders for which Foulks caused the two checks to be written.

The fourth check, in the amount of $10,118.70, and the fifth check, in the amount of $5,531.10, were also deposited into Foulks's Yurika account. He used $8,258.94 and $4,518.46, respectively, to buy food, and again kept the difference for himself.

Between the fifth and sixth checks, the Salvation Army bookkeeper notified the Area Coordinator that she had found someone who was able to sell Yurika products at a lower price. A memo was sent to Foulks directing him to purchase all Yurika products from this other person in the future.

Ignoring the memo, Foulks had the sixth check made out to Ted's Quick Cuisine in the amount of $5,508.80. Ted's was Foulks's wholesaler of Yurika products. Foulks presented this check to Ted's for an order of $4,395.73, explaining that there had been a bookkeeper's error. At Foulks's direction, Ted's wrote Foulks a check for the difference.

Foulks was indicted by a grand jury on six counts of embezzlement of federal funds in violation of 18 U.S.C. Sec. 641. After a bench trial, he was convicted on all counts. He was sentenced to a term of five years imprisonment. Imposition of sentence was suspended on the condition that Foulks serve six months in a jail-type institution and the remaining four and one-half years on probation. In addition, Foulks was ordered to pay restitution in the amount of $17,680.63.

On appeal, Foulks argues that the funds at issue were not federal funds within the meaning of 18 U.S.C. Sec. 641, and thus he cannot be guilty of violating that statute. Foulks relies on United States v. Gavin, 535 F.Supp. 1345 (W.D.Ohio 1982), aff'd, 718 F.2d 1101 (6th Cir.1983), and United States v. Morris, 541 F.2d 153 (6th Cir.1976), contending that the funds had lost their federal character. We disagree.

Gavin also involved a prosecution for conversion of federal funds brought under 18 U.S.C. Sec. 641. A check from the Small Business Administration in favor of a borrower named Tech-Fab...