U.S. v. Graves

• Decision Date: 05 August 1977
• Docket Number: No. 76-3526,76-3526
• Citation: 556 F.2d 1319
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. Glen D. GRAVES, Lewis Weinstein, and Graves Construction Company, Inc., a/k/a Graves Construction, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1319

556 F.2d 1319

UNITED STATES of America, Plaintiff-Appellant, v. Glen D. GRAVES, Lewis Weinstein, and Graves Construction Company, Inc., a/k/a Graves Construction, Inc. Defendants-Appellees.

No. 76-3526.

United States Court of Appeals Fifth Circuit.

Aug. 5, 1977.

Thomas W. Turner, Sp. Atty., Mervyn Hamburg, U. S. Dept. of Just., Crim. Div., Fraud Section, Washington, D. C., James E. Wilson, D. H. Perkins, Jr., Asst. U. S. Attys., Shreveport, La., for plaintiff-appellant.

C. William Gerhardt, Shreveport, La. (Court-appointed), for Glen D. Graves and Graves Construction Co.

John R. Martzell, New Orleans, La., for Lewis Weinstein.

Appeal from the United States District Court for the Western District of Louisiana.

Before TUTTLE, TJOFLAT and HILL, Circuit Judges.

JAMES C. HILL, Circuit Judge:

The United States brings this appeal from the pretrial dismissal of an indictment charging appellees with conspiracy to submit false statements to the Federal Housing Administration ("FHA") and the completed substantive offenses. ¹ The Government alleged that appellees had (a) fraudulently attempted to secure mortgage insurance under section 235 of the National Housing Act of 1968 for buyers whom they knew were not qualified; (b) falsified documents submitted to FHA concerning the income, assets, liabilities, credit, employment and other information pertaining to prospective mortgages; and (c) failed to comply with the statutory requirement of obtaining a $200 down payment from each prospective mortgagor and falsified documents pertaining thereto.

Prior to trial, the appellees filed motions to dismiss the indictment on the ground that FHA knew of, acquiesced in, approved, and encouraged the submission of false statements such as those alleged in the indictment. Characterizing the alleged actions of FHA officials as "outrageous governmental misconduct," the appellees sought dismissal of the indictment on the ground of entrapment as a matter of law. At a hearing on the motion, the Government objected to pretrial consideration of the entrapment issue and contended that entrapment could not be proven by showing misconduct by FHA officials who were not connected with the enforcement of criminal laws. Even after the district court permitted extensive testimony by defense witnesses, the Government declined to call rebuttal witnesses and continued to assert that consideration of the entrapment defense was premature. Citing United States v. Bueno, 447 F.2d 903 (5th Cir. 1971), cert. denied, 411 U.S. 949, 93 S.Ct. 1931, 36 L.Ed.2d 411 (1973), the district court then dismissed the indictment. We reverse.

I. The Pretrial Hearing.

Testimony adduced at the hearing showed that appellee Graves, during 1971, operated a home building company known as Graves Construction Company. Included among his customers were persons who sought FHA financing pursuant to section 235 of the National Housing Act of 1968, which applied only to low income families meeting certain standards. Prior to February or March, 1971, appellee Graves did not accept as potential customers any applicants who were unable to furnish the required $200 down payment. ² Graves later discovered that persons whom his firm had rejected had obtained FHA-approved financing with rival builders only a short time after his firm had rejected them. He complained to the local FHA officials about this practice, but no action was taken by them in response.

At this point, Graves exercised self help to protect his interests in the 235 program. After making inquiries of several individuals who had been approved by other builders, he secured approximately 75 affidavits from home buyers who had not furnished the builder with the requisite $200 down payment or had otherwise failed to comply with applicable FHA regulations. When confronted with these statements, the FHA officials responded that the absence of the down payments was unimportant and that any of the FHA requirements could be waived.

Thereafter, appellee began accepting customers for FHA approved housing even though they did not have the required $200 down payment. The applications forwarded to FHA for these customers contained false statements that the down payment was available or had been paid. In defense of his actions, Graves testified at the pretrial hearing, taking the position that he was guilty of no wrongdoing because FHA officials had sanctioned his practices and those of his competitors.

II. Did the Appellees' Motion Present a Jury Question?

The appellant United States first presents the threshold question whether the district court erred by entertaining before trial the appellees' motion to dismiss on the ground of governmental misconduct. Since the defense is akin to entrapment, the Government argues, the question should have been presented to the jury for consideration. The appellees counter with the argument that an allegation of governmental misconduct is distinguishable from an entrapment defense in terms of the proof required. They contend that the focus of an entrapment defense is the predisposition of the defendant to commit the crime, whereas the focus in a governmental misconduct case is solely upon the actions of the government agents. They contend further that their motion to dismiss was "capable of determination without the trial of the general issue," as contemplated by Rule 12(b), Fed.R.Crim.P., thereby permitting its pretrial disposition by the court.

This case does not present what might be described as a "classic" entrapment defense. In the typical entrapment situation the defendant alleges that law enforcement officers have enticed him to commit an unlawful act which he had no predisposition to commit. In such a case, the entrapment defense "focus(es) on the intent or predisposition of the defendant to commit the crime," United States v. Russell, 411 U.S. 423, 429, 93 S.Ct. 1637, 1641, 36 L.Ed.2d 366 (1973), rather than upon the conduct of the Government's agents. In the absence of a conclusive showing, this "subjective" approach ³ permits the jury to determine as a question of fact the defendant's predisposition to commit the crime.

Thus, the question is for the jury, unless the evidence is so clear and convincing that it can be passed on by the trial judge as a matter of law. Sherman v. United States, 356 U.S. 369, 377, 78 S.Ct. 819, 2 L.Ed.2d 848 (1958); Coronado v. United States, 266 F.2d 719 (5th Cir. 1959) cert. denied, 361 U.S. 851, 80 S.Ct. 112, 4 L.Ed.2d 90 (1959). In Sherman the court stated as follows:

Furthermore, it was the position of Mr. Justice Roberts that the factual issue of entrapment now limited to the question of what the government agents did should be decided by the judge, not the jury. Not only was this rejected by the Court in Sorrells, (Sorrells v. U. S., 287 U.S. 435, 53 S.Ct. 210, 77 L.Ed. 413) but where the issue has been presented to them, the Courts of Appeals have since Sorrells unanimously concluded that unless it can be decided as a matter of law, the issue of whether a defendant has been entrapped is for the jury as part of its function of determining the guilt or innocence of the accused.

356 U.S. at 377, 78 S.Ct. at 823 (footnote omitted) (emphasis supplied).

It has also been said that the "issue of entrapment is a question for the jury unless as matter of law the defendant has established beyond a reasonable doubt that he was unlawfully entrapped." Goss v. United States, 376 F.2d 812, 813 (5th Cir. 1967) (per curiam). The notion that entrapment is generally a question for the jury finds support in Rule 12(b). The defendant's predisposition to commit an unlawful act will seldom be "capable of determination without the trial of the general issue."

In the instant case, however, the appellees do not assert a classic entrapment defense, i. e., they do not argue that the government encouraged criminal acts in order to obtain a prosecution. Rather, they argue that the FHA officials were so involved in the corruption alleged that the law enforcement officials, representing an altogether different agency of government, should be precluded from bringing this prosecution.

Although the appellees perfunctorily assert the lack of any predisposition to commit the offenses alleged, the core of their entire defense is the alleged misconduct of FHA officials. Their motion presented the question whether this conduct violated due process principles, as suggested in Russell, supra, to such an extent that judicial processes could not be invoked against them. Since their defense was predicated entirely on alleged governmental misconduct, and not upon the subjective predisposition of the appellees, it was an appropriate question for the court to resolve on a pretrial motion. To paraphrase Rule 12(b), the question presented could be answered without trial of the general issue. Moreover, the issue raised in appellees' pretrial motion was essentially a question of law, namely, whether the conduct of the FHA officials constituted outrageous governmental misconduct within the meaning of Russell, supra and Hampton v. United States, 425 U.S. 484, 96 S.Ct. 1646, 48 L.Ed.2d 113 (1976). Thus, it was properly a question for the court and not the jury.

Although this is a question of first impression in our Circuit, we note that the Eighth Circuit has adopted a rule substantially similar to that fashioned today. In United States v. Quinn, 543 F.2d 640 (8th Cir. 1976), the court affirmed the trial court's refusal to submit to the jury that aspect of the defendant's entrapment defense alleging outrageous governmental misconduct:

Whether a person has been entrapped in (the conventional) sense of the term is ordinarily a question of fact for the jury with the burden being on the government to prove an absence of entrapment. In the instant case, as we have seen, the factual aspect of the defendant's claim of entrapment was submitted to the jury, and the jury resolved it...