U.S. v. Harmas, 90-3604

• Citation: 974 F.2d 1262
• Decision Date: 09 October 1992
• Docket Number: No. 90-3604,90-3604
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Robert O. HARMAS, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)

Page 1262

974 F.2d 1262

UNITED STATES of America, Plaintiff-Appellee, v. Robert O. HARMAS, Defendant-Appellant.

No. 90-3604.

United States Court of Appeals, Eleventh Circuit.

Oct. 9, 1992.

John D. Cline, Tom McCoun, St. Petersburg, Fla., for defendant-appellant.

Charles Truncale, Asst. U.S. Atty., Jacksonville, Fla., for plaintiff-appellee.

Appeal from the United States District Court for the Middle District of Florida.

Before KRAVITCH and DUBINA, Circuit Judges, and RONEY, Senior Circuit Judge.

DUBINA, Circuit Judge:

The appellant, Robert Harmas ("Harmas"), appeals his conviction for fraud and other related counts. For the reasons which follow, we affirm.

I. STATEMENT OF THE CASE

A. Background Facts

In 1986, Florida Federal Savings Bank ("Florida Federal") was the second largest savings and loan association in the Southeast and the third largest Guaranteed Student Loan Program ("GSLP") lender in the United States. Florida Federal's GSLP ¹ was managed by its Student Loan Division. ²

In the fall of 1986, Florida Federal's Student Loan Division became aware of problems with one of its computer collection systems. The system, known as "Hogan," recorded Florida Federal's collection activity and was designed to alert collectors within the Student Loan Division when a GSLP account became delinquent and required action. However, because Hogan malfunctioned, the Student Loan Division faced a potential loss of millions of dollars in insurance coverage on GSLP accounts. ³ The Student Loan Division promptly notified Harmas, Vice-President and Operations Manager of the Student Loan Division, and James L. Lamantia ("Lamantia"), Florida Federal's Assistant Vice-President and Manager of the Collection and Claims Department. Harmas advised Jeffery A. Flatten ("Flatten"), Senior Vice-President and the highest ranking official in the Student Loan Division, of the situation. To remedy the problem, Flatten ordered two collection agencies to service accounts in their early stages of delinquency while the Student Loan Division attempted to perform the collection activity on the accounts that were seriously delinquent; that approach proved impossible because the Student Loan Division employed only a small staff to service the GSLP program.

Sharon Oliphant ("Oliphant") and Sheree Willey ("Willey") of the Student Loan Division met with Harmas to discuss the problem. They informed him that the loan accounts were maintained by two systems: Hogan and a DOS system, which involved recording the collection activity on handwritten collection logs. Oliphant and Willey believed that a fraudulent backdate could be entered in the Hogan documents with a password. The password would override the automatic system date, the date when the information was actually entered, and then allow one to generate records of fictitious collection activity. Unknown to the parties, Hogan's memory retained both the system's date and the fraudulent backdate and was accessible to prove the actual date of each fraudulent backdated entry. Thereafter, the Hogan accounts were backdated to make it appear that the Student Loan Division had been properly servicing the accounts, and all handwritten collection logs pertaining to the DOS system were falsified.

Eventually, the job of falsifying documents became so complex that Harmas instructed Oliphant to designate four collectors to falsify records full time. Those collectors were moved to the Data Entry Department an area away from the collections department so that the work could continue without interruption. Henry Schall and Gail Klinefelter were two of the persons designated to handle the GSLP accounts maintained by Hogan. A third collector, Sandra Ferguson ("Ferguson") was designated to work on falsifying the handwritten collection records. Ferguson created fraudulent collection logs that were included in the default insurance claims forwarded to the guarantee agencies. The fourth collector, Betty Will, served as a quality control manager for the project, ensuring that the false records of the collection activity comported with the federal regulations. All the remaining collectors assisted in the falsification activity, mostly by making handwritten entries in the collection logs. Monthly meetings were held and progress reports were made regarding the conspiracy. Collectors that refused to participate in the conspiracy were transferred to other departments.

In addition to the false chronological summaries, false demand letters were created because the guarantee agencies required that default insurance claims be supported by documentary evidence of the due diligence activity. Collectors obtained backdated final demand letters from the Word Processing Department, which were copied and included in the default insurance claim file. The original fraudulently backdated letters were destroyed.

In late April 1987, fearing disclosure to authorities by former employees, LaMantia ordered the falsification project stopped. Notwithstanding this order, it continued for several more months because previously submitted false claims were returned to Florida Federal for adequate documentation and default insurance claims were refiled two or three times before final approval for payment was given. This in turn affected the guarantee agencies because of the time lag between the submission of a reinsurance claim and payment by the federal government after filing.

In September 1977, Rene Rogers, a former collector who had refused to become involved in the criminal conspiracy, sent a letter to Eric Stattin ("Stattin"), Florida Federal's President, advising him of the conspiracy. Stattin ordered an internal inquiry. Subsequently, the Federal Bureau of Investigation was notified and an investigation was conducted. As part of the investigation, Harmas was interviewed. He admitted that the conspiracy occurred from 1986 to 1987 and that he had discussed the mechanics of the scheme with Flatten. He stated that the conspiracy was common knowledge throughout the Student Loan Division.

B. Procedural History

A federal grand jury returned a forty-three count indictment against Harmas charging him with conspiracy to defraud and to commit offenses against the government, making false statements, making false claims, mail fraud, and stealing government money. ⁴ Following a jury trial, Harmas was found guilty of all forty-three counts and was sentenced to two years imprisonment to run concurrently on each count. He then perfected this appeal.

II. DISCUSSION

A. Conspiracy

Harmas argues that Count One of the indictment should have been dismissed. Count One charged a conspiracy to defraud and a conspiracy to commit offenses against the United States in violation of 18 U.S.C. § 371. ⁵ He contends that Count One is duplicitous and that the district court should have limited the government's prosecution to one theory of prosecution.

Title 18 U.S.C. § 371 states:

If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined ... or imprisoned ... or both. If, however, the offense, the commission of which is the object of the conspiracy, is a misdemeanor only, the punishment for such conspiracy shall not exceed the maximum punishment provided for such misdemeanor.

In order to charge a violation under § 371, the government must show that the defendant conspired to commit one or more substantive offenses against the United States, or that the defendant conspired to defraud the government in any manner or for any purpose. United States v. Sans, 731 F.2d 1521, 1533-35 (11th Cir.1984), cert. denied, 469 U.S. 1111, 105 S.Ct. 791, 83 L.Ed.2d 785 (1985). The statute is written in the disjunctive and should be interpreted as establishing two alternative means of committing a violation. United States v. Elkins, 885 F.2d 775, 781 (11th Cir.1989), cert. denied, 494 U.S. 1005, 110 S.Ct. 1300, 108 L.Ed.2d 477 (1990).

Harmas cites United States v. Minarik, 875 F.2d 1186 (6th Cir.1989), in support of his argument that the government should have charged him with a conspiracy to commit offenses against the United States. Minarik held that a defendant charged under § 371 must be charged with a conspiracy to commit an offense against the government and not a conspiracy to defraud if there is a specific statute describing the conduct involved in the alleged conspiracy. Id. at 1193-94. The court went on to state that § 371's misdemeanor clause, which limits the punishment for conspiracies whose object is a misdemeanor to a punishment no greater than that of the underlying misdemeanor, would be defeated if prosecution as a felony was allowed under the defraud clause. Id. at 1194. However, in United States v. Sans, we held it permissible to prosecute under either the defraud clause or the offense clause regardless of whether there was a specific statute describing the conduct alleged in the conspiracy and regardless of whether the object of the conspiracy was designated a misdemeanor. 731 F.2d at 1534. Other courts have allowed prosecution under the defraud clause despite the availability of a separate statute. See United States v. Mohney, 949 F.2d 899, 905 (6th Cir.1991); United States v. Bilzerian, 926 F.2d 1285, 1301-02 (2d Cir.), cert. denied, --- U.S. ----, 112 S.Ct. 63, 116 L.Ed.2d 39 (1991); United States v. Reynolds, 919 F.2d 435, 438-39 (7th Cir.1990), cert. denied, --- U.S. ----, 111 S.Ct. 1402, 113 L.Ed.2d 457 (1991); United States v. Little, 753 F.2d 1420 (9th Cir.1985). The Supreme Court has held that the existence of a specific statute encompassing the conduct charged under a § 371 conspiracy does not prevent a charge under the defraud clause. Dennis v. United States, 384 U.S. 855, 863-64, 86 S.Ct. 1840, 1845-46, 16 L.Ed.2d 973 (196...