U.S. v. Hartness

• Decision Date: 13 June 1988
• Docket Number: No. 87-1835,87-1835
• Citation: 845 F.2d 158
• Parties: UNITED STATES of America, Appellee, v. Billy H. HARTNESS and Brenda K. Keener, Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 158

845 F.2d 158

UNITED STATES of America, Appellee, v. Billy H. HARTNESS and Brenda K. Keener, Appellants.

No. 87-1835.

United States Court of Appeals Eighth Circuit.

Submitted Jan. 15, 1988.

Decided April 15, 1988.

Rehearing and Rehearing En Banc Denied June 13, 1988.

Charles S. Gibson, Dermott, Ark., for appellants.

Sandra Cherry, Asst. U.S. Atty., Little Rock, Ark., for appellee.

Before JOHN R. GIBSON and MAGILL, Circuit Judges, and FLOYD R. GIBSON, Senior Circuit Judge.

FLOYD R. GIBSON, Senior Circuit Judge.

On April 1, 1987 Billy Hartness and Brenda Keener were found guilty in the district court ¹ of conspiracy to defraud the United States in violation of U.S.C. 18 Sec. 371 (1982). ² Hartness was also found guilty of one count and Keener of two counts of filing false documents with the government, all in violation of 18 U.S.C. Sec. 1001 (1982). ³ We affirm.

I. BACKGROUND

At all relevant times Billy Hartness was a building contractor involved in the construction of single family dwellings in Monticello, Arkansas and the surrounding area. Brenda Keener was a certified public accountant employed by Hartness and the operator of Keener Realty, a realty company operating out of the Hartness Building Supply office.

Many of the homes built by Hartness were purchased by individuals receiving assistance from the Farmers Home Administration Rural Housing Program. Pursuant to this program FmHA provides low interest loans to qualified individuals to enable them to purchase homes.

At issue in this appeal are the actions of Hartness and Keener in connection with a loan application filed by Michael Ray Grubb and his wife Deedra Grubb. Grubb was a part-time bookkeeper for Hartness from January 1983 to February 1985 while attending college full-time. During the summers when school was not in session Grubb worked full-time for Hartness.

Shortly before getting married, Grubb became interested in purchasing a home from Hartness. Grubb's original application for FmHA assistance was filled out by Keener and presented to Grubb for his signature. The application stated that Grubb worked forty hours per week, fifty-two weeks per year, and earned $3.45 per hour for an annual total of $7,176. Grubb's status as a full-time student was not mentioned on the application.

After the loan application was submitted Hartness signed three separate Verification of Employment forms (VOEs). On the first form, dated March 8, 1984, Grubb's base pay to date, past year income, and hours per week were incorrectly reported. The second VOE, dated July 2, 1984, reported an increase in Grubb's hourly wages to $3.90 per hour and continued to report full-time employment status. At about this time Keener told Grubb that his wife should not seek employment until after closing on the house because a large increase in income would result in denial of their application.

On August 21, 1984, the final VOE was signed by Hartness reporting that Grubb was earning $4.25 per hour, forty-three and one-half hours per week, fifty-two weeks per year. Grubb's past year income was reported to be $8,211 and his expected income for the following year was reported to be approximately $10,000. At trial Grubb testified that on the date of the final VOE he was earning less than $4.25 per hour, was not working full-time year-round, and had not earned $8,211 the previous year. Grubb testified that due to his marriage the figures reported on the second VOE would not have qualified him for a loan, so the figures were increased. Grubb further testified that he and Keener went over all the figures "to make it work." When asked whether he planned to make $10,000 the following year, Grubb responded, "Not unless I got a nice raise."

Appellants were charged in a multi-count indictment with one count of conspiring to defraud the government and numerous counts of submitting false statements to the government. Keener was convicted on the conspiracy count, on Count VI dealing with the Grubb application, and on Count X which is not relevant to this appeal. Hartness was convicted on the conspiracy count as well as on Count V dealing with the Grubb VOE.

II. DISCUSSION

Appellants' first argument is that Counts V and VI of the indictment failed to state an offense and therefore should have been dismissed by the district court.

Count V charged:

On or about March 7, 1984, in the Eastern District of Arkansas, the defendant, Brenda K. Keener, in a matter within the jurisdiction of the Farmers Home Administration, an agency of the Department of Agriculture of the United States, did willfully and knowingly use and cause to be used a false writing and document containing a materially false, fictitious and fraudulent statement, knowing the same to contain such a statement, in that in an Application for Rural Housing Assistance submitted to the Farmers Home Administration the defendant stated and represented that the annual income of Michael Ray Grubb was $7,176 whereas in truth and in fact, as the defendant then knew, the annual income of Michael Ray Grubb was less than that amount, all in violation of Section 1001 of Title 18 of the United States Code.

Keener argues that Count V fails to state an offense because it is legally impossible to falsify a projection of future events. Annual income is defined as "any income planned to be received in the coming year by the applicant or a member of his household." Johnson v. Department of Agric., 734 F.2d 774, 776 (11th Cir.1984). See also 7 C.F.R. Secs. 1944.8(c)(2) and (c)(3) (1984). FmHA employees testified that annual income is an estimate of projected income based upon current income and events expected to occur in the future.

Taken to its logical conclusion, Keener's argument would allow her to falsify with impunity the statement of annual income on every loan application she assists in filling out. Since it was merely a guess, could Keener have legally estimated Grubb's income to be $1 million. We think not.

Granted, a statement of future earnings need not be made with the same degree of precision required of a statement of past earnings. No one can be prosecuted for failing to accurately predict the future. At the same time, however, one who cavalierly adjusts her prediction to suit her needs can not seek shelter behind the definition of income and argue that an estimate can not be false. Based on the facts in existence on the date of the application, Keener's statement of Grubb's projected annual income was false and was known by Keener to be false. The projection was based on full-time employment when Keener, Grubb's immediate supervisor, knew that Grubb worked only part-time and attended college full-time. In support of her argument Keener cites United States v. Vesaas, 586 F.2d 101 (8th Cir.1978), in which a conviction under 18 U.S.C. Sec. 1001 was reversed because the allegedly false statement was literally and factually correct. Since it is legally impossible to hold stock in joint tenancy with a decedent, a statement denying such ownership can not be the subject of prosecution under Sec. 1001, the court held. We fail to see the relevance of Vesaas to the present case. It is not legally impossible to falsify annual income even though it is a projection because criteria are provided from which to make the projection. See 7 C.F.R. Sec. 1944.8(c). Putting false information into the equation necessarily leads to a false projection. Consistent with Keener's argument, if we take into account the definition of income, Count V of the indictment charged that Keener "stated and represented that the [projected] annual income of Michael Ray Grubb was $7,176 whereas in truth and in fact, as the defendant then knew, the [projected] annual income of Michael Ray Grubb was less than that amount." We believe this language states an offense.

Count VI, which is challenged by Hartness, charged:

On or about August 21, 1984, in the Eastern District of Arkansas, the defendants, Billy Horace Hartness and Brenda K. Keener, in a matter within the jurisdiction of the Farmers Home Administration, an agency of the Department of Agriculture of the United States, did willfully and knowingly use and cause to be used a false writing and document containing a materially false, fictitious and fraudulent statement, knowing the same to contain such a statement, in that in a Verification of Employment submitted to the Farmers Home Administration the defendants stated and represented that Michael R. Grubb was employed by Billy Hartness Building Supply earning $10,000 per year whereas in truth and in fact, as the defendants then knew, Michael R. Grubb earned $7,370, all in violation of Sections 1001 and 2 of Title 18 of the United States Code.

Hartness argues that Count VI fails to state an offense because it was premised on a false estimate of future earnings. For the reasons previously discussed, we believe that Count VI states an offense.

Appellants next argue that the district court erred in denying their motions for judgment of acquittal based on insufficiency of the evidence. When reviewing the sufficiency of the evidence we must give the government the benefit of all reasonable inferences that may be drawn from the evidence. Viewing the evidence in a light most favorable to the government, we will reverse the convictions only if the verdicts are not supported by substantial evidence. United States v. Casperson, 773 F.2d 216, 221 (8th Cir.1985).

Keener challenges her conviction on Count V on two grounds. First, she argues that the evidence at trial showed that Grubb actually earned in excess of $7,176 in the twelve months following the loan application. Therefore, because her statement of Grubb's income was correct, she should have been acquitted. We disagree. The correct test is whether the statement of income was false when made. Subsequent events are relevant only to the extent that they were foreseeable on the day the loan application was...