U.S. v. Irons, 80-1478

• Decision Date: 04 February 1981
• Docket Number: No. 80-1478,80-1478
• Parties: , 28 Cont.Cas.Fed. (CCH) 81,357 UNITED STATES of America, Plaintiff-Appellee, v. Louis IRONS, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 872

640 F.2d 872

59 A.L.R.Fed. 859, 28 Cont.Cas.Fed. (CCH) 81,357

UNITED STATES of America, Plaintiff-Appellee, v. Louis IRONS, Defendant-Appellant.

No. 80-1478.

United States Court of Appeals, Seventh Circuit.

Argued Sept. 10, 1980.

Decided Feb. 4, 1981.

Leo E. Holt, Harvey, Ill., for defendant-appellant.

Joseph H. Hartzler, Asst. U. S. Atty., Chicago, Ill., for plaintiff-appellee.

Before PELL and CUDAHY, Circuit Judges, and DUMBAULD, Senior District Judge. ^*

CUDAHY, Circuit Judge.

Defendant-appellant Louis Irons seeks review of his conviction on two counts of violating the federal conflict of interest law, 18 U.S.C. § 208(a). ¹ Each count charged that Irons, an Education Program Officer for the Department of Health, Education and Welfare ("HEW"), personally and substantially participated in a contract and matter between HEW and Advance Photo and Sounds ("APS"), a company in which he had a personal financial interest. ²

Prior to trial, Irons moved to quash the indictment on the grounds that prosecution was barred by the statute of limitations. 18 U.S.C. § 3282. ³ He argued that the Government had attempted to extend the five year limitations period by padding the indictment with charges which fell outside of the conduct proscribed by the statute. The district court denied the motion and found Irons guilty on both counts following a bench trial on stipulated facts. Irons appeals his conviction. We affirm.

THE FACTS

I. The Enrichment Learning Contract

In late 1973, Irons was employed as an Education Program Director for the Department of Health, Education and Welfare with supervisory responsibility over several educational programs funded by HEW including "Enrichment Learning," "Vision," and "Fellowship for Action." ⁴ He was authorized to advise, assist and recommend action to the directors of projects which he supervised, particularly in the formation of program budgets.

Ken Tatum, project director for Enrichment Learning, met with Irons in December 1973, to discuss the program's proposed budget for the following school year. Tatum had allocated a sum of money for the purchase of audio-visual equipment. Irons advised Tatum that he would need more than he had specified, and the budget was subsequently amended to provide for the additional amount. In April 1974, HEW awarded Enrichment Learning a grant of $183,000, which included approximately $13,000 for audio-visual equipment.

Tatum then sent out letters to various companies soliciting bids for the equipment. At the suggestion of Irons, one letter was addressed to Fred Bronaugh of Advance Photo and Sounds. Tatum did not know that prior to this time APS had never done business as an audio-visual supplier, or that Bronaugh, a long-time friend of Irons, had never been involved in the audio-visual equipment business and did not own any interest in the company. ⁵ The APS business address furnished to Tatum was, in fact, the basement of a residential building owned by Irons' father and served only as a storage facility.

APS submitted a bid to Enrichment Learning on July 2, 1974, but Tatum was forced to solicit additional bids after all of the initial responses were too high. Prior to receiving a second bid from APS, Irons approached Tatum and questioned him about the status of the audio-visual equipment purchase. On September 3, 1974, Tatum accepted APS' second bid for the contract.

Tatum, anxious to obtain the equipment, decided to deliver the letter of acceptance in person. When he arrived at the APS address, he was directed to a funeral home where he found both Bronaugh and Irons. Tatum indicated he needed the equipment as soon as possible and agreed to pay for it in advance of delivery. Bronaugh instructed Tatum to leave a check for $12,855 at Irons' home. Bronaugh deposited this check in the APS account on September 5, 1974. One week later, Bronaugh wrote an APS check to Irons in the amount of $10,800. Irons purchased the Enrichment Learning audio-visual equipment from a

supplier in Hinsdale, Illinois, on September 13, 1974, and Tatum picked up the equipment at Irons' home several weeks later. At the time of these activities, Tatum did not know that Irons was associated with APS. ⁶

II. The Vision Contract

Irons' supervisory responsibilities as Education Program Director also extended to Vision, a mathematics and reading skills improvement program for school age children. In May of 1974, Elizabeth Jackson, director of Vision, sought Irons' advice on the disposition of a fiscal year budget surplus. Irons, who regularly reviewed Vision funding proposals, recommended that Jackson purchase audio-visual equipment and suggested to her that Bronaugh could give her a good price. On the basis of Irons' recommendation, Jackson ordered $3,120 worth of audio-visual materials from APS on May 14, 1974. The equipment was delivered on August 28, 1974, and Jackson gave Irons a check for the proper amount on the following day. After this Vision check had been deposited into the APS account. Bronaugh gave Irons a check drawn on the APS account for $2,800. At the time of these events, Jackson did not know that Irons had any connection with APS.

THE ISSUE

Irons was indicted on August 29, 1979, for violating the federal conflict of interest law which forbids

an officer or employee of the executive branch of the United States Government (or) of any independent agency of the United States ... (from) participat(ing) personally and substantially as a Government officer or employee, through decision, approval, disapproval, recommendation, the rendering of advice, investigation or otherwise in a judicial or other proceeding, ... contract ... or other particular matter in which, to his knowledge, he ... has a financial interest.

18 U.S.C. § 208(a) (Emphasis supplied). The indictment contained two counts focusing on Irons' activities in the Enrichment Learning contract and the Vision contract respectively. Irons moved to quash the indictment on the grounds that prosecution was barred by the statute of limitations. Count One of the indictment ⁷ charged, in relevant part:

From in or about September 1973, to in or about January 1975, ... Louis Irons ... knowingly participated personally and substantially as a Government employee through recommendation, the rendering of advice, causing delivery to be made of equipment, receiving payment of monies for such equipment, and otherwise, in a contract and matter between Enrichment Learning, ... and Advance Photo and Sounds, ... in which company, to his knowledge, he had a financial interest. (Emphasis supplied.)

Under Irons' interpretation of § 208(a), the Government may only prosecute employees who participate in precontractual activities such as "decision, approval, disapproval, recommendation, the rendering of advice, (or) investigation." See 18 U.S.C. § 208(a). Irons contends that any activity which could constitute a violation of the statute occurred prior to July 1, 1974, so that the indictment, returned on August 29, 1979, was not timely filed. Irons claims that the Government additionally and improperly charged him with "causing delivery to be made of equipment" and "receiving payment of monies for such equipment" merely to bring the case within the five year statute of limitations. These acts charged in Count I, completed in September of 1974, are not, under defendant's theory, proscribed by the statute and are "not necessary to the offense" which consists solely of a breach of duty or "abandonment of fidelity" to the government. Def.Br. at 19.

The Government responds to this argument by stating that Irons' activities involved several criminal acts, which were either specifically proscribed by the statute ⁸ or included in the provision's catchall language. The statute proscribes participation in a contract involving a conflict of interest through "decision, approval, disapproval, recommendation, the rendering of advice, or otherwise." 18 U.S.C. § 208(a) (Emphasis supplied). Irons was indicted for "causing delivery to be made of equipment (and) receiving payment of monies for such equipment" in addition to "rendering advice and making recommendations." Irons claims that the activities involving delivery and payment are outside the specific statutory prohibitions and not properly included within the "or otherwise" language of the provision. Thus, the issue presented here is whether the acts of "causing delivery to be made of equipment" and "receiving payment of monies for such equipment" are properly charged under the language of the statute as acts of proscribed participation in a contract involving a conflict of interest. The resolution of this question depends upon the interpretation given to the phrase "or otherwise" as it appears in the statute. ⁹

Irons' argument, as we interpret it, urges, inter alia, a narrow application of the rule of ejusdem generis to the statutory phrase "or otherwise." Under this principle of statutory construction, the scope of a general term in a statute is limited by the nature of the preceding class or thing (in this case matters generally preliminary to the formation of the contract) unless a contrary intent is clearly shown. United States v. Baranski, 484 F.2d 556, 566 (7th Cir. 1963). The rule has been applied in a number of contexts to interpret the phrase "or otherwise." ¹⁰ We find it appropriate here, in order to preserve the meaning which Congress intended for Section 208, to construe the statutory phrase "or otherwise" in a realistic and relatively inclusive fashion.

This conclusion rejects a formalistic application of ejusdem generis. The rule is intended only as an aid to ascertainment of legislative intent when uncertainty or ambiguity exists. The Supreme Court, in considering the application of this rule to determine the meaning of the phrase "or otherwise" in a criminal statute, emphasized that, "(Ejusdem generis ) may not be used to defeat the obvious purpose of leg...