U.S. v. Meadows

• Decision Date: 13 July 1979
• Docket Number: No. 78-5572,78-5572
• Citation: 598 F.2d 984
• Parties: 4 Fed. R. Evid. Serv. 567 UNITED STATES of America, Plaintiff-Appellee, v. Donald E. MEADOWS, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 984

598 F.2d 984

4 Fed. R. Evid. Serv. 567

UNITED STATES of America, Plaintiff-Appellee, v. Donald E. MEADOWS, Defendant-Appellant.

No. 78-5572.

United States Court of Appeals, Fifth Circuit.

July 13, 1979.

P. Bruce Kirwan, Federal Public Defender, Atlanta, Ga., for defendant-appellant.

Janis H. Kockritz, Atty., Dept. of Justice, Appellate Sect., Crim. Div., Washington, D. C., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of Georgia.

Before TUTTLE, GODBOLD and RUBIN, Circuit Judges.

TUTTLE, Circuit Judge:

Meadows was a CETA ¹ employee who, through an administrative error, received duplicate paychecks and cashed them until the mistake was discovered. He was convicted of "obtain(ing) by fraud" the duplicate paychecks in violation of 18 U.S.C. § 665. Because the district court improperly charged the jury in its definition of fraud as applied to the facts of the case, we reverse and remand for a new trial. Other issues raised in this appeal which may arise on retrial are also considered.

I. FACTS.

Meadows was indicted on one count of violating 18 U.S.C. § 665. ² The relevant facts are these. Meadows had begun working as a CETA employee in January, 1975, when he was hired to train as an Industrial Waste Inspector for the Atlanta Department of Environment and Streets, Bureau of Pollution Control. A dispute arose as to the wage scale upon which Meadows was to be paid, and after a long series of discussions with various department heads and the mayor himself in which Meadows alleged that he was being discriminated against he was transferred to another CETA position with the Institute of the Black World in the Department of Community and Human Development. As a result of the previous salary grievances, it was agreed that Meadows' pay scale would be raised at his new position with the Institute of the Black World. Although Meadows was transferred to Black World, he was told that he would continue to be paid at the lower scale and was to pick up his checks at the Bureau of Pollution Control in City Hall until he could be switched from one payroll to the other. A few weeks later, Meadows began to receive his paychecks at the increased salary scale directly from Black World and quit going to City Hall to pick up checks from the Bureau of Pollution Control.

On September 21, 1976 just one week after Meadows had received his regular paycheck from Black World he received a call from his CETA counselor, informing him that there was a paycheck for him at City Hall from the Department of Environment and Streets. Meadows picked up the check and cashed it. One month later, again while receiving his normal check from Black World, Meadows received another call from his counselor to pick up an Environment and Streets' paycheck at City Hall. He also picked up this check and deposited it in his personal bank account. Thereafter, from October 4 to December 13, 1976, Meadows personally and on his own initiative went to City Hall each week after receiving his normal paycheck from Black World and claimed the additional check from the Department of Environment and Streets. The net amount of each additional check was exactly the same as he had been earning each week at the Bureau of Pollution Control.

In December, 1976, Meadows picked up a yearly bonus check from Black World. Since the check was roughly one-half of a full year's bonus, Meadows complained to the Atlanta supervisor of CETA personnel records. He also picked up a full bonus check at City Hall from the Department of Environment and Streets.

When a financial analyst looked into Meadows' complaint regarding his Black World bonus, it was discovered that Meadows had been receiving two paychecks as a result of an administrative error at the Inspection and Monitoring division of the Bureau of Pollution Control. The timekeeper had been instructed to continue reporting Meadows' time even though he was no longer working there to insure that he remained on a CETA payroll until he was transferred to another CETA position. When Meadows was picked up on the payroll at Black World, no one informed the timekeeper at the Department of Environment and Streets to remove him from their payroll.

The record is clear that Meadows did nothing to cause this initial administrative error. He only began picking up the checks after he was called by his CETA counselor. Meadows readily admitted that he had picked up the extra checks and cashed or deposited them into his account, but stated that he had thought the first extra check was some sort of severance pay and then figured the other checks may have been a subtle way to compensate him for the discrimination he had complained of while working at the Bureau of Pollution Control. The prosecution introduced testimony to rebut this defense. Several CETA officials who met with Meadows after the discrepancy was discovered testified that he admitted to them that he was aware after the first additional check that the paychecks from his former position had been issued erroneously and that he knew the only checks he should have been receiving were those from Black World.

II. THE FRAUD INSTRUCTION.

During the course of the general charge, the trial court gave the following instruction to the jury:

I charge you that fraud is an intentional perversion of truth for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him or to surrender a legal right; a false representation of a matter of fact whether by words or by conduct, by false or misleading allegations, or by concealment of that which should have been disclosed which deceives and is intended to deceive another so that he can act upon it to his legal injury.

In determining whether or not the defendant, Mr. Meadows, in this case obtained CETA funds by fraud as charged in the indictment, the jury may consider acts and omissions as well as affirmative statements, because under the law fraud may result from statements of half-truths or the concealment of material facts.

(emphasis added).

The appellant's trial counsel made several objections to this charge, one of which we feel has merit. Although the court gave an adequate dictionary definition of fraud in the first paragraph quoted above, it poisoned the otherwise healthy charge when, in the second paragraph, it applied the law to these facts. By stating merely that "fraud may result from statements of half-truths or the concealment of material facts," without more, the court understated the principle of law by failing to remind the jury of the intent required to convict. Pence v. United States, 316 U.S. 332, 338, 62 S.Ct. 1080, 86 L.Ed. 1510 (1942). Such an understatement on a specific and paramount issue, at this critical stage of the charge when the jury was instructed on how these elusive and ethereal principles should be applied to the facts of the particular case, created reversible error that could not be cured by the unexceptional abstract charge. Further, the error was exacerbated by the court's repetition of the same language in two supplemental charges. After deliberating for approximately three hours, the jury sent a note to the trial court indicating that they wanted further instruction on the legal definition of fraud. The court repeated the above quoted instruction twice, the defense counsel renewed his objections, and after additional deliberation of only fifteen minutes, the jury returned its verdict of guilty. It is clear that the crux of the jury's confusion was how the unfamiliar legal definition of fraud was to be applied to the unique facts of this case. The understatement created the possibility that the jury might have convicted Meadows for an innocent, unintentional omission of a material fact. Although there may be sufficient evidence to indicate that Meadows' conduct in continuing to pick up the paychecks that he knew were mistakenly issued to him constituted fraud, the question is not whether guilt may be spelt out of a record, but whether guilt has been found by a jury according to the procedure and standards appropriate for criminal trials in the federal courts. Although we realize, of course, that all instructions must be considered as a whole, and not word-by-word or phrase-by-phrase, such a fundamental understatement as to the paramount issue at a critical stage of the instruction requires reversal.

III. FAILURE TO GRANT JUDGMENT OF ACQUITTAL.

Meadows contends that the trial court committed reversible error in failing to grant his motions for judgment of acquittal at the close of the government's case and at the close of all evidence. The basis of his argument is that since he engaged in no "active fraud" in obtaining the extra paychecks, there was no reason for the court to have allowed the case to go to the jury on the charges of obtaining CETA funds by fraud. We disagree.

The appellant's contentions misconstrue the nature of Meadows' conduct and the law of fraud. Although he may have taken no action to initiate the issuance of the paychecks, his conduct in picking up checks for several months which he admittedly knew were erroneously issued was sufficient evidence of fraud to warrant submission of the case to the jury.

Although we generally consider fraud as a false representation or concealment of a material fact that should have been disclosed, when made with knowledge of its falsity and with intent to deceive another so that he can act upon it to his legal detriment, E. g., Pence v. United States, 316 U.S. 332, 338, 62 S.Ct. 1080, 86 L.Ed. 1510 (1942); United States v. Nill, 518 F.2d 793, 800 (5th Cir. 1975), this amorphous concept "is measured by a nontechnical standard. 'It is a reflection of moral uprightness, of fundamental honesty, fair play and right dealing in the general and business life of members of society', Gregory v. United States, 5 Cir., 1958, 253 F.2d 104, 109." United States v. Bruce, ...