U.S. v. Milton, s. 91-3238

• Citation: 303 U.S. App. D.C. 386,8 F.3d 39
• Decision Date: 14 March 1994
• Docket Number: 91-3239 and 93-3017,Nos. 91-3238,s. 91-3238
• Parties: , 39 Fed. R. Evid. Serv. 1086 UNITED STATES of America v. John W. MILTON and James Milton, Appellants. UNITED STATES of America v. John W. MILTON, Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)

Page 39

8 F.3d 39

303 U.S.App.D.C. 386, 39 Fed. R. Evid. Serv. 1086

UNITED STATES of America v. John W. MILTON and James Milton, Appellants.

UNITED STATES of America v. John W. MILTON, Appellant.

Nos. 91-3238, 91-3239 and 93-3017.

United States Court of Appeals District of Columbia Circuit.

Argued Sept. 15, 1993.

Decided Nov. 2, 1993.

Rehearing and Suggestion for Rehearing In Banc

Denied March 14, 1994.

Appeal from the United States District Court for the District of Columbia (91cr0004-1 & 91cr0004-2).

William J. Murphy argued the cause and filed the briefs for appellant John W. Milton.

W. Gregory Spencer, Asst. Federal Public Defender (appointed by the court for appellant James Milton) argued the cause for amicus curiae. With him on the brief was A.J. Kramer, Federal Public Defender.

David E. Green, Sr. Litigation Counsel, U.S. Dept. of Justice, argued the cause and filed the brief for appellee.

Before: EDWARDS, WILLIAMS, and RANDOLPH, Circuit Judges.

Opinion for the court filed by Circuit Judge RANDOLPH.

RANDOLPH, Circuit Judge:

The brothers John and James Milton were convicted, after a jury trial, of stealing "money ... of the United States or of any department or agency thereof," in violation of 18 U.S.C. § 641; aiding and abetting the making of materially false statements, in violation of 18 U.S.C. § 1001; and conspiracy, in violation of 18 U.S.C. § 371. The court sentenced John Milton to concurrent terms of 37 months' imprisonment on each count and, after reconsideration, ordered him to pay $43,751.82 in restitution; the court sentenced James Milton to concurrent terms of 33 months' imprisonment and ordered him to pay $18,000 in restitution. John appeals from the judgment of conviction and from the court's order, entered after an evidentiary hearing, finding that his retained counsel had adequately represented him. James appeals from the judgment of conviction and the district court's application of the Sentencing Guidelines to his conviction on the conspiracy count. We consolidated the appeals and now affirm.

I

In 1986, John Milton served as a staff attorney with the Equal Employment Opportunity Commission. At his suggestion, the EEOC brought a contempt action against CW Transport Inc., claiming that it had violated a consent decree prohibiting employment discrimination. The violations allegedly occurred at the company's Chicago/Bridgeview terminal. With John Milton representing the EEOC, the parties settled the action in June 1987. Under their written agreement, which John Milton helped negotiate and to which he affixed his signature, the trucking company was to deliver a $1 million check made out to the EEOC. The company's payment was irrevocable. The EEOC was to deposit the money in a claims account, from which backpay awards would be made to unsuccessful minority job applicants at the Chicago/Bridgeview terminal between 1974 and 1987. The EEOC was to obtain from each former job applicant sharing in the settlement a signed statement releasing CW Transport from any further liability on any discrimination claim. The parties agreed upon a form entitled "COMPLETE AND FINAL RELEASE OF ALL OF MY CLAIMS" and attached it to the written settlement agreement.

John Milton deposited the $1 million check with E.F. Hutton & Company in Washington, D.C., in an account entitled "John W. Milton, Esq., and such other person designated by the EEOC as EEOC Representative for Account Claimants in EEOC vs. CW Transport (Case 86C 680C)." E.F. Hutton agreed to make disbursements from the account on Milton's written instructions. John Milton and another EEOC employee had the responsibility of determining the eligibility of claimants and the amount of their share of the fund.

The evidence showed that of the approximately 200 claimants paid from the settlement fund, one group recruited by John Milton and another recruited by his brother James submitted false claims and then shared the proceeds with one or the other of the brothers. The first group consisted of three men from Shreveport, Louisiana (the "Shreveport claimants"). ¹ John Milton had represented these men on behalf of the EEOC in an unrelated and unresolved case against another trucking company in the early 1980's. John enlisted the Shreveport claimants, telling them that their case had been settled and that they were entitled to receive money from that settlement. He sent a claims form to each of them and explained that CW Transport had merged with the other trucking company, or that there had been a class action settlement involving both companies.

The second group of false claimants, six individuals from New York and Connecticut (the "New York claimants"), were friends or acquaintances of James Milton. James promised each of them between $1,000 and $1,500 for signing some papers in a lawsuit conducted by his brother.

On October 15 or 16, 1987, the claimants in both groups, accompanied by one or both of the Miltons, picked up their checks at E.F. Hutton's Washington office, signed claims release forms and then cashed their checks at a nearby bank. Each false claimant handed over his cash, between $5,700 and $6,500, to John or James, who then handed back $900 to $1,700.

In February 1988, John Milton sent another check from the settlement fund to the Shreveport claimants, made out in the maiden name of the wife of one of the Shreveport claimants. The check, sent pursuant to a promise Milton made in October 1987, was meant to cover the Shreveport claimants' travel expenses and the tax liability of one of the Shreveport claimants.

II

A. The Convictions Under 18 U.S.C. § 641

1. Government Money

The Miltons' initial argument for setting aside their convictions under 18 U.S.C. § 641 is in the form of confession and avoidance the money they pilfered was not, as section 641 1 requires, "money ... of the United States." Therein lies a puzzle: if the $1 million was not money of the United States, whose money was it? Certainly not CW Transport's. The company relinquished any ownership interest. Suppose no claimant ever appeared; CW Transport still could not recoup a cent. The money surely was not E.F. Hutton's. It functioned only as a repository for the funds. One might say the $1 million belonged to potential legitimate claimants, whomever they turned out to be. Most of the money eventually would wind up in their collective pockets, less federal, state and local taxes withheld. But whose money was it before these people came forward and received their due? The most likely candidate is the one the Miltons would exclude--the United States, or in the words of section 641, "an agency thereof," the EEOC.

The government supports this result, and the Miltons' convictions under section 641, on the ground that "from the time it received the check until the money was disbursed--a period that included the time the money was stolen by the Miltons--the EEOC exercised complete supervision and control over the Settlement Fund." Brief for Appellee at 17. ² The Miltons, citing several federal appellate decisions and two ancient Supreme Court opinions (United States v. Mason, 218 U.S. 517, 31 S.Ct. 28, 54 L.Ed. 1133 (1910); United States v. Johnston, 268 U.S. 220, 45 S.Ct. 496, 69 L.Ed. 925 (1925)), counter that supervision and control is not the test here; that the district court erred in so instructing the jury; ³ that the key is ownership; and that supervision and control comes into play only when money originating with the government is in someone else's hands (not the case here, the Miltons say) and the question is whether the government has retained an ownership interest in it.

Not much can be made of Mason or Johnston, certainly nowhere near as much as the Miltons would like. At the time of Mason, federal district court clerks collected fees, deducted their fixed salary and expenses, and remitted the surplus to the United States. 218 U.S. at 522-23, 31 S.Ct. at 30-31. District court clerk Mason skipped the remitting step. Did he thereby embezzle money of the United States, under an earlier version of section 641? No, the Supreme Court held. The surplus fees were not public money, and clerks were not bound to remit anything to the government until they filed their half-yearly returns showing the amounts due, if any. Even at that point "the clerk is not trustee but debtor." 218 U.S. at 531, 31 S.Ct. at 34. Far from reciting any broad propositions of the sort the Miltons suggest, the Court in Mason rested its decision on narrow grounds. The fees, when the clerk collected them, were not public moneys but were in the nature of wages and reimbursement for expenses. Id. at 530, 31 S.Ct. at 33. The clerk had a duty to pay over any surplus to the government when he filed his return, but the indictment failed to allege that the duty had arisen. Id. at 531, 31 S.Ct. at 34. Johnston is much to the same effect. The defendant collected admission fees for boxing matches but failed to remit the federal taxes on the fees. He could not be properly charged, the Court ruled, with embezzling money of the United States. Those required to pay this tax were in the same position as "others answerable for a tax," that is, each was "debtor and not a bailee." 268 U.S. at 227, 45 S.Ct. at 496. In this case, of course, the Miltons were neither.

This brings us to the federal appellate decisions. As to the meaning of "money ... of the United States," the leading case in this circuit, indeed the only case, is Arbuckle v. United States, 146 F.2d 657 (D.C.Cir.1944). The Senate Restaurant deposited receipts from its customers in a private bank, as the Senate Rules Committee had authorized. The deposits were used to pay for food and other expenses, but when, "as was invariably the case," the restaurant operated at a deficit, a "congressional appropriation" would cover the shortfall. 146 F.2d at 658-59. Arbuckle, the restaurant's manager, diverted some of the restaurant's receipts to...