U.S. v. Montoya

• Decision Date: 12 September 1983
• Docket Number: No. 82-1728,82-1728
• Parties: 14 Fed. R. Evid. Serv. 34 UNITED STATES of America, Plaintiff-Appellee, v. Ricardo A. MONTOYA, d/b/a Ram Corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1340

716 F.2d 1340

14 Fed. R. Evid. Serv. 34

UNITED STATES of America, Plaintiff-Appellee, v. Ricardo A. MONTOYA, d/b/a Ram Corporation, Defendant-Appellant.

No. 82-1728.

United States Court of Appeals, Tenth Circuit.

Sept. 12, 1983.

David L. Norvell, Albuquerque, N.M., for defendant-appellant.

William L. Lutz, U.S. Atty., Albuquerque, N.M., for plaintiff-appellee.

Before HOLLOWAY, SEYMOUR, and TIMBERS, ^* Circuit Judges.

TIMBERS, Circuit Judge.

Appellant Ricardo A. Montoya, doing business as the Ram Corporation, entered into an agreement with the Governor's Office Of Community Affairs of the State of New Mexico to "weatherize" homes of elderly, low income New Mexico citizens. The Department of Energy funded the weatherization project as part of the Energy Conservation In Existing Buildings Act of 1976, 42 U.S.C. Secs. 6851-73 (1976 & Supp. IV 1980). Montoya subsequently submitted claims to the state agency for work his firm allegedly had completed on the project. After an investigation, the state agency discovered that Montoya had never completed any work whatsoever. Consequently, the United States indicted Montoya for presenting false claims to the federal government in violation of the False Claims Act, 18 U.S.C. Sec. 287 (1976).

Before trial, Montoya moved to dismiss the indictment for lack of jurisdiction under Sec. 287. According to Montoya, since the state agency administering the weatherization project received no apparent supervision from the federal government, he asserted that his conduct, if criminal, could have violated only state law. The District Court for the District of New Mexico, Howard C. Bratton, Chief Judge, denied the motion after an evidentiary hearing. After trial, the jury convicted Montoya on all six counts of presenting false claims to the government. The court later denied a motion for a new trial claiming newly discovered evidence. Montoya was sentenced to five years on each count, the sentences to run concurrently.

Montoya appeals from his judgment of conviction and from the order denying his motion for a new trial. He reasserts that the United States should not have charged him under Sec. 287. He also claims that certain improprieties in the conduct of the trial denied him due process. In the latter category are his claims (1) that the court improperly denied his motion for a continuance in the middle of the trial, arguing that such continuance would have enabled him to obtain out-of-town witnesses whose testimony purportedly would have impeached that of Reuben Gonzales, a key government rebuttal witness; and (2) that the government withheld evidence of its prior offer of immunity to Gonzales, thereby depriving Montoya of critical impeachment material.

Montoya does not challenge the sufficiency of the evidence to support his conviction.

After careful consideration, for the reasons stated below, we affirm the judgment of conviction and the order denying a new trial.

I.

Appellant's primary contention on appeal is that his activities, however criminal, did not fall within the ambit of 18 U.S.C. Sec. 287, which proscribes the presentment of false claims to the federal government. Section 287 provides:

"Whoever makes or presents to any person or officer in the civil, military, or naval service of the United States, or to any department or agency thereof, any claim upon or against the United States, or any department or agency thereof, knowing such claim to be false, fictitious, or fraudulent, shall be [punished]."

Montoya asserts that, since he contracted with the state agency and received payment from the state, he cannot be considered to have presented a claim to the United States or to one of its departments or agencies.

At first blush, Montoya's argument has a certain surface appeal. The statute prohibits only the presentment of false claims to the federal government. The Governor's Office of Community Affairs is not an agency of the United States.

Upon careful analysis of the statute, however, especially in the light of persuasive case law, we find that the initial apparent force of Montoya's argument does not pass muster. According full deference to the maxim that a criminal statute is to be strictly construed, courts have not read Sec. 287 in the literal manner suggested by Montoya. Rather, claims presented to an intermediary have been held to come within Sec. 287 as long as payment comes ultimately from the federal government.

To delineate the scope of Sec. 287, we turn first to United States ex rel. Marcus v. Hess, 317 U.S. 537 (1943), in which the Court analyzed components of a violation of Sec. 5438 of the Revised Statutes, the precursor to 18 U.S.C. Sec. 287. In Hess, municipalities had awarded bids on public works projects which were funded largely by the federal Public Works Administration. Section 5438 provided that within its purview fell:

"Every person who makes or causes to be made, or presents or causes to be presented, for payment or approval, to or by any person or officer in the civil, military or naval service of the United States, any claim upon or against the Government of the United States, or any department or officer thereof, knowing such claim to be false, fictitious, or fraudulent...."

Two companion sections, Secs. 3491 and 3493 of the Revised Statutes, provided that an informer could seek damages on behalf of the government for a Sec. 5438 violation and share in any eventual recovery. The private plaintiff in Hess had won in the district court, recovering the informer's share for the contractors' fraudulent claims against the municipalities. The Third Circuit, however, overturned the verdict against the contractors on the ground that "[t]he claims of the defendants ... were simply against the local municipalities. Since the defendants had no claim upon or against the United States, this action was not authorized by the informer statutes." 127 F.2d at 237.

In reinstating the verdict entered in the district court, the Supreme Court held that Sec. 5438 did not require a claim to be presented directly to the federal government. It noted that the Public Works Administration disbursed the funds and sponsored the local municipal construction programs: any false claim presented to the local municipality would in turn be passed on to the federal agency. The Court reasoned that "[b]y their conduct, the respondents thus caused the government to pay claims of the local sponsors in order that they might in turn pay respondents under contracts found to have been executed as the result of fraudulent bidding." 317 U.S. at 543. Thus, as long as the claim ultimately would be satisfied out of federal funds pursuant to a federal program, the Court held that the jurisdictional requirements of Sec. 5438 had been satisfied.

One might attempt to distinguish Hess on the ground that Sec. 5438 is no longer in effect, having been replaced by the more narrowly drawn Sec. 287. By its terms, Sec. 287 proscribes only the presenting of false claims to an agency of the United States not "[causing] to be presented" those claims as prohibited by Sec. 5438. The Third Circuit rejected this attempted distinction in United States v. Catena, 500 F.2d 1319 (3d Cir.), cert. denied, 419 U.S. 1047 (1974). We find its reasoning persuasive. In Catena, a physician had been tried and convicted of fraudulently presenting false Medicare claims for payment. In defense, he asserted that he should have been immune from prosecution under Sec. 287 because he had submitted the claims only to private insurance companies, rather than to the federal government. The court, however, reasoned that:

"The 'cause' language of the former version of Sec. 287 has clearly been replaced by 18 U.S.C. Sec. 2(b), which states that

[w]hoever willfully causes an act to be done which if directly performed by him or another would be an offense against the United States, is punishable as a principal.

Just as under the former version of Sec. 287 at issue in Hess, under the combination of the present version of Sec. 287 and the present Sec. 2(b) a person may be guilty of causing a false claim to be presented to the United States even though he uses an innocent intermediary (in this case the insurance carriers) to actually pass on the claims to the United States."

Id. at 1322-23.

We agree that Sec. 287 must be read to include causing a false claim to be presented to the government. Such a reading is consonant with the history of the statute, the surrounding statutory provisions and case law construing the statute. ¹

Montoya argues that even if federal involvement does not have to be direct to provide the basis for a Sec. 287 violation, it must at least be substantial. He characterizes the federal presence in the instant weatherization projects as evanescent--the Department of Energy merely granted the money to New Mexico and retained only minimal control and interest thereafter. He stresses that, because at least some federal funds are commingled with those of the state in a wide array of projects administered at the state level, the federal presence must be manifested during the pendency of the project lest federal jurisdiction be expanded exponentially. While we agree that the federal involvement must be more than nominal, see Lowe v. United States, 141 F.2d 1005 (5th Cir.1944), we are persuaded that sufficient federal involvement was present in view of the facts of the instant case.

There can be no dispute that the monies to be paid to Montoya were federal in origin, pursuant to the Department of Energy grant to the Governor's Office of Community Affairs. 42 U.S.C. Secs. 6851-73 (1976). Under the terms of every weatherization grant, the administering state agencies are required to detail expenditures periodically and to furnish substantiating audits. 42 U.S.C. Sec. 6867. The contiguous provision, 42 U.S.C. Sec. 6866, requires the Department of Energy to monitor and evaluate each project. The...