U.S. v. Notarantonio, s. 84-1496

• Decision Date: 29 March 1985
• Docket Number: 84-1497 and 84-1818,Nos. 84-1496,s. 84-1496
• Parties: UNITED STATES of America, Appellee, v. James A. NOTARANTONIO, Defendant, Appellant. UNITED STATES of America, Appellee, v. Edward NOTORANTONIO, Defendant, Appellant. UNITED STATES of America, Appellee, v. INGE COMPANY INCORPORATED, Defendant, Appellant.
• Court: U.S. Court of Appeals — First Circuit

Page 777

758 F.2d 777

UNITED STATES of America, Appellee, v. James A. NOTARANTONIO, Defendant, Appellant.

UNITED STATES of America, Appellee, v. Edward NOTORANTONIO, Defendant, Appellant.

UNITED STATES of America, Appellee, v. INGE COMPANY INCORPORATED, Defendant, Appellant.

Nos. 84-1496, 84-1497 and 84-1818.

United States Court of Appeals First Circuit.

Argued Nov. 7, 1984.

Decided March 29, 1985.

Oleg Nikolyszyn, Providence, R.I., with whom William A. Dimitri, Jr., Providence, R.I., was on brief for defendant, appellant.

Paul J. Larkin, Jr., Dept. of Justice, Washington, D.C., with whom Lincoln C. Almond, U.S. Atty., Providence, R.I., William C. Bryson, Dept. of Justice, Washington, D.C., and Edwin J. Gale, Sp. Atty. Dept. of Justice, Providence, R.I., were on brief, for appellee.

Before CAMPBELL, Chief Judge, McGOWAN, ^* Senior Circuit Judge, and BOWNES, Circuit Judge.

McGOWAN, Senior Circuit Judge.

Appellant James Notarantonio was convicted in the District Court of Rhode Island for violating various statutes that prohibit making, or conspiring to make, false statements in connection with programs involving federal funds. Mr. Notarantonio made the statements in connection with his work on a construction project financed with a loan guaranteed by the Small Business Administration. His principal contention upon appeal is that his statements fall outside the ambit of the relevant statutory provisions. He also contends that the evidence is insufficient to support the conspiracy count.

Appellant Edward Notorantonio, James Notarantonio's cousin, ¹ was convicted in the same trial on a conspiracy count only. Edward Notorantonio was accused of conspiring with James Notarantonio to make one of the false statements involved here. Edward Notorantonio challenges the sufficiency of the evidence supporting his conviction.

Appellant Inge Company, of which James Notarantonio is owner and president, was convicted in the same trial on a conspiracy count only. It was accused of conspiring with James Notarantonio and with Edward Notorantonio to make one of the false statements. The Inge Company adopts the arguments of James Notarantonio and Edward Notorantonio.

For the reasons stated below, we affirm all the convictions of all defendants.

I

James Notarantonio is the president and sole owner of the Inge Company, which the City of Providence, Rhode Island hired to construct a solid-waste disposal plant. Acting for the Inge Company, Mr. Notarantonio sought a loan of $5,000,000 from the Rhode Island Industrial Facilities Corporation (RIIFC). The federal Small Business Administration (SBA), after examining a number of documents submitted to it by Mr. Notarantonio, agreed to repay the loan to RIIFC if Mr. Notarantonio defaulted.

After obtaining the SBA's guarantee, the RIIFC granted the loan and deposited the loan proceeds with the Industrial National Bank of Rhode Island (the Bank), which acted as trustee of the funds. To draw upon the loan proceeds, the Inge Company through Mr. Notarantonio, submitted requisitions to the Bank. These requisitions contained certifications by Mr. Notarantonio on behalf of the Inge Company and by the "project supervisor" (an individual employed by an architectural-engineering firm) that the requisitions sought compensation for "proper" expenses of the construction project. The treasurer of the RIIFC then added his signature to the certification form, and the reimbursement was processed by the Bank and paid to the Inge Company. The SBA did not ask to see the requisitions or the certifications until after the loan went into default.

Mr. Notarantonio was indicted on counts involving five sets of alleged transactions, all occurring after the loan and the loan guarantee had been granted. According to the government, Mr. Notarantonio improperly used funds from the loan to pay for an inspection of a turbine generator that had no connection to the construction project for which the loan was granted. The government also alleged that Mr. Notarantonio, using his personal funds, purchased a used garbage shredder in Connecticut for $52,000 and, after a somewhat circuitous series of transactions that involved transfers of ownership to Edward Notorantonio and then the Inge Company, submitted the purchase of the shredder as a project expense of the Inge Company of $175,000. (The transactions involving the shredder are the only transactions at issue in the conspiracy charges.) James Notarantonio also submitted, in separate transactions, the costs of boat covers and of a marine generator purchased for his cabin cruiser, docked in Florida, as expenses of the construction project. The charges for the boat covers were listed as expenses for "truck covers." The charges for the marine generator were accurately described. Finally, the government accused Mr. Notarantonio of submitting a $50,000 check made out to Damiano Brothers Welding, a Rhode Island firm, as evidence of a reimbursable expense when no such payment had ever been made.

The counts involving the turbine inspection and the check made out to Damiano Brothers were dismissed on a Motion for Judgment of Acquittal made at the close of the government's case in chief. Those dismissals are not at issue here.

The jury found Mr. Notarantonio guilty on the counts involving the used shredder and the two purchases of nautical items. For each of these allegedly fraudulent transactions, Mr. Notarantonio had been charged with a violation of 15 U.S.C. Sec. 645(a), which reads in full:

Whoever makes any statement knowing it to be false, or whoever willfully overvalues any security, for the purpose of obtaining for himself or for any applicant any loan, or extension thereof by renewal, deferment of action, or otherwise, or the acceptance, release, or substitution of security therefor, or for the purpose of influencing in any way the action of the [Small Business] Administration, or for the purpose of obtaining money, property, or anything of value, under this chapter, shall be punished by a fine of not more than $5,000 or by imprisonment for not more than two years, or both.

15 U.S.C. Sec. 645(a) (1982). Mr. Notarantonio argues that the statements at issue here were not made to obtain money from, or otherwise influence, the actions of the SBA, and that the counts under this statute must therefore fail.

For each of the transactions involving the shredder and the nautical purchases, Mr. Notarantonio had also been charged with a count under 18 U.S.C. Sec. 1001, which reads in full:

Whoever, in any matter within the jurisdiction of any department or agency of the United States knowingly and willfully falsifies, conceals or covers up by any trick, scheme, or device a material fact, or makes any false, fictitious or fraudulent statements or representations, or makes or uses any false writing or document knowing the same to contain any false, fictitious or fraudulent statement or entry, shall be fined not more than $10,000 or imprisoned not more than five years, or both.

18 U.S.C. Sec. 1001 (1982). Mr. Notarantonio argues that his statements were neither material nor regarding matters within the jurisdiction of the SBA, and thus that the counts under this statute must fail.

Finally, in connection with the shredder transactions, Mr. Notarantonio, as well as Edward Notorantonio and the Inge Company, were charged with conspiracy under 18 U.S.C. Sec. 371, the relevant paragraph of which reads:

If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined not more than $10,000 or imprisoned not more than five years, or both.

18 U.S.C. Sec. 371 (1982). Mr. Notarantonio argues that, for the reasons described above, his convictions under 15 U.S.C. Sec. 645(a) and 18 U.S.C. Sec. 1001 cannot stand and thus that no underlying offense exists to support a conviction for conspiracy. He also argues that the evidence is insufficient to show his alleged co-conspirator Edward Notorantonio intended to commit any crime, and thus insufficient to convict Edward Notorantonio of conspiracy. He argues further that the asserted insufficiency of the evidence relating to Edward Notorantonio necessitates overturning his own conviction on the conspiracy count because as a matter of law no conspiracy can exist between Mr. Notarantonio and his employer the Inge Company. Edward Notorantonio and the Inge Company make essentially the same arguments against their convictions.

II.

The first prerequisite for a conviction under section 645(a) is a statement made by the defendant that he knows to be false or a willful overvaluation of a security. See 15 U.S.C. Sec. 645(a) (1982). False statements are involved here. The statements chiefly at issue are signed representations on behalf of the Inge Company "that each obligation mentioned herein has been properly incurred and is a proper charge against the ... construction fund." Transcript of Trial, December 12, 1983, at 62. This representation accompanied each of the requisitions here at issue. See id. at 63-64 (shredder), 69-70 (marine generator), 70-71 (deck covers). In addition, in one instance the invoice certified by Mr. Notarantonio as representing a proper expense is itself a possible source of a false statement.

The parties do not dispute that a "statement" within the meaning of section 645(a) is involved. See Owen v. United States, 386 F.2d 774 (5th Cir.1967) (written representations on application for loan and false invoices); cf. United States v. Elliott, 689 F.2d 178 (10th Cir.1982) (per curiam) (submitting third-party check payable to SBA when funds in third party's checking account are insufficient to cover check is not a "statement" for purposes of section 645(a)).

The falsity of the statements is a matter of more...