U.S. v. Roberts

• Decision Date: 04 November 1998
• Docket Number: No. 98 CR 459(ILG).,98 CR 459(ILG).
• Citation: 28 F.Supp.2d 741
• Parties: UNITED STATES of America, v. Linwood ROBERTS, Defendant.
• Court: U.S. District Court — Eastern District of New York

28 F.Supp.2d 741

UNITED STATES of America, v. Linwood ROBERTS, Defendant.

No. 98 CR 459(ILG).

United States District Court, E.D. New York.

November 4, 1998.

Lawrence S. Lustberg, Gibbons, Crummy, Del Deo, Dolan, Griffinger & Vecchione, Newark, NJ, Frank V. Carone, Jr., Frank R. Seddio P.C., Brooklyn, NY, for Linwood Roberts.

Miriam R. Best, Senior Trial Counsel, United States Attorney's Office, Criminal Div., Brooklyn, NY, for U.S.

MEMORANDUM & ORDER

GLASSER, District Judge.

BACKGROUND

For the purposes of deciding this motion, the following facts are assumed to be true. In 1993, Carlton Nembhard, a Brooklyn mortgage broker, was introduced to Mariano ("Mario") Ventura, a technical support aide in the Brooklyn City Collector's office (a borough office of the New York City Department of Finance, or "DOF"). Ventura, who had worked at the Brooklyn City Collector's Office since 1985, was able to manipulate the DOF's records to make it falsely appear as though the property taxes and interest for specific properties had been paid. Beginning in March 1993, Ventura began falsifying these records at the behest of Nembhard.

The defendant Linwood Roberts ("Roberts"), a real estate agent and mortgage broker, was also involved in this fraud. Roberts brokered mortgages for clients, some of whom were also delinquent on their property taxes and interest charges. Roberts told these clients to pay him directly the amounts they owed for the outstanding taxes and interest and he promised to hold the money in escrow until their loans closed. Thereafter, Roberts would provide a list of these clients' properties to Nembhard, who subsequently brought the list to Ventura. Ventura would then fraudulently eliminate all the tax charges for these properties and give Nembhard a receipt showing that all the charges had been paid. Roberts subsequently took his clients' cash, which had been previously escrowed for the payment of the taxes, and split it between himself, Nembhard and Ventura. Both Roberts' clients and the DOF erroneously thought the taxes and interest had been paid.

The scheme lasted from 1993 until 1995, when the DOF changed its computer system. In March 1996, Ventura was arrested for his role in the scheme and began cooperating with the government. In September 1996, Nembhard was also arrested and he also began cooperating.

On April 30, 1998, Roberts was indicted and charged with violating Sections 371 and 666 of Title 18 of the United States Code. Defendant Roberts now moves to dismiss the indictment on the grounds that: (1) 18 U.S.C. § 666, as applied in the present case, exceeds Congress' authority to prosecute purely local criminal conduct; and (2) the government has failed to sufficiently allege or establish a jurisdictional element of the charged offense, i.e., that Ventura was an agent of a local government agency that received in excess of $10,000 in federal benefits. In the alternative, defendant moves for an order directing the government: (1) to provide him with a bill of particulars; and (2) to disclose to him specific Brady material.

DISCUSSION

I. Federalism

18 U.S.C. § 666 states, in pertinent part, that:

(a) Whoever, if the circumstance described in subsection (b) of this section exists —

(1) being an agent of an organization, or of a State, local, or Indian tribal government, or any agency thereof —

* * * * * *

(2) corruptly gives, offers, or agrees to give anything of value to any person, with intent to influence an agent of an organization or of a State, local or Indian tribal government, or any agency thereof, in connection with any business, transaction, or series of transactions of such organization, government, or agency involving anything of value of $5,000 or more;

shall be fined under this title, imprisoned not more than 10 years, or both.

(b) The circumstance referred to in subsection (a) of this section is that the organization, government, or agency receives, in any one year period, benefits in excess of $10,000 under a Federal program involving a grant, contract, subsidy, loan, guarantee, insurance, or other form of Federal assistance.

Congress enacted 18 U.S.C. § 666 pursuant to its spending power. United States v. Cantor, 897 F.Supp. 110, 112 (S.D.N.Y.1995). It was designed to increase the protection of the integrity of federal funds disbursed through federal programs. United States v. Foley, 73 F.3d 484, 489 (2d Cir.1996). Here, the defendant seeks to dismiss the indictment because, he argues, the government's application of § 666 to the present case is an unconstitutional extension of federal power. See Def.'s Mem. at 3-5.

Roberts' "federalism argument" consists of two prongs. First, he argues that United States v. Lopez, 514 U.S. 549, 115 S.Ct. 1624, 131 L.Ed.2d 626 (1995), precludes Congress from using its spending power to unconstitutionally enlarge the federal police power. See Def.'s Mem. at 4-5. Second, defendant maintains that, in this case, the connection between the bribery of Ventura and any federal funds is too attenuated to support an indictment under § 666. Each of these arguments is addressed in turn.

A. The Lopez Argument

In Lopez the Supreme Court invalidated the Gun-Free School Zones Act of 1990, finding that the statute exceeded Congress' power to act under the Commerce Clause. Here, Roberts urges this Court to find that the present application of § 666 is a similar unconstitutional extension of Congressional power. Specifically, he argues that the Commerce Clause's constitutional limitations, as delineated by the Supreme Court in Lopez, should apply to the facts of this case. See Def. Mem. at 4-5. This Court does not agree.

Commerce Clause jurisprudence identifies three broad categories of activity that Congress may regulate under its commerce power. Lopez at 558, 115 S.Ct. 1624. "First, Congress may regulate the use of the channels of interstate commerce. Second, Congress is empowered to regulate and protect the instrumentalities of interstate commerce, or persons or things in interstate commerce, even though the threat may come only from intrastate activities. Finally, Congress' commerce authority includes the power to regulate those activities having a substantial relation to interstate commerce, i.e., those activities that substantially affect interstate commerce." Id. at 558-59, 115 S.Ct. 1624 (citations omitted).

In Lopez, the Court wrote that "[the Gun-Free School Zones Act of 1990] neither regulates a commercial activity nor contains a requirement that the possession [of guns] be connected in any way to interstate commerce." Id. at 551, 115 S.Ct. 1624. As such, the Court held that the Act exceeded the authority of Congress to regulate commerce and invalidated the statute based on a specific application of the Commerce Clause. See id.

The Supreme Court engages in an altogether different calculus when reviewing legislation enacted pursuant to Congress' spending power. In Pennhurst State School & Hospital v. Halderman, 451 U.S. 1, 17, 101 S.Ct. 1531, 67 L.Ed.2d 694 (1981), the Court wrote "... legislation enacted pursuant to the spending power is much in the nature of a contract: in return for federal funds, the States agree to comply with federally imposed conditions. The legitimacy of Congress' power to legislate under the spending power thus rests on whether the State voluntarily and knowingly accepts the terms of the `contract.' See Chas C. Steward Mach. Co. v. Davis, 301 U.S. 548, 585-598, 57 S.Ct. 883, 81 L.Ed. 1279 (1937); Harris v. McRae, 448 U.S. 297, 100 S.Ct. 2671, 65 L.Ed.2d 784 (1980)." Lopez and Pennhurst demonstrate that the Commerce Clause and the Spending Power have distinct applications, interpretations and limitations. Accordingly, the Commerce Clause analysis in Lopez is inapplicable to the evaluation of Congress' use of the Spending Power that is relevant here.

A review of the case law reveals that several courts have addressed and rejected "federalism" arguments directed at § 666. In United States v. Ferrara, 990 F.Supp. 146 (E.D.N.Y.1998), the Court, in response to the defendant's argument that the government is "endeavoring to federalize local conduct unrelated to federal monies," wrote:

Federalism has not been compromised here. The federal government has a right to attach reasonable conditions to the disbursements of its funds. State and local governments are free to accept or reject federal monies so encumbered. The choice rests with them. And their ability to prosecute local bribery schemes is not impaired either. Rather, each jurisdiction — state and federal — may prosecute offenders consistent with their respective interests. This circumstance is not violative of the Tenth Amendment.

990 F.Supp. at 152 (citations omitted).

Similarly, in United States v. Cantor, 897 F.Supp. 110 (S.D.N.Y.1995), the court rejected defendant's Tenth Amendment challenge to § 666, finding that the section does not impose a condition on federal funds nor prevents state action. Id. at 113. The court also found that the "conduct prohibited by § 666 [was not] so remote from the federal interest in protecting federal funds from the effects of local bribery schemes as to exceed the scope of the Congressional spending power or to run afoul of the Tenth Amendment." Id.

Roberts criticizes Cantor and Ferrara for failing to discuss the Supreme Court's decision in Lopez. Def.'s Reply at 5. However, for the reasons stated above, Roberts' reliance on Lopez is misplaced and, as such, this Court is unpersuaded by defendant's Lopez argument.

B. The Federal Funds Connection

Defendant argues that the absence of a connection between the bribery of Ventura and any federal funds precludes § 666 from applying to the facts of this case. The Government's response is that the DOF, the agency where Ventura worked and was bribed, receives and distributes federal funds in excess of $10,000. However, the Government's assertion that the DOF's "receipt and...