U.S. v. Shafer

• Decision Date: 28 October 1999
• Docket Number: No. 98-1955,98-1955
• Citation: 199 F.3d 826
• Parties: (6th Cir. 1999) United States of America, Plaintiff-Appellee, v. David L. Shafer, Defendant-Appellant. Argued:
• Court: U.S. Court of Appeals — Sixth Circuit

Page 826

199 F.3d 826 (6th Cir. 1999)

United States of America, Plaintiff-Appellee, v. David L. Shafer, Defendant-Appellant.

No. 98-1955

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

Argued: October 28, 1999

Decided and Filed: December 22, 1999

Curtis J. Bell, (argued), Gary C. Giguere, Jr., BELL & ANKLEY, Kalamazoo, Michigan, for Appellant.

Julie Ann Woods, OFFICE OF THE U.S. ATTORNEY FOR THE WESTERN DISTRICT OF MICHIGAN, Grand Rapids, Michigan, for Appellee.

Appeal from the United States District Court for the Western District of Michigan at Grand Rapids, No. 97-00175--Robert Holmes Bell, District Judge.

Before: WELLFORD, MOORE, and GILMAN, Circuit Judges.

MOORE, J., delivered the opinion of the court, in which GILMAN, J., joined.

WELLFORD, J. (pp. 12-14), delivered a separate concurring opinion.

OPINION

KAREN NELSON MOORE, Circuit Judge.

David Shafer appeals his conviction and sentence for making false statements that pertain to a matter within the jurisdiction of a federal agency in violation of 18 U.S.C. § 1001. Shafer argues that his conviction should be overturned because the false statements in this case were made to a state agency and therefore did not pertain to a matter within the jurisdiction of a federal agency. Shafer also argues that the district court improperly determined that his failure to pay overtime wages in violation of the Fair Labor Standards Act ("FLSA") was "relevant conduct" when it included these unpaid overtime wages in its sentencing calculation. For the reasons set forth below, we AFFIRM the conviction, but VACATE Shafer's sentence and REMAND the case to the district court for resentencing consistent with this opinion.

I. BACKGROUND

David Shafer was the owner and president of APEC, Ltd., a company that had contracted with the Michigan Department of Military Affairs to remove underground storage tanks and contaminated soil at several national guard armories located in Michigan. The contract required Shafer to pay the workers on the project a prevailing wage pursuant to the Davis-Bacon Act, 40 U.S.C. § 276a, and it required Shafer to send the Michigan Department of Military Affairs a payroll certification statement that listed the wages that his company had paid its workers. Between December 4, 1992 and January 8, 1993, Shafer sent several payroll certification statements to the Michigan Department of Military Affairs that verified that his company had paid its workers the prevailing wage.

In December of 1992, the United States Department of Labor began to investigate Shafer after it received a complaint that Shafer was not paying his workers the prevailing wage. Shafer was eventually indicted by a federal grand jury on charges that he made false statements in a matter within the jurisdiction of a federal agency in violation of 18 U.S.C. § 1001. On April 21, 1998, after a two-day trial, the jury convicted Shafer of the charges. He was sentenced to twenty-four months of incarceration and a three-year period of supervised release, and he was required to pay a $24,000 fine, restitution of $25,000, and $800 in special assessments.

Shafer's sentence was based on a total loss figure of $140,363.49. The district court calculated this figure by adding the wages that the workers would have received had Shafer complied with the Davis-Bacon Act to the amount of overtime that Shafer should have paid his workers for their work on non-government contracts. In 1991, the Department of Labor investigated Shafer and discovered that he had failed to pay his workers $28,784.27 in overtime wages for their work on non-government projects in violation of the FLSA, 29 U.S.C. § 207(a)(1). Since the 1991 investigation, the Department of Labor has determined that Shafer has failed to pay an additional $57,912.57 in overtime wages. The district court concluded that the total amount of unpaid overtime wages for work on non-government projects was "relevant conduct" and should be included in Shafer's base offense level pursuant to U.S.S.G. § 1B1.3(a)(2) (1997). The total loss figure increased Shafer's base offense level an additional seven levels. Shafer now appeals the conviction and the district court's inclusion of the unpaid overtime wages in his sentence.

II. ANALYSIS

A. False Statements in Violation of 18 U.S.C. § 1001

Shafer argues that there is insufficient evidence to sustain his conviction under 18 U.S.C. § 1001 because the false statements in this case were made to a state agency and therefore did not pertain to a matter within the jurisdiction of a federal agency. The primary question in this case - whether the false statements were made in a matter that is within the jurisdiction of a federal agency - is a question of law that we review de novo. United States v. Lawson, 809 F.2d 1514, 1517 (11th Cir. 1987); United States v. Plascencia-Orozco, 768 F.2d 1074, 1075-76 (9th Cir. 1985).

18 U.S.C. § 1001 provides that:

[w]hoever, 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.

To sustain a conviction for making false statements in violation of § 1001, the prosecution must prove that "(1) the defendant made a statement; (2) the statement is false or fraudulent; (3) the statement is material; (4) the defendant made the statement knowingly and willfully; and (5) the statement pertained to an activity within the jurisdiction of a federal agency." United States v. Lutz, 154 F.3d 581, 587 (6th Cir. 1998) (citing United States v. Steele, 933 F.2d 1313, 1318-19 (6th Cir. 1991)).

The Supreme Court has repeatedly stated that "the term 'jurisdiction' should not be given a narrow or technical meaning for the purposes of § 1001." Bryson v. United States, 396 U.S. 64, 70-71 (1969); United States v. Rodgers, 466 U.S. 475, 479-80 (1984); see also United States v. Gibson, 881 F.2d 318, 322 (6th Cir. 1989). Indeed, the Court has explained that "[a] department or agency has jurisdiction, in this sense, when it has the power to exercise authority in a particular situation . . . . [T]he phrase 'within the jurisdiction' merely differentiates the official, authorized functions of an agency or department from matters peripheral to the business of that body." Rodgers, 466 U.S. at 479.

We have held that a matter is within the jurisdiction of a federal agency for the purposes of § 1001 when the federal agency has power to exercise its authority, even if the federal agency does not have complete control over the matter. Gibson, 881 F.2d at 322-23. In Gibson, the defendant was convicted for violating § 1001 after he submitted false invoices to a private coal mining company. The coal mining company had a cost-plus contract with the Tennessee Valley Authority ("TVA") in which the amount that the TVA was charged depended on the cost of the company's materials and labor. Id. at 320. The defendant argued that the matter was not within the jurisdiction of a federal agency because the false invoices were not submitted directly to the TVA. Id. at 322. However, we stated that "[t]here is no implicit requirement that the statements be made directly to, or even be received by, the federal department or agency." Id. Because the false invoices were sent to a private company that was required to make regular reports to a government agency, and because the federal agency retained the ultimate authority to see that the federal funds were properly spent, we concluded that the false statements in the case pertained to a matter that was within the jurisdiction of a federal agency. Id. at 323.

Similarly, in United States v. Lewis, 587 F.2d 854, 855-57 (6th Cir. 1978), we upheld a § 1001 conviction involving a defendant who had made false statements to a state agency on grounds that the agency had received federal support and was subject to federal regulation. In Lewis, the defendant, who was employed and received outside income, denied that she was employed and stated that she had not received any outside income in order to obtain benefits under the Aid to Families of Dependent Children ("AFDC") program. The AFDC program was operated by the Michigan Department of Social Services and the program was funded by both the state and federal government. Id. at 855. Even though there was no reference to any federal involvement in the program on the forms that the defendant prepared or the benefit checks that she received, we still concluded that the matter was within the jurisdiction of a federal agency. Id. at 855-56. Because the falsified eligibility information affected the right of the state to participate in the federal program and to obtain its share of federal reimbursement money, we held that the defendant's conduct satisfied the jurisdictional element of the § 1001 violation. Id. at 856.

Based on Gibson and Lewis, we conclude that the false statements in the present case pertained to a matter within the jurisdiction of a federal agency. Shafer's contract with the Michigan Department of Military Affairs to remove the underground storage tanks was funded entirely by the federal government, and the contract to install new storage tanks was jointly funded by the federal and state government, with the federal government paying seventy-five percent and the state paying twenty-five percent of the project. Furthermore, the contract required Shafer's company to pay the workers on the project the "prevailing" wage in accordance with the Davis-Bacon Act, 40 U.S.C. § 276a, pursuant to which the Department of Labor has the authority to supervise and investigate the payroll certification...