United States v. Brown
| Decision Date | 01 November 2022 |
| Docket Number | CR. 19-00046 LEK |
| Parties | UNITED STATES OF AMERICA, Plaintiff, v. CHARLES KIMO BROWN, Defendant. |
| Court | U.S. District Court — District of Hawaii |
UNITED STATES OF AMERICA, Plaintiff,
v.
CHARLES KIMO BROWN, Defendant.
No. CR. 19-00046 LEK
United States District Court, D. Hawaii
November 1, 2022
DECISION
LESLIE E. KOBAYASHI UNITED STATES DISTRICT JUDGE
The instant case centers around whether the wage vouchers that Defendant Charles Kimo Brown (“Brown”) submitted on April 11, 2014 and April 18, 2024 to the International Longshore and Warehouse Union Local 241 (“ILWU”), Hawaii Longshore Workers Division (“Longshore Division”) contained false entries and whether Brown willfully made false entries on these wage vouchers. If the Court determines that Plaintiff United States of America (“the Government”) has carried its burden of proof on these two factual issues, then the Court must determine whether Brown knowingly embezzled or converted the Longshore Division's funds and whether he did so willfully with an intent to deprive the Longshore Division of its funds.
As set forth more fully below, the Court FINDS and CONCLUDES that the Government has shown by proof beyond a reasonable doubt that Brown is guilty of Counts 1, 2, 3, and 4.
INTRODUCTION
Brown is charged with four criminal counts: Counts 1 and 3 for Falsification of Financial Records of a Labor Union, in violation of 29 U.S.C. § 439(c) (“Counts 1 and 3”); and Counts 2 and 4 for Embezzlement of Labor Union Funds, in violation of 29 U.S.C. § 501(c) (“Counts 2 and 4”). See Indictment, filed 4/11/19 (dkt. no. 1). Specifically, Brown is alleged, as to Counts 1 and 3, to have willfully made a false entry in wage vouchers required to be kept by his union pursuant to federal law, and one wage voucher was for the period from April 7 to April 11, 2014 (Count 1), and the other was for the period from April 14 to April 18, 2014 (Count 3). [Id. at pgs. 4-5.]
As to Count 2, it is alleged that, “[o]n or about April 14, 2014, within the District of Hawaii, CHARLES KIMO BROWN, the defendant, while an officer of the Longshore Division, did knowingly embezzle and convert to his own use monies and funds of the Longshore Division in the approximate amount of $393.75.” [Id. at pg. 4 (emphasis in original).]
As to Count 4, it is alleged that, “[o]n or about April 21, 2014, within the District of Hawaii, CHARLES KIMO BROWN, the defendant, while an officer of the Longshore Division, did knowingly embezzle and convert to his own use
monies and funds of the Longshore Division in the approximate amount of $1,181.25.” [Id. at pg. 5 (emphasis in original).]
Brown entered a plea of not guilty to all charges on April 22, 2019. See Minutes - EP: Initial Appearance and Arraignment & Plea to the Indictment, filed 4/22/19 (dkt. no. 8). On August 2, 2021, Brown was advised of his constitutional right to trial by jury, acknowledged his understanding of this right, and stated his desire to waive his right to jury. See Minutes - EP: Waiver of Right to Jury Trial, filed 8/2/21 (dkt. no. 44). His written waiver of jury trial was filed that same day. See Waiver of Jury Trial and Consent to Be Tried by the Court, filed 8/2/21 (dkt. no. 43).
A non-jury trial was held on April 5 through 7, 2022 in this matter. See Minutes - EP: Non Jury Trial (Day 1), filed 4/5/22 (dkt. no. 68); Minutes - EP: Non Jury Trial (Day 2), filed 4/6/22 (dkt. no. 69); Minutes - EP: Non Jury Trial (Day 3), filed 4/7/22 (dkt. no. 70).
The parties elected to submit their closing arguments in writing: the Government filed its brief on May 19, 2022, Brown filed his brief on June 2, 2022, and the Government filed its rebuttal brief on June 9, 2022. [Dkt. nos. 74, 75, 77.] This Court directed the Government to submit a supplemental brief regarding the Indictment's allegations regarding the approximate amounts embezzled in Counts 2 and 4. See Minute
Order - EO: Court Order Directing the Filing of Limited Supplemental Briefing, filed 9/13/22 (dkt. no. 79). The Government filed its supplemental brief on October 4, 2022 (“Government's Supplemental Brief”), and Brown filed his response brief on October 11, 2022 (“Brown Supplemental Brief”). [Dkt. nos. 80, 81.]
STANDARDS
I. Falsification of Financial Records of Labor Union (Counts 1 and 3)
To convict Brown on Counts 1 and 3 for violations of 29 U.S.C. § 439(c), the Government must prove that he willfully made false entries on his union wage vouchers. The statute provides:
(c) False entry in or willful concealment, etc., of books and records
Any person who willfully makes a false entry in or willfully conceals, withholds, or destroys any books, records, reports or statements required to be kept by any provision of this subchapter shall be fined not more than $10,000 or imprisoned for not more than one year, or both.
29 U.S.C. § 439(c). “Willfulness requires that an act be done knowingly and intentionally, not through ignorance, mistake or accident.” United States v. Morales, 108 F.3d 1031, 1037 (9th Cir. 1997) (citing Ninth Circuit Manual of Model Jury Instructions-Criminal, 5.05 (West 1995)).
II. Embezzlement of Labor Union Funds (Counts 2 and 4)
Under § 501(c),
Any person who embezzles, steals, or unlawfully and willfully abstracts or converts to his own use, or the use of another, any of the moneys, funds, securities, property, or other assets of a labor organization of which he is an officer, or by which he is employed, directly or indirectly . . . [is guilty of a felony].
29 U.S.C. § 501(c). The Ninth Circuit has held that the “essence” of this crime is the “taking of another's property knowing that the other person would not have wanted that to be done.” United States v. Thordarson, 646 F.2d 1323, 1333 (9th Cir. 1981) (citing United States v. Silverman, 430 F.2d 106, 126-27 (2nd Cir. 1970)). Fraudulent intent and conversion to defendant's own use or the use of another are elements of § 501(c), however, “lack of authorization or lack of good faith belief in union benefit” are not essential elements of this claim. Id. at 133435.
United Bhd. of Carpenters & Joiners of Am. v. Bldg. & Constr. Trades Dep't, 911 F.Supp.2d 1118, 1137 (E.D. Wash. 2012), aff'd, 770 F.3d 834 (9th Cir. 2014) (alterations in Bldg. & Constr. Trades). The definition of “embezzlement”
encompasses the fraudulent appropriation of the property of another by one in lawful possession thereof. See United States v. Dupee, 569 F.2d 1061, 1064 (9th Cir. 1978). The concept of unlawful conversion encompasses the use of property, placed in one's custody for a limited purpose, in an unauthorized manner or to an unauthorized extent. See Morissette v. United States, 342 U.S. 246, 272, 72 S.Ct. 240, 254, 96 L.Ed. 288 (1952); Woxberg v. United States, [329 F.2d 284 (9th Cir. 1964)].
United States v. Andreen, 628 F.2d 1236, 1241 (9th Cir. 1980). Section 501(c), however, specifically pertains to “assets of a labor organization of which he is an officer . . . .” 29 U.S.C. § 501(c). Therefore,
[t]he statute goes beyond traditional concepts of embezzlement, however, and imposes liability for an intentional breach of special fiduciary duties imposed by other regulatory statutes or governing instruments. See 29 U.S.C. § 186(c). The statute defines an offense “the common thread [of which] is that the defendant, at some stage of the game, has taken another person's property or caused it to be taken, knowing that the other person would not have wanted that to be done.” United States v. Silverman, 430 F.2d 106, 126-27 (2d Cir. 1970). The essence of the crime is theft and in the context of union funds or pension plans the offense includes a taking or appropriation that is unauthorized, if accomplished with specific criminal intent. In this respect lack of authorization may be shown if the diversion is substantially inconsistent with the fiduciary purposes and objectives of the union funds or pension plan, as set forth by statutes, bylaws, charters, or trust documents which govern uses of the funds in question. Whatever imprecision attends this definition is remedied substantially by the requirement of scienter, which is an essential element of the crime. Cf. Screws v. United States, 325 U.S. 91, 65 S.Ct. 1031, 89 L.Ed. 1495 (1945). The act to be criminal must be willful, which means an act done with a fraudulent intent or a bad purpose or an evil motive.
Andreen, 628 F.2d at 1241 (some alterations in Andreen) (footnotes omitted).
Although no specific dollar amount is required by language of 29 U.S.C. § 501(c), Counts 2 and 4 of the Indictment charged Brown with embezzling approximately $393.75 and $1,181.25, respectively. See Indictment at pgs. 4-5. Thus, these approximate amounts are elements of the charged offenses. See, e.g., United States v. Marolda, 615 F.2d 867, 872 (9th Cir. 1980) (holding that, “having charged [the defendant] as it did in the indictment, the government was bound to show that the expenditures were neither properly authorized by nor beneficial to the union”).
The Government argues Marolda has been effectively overruled by United States v. Miller, 471 U.S. 130 (1985). [Government's Supplemental Brief at 6.] This argument is rejected because Miller is distinguishable from Marolda. The indictment in Marolda alleged that additional circumstances, which were not required under the statute, were present in one offense, and therefore the Ninth Circuit held that the government was required to prove the offense as charged. See 615 F.2d at 869-70. In contrast, the indictment in Miller alleged two distinct types of fraud, and the government only prosecuted one type at trial. See 471 U.S. at 132. The United States Supreme Court held the defendant's “right to be tried only on offenses for which a grand jury has returned an indictment” was not violated because the government's
prosecution of only one type of fraud at trial “added nothing new to the grand jury's indictment and constituted...
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