United States v. Coastal Contracting & Engineering Co.

Decision Date02 July 1959
Docket NumberCr. No. 24675.
Citation174 F. Supp. 474
PartiesUNITED STATES of America v. COASTAL CONTRACTING AND ENGINEERING COMPANY, Inc., and Murray B. Silverman.
CourtU.S. District Court — District of Maryland

Leon H. A. Pierson, U. S. Atty., John R. Hargrove and R. Taylor McLean, Asst. U. S. Attys., Baltimore, Md., for plaintiff.

Walter C. Herlihy and S. Herbert Harris, Baltimore, Md., for defendants.

THOMSEN, Chief Judge.

The government is pressing the second and third counts of a three-count indictment charging Coastal Contracting and Engineering Company and its president, Murray B. Silverman, with violations of 18 U.S.C.A. § 1001, in connection with documents submitted in support of the estimated cost of work done or to be done under proposed changes to a construction contract. 18 U.S.C.A. § 1001 reads as follows:

"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. * * *"

The case was tried before the court without a jury.

Findings of Fact

Coastal entered into a contract with the Department of the Navy, Bureau of Yards and Docks, dated 26 June 1957, for the construction of a transmitter building for a reflector at the United States Naval Radio Station, Annapolis, Maryland, at a cost of $244,350. The contract contained customary provisions for Changes and Disputes, set out in the margin.1

J. A. Coddington, Capt., CEC, USN, was the Officer in Charge of Construction, with authority to sign the change orders involved in this case. In accordance with customary procedures, P. A. Petzrick, Lt. J.G., CEC, USN, the officer who supervised the administration of the contract after the middle of November 1957, conducted negotiations with the contractor so that he could recommend to the Officer in Charge of the Construction what would be a fair and equitable price for the changes.

Second Count

The original contract called for a concrete slab in which were imbedded copper conduits2 which curved from a pipe-trench into the transformer room and through a masonry wall. The radius of the curve was changed twice after the conduits were put in place, requiring "bends" which are not items of standard manufacture. It was necessary for Coastal to purchase lengths of straight pipe and have them bent to order either by the suppliers or by subcontractors. This required some travel by Coastal's employees and considerable wastage of pipe.

The government had advised Coastal of the proposed copper conduit change in September 1957. The supplies were purchased and the work done in October, and on November 15, 1957, Coastal requested an extra payment of $3,264.55 for this change. When Lt. Petzrick took over the administration of the contract late in November, he felt that Coastal's request was too high; he arranged a conference with Ewell, Coastal's superintendent, early in December, at which he requested that Coastal submit another "estimate summary for change order" with supporting figures. In response to this request, Coastal submitted an estimate summary, dated March 4, 1958, signed by Murray B. Silverman, president. Attached to the estimate summary was a paper on Coastal stationery headed "Cost Breakdown", on which Coastal's travel and direct labor expenses totaling $537.40 were itemized, and three other items were listed, as follows: "Materials from Nicholson Engineering Company $2,291.04. Subcontractors: Nash Welding $215.00; Doane & Lewis Lubricators $417.00." Also attached to the estimate summary was what purported to be a letter from Nicholson Engineering Company on that company's stationery, signed "M. Beck", addressed to Coastal, stating: "In response to your request for a breakdown of costs for copper conduit which we supplied to you in various sizes on subject job, we are submitting herewith the following breakdown: * * *". Then followed a list of items totaling $1,909.20, to which was added "Contractor's handling charges — 17% — $381.84", making a grand total of $2,291.04.

The letter was not authorized in any way by the Nicholson Engineering Company. No such person as "M. Beck" had any connection with that company. The fictitious name was signed to the letter by defendant Silverman or at his direction.3

Only $466.61 of the items listed in the "M. Beck" letter had been actually sold by Nicholson to Coastal.4 Several other items in the letter represented materials purchased by Coastal for cash. Some of the items were false and fictitious altogether,5 some were included at inflated amounts.6 The item "Contractor's handling charges — 17% — $381.84" was entirely false, since no such charge was contracted for, billed or paid.

The false letter, containing the false and fictitious statements and representations, was submitted by Silverman on behalf of Coastal knowingly and wilfully on a material matter within the jurisdiction of the Navy Department, namely, the amount to be allowed Coastal for the change.

On March 5, 1958, a conference was held, attended by Lt. Petzrick and other representatives of the Navy Department and by Silverman and Ewell on behalf of Coastal. As a result of bargaining at that conference, the parties agreed to a settlement, which resulted in the allowance in Change Order C of the net sum of $2,300 for the change in the copper conduit.7 Lt. Petzrick did not know that the "M. Beck" letter was false and fictitious, and considered that letter in reaching the settlement figure of $2,300, which he recommended to Capt. Coddington, the Officer in Charge of Construction.

For reasons discussed below, the fact that Lt. Petzrick was influenced by that letter is not an essential part of the crime under sec. 1001. The important thing is that Silverman and Coastal submitted the false document, and made the false and fictitious statements contained therein, knowingly, wilfully and deliberately, intending that they should influence the representatives of the Navy Department. The matters dealt with in the letter were material to the matter under discussion, and the misstatements were material.

Third Count

The original contract called for a ¼ ton capacity chain hoist. In the fall of 1957 the Navy decided to install a 2 ton capacity electric operated hoist and a ½ ton capacity extended hand wheel chain operated hoist with special mounting hooks in lieu of the ¼ ton capacity chain hoist originally specified. The revised drawings for the large hoist were ready on October 30, 1957.

On November 15, 1957, Silverman, on behalf of Coastal, submitted an estimate summary for change order to which were attached a breakdown on Coastal's stationery and what purported to be a letter, dated November 12, 1957, from Standard Distributing Company signed "Andrew Livingston, Sales Department", quoting a price of $4,579.79 for the two hoists and stating: "It may be added that the weather proofing does not meet Radio Interference Suppression Specifications, and in checking we have not yet to find any manufacturers who are able to comply with Navy requirements." This letter was false and fictitious in that Andrew Livingston was an infant of tender years, too young to be employed by anyone, and did not sign the letter. Standard Distributing Company is a subsidiary or associated company of Coastal's, and sometimes acted as Coastal's purchasing agent. The principal importance of this letter is that it shows the disposition of Silverman to submit false and fictitious letters, and weighs against the credibility of his contention that the other false and fictitious letters were authorized by representatives of the companies whose letters they purported to be.

After further negotiations, the Navy Department dropped the requirement that the large hoist contain a radio interference suppressor. Meanwhile, Ewell had spent some time traveling to find a hoist that would suit the Navy. In January 1958 it appeared that a Manning, Maxwell & Moore hoist, sold in Maryland through the Freeland Equipment Company, would meet the specifications, and a representative of the manufacturer and a representative of Freeland met Ewell on January 23 to look over the plans and specifications and prepare an estimate.

On January 23 Freeland sent Coastal a letter signed by Edward J. Schutt, Jr., Freeland's sales and service manager, quoting a price of $3,597 for the large hoist and $320 for the small hoist, a total of $3,917.8

On January 28 Coastal sent a letter signed by Silverman, its president, addressed to District Public Works Office, Severn River Naval Command, enclosing an estimate summary for change order on the additional hoists, together with shop drawings submitted by Manning, Maxwell & Moore. The estimate summary included under the heading "Prime Contractor's Direct Material" the sum of $4,936; the accompanying breakdown included "Materials — Two Hoists — $4,936." Lt. Petzrick had made some study of hoist costs and felt this item was entirely out of line. Accordingly, the matter was discussed at the meeting on March 5, 1958. The minutes of that meeting show:

"Additional Hoists — In reviewing submitted costs for this item, Lt. Petzrick pointed out that supplier's prices for hoists were considered high, there being no back-up included to substantiate those prices. Also the subcontract electrical work involved and prime contractor's direct labor costs were not acceptable. Upon review of entire estimate, it was agreed that a reasonable cost for electrical work was $50.00; prime contractor's direct labor for additional steel erection, labor and supervision $290.00; the balance, cost of hoists being held in abeyance pending
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3 cases
  • U.S. v. Snider
    • United States
    • U.S. Court of Appeals — Fourth Circuit
    • July 19, 1974
    ...279 F.2d 401, 404 (9th Cir. 1960), cert. denied, 365 U.S. 836, 81 S.Ct. 750, 5 L.Ed.2d 745 (1961); United States v. Coastal Contracting and Engineering Co., 174 F.Supp. 474 (D.Md.1959), it must be deceptive, 'calculated to induce agency reliance or action,' United States v. Quirk, 167 F.Sup......
  • Robles v. United States
    • United States
    • U.S. Court of Appeals — Ninth Circuit
    • July 26, 1960
    ...required to be made." Weinstock v. United States, supra, 231 F.2d at page 701. See also, United States v. Coastal Contracting & Engineering Co., D.C.Md.1959, 174 F. Supp. 474. There was evidence which the jury must have believed that the documents described in the indictment were of the req......
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    • U.S. District Court — Southern District of California
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    ...favorable agency action has actually resulted. Brandow v. United States, 9 Cir., 1959, 268 F.2d 559; United States v. Coastal Contracting & Engineering Co., D.C.Md.1959, 174 F.Supp. 474; United States v. Quirk, D.C.E.D.Pa.1958, 167 F.Supp. 462, affirmed, 3 Cir., 1959, 266 F.2d 26. The purpo......

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