United States v. Uzzell

• Decision Date: 26 November 1986
• Docket Number: Civ. A. No. 85-1834.
• Citation: 648 F. Supp. 1362
• Parties: UNITED STATES of America, Plaintiff, v. George UZZELL and Vernon Uzzell, Defendants.
• Court: U.S. District Court — District of Columbia

648 F. Supp. 1362

UNITED STATES of America, Plaintiff, v. George UZZELL and Vernon Uzzell, Defendants.

Civ. A. No. 85-1834.

United States District Court, District of Columbia.

November 26, 1986.

Michael F. Hertz, Robert L. Ashbaugh, Joan E. Hartman, Civil Div., Dept. of Justice, Washington, D.C., for plaintiff.

Stuart L. Nachman, Norfolk, Va., Frank W. Dunham, Jr., Washington, D.C., for defendants.

MEMORANDUM OPINION AND ORDER

JOYCE HENS GREEN, District Judge.

On March 4, 1986, plaintiff United States moved this Court for "partial" summary judgment¹ on the issues of liability and damages under the False Claims Act, 31 U.S.C. §§ 3729-3731.

Federal Rule of Civil Procedure 56(c) directs that summary judgment shall be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." The Supreme Court recently emphasized that summary judgment is warranted when there is "no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., ___ U.S. ___, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986) (emphasis in original). "There is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party.... If the evidence is merely colorable ... or is not significantly probative ... summary judgment may be granted." Id. at 2511 (citations omitted).

Discussion

I. Collateral Estoppel Effect of the Criminal Conviction

The primary issue to be decided in determining whether there is a genuine issue of material fact with regard to the False Claims Act cause of action is whether the criminal conspiracy conviction of defendants George Uzzell and Vernon Uzzell under 18 U.S.C. § 286 is conclusive evidence in a civil case as to the necessary elements of a violation of 31 U.S.C. § 3729.

To establish civil liability under section 3729, the government must establish that defendants knowingly presented false, fictitious, or fraudulent claims upon the United States Government. See United States v. Lawson, 522 F.Supp. 746, 750 (D.N.J.1981). Essentially, the same elements (in addition to conspiracy) must be proved by the government to obtain a criminal conviction for filing false claims under 18 U.S.C. § 286.

A criminal conviction is conclusive proof and operates as an estoppel on defendants as to the facts supporting the conviction in a subsequent civil action. Local 167 of International Brotherhood of Teamsters, Chauffeurs, Stablemen & Helpers of America v. United States, 291 U.S. 293, 298-99, 54 S.Ct. 396, 398-99, 78 L.Ed. 804 (1934); Brown v. United States, 524 F.2d 693, 705, 207 Ct.Cl. 768 (1975). To apply the principle of estoppel, however, the trial court in the subsequent civil proceeding must examine the record to determine exactly what was decided in the criminal proceeding. Emich Motors Corp. v. General Motors, 340 U.S. 558, 569, 71 S.Ct. 408, 414, 95 L.Ed. 534 (1951). Estoppel extends only to questions "directly put in issue and directly determined" in the criminal prosecution. Id. at 569, 71 S.Ct. at 414; Brown 524 F.2d at 705. The difficult problem, as recognized by the Emich Court, is discerning what matters were adjudicated in the antecedent suit. In aid of its determination, the trial court must look to the record, the pleadings, the evidence submitted, the jury instructions, and any opinions of the courts. Emich Motors 340 U.S. at 569, 71 S.Ct. at 414.

In the instant case, determining the scope of the prior criminal conviction of the defendants is not a difficult task. The indictment, the transcript of the criminal trial, the jury verdict, and the affirmation of the conviction by the Fourth Circuit Court of Appeals make clear that defendants are estopped from now denying their liability under the False Claims Act, 31 U.S.C. § 3729-3731.

On October 30, 1983, George Uzzell and Vernon Uzzell were indicted on seven counts of criminal conspiracy to defraud the United States Government by filing false claims under the "8(a)" program of the Small Business Administration (SBA), a program through which the SBA provides loans to small businesses owned by socially and economically disadvantaged individuals. 15 U.S.C. § 637(a).

Count 1 of the indictment alleged that defendants conspired to defraud the government by filing false claims (18 U.S.C. § 286); Counts 2 through 4 charged defendants with filing false claims as individuals (18 U.S.C. § 287); and Counts 5 through 7 charged them with filing false claims specifically with the SBA (15 U.S.C. § 645).

Count 1 is a comprehensive charge and lists the specific activities comprising the conspiracy charge as well as thirty-nine "overt acts" underlying the charge. Count 1 of the indictment charged, inter alia, that:

12. ... George Uzzell and Vernon Uzzell did combine, conspire, confederate and agreee sic with each other to knowingly defraud the United States and the Small Business Administration by obtaining and aiding to obtain the payment and allowance of false, fictitious, and fraudulent claims.

13. It was a part of the said conspiracy that the co-conspirators would and did submit to SBA claims against the advance funds for work allegedly performed for Genco by Martec. The claims would be accompanied by Martec invoices which fraudulently alleged that Martec had performed and was going to perform work for Genco. In fact, Martec performed little or no work for Genco.

14. It was part of the said conspiracy that Martec invoices were presented to SBA by Genco for work performed by Genco employees. The conspirators would present claims for the work by the Genco employees to SBA, and Genco would be reimbursed.

15. It was part of the said conspiracy that the conspirators would and did present Martec invoices for work performed by other legitimate contractors, and paid out of the SBA advance account.

16. It was a part of the said conspiracy that the conspirators would not reimburse the SBA for advanced funds after payment by the contracting agency.

17. It was a part of the said conspiracy that the conspirators would and did use the funds obtained from SBA through Martec for their own gain.

The thirty-nine "overt acts" included in Count 1 consist of a list of the specific financial transactions at issue, including: the four claims by Martec to the advanced payment account on August 14, 1978 ($30,000), November 20, 1978 ($158,755.00), June 5, 1979 ($100,375.44), and September 27, 1979 ($58,380.68), and the disbursements by Martec. Chief District Judge Kaufman, presiding at the defendants' criminal trial, dismissed Counts 2 through 7 on the ground of improper venue. United States v. George Uzzell and Vernon Uzzell, Cr. No. K83-00421 (D.Md.1984).

Judge Kaufman sentenced the defendants to six months' work release, five years' probation, 200 hours of community service, and restitution in an amount to be determined through civil litigation. The convictions were affirmed by the Fourth Circuit Court of Appeals. United States v. Uzzell, 780 F.2d 1143 (4th Cir.1986). The Court of Appeals concluded that there was more than sufficient evidence presented to convict both defendants of the conspiracy. Defendants had challenged, as they continue to dispute, the sufficiency of the evidence implicating Vernon Uzzell's participation in the conspiracy. The Court of Appeals concluded that "far from being insufficient, the showing of Vernon's participation seems overwhelming.... There was more than an abundant basis for finding that Vernon was a knowing participant in the fraudulent scheme." Id. at 1146 (emphasis added).

Defendants argue that the record is unclear as to the scope of the matters encompassed in the criminal conviction. They argue that the jury's conviction on Count 1 may have been based only on the first overt act,² and that defendants' guilt as to the other thirty-eight acts alleged to constitute the defendants' fraudulent scheme was not conclusively established by the verdict.

The "first overt act" referred to by defendants as the possible sole basis for the conspiracy conviction is not at issue in this case, but most importantly, the criminal trial record reflects it was peripheral in that trial as well. The government's case clearly focuses on the three other claims made on November 20, 1978, June 5, 1979, and September 27, 1979, for a total of $317,510.62 in disbursements.

Defendants' argument that the verdict may rest on only the first overt act is without merit. The jury returned a guilty verdict on Count 1, and nothing in the record indicates that anything less than all of the specific acts alleged in the count were determined by the jury in reaching that verdict. Furthermore, the Fourth Circuit Court of Appeals' opinion discussed the entire fraudulent scheme, specifically noted the disbursements to Martec, and found the evidence of conspiracy "overwhelming," not based merely on the first overt act.

Defendants cite DeCavalcante v. Commissioner of Internal Revenue, 620 F.2d 23 (3d Cir.1980), in support of their argument that the collateral estoppel effect of the convictions should be narrowly construed. DeCavalcante suggests, however, that although a guilty plea by itself would not be sufficient to prove the elements for the civil charge, the admissions made by the defendant in his Rule 11 proceeding "broadened the collateral estoppel effect of the guilty plea." Id. at 26 n. 9. Similarly, in the instant case, the facts revealed and admissions made in the criminal trial supplement the jury's verdict of conspiracy as matters for this Court to consider in determining the scope of collateral estoppel. An affidavit or a certified transcript of prior testimony may provide the basis for summary judgment. International Distributing Corp. v. American District Telegraph Co., 569 F.2d 136, 138 (D.C.Cir.1977).

Defendants...