US v. Webb, 87 CR 1009.

• Decision Date: 03 August 1988
• Docket Number: No. 87 CR 1009.,87 CR 1009.
• Citation: 691 F. Supp. 1164
• Parties: UNITED STATES of America v. Rosie WEBB.
• Court: U.S. District Court — Northern District of Illinois

691 F. Supp. 1164

UNITED STATES of America v. Rosie WEBB.

No. 87 CR 1009.

United States District Court, N.D. Illinois, E.D.

August 3, 1988.

Sharon Jones, Asst. U.S. Atty., Chicago, Ill., for plaintiff.

Spencer W. Waller, Freeborn & Peters, Chicago, Ill., for defendant.

MEMORANDUM OPINION

BRIAN BARNETT DUFF, District Judge.

A jury convicted defendant Rosie Webb on nineteen counts of a fifty-seven count indictment relating to a conspiracy to defraud the United States Department of Housing and Urban Development ("HUD"). The nineteen counts against her included: seventeen counts alleging theft of government property, 18 U.S.C. § 641; one count alleging conspiracy to defraud the United States, 18 U.S.C. § 371; and one count alleging aiding and abetting theft from government programs, 18 U.S.C. § 666 ("§ 666"). Defendant has moved for a new trial and a judgment of acquittal on all counts, and for judgment notwithstanding the verdict on Count II, the § 666 charge. Although most of her arguments lack merit, her attack on the § 666 charge hits the mark. Thus, for the reasons set forth below, this court will reverse the jury's verdict and enter a judgment of acquittal on the § 666 charge.

FACTS

Pursuant to § 8 of the United States Housing Act of 1937, 42 U.S.C. 1437f (as amended) ("§ 8"), the United States Department of Housing and Urban Development ("HUD") administers programs ("§ 8 programs") providing rental and utility payment assistance to low and moderate income families. Under these § 8 programs, HUD either contracts directly with private or public landlords to pay a portion of the market rent of qualifying tenants, or enters into contributions contracts with public housing agencies which then contract with the landlords.

Prior to 1984, HUD engaged the private accounting firm Hill & Co. ("Hill Taylor") to manage and administer a § 8 program in the Northern District of Illinois. Under this program, HUD contracted directly with eligible landlords, and deposited benefits earmarked for them in a bank account at Drexel National Bank in Chicago (the "§ 8 account"). Hill Taylor had access to this account, and made the payments from it to the landlords. Hill Taylor also made inspections to ensure that the tenants on whose behalf the payments were made remained qualified for § 8 benefits once they were in the program. During the period relevant to this case, Hill Taylor administered § 8 benefits on behalf of HUD in excess of $180,000 per year.

From October, 1984 to March, 1985 a number of Hill Taylor employees and others conspired to and did defraud the United States by falsifying Hill Taylor records and embezzling § 8 funds. As part of the conspiracy, the Hill Taylor employees issued checks to fictitious landlords and stole checks payable to valid landlords. The checks were drawn on the § 8 account and cashed by members of the conspiracy at currency exchanges throughout the city. They totalled more than $230,000.

At the time of the conspiracy, defendant worked as a teller at the Savoy Currency Exchange in Chicago. According to the government, she participated in the conspiracy by cashing a number of the fraudulent and stolen checks.

The government's key witness against defendant was Trudy Williams, a former Hill Taylor employee and participant in the conspiracy. She testified for two days, and claimed that she had been introduced to defendant by a friend—whom she identified on the second day of her testimony as Robert Person — and that defendant had cashed embezzled checks for her and another co-conspirator in return for at least $100 per check. The jury apparently believed her, and found defendant guilty on all nineteen counts with which she was charged.

MOTIONS FOR NEW TRIAL AND ACQUITTAL ON ALL COUNTS

Defendant presents three arguments in her motions for a new trial or an acquittal on all counts: that the court should have barred the testimony of Robert Person; that the court erred in denying her request for an instruction that character evidence alone can provide reasonable doubt of a defendant's guilt; and that the jury's verdict was not supported by facts sufficient to establish guilt beyond a reasonable doubt. These arguments are without merit.

With respect to the first, defendant maintains that the government's failure, until the second day of trial, to ask Ms. Williams the identity of the friend who introduced her to defendant demonstrates government misconduct requiring exclusion of the friend's subsequent testimony. Defendant contends that because Ms. Williams had not identified the friend in pre-trial statements, in grand jury testimony, or on the first day of trial, and because the government certainly would not have asked for the name during trial without knowing the answer, the government must have first asked Ms. Williams for the information on the night after her first day of testimony. This was improper, however, because the court had ordered the government not to discuss the case with Ms. Williams during the overnight recess. Further, defendant insists, the delay in asking the friend's name amounted to a Jenck's Act violation, see 18 U.S.C. § 3500, inasmuch as it allowed the government to question Mr. Person without having obtained any witness statements or other materials which defendant could use to impeach his testimony.

Yet, the government attorney's sworn statement, uncontradicted by the testifying witnesses, indicates that the government first asked Ms. Williams her friend's identity during the weekend before Ms. Williams testified, and did so only when it learned that defendant intended to assert at trial that she did not know the members of the conspiracy. Thus, the government did not violate the court's order; further, since there is nothing improper in failing to ask for information until it becomes relevant, the Jencks Act theory fails as well.

As for defendant's "character instruction" argument, this too must fail. Although the defendant correctly notes that United States v. Burke, 781 F.2d 1234 (7th Cir.1986), expressly left open the possibility that such an instruction — "character evidence alone may create a reasonable doubt of defendant's guilt" — might be appropriate in "special circumstances," Id. at 1242 n. 5, it made quite clear that such an instruction is never required and remains within the discretion of the court. This court decided during trial that the instruction was unnecessary and confusing, and perhaps even unduly prejudicial, and thus refused to give it. The court finds no error now in that decision.

Finally, this court finds, as it must to sustain a jury's verdict, that there is substantial evidence to support the jury's finding on each count. See Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680 (1942); United States v. Redwine, 715 F.2d 315, 319 (7th Cir.1983). The testimony of Ms. Williams permitted the jury to find that each of the checks was embezzled, and that defendant knew this and yet cashed the checks. The fact that Ms. Williams could not identify her signature on each and every check, and that defendant presented evidence contradicting other aspects of Ms. Williams testimony, does not defeat the jury's ability to infer defendant's guilt on each of the counts.

Accordingly, defendant's motions for a new trial or judgment of acquittal on all counts will be denied.

MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT ON THE § 666 COUNT

Defendant next argues that her conviction under § 666 must be vacated and a judgment of acquittal entered. At the time relevant to this case, § 666 provided, in pertinent part:

(a) Whoever,

(1) being an agent of an organization ... which 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,

(A) embezzles, steals, obtains by fraud, or otherwise without authority knowingly converts to the use of any person other than the rightful owner or intentionally misapplies, property that —

(i) is valued at $5,000 or more, and

(ii) is owned by, or is under the care, custody or control of such organization, shall commit an offense against the United States.

18 U.S.C. § 666 (Supp.1984).¹ Defendant claims that her conviction under this statute was improper for two reasons: first, because the government cannot aggregate the amount of the checks she cashed — all valued at under $5,000 — in seeking to satisfy the $5,000 statutory minimum; and second, because the federal funds paid to Hill Taylor pursuant to Hill Taylor's contract with HUD did not constitute "benefits" within the meaning of § 666.

Aggregation

At trial, the government requested an instruction on the § 666 charge which required the jury to find, among other things, "that William Hardy, Ora Pearson, and Trudy Williams embezzled, stole, or otherwise without authority knowingly converted to the use of persons other than the rightful owners, property valued at $5,000 or more, and ... that the defendant knowingly aided and abetted William Hardy, Ora Pearson, and Trudy Williams in commission of the offense." Defendant requested the following addition to this charge: "In considering the charge you must consider the value of each item of property individually." Because of the paucity of case law on when the government may "aggregate" the value of property taken at different times in order to satisfy a statutory minimum, this court discussed the issue at length with the parties.

The government conceded that, because no single item of property exceeded $5,000, the defendant's requested instruction, if proper, would require an acquittal. Thus, after considerable discussion left the matter unresolved, the parties agreed that the court could give the government's version alone and then rule on the validity of defendant's version if the jury returned a guilty verdict. That time has come.²

No court has addressed the...