United States v. Zwick

Opinions of the United

1999 Decisions States Court of Appeals

for the Third Circuit

12-15-1999

United States v. Zwick

Precedential or Non-Precedential:

Docket 98-3641

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Filed December 15, 1999

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 98-3641

UNITED STATES OF AMERICA

v.

JAMES J. ZWICK,

Appellant

On Appeal from the United States District Court

for the Western District of Pennsylvania

(Criminal Action No. 97-cr-00182-1)

(District Judge: The Honorable William L. Standish)

Argued: July 15, 1999

Before: ROTH, RENDELL, Circuit Judges, and

POLLAK,* District Judge

(Filed December 15, 1999)

SHELLEY STARK, Esquire

[ARGUED]

Office of Federal Public Defender

960 Penn Avenue

415 Convention Tower

Pittsburgh, PA 15222

Counsel for Appellant

_________________________________________________________________

* Hon. Louis H. Pollak, Senior Judge of the United States District Court

for the Eastern District of Pennsylvania, sitting by designation.

ROBERT S. CESSAR, ESQUIRE

[ARGUED]

Office of U.S. Attorney

633 U.S. Post Office & Courthouse

Pittsburgh, PA 15219

Counsel for Appellee

OPINION OF THE COURT

RENDELL, Circuit Judge.

In this appeal, we are asked to construe 18 U.S.C.S 666,

a criminal provision entitled "Theft or bribery concerning

programs receiving Federal funds" ("the Act" or "the

statute"). Appellant James J. Zwick claims that the District

Court misinterpreted the statute when it upheld his three-

count conviction for bribery under S 666(a)(1)(B) without

proof of a connection between the offense conduct and

federal funds or programming. We conclude that the

District Court erred in interpreting the statute in this

respect and will therefore remand for further proceedings

consistent with this opinion. Zwick also challenges the

District Court's failure to reduce his offense level by an

additional point for acceptance of responsibility pursuant to

U.S.S.G. S 3E1.1(b). Because we find that the District Court

erred in its application of this Guideline provision, we will

vacate this aspect of the sentencing order and direct the

District Court on remand to award the additional one-point

reduction if it determines that Zwick timely provided

complete information to the government or timely notified

the government of his intent to plead guilty to enable the

government and court to conserve their resources.1

I.

Appellant James J. Zwick was an elected member of the

Ross Township Board of Commissioners, the governing

body of Ross Township, Pennsylvania. Zwick and his fellow

_________________________________________________________________

1. We reject Zwick's remaining challenges to the application of the

statute to his particular situation, as we discuss more fully below.

2

commissioners made policy decisions for the Township,

including fixing salary levels, executing contracts,

authorizing bids, and adopting budgets. In November of

1997, the government accused Zwick of abusing his

position to obtain illegal benefits and filed afive-count

indictment charging him with three counts of theft or

bribery concerning federal programs under 18 U.S.C.S 666,

one count of mail fraud under 18 U.S.C. SS 2 & 1341, and

one count of bank fraud under 18 U.S.C. SS 2 & 1344. The

District Court had jurisdiction over Zwick's case pursuant

to 18 U.S.C. S 3231.

Initial efforts at negotiating a guilty plea failed when the

government declined to accept a conditional plea, which

would have preserved Zwick's legal challenge to the

application of S 666 when there is no connection between a

defendant's conduct and federal funds or programming.

After declining to accept the plea, the governmentfiled a

superseding indictment, which contained all of the charges

in the original indictment, and added another count of theft

or bribery under S 666, another count of bank fraud, and

three more counts of mail fraud. Again, Zwick was willing

to plead guilty to the bank fraud and mail fraud counts,

but continued to seek a conditional guilty plea on the S 666

counts. During a status conference on January 27, 1998,

Zwick informed the District Court of his intention to plead

guilty to the fraud counts, and the District Court scheduled

the plea hearing for February 2, 1998. Further plea

negotiations were derailed, however, when articles appeared

in the Pittsburgh Post Gazette and North Hills News Record

on January 28, 1998 and January 29, 1998, declaring that

Zwick would plead guilty to the fraud charges. Zwickfiled

a motion with the District Court to dismiss the indictment

based on prosecutorial misconduct, alleging that, by

providing information for the articles, the government had

violated its obligation to refrain from making extrajudicial

statements regarding the possibility of a guilty plea. The

District Court denied Zwick's motion. Zwick ultimately

entered a guilty plea to the fraud counts on March 9, 1998.

The case against Zwick on the S 666 charges proceeded

to trial on March 10, 1998, after a brief continuance so that

Zwick could enter treatment for his gambling addiction.

3

Although Zwick waived his right to a jury trial and

requested a bench trial, the government opposed this

request, so the case was tried to a jury. Zwick was

convicted on counts one, two, and three of the four S 666

charges.

Because Zwick makes several challenges to the

sufficiency of the evidence to support his conviction under

S 666, we will review the relevant facts adduced at trial

regarding the alleged bribes. In count one, the government

alleged that Zwick solicited a bribe from Christopher Kaclik,

the owner and developer of the Shannopin Square II office

building located in Ohio Township. Kaclik first became

associated with Zwick in 1994, when he applied for sewer

access for the predecessor to Shannopin Square II,

Shannopin Square I. At that time, Kaclik testified that

Zwick told him "anything you need to get done in the

Township of Ross, I can help you out." In May or June of

1996, during the building of Shannopin Square II, Zwick

met with Kaclik at the development site and offered to

secure the necessary votes for approval of the sewer taps in

exchange for a donation to the "Men's Summer League for

Ross Township," a basketball league run by Zwick. Kaclik

wrote a check for $5,000, made out to "James Zwick," with

a notation reading "Men's Summer League 1996

Basketball." At Zwick's suggestion, Kaclik also provided

Zwick with a blank check for $7,500, which Zwick falsely

represented he would put toward the $17,500 required to

reserve the sewer taps. When Kaclik discovered that Zwick

had personally endorsed and cashed the checks, he asked

that Zwick return the money. After repeated phone calls to

Zwick, Kaclik received $2,500 from Zwick.

Count two involved Zwick's dealings with the Fosnights,

who had obtained an option on property in Zwick's ward in

Ross Township to build and operate an assisted living

facility there. To complete their project, the Fosnights were

required to obtain approval from the Ross Township Board

of Commissioners for various permits, including a

conditional use permit and site plan approval. On

September 9, 1996, after the Township Planning

Commission had already recommended approval of the

conditional use permit, the Board of Commissioners voted

4

to table the permit for further investigation. After that

meeting, Zwick contacted Tim Fosnight and set up a

meeting with him and his brother Aaron at the project site.

Zwick offered to help them obtain the required permits in

exchange for a $15,000 donation to construct a playground

on the grounds of his "pet" project, North Hills Affordable

Housing ("NHAH"). Zwick explained that he could require

the Fosnights to pay for a new traffic light and traffic

studies, which could involve significant costs of up to

$100,000 and lead to considerable delay, but he would not

do so if such a "donation" was made.

The Fosnights made four payments to Zwick totaling

$10,500. Zwick directed them to make out the first two

checks to "CSC"2 and "Cash" totaling $4,500. Zwick cashed

both, and the funds were never received by NHAH. The next

two checks, totaling $6,000, were made out to NHAH.

Nonetheless, upon receipt of the funds, Judith Eakin,

Director of NHAH, wrote Zwick two checks for $6,000 as

payment for the telephone system Zwick was installing for

NHAH, the project Zwick told the Fosnights their

contribution would fund. Two months later, Zwick informed

Eakin that more money was needed to purchase equipment

that would complete the telephone system. When Eakin

told Zwick that NHAH had no additional funds available for

the telephone system, as no additional funds were in hand,

Zwick assured Eakin that a further donation would be

forthcoming from the Fosnights, and that, if the anticipated

donation were not to be received in timely fashion, Zwick

would personally guarantee the sum in question. In

reliance on Zwick's personal guarantee, Eakin was

authorized by her board president to advance Zwick the

money required to purchase the equipment. Accordingly, in

the ensuing two weeks, Eakin issued Zwick two checks

totaling $7,440 made out to "Jim Zwick" as payment for the

phone system. Shortly thereafter, Eakin agreed to issue

Zwick two "replacement" checks for $7,740 when Zwick

informed her that his accountant said the earlier checks

should have been issued to his company, Jim Zwick

Communications Systems, and not to him personally.

Although Zwick provided Eakin with a check for $7,740 to

_________________________________________________________________

2. CSC is an abbreviation for the name of Zwick's company. App. 427.

5

replace the check issued to him personally, when NHAH

attempted to cash it, it was returned from the bank due to

an irregular signature. NHAH never received these funds.

Zwick provided the Fosnights with a traffic study from

his office so they would not have to finance their own, and

the Fosnights did not make a contribution to the costs of

constructing a traffic light. Zwick voted for the approval of

the Fosnights' conditional use permit. He also moved to

approve the Fosnights' final site permit but abstained from

voting on it, explaining that he might put a bid on the

telephone work for the project and did not want to create

the appearance of a conflict of interest.

Count three charged that Zwick had solicited bribes from

Justin Ruff, the owner of Admiral Lawn Service, when he

asked Ruff for "performance bonds" in exchange for

ensuring that Ruff was awarded landscaping contracts with

Ross Township. Although bonds were required for contracts

over $10,000, Ross Township commissioners were not

authorized to solicit or accept them, and certainly not

entitled to cash them. Performance bonds were supposed to

be kept in escrow and returned once the project was

complete. In the summer of 1996, Ruff gave Zwick two

blank checks for $3,500 in connection with a landscaping

contract in Denny Park, Ross Township. Although Ruff was

awarded the contract and performed the work, his checks

were never returned to him; Zwick had cashed them and

kept the proceeds. Zwick eventually repaid Ruff after Ruff

repeatedly asked him to do so. Zwick continued to solicit

bribes from Ruff in connection with various projects,

including $4,500 for a $45,000 project that included

cutting grass and dragging ball fields in Ross Township.

Ruff repeatedly refused to pay Zwick after becoming aware

that Zwick's requests violated Ross Township's policy

regarding performance bonds.

After he was convicted on the three counts, Zwick filed a

motion for judgment of acquittal pursuant to Federal Rule

of Criminal Procedure 29. The District Court denied the

motion on October 5, 1998. The Probation Office prepared

a Presentence Investigation Report recommending that

Zwick be awarded a two-point reduction for acceptance of

responsibility pursuant to U.S.S.G. S 3E1.1(a). However, the

6

Probation Office Report did not recommend awarding the

extra one-point reduction available under S 3E1.1(b)

because the government had to prepare for trial on the

bribery counts. The District Court found that the Probation

Office's conclusion was a reasonable one "[b]ased on the

unusual circumstances and procedural posture of this

case." The District Court also considered that Zwick raised

factual issues at trial, rather than limiting himself to legal

arguments. The District Court sentenced Zwick to

concurrent terms of thirty-three months as to each count,

to be followed by five years of supervised release. Zwick

filed the instant appeal. We have jurisdiction pursuant to

28 U.S.C. S 1291.

II.

Zwick contends that the evidence as to all three counts

of his S 666 conviction is insufficient because the

government failed to prove the existence of any connection

between his conduct and federal funds or programming.

Specifically, he argues that S 666 requires such a

connection, or, alternatively, that the statute is

unconstitutional as applied to him. We exercise plenary

review over questions of statutory interpretation. See United

States v. Hayden, 64 F.3d 126, 128 (3d Cir. 1995).

The federal bribery statute at issue, 18 U.S.C.S 666,

provides in pertinent part:

S 666. Theft or bribery concerning progr ams

receiving Federal funds

(a) Whoever, if the circumstance described in

subsection (b) of this section exists --

(1) being an agent of an organization, or of a Sta te,

local, or Indian tribal government, or any agency

thereof --

. . . .

(B) corruptly solicits or demands for the benefit of

any person, or accepts or agrees to accept,

anything of value from any person, intending to be

influenced or rewarded in connection with any

7

business, transaction, or series of transactions of

such organization, government, or agency involving

anything of value of $5,000 or more;

. . . .

shall be fined under this title, imprisoned not more

than 10 years, or both.

(b) The circumstance referred to in subsection (a) of

this section is that the organization, government, or

agency 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.

Prior to the enactment of S 666 in 1984, the limited scope

of the federal bribery statute and general theft of property

statute hampered the federal government's efforts to reach

crimes affecting federal interests due to tracing

requirements and limitations on application to non-federal

employees. See 18 U.S.C. SS 201, 641. By its terms, S 666

fills these particular voids; it imposes no title or tracing

requirements and covers non-federal employees. The

government only must prove the basic elements of the S 666

offense. However, as Zwick's challenge reveals, the law is

unsettled as to what S 666 requires. In Salinas v. United

States, 522 U.S. 52, 118 S. Ct. 469, 475 (1997), the

Supreme Court resolved one significant issue, namely, that

the government need not show federal funds actually were

involved in or affected by an alleged bribery transaction.

Yet, the Court specifically left open the question before us,

that is, to what extent the statute "requires some other

kind of connection between a bribe and the expenditure of

federal funds." Id. at 474. We had prior occasion in this

Circuit to examine the scope of S 666, see United States v.

Cicco, 938 F.2d 441, 444 (3d Cir. 1991), but we have not

addressed the specific question before us in this case. It is

instructive to review the approaches taken by federal courts

that have considered the extent to which S 666 requires a

relationship between the offense conduct and federal funds

or programs.

8

A. Pre-Salinas

Prior to Salinas, courts evaluated the requisite

relationship under S 666 between a corrupt act and federal

funds or programming from a number of different

perspectives. Several courts viewed the statute's"plain

language" as lacking any requirement, either implicitly or

as an element of the offense, that the government prove

federal money was directly involved in, or traceable in some

way to, the corrupt transaction. Bolstering their view was

the rationale that Congress sought to "cast a broad net" in

protecting the integrity of agencies receiving federal funds

and thus enacted S 666 with the specific intent to eliminate

any tracing requirements that previously had obstructed

prosecution efforts. See United States v. Westmoreland, 841

F.2d 572, 576-578 (5th Cir. 1988) (holding that direct

involvement of federal funds in transaction is not an

essential element of bribery charge under S 666); see also

United States v. Pretty, 98 F.3d 1213, 1218-1219 (10th Cir.

1996) (finding that the defendant was chargeable under

S 666 even if actual money could not be traced to a federal

program); United States v. Paradies, 98 F.3d 1266, 1288-89

(11th Cir. 1996) (agreeing with Westmoreland that S 666

does not require that the government trace the flow of

federal funds to a particular project); United States v.

Valentine, 63 F.3d 459, 464-65 (6th Cir. 1995) (holding that

government does not need to prove that the

misappropriated funds actually came from a federal

program in a theft case); United States v. Simas, 937 F.2d

459, 463 (9th Cir. 1991) (concluding that the government

was not required to trace federal funds to the project at

issue to establish a S 666 violation).

Interpreting a different subsection of S 666, others held

that the program touched by bribery need not be the direct

and actual recipient of $10,000 per year in federal funds.

See United States v. Coyne, 4 F.3d 100, 109-110 (2d Cir.

1993) (finding that S 666 lacks any requirement that the

program at issue be the actual recipient of federal funds);

United States v. Little, 889 F.2d 1367, 1369 (5th Cir. 1989)

(same).

When asked to uphold convictions or find defendants

guilty with no proof of a federal interest in the corrupt act,

9

however, some courts were reluctant to do so. See United

States v. Foley, 73 F.3d 484, 488-493 (2d Cir. 1996)

(reversing Foley's conviction after government did not prove

that corruption in some way touched on federal funds);

United States v. Frega, 933 F. Supp. 1536, 1540-1541 (S.D.

Cal. 1996) (dismissing indictment for failure to allege that

"federal funds were corruptly administered, were in danger

of being corruptly administered, or even could have been

corruptly administered."). Courts in this camp expressed

concern that interpreting S 666 to have no federal interest

requirement would make a federal offense out of routine

local bribery, dramatically changing the state-federal

balance without an express Congressional directive that it

intended to do so. See Frega, 933 F. Supp. at 1540.

Courts finding that a federal connection is required were

comfortable reaching this result even though they agreed

that S 666 does not require tracing of funds or proof of an

effect on federal funds and programs. For example, the

Ninth Circuit's holding in Simas, that tracing is not

required, did not prevent the District Court for the

Southern District of California from concluding in Frega

that S 666 requires a federal connection. Likewise, the

Court of Appeals for the Second Circuit held thatS 666

does not require that the corrupt act actually affected

federal funds in United States v. Bonito, 57 F.3d 167, 172-

173 (2d Cir. 1995), but concluded in a subsequent case

that S 666 does require proof that the corruption has some

connection with federal funds. See Foley, 73 F.3d at 493. A

circuit split was created between the Second and Fifth

Circuits when the Fifth Circuit held that a defendant's

conduct fell within S 666 without specifically requiring a

connection between the corrupt act and the federal funds,

other than the fact that the accepters of the bribes were

local government agents with duties relating to a federally-

funded program. See United States v. Marmolejo, 89 F.3d

1185, 1203 (5th Cir. 1996), aff'd, Salinas v. United States,

118 S. Ct. at 474.3 Neither Foley nor Marmolejo was a

_________________________________________________________________

3. Marmolejo and Foley also parted ways regarding how to determine

whether the transactions at issue are equal to or greater than $5,000 in

value.

10

unanimous decision.4

B. Salinas

On certiorari from the Fifth Circuit's Marmolejo decision,

the Supreme Court did not resolve the broad question

before us of whether defendants can be prosecuted under

S 666 absent a federal interest in the offense conduct, but

instead addressed the narrower question of whether S 666

applies only when the bribe has a demonstrated effect on

federal funds. Salinas, 118 S. Ct. at 472. 5 The Court found

that the statute's "expansive, unqualified language, both as

to the bribes forbidden and the entities covered, does not

support the interpretation that federal funds must be

affected to violate S 666(a)(1)(B)." Id. at 473. The Court

acknowledged that it could depart from a statute's clear

language upon an extraordinary showing of contrary

intentions in the legislative history. See United States v.

Albertini, 472 U.S. 675, 680 (1985). However, because the

statute was enacted to expand the application of federal

bribery provisions to non-federal employees, the Court

found that it would be "incongruous" to restrict S 666 so

_________________________________________________________________

4. In the Foley dissent, Judge Lumbard argued, in essence, that there is

no federal connection requirement. Foley 73 F.3d at 494-497 (Lumbard,

J., dissenting). Rather, the plain language of S 666 simply outlaws bribes

to agents of organizations that receive federal funds: "It is sufficient

that

Foley was an agent of a government that received $10,000 in federal

funds and that he took a bribe involving something worth at least

$5,000." Id. at 495. Taking the opposite view in the Marmolejo dissent,

Judge Jolly endorsed the Second Circuit majority's reasoning in Foley;

he argued that the Marmolejo majority misinterpreted its earlier decision

in Westmoreland, on which it relied, and that S 666 was not intended to

criminalize all acts of bribery involving entities that happened to

receive

some federal funding. Marmolejo, 89 F.3d at 1201-1204 (Jolly, J.,

dissenting).

5. Salinas, a deputy sheriff for Hidalgo County, Texas, was convicted

under S 666 for accepting benefits from a federal prisoner in his custody

in exchange for allowing the prisoner to have "contact visits" with his

wife and girlfriend. See Marmolejo, 89 F.3d at 1191. Hidalgo County had

an agreement with the federal government to house federal prisoners in

exchange for grants for improving its prison as well as payment per day

for each federal prisoner housed. Id.

11

that it applies only when a demonstrated effect on federal

funds is shown. Salinas, 118 S. Ct. at 473. Significantly,

the Court found only that the "text of S 666(a)(1)(B) is

unambiguous on the point under consideration here." Id. at

475 [emphasis added]. The Court did not reach a holding

on whether another kind of federal connection was required

under S 666, believing that the facts of Salinas' case

presented a sufficient connection:

We need not consider whether the statute requires

some other kind of connection between a bribe and the

expenditure of federal funds, for in this case the bribe

was related to the housing of a prisoner in facilities

paid for in significant part by federal funds themselves.

And that relationship is close enough to satisfy

whatever connection the statute might require.

Id. at 474. The Court accordingly rejected a challenge to the

constitutionality of the provision, at least as applied to

Salinas:

Furthermore, there is no serious doubt about the

constitutionality of S 666(a)(1)(B) as applied to the facts

of this case. Beltran was without question a prisoner

held in a jail managed pursuant to a series of

agreements with the Federal Government. The

preferential treatment accorded to him was a threat to

the integrity and proper operation of the federal

program. Whatever might be said about S 666(a)(1)(B)'s

application in other cases, the application of

S 666(a)(1)(B) to Salinas did not extend federal power

beyond its proper bounds.

Id. at 475.

C. Post-Salinas

Courts clearly have recognized that Salinas left open the

question of whether S 666 requires that a federal interest be

implicated by the offense conduct. See United States v.

Dakota, 188 F.3d 663 (6th Cir. 1999) (finding that in

Salinas, "the nature of any necessary connection is left

unanswered"); United States v. Santopietro, 166 F.3d 88, 93

(2d Cir. 1999) (finding that the Supreme Court "was careful

12

to note that the statute survived the constitutional as-

applied challenge because the benefit obtained by means of

the bribe -- the preferential treatment -- `was a threat to

the integrity and proper operation of the federal

program.' "). Therefore, Salinas has not prevented courts

from reaching conflicting conclusions on whether S 666

requires proof of a federal interest in the offense conduct.

The Sixth Circuit held post-Salinas that S 666 does not

require proof of a connection between the offense conduct

and federal funds or programming. See Dakota, 188 F.3d at

668 (finding no connection requirement based on its

determination in its pre-Salinas decision in Valentine, a

theft case, and providing no additional case cites or

reasoning). Taking the opposite view, the Second Circuit

held that its holding in Foley -- that some federal

connection was required -- remained good law post-

Salinas. See Santopietro, 166 F.2d at 93. The District Court

of Massachusetts determined post-Salinas that S 666 was

unconstitutional as applied to the defendant in that case,

reasoning that the conduct at issue was not related to a

legitimate national problem as required by South Dakota v.

Dole, 483 U.S. 203, 207-08 (1987) and thus Congress

exceeded its bounds under the spending clause. See United

States v. McCormack, 31 F. Supp.2d 176 (D. Mass. 1998).6

_________________________________________________________________

6. Judge Gertner comprehensively evaluated whether "S 666 give[s]

federal authorities a blank check to prosecute ostensibly significant acts

of corruption involving the Malden Police Department just because the

department receives a certain level of federal funds." Id. at 181. While

expressing the view that the relevant language inS 666(a)(1)(B), "in

connection with any business or transaction," is ambiguous and requires

an examination of legislative history, id. at 186 (citing Foley, 73 F.3d

at

490 - 492 and Frega, 933 F. Supp. at 1543), Judge Gertner concluded

that Salinas foreclosed her from so ruling based on Salinas' holding that

S 666(a)(1)(B) is clear and unambiguous. McCormack, 31 F. Supp.2d at

186. Yet, the Court acknowledged that Salinas expressly left open the

possibility that S 666(a)(1)(B) is unconstitutional as applied to cases

that

lack some connection between the corrupt activity and federal funds or

programming. The Court also found McCormack's prosecution under

S 666 deficient in another respect relating to the "$5,000 value"

requirement. Id. at 189.

13

III.

Zwick asks us to add our voice to the chorus of opinions

regarding the need to prove that a federal interest was

implicated by corrupt acts in a S 666 prosecution. To reach

our own determination of whether S 666 requires such

proof, we begin by examining the statutory language itself.

See Collinsgru v. Palmyra Bd. of Educ., 161 F.3d 225, 233

(3d Cir. 1998) (evaluating the Individuals with Disabilities

Education Act) (citing United States v. Ron Pair Enters., Inc.,

489 U.S. 235 (1989)).

Section 666(a)(1)(B) requires proof that a bribe was given

"in connection with" any business or transaction of an

agency described in subsection (b), namely those receiving

funds under certain federal assistance programs. The

language does not state explicitly that the government must

show a connection between the bribe and federal interests.

Yet, the title of S 666, "Theft or bribery concerning

programs receiving Federal funds," implies that a federal

connection is anticipated, as does the statute's reference

only to "agents" of entities receiving federal funds who

accept bribes "in connection with" the business of the

organization receiving federal funds.

The wording of this statute is far from straightforward in

many respects. Our reading of the statute, and the struggle

of other courts to construe its meaning, lead us to conclude

that S 666 can hardly be described as "plain to anyone

reading the Act." Gregory v. Ashcroft, 501 U.S. 452, 467

(1991) (interpreting Federal Age Discrimination in

Employment Act).7 The only thing plain about the statute is

that it yields two plausible alternative interpretations on

the issue raised by Zwick. While noting that the fact

_________________________________________________________________

7. We find that nothing in Salinas prevents us from determining that

S 666(a)(1)(B) is ambiguous on the issue of whether there is a federal

connection requirement, thus we disagree with the determination on this

point reached by the District Court in McCormack. See McCormack, 31

F. Supp.2d at 186 (finding that "Salinas has shut off this avenue of

analysis."). Salinas found S 666(a)(1)(B) clear and unambiguous only on

the question of whether the government must prove that the corrupt

activity had a demonstrated effect on federal funds or programming.

Salinas, 118 S. Ct. at 475.

14

pattern in Salinas satisfied any federal connection test that

S 666 might require, the Supreme Court pointedly skirted

the issue of whether the statute clearly mandated such a

connection, suggesting that the possibility of more than one

interpretation is valid. The most literal interpretation --

that the statute lacks a federal connection requirement --

is troubling from an interpretative standpoint in that it

broadens the range of activity criminalized by the statute

and alters the existing balance of federal and state powers

by encompassing acts already addressed under state law in

which the federal government may have little interest. We

cannot embrace such a broad reading of this federal

criminal law unless that is the clear directive from

Congress. Given the statute's ambiguity on this question,

we will consult the legislative history. See Director, Office of

Workers' Compensation Programs v. Sun Ship, Inc., 150

F.3d 288, 291 (3d Cir. 1998); Collinsgru, 161 F.3d at 233.

Before proceeding further, it is worth reviewing our prior

analysis of S 666, albeit on a different issue, in United

States v. Cicco, 938 F.2d at 444. In Cicco , we considered

whether S 666 is sufficiently broad to cover the solicitation

of election day services in exchange for municipal

employment.8 On appeal, we recognized that the statutory

language could be construed literally to cover Cicco's

conduct, but found that "the language of the drafters of

S 666 is also consistent with an intention of focusing solely

on offenses involving theft or bribery" in a classic sense.

Cicco, 938 F.2d at 444. Thus, we found that the statute

was ambiguous and turned to the legislative history. Id.9

_________________________________________________________________

8. The District Court entered a judgment of acquittal in Cicco after

determining that Congress did not intend S 666 to apply to Cicco's

actions and that the government's interpretation of the statute was

unconstitutionally vague and deprived Cicco of fair notice. Id. at 444.

9. In outlining our approach in Cicco, we stated that examining the reach

of a federal criminal statute requires close attention to statutory

language, legislative history, and purpose to strictly determine the scope

of forbidden conduct. Id. (citing Dowling v. United States, 473 U.S. 207,

213 (1985)). We learned through our legislative history review in Cicco

that Congress enacted S 666 to "protect federal funds by authorizing

federal prosecution of thefts and embezzlement from programs receiving

substantial federal support even if the property no longer belonged to the

federal government . . . [and] to enlarge and clarify the class of persons

subject to the federal bribery laws" to go beyond only those who can be

considered federal public officials. Cicco, 938 F.2d at 445 (citations

omitted).

15

As in Cicco, we now face a choice between a highly literal

interpretation -- that no federal interest requirement is

specifically set forth in the statute -- and a plausible, albeit

more contextual, alternative. Thus, as in Cicco, we will refer

to the legislative history for assistance in determining what

Congress intended. See Collinsgru, 161 F.3d at 233.10

The legislative history of S 666 explains that the statute

was enacted to correct deficiencies in existing law by

"creat[ing] new offenses to augment the ability of the United

States to vindicate significant acts of theft, fraud, and

bribery involving Federal monies that are disbursed to

private organizations or State and local governments

pursuant to a Federal program." S. REP. NO. 98-225, 369-

370 (1984) (emphasis added), reprinted in 1984

_________________________________________________________________

10. Examination of and references to the legislative history are not

uncommon among the decisions that analyze S 666. The Supreme Court

in Salinas referred to Congress' intentions in enacting S 666, although it

did not review or cite Congressional reports directly. See Salinas, 118 S.

Ct. at 474 (recounting Congress's intent in enactingS 666 based on a

"chronology [of case law] and the statutory language" and rejecting

Salinas' interpretation of the legislative history). See also Bonito, 57

F.3d

at 172 (citing legislative history noted by Bonito and ultimately

rejecting

Bonito's arguments); Valentine, 63 F.3d at 463 (reviewing legislative

history to determine whether it supported Valentine's argument);

Westmoreland, 841 F.2d at 576-577 (reviewing legislative history " `as an

additional tool of analysis' with the recognition that our inquiry will

result in `a limitation on the plain meaning of the statutory language'

only under exceptional circumstances") (quoting Garcia v. United States,

469 U.S. 70, 75 (1984)); Frega, 933 F. Supp. at 1542-1543 (reviewing

legislative history after finding statute ambiguous because interpretation

not requiring federal connection would alter federal-state balance absent

a clear Congressional directive). Courts interpreting subsection (b) have

followed a similar course. See United States v. LaHue, 170 F.3d 1026,

1030 (10th Cir. 1999) ("Like other courts that have wrestled with an

interpretation of section 666(b), we look to the legislative history and

the

underlying purpose of the statute for guidance"); United States v.

Copeland, 143 F.3d 1439, 1442 (11th Cir. 1998) (having reached the

conclusion on a "plain reading of S 666(b), we normally would not engage

in any additional analysis. However, since some circuits have found

S 666(b) to be ambiguous on its face, it is worth noting that our

conclusion is consistent with the statute's legislative history."); Coyne,

4

F.3d at 109 (reviewing legislative history regarding whether program at

issue must be actual recipient of federal funds).

16

U.S.C.C.A.N. 3182, 3510-11. A similar expectation is

reflected in the stated purpose of the statute, described as

protecting the integrity of vast sums of money distributed

through Federal programs from theft, fraud, and undue

influence by bribery. Indeed, the title of the relevant section

of this portion of the legislative history, "Program Fraud

and Bribery," suggests that Congress envisioned that a

federally funded program would be the target or victim of

the corrupt activity punishable under S 666.

There is no doubt that the legislative history promotes a

broad interpretation of the term "Federal program involving

a grant, a contract, a subsidy, a loan, a guarantee,

insurance, or another form of Federal assistance" to

supplement the application of federal bribery and theft

statutes. S. REP. NO. 98-225, 369-370. However, those gaps

to be filled by this statute relate to elements in the federal

bribery and theft statutes that increased the difficulty of

reaching crimes in which there was a real federal interest.

Under the theft of federal property statute, 18 U.S.C. S 641,

the federal government could prosecute only when it could

establish that the stolen property was property of the

United States, which often was impossible if title had

passed before the property was stolen or when federal

funds were so commingled with non-federal funds that the

federal character of those funds could not be shown.

Perhaps more relevant for our purposes was the federal

bribery statute, 18 U.S.C. S 201, which was construed to be

inapplicable to some or all employees of private

organizations receiving federal funds, making it more

difficult for federal authorities to prosecute bribery even

when federal interests were at stake. The goal was to

overcome impediments to reaching actions in which there

was a federal interest, not to federalize crimes in which a

federal interest was lacking.

Not surprisingly, the Senate Report notes that the intent

of the statute is "to reach thefts and bribery in situations

of the types involved in the Del Toro, Hinton, and Mosley

cases cited herein," three cases in which the corrupt

transaction clearly implicated federal interests. S. REP. No.

98-225, 369-370. In United States v. Del Toro, 513 F.2d 656

(2d Cir. 1975), the defendants conspired to bribe Pedro

17

Morales, the Assistant Administrator of the Harlem-East

Harlem Model Cities Program, a program that wasfinanced

and supervised by the United States Department of

Housing and Urban Development ("HUD"). The federal

government paid one hundred percent of the cost of the

program, and eighty percent of its salaries, including

Morales's salary. Id. at 658, 661. The defendants wanted

Morales to use his position with the program to secure

Model Cities an office space lease in a building for which

one of the defendants was the rental agent. Id. at 658.

Because Morales was a city employee, and not a federal

one, however, the Second Circuit Court of Appeals

concluded that Morales was not a "public official" for

purposes of S 201: "We do not believe that Morales was

acting `under or by authority of any such department,

agency, or branch' of the federal government. He was a city

employee, carrying out a task delegated to him by his

superior, another city employee." Id. at 662. Yet, the federal

interest in Morales' corrupt transaction is apparent: the

bribed official administered a program significantly funded

by federal monies and the bribe was related to the program

administered by the official.

In the other two decisions cited in the Senate Report, the

Seventh Circuit determined that non-federal employees

could be considered "public officials" for purposes of S 201,

but this decision turned on the fact that the defendants

exercised considerable discretion in the administration of

federal funds and the bribery related to the defendant's

administration of the program, which for our purpose

suggests that a federal interest clearly was implicated. See

United States v. Hinton, 683 F.2d 195, 198-200 (7th Cir.

1982); United States v. Mosley, 659 F.2d 812, 816 (7th Cir.

1981). In Hinton, the defendants were officials of United

Neighborhoods, Inc., a non-profit corporation that had

entered into a contract with the City of Peoria to administer

funds that HUD awarded to Peoria. The defendants had

discretion in administering the federal funds, and the

federal funds paid the defendants' salaries and the entire

cost of the program they administered. Significantly, the

bribery related to rehabilitation contracts that fell within

18

the purview of the program and were paid with federal

funds. Hinton, 683 F.2d at 196-99.11

In Mosley, the defendant, an employee of the State of

Illinois Bureau of Employment Security ("IBES"), was

convicted of receiving bribes in exchange for giving

preferential treatment to Comprehensive Employment and

Training Programs Act ("CETA") applicants when he

evaluated and referred applicants for CETA-funded jobs.

Mosley, 659 F.2d at 813. The federal government funded

the CETA program, the CETA jobs, and all of IBES's costs,

including Mosley's salary. Id. As in Hinton, the defendants

could be considered public officials because the program in

Mosley was funded by the federal government, the

defendant exercised discretion in the administration of

federal funds, and the bribery related to the defendant's

administration of the program. Again, the federal interest is

clear.

The Senate Report's examples of intended S 666 offenses

involved situations in which the corrupt acts clearly

implicated a federal interest, as the acts were closely tied to

the funded programs.12 Another comment in the Senate

_________________________________________________________________

11. In affirming Hinton, the Supreme Court determined that individuals

employed by private organizations that receive federal funds may be

covered by S 201, at least if an individual possesses "some degree of

official responsibility for carrying out a federal program or policy."

Dixson

v. United States, 465 U.S. 482, 499-500 (1984). In limiting the

parameters of its holding, however, the Supreme Court cautioned:

By finding petitioners to be public officials within the meaning of

section 201(a), we do not mean to suggest that the mere presence of

some federal assistance brings a local jurisdiction and its

employees

within the jurisdiction of the federal bribery statute or even that

all

employees of local organizations responsible for administering

federal grant programs are public officials within the meaning of

section 201(a). To be a public official under section 201(a), an

individual must possess some degree of responsibility for carrying

out a federal program or policy . . . individuals who work for

block

grant recipients and business people who provide recipients with

goods and services can not be said to be public officials under

section 201(a) unless they assume some duties of an official

nature.

Id. at 500.

12. See also LaHue, 170 F.3d at 1031 ("In all three cases [Del Toro,

Hinton, and Mosley], the organization in question received federal

19

Report illustrates that an entity's receipt of federal funds

does not automatically establish a federal interest in

corrupt activity of employees of that entity:

For example, if a government agency lawfully

purchases more than $10,000 in equipment from a

supplier, it is not the intent of this section to make a

theft of $5,000 or more from the supplier a Federal

crime.

S. REP. NO. 98-225, 370. Thus, nothing in the legislative

history suggests that Congress intended to go well beyond

the examples in Del Toro, Hinton, and Mosley to make S 666

applicable when no federal interest is implicated by certain

offense conduct.

Not only does the legislative history of S 666 lead us to

conclude that the statute should be read to incorporate a

federal interest requirement, but several well-established

principles of statutory construction dictate this result.

According to the Supreme Court, ambiguity in the language

of a criminal statute should be resolved in favor of the

defendant. See United States v. Bass, 404 U.S. 336, 347

(1971) ("In various ways over the years, we have stated that

`when choice has to be made between two readings of what

conduct Congress has made a crime, it is appropriate,

before we choose the harsher alternative, to require that

Congress should have spoken in language that is clear and

definite.' ") (quoting United States v. Universal C.I.T. Credit

Corp., 344 U.S. 218, 221-22 (1952)). Congress has not

"clearly and definitely" instructed thatS 666 should be

applied even absent some federal interest in the offense

conduct. We should refuse the broader reading urged by

the government and adopt the narrower construction of the

activity criminalized by this provision. See also LaHue, 170

F.3d at 1029 (in evaluating another subsection ofS 666,

"we must exercise particular restraint in interpreting federal

criminal statutes") (citing Dowling, 473 U.S. at 214).

_________________________________________________________________

program funds as the intended recipient, and each was charged with the

responsibility for administering or spending the federal grant monies to

benefit the intended beneficiaries.").

20

The Supreme Court also has instructed us that we

should not interpret a statute in a manner that significantly

alters the federal-state balance unless Congress has clearly

indicated that it intended to do so. See Bass, 404 U.S. at

349 ("In traditionally sensitive areas, such as legislation

affecting the federal balance, the requirement of clear

statement assures that the legislature has in fact faced,

and intended to bring into issue, the critical matters

involved in the judicial decision."); see also McCormack, 31

F. Supp.2d at 186-187; Frega, 933 F. Supp. at 1540 (citing

Bass). If we adopted the government's interpretation that

S 666 requires no connection between the offense conduct

and federal funds or programming, S 666 would criminalize

a host of corrupt acts committed by state agents, among

others, by virtue of the fact that all states receive at least

$10,000 in federal funds per year. See McCormack, 31 F.

Supp.2d at 186. This result raises significant federalism

concerns, turning traditionally local conduct into a matter

for federal enforcement involving a substantial extension of

federal law enforcement resources. See Bass, 404 U.S. at

350. We will not transform S 666 into a general federal anti-

corruption statute when Congress has not clearly expressed

its intention to do so. See McCormack, 31 F. Supp.2d at

186 (expressing concern about adopting government's

interpretation); Frega, 933 F. Supp. at 1540. As the

Supreme Court stated in Bass, "consistent with our regard

for the sensitive relation between federal and state criminal

jurisdiction, our reading preserves as an element . . . a

requirement suited to federal criminal jurisdiction alone."

404 U.S. at 351.13

_________________________________________________________________

13. In interpreting the illegal gratuity statute, 18 U.S.C. S

201(c)(1)(A),

Justice Scalia stated for an unanimous Court that"a statute in this field

that can linguistically be interpreted to be either a meat axe or a

scalpel

should reasonably be taken to be the latter. Absent a text that clearly

requires it, we ought not expand this one piece of the [illegal gratuity]

regulatory puzzle so dramatically as to make many other pieces misfits."

United States v. Sun-Diamond Growers of California, ___ U.S. ___, 119 S.

Ct. 1402, 1410 (1999) (holding that S 201(c)(1)(A) requires that the

government prove a link between a thing of value conferred upon a

public official and a specific official act for or because of which it was

given). We point out, however, that SS 201 and 666 are not necessarily

parallel in their applications, so these remarks do not dictate a

substantive outcome here. See United States v. Jennings, 160 F.3d 1006,

1015 fn 4 (4th Cir. 1998) (outlining distinctions between application of

two provisions but not deciding whether S 666, like S 201, prohibits

gratuities).

21

Finally, when a statute is unclear, we will construe it so

as to avoid constitutional concerns, assuming that such

construction does not amount to a rewriting of the statute.

See Albertini, 472 U.S. at 680. InterpretingS 666 to have no

federal interest requirement produces serious concerns as

to whether Congress exceeded its power under the

Spending Clause in enacting this statute. See McCormack,

31 F. Supp.2d at 187-89.14 To pass muster under the

Spending Clause, legislation regulating behavior of entities

receiving federal funds must, among other things, be based

upon a federal interest in the particular conduct. See South

Dakota v. Dole, 483 U.S. 203, 207 (1987). Applying S 666 to

offense conduct, absent evidence of any federal interest,

would appear to be an unconstitutional exercise of power

under the Spending Clause.

Thus, we hold that S 666 requires that the government

prove a federal interest is implicated by the defendant's

offense conduct. In so holding, we part ways with the Sixth

Circuit's holding in Dakota and agree with the result

reached by the Second Circuit, as expressed most recently

in Santopietro, and the District Court for the Southern

District of California in its pre-Salinas Frega decision.

Given that the Supreme Court found a sufficient federal

connection existed in Salinas, we surmise that a highly

attenuated implication of a federal interest will suffice for

purposes of S 666.15 We can conceive of several ways in

which the government could prove a federal interest in a

S 666 in light of this threshold. The amount of federal funds

could provide the requisite federal implication, even if the

purpose of those funds has no explicit relationship to the

subject of the bribe. If, for example, in a given year, the

_________________________________________________________________

14. According to the Second Circuit, "Salinas may be read to indicate

that the `threat to the integrity and proper operation of [a] federal

program' created by the corrupt activity is necessary to assure that the

statute is not unconstitutionally applied." Santopietro, 166 F3d at 93

(citing Salinas, 118 S. Ct. at 475).

15. In Salinas, the Supreme Court found that the federal government's

interest in the housing of federal prisoners in federally-funded local

facilities was sufficiently implicated when a prison official accepts

bribes

from a federal prisoner in exchange for permitting the prisoner to have

conjugal visits. See Salinas, 118 S. Ct. at 474.

22

greater part of a township's budget came from federal

funds, bribery of a township agent for any purpose might

be said to implicate federal interests. Absent that situation,

the offense conduct would have to somehow implicate a

particular substantive federal interest, as the Supreme

Court found it did in Salinas, where federal funds were

being provided to house federal prisoners in local prisons.

Examples from other cases may be illustrative. The

Second Circuit found a sufficient federal connection in

Santopietro when real estate developers made corrupt

payments to defendants to secure defendants' influence

with city agencies overseeing housing and urban

development programs that were the beneficiaries of federal

funds. See Santopietro, 166 F.3d at 93 - 94. The Second

Circuit concluded that "this is not a case where the

transactions sought to be influenced concerned one

department of a city and the requisite $10,000 of federal

funds were received by a totally unrelated department." Id.

However, the Court noted that the federal interest

requirement "would not permit the Government to use

section 666(a)(1)(B) to prosecute a bribe paid to a city's

meat inspector in connection with a substantial transaction

just because the city's parks department had received a

federal grant of $10,000." Id., at 93.

The District Court in Frega concluded that bribing state

court judges to influence decisions in certain cases did not

produce the requisite federal interest when California

received federal funds for purposes not related to the state

courts. See Frega, 933 F.Supp. at 1542 - 1543. The Court

hypothesized, however, that some circumstances involving

state court judges might produce the requisite federal

connection, such as if the state court system received

federal funding for the purpose of appointing counsel in

death penalty habeas proceedings, and a state court judge

accepted a bribe in exchange for appointing a particular

attorney as habeas counsel. See id.

There was evidence at Zwick's trial revealing that the

federal funds were provided to Ross Township for

reimbursement for emergency snow removal and funding of

a project to prevent stream bank erosion.16 These uses bear

_________________________________________________________________

16. The government presented proof that Ross Township received in

excess of $10,000 in federal funds in a one-year period from two

23

no obvious connection to Zwick's offense conduct, which

involved sewer access, use permits and landscaping

performance bonds. However, we will not direct the entry of

a judgment of acquittal because the District Court ruled

that S 666 did not require, and thus the government need

not present proof, that Zwick's conduct implicated a federal

interest.17 Instead, we will vacate Zwick's conviction and

remand for a new trial.

IV.

Zwick raises several other challenges to his S 666

conviction that we find to be without merit. In connection

with the conduct charged in count one, Zwick argues that

there was insufficient evidence establishing that he acted

as an agent of an entity that received the requisite amount

of federal funds as S 666 requires. Zwick contends that the

evidence presented at trial shows that Zwick was acting as

an agent of Lowries Run, not as an agent of Ross Township.

The government's theory at trial was that Zwick had offered

to obtain sewer access for Kaclik in his capacity as an

_________________________________________________________________

sources. First, Ross Township applied for federal reimbursement under

a Presidential Declaration of Major Disaster for costs associated with the

blizzard of 1996 and consequently received $30,587 in June of 1996

from the Federal Emergency Management Agency ("FEMA"). The funds

first flowed through the Pennsylvania Emergency Management Agency

("PEMA"), but they were segregated from other Commonwealth funds

prior to distribution to Ross Township. Second, the United States Army

Corps of Engineers carried out and funded a $326,200 project, to which

Ross Township contributed $65,300, to prevent the erosion of a stream

bank in Ross Township.

17. At a pretrial conference, counsel discussed with the District Court

whether S 666 requires a showing of a federal interest in Zwick's

conduct. Counsel for the government informed the District Court that

"there are crucial issues as to what would be admissible and arguable at

trial that turn on what the jury instructions that you issue will be. For

example, we would need a determination on whether there does or does

not need, as we maintain, need to be a nexus between the bribe and

receipt of federal funds by Ross Township." App. 269. In response, the

District Court stated at least twice that "there doesn't have to be any

relationship." App. 270, line 9, App. 271, lines 3-4.

24

agent of Ross Township, not of Lowries Run, and the

government did not offer any proof that Lowries Run

received federal funds. Zwick concludes that his conviction

on count one should be reversed.

Under S 666(b), the government must establish that at

least $10,000 in federal funds within a one-year period

were received by the entity for which the defendant was

acting as an agent. A defendant advancing a claim based on

insufficiency of the evidence carries a heavy burden, as we

apply a particularly deferential standard in reviewing this

type of claim. United States v. Dent, 149 F.3d 180, 187 (3d

Cir. 1998). We do not weigh the evidence or determine the

credibility of the witnesses. Id. Rather, viewing the evidence

in the light most favorable to the government, we will

sustain the verdict if any rational trier of fact could have

found the essential elements of the crime beyond a

reasonable doubt. Id.

The Lowries Run Sanitary Authority ("Lowries Run") is a

joint venture between Ross Township and the McCandless

Township Sanitary Authority; two of the members of its

governing board are appointed by Ross Township, and two

are appointed by McCandless Township. Lowries Run board

members need not be commissioners from Ross Township.

Zwick was selected as a member of the Lowries Run board,

but not in his capacity as a Ross Township commissioner.

Lowries Run operates independently from Ross Township; it

has its own bank account that is administered by the

McCandless Sanitary Authority, and money that it receives

belongs to Lowries Run, not Ross Township.

At trial, Kaclik testified that he could have applied to

either Ross Township or Lowries Run for sewer access for

his project, Shannopin Square II. Kaclik testified further

that he understood that, in exchange for his money, Zwick

would influence Ross Township to approve Kaclik's sewer

access application; although he had the option of tapping

into either the Ross Township or the Lowries Run sewer

system, he preferred the Township option because it was

less expensive. App. 732, 758-59. Thomas D. Lavorini,

Manager of Ross Township, testified that he believed Kaclik

approached Ross Township about obtaining access to the

Ross Township sewer line, and that Lavorini may have had

25

a discussion with Zwick about Kaclik's request. App. 658-

59. Kaclik also testified that Zwick had told him he would

obtain the necessary Republican and Democratic votes and

that Zwick cashed Kaclik's check so that the Township

would not know the source of the money. App. 733, 740-

41. Both of Zwick's comments suggest Zwick was offering to

deal with the Township, and not Lowries Run, on Kaclik's

behalf.

The substance of Kaclik's testimony suggests that he had

some confusion regarding the difference between the

Township and Lowries Run, and there was documentary

evidence that the only formal application Kaclikfiled was

with Lowries Run. App. 751-52, 761-62. However,

assuming a jury found Kaclik and Lavorini credible, this

evidence is not so compelling that it could have prevented

a jury from finding, based on the evidence before it, that

Zwick was acting as an agent of Ross Township during the

sewer access transactions. Thus, we reject Zwick's

argument.

With respect to count two, Zwick also argues that the

government failed to establish that Zwick intended to be

influenced "in connection with any business, transaction,

or series of transactions of such organization, government,

or agency involving anything of value of $5,000 or more."

See 18 U.S.C. S 666(a)(1)(B) (emphasis added). According to

Zwick's interpretation of S 666, the transaction or

transactions must be worth at least $5,000 to Ross

Township, not to the other entities involved. He also claims

that the transactions involved in count two were not worth

$5,000 or more as S 666 requires, but rather worth only

$700, the cost of the conditional use permit and thefinal

site plan that Zwick offered to help the Fosnights obtain.

First, we disagree with Zwick's reading of the statute

regarding valuation of the $5,000 element. We find that the

plain language of the statute does not require that value be

measured from the perspective of the organization,

government, or agency. See 18 U.S.C. S 666(a)(1)(B)

(prohibiting bribery "in connection with any business,

transaction, or series of transactions of such organization,

government, or agency involving anything of value of $5,000

or more" (emphasis added)); see also Santopietro, 166 F.3d

26

at 93 ("there is no requirement that the corrupt

transactions are worth $5,000 or more to the entity

receiving the federal funds"); United States v. Marmolejo, 89

F.3d 1185 (5th Cir. 1996)18 (finding that the $5,000 value

element was designed to limit application of S 666 to

significant corrupt transactions, not to restrict the manner

in which or the perspective from which that value is to be

calculated). See also United States v. Apple, 927 F. Supp.

1119, 1126 (N.D. Ind. 1996) (concluding that the

government is not required "to show that the thing that

held value of over $5,000 held that value for" the entity);

United States v. Vona, 842 F. Supp. 1534, 1536 (W.D.N.Y.

1994) (finding that the Act does not require that the

defendant gain $5,000 or that the victim lose $5,000, but

that "as long as the overall transaction or the target of the

bribe is valued at $5,000 or more, the element of the crime

is satisfied"); United States v. Mongelli, 794 F. Supp. 529,

530 (S.D.N.Y. 1992) ("The $5,000 triggering provision

should thus be interpreted as intended to require that

substantial matters of that actual value be involved, not

that the agency be at risk of losing that amount.").19

Second, we reject Zwick's argument that the transactions

at issue were worth less than $5,000. Significantly, the

Fosnights agreed to pay Zwick $15,000 for his assistance,

which indicates that the value of the transactions was well

_________________________________________________________________

18. In Marmolejo, defendant local officials agreed to provide a prisoner

with conjugal visits in exchange for $6,000 a month and $1,000 for each

visit. Id. at 1191. To value the transactions at issue, the Court looked

to

"traditional valuation methods," specifically, what a person in the

marketplace would be willing to pay for the transaction. Id. at 1193.

19. We also reject Zwick's argument that we should follow the Second

Circuit in requiring that the value be determined from Ross Township's

perspective. For this argument, Zwick relies on the Second Circuit's

ruling in Foley that the transaction must be valued from the perspective

of the entity receiving the funds. Foley, 73 F.3d at 493. Regardless of

the

merits of Zwick's claim, the Second Circuit has since abandoned that

construction. See Santopietro, 166 F.3d at 93 ("[T]o the extent that Foley

required the Government to plead and prove that the transaction

involved something of value to the governmental entity that received the

requisite amount of federal funds, that narrowing construction of the

statute must . . . be discarded."). Thus, Zwick's reliance on Foley is

misplaced.

27

above $700 and the $5,000 minimum. App. 424 - 425. See

Marmolejo, 89 F.3d at 1194 (finding that the value of the

conjugal visits was more than $5,000, because the prisoner

was willing to pay $6,000 a month plus $1,000 per visit for

them). There was evidence at trial that the Fosnights would

have lost the $10,000 they paid to the owners of the

property had their conditional use permit not been

approved. App. 420-21, 465. The overall value of the

Fosnight project was $4.6 million, and Ross Township

would receive $90,000 in tax benefits from the project on a

yearly basis, as well as $6,939 in permit fees before the

project could go forward. App. 439, 442. The Fosnight

project was clearly a significant transaction within the

intended reach of the statute. Because we believe that there

was substantial evidence from which the jury could have

found that the $5,000 element was satisfied, we reject

Zwick's challenge to the calculation of value underS 666

with respect to count two.

We also are not persuaded by Zwick's argument,

applicable to all counts, that the District Court improperly

instructed the jury that the future value of the transaction

can be taken into account. Zwick cites the Sixth Circuit's

decision in Valentine that the government could not

aggregate the values of numerous thefts that occurred over

a three-year period in order to meet the $5,000 threshold

under S 666(a)(1)(A), the theft provision. See Valentine, 63

F.3d at 464. Valentine is simply inapposite. Under the theft

provision, the stolen property must be worth $5,000, while

the bribery provision looks to the value of the underlying

business or transaction. Compare 18 U.S.C.S 666(a)(1)(A)

(prohibiting theft of "property that . . . is valued at $5,000

or more") with 18 U.S.C. S 666(a)(1)(B) (prohibiting bribery

"in connection with any business, transaction, or series of

transactions of such organization, government, or agency

involving anything of value of $5,000 or more"). Further,

unlike in Valentine, the government in this case did not

attempt to proffer evidence of the value of transactions or

business outside of the statutory period in order to satisfy

the $5,000 threshold. Here, the references to Ross

Township's future revenues from the transactions were

actually evidence of their current value. Even without

reference to future revenues, there is substantial evidence

28

establishing that the present value of the transactions and

business involved in each of counts one, two, and three was

at least $5,000. The sewer taps that Zwick offered to obtain

for Kaclik were clearly worth more than $5,000, as Kaclik

was willing to pay $17,500 to ensure that he received them;

the contracts that were the subject of the bribery at count

three were worth $45,000; and the permits in count two

were worth more than $5,000 to the Fosnights, because, as

detailed above, they were willing to pay Zwick $15,000 to

ensure that they received them and would have lost

$10,000 if they did not receive them in a timely manner.

V.

Zwick's final contention is that the District Court erred in

failing to award him an additional point reduction in his

offense level for acceptance of responsibility pursuant to

U.S.S.G. S 3E1.1(b). We give great deference to the District

Court's evaluation of the defendant's acceptance of

responsibility, but exercise plenary review of the Court's

construction of S 3E1.1. See United States v. Ceccarani, 98

F.3d 126, 129 (3d Cir. 1996). We review the District Court's

determinations of fact for clear error. Id.

Section 3E1.1 provides:

(a) If the defendant clearly demonstrates acceptan ce of

responsibility for this offense, decrease the offense level

by 2 levels.

(b) If the defendant qualifies for a decrease un der

subsection (a), the offense level determined prior to the

operation of subsection (a) is level 16 or greater, and

the defendant has assisted authorities in the

investigation or prosecution of his own misconduct by

taking one or more the following steps:

(1) timely providing complete information to the

government concerning his own involvement in the

offense; or

(2) timely notifying authorities of his intention to

enter a plea of guilty, thereby permitting the

government to avoid preparing for trial and

29

permitting the court to allocate its resources

efficiently,

decrease the offense level by 1 additional level.

The District Court awarded Zwick the two-point

reduction provided in S 3E1.1(a). At issue here is the

Court's rejection of the one-point reduction under

S 3E1.1(b). Section 3E1.1(b) focuses on the timeliness of a

defendant's offer of information or notice of intent to plead

such that the defendant provides an opportunity to the

government and court to conserve resources. See U.S.S.G.

S 3E1.1, App. Note 6 ("For example, to qualify under

subsection (b)(2), the defendant must have notified

authorities of his intention to enter a plea of guilty at a

sufficiently early point in the process . . . ."); United States

v. Narramore, 36 F.3d 845, 847 (9th Cir. 1994) ("The

additional reduction in section (b) with which we are

concerned, is unlike the initial reduction in section (a), for

it does not rest upon the demonstration of contrition.

Section (b) allows the defendant to earn an additional

reduction by providing timely notice of his intention to

plead guilty, and it thus creates an incentive for an early

plea").

Parsing section 3E1.1(b), it directs the sentencing judge

to decrease the offense level by one additional level if 1) the

defendant is entitled to the two-point reduction under

S 3E1.1(a); 2) the defendant's offense level is 16 or greater;

and 3) the defendant satisfies either of the two

requirements provided in subparagraphs (b)(1) and (b)(2).

See United States v. Paster, 173 F.3d 206, 214-15 (3d Cir.

1999).

Zwick clearly satisfied the first two conditions under

subsection (b), in that he was awarded the two-point

reduction under S 3E1.1(a), and had an offense level of 22.20

_________________________________________________________________

20. Although the government argues in its brief that "it is difficult if

not

impossible, to find acceptance of responsibility in Zwick's pretrial and

trial conduct," see Brief for Appellee at 53, we limit our discussion to

whether Zwick satisfied either subparagraph (1) or (2) of S 3E1.1(b)

because acceptance of responsibility is not the element at issue in this

appeal and we assume it will be satisfied even after remand. In addition,

30

However, the District Court adopted the Probation Office's

conclusion that Zwick was not entitled to the extra point

under subsection (b) because the government was required

to prepare for trial,21 noting also that defendant made

factual arguments at trial.22

We believe that the District Court did not fully consider

the elements of subsection (b). To receive an additional

reduction for timely providing complete information to the

government, subparagraph one of S 3E1.1(b) requires that

the defendant timely provide complete information; it does

not require, either expressly or impliedly, that the

defendant actually forego his trial. See S 3E1.1(b)(1)

(providing for a reduction for a defendant for "timely

providing complete information to the government

concerning his own involvement in the offense"). Instead of

concluding that the one-point deduction was foreclosed

_________________________________________________________________

we also assume that, even after remand, Zwick's offense level will be at

level 16 or greater as subsection (b) requires. Although Zwick's offense

level may change if the District Court determines on remand that the

judgment on the S 666 counts is to be vacated, the offense level for the

fraud counts alone is 17, which satisfies the second requirement of

S 3E1.1(b) that Zwick's offense level be 16 or higher.

21. The Probation Office, in its Presentence Investigative Report ("PSR")

found:

The defendant entered a guilty plea to Counts 4, 5, 7, 8, 9, and 10

of the indictment. Ostensibly, he chose to go to trial over the

remaining counts of the indictment, believing he should not have

been charged with those offenses in federal court, instead that he

should have been charged in state court. During the presentence

interview, he admitted his conduct in all of the charged counts was

illegal. The government was, therefore, required to prepare for

trial

in this matter. In view of this, only a two-point reduction for

acceptance of responsibility is warranted.

PSR P 75.

22. Specifically, the District Court noted that the defendant's opening

statement informed the jury that the government had to prove

defendant's intent, and that defendant cross-examined Tim Fosnight as

to the defendant's voting activities at a Ross Township Planning

Commission hearing on the approval of a conditional use permit for the

Fosnights' project in an effort to require the government to prove intent.

31

simply because the government prepared for trial, the

District Court should have considered whether Zwick timely

provided complete information as the Guideline requires.

Likewise, subparagraph two of S 3E1.1(b) requires that

the defendant express his notice of intent to plead guilty

early enough to permit the court and government to

conserve resources, not that a guilty plea be entered in a

timely fashion or that the reduction is unavailable if the

case proceeds to trial. See S 3E1.1(b)(2). Permitting the

government and court to conserve resources, see WEBSTER'S

II NEW RIVERSIDE UNIVERSITY DICTIONARY 876 (defining "permit"

as "[t]o afford opportunity"), is not synonymous with the

actual conservation of resources. We recognize that other

courts, such as the Seventh Circuit Court of Appeals,

require actual conservation of resources as a condition to

receiving the point deduction under subsection (b)(2). See

United States v. Wilson, 134 F.3d 855, 872 (7th Cir. 1998)

("courts are still required to consider whether this

expressed intent actually resulted in conserving

Government and court resources."). However, we believe

that our reading is true to the plain language of the

Guideline and comports with the underlying purpose the

Guideline serves. This Guideline rewards the defendant's

willingness to acknowledge responsibility for criminal

wrongdoing in lieu of requiring all allegations to be proved

in a trial. As such, the Guideline is triggered by the

defendant's behavior, not by whether other factors out of

the defendant's control prevent the acceptance of the

defendant's plea. Surely the possibility of an extra point

reduction is not necessarily foreclosed, for instance, by the

government's rejection of a plea, for whatever reason. The

government's refusal to accept the plea and to avail itself of

the opportunity to conserve resources is not a per se

barrier to the one-point deduction. If the drafters of the

Guideline intended to limit the award of the point to

situations in which a plea was entered, or resources were

actually conserved, they could have crafted the language to

reflect this intention.

We recognize that conditional pleas raise unique issues,

which need to be evaluated on a case-by-case basis. 23 We

_________________________________________________________________

23. See United States v. Rogers, 129 F.3d 76, 80-81 (2d Cir. 1997)

(finding that conditional offer to plead guilty did not come early enough

32

also acknowledge that it may be a rare case in which

anything short of a timely entry of a guilty plea suffices for

purposes of S 3E1.1(b).24 However, because the District

Court did not fully address, let alone resolve, whether

Zwick's pre-trial activity entitled him to a reduction under

the specific terms of S 3E1.1(b), we will remand to the

District Court for consideration of whether Zwick timely

provided complete information to the government under

S 3E1.1(b)(1), or if his expression of his intent to plead

_________________________________________________________________

in the proceedings to satisfy S 3E1.1(b)(2) because it came after the case

was "effectively tried" with the motion to suppress); United States v.

Gonzales, 19 F.3d 982, 983-84 (5th Cir. 1994) (refusing to award an

additional point because Gonzales never entered an actual guilty plea;

the suppression hearing to which Gonzales wished to preserve a

challenge in his guilty plea was the equivalent of a full trial, requiring

full preparation and expenditure of resources by the government and the

court).

24. See United States v. Morillo, 8 F.3d 864, 872 (1st Cir. 1993) ("A

defendant who withholds a guilty plea until he stands poised on the

brink of trial has no entitlement to the soothing unguent of section

3E1.1(b)(2). Therefore, the court below acted appropriately in awarding

appellant a two-level, rather than a three-level, decrease for acceptance

of responsibility"); Narramore, 36 F.3d at 846-47 (holding that defendant

was not entitled to a reduction under S 3E1.1(b)(2) because he could

have informed government of intention to plead guilty, even though he

was waiting to actually plead guilty until after the court ruled on his

motion to suppress); United States v. Villasenor-Cesar, 114 F.3d 970,

975 n.4 (9th Cir. 1997) ("Like Narramore, Villasenor-Cesar could have

preserved the availability of the subsection (b)(2) adjustment if, instead

of pursuing a stipulated-facts trial, he had notified authorities of his

intent to plead guilty if the district court ruled against him on his

motion

to dismiss the indictment."); United States v. Covarrubias, 65 F.3d 1362,

1368 (7th Cir. 1995) ("Because defendant made no attempt to conserve

government and district court resources in his case prior to November 7,

the district court did not clearly err in denying him the additional

reduction" when defendant did not plead guilty until the day of trial, and

did not inform the government that he would be pleading guilty in the

event that the motion to suppress, which was decided on the morning of

trial, was denied); United States v. Williams , 74 F.3d 654, 657 (5th Cir.

1996) (agreeing with Covarrubias).

33

guilty was sufficiently timely under S 3E1.1(b)(2) to permit

the conservation of government and court resources. 25

VI.

For all of the foregoing reasons, we will remand this

matter to the District Court for a new trial. We also will

vacate the District Court's sentencing decision denying the

additional one-point reduction under S 3E1.1(b), and

remand to the District Court so that it may determine if

Zwick is entitled to a reduction under S 3E1.1(b) for timely

providing information to the government, or timely offering

notice of intent to plead guilty. We reject Zwick's other

contentions, and will affirm as to those issues.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

_________________________________________________________________

25. We also find that the fact that Zwick made legal arguments at trial

is inapposite with respect to S 3E1.1(b). Application Note two provides

that a defendant may be entitled to a reduction even if he goes to trial,

if he does so to "assert and preserve issues that do not relate to factual

guilt (e.g., to make a constitutional challenge to a statute or a

challenge

to the applicability of a statute to his conduct)." Although the note does

not explicitly provide that it applies only to S 3E1.1(a), a logical

reading

of the note compels this conclusion. The note espouses the principle that

a defendant may in some circumstances show contrition even if he

proceeds to trial; this has little to do with the timeliness of a

defendant's

offer of information or expression of intent to plead guilty, the focus of

S 3E1.1(b). See Villasenor-Cesar, 114 F.3d at 974. In addition, the note

is essentially a continuation of Application Note 1, which applies to

subsection (a).

34