Christopher Code v. Ryan McCarthy

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued January 30, 2020 Decided May 26, 2020

No. 18-5122

CHRISTOPHER J. CODE,

APPELLANT

v.

RYAN D. MCCARTHY , SECRETARY, U.S. DEPARTMENT OF THE

ARMY ,

APPELLEE

Appeal from the United States District Court

for the District of Columbia

(No. 1:15-cv-00031)

Nathan S. Mammen argued the cause for appellant. With

him on the briefs were Hannah L. Bedard and Matthew J.

McIntee.

John B. Wells, Raymond J. Toney, and Brian D. Schenk

were on the brief for amicus curiae Military-Veterans

Advocacy, Inc. in support of appellant.

Jeremy A. Haugh, Special Assistant U.S. Attorney, argued

the cause for appellee. With him on the brief were Jessie K.

Liu, U.S. Attorney at the time the brief was filed, and R. Craig

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Lawrence, Assistant U.S. Attorney. Roberto C. Martens Jr.,

Special Assistant U.S. Attorney, entered an appearance.

Before: TATEL, PILLARD, and WILKINS, Circuit Judges.

Opinion for the Court filed by Circuit Judge PILLARD.

PILLARD , Circuit Judge: Lieutenant Christopher Code

asked the Army Board for the Correction of Military Records

(the Board or ABCMR) to expunge or amend Army

investigators’ determinations recorded in his military files.

The records at issue stated that credible information and

probable cause existed to believe that Code committed the

criminal offenses of making a false official statement with

intent to deceive and obtaining services under false pretenses.

The allegedly false statement was the expiration date of Code’s

current military orders, which he wrote in a blank on the 2007-

2008 school year registration form to re-enroll his three

children at the Fort Buchanan base school that they had

attended since 2005. The Secretary of the Army claims Code’s

provision of that date was a false pretense that he used to obtain

an additional year of schooling for his children when, the Army

alleges, Code knew they were not entitled to that service.

When Code filled out the school form on April 30, 2007,

he was under orders assigning him to Fort Buchanan for three

years, from July 2005 to July 2008. Where the school

registration form stated “I am active duty and my current orders

will expire on _____,” Code filled in “July 2008.” Army

investigators apparently at first believed Code’s assignment

was for two years, not three; they opened a fraud investigation

on that premise. It is by now undisputed, however, that the

assignment was for three years. The investigation did not lead

to any criminal prosecution or military discipline. Yet, when

Code sought to have the allegations and charges removed from

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his military records, the Board denied his application and the

district court sustained its decision. Because a basic mistake of

fact renders the Board’s decision arbitrary and capricious, we

reverse.

BACKGROUND

A. Legal Context

The U.S. Department of Defense operates elementary and

secondary schools to serve families of individuals who live

and/or work on military installations where appropriate local

free public education is not available to their dependents. See

10 U.S.C. § 2164(a)(1)-(2); Department of Defense Instruction

(DoDI) 1342.26 ¶¶ 1, 6.2 (1997). The children of active duty

military members, including those who live outside such an

installation, may receive “tuition-free education at an

installation.” DoDI 1342.26 ¶¶ 6.2.1.1, 6.2.2.1. Eligibility for

tuition-free education is “based upon the permanent duty

station to which the military sponsor [e.g., the parent] is

assigned by official orders.” Id. ¶ 6.3.3. Anticipating possible

changes in a sponsor’s duty station, the governing statute and

policy provide that, “[i]f the status of the sponsor of a currently

enrolled student changes so that the child would no longer be

eligible for enrollment” at the military installation’s school,

“enrollment may continue for the remainder of the school

year.” Id. ¶ 6.3.7; see 10 U.S.C. § 2164(h)(1) (“The Secretary

of Defense shall permit a dependent of a member of the armed

forces . . . to continue enrollment in an educational program

provided by the Secretary . . . for the remainder of a school year

notwithstanding a change during such school year in the status

of the member . . . that, except for this paragraph, would

otherwise terminate the eligibility of the dependent to be

enrolled in the program.”).

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Under the Uniform Code of Military Justice (UCMJ), a

person commits the offense of making a false official statement

when he, “with intent to deceive[,] (1) signs any false record,

return, regulation, order, or other official document, knowing

it to be false; or (2) makes any other false official statement

knowing it to be false.” 10 U.S.C. § 907(a). A person commits

larceny under the UCMJ when he “wrongfully takes, obtains,

or withholds, by any means, from the possession of the owner

or of any other person any money, personal property, or article

of value . . . with intent permanently to deprive or defraud

another person of the use and benefit of property or to

appropriate it” for his own use or use by another. Id.

§ 921(a)(1). The UCMJ also makes it a criminal offense to,

“with intent to defraud, knowingly use[] false pretenses to

obtain services.” Id. § 921b. As relevant here, all three

offenses require proof of wrongful intent, and both false

statement and false pretenses specifically require intent to

defraud.

As soon as a Department of Defense Criminal

Investigative Organization has “credible information that” the

subject of an investigation “committed a criminal offense,” it

must place the subject’s name and identifying information in

the title block of an investigative report—a step known as

“titling.” DoDI 5505.7 ¶¶ 6.1, 6.5 (2003). The Department of

Defense defines credible information as “[i]nformation

disclosed or obtained by a criminal investigator that,

considering the source and nature of the information and the

totality of the circumstances, is sufficiently believable to lead

a trained investigator to presume that the fact or facts in

question are true.” Id. ¶ E1.1.1. Concurrent with titling, the

investigative organization must list the subject’s name in the

Defense Central Index of Investigations (DCII), a searchable

database used by the Department of Defense’s security and

investigative agencies and selected other federal agencies “to

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determine security clearance status and the existence/physical

location of criminal and personnel security investigative files.”

Id. ¶ E1.1.3. The subject’s identifying information “shall be

removed from the title block of a report of investigation and the

DCII” only “in the case of mistaken identity” or if it is

“determined a mistake was made at the time the titling and/or

indexing occurred in that credible information indicating that

the subject committed a crime did not exist.” Id. ¶ 6.6.

When and if investigation “adequately substantiate[s]” the

commission of a criminal offense such that investigators have

“probable cause supported by corroborating evidence” to

believe that the subject in fact committed the crime, the

military investigative organization may issue an investigative

report supporting its determination that the offense is

“founded.” Army Regulation 190-45, ¶ 4-3(a) (2007); id.

Glossary § II, “Founded offense”; see Appellee’s Br. 26. If

investigators determine that no crime was committed, the

offense is reported as “unfounded.” See Army Regulation

190-45 Glossary § II, “Unfounded offense.”

Individuals who believe their military file contains an error

may request that the Secretary of the military department that

created the record make corrections to it. See 10 U.S.C. § 1552.

Secretaries generally rely on civilian boards to review and act

on requests for correction. Id. § 1552(a)(1). The Secretary of

the Army reviews correction applications through the Army

Board for the Correction of Military Records, a board of

civilians “vested with broad authority to ‘correct any military

record when it considers it necessary to correct an error or

remove an injustice.’” Wolfe v. Marsh, 835 F.2d 354, 357

(D.C. Cir. 1987) (alterations omitted) (quoting 10 U.S.C.

§ 1552). The Board must “[r]eview all applications that are

properly before [it] to determine the existence of error or

injustice,” 32 C.F.R. § 581.3(b)(4)(i); “direct or recommend

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changes” where needed to correct an error or injustice, id.

§ 581.3(b)(4)(ii); recommend hearings “when appropriate in

the interest of justice,” id. § 581.3(b)(4)(iii); and “[d]eny

applications when the alleged error or injustice is not

adequately supported by the evidence,” id. § 581.3(b)(4)(iv).

The burden rests with the applicant to “prov[e] an error or

injustice by a preponderance of the evidence.” Id.

§ 581.3(e)(2). When a titling/indexing decision is under

review, the reviewing body “shall consider the investigative

information available at the time the initial titling/indexing

decision was made.” DoDI 5505.7 ¶ 6.9.

B. Factual Record

Christopher Code was an officer in the U.S. Navy and is

now a member of the Navy Reserve. On July 25, 2005, Code

began a three-year tour of duty at Fort Buchanan Army Base in

San Juan, Puerto Rico. See Navy Personnel Command,

Official Change Duty Orders for Lt Christopher John Code

(Jan. 24, 2005) (J.A. 421); Memorandum from the Dep’t of

Def., San Juan Military Entrance Processing Station, to Fort

Buchanan Family Hous. (July 25, 2005) (J.A. 471); Code v.

Esper, 285 F. Supp. 3d 58, 61-62 (D.D.C. 2017); Appellee’s

Br. 10. During that tour of duty, Code and his family lived in

off-base housing and his three children attended the

Department of Defense school at the Fort Buchanan base.

Sometime between January and March of 2007, Code

learned that he was likely to receive new “permanent change of

station” orders assigning him somewhere else before his

current orders assigning him to Puerto Rico expired in July

2008. Fla. Fraud Resident Agency, Army CID, Agent’s

Investigation Report (Jan. 25, 2008) (J.A. 405); Code Decl. ¶ 6

(J.A. 455). Because his elderly father had only recently moved

to live with Code’s family in Puerto Rico, Code’s preference

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was to remain at Fort Buchanan for the full three years if

possible. With the support of his superiors, Code applied on

March 12, 2007, for a one-month extension of his then-current

orders which, if granted, would keep him at Fort Buchanan

through August 2008.

In a letter dated Thursday, April 26, 2007, the Navy’s

department of human resources denied the extension request,

describing it as a request for a “thirteen-month extension.”

Letter from Head, Human Res. Cmty., to Lt. Christopher Code

(Apr. 26, 2007) (J.A. 430). Code asserts, and the Secretary

does not dispute, that he did not receive the denial letter until

Tuesday, May 8, 2007, as evidenced by a faxed copy of the

letter with a heading showing the date of May 8, 2007.

Meanwhile, Code’s three children were attending the Fort

Buchanan school, where they had been enrolled since Code’s

tour in Puerto Rico began in 2005. Registration for the

upcoming school year was in progress. See Oral Arg. Rec.

22:13-37; see also DoDI 1342.26 ¶ 6.3.4.3 (referencing May

enrollment deadline). On Monday, April 30, 2007, Code

submitted an application to reenroll the children for the 2007-

2008 school year. Where the enrollment form stated: “I am

active duty and my current orders will expire on _____,” Code

filled in “July 2008,” as he presumably had done each of the

prior two years. Suppl. DoDEA Form 600 – School Year

2007-2008 (Apr. 30, 2007) (J.A. 223). The form also stated

that “if my orders change/terminate before the start of the SY

2007-2008, I will notify the registrar immediately.” Id.

Although Code did not sign his name on the line appearing next

to that statement, he signed the bottom of the form, under a

statement averring the veracity of information provided.

As Code later explained under oath, “[a]t the time I

submitted the paperwork, I did not yet know that my request

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for extension had been denied and still believed that my

extension request would be granted.” Code Decl. ¶ 7 (J.A.

456). But school enrollment forms were due, and there is no

contention that the Code family was rushing to submit theirs

early. See Oral Arg. Rec. 22:13-37. As of April—the same

time of year the Code family had applied the prior year—the

school was urging parents of currently enrolled children to

submit any 2007 reenrollment forms. Code’s wife told the

school’s Registrar of the possibility that Code would receive

early change orders, in advance of his current orders’ July 2008

expiration date. Code attests that the Registrar “advised my

wife that my children’s eligibility to attend the [Fort] Buchanan

school for the 2007-2008 term was tied to my current orders,

which at that point still had me stationed in San Juan through

July 2008.” Code Decl. ¶ 8 (J.A. 456).

On May 23, 2007, Code received change-of-station orders

directing him to report for duty in Kingsville, Texas, in June

2007. Code attests that, “[i]mmediately upon receipt” of his

new orders, he notified the Registrar, who assured him that the

children could stay at the Fort Buchanan school, because

“eligibility was based on my Orders at the time of enrollment.”

Id. ¶ 9; Suppl. Code Decl. ¶ 2 (J.A. 497). Pursuant to his

orders, Code reported to Kingsville in June 2007. His wife and

children, together with Code’s father, remained in Puerto Rico

for the time being, and the children attended the Fort Buchanan

school during the 2007-2008 school year.

In November 2007, base police in Puerto Rico became

aware that the Code children were attending the Fort Buchanan

school while Code was stationed elsewhere. In January 2008,

the Florida Fraud Resident Agency of the U.S. Army Criminal

Investigation Command (known as the “CID” because it was

formerly called the Criminal Investigation Division) opened an

investigation into whether Code’s children were fraudulently

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enrolled in the Fort Buchanan school. The Army CID first

interviewed an unnamed First Sergeant at the Military Entrance

and Processing Station at Fort Buchanan. The First Sergeant

erroneously informed the CID that the orders assigning Code

to Fort Buchanan, which were in effect when Code completed

the school enrollment form, expired “sometime during the

summer months” of 2007. Fla. Fraud Resident Agency, Army

CID, Agent’s Investigation Report (Jan. 25, 2008) (J.A. 405).

As noted above, it is undisputed that Code’s current orders at

the time he submitted the form assigned him to Fort Buchanan

until July 2008.

Without yet having contacted Code, the Army CID

interviewed the Fort Buchanan school Registrar on January 25,

2008. There is no record whether the investigator asked about

the Registrar’s actual conversations with Code or his wife. The

interview report reflects only that the Army CID presented to

the Registrar hypothetically “the scenario involving Lt. Code.”

Fla. Fraud Resident Agency, Army CID, Agent’s Investigation

Report (Jan. 25, 2008) (J.A. 404). The Registrar responded

with her then-current understanding that (in retrospect) she

believed Code’s children would have been ineligible to register

for or attend the school “since the sponsor, Lt. Code was no

longer assigned or stationed in Puerto Rico.” Id. She then

stated that Code did not fit any applicable exceptions, including

an exception that she described as allowing children to “finish

the school year, if the school year was in progress (Sep[tember]

through May)” when the sponsor received new orders. Id. She

appears to have been referring to the rule providing that “[i]f

the status of the sponsor of a currently enrolled student changes

so that the child would no longer be eligible for enrollment . . . ,

enrollment may continue for the remainder of the school year.”

DoDI 1342.26 ¶ 6.3.7; see 10 U.S.C. § 2164(h)(1).

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In late July 2009, the Army CID also queried by email the

Navy human resources officer who had sent Code the April 26,

2007, letter notifying him that his extension request had been

denied. The Army CID wished to know “the date Lt. Code

received the letter of denial,” given “the closeness on the dates

of the false statement (30 Apr 07) and the date of the letter of

denial of extension (26 Apr 07).” Fla. Fraud Resident Agency,

Army CID, Agent’s Investigation Report (July 30, 2009) (J.A.

441). The officer responded:

If you are trying to prove that he intentionally

defrauded the local school by saying he thought his

extension was approved, I can affirm with absolute

confidence that I personally told him otherwise

within no more than a few days after the date on

letter, and certainly we issued him transfer orders,

which presumably he executed, which once again

would indicate that he knew he was no longer

eligible to use the school.

Id. (J.A. 441-42).

At some point during the investigation, the Army CID

obtained a copy of Code’s orders assigning him to Fort

Buchanan in July 2005. Those orders, as confirmed by Code’s

commanding officer when he signed in for duty, authoritatively

established that Code was assigned to Fort Buchanan from July

25, 2005, until July 25, 2008. See Navy Personnel Command,

Official Change Duty Orders for Lt Christopher John Code

(Jan. 24, 2005) (J.A. 421); Memorandum from the Dep’t of

Def., San Juan Military Entrance Processing Station, to Fort

Buchanan Family Hous. (July 25, 2005) (J.A. 471) (copy of

memorandum from Code’s commanding officer certifying that

Code’s “tour is from July 25, 2005, to July 25, 2008”). The

district court found that that the Army CID’s description of

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Code’s tour as a “twenty-four month tour, ending in the

summer of 2007 . . . does not appear to have been an accurate

description of [Code’s] orders” because his “tour in Puerto

Rico was initially scheduled to last for three years, concluding

in the summer of 2008,” and specifically noted that Code’s

orders expired in July 2008. Code, 285 F. Supp. 3d at 62. The

Secretary’s own brief tells us that Code’s “tour of duty in

Puerto Rico was to be from August 2005 until July 2008” and

that Navy personnel advised Code he would receive new

change of station orders before his “current orders expired in

July 2008.” Appellee’s Br. 10 (quoting J.A. 471). At oral

argument, counsel for the Secretary confirmed that Code’s

orders “expired on [their] face, by [their] terms . . . in 2008,”

and that the Secretary did not “contest[] that, in fact, Lt. Code

was given orders to be at Fort Buchanan, Puerto Rico, initially

. . . [until] 2008.” Oral Arg. Rec. 16:26-35, 17:27-42. Those

were Code’s “current orders” until his tour of duty was cut

short by issuance on May 23, 2007, of Permanent Change of

Station orders sending him to the Naval Air Station at

Kingsville, Texas.

Nonetheless, as the Army CID later summed up its

reasoning, “Mr. Code was aware, or should have been aware

that his dependents were not authorized [sic] the services,

which is why he would have provided the false date to ensure

his dependents could enroll.” Memorandum from the Army

CID to Director, Army Review Bds. Agency, at 2 (May 26,

2016) (J.A. 314). The Army CID stressed that this was “re-

iterated” by the CID at its February 2008 interview with Code.

Id.

The children openly attended the Fort Buchanan school

throughout the 2007-2008 school year. The school is run by

the Department of Defense, which manages its enrollment

according to priorities established by Department of Defense

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regulation. See DoDI 1342.26 ¶ 6.2.2. The February 2008

interview was the first that Code learned about any potential

problem with his children’s enrollment. See Code Decl. ¶ 10

(J.A. 456). There is no evidence that the school at any point—

either before or after the CID’s February 2008 interview with

Code—asked the family to remove the children from the school

or otherwise took steps to exclude them.

In its earliest report in the record, the Army CID stated on

July 30, 2009, that it had what it believed was both “credible

information” and “probable cause” to believe that Code made

a false statement on April 30, 2007, when he submitted the

application form to the Fort Buchanan school for his three

children for the 2007-2008 school year. Based on Domestic

Dependent Elementary and Secondary School (DDESS)-

Puerto Rico tuition rates, the Army CID calculated that the

“monetary loss to the U.S. Government [was] $44,200.” Army

CID, Report of Investigation - 3rd Status, at 2 (July 30, 2009)

(J.A. 227). The investigators referred the putative debt to the

Defense Finance and Accounting Service for collection. On

September 30, 2010, the Accounting Service initiated debt

collection against Code.

The Army CID concluded its investigation on January 12,

2011, issuing a final report that determined there was

[p]robable cause to believe Lt. Code committed the

offense of False Official Statement and Larceny

when he falsified documentation by registering his

three children in the DDESS for a year while he was

not assigned to the geographic area. Lt. Code

knowingly falsified these DDESS documents 4 days

after his Permanent Change of Station (PCS),

extension request was denied, transferring him from

Puerto Rico to Kingsville, TX.

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Army CID, Report of Investigation - Final, at 2 (Jan. 12, 2011)

(J.A. 398-99). The Army CID noted that it had referred the

case to the U.S. Attorney’s Office in San Juan but that the U.S.

Attorney had declined to prosecute, leaving to the Department

of Defense and Code’s chain of command whether to take any

action against him. Defense Department personnel declined to

take any prosecutorial or disciplinary action.

C. Procedural History

Code applied first to the Army CID itself, then to the Army

Board for Correction of Military Records, for expungement or

correction of the Report of Investigation—that is, to vacate the

CID’s titling and probable-cause determinations. Code

explained that he could not have made a false official statement

because the registration form asked specifically and

exclusively for the date of expiration of his “current orders,”

which, when he signed the registration form, he accurately

stated were set to expire in July 2008.

The Army CID and Board nonetheless denied relief, and

Code timely sought review in district court. The district court

identified several inadequacies in the Board’s decision,

including the Board’s application of the wrong regulation to

determine the eligibility of Code’s children and its failure to

address Code’s challenge to the Army CID’s referral of the

investigative report to the Defense Finance and Accounting

Service to initiate collection. Over Code’s objection, the

district court granted the Secretary’s motion for voluntary

remand to allow the Board to “address the inadequacies” raised

by Code’s complaint. Code v. McHugh, 139 F. Supp. 3d 465,

472 (D.D.C. 2015).

The Board issued a second decision reinstating and

bolstering its initial decision of almost three years earlier. The

Board denied any relief in Code’s favor, instead taking the

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occasion to recommend that the Army CID amend the Report

of Investigation to substitute a charge of obtaining services

under false pretenses for the inapposite larceny charge. See

ABCMR, Record of Proceedings (Jan. 31, 2017) (J.A. 110).

The Board determined that, while the behavior the CID

ascribed to Code did not amount to larceny, Code could instead

be re-titled with, and have founded against him, an offense of

obtaining services under false pretenses, which

“contemplate[s] the wrongful obtaining of services rather than

tangible property.” Id. ¶ 19 (J.A. 141).

Code returned to the district court to pursue his claim that

the Board’s denial of relief from the titling and probable-cause

determinations was arbitrary and capricious. He continued to

contend that the Army CID lacked any evidence of a false

statement, given that “the information [Code] submitted on the

application was completely true and accurate.” Am. Compl.

¶ 2, Code v. Speer, No. 15-cv-31 (D.D.C. Apr. 13, 2017), ECF

No. 17.

Ruling on cross-motions for summary judgment, the

district court held “that there was nothing arbitrary, capricious

or contrary to law about the [Board]’s conclusion that there was

sufficient evidence to support the CID’s decision to title [Code]

with the charges of Obtaining Services under False Pretenses

and Making a False Official Statement.” Code, 285 F. Supp.

3d at 61. The district court emphasized that both the CID and

the Board had concluded that Code’s statement “that ‘I am

active duty and my current orders will expire on July 2008’”

was “a purposeful misrepresentation of the true nature of

[Code’s] orders because, at the time he made this statement,

[Code] knew that his ‘current orders’ were actually going to

‘expire’ in the near future, and that he was going to be required

to leave Puerto Rico long before 2008.” Id. at 67. The district

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court did not separately address Code’s challenge to the

probable-cause determination.

On appeal, Code renews his contention that he made no

false statement because, at the time he filled out and signed the

school enrollment form asking him for the date his “current

orders will expire,” his current orders assigned him to Fort

Buchanan until July 2008. He contends that the Board’s failure

to expunge or amend the titling, indexing, and probable-cause

finding was therefore arbitrary and capricious under the

Administrative Procedure Act (APA). See 5 U.S.C.

§ 706(2)(A).

DISCUSSION

Three principles control our review. First, “[o]n review of

a district court’s grant of summary judgment in connection

with the appeal of a decision of the ABCMR [Army Board for

Correction of Military Records], we review the ABCMR’s

decision de novo, applying the same standards as the district

court” and with “no particular deference to the judgment of the

district court.” Coburn v. McHugh, 679 F.3d 924, 929 (D.C.

Cir. 2012) (citations and internal quotation marks omitted).

Second, “under section 706(2) of the [APA], this court

shall ‘set aside’ the ABCMR’s ‘action, findings, and

conclusions’ regarding the correction of military records if they

are ‘arbitrary, capricious, an abuse of discretion, or otherwise

not in accordance with law.’” Haselwander v. McHugh, 774

F.3d 990, 996 (D.C. Cir. 2014) (quoting 5 U.S.C. § 706(2)(A)).

The Secretary’s “broad discretion in administering the

correction of military records” does not obviate the APA’s

requirement that administrative actions “be supported by

‘reasoned decisionmaking.’” Id. (quoting Allentown Mack

Sales & Serv., Inc. v. NLRB, 522 U.S. 359, 374 (1998)); see

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also Kreis v. Sec’y of the Air Force, 866 F.2d 1508, 1514 (D.C.

Cir. 1989).

Third, we have recognized that, “when a military records

correction board fails to correct an injustice clearly presented

in the record before it, it is acting in violation of its statutory

mandate under 10 U.S.C. § 1552. And such a violation,

contrary to the evidence, is arbitrary and capricious.”

Haselwander, 774 F.3d at 996 (alterations omitted) (quoting

Yee v. United States, 512 F.2d 1383, 1387 (Ct. Cl. 1975)).

We also have noted that “[a] Correction Board can only

exercise its discretion for the benefit of the individual

member.” Wolfe, 835 F.2d at 358. In view of that constraint,

it is not clear that the Board acted within the scope of its

authority when it suggested that Code could be re-titled with a

new offense. But because Code does not press that argument,

see Oral Arg. Rec. 10:42-58, and prevails on other grounds, we

do not resolve it now.

A. Probable Cause

The Secretary has forfeited any defense of the Army CID’s

probable-cause determination. In neither its initial review nor

its review on remand from the district court did the Board

separately address Code’s contentions that the CID lacked

probable cause to conclude that he had committed fraud.

Rather than account for the Board’s omissions, counsel for the

Secretary asserts that it was Code who failed to preserve his

challenge to probable cause on summary judgment in the

district court. Oral Arg. Rec. 12:57-13:29. That is wrong. Not

only at summary judgment, but also at every other opportunity,

Code has asked for the probable cause determination to be

reversed or expunged—and has challenged as arbitrary and

capricious the Board’s failure to do so. See Appellant’s

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Br. 33-34; Pl.’s Req. for Recons. at 1, Code v. Speer, No. 15-

cv-31 (D.D.C. Jan. 16, 2018), ECF No. 29; Pl.’s Mem. in

Support of His Cross-Mot. for Summ. J. & in Opp’n to Def.’s

Mot. for Summ. J. at 13, Code v. Speer, No. 15-cv-31 (D.D.C.

Jan. 16, 2018), ECF No. 20-1; Am. Compl. ¶ 113, Code v.

Speer, No. 15-cv-31 (D.D.C. Apr. 13, 2017), ECF No. 17;

Compl. ¶¶ 77-78, Code v. McHugh, No. 15-cv-31 (D.D.C. Jan.

9, 2015), ECF No. 1; Letter from Andrew K. Wible, Cohen

Mohr LLP, to Army Review Bds. Agency, at 1 (Sept. 26, 2013)

(J.A. 369); Letter from Andrew K. Wible, Cohen Mohr LLP,

to U.S. Army Crime Records Ctr., at 1 (Jan. 24, 2013) (J.A.

389). We reverse the district court’s decision insofar as it

declines to hold arbitrary and capricious the Board’s failure to

engage with Code’s challenge to the probable-cause

determination.

In any case, for essentially the same reasons explained

below in connection with the titling and indexing decision, the

Board’s determination of probable cause to believe that Code

defrauded the Department of Defense cannot stand.

B. Titling and Indexing

We hold arbitrary and capricious the Board’s decision

affirming the Army CID’s titling and indexing decision.

1. Review of a titling and indexing decision is unusual,

but it is called for here by several circumstances particular to

this case.

First, the case appears before us without a record that

separately identifies whatever initial, presumably limited, body

of evidence the Army CID relied on to decide to title and index

Code for criminal fraud. Applicable regulations suggest that

titling is akin to a threshold reason-to-believe or reasonable-

suspicion standard, typically made at the very outset of an

18

investigation. As Department of Defense rules explain,

“[t]itling and indexing . . . shall be done as early in the

investigation as it is determined that credible information exists

that the subject committed a criminal offense.” DoDI 5505.7

¶ 6.1. The earliest determination in the record before us,

however, is reflected in the July 30, 2009, Report of

Investigation, in which the titling and probable cause

determinations are merged. That Report was “generated to

correct identifying on the subject [sic], change the offenses

from U.S. Code to UCMJ, and list the offenses as founded.”

Army CID, Report of Investigation - 3rd Status, at 2 (July 30,

2009) (J.A. 225). We have no record of any threshold titling

and indexing determination apart from and in advance of the

Report that also found probable cause, nor has the Secretary

explained how we might otherwise isolate the information that

was available to the investigators at the investigative threshold.

In fact, we lack any distinct evidentiary record underpinning

the 2009 titling, indexing, or founding decisions; this appeal

came to us on the record supporting the 2011 final Report of

Investigation. See Army CID, Report of Investigation - Final

(Jan. 12, 2011) (J.A. 398-445).

Another unusual twist in this case is that the decision

appears to be having an impermissible continuing effect on

Code. As conceded by the Secretary and reflected in the

record, the Army appears to be relying exclusively on the

challenged titling decision to seek to collect from him the value

of the education that it asserts Code obtained for his children

under false pretenses. Ordinarily, a titling decision is

superseded and largely mooted by a finding of probable cause.

Reporting an offense as “founded” reflects that investigation

has “adequately substantiated” the charge, giving law

enforcement “probable cause supported by corroborating

evidence” to believe the crime was committed. If the

investigation yields a determination of no probable cause to

19

believe that a crime was committed, the offense is reported as

“unfounded.” See Army Regulation 190-45, ¶ 4-3(a); id.

Glossary § II (defining “Founded offense” and “Unfounded

offense”). Titling and indexing, on the other hand, “are

administrative procedures and shall not connote any degree of

guilt or innocence.” DoDI 5505.7 ¶ 6.5. Department of

Defense policy therefore confines the use of titling and

indexing to “law enforcement or security purposes” and forbids

“[j]udicial or adverse administrative actions . . . against

individuals or entities based solely on the fact that they have

been titled or indexed due to a criminal investigation.” Id.

¶¶ 6.2, 6.5.2.

Notwithstanding the prohibition against sole reliance on a

titling decision as grounds for “adverse administrative actions,”

counsel for the Secretary asserts that the Defense Finance and

Accounting Service may continue to seek to collect from Code

the cost of his three children’s year of schooling at Fort

Buchanan based on the titling decision alone. See Oral Arg.

Rec. 36:55-37:37 (counsel for the Secretary stating that “[t]he

titling decision would still be adequate” to support the

Department’s claim of entitlement to recoup tuition costs from

Code), 38:36-57; see also Def. Fin. & Accounting Serv.,

Advisory Opinion: Department of Defense Education Activity

(DoDEA) Debt Situation Involving Navy Lt Code, at 3 (Oct.

13, 2016) (J.A. 213) (“The fact that [Code] was not charged

with a crime does not negate this debt to the US

Government.”). The record suggests that the Department of

Defense does indeed plan to continue to seek to collect in

excess of $40,000 from Code based on the mere suspicion that

he obtained those services by fraud. The Defense Finance and

Accounting Service notified Code of the putative tuition debt

only because the Army CID forwarded to the Accounting

Service the Report of Investigation reflecting both the titling

and probable cause determinations. See ABCMR, Record of

20

Proceedings ¶ 6 (Jan. 31, 2017) (J.A. 112). The Accounting

Service did not distinguish between titling and probable cause

when it insisted that it would not cancel the debt or cease efforts

to recoup it unless the Army CID “overturned” its prior

determination. Letter from Bridgette Chrisman, Customer

Care Representative, Def. Fin. & Accounting Serv., to

Christopher J. Code (Apr. 20, 2012) (J.A. 201); see also Def.

Fin. & Accounting Serv., Advisory Opinion: Department of

Defense Education Activity (DoDEA) Debt Situation

Involving Navy Lt Code, at 1 (Oct. 13, 2016) (J.A. 211); Email

from Leonard Cooley, Def. Fin. & Accounting Serv., to Maria

Sanchez, Army Review Bds. Agency (May 3, 2016, 12:21

EDT) (J.A. 244); but see Memorandum from the Army CID to

Director, Army Review Bds. Agency, at 1 (May 26, 2016) (J.A.

313) (stating that the Defense Finance and Accounting Service,

“not CID, is the determining body responsible for recouping

funds”).

2. Because of the evident continuing harm to Code from

the Board’s refusal to correct the record titling and indexing

him for crimes of making a false official statement and

procuring services under false pretenses, we review those

decisions and hold that they were arbitrary and capricious. The

record of titling and indexing presented to the Board and

reviewed by the district court did not credibly suggest that

Code falsified the Fort Buchanan school enrollment form, nor

that he did so as a ruse to get his children school access they

did not deserve. We therefore cannot agree with the district

court that the Board “provided a reasoned explanation of its

decision that is rationally related to the evidence before it”

when it held that credible information supported the Army

CID’s titling and indexing determinations that Code knowingly

submitted a false enrollment form, thereby committing crimes

of fraud and obtaining services by false pretenses. Code, 285

F. Supp. 3d at 68.

21

The record submitted in support of titling and indexing

reflects the Army CID’s determination that Code fraudulently

“certified his date of departure” as July 2008 on the enrollment

form, and that it rested those threshold determinations on

interviews and “examination of records and military orders”

showing that Code “was assigned” to his post at the Fort

Buchanan Military Entrance and Processing Station (MEPS)

on August 3, 2005, and “the tour at MEPS was twenty-four

months.” Army CID, Report of Investigation - 3rd Status, at

3-4 (July 30, 2009) (J.A. 226-27). Investigators purported to

have determined that, “[a]t the time Lt. Code signed the

DoDEA Form 600 on 30 Apr 07, he knew that his P[ermanent]

C[hange of] S[tation] was in June 07, and as such his dependent

children were not eligible for attendance at the DOD school on

[Fort] Buchanan.” Id. at 4 (J.A. 227). The Army CID’s final

report likewise announced that “Code falsified documentation

by registering his three children in the DDESS for a year while

he was not assigned to the geographic area,” basing its

inference of fraudulent intent on its conclusion that Code did

so “4 days after his Permanent Change of Station (PCS)[]

extension request was denied, transferring him from Puerto

Rico to Kingsville, TX.” Army CID, Report of Investigation -

Final, at 2 (Jan. 12, 2011) (J.A. 399).

The Army CID’s investigators made a simple but

consequential mistake at the outset and then compounded their

error when they should have corrected course. It is apparently

not unusual for a tour of duty at the Military Entrance and

Processing Station to last only two years. The Army CID’s

first error was to accept—apparently without checking the

records—the statement of the First Sergeant at the Military

Entrance and Processing Station that Code’s 2005 assignment

to Fort Buchanan was due to expire in the summer of 2007. See

Fla. Fraud Resident Agency, Army CID, Agent’s Investigation

Report (Jan. 25, 2008) (J.A. 405). Accepting the First

22

Sergeant’s accusation, the Army CID concluded that Code was

seeking at the tail end of his assignment to enroll his children

in the Fort Buchanan School for an additional year—a year

during which he already knew (according to the Army CID) he

would no longer be assigned to Fort Buchanan. Second, failing

to discern that, even without extension, Code’s then-current

orders lasted until July 2008, not July 2007, the Army CID

jumped to further erroneous conclusions: that Code already

knew when he submitted the school enrollment form that his

request for extension had been denied, and that he also knew,

even before his reassignment to Texas, that he would have to

leave Fort Buchanan in 2007.

At the time of their initial titling and indexing decision, the

Army CID investigators presumably had it within their power

to verify the premise of their fraud theory. The record of the

titling and indexing decisions includes Code’s official orders.

It is uncontested that Code’s orders assigned him to Fort

Buchanan from 2005 to 2008. The Secretary now

acknowledges that official records authoritatively contradict

any information that might have led the Army CID to think that

Code’s assignment to Puerto Rico was for only 24 months. See

Oral Arg. Rec. 16:10-38. Code never denied that the

assignment was subject to change. But the Secretary also does

not contest that Code’s superiors supported his application to

serve out—and even slightly extend—his assignment at Fort

Buchanan through August 2008, giving Code grounds for

optimism that he might stay. In any event, it is clear and

undisputed that no changed orders had yet issued when Code

filled out the school’s application form in April 2007.

Therefore, the only factually accurate way for Code to fill out

the form when he did was to write “July 2008” in the blank

where the form states “My current orders will expire on

_______.” Suppl. DoDEA Form 600 – School Year

2007-2008 (Apr. 30, 2007) (J.A. 223). Code’s request for

23

correction of the titling decision is therefore “supported by

uncontested, creditable evidence,” and the Board’s decision

otherwise “defies reason and is devoid of any evidentiary

support.” Haselwander, 774 F.3d at 992-93.

Code has consistently acknowledged that, at the time he

signed the application, he had heard that his orders were likely

to be changed. Indeed, by Code’s uncontradicted account, the

family informed the school’s Registrar in April that Code

anticipated early reassignment elsewhere, and, after his

Permanent Change of Station order came through in late May,

Code contacted the Registrar again to verify the children’s

eligibility. See Code Decl. ¶¶ 8-9 (J.A. 456). The Registrar

assured him, Code attested, that the children could stay at the

Fort Buchanan school, because “eligibility was based on my

Orders at the time of enrollment.” Suppl. Code. Decl. ¶ 2 (J.A.

497). The way the application form is worded is not to the

contrary.

The Board did not deem Code’s account unworthy of

belief for any reason, but rejected it for want of corroboration,

“such as a statement from the Registrar,” which, the Board

opined, “would appear to be easily obtained.” ABCMR,

Record of Proceedings ¶ 4 (Aug. 12, 2014) (J.A. 364). But it

is not at all apparent how Code could have obtained such a

statement. Tellingly, the Army CID’s own interview of the

Registrar—at which the investigator in 2008 hypothetically

posed to her the “situation” involving Code’s children—failed

to contradict Code’s account of his actual conversation with her

in 2007. Fla. Fraud Resident Agency, Army CID, Agent’s

Investigation Report (Jan. 25, 2008) (J.A. 404). If she had told

Code that children are ineligible once their parent is reassigned

elsewhere, or if the Codes had in fact never asked her about

their children’s eligibility, one would expect the Registrar to

have said so. The omission from the Army CID’s interview

24

report of any statement on the Registrar’s part regarding her

actual communications—or lack thereof—with the Code

family tends to corroborate Code’s declaration.

C. The Alternative, Failure-to-Disenroll Theory

The Secretary has fleetingly suggested that the charged

offense of obtaining services under false pretenses is separately

supported by Code’s action in keeping the children enrolled in

school at Fort Buchanan after his Permanent Change of Station

orders sent him to Texas. Oral Arg. Rec. 30:05-31:06; see also

ABCMR, Record of Proceedings ¶ 19 (Jan. 31, 2017) (J.A.

141). But the only falsehood or fraud the Army CID identified

was that Code submitted a school application for the 2007-

2008 school year listing July 2008 as the date his assignment

to Fort Buchanan was due to expire. The Board itself described

the sole issue before it as whether to expunge records of the

CID investigators’ determination that “there was credible

evidence to believe [Code] fraudulently obtained education

services from the government and did so by means of a false

official statement.” ABCMR, Record of Proceedings ¶ 28

(Jan. 31, 2017) (J.A. 144). We cannot sustain the Board’s

decision on a different ground, neither charged nor litigated in

this case.

As explained above, the sole falsehood anywhere in the

record of the Army CID’s investigation was the statement Code

made on the school application form on April 30, 2007, that his

“current orders” expired on “July 2008.” In its interim and

final titling decisions, the CID found that Code “falsely listed

his [order expiry date] of July 2008,” Army CID, Report of

Investigation - 3rd Status, at 2 (July 30, 2009) (J.A. 225), and

concluded that there was “probable cause to believe Lt. Code

committed the offense of False Official Statement and Larceny

when he falsified documentation by registering his three

25

children in the DDESS for a year while he was not assigned to

the geographic area,” Army CID, Report of Investigation -

Final, at 2 (Jan. 12, 2011) (J.A. 399).

Even if the Army had made, the Board upheld, and

briefing preserved a charge of fraudulent failure to disenroll, a

titling and indexing decision made on that theory must fail

because it is unsupported by any credible information that

Code acted with fraudulent intent when he persisted in sending

his children to the Fort Buchanan school. This alternative

theory assumes that the application itself was not fraudulent

and that the children were permissibly re-registered at the Fort

Buchanan school, but that Code knew that his children became

ineligible once his new Permanent Change of Station orders

came through yet failed at that time to withdraw them from the

school.

Because state of mind is what differentiates mere error

from criminal fraud, a charge of fraudulent failure to withdraw

could not be made without credible information that the suspect

acted with fraudulent intent. See generally United States v.

Project on Gov’t Oversight, 616 F.3d 544, 552 & n.9 (D.C. Cir.

2010) (collecting cases). But the Army CID never identified

any credible information on which to conclude that Code knew

that his children lost their school eligibility simultaneously

with his change of orders, and hence that he knowingly violated

an obligation to take them out of school. The Board only gets

part of the way with its contention that Code’s “change of

station orders taking him to Texas had the obvious effect of

making him and his family ineligible for tuition-free education

at the Fort Buchanan school.” ABCMR, Record of

Proceedings ¶ 27 (Jan. 31, 2017) (J.A. 144). We assume that

the Board is correct that, under Department of Defense policy,

Code’s reassignment rendered his children ineligible. But that

does not mean Code knew they were ineligible. And, contrary

26

to the Board’s characterization, the eligibility rules for children

of a servicemember who moves are far from “obvious.” Id.

Department of Defense law and rules tying eligibility to

where the servicemember is stationed include an exception

allowing “currently enrolled students” to remain throughout a

school year, even after their parent-sponsor has been assigned

elsewhere. The statute states that

[t]he Secretary of Defense shall permit a dependent

of a member of the armed forces . . . to continue

enrollment in an educational program provided by

the Secretary . . . for the remainder of a school year

notwithstanding a change during such school year

in the status of the member . . . that, except for this

paragraph, would otherwise terminate the eligibility

of the dependent to be enrolled in the program.

10 U.S.C. § 2164(h)(1). In similar terms, the implementing

rule provides that, “[i]f the status of the sponsor of a currently

enrolled student changes so that the child would no longer be

eligible for enrollment,” the student’s enrollment nonetheless

“may continue for the remainder of the school year.” DoDI

1342.26 ¶ 6.3.7.

The record contains no credible information that Code

knew no such exception applied to his children. Indeed, Code’s

unrebutted declaration attests to the contrary: When Code

informed the Fort Buchanan school Registrar that he had been

reassigned to Texas, she assured him that the children could

complete the year at the Fort Buchanan school because they

had validly enrolled based on his prior assignment. See Suppl.

Code Decl. ¶ 2 (J.A. 497). Even if that view misapprehends

the relevant rule, as the Secretary now argues and we assume,

it is entirely plausible that the Registrar so understood it when

she spoke to Code.

27

Indeed, the plausibility of Code’s account of his

understanding based on his exchange with the Registrar gains

powerful support from the Army’s own inconsistent usage of

the term “enrolled.” The Secretary now argues that children

are only “enrolled” within the meaning of the currently-

enrolled-student exception once classes are underway in the

corresponding school year, whereas Code was reassigned

during the summer before school had resumed for the fall term,

making his children ineligible to “continue enrollment” under

the exception. Appellee’s Br. 42; see Oral Arg. Rec. 31:07-35.

The Registrar’s post-hoc response to the hypothetical posed by

the Army CID also narrowly construed enrollment to refer only

to attendance while “the school year was in progress

(Sep[tember] through May).” Fla. Fraud Resident Agency,

Army CID, Agent’s Investigation Report (Jan. 25, 2008) (J.A.

404). But the Board and counsel for the Secretary on this

appeal themselves all repeatedly used the term “enrollment” to

refer to registration, without regard to whether classes were yet

underway. See, e.g., Memorandum from the Army CID to

Director, U.S. Army Crime Records Ctr. (Apr. 4, 2013)

(J.A. 383) (“Code committed the offenses [of] False Official

Statement and Larceny when he enrolled his children prior to

the start of the 2007-2008 school year . . . .”); ABCMR, Record

of Proceedings ¶¶ 19, 27 (Jan. 31, 2017) (J.A. 141) (noting that

Code “is accused of fraudulently enrolling his children into the

Fort Buchanan school”); Appellee’s Br. 9, 11; Oral Arg. Rec.

30:48-54 (“They had only been enrolled. So they hadn’t

actually started school.”) (all emphases added). The Board’s

and government counsel’s equation of registration and

enrollment is inconsistent with the Department of Defense’s

reading of its own rule, but it reinforces the plausibility of

Code’s understanding, avowedly on the Registrar’s advice, that

despite his reassignment his children were “enrolled” and so

eligible to remain at the Fort Buchanan School under the

exception for currently enrolled students.

28

Ultimately, the Secretary’s case for fraudulent failure-to-

disenroll rests on the “presumption of administrative

regularity” the ABCMR accords official actions. 32 C.F.R.

§ 581.3(e)(2); see Appellee’s Br. 43-44 (citing Roberts v.

United States, 741 F.3d 152, 158 (D.C. Cir. 2014)). The

Secretary contends that a presumption that government

personnel “properly discharge[] their official duties”

establishes that, had Code or his wife called the Registrar, she

necessarily would have informed them of their children’s

ineligibility. Roberts, 741 F.3d at 158 (quoting 32 C.F.R.

§ 723.3(e)(2)); Army Board for Correction of Military

Records, Record of Proceedings (Aug. 12, 2014) (J.A. 365).

The Secretary reasons that Code’s affidavits cannot overcome

such a presumption without “corroborating evidence”—in

particular, a signed statement from the Registrar affirming

Code’s own declarations that she told him his children could

remain at the school through the 2007-2008 school year.

Appellee’s Br. 43; see also ABCMR, Record of Proceedings

¶¶ 4, 8 (Aug. 12, 2014) (J.A. 364-65). To the contrary, once

Code identified the absence of evidence supporting the Army

CID’s actions, it was not his obligation to disprove fraudulent

intent. Rather, the issue was that the Army investigators had

never met their burden to show it—first with “credible

information” for titling and indexing, and then with probable

cause to deem the charge “founded.” Neither the Army CID,

the Board, nor counsel for the Secretary have pointed to any

evidence that Code intended to defraud the government—

whether when he submitted the enrollment form accurately

stating the expiration date of his current orders, or when, after

his orders changed, his children continued to attend the Fort

Buchanan school where they were enrolled. We reject the

extraordinary position that a background presumption of

regularity can alone prove criminal intent to defraud, and that

a suspect’s statement to the contrary under oath cannot rebut

such “proof” unless independently corroborated by the very

29

official benefiting from the presumption—especially where, as

here, the administrative process does not appear to provide for

any opportunity to question or obtain a statement from the

official under oath. See 32 C.F.R. § 581.3(c)(2)(iii), (f).

CONCLUSION

We reverse the judgment of the district court, vacate the

decision of the Army Board for the Correction of Military

Records, and remand the case to the district court with

instructions to remand to the Board for further proceedings

consistent with this opinion.

So ordered.