United States v. Mary Rose Oakar and Joseph Demio

STEPHEN F. WILLIAMS, Circuit Judge,

concurring in part and dissenting in part:

My colleagues carve out what is to me an inexplicable exception to the coverage of 18 U.S.C. § 1001 . Finding no basis for this exception, I dissent.

Count Two of the indictment charges former Representative Mary Rose Oakar with having knowingly made a false statement, on or about May 15, 1992, in the form of a financial disclosure statement filed with the Clerk of the House. In the statement, according to the government, Oakar omitted at least $50,000 of personal liabilities. At the time of the alleged offense, § 1001 made it criminal to make a false statement “in any matter within the jurisdiction of any department or agency of the United States.” 18 U.S.C. § 1001 . Under Hubbard v. United States, 514 U.S. 695 , 115 S.Ct. 1754 , 131 L.Ed.2d 779 (1995), it is clear that the latter phrase embraces only executive branch de *158 partments or agencies. 1 It follows, therefore, indisputably, that the filing of the statement with the House Clerk could not, in itself, be criminal under § 1001.

But established precedents, not disputed by Oakar, make it clear that § 1001 embraces false statements made to anybody on earth if the maker “knew or should have known that the information was to be submitted to a government agency.” United States v. Yermian, 468 U.S. 63, 66-67 , 104 S.Ct. 2936, 2938 , 82 L.Ed.2d 53 (1984). 2 Indeed, the eases are legion in which § 1001 liability was grounded on statements not made to a federal agency at all. These include statements made to private organizations such as a defense contractor, as was the case in Yermian itself (false statements made by an employee to a defense contractor that in turn submitted them to the Department of Defense); an environmental group, see United States v. Oren, 893 F.2d 1057, 1064-65 (9th Cir.1990) (false statement made to a private conservation organization regarding land that at the time of the statement the National Park Service had power to and later did acquire); a private coal mine operator, see United States v. Gibson, 881 F.2d 318, 320-21 (6th Cir.1989) (false invoices submitted to contractor for costs that were to be passed on to the government under a cost-plus contract with TVA); a subsidiary of a federally insured bank, see United States v. Cartwright, 632 F.2d 1290, 1291 (5th Cir.1980) (false statements made in manipulating funds of bank’s subsidiary); and a firm budding a nuclear plant, see United States v. Green, 745 F.2d 1205 (9th Cir.1984) (test data submitted by paint supplier to contractor, falsely indicating that paint met standards of Nuclear Regulatory Commission). And liability has been based on false statements to state agencies. See United States v. Davis, 8 F.3d 923 (2d Cir.1993) (false statements submitted by federal prisoner to authorities of state prison in which he. was held under contract); United States v. Wright, 988 F.2d 1036 (10th Cir.1993) (false statements to a state environmental agency with primary enforcement responsibility for federal water quality standards); United States v. Suggs, 755 F.2d 1538 (11th Cir.1985) (false statement to state labor department in connection with federally funded program); but cf. United States v. Facchini 874 F.2d 638, 642-43 (9th Cir.1989) (en banc) (finding no liability for false statements in support of unemployment claims, made to state agency whose administrative costs were federally supported, where federal monitor lacked power to modify payments on account of state’s excess payments). And to municipalities. See United States v. Petullo, 709 F.2d 1178 (7th Cir.1983) (false invoices for snow removal from streets of Chicago after declaration of federal disaster area triggered federal support).

Until the Supreme Court’s decision in Hubbard , the appellate courts had no occasion to tackle the parallel issue presented here — a statement given to the legislative branch but arguably in a matter within the jurisdiction of the executive branch. The formerly prevailing view read “department or agency” as including the legislative and judicial branches, see United States v. Bram-blett, 348 U.S. 503 , 75 S.Ct. 504 , 99 L.Ed. 594 (1955), and made such an analysis pointless. The Second Circuit has recently, however, upheld a § 1001 conviction for false statements made to an assistant United States Attorney during negotiations to settle pending litigation before a magistrate judge, “notwithstanding the fact that-the matter may also be within jurisdiction of a federal court.” United States v. Tracy, 108 F.3d 473, 477 (2nd Cir.1997). Although the court noted that the statements had not been “presented to a federal court,” id. at 477 , it is not clear whether or how that comment may qualify the court’s apparent acceptance of dual jurisdiction.

*159 At the time of Oakar’s filing there was a similar prospect of flow-through to a federal executive agency. For some time before the filing there had been widespread publicity about members’ large and prolonged overdrafts at the House Bank, and on March 27, 1992 (six weeks before her filing), the Attorney General appointed former Judge Malcolm R. Wilkey as a special counsel to look into the possibility of crimes committed in connection with these overdrafts. He was not looking into the possibility of deception in statements filed under the Ethics in Government Act, so far as appears, but into a range of substantive crimes. And he, or the prosecutors who succeeded him after he filed his report, found them. See United States v. Oakar, 924 F.Supp. 232, 240 (D.D.C.1996) (tracing succession). At least two members of Congress and the wives of two members pleaded guilty to criminal charges, including conversion of government property and bank fraud, in violation of §§ 641 and 1344 of Title 18. 3 It was evidently in this pursuit that Wilkey or his successors came across the allegedly false Oakar statement. See uncon-tradicted assertion in Appellant’s Brief at 22. Cf. Appellee’s Reply Brief at 26 (asserting that implications of government’s theory resting liability on pendency of the investigation were broad, but not questioning its premises). See also Final Report: Preliminary Inquiry of the Special Counsel to the Attorney General Concerning the House Banking Facility 38 (Dec. 16, 1992) (describing investigatory methods as including computerized review of House Bank records, supplemented by review of “filings under ... the Ethics in Government Act to determine whether transactions were being concealed.”) [Exhibit 5 to Defendant’s Motion to Dismiss Count One, United States v. Oakar, Crim. No. 95-0043 (D.D.C., June 30, 1995) (Dkt. 20).]

In a trial the government might not be able, in the end, to show that Oakar knew or ought to have known that the statement filed with the House Clerk would be submitted to the Department of Justice (in the form of special counsel Wilkey or his successors). But that is a matter for trial, not a reason for dismissing Count Two. The indictment charges Oakar with making a false statement “in a matter within the jurisdiction of an agency of the United States.” The pleading of a crime in the statutory form normally suffices. See Hamling v. United States, 418 U.S. 87, 117 , 94 S.Ct. 2887, 2907-08 , 41 L.Ed.2d 590 (1974) (indictment can set forth offense in language of statute itself as long as that language clearly sets out all elements). Here the indictment adds some surplusage, saying that Oakar made the false statement by filing with the House Clerk a Financial Disclosure Statement for 1991 that omitted $50,000 in liabilities. On the basis of liability for statements made to private organizations, state agencies and municipalities, the additional allegations are perfectly consistent with liability under § 1001.

My colleagues, however, insist that the qualified congressional grant of jurisdiction to the Attorney General to pursue civil penalties against members of Congress failing to file required statements, or filing false ones, on a reference by the House Ethics Committee, see § 104 of the Ethics in Government Act, 5 U.S.C. app., negates any coverage by § 1001. To be more exact, the majority reformulates the question: “Thus, the question is whether, by granting the Attorney General authority to seek civil penalties for the making of false statements and to appoint Judge *160 Wilkey to investigate the House Bank scandal, Congress intended to create Executive Branch jurisdiction within the meaning of § 1001.” Maj. Opin. at 155. But unless there was some other doctrine under which false statements in the House are exempt from § 1001 liability (where parallel statements to a private organization, a state, or a municipality would be covered), this is pure intellectual ju-jitsu. (It also misperceives the government’s theory here. The appointment of Judge Wilkey, evidently a simple exercise of the Attorney general’s authority to delegate his own functions, see 28 U.S.C. § 510 , is of significance only in that it put Oakar on clear notice, that her financial disclosures, in any form, were likely to come under Justice Department scrutiny.) The majority’s real theory is evidently that § 104 of the Ethics in Government Act itself negates the sort of liability that would attach to Oakar if, as a private citizen, she made a false statement to another private citizen, which a federal executive investigation was likely to find in the course of properly pursuing matters within its authority.

If the claim of implicit exemption were an issue of first impression, it would seem weak to me. But it is not. We have already rejected such a reading of the Ethics in Government Act. In a decision written by then-Circuit Judge Scalia, United States v. Hansen, 772 F.2d 940, 945 (D.C.Cir.1985), we said: “There is no difficulty in applying both 18 U.S.C. § 1001 and [§ 104 of the Ethics in Government Act]____ [T]hose who intentionally fail to file [Ethics in Government Act] forms are subject only to the civil sanction ... while those who he on their forms are additionahy subject to the criminal penalty of § 1001.” Id.

My colleagues attempt to discount Hansen on the grounds that it was decided before Hubbard , in an era when, under controlling precedents, Congress was a “department or agency” within the meaning of 18 U.S.C. § 1001 . Maj. Op. at 155. But Hubbard merely removes one basis for finding the statement covered. Far from holding that Congress did not intend “to authorize § 1001 prosecutions for statements made to the Legislative Branch,” Maj. Op. at 155, it simply

establishes that neither the House nor its Clerk nor the House Ethics Committee is a “department or agency” within the meaning of § 1001. See United States v. Dean, 55 F.3d 640, 658-59 (D.C.Cir.1995) (rejecting attempt of government to rest liability solely on testimony misleading a Senate Committee). Nothing in Hubbard suggests that statements to organizations not covered by 18 U.S.C. § 1001 cannot be prosecuted under 18 U.S.C. § 1001 if they are also on matters within the jurisdiction of an executive branch “department or agency.” Nor did Hubbard suggest that a matter could not be within the jurisdiction of departments or agencies of the executive as well as of one (or both) of the other branches. Since Hansen says simply that § 104 of the Ethics in Government Act does not negate § 1001 liability, it is still good law; Hubbard means only that the government cannot rest on the notion that Congress or one of its committees is a covered “department or agency.” Given the established cases finding liability even for statements made to entities other than covered departments or agencies, Hubbard has no effect on Hansen's essential point. Persons making statements to Congress under circumstances that would entail liability if made to. a private organization such as General Motors remain as hable as ever. The government should have a chance to show that Oakar’s conduct fits within these principles.

The majority suggests that failure to exempt statements made in a matter in the jurisdiction of the judicial and legislative branches could lead to § 1001 prosecutions for ordinary trial perjury; because the perju-rious statement would itself be likely to precipitate a Department of Justice investigation and prosecution, the perjuror would be on adequate notice under Yermian . Maj. Op. at 156. Perhaps so — but resolution would seem to turn more on such issues as how one defines the Justice Department’s “jurisdiction,” and whether the perjurious statement itself was “in a matter” within that jurisdiction, see pp. 161-62 below, than on whether statements in courtrooms are somehow immune from § 1001. Except in jurisdictions applying the judicially invented “exculpatory no” exception, false statements made in mat *161 ters that the Justice Department already is investigating trigger § 1001 liability, see, e.g., United States v. Wiener, 96 F.3d 35 (2d Cir.1996), even though the prosecutor might also seek an obstruction of justice conviction under 18 U.S.C. § 1503 . Compare United States v. Grubb, 11 F.3d 426, 436-38 (4th Cir.1993) (finding that false statement to FBI agent can be basis of obstruction of justice charge) with United States v. Aguilar, 21 F.3d 1475, 1486 (9th Cir.1994) (rejecting such a theory). Counts Three and Seven of the Indictment explicitly charge Oakar under such a theory. It is hard for me to see why it should make a difference that an intermediary (the Clerk of the House) stood between Oakar and the Department’s investigative staff in regard to the statement that is subject of Count Two. Cf. Tracy, 108 F.3d at 476-77 .

The 1996 amendments to § 1001, extending “department or agency” to encompass the legislative and judicial branches, see n.l above, render the current issue a matter of history (except, of course, to Oakar and the government). But this ease forces one to ponder the implications of applying § 1001 to statements not made to a “department or agency.” The Supreme Court made that application clear in Yermian , rejecting the defendant’s claim that guilt required “actual knowledge of federal involvement.” 468 U.S. at 74 , 104 S.Ct. at 2942 . The Court upheld a conviction based on a jury instruction that the defendant could be found guilty if he “knew or should have known that the information was to be submitted to a government agency,” id. at 66-67 , 104 S.Ct. at 2938 , and left open the question of whether even reasonable foreseeability was required, id. at 75 n. 14, 104 S.Ct. at 2943 n. 14. The Court in places appeared to take the view that the “in any matter” clause was intended only to be sure that the statute was “limited to issues of federal concern.” Id. at 74 , 104 S.Ct. at 2942 . In the modern world, that is scarcely any limit at all. Thus Yermian might be read to permit § 1001 to reach any material, knowing false statement that turns out to have a fortuitous federal involvement — for example, a statement that the IRS happens upon in the course of a tax audit, or a casual falsehood made in the unknown presence of a federal officer and somehow pertinent to his mission.

There has been some judicial resistance to Yermian . In one case the majority applied it faithfully, but with the comment that “[i]t implies no disrespect to say that Yermian is not as firmly entrenched in our jurisprudence as McCulloch v. Maryland, say, or Brown v. Board of Education.” United States v. Gibson, 881 F.2d 318 , 323 n. 2 (6th Cir.1989). The dissenter, on the basis of a head count of justices in the Yermian majority no longer on the Court, declared that the ease was no longer “good law” and declined to apply it. See id. at 324-25.

Of course, the Court may ultimately resolve Yermian’s open question in favor of a narrow construction, requiring evidence that the defendant should have known of the prospective federal involvement. While the Court there pointed to alternative language by which Congress could ham explicitly preserved a requirement of intent to mislead federal authority, Yermian, 468 U.S. at 73 , 104 S.Ct. at 2941-42 , it does not follow, from Congress’s failure to choose that language, that it intended to dispense with the traditional rule associated with common law fraud that the maker of a statement to a third party (i.e., one other than the actual victim) must have “intend[ed] or [have] reason to expect that its terms will be repeated or its substance communicated to the other.” Restatement (Second) of Torts § 533.

The parties have not raised the issue of alternative sources of limits, but a couple (besides the question Yermian explicitly left open) deserve mention. The statute imposes liability only for a statement made “in any matter within the jurisdiction of any department or agency of the United States.” 18 U.S.C. § 1001 (emphasis added). The word “matter” suggests a case or inquiry. It also suggests an existing matter, i.e., a pending one — or at least one likely to be launched as a foreseeable result of a false statement made to a department or agency. Compare United States v. Rodgers, 466 U.S. 475 , 104 S.Ct. 1942 , 80 L.Ed.2d 492 (1984) (liability for *162 false statement to FBI setting it off on a pointless investigation).

Moreover, it is not clear that a person is making a statement “in any matter” if a reasonable person in his position would not have foreseen the statement’s connection to the “matter.” The Court in Yennian noted that Congress in its 1934 amendment of the statute deleted the “specific intent” provision, which had required that the statement be made “for the purpose and with the intent of cheating and swindling or defrauding the Government of the United States or any department thereof.” Yermian, 468 U.S. at 70-74 , 104 S.Ct. at 2940-42 . But deletion of that phrase hardly compels the conclusion that Congress intended liability where the defendant was unaware of any link to a federal “matter.” All agree that the catalyst for the change was the “hot-oil” scandal of the 1930s, which involved false statements that had been submitted to the government, and whose falsity tended to thwart its regulatory goals. But they had not been submitted for the purpose of securing payment from the federal government, and were thus outside the predecessor act. See Hubbard , 514 U.S. at -, 115 S.Ct. at 1761 . The regulatory program’s efficacy depended on the regulated firms’ submission of accurate information. There appears no comparable dependence on the reliability of information acquired serendipitously.

Of course these issues are not now before us. I mention them only to make the point that, on the one that is, the government’s reading of the statute does not inevitably lead to a complete metastasis of § 1001 liability.

I agree with the court’s reversal of the district court’s striking of certain allegations from Count Four of the indictment. But because I disagree with the exclusion of § 1001 liability, derived from the supposed effect of § 104 of the Ethics in Government Act, I respectfully dissent.

.. Since Hubbard , Congress has amended the statute to expand its reach to the judicial and legislative branches, with some exceptions. See False Statements Accountability Act of 1996 § 2(b), Pub.L. No. 104-292, 110 Stat. 3459 (Oct. 11, 1996). The extension of course does not apply to any conduct of Oakar in May 1992.

. This formulation may understate the breadth of potential § 1001 liability for false statements to third parties. I return below to the issue of intent.

. See United States v. Solarz, Crim. No. 95-93 (D.D.C., April 18, 1995) (criminal information prepared by House Bank Task Force charging wife of former Congressman with two misdemeanors, including one count of conversion under 18 U.S.C. § 641 ; plea agreement filed same day at Dkt. 1); United States v. Carroll Hubbard, Jr., Crim. No. 94-0128 (D.D.C., April 5, 1994) (criminal information prepared charging former member of Congress with stealing and conversion of government property, 18 U.S.C. § 641 ; plea agreement filed same day at Dkt. 7); United States v. Carol Brown Hubbard, Crim. No. 94-0127 (D.D.C., April 5, 1994) (criminal information charging defendant with aiding and abetting Carroll Hubbard in his violation of 18 U.S.C. § 641 ; plea agreement filed same day); and United States v. Perkins, Crim. No. 94-0480 (D.D.C., Dec. 13, 1994) (criminal information charging former member of Congress with violating bank fraud statute, 18 U.S.C. § 1344 ; plea agreement filed same day at Dkt. 2). [Exhibits A, E, F & C to Government’s Memorandum of Points and Authorities at 6-7, United States v. Oakar, Crim. No. 95-0043 (D.D.C., June 30, 1995) (Dkt. 32).]