Petition for Writ of Certiorari — Kenneth R. Spirito, Petitioner v. United States

Supreme Court briefSep 26, 2022

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No. _______

In The

Supreme Court of the United States

KENNETH R. SPIRITO,

Petitioner,

UNITED STATES OF AMERICA,

Respondent.

On Petition for Writ of Certiorari

to the United States Court of Appeals

for the Fourth Circuit

APPENDIX

Erin Harrigan

GENTRY LOCKE

10 Franklin Road, S.E.

Post Office Box 40013

Roanoke, Virginia 24022-0013

Telephone: (540) 983-9300

Facsimile: (540) 983-9400

harrigan@gentrylocke.com

Counsel for Petitioner

LANTAGNE LEGAL PRINTING

801 East Main Street Suite 100 Richmond, Virginia 23219 (800) 847-0477

APPENDIX TABLE OF CONTENTS

Opinion of the United States Court of

Appeals for the Fourth Circuit,

filed May 31, 2022 .................................................... A1

Opinion of the United States District Court

for the Eastern District of Virginia,

filed July 10, 2021 .................................................. A47

Order on Rehearing of the United States

Court of Appeals for the Fourth Circuit,

filed June 28, 2022 ................................................. A66

18 U.S.C. § 666 ....................................................... A67

18 U.S.C. § 1957 ..................................................... A69

49 U.S.C. § 46301 ................................................... A71

14 C.F.R. § 13.15 .................................................... A82

14 C.F.R. § 13.16 .................................................... A85

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 20-4393

UNITED STATES OF AMERICA,

Plaintiff - Appellee,

KENNETH R. SPIRITO,

Defendant - Appellant.

Appeal from the United States District Court for the

Eastern District of Virginia, at Newport News.

Raymond A. Jackson, District Judge. (4:19-cr-00043RAJ-DEM-1)

Argued: September 24, 2021

Decided: May 31, 2022

Before GREGORY, Chief

THACKER, Circuit Judges.

Judge,

MOTZ,

and

Reversed and vacated in part, affirmed in part, and

remanded by published opinion. Chief Judge

Gregory wrote the opinion, in which Judge Motz and

Judge Thacker joined.

ARGUED: Erin Harrigan, GENTRY LOCKE,

Richmond, Virginia, for Appellant. Brian James

Samuels, OFFICE OF THE UNITED STATES

ATTORNEY, Newport News, Virginia, for Appellee.

ON BRIEF: Raj Parekh, Acting United States

Attorney, Alexandria, Virginia, Lisa R. McKeel,

Assistant United States Attorney, OFFICE OF THE

UNITED STATES ATTORNEY, Newport News,

Virginia, for Appellee.

GREGORY, Chief Judge:

In 2012, Kenneth R. Spirito and members of the

Peninsula Airport Commission began searching for

an airline carrier that would bring low-cost air

service and attendant passenger traffic to Newport

News-Williamsburg International Airport. They

came upon a start-up airline called People Express;

but People Express had trouble securing funding. So

Spirito spearheaded an effort to use restricted state

and federal funds as collateral to secure a bank loan

for People Express. After People Express defaulted

on the loan and millions of dollars were lost, Spirito

was indicted, tried, and convicted of federal program

fraud, money laundering, and perjury. On appeal,

Spirito maintains that there was insufficient

evidence to support conviction on some counts, as

well as that the district court erred by refusing to

give a particular jury instruction, excluding a certain

piece of evidence, and entering a forfeiture money

judgment without notice. Finding one of these

arguments persuasive, we reverse the conviction on

Count 19 (a federal program fraud charge for three

credit card transactions), and affirm the district

court’s judgment of convictions and sentences as to

the other counts.

Kenneth R. Spirito served as Executive Director

of the Newport News-Williamsburg International

Airport from 2009 to 2017, and the Peninsula

Airport Commission (“PAC”)—made up of six

individuals appointed by the City of Newport News

and City of Hampton—serves as the airport’s

governing body.1 In his role, Spirito executed the

decisions of the PAC and oversaw the airport’s daily

operations.

The airport receives funds from at least five

government programs (individually and collectively,

“PAC funds”). State Entitlement funds are subject to

Virginia state law and are regulated by the Virginia

Department of Aviation (“DOAV”). These funds can

be used for capital projects, and the airport must

report its use annually via Entitlement Utilization

Reports. The Federal Aviation Administration

(“FAA”) oversees the remaining four programs: (i)

the Airport Improvement Program requires airport

revenue to cover operating and capital needs; (ii)

“passenger facility charges” may be used for FAAapproved airport development projects and the

airport must submit reports detailing its use against

specific projects; (iii) Small Community Air Service

Development (“SCASD”) funds are reimbursable

grants for marketing and air service development

after the incursion of expenses related to flights

1 The facts described below are drawn from the evidence

introduced at trial and viewed in the light most favorable to the

government. See United States v. Palacios, 677 F.3d 234, 250

(4th Cir. 2012) (citation omitted).

operating at a loss; and (iv) the Regional Air Service

Enhancement Group (“RAISE”) provides $700,650 in

matching funds for money the airport receives from

the SCASD and such funds are to be placed in

escrow. At trial, all state and federal regulators

testified that, under relevant regulations, manuals,

and policies, PAC funds could not be used to

collateralize a loan or subsidize an airline. Several

witnesses testified that Spirito knew of these

restrictions and that he could contact regulators to

clear up any ambiguity regarding the restrictions.

In 2012, AirTran Airways stopped providing

services at the airport. As a result, the airport lost

low-cost air service and attendant passenger traffic.

Hoping to abate the negative effect on the airport

and local community, Spirito and PAC member

James Bourey tried to identify and recruit a new air

service provider. Eventually, they came upon People

Express. At the time, People Express was not

operational, but it obtained terminal space rent free

at the airport with plans to make the airport its

headquarters and start flying by the fall of 2012. But

it could not attract investors, so People Express

remained grounded.

As 2014 began, People Express still had no

planes in the air. It planned a deal with another

airline—Vision Airways—to lease planes and crew

for use under the People Express name. This deal

required People Express to raise at least $10 million.

The airline eventually applied for funding from

TowneBank, a regional bank headquartered in

Virginia. Uninterested in giving People Express a

loan because of its lack of tax returns, lack of

profitability, and significant debts, TowneBank

decided in May 2014 that it would extend a $5

million loan if the airline procured a guarantor and a

third-party source of cash collateral. TowneBank

required the cash collateral to be placed in accounts

with the bank. Once these accounts were funded, the

money could not be removed without the bank’s

approval.

Soon after, Spirito told Bourey and People

Express CEO Jeff Erikson that he had a way to

make it happen: the loan could be secured using

PAC funds. On June 5, Spirito emailed TowneBank

confirming the creation of three collateral accounts,

providing the titles of the accounts, and noting the

total funds that would be put into each account.

Spirito met with Renee Carr, the airport’s Director of

Finance, and instructed her on how to fund the

collateral accounts, providing handwritten notes

detailing which funds would go into which accounts.

When Carr expressed concern about the airport

guaranteeing a private loan for People Express,

Spirito asked, “Well, do you know what it takes to

start an airline?” J.A. 1658.

About two weeks later, it became official: thenPAC Chairperson LaDonna Finch executed various

contracts on behalf of the PAC to guarantee

performance of a $5 million line of credit issued by

TowneBank to People Express. PAC members

testified that they did not fully understand the

implications of or appreciate that PAC funds would

be used as collateral for the loan.2 And they relied on

Finch did not know specifics about the collateral or

understand the details of the loan; Finch admitted to signing

the relevant documents after “leaf[ing] through [the] pages.”

J.A. 755. PAC member George Wallace did not understand that

the loan would be guaranteed by the airport. PAC member

Stephen Mallon did not understand that the airport was

Spirito for advice and recommendations related to

the management of PAC funds. As Spirito confirmed

during cross-examination: “[The PAC] executed the

[loan] agreement . . . . The funding was my idea.”3

J.A. 2103.

The testimony of Special Agent Christopher

Waskey, as well as the bank records introduced at

trial, revealed which PAC funds were used to

populate each collateral account. Counts 1-6 of the

superseding indictment, charging misapplication of

funds in violation of 18 U.S.C. § 666(a)(1)(A), relate

to Spirito directing the initial transfer of PAC funds

into the collateral accounts in June and July 2014:

• Count 1: $720,000 in State Entitlement funds;

• Count 2: $1,280,000 million in airport revenue;

• Count 3: $700,650 in RAISE funds;

• Count 4: $565,000 in airport revenue;

• Count 5: $385,000 in Passenger Facilities

Charges; and

• Count 6: $460,119.37 in State Entitlement

funds.

Counts 7-11, also charging misapplication of

funds in violation of 18 U.S.C. § 666(a)(1)(A), relate

to Spirito directing the transfer of additional PAC

funds into the collateral accounts in September,

putting its own assets at risk in the form of collateral and was

unaware of how the loan guaranty was funded until 2017.

3 Also in June 2014, Spirito sought RAISE funds for People

Express. He procured $700,000, and RAISE had no idea that

the funds would be used as collateral for a loan to People

Express. After People Express obtained the loan proceeds, it

sent $650,650 of the $700,000 to Vision Airways.

October, and December 2014, as well as January and

April 2015:

• Count 7: $148,213.96 in State Entitlement

funds;

• Count 8: $26,000 in Passenger Facilities

Charges;

• Count 9: $666,666.66 in State Entitlement

funds;

• Count 10: $13,000 in Passenger Facilities

Charges; and

• Count 11: $249,312.79 in State Entitlement

funds.

In November 2014, People Express fell behind on

the interest payments and were without funds to

catch up. TowneBank turned to the PAC, seeking the

money owed. Between December 2014 and April

2015, Spirito authorized a series of transfers from

the collateral accounts to make interest and

principal payments on the loan. These transactions

support Counts 12-17 of the superseding indictment,

charging money laundering in violation of 18 U.S.C.

§ 1957.

But ultimately, the $5 million loan was not enough

to keep People Express in the air. People

Express drew down the entire line of credit by

August 2014 (one month after the loan’s inception),

suspended service in September 2014, and defaulted

on the loan in January 2015. In early 2015,

TowneBank called the loan and cleaned out the

collateral accounts to satisfy People Express’ debt.

Evidence adduced at trial suggested that Spirito,

at the time he ordered the collateral accounts funded

and after, concealed the fact that PAC funds were

used to guarantee a commercial loan.

For example, the titles Spirito gave to each

collateral account—“State Entitlement,” “SCASD,”

and “RAISE”—did not reflect the PAC funds placed

into the accounts. J.A. 1666; see also J.A. 36–37. The

“State Entitlement” account contained State

Entitlement funds, airport revenue, and passenger

facility charges. See J.A. 1664, 1670, 1875, 2017. The

“SCASD” account contained airport revenue. J.A.

1664–65. And the “RAISE” account contained RAISE

funds and passenger facility charges. J.A. 1669.

In one instance, in the fall of 2014, Spirito

instructed airport staff to delay submitting audited

financial statements to the City of Newport News

because he was concerned that the loan guaranty

would be reflected as a potential liability.

In another instance, in May 2014, Spirito

submitted a discretionary funds application to the

DOAV, but did not tell the state that, at the same

time, State Entitlement funds were being committed

as collateral for a loan. And Spirito did not include

the loan guaranty in the airport’s 2014 Entitlement

Utilization Report.

The airport did not file its 2015 and 2016

Entitlement Utilization Reports by the relevant

deadlines. After several follow-up requests, the

reports were submitted in October 2016. As to the

2015 report, Spirito directed the inclusion of an

entry entitled “Air Service Development” in the

amount of $3.5 million. In early 2017, more than two

years after the loan was collateralized and defaulted,

Carr revealed in response to an inquiry about the

line item that the funds were used for a loan

guaranty.

And in another instance, in January 2017, after

learning of the defaulted loan via a news article, the

FAA emailed Spirito, asking: “How much was paid

and specifically what type of funds were used to

make the payment?” J.A. 2086. In his response,

Spirito stated that State Entitlement, SCASD, and

RAISE funds were used, and listed amounts for

each. See J.A. 2346. He did not reveal that passenger

facility charges and airport revenue were also used.

This conduct underlies Count 18, charging

falsification of records in federal investigations, in

violation of 18 U.S.C. § 1519.

Earlier on, when People Express failed, Spirito

circulated press talking points that discussed

“[f]unds used to help launch an [a]ir [s]ervice,” but

did not reference the loan guaranty. J.A. 2165. At

one point, Spirito told the owner of the airport

restaurant that his career in the airline industry

“would be over” if the loan guaranty went public.

J.A. 1599.

And all the regulator witnesses testified that

Spirito did not ask if the PAC funds could be used to

guarantee a commercial loan, and they were

informed only well after the fact that PAC funds

were used this way.

In May 2017, the PAC terminated Spirito’s

employment as Executive Director, after discovering

that he used an airport credit card to buy a vehicle

A10

warranty and pay for repairs to his personal vehicle.

Spirito characterized the auto expenses as “vehicle

maintenance” on reimbursement receipts and

admitted that he made these purchases and later

remitted funds back to the Airport Commission in

the amount of approximately $5,800. This conduct

underlies Count 19, charging misapplication of funds

in violation of 18 U.S.C. § 666(a)(1)(A).

In 2018, Spirito filed a civil defamation suit

against the PAC and certain airport employees. He

eventually provided testimony in a deposition during

which he testified about several matters related to

the loan guaranty. He denied using airport revenue

as collateral for the loan and said he told the PAC

that airport revenue could not be used for this

purpose; claimed that he opposed the loan guaranty;

and denied his role in designing the collaterization

schedule. The statements Spirito made during this

civil deposition underlie Counts 20, 21, and 23,

charging perjury in violation of 18 U.S.C. § 1623(a).

A superseding indictment charged Spirito with

24 counts, and a forfeiture allegation sought a

monetary judgment of $3,817,931.29.

Spirito proceeded to trial on February 25, 2020.

During his case-in-chief, Spirito sought to present

evidence that, in 2017, the Virginia General

Assembly passed Senate Bill 1417, which amended

Virginia Code § 5.1-2.16 relating to the use of State

Entitlement funds. The amendment added the

following sentence to the statute: “State moneys . . .

shall not be used for (i) operating costs unless

otherwise approved by the Board or (ii) purposes

A11

related to supporting the operation of an airline,

either directly or indirectly, through grants, credit

enhancements, or other related means.” J.A. 320. In

a letter sent to some members of the Virginia

General Assembly (with Wallace and Spirito carbon

copied), the Virginia Secretary of Transportation

stated that this addition was prompted by the PAC’s

unauthorized use of state entitlement funds. S.A.

471–72. Spirito’s counsel proffered the amendment

and letter as evidence that, in 2014, Spirito could

use the funds the way he did, as well as evidence

that Spirito lacked intent to misuse restricted funds.

The district court precluded mention of this

evidence.4

At the close of his case, Spirito asked the district

court to provide the following limiting instruction:

[E]vidence of alleged violations as to any . . .

handbooks, rules, publications, guidelines

and regulations should not be considered by

you as a violation of criminal law per se. You

may consider, however, evidence of the . . .

handbooks, rules, publications, guidelines

and regulations as you would any other

evidence in determining whether or not the

defendant had the required intent to violate

the criminal statute charged in the

indictment.

J.A. 2182. The district court refused this instruction,

finding that “the charge, as a whole, is sufficient to

The district court also excluded evidence related to

another airport in Virginia––specifically, in Lynchburg––which

used State Entitlement funds for an ineligible project in 2013.

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avoid any confusion that this conduct has to be a

violation of [a] criminal statute.” J.A. 2216.

The jury returned guilty verdicts on all but one

of the counts, acquitting Spirito on one perjury

charge (Count 22).

Spirito filed post-trial motions for judgments of

acquittal, challenging all counts of conviction. The

district court denied these motions except as to

Count 24, the conviction for obstruction of justice.

On July 1, 2020, the government filed a motion

for a preliminary order of forfeiture, requesting a

$3,817,931.29 money judgment, as well as forfeiture

of two Wells Fargo bank accounts and two Jeeps.

Five days later, on July 6, the district court entered

the order.5 According to trial counsel, “[t]he

[preliminary] order expressly incorporates itself into

the Judgment.” United States v. Spirito, No. 4:19CR-43, (E.D. Va., Pacer No. 138 at 2) (citing

Preliminary Order of Forfeiture, ¶ 9); see

Preliminary Order of Forfeiture, J.A. 2484

(“Pursuant to Rule 32.2(b)(4)(B), this order of

forfeiture shall be included in the Judgment imposed

in this case.”). Spirito did not object to the

preliminary order of forfeiture before the sentencing

that followed two weeks later, during the sentencing,

or before the entry of judgment.

On July 15, the district court departed below the

advisory sentencing guidelines range, and sentenced

According to the preliminary order of forfeiture, the

money judgment corresponds with the sum involved in the

money laundering transactions for which the jury found Spirito

guilty. J.A. 2481.

A13

Spirito to 48 months of probation, with a special

condition of home detention for 30 months. The

district court also ordered Spirito to pay

$2,511,153.16 in criminal restitution.6

Spirito timely appealed. He challenges the

sufficiency of the evidence supporting some of his

convictions, as well as the district court’s decision

not to provide the requested jury instruction;

exclusion of evidence regarding the change in state

law; and issuance of a forfeiture order without

notice.

II.

The Court reviews “challenges to the sufficiency

of evidence de novo.” United States v. Graham, 796

F.3d 332, 373 (4th Cir. 2015). If, viewing the

evidence in the light most favorable to the

government, the Court concludes there is substantial

evidence to uphold the jury’s decision, this Court will

affirm the verdict. Burks v. United States, 437 U.S.

1, 17 (1978). “Substantial evidence is such evidence

that a reasonable finder of fact could accept as

adequate and sufficient to support a conclusion of a

defendant’s guilt beyond a reasonable doubt.” United

States v. Hager, 721 F.3d 167, 179 (4th Cir. 2013). In

reviewing the sufficiency of the evidence, the Court

“allow[s] the government the benefit of all

reasonable inferences from the facts proven to those

sought to be established,” United States v. Tresvant,

677 F.2d 1018, 1021 (4th Cir. 1982), and does not

weigh the credibility of the evidence or resolve

6 Spirito does not challenge the district court’s order to pay

criminal restitution.

A14

conflicts in the evidence, United States v. Beidler,

110 F.3d 1064, 1067 (4th Cir. 1997). Reversal of a

conviction for insufficient evidence is limited to

“cases where the prosecution’s failure is clear.”

United States v. Foster, 507 F.3d 233, 244–45 (4th

Cir. 2007).

Spirito first argues that there was insufficient

evidence for the jury to find him guilty of federal

program fraud, as charged in Counts 1-11. Section

666 prohibits an agent of an organization receiving

in any one-year period federal benefits in excess of

$10,000 from “embezzl[ing], steal[ing], obtain[ing] by

fraud or otherwise without authority knowingly

convert[ing] to the use of any person other than the

rightful owner or intentionally misappl[ying]”

property owned or controlled by that organization

and carrying a value of $5000 or more. 18 U.S.C. §

666(a)(1)(A).

Spirito concedes that the government prosecuted

him under the theory of “intentional misapplication.”

Opening Br. at 28. Spirito argues that, for several

reasons, there was insufficient evidence for a

reasonable jury to convict him under this theory.

These reasons include that he (i) acted “with[]

authority”; (ii) did not receive a “bribe, kickback, or

personal benefit”; and (iii) did not “obtain[] the

property” of another or “deprive” another of their

property. Opening Br. at 28, 30–31.

First, Spirito contends that he acted at the

direction and with the authority of the PAC. The

district court concluded otherwise, explaining: “[T]he

Government presented adequate evidence to support

A15

the jury’s conclusion that the Defendant—not the

[Airport Commission], [its] employees, or [its]

counsel—was responsible for allocating restricted

funds for a loan guarantee to [People Express].” J.A.

2527. We agree, and Spirito’s attempt to blur the

facts to prove otherwise is unavailing.

To be clear, the PAC executed the loan guaranty,

but Spirito single-handedly decided how to fund the

collateral accounts that were pledged in support of

the loan. The evidence adduced at trial

demonstrated that he knew of the restrictions on the

PAC funds; he selected the PAC funds to be placed in

the collateral accounts; he named the collateral

accounts; he directed the funding of the collateral

accounts; and he knew that the PAC would be

unable to withdraw funds from the collateral

accounts without TowneBank’s permission.

The evidence also suggested that Spirito knew

that his actions were unauthorized and illegal. He

did not seek clarification from state and federal

regulators; he used misleading titles on the

collateral accounts; he concealed use of the PAC

funds by delaying submission of audited financial

statements and Entitlement Utilization Reports, and

by omitting mention of the loan in the Entitlement

Utilization Reports and press talking points; he lied

about the use of the PAC funds when directly

questioned by the FAA and lied about other issues

related to the loan and collateral accounts when

questioned during the civil deposition; and, at one

point, he proclaimed that his career “would be over”

if the loan guaranty went public. This evidence

permits a reasonable jury to conclude Spirito did not

act at the direction and with the authority of the

PAC.

A16

Second, Spirito argues that he did not

intentionally misapply the funds because he received

no “bribe, kickback, or personal benefit.” Opening

Br. at 31. But nothing in the statute suggests that a

bribe, kickback, or personal benefit must flow from

the intentional misapplication of property. The

Second Circuit spells this point out well:

Section 666(a)(1)(A) prohibits embezzling,

stealing, obtaining by fraud, converting, or

intentionally misapplying funds. The first

four prohibitions cover any possible taking of

money for one’s own use or benefit.

Intentional misapplication, in order to avoid

redundancy,

must

mean

intentional

misapplication for otherwise legitimate

purposes; if it were for illegitimate purposes,

it would be covered by the prohibitions

against embezzlement, stealing, obtaining by

fraud, or conversion.

United States v. Urlacher, 979 F.2d 935, 938 (2d Cir.

1992). Other sister circuits have also refused to limit

intentional misapplication under § 666(a)(1)(A) by

applying a personal benefit or illegitimate purpose

requirement. See, e.g., United States v. CornierOrtiz, 361 F.3d 29, 37 (1st Cir. 2004) (citing Urlacher

to conclude that using funds for legitimate purposes,

but in violation of conflict of interest rules, is still an

intentional misapplication); United States v. Shulick,

18 F.4th 91, 107–13 (3d Cir. 2021) (rejecting

argument that a § 666(a)(1)(A) violation under the

intentional misapplication theory may never occur

unless the defendant misapplied property for his

benefit and to the detriment of the proper recipient

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of federal funds); United States v. Frazier, 53 F.3d

1105, 1114 (10th Cir. 1995) (concluding that there

was a misapplication even though “[t]he funds were

[still] used to purchase computers and computer

equipment for the [victim] organization”); United

States v. Freeman, 86 F. App’x 35, 41 (6th Cir. 2003)

(unpublished) (finding no error where district court

instructed jury that “[§ 666] prohibits a defendant

from intentionally misapplying or misappropriating

funds, even if the funds are used for otherwise

legitimate purposes”); United States v. Cameron, 86

F. App’x 183, 189 (7th Cir. 2004) (unpublished)

(concluding that § 666(a)(1)(A) “does not require

conversion of funds to one’s own use; it requires only

an intentional misapplication of funds, even if the

funds are used for what would otherwise be a

legitimate purpose”).

Third, Spirito maintains that he did not “obtain[]

the property” of another or “deprive” another of their

“property.”

But

the

statute

requires

the

“misapplication” of property owned by, or under the

care, custody, or control of another—it does not

require the defendant to “obtain” the property or

“deprive” the owner of the property.

Spirito further argues that he made a mere

regulatory decision regarding the funds and, even if

the decision was bad or made for sinister reasons, it

does not amount to the “misapplication” of property.

Opening Br. at 31–33. To support this argument,

Spirito points to a recent Supreme Court case:

United States v. Kelly, 140 S. Ct. 1565 (2020). In

Kelly, two officials in the administration of former

New Jersey Governor Chris Christie conspired to

shut down toll lanes on the George Washington

Bridge to punish the mayor of Fort Lee for refusing

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to endorse Christie’s reelection bid. Id. at 1569–70. A

jury convicted the two government officials under §

666(a)(1)(A) and the Supreme Court reversed,

explaining that the federal program theft statute

sought to safeguard against “property fraud”—not to

“criminaliz[e] all acts of dishonesty.” Id. at 1571

(emphasis added). In Kelly, the government officials

never sought “to take the government’s property”—

they sought only to divert the State’s regulatory

power to injure a political adversary. Id. at 1572.

Just as the defendants in Kelly merely exercised

their regulatory power, Spirito contends, so too did

he exercise his right to “allocate[e] airport funds

among airport uses,” even if such allocations broke

the rules. Opening Br. at 35.

But Spirito did not use his regulatory power to

allocate airport funds “among airport uses.” He used

his regulatory power to pledge airport funds to a

private entity (TowneBank) for the exclusive benefit

of another private entity (People Express). In other

words, TowneBank was a mere middleman for what

amounted to a loan to a private company. Unlike

Kelly, which involved the use of regulatory power for

political retribution, the object of the crime here was

property and the goal was to misapply property

owned by the airport. And the PAC funds were

indeed lost when TowneBank emptied the collateral

accounts to satisfy the defaulted loan. As the district

court

aptly

explained:

“[A]n

intentional,

unauthorized distribution of public funds to a

private entity falls squarely within the meaning of

misapplication as found in § 666(a)(1)(A).” J.A. 2528.

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Having found that Spirito’s federal program

fraud convictions under Counts 1-11 are affirmed,

his appeal with respect to the money laundering

convictions under Counts 12-17 can now be disposed

of rather easily. His sole argument is that the money

laundering convictions cannot stand because his

federal program fraud convictions are infirm.

Opening Br. at 35. Because we affirm his federal

program fraud convictions, his sole argument for

reversing his money laundering convictions fails.

Spirito next argues that there was insufficient

evidence for a reasonable jury to find that his

statements to a federal agency as charged in Count

18 were false and made with the requisite intent to

impede an investigation. Title 18 U.S.C. § 1519

“requires the government to prove the following

elements: (1) the defendant made a false entry in a

record, document, or tangible object; (2) the

defendant did so knowingly; and (3) the defendant

intended to impede, obstruct, or influence [a federal]

investigation.” United States v. Powell, 680 F.3d 350,

355–56 (4th Cir. 2012). Spirito challenges the second

element only.7

According to Spirito, the government did not

provide sufficient evidence for a jury to find that he

violated § 1519 upon sending his 2017 email in

Spirito also states that “the government has failed to

prove that . . . he acted with intent to obstruct a federal

investigation.” Opening Br. at 46. Such a bare assertion—

unadorned by argument—does not preserve a claim.

A20

response to the FAA’s question about “[the] type of

funds [] used to make the [loan] payment.” Opening

Br. at 44–45; S.A. 420. Spirito maintains that “[t]he

government did not point to evidence to show that

[his] statements were knowingly false at the time

they were made, aside from pointing to the evidence

adduced in support of Counts 1 through 17.”

Opening Br. at 45.8

In his email response to the FAA, Spirito stated

that the loan used about $3.5 million in State

Entitlement Funds, $300,000 in SCASD funds, and

$700,000 in RAISE funds. S.A. 420. This response

was false because it omitted mention of the airport

revenue and passenger facility charges used and

mentions SCASD funds, which were not in fact ever

used.

Spirito’s arguments to the contrary are

unavailing. First, he asserts that “[t]he government

elicited testimony from its own witness that calls . . .

into question” whether he “knowingly” provided false

statements as suggested by the evidence adduced in

support of Counts 1-17. Opening Br. at 45. Spirito

points to the testimony of Michael Swain, a

supervisor at the DOAV, who Spirito maintains

provided evidence suggesting that he properly used

State Entitlement Funds and passenger facility

charges. Reply Br. at 19–20. But Spirito does not

suggest that this witness provided evidence tending

8 The government contends that Spirito waived this argument

and––if reviewable—it fails on plain-error review. See Response

Br. at 34; United States v. Robinson, 744 F.3d 293, 298 (4th Cir.

2014) (“Where courts may review a forfeited claim for plain

error, a claim that has been waived is not reviewable on appeal,

even for plain error.”) We need not decide whether Spirito

waived or forfeited this claim because it fails even under de

novo review.

A21

to show that he properly used airport revenue—a

line item omitted from the email response to the

FAA. Moreover, even assuming the government’s

witness “called into question” the issue of whether

Spirito

properly

used

government

funds,

“determining witness credibility and weighing

conflicting evidence are the responsibility of the

factfinder.” United States v. Chavez, 894 F.3d 593,

608 (4th Cir. 2018). So, to the extent there existed

conflicting testimony about Counts 1-17––and

thereby, the mens rea element in Count 18––we are

unpersuaded by Spirito’s argument. United States v.

Millender, 970 F.3d 523, 529 (4th Cir. 2020) (“[W]e

assume that the jury resolved any conflicting

evidence in the prosecution’s favor.”); United States

v. Northcutt, 619 F. App’x 235, 236 (4th Cir. 2015)

(“[W]e do not review the jury’s credibility

determination . . . .”).9

Second, Spirito suggests that he did not

“knowingly” provide a false statement because any

falsehood he may have told was “unwitting.”

Opening Br. at 45. This argument is belied by the

record. Spirito was questioned about his email

response while on the stand, and he did not claim

that his answers were mistaken; he maintained that

he responded accurately.

For these reasons, the evidence was sufficient for

a reasonable jury to find that Spirito’s statements to

a federal agency as charged in Count 18 were false

and made with the requisite intent to impede an

investigation, in violation of 18 U.S.C. § 1519.

Spirito’s perjury conviction related to his denial of using

airport revenue further supports the conclusion that the jury

resolved credibility determinations as to the mens rea element

of the § 1519 violation against Spirito.

A22

Spirito next challenges the federal program

fraud conviction related to the three unauthorized

credit card transactions, as charged in Count 19.

Recall that § 666 prohibits an agent of an

organization receiving in any one-year period federal

benefits in excess of $10,000 from “embezzl[ing],

steal[ing], obtain[ing] by fraud or otherwise without

authority knowingly convert[ing] to the use of any

person other than the rightful owner or intentionally

misappl[ying]” property owned or controlled by that

organization and carrying a value of $5000 or more.

18 U.S.C. § 666(a)(1)(A).

The question presented is whether §

666(a)(1)(A)(i) criminalizes multiple conversions of

less than $5,000, if the government must point to

conversions that took place over more than one year

to reach the $5,000 statutory minimum. Spirito

notes that, though the three transactions totaled just

over $5,000, they occurred over the course of a year

and a couple of days. Those couple of days, Spirito

argues, save him from culpability under §

666(a)(1)(A). The government contends that a § 666

violation occurs even when a defendant converts

property valued at $5,000 beyond a one-year time

frame. The district court denied Spirito’s motion for

judgment of acquittal as to this issue, explaining:

“[T]he Court [] rejects Defendant’s request to impose

a one-year temporal limitation on his conversion of

PAC funds. . . . The Fourth Circuit is going to have

to set its own precedent on this because the Court

has an issue [here].” J.A. 2531 (third alteration in

original) (internal quotation marks and citation

omitted).

A23

We first look to the language of the statute to

resolve this dispute. The government correctly states

that, though subsection (b) prohibits converting the

funds of an organization that receives, “in any one

year period, benefits in excess of $10,000,” 18 U.S.C.

§ 666(b), the subsection establishing the $5,000

conversion threshold, 18 U.S.C. § 666(a)(1)(A)(i),

includes no such temporal limit. But we must also

consider “the specific context in which that language

is used, and the broader context of the statute as a

whole.” Yi v. Fed. Bureau of Prisons, 412 F.3d 526,

530 (4th Cir. 2005) (quoting Robinson v. Shell Oil

Co., 519 U.S. 337, 341 (1997)). The phrase “in any

one-year period,” as associated with the $10,000

federal funding requirement, is defined as “a

continuous period that commences no earlier than

twelve months before the commission of the offense

or that ends no later than twelve months after the

commission of the offense” and “[s]uch period may

include time both before and after the commission of

the offense.” 18 U.S.C. § 666(d)(5). In other words,

the one-year time restriction related to the $10,000

federal funding requirement can be satisfied in one

of three ways: the one-year period can (i) start 12

months before the conversion, (ii) end 12 months

after the conversion, or (iii) include time both before

and after the conversion. Considering that the oneyear period can include time both before and after

the conversion, the statute most naturally reads as

requiring the offense to fall within a 12-month

window.10

10 See United States v. Valentine, 63 F.3d 459, 463 (6th Cir.

1995) (concluding the same and explaining that “[t]he

interrelationship between subsections (a) and (b) of the statute

A24

In other words, the government must present

evidence showing that, within a one-year period, the

defendant committed one or more acts of conversion

with an aggregate value of $5,000 or more.11

Our reading is not contrary to clearly expressed

congressional intent. Congress enacted § 666 as part

of the Comprehensive Crime Control Act of 1984.

Pub.L. No. 98–473, 98 Stat. 1837 (1984). According

to the Senate Report, the purpose of § 666 was 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 of State and local governments

pursuant to a Federal program.” S.Rep. No. 225,

98th Cong., 2d Sess. 369, reprinted in 1984

U.S.C.C.A.N. 3182, 3510 (emphasis added). Congress

intended the terms of the statute to be construed

“consistent with the purpose of this section to protect

the integrity of the vast sums of money distributed

through Federal programs from theft, fraud, and

undue influence by bribery.” S.Rep. No. 98–225 at

370; 1984 U.S.C.C.A.N. at 3511. “The phrase

‘significant acts of theft, fraud, and bribery’ suggests

that Congress did not intend the statute to reach

theft of minimal amounts . . . .” United States v.

Valentine, 63 F.3d 459, 463 (6th Cir. 1995). The

temporal limitation requirement, paired with the

monetary threshold requirement, brings this stated

mandate that a one-year limitation likewise attaches to the

$5,000 threshold requirement”).

11 See also Valentine, 63 F.3d at 463 (noting that the

statute is violated by a $5,000 theft only “if the circumstance

described in subsection (b) . . . exists” and subsection (a)

specifically incorporates the elements of subsection (b), and

concluding that, “if subsection (b) contains a time restraint, it is

applicable to subsection (a)”).

A25

objective to life: without the temporal limitation, the

government could aggregate small thefts over years,

decades, or even a defendant’s lifetime to meet the

$5,000 statutory minimum. In other words, the

government’s proposed statutory construction would

nullify congressional intent by allowing the statute

to reach insignificant acts of theft over an indefinite

time period.

Our conclusion that § 666 requires each

transaction used to reach the aggregate $5,000

requirement to occur within the same one-year

period aligns with the conclusions of other circuit

courts that have considered the issue. Valentine, 63

F.3d at 464 (concluding that “[t]he interrelationship

between subsections (a) and (b) of the statute

mandates that a one-year limitation likewise

attaches to the $5,000 threshold requirement”);

United States v. Hines, 541 F.3d 833, 837 (8th Cir.

2008) (concluding that “[s]ignificant longstanding

schemes that extend for longer than one year . . .

may be charged in multiple counts so long as the

$5,000 requirement is met in each one-year time

period” “wherein the government agency or

organization received $10,000 or more in federal

funds”); United States v. Newell, 658 F.3d 1, 24 (1st

Cir. 2011) (“We have previously held that the

government may aggregate transactions occurring

within a one-year time period in order to meet the

$5000 jurisdictional minimum of § 666(a)(1)(A).”

(first citing United States v. Cruzado-Laureano, 404

F.3d 470, 484 (1st Cir. 2005); then citing Hines, 541

F.3d at 837))12

12 This result also aligns with our unpublished decision in

United States v. Doty:

A26

The government states that “[t]he First Circuit

has ruled that by the plain text of the [statute] the

one-year limitation in § 666(b) does not require a

court to ‘treat[] all qualifying transactions within a

one-year period as aggregated together to state one

offense under § 666(a)(1)(A).’” Response Br. at 43

(third alteration in original) (quoting Newell, 658

F.3d at 24). Instead, the government argues, “the

First Circuit ‘concluded the unit of prosecution in §

666(a)(1)(A) is transactional,’” id. (quoting Newell,

658 F.3d at 24), and “‘each theft or group of thefts

equaling at least $5000’ is a unit of prosecution,” id.

(quoting United States v. Ayala, 821 F. App’x 761,

763 (9th Cir. 2020)), as long as the unit of

prosecution involves a “singular stream” of

transactions and not “multiple distinct transactions,”

We do not suggest, and need not find, that this

aggregation has no bounds. Although the statute does

not explicitly articulate a temporal limitation, it does

provide a context clue. To be prosecuted under §

666(a), “the circumstance described in subsection (b)

of [that] section [must] exist[ ].” 18 U.S.C. § 666(a).

The relevant “circumstance” is that the government

organization “receives, in any one year period,

benefits in excess of $10,000 under a Federal

program.” [18 U.S.C.] § 666(b). And the one-year

period must be “a continuous period that commences

no earlier than twelve months before the commission

of the offense or that ends no later than twelve

months after the commission of the offense” and may

include “time both before and after the commission of

the offense.” [18 U.S.C.] § 666(d)(5). Conditioning the

commission of the offense on the “exist[ence]” of this

“circumstance” at least suggests a temporal limit.

832 F. App’x 174, 180 n.4 (4th 2020) (internal citations

omitted).

A27

id. at 42–43 (quoting United States v. Lopez-Cotto,

884 F.3d 1, 11–12 (1st Cir. 2018)).

The government misreads the decisions it cites.

The Newell court said that cases like the one at bar

did not resolve the controversy before it, explaining:

[Those] cases were concerned with the

propriety

aggregation

when

the

transactions involved sums which fell below

the jurisdictional minimum and hence did

not make out independent violations of §

666. However, one of the rationales for

allowing

aggregation

under

such

circumstances is to ensure that poorly

motivated officials do not evade liability

under § 666 simply by stealing less than

$5000 at a time. See Webb, 691 F. Supp. at

1168; Sanderson, 966 F.2d at 189. Worries

about opportunistic evasion of liability do not

apply to transactions that involve sums

larger than the statutory minimum. Since

most of the bundled transactions in this case

involved sums greater than $5000, it is not

clear whether this line of precedent would

support the aggregation that occurred in this

case.

658 F.3d at 24–25 (citing Cruzado–Laureano, 404

F.3d 470; Hines, 541 F.3d 833). The question in

Newell was whether the transactions bundled under

counts 2, 7, 8, 9, 11, 29 and 30 were duplicitous—

that is, whether they described distinct violations of

§ 666(a)(1)(A) and another statutory provision. Id. at

23. Though the Newell court pontificated about a

problem that could arise when bundling transactions

A28

involving amounts less than $5,000, it only held that

the bundled transactions in that case, which

involved amounts more than $5,000, “were

duplicitous, and that the failure to provide a specific

unanimity instruction was error.” Id. at 28. And

notably, when noting that the First Circuit “[has]

previously held that the government may aggregate

transactions occurring within a one-year time period

in order to meet the $5000 jurisdictional minimum of

§ 666(a)(1)(A),” id. at 24 (citing Cruzado-Laureano,

404 F.3d at 484), the Newell court cited to the Eighth

Circuit’s decision in Hines, which found that § 666

permits the government to aggregate multiple

transactions in single count to reach the $5,000

minimum as long as the transactions fall within a

one-year period, id. (citing Hines, 541 F.3d at 837).

Still, as the Newell court made clear, CruzadoLaureano, Hines, and other like-cases were not

dispositive of the controversy before the court. Id.

Moreover, contrary to the government’s

suggestion, the Ayala court also did not decide

whether a one-year temporal limitation applies in a

case like this one; instead, it concluded that it need

not decide because, “even if the district court erred

in failing to treat § 666(a)(1)(A) as transactional, as

opposed to calendar-based, that error [was] not

plain.” 821 F. App’x. at 763. And the Lopez-Cotto

court considered whether the government may prove

an agreement for the ongoing stream of benefits

worth at least $5,000, rather than an agreement for

stand-alone bribes—it did not consider whether

stand-alone bribes that occur beyond a period of one

year may be aggregated to satisfy the $5,000

statutory minimum. 884 F.d at 8 (describing a

“stream of benefits” prosecution approach as one in

A29

which a government official “enter[s] into an ongoing

agreement to accept benefits in exchange for

providing government business to the briber” and,

“in the aggregate, under the ongoing scheme, the

government business conferred had a value of at

least $5,000”).13

13 The government also argues that “the jury could have

determined that the conversion of funds occurred within a oneyear period.” Response Br. at 40. The government explains:

“[With] the posting date on the credit card statement reflecting

payment for the first transaction was on November 28, 2014,

and Spirito ma[king] payment on the third transaction on

November 27, 2015 (with the obligation of funds beginning

even earlier when repairs commenced), Spirito either obligated

funds or made payments to which he was not entitled within a

one-year period.” Id. at 40–41.

We cannot accept this unreasonable interpretation of the

record. Spirito first obligated funds to which he was not

entitled on November 25, 2014—the day he first swiped his

airport-issued credit card to cover an impermissible

expenditure; this transaction happened to be posted on the

credit card statement on November 28. S.A. 444; see also J.A.

1817–25. He last obligated funds to which he was not entitled

on November 27, 2015—the day he used the credit card to pay

for a third unauthorized expenditure; this transaction

happened to be posted on November 30. S.A. 465; see also J.A.

1810. Whether we look to the November 25, 2014 and

November 27, 2015 credit card transaction dates, or the

November 28, 2014 and November 30, 2015 credit card

transaction posting dates, the conversions occurred over the

course of one year and two days. The government does not

explain why we should mix-and-match the transaction and

transaction posting dates when considering this issue. In our

view, it seems illogical to resolve this issue by considering the

transaction date related to one conversion and the posting date

related to another conversion. Nor does the government explain

how Spirito managed to obligate funds when the repairs began

(and before any credit card transaction occurred).

A30

Because § 666 requires each transaction used to

reach the $5,000 statutory requirement to occur

within the same one-year period, we reverse Spirito’s

conviction on Count 19.

Spirito further complains that there was

insufficient evidence for a reasonable jury to find

that his sworn statements charged in Counts 20, 21,

and 23 were false and material to the civil matter in

which those statements were made. Recall that

Count 20 charged Spirito with making false

statements when he testified that he did not divert

airport revenue for the loan guaranty. J.A. 361–63.

Count 21 charged Spirito with making false

statements when he testified that he opposed the

loan guaranty while the PAC supported it. J.A. 364–

65. And Count 23 charged him with making false

statements when he testified that he did not know

that TowneBank would not lend money to People

Express without a loan guaranty and that he had no

role in selecting and authorizing the funds to be

placed in the collateral accounts. J.A. 369–71.

A defendant commits perjury under 18 U.S.C. §

1623(a) when he has “(1) knowingly made a (2) false

(3) material declaration (4) under oath (5) in a

proceeding before or ancillary to any court of the

United States.” United States v. Wilkinson, 137 F.3d

214, 224 (4th Cir. 1998). Spirito does not deny

making these statements. Nor does he reject the

government’s assertion that they were false, made

under oath, and in an ancillary proceeding. Instead,

he contends that these statements were immaterial.

A31

“A statement is material if it has a natural

tendency to influence, or is capable of influencing,

the decision-making body to which it was

addressed.” United States v. Littleton, 76 F.3d 614,

617–18 (4th Cir. 1996). This Court observed in

Wilkinson that, because “a deponent’s testimony is

not actually addressed to a decision-making body,”

the materiality standard “does not neatly apply

when, as here, the defendant is charged with

committing perjury during a civil deposition.” 137

F.3d at 225.

The Second and Fifth Circuits have adopted

broad standards for evaluating the materiality of a

statement made during a civil deposition. United

States v. Holley, 942 F.2d 916, 924 (5th Cir. 1991)

(explaining that material statements include those

“with respect to matters properly the subject of and

material to the deposition, even if the information

elicited might ultimately turn out not to be

admissible at a subsequent trial”); United States v.

Kross, 14 F.3d 751, 754 (2d Cir. 1994) (explaining

that statements made in civil depositions are

material when “a truthful answer might reasonably

be calculated to lead to the discovery of evidence

admissible at the trial of the underlying suit”). The

Sixth Circuit has adopted a narrower materiality

standard for civil depositions. United States v.

Adams, 870 F.2d 1140, 1147 (6th Cir. 1989) (holding

that “a false statement during a civil deposition is

material if the topic of the statement is discoverable

and the false statement itself had the tendency to

affect the outcome of the underlying civil suit for

which the deposition was taken”). In Wilkinson, this

Court did not reach the question of which standard

of materiality should apply to statements made in

A32

the context of a civil deposition because the

statements at issue met the most stringent

standard. 137 F.3d at 225, 228–29.

Spirito encourages this Court to adopt a

narrower approach. But more importantly, Spirito

contends that, “[i]n order to answer [the materiality]

question, the government must offer evidence to

show, at a minimum, the nature of the underlying

civil proceeding.” Opening Br. at 52. Here, Spirito

argues, “the government did not introduce any

evidence about the nature of the underlying civil

litigation and pointed simply to the evidence

adduced at trial regarding the program fraud counts

in the criminal case.” Id.

But this is not true. Consider the following

exchange during Spirito’s cross-examination:

Q. And describe what happened . . . when

you first interacted with the agents.

A. Well, the doorbell rang, and I answered

the door, and a gentleman and a

representative from the . . . Department of

Transportation . . . identified themselves.

They . . . said, [w]e would like to ask you

some questions about the People Express

loan and, I guess, the airport’s involvement

in that. . . .

Q. Now, at that time, did you think or know

that you were a suspect?

A. Well, no. No. Because I was involved in a

civil suit and . . . they were going to ask me

questions. I assumed they were . . . . going to

ask me questions about the People Express

loan and the airport’s involvement while my

civil suit was in federal court.

A33

Q. You were the plaintiff in that civil suit?

A. Yes.

Q. You were suing the Peninsula Airport

Commission, correct?

A. Yes. . . .

Q. All right. Now, did there come a point

[during] the [] visit where you spoke with

your lawyer?

A. Well, . . . I invited them in the house, and

when it became apparent to me that I

probably should have my attorney at the time

at least on the phone, because I just didn’t

know what to do, I mean . . . was going to

answer the questions, but I didn’t want to

have––you know, I had a light bulb go off in

my head, like, oh, maybe it’s going to

interrupt my civil suit, and I don’t know if

that conflicts. So I contacted my attorney,

and my attorney said, in fact, it was going to,

possibly. . . . So we were going to contact

them at a later date, but the civil suit was

getting heavier and heavier post-February.

Q. Okay. And ultimately, agents came back

to your house in May of 2019, correct?

A. Yes. . . .

Q. And, Mr. Spirito, in the course of that

deposition, you were also asked many

questions about the credit card usage that

you’ve testified to about here today, correct?

A. Yes.

Q. Because your performance and some of the

issues that occurred while you were employed

at the airport were issues that were subjects

of inquiry at the deposition?

A. That’s correct.

A34

J.A. 2064–66, 2093 (emphasis added).

Spirito’s argument—which focuses on whether

the government offered any evidence of the

underlying proceedings—fails because, as can be

seen, the government did offer such evidence during

the trial. Spirito testified that, when investigators

first attempted to interview him, he was a plaintiff

in a civil lawsuit against the PAC. He “assumed” the

investigators were “going to ask [him] questions

about the [People Express] loan and the airport’s

involvement,” which he thought were so connected to

his civil defamation suit that answering the

investigator’s questions may “interrupt” or

“conflict[]” with the civil suit. J.A. 2065–66. And,

“[his] attorney said, in fact, it was going to, possibly.”

Id. Though both Spirito and his attorney used

qualifying language to describe the potential impact

of the deposition testimony on the underlying civil

suit, the government did present evidence on the

underlying civil defamation case and that evidence

was sufficient for a reasonable jury to find that

Spirito’s false declaration met even the more

stringent materiality standards.

Spirito next contends that the district court

erroneously rejected his request to instruct the jury

that a violation of a policy, guideline, or regulation

does not amount to a crime, thereby inviting the jury

to convict him for civil infractions, not federal

program fraud and money laundering.

This Court reviews a district court’s refusal to

give a jury instruction for abuse of discretion. United

States v. Brooks, 928 F.2d 1403, 1408 (4th Cir. 1991).

A35

Such refusal is only reversible error if the

instruction (i) was correct; (ii) was not substantially

covered by the court’s charge to the jury; and (iii)

dealt with some point in the trial so important that

failure to give the requested instruction seriously

impaired the defendant’s ability to conduct his

defense. United States v. Lewis, 53 F.3d 29, 32 (4th

Cir. 1995).14

Spirito asked the district court to instruct the

jury that:

[E]vidence of alleged violations as to any . . .

handbooks, rules, publications, guidelines

and regulations should not be considered by

you as a violation of criminal law per se. You

may consider, however, evidence of the . . .

handbooks, rules, publications, guidelines

and regulations as you would any other

evidence in determining whether or not the

defendant had the required intent to violate

the criminal statute charged in the

indictment.

J.A. 2182. The district court refused this instruction,

finding that “the charge, as a whole, is sufficient to

avoid any confusion that this conduct has to be a

violation of [a] criminal statute.” J.A. 2216. To be

sure, the proposed instruction is a correct statement

Spirito states that this issue should be reviewed de novo

because it concerns whether “a jury instruction failed to

correctly state the applicable law.” United States v. Raza, 876

F.3d 604, 613–14 (4th Cir. 2017). The question here is not that.

As Spirito concedes in his briefs, the question is whether the

district court erred in failing to instruct the jury. See Opening

Br. at 36, 37.

A36

of law and would draw a clear line between the

appropriate use of civil regulations to define the

contours of a criminal law and the inappropriate

replacement of a criminal law with civil regulations,

but the district court’s charge to the jury

substantially covered the proposed instruction.

As to federal program fraud, the district court

instructed:

In order to prove the defendant guilty . . .,

the government must prove each of the

following elements beyond a reasonable

doubt: Number one, . . . the defendant was

an agent of . . . The Peninsula Airport

Commission . . .; Number two, that in . . .

calendar years of 2014 and 2015, the

Peninsula Airport Commission received

federal benefits in excess of $10,000; Three,

that the defendant . . . intentionally

misapplied property; Four, that such

property was in the care, custody, and

control of the Peninsula Airport Commission;

and, Five, that the provider of such property

had an aggregate value of at least $5,000.

J.A. 2335–36. As to the “intentional misapplication”

theory, the district court explained:

To intentionally misapply money or property

means to intentionally use money or

property of the [] Airport Commission

knowing that such use is unauthorized or

unjustifiable or wrongful. Misapplication

includes the wrongful use of the money or

property for an unauthorized purpose, even

A37

if such use

Commission.

benefitted

the

[]

Airport

J.A. 2337. And as to intent, the district court said:

The term “intentionally[]” . . . means that he

knowingly performed an act, deliberately

and willfully on purpose as contrasted with

accidentally, carelessly, or unintentionally. .

The intent of a person or the knowledge that

a person possesses at any given time may not

ordinarily be proved directly because there’s

no way of scrutinizing the workings of the

human mind. In determining the issue of

what a person knew or what a person

intended at a particular time, you may

consider any statements made or acts done

or omitted by that person and all other facts

and circumstances received in evidence

which may aid in your determination of that

person’s knowledge or intent. . . . It is

entirely up to you, however, to decide what

facts to find from the evidence received in

the trial.

J.A. 2327–29.

The jury instructions make clear that, to convict

Spirito, the jury must conclude that he “misapplied”

the funds—i.e., used them for “an unauthorized

purpose”—and that he did so “intentionally”—not

accidentally. Spirito’s civil violation-transformed-tocrime accusation cannot be reconciled with the

district court’s separate and distinct instruction on

A38

“intent,” which makes clear that something more

than a regulatory violation is required. This specificintent aspect of the instruction disabuses a juror of

any notion that mere misapplication of funds or

violation of a regulation, standing alone, amounts to

criminal liability.15 See United States v. Herder, 594

F.3d 352, 360–61 (4th Cir. 2010) (sustaining jury

charge that did not include a “mere proximity”

instruction because the instructions given required

proof of knowledge and control). Nor was there any

statement regarding civil or administrative law

incorporated in the jury instructions that could

confuse the jury into finding criminal liability on

that basis alone. But cf. United States v. Ransom,

642 F.3d 1285 (10th Cir. 2011) (affirming conviction

where district court instructed jury on specific

regulation and further instructed that regulatory

violation was not “a violation of criminal law per se”

but was relevant to the defendant’s intent). Instead,

the district court told the jury to look to “all [] facts

and circumstances received in evidence” to

determine “[Spirito’s] knowledge or intent” and

explained that “[i]t is entirely up to [them] [] to

decide what facts to find from th[at] evidence.” J.A.

2319, 2329. This instruction would not permit the

jury to convict Spirito had the government’s proof

In his reply brief, Spirito argues that, “[i]n enacting 18

U.S.C. § 666, Congress never intended a jury to wade through a

complex web of overlapping federal and state regulations, or to

interpret a government agency policy manual, to determine

whether a defendant had committed the crime of federal

program fraud.” Reply Br. at 1. Spirito did not make this

argument in his opening brief. And, no doubt, it was

appropriate for the jury to consider any handbooks, rules,

publications, guidelines, and regulations to determine whether

the funds were “misapplied.”

A39

shown no more than a civil or administrative law

violation.

Thus, the district court did not abuse its

discretion in denying Spirito’s requested jury

instruction.

Spirito also challenges the district court’s

exclusion of evidence related to a change in state law

and another entity’s operations under that law.

Spirito asserts that this evidence was critical to his

defense against the government’s theory that he

acted in violation of state policies in allocating

airport funds. We afford substantial deference to the

district court’s decision to admit or exclude evidence

and will not reverse absent an abuse of discretion.

See United States v. White, 810 F.3d 212, 227 (4th

Cir. 2016).

Trial counsel sought to introduce evidence of the

January 2017 letter written by the Virginia

Secretary of Transportation and a copy of the

legislation discussed in it, explaining:

[W]hen the jury has to determine if there

was a misappropriation, they will have to

determine if there was a law that this use of

State entitlement funds violated, and in

determining if there’s been a violation of the

law, . . . a relevant factor . . . is . . . if the

people who make the laws decided they had

to change it so as to make this act

subsequently illegal. . . . [I]f the legislature

turns around and changes the law for the

specific reason of making this illegal, then it

A40

can follow . . . that before they changed the

law, it wasn’t illegal.

J.A. 1934–35. The trial court denied trial counsel’s

request to introduce evidence of the amended state

statute, explaining: “No, it doesn’t follow. It may

follow that they amended the law in some way. It

doesn’t mean that it was not improper or unlawful

before the fact.” J.A. 1935. We agree.

Evidence of the amended state statute would not

help the jury determine the legality of Spirito’s

actions because, even if the state legislature added a

line that makes obvious the prohibition on the

conduct that catalyzed this case, it does not mean

that the conduct was lawful before the statute’s

amendment.

Even if the district court had abused its

discretion, any error was harmless. See Fed. R.

Crim. P. 52(a); United States v. Johnson, 617 F.3d

286, 292 (4th Cir. 2010) (explaining that evidentiary

rulings are subject to harmless error review). The

January 2017 letter specifically noted that using

“$3.55m in state funds to pay off the loan” was an

“unauthorized use of state entitlement funds.” S.A.

472. In addition, as discussed above, Spirito

concealed his use of PAC funds to fund the collateral

accounts. With this overwhelming evidence of the

illegality of his actions, any error did not prejudice

Spirito.16 See United States v. Caldwell, 7 F.4th 191,

206–07 (4th Cir. 2021) (citing United States v.

Spirito also contends that the district court erred by

excluding evidence as to the circumstances surrounding the

Lynchburg airport’s use of “ineligible” funds in 2013. Opening

Br. at 41. Considering the overwhelming evidence discussed

above, any error did not contribute to the outcome.

A41

Baxter, 54 F.3d 774, at *6 (4th Cir. 1995) (per

curiam) (finding an abuse of discretion when the

court refused to permit questions related to the key

government witness’s juvenile adjudication but

nevertheless concluding the error was harmless

because the witness’s “credibility was attacked on

the stand despite the exclusion of the juvenile

adjudication evidence” and there was otherwise

“overwhelming evidence of [the defendant’s] guilt”)).

Finally, we consider Spirito’s arguments

regarding the forfeiture money judgment. To the

extent that Spirito’s cursory reference to the

forfeiture amounting to an excessive fine in violation

of the Eighth Amendment is sufficient to raise the

issue on appeal, see Opening Br. at 55–57, his

argument is not persuasive.

We weigh several factors to determine whether a

challenged forfeiture amounts to an excessive fine:

(i) the nature and extent of the illegal activity; (ii)

whether the defendant fit into the class of persons

for whom the statute was principally designed; (iii)

the harm caused by the charged crime; (iv) the

amount of the forfeiture and its relationship to the

authorized penalty; and (v) the relationship between

the crime charged and other crimes. United States v.

Bajakajian, 524 U.S. 321, 337–39 (1998)). Spirito

concedes that he did not raise this excessive fine

issue below. Thus, plain error review applies.

As an initial matter, Spirito’s laundering

activities, which involved $3,817,931.29, could have

subjected him to a criminal fine of up to

$7,635,862.58—a total that far exceeds the amount

A42

to be forfeited. “Such punishment does not suggest ‘a

minimal level of culpability.’” United States v.

Jalaram, Inc., 599 F.3d 347, 356 (4th Cir. 2010)

(quoting Bajakajian, 524 U.S. at 339). In addition,

Spirito argues that “to hold him responsible for the

full amount of the loss is grossly disproportional to

the gravity of [his] actions” because the PAC voted to

issue and carry out the contractual obligations

associated with the loan, and ultimately, “he acted

with the best of intentions and without obtaining

any personal benefit.” Opening Br. at 56–57. Even if

true, Spirito does not explain how these facts pull

him outside of the class of persons for whom the

money laundering statute was principally designed,

negate the harm caused by his money laundering

activities, or change the close relationship between

the money laundering and federal program fraud

crimes. For these reasons, we find that the forfeiture

order does not constitute an excessive fine and, at a

minimum, any contrary conclusion on the part of the

district court did not rise to the level of plain error.

Spirito also argues that the district court erred

in entering a forfeiture order without providing him

notice and an opportunity to be heard. Under the

rule governing forfeiture in criminal cases, a court

shall not enter a judgment of forfeiture unless the

defendant first receives notice via the indictment or

information that the government will seek forfeiture

as part of any sentence. Fed. R. Crim. P. 32.2(a).

Second, the court must determine, as soon as is

practicable following a verdict of guilty on the

substantive charges, what property is subject to

forfeiture,17 and enter a preliminary order of

17 “If the government seeks forfeiture of specific property,

the court must determine whether the government has

A43

forfeiture. Fed. R. Crim. P. 32.2(b)(1)-(2). “Unless

doing so is impractical, the court must enter the

preliminary order sufficiently in advance of

sentencing to allow the parties to suggest revisions

or modifications before the order becomes final as to

the defendant under Rule 32.2(b)(4).” Fed. R. Crim.

P. 32.2(b)(2)(B). “Third, “[a]t sentencing[,] . . . the

order of forfeiture becomes final,” Fed. R. Crim. P.

32.2(b)(4)(A), and “[t]he court must include the

forfeiture when orally announcing the sentence or

must otherwise ensure that the defendant knows of

the forfeiture at sentencing,” Fed. R. Crim. P.

32.2(b)(4)(B). “The court must also include the

forfeiture order, directly or by reference, in the

judgment, but the court’s failure to do so may be

corrected at any time under Rule 36.” Fed. R. Crim.

P. 32.2(b)(4)(B).

Spirito complains that the district court signed

the preliminary order less than 14 days after the

draft order was submitted by the government,

thereby depriving him of any meaningful

opportunity to challenge the money judgment as a

violation of his Eighth Amendment right to be free

from excessive fines.18 Spirito further argues that

the district court erred in neither mentioning

forfeiture when orally announcing his sentence nor

taking steps to ensure that Spirito knew of the

forfeiture at the time of his sentencing. Spirito

established the requisite nexus between the property and the

offense. If the government seeks a personal money judgment,

the court must determine the amount of money that the

defendant will be ordered to pay.” Fed. R. Crim. P. 32.2(b)(1)(2).

18 Under the Eastern District of Virginia’s Local Criminal

Rule 47(F)(1), opposing parties shall file response briefs within

14 calendar days after service of a motion.

A44

concedes that he did not raise these objections below;

thus, plain error review applies.

In United States v. Martin, the district court

ordered criminal forfeiture of the appellants’

property, but did not reference forfeiture when

sentencing appellants. 662 F.3d 301, 307 (4th 2011).

We explained that Rule 32.2’s requirement that

district courts “include the forfeiture when orally

announcing the sentence or [] otherwise ensure that

the defendant know of the forfeiture at sentencing”

is “not [meant] to create a coercive sanction, but to

ensure that a defendant is on notice as to all aspects

of his sentence, including forfeiture.” Id. at 309

(emphasis omitted). We affirmed the criminal

forfeiture of the appellants’ assets because “there

[was] no dispute that [the] [a]ppellants were fully

aware of both the pending forfeiture itself and . . .

the exact amount.” Id. The appellants “[did] not—

and indeed could not—argue that they were caught

off-guard” because the district court held hearings on

forfeiture, in which both the fact of liability and the

amount were determined, and made clear at the end

of the final forfeiture hearing that it intended to

enter the forfeiture order. Id.

This case presents no substantial difference.

Spirito had notice that forfeiture would be a part of

his case through the issuance of a Presentence

Investigation Report, motion for a preliminary order

of forfeiture, and preliminary order of forfeiture—the

latter two of which noted the precise forfeiture

amount. J.A. 2600, 2465–66, 2474, 2479, 2481–83.19

19 Forfeiture was also mentioned in the superseding indictment,

but that document noted “[a] monetary judgment in the

amount of not less than $4,563,312.78, representing the

proceeds of the scheme alleged in Counts 1-11,” J.A. 373—not

A45

And trial counsel conceded, in Spirito’s reply to his

Motion to Stay Forfeiture Pending Appeal filed

below, that “[t]he [preliminary] order expressly

incorporates itself into the Judgment.” United States

v. Spirito, No. 4:19-CR-43, (E.D. Va., Pacer No. 138

at 2) (citing Preliminary Order of Forfeiture, ¶ 9);

Opening Br. at 22 n.7 (noting motion to stay

forfeiture order). So Spirito understood that, if he did

not object sometime before the district court entered

judgment, he would have to forfeit the specified

amount. Yet Spirito made no attempt to object

during the nine days that passed between entry of

the preliminary forfeiture order and sentencing. Nor

did he object during or immediately after sentencing.

Instead, he waited 41 days after sentencing—until

the day the government seized a bank account

belonging to him and his family—to object for the

first time.

Ultimately, because Spirito, like the appellant in

Martin, was “indisputably on notice at the time of

sentencing that the district court would enter [a]

forfeiture order[]” and had ample opportunity to

object, “we refuse to vacate the district court’s []

forfeiture order[].” 662 F.3d at 309–10.

III.

For the foregoing reasons, we reverse and vacate

the conviction and sentence on Count 19, and affirm

the convictions, sentences, and judgment on the

remaining counts. We remand to the district court

with instructions to conduct such further

the ultimate $3,817,931.29 money judgment, which represented

the proceeds of the money laundering scheme alleged in Counts

12-17.

A46

proceedings as may be appropriate and consistent

with this opinion.

REVERSED AND VACATED IN PART,

AFFIRMED IN PART, AND REMANDED

A47

FILED: JULY 10, 2020

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

Newport News Division

CRIMINAL ACTION NO. 4:19-cr-43

UNITED STATES OF AMERICA

KENNETH R. SPIRITO,

Defendant.

MEMORANDUM OPINION AND ORDER

Before the Court is Kenneth

(“Defendant”) Motion for Judgment of

Acquittal. ECF No. 98.

Spirito’s

I. FACTUAL AND PROCEDURAL HISTORY

From January 4, 2009 through May 15, 2017,

Defendant was the Executive Director of the

Peninsula Airport Commission (“PAC”), the entity

responsible

for

operating

the

Newport

News/Williamsburg International Airport (“the

Airport”). During Defendant’s tenure as Executive

Director, the PAC experienced major stressors after

the Airport’s main source of traffic decided to

discontinue flights out of Newport News in favor of

Norfolk. Hoping to ward off prolonged consequences

to the Airport and the surrounding community,

A48

Defendant and the PAC Board began to look for

ways to increase air traffic into the Airport. In 2014,

Defendant enacted a plan for a loan guarantee that

benefited People Express Airlines (“PEX”), a

fledgling company that was attempting to begin

flights out of the Airport. PEX quickly defaulted on

the loan and the PAC was left responsible for PEX’s

obligations to TowneBank. The instant criminal

prosecution began as a probe into Defendant’s

allocation of the PAC funds supporting the loan

guarantee, as well as his manipulation of the PAC

Board to gain approval for his plan. The prosecution

expanded after scrutiny of Defendant’s conduct on

the following matters: (1) Defendant’s use of PAC

credit cards for his own purposes; (2) Defendant’s

testimony as the plaintiff in a civil case against the

PAC after he was terminated from his position as

Executive Director; and (3) Defendant’s interactions

with investigators who were looking into PAC

finances during his tenure as Executive Director.

Defendant was named in an eighteen-count

Indictment on May 13, 2019 (“Indictment 1”). ECF

No. 3. Indictment 1 charged Defendant with Counts

1-11, Misapplication of Property from an

Organization Receiving Federal Funds, in violation

of 18 U.S.C. §§ 666(a)(1)(A) and 2 (“the

Misapplication Counts”); Counts 12-17, Engaging in

Monetary Transactions in Property Derived from

Specified Unlawful Activity, in violation of 18 U.S.C.

§§ 1957 and 2 (“the Money Laundering Counts”); and

Count 18, Falsification of Records in Federal

Investigations, in violation of 18 U.S.C. § 1519.

On August 27, 2019, Defendant filed a Motion to

Dismiss on Counts 1-17 of Indictment 1 (“Motion to

Dismiss 1”). ECF No. 26. On September 9, 2019, the

A49

Government

obtained

twenty-four-count

superseding indictment (“Indictment 2”). ECF No.

29. Indictment 2 maintained Counts 1-18 of

Indictment 1, but added Count 19, Conversion of

Property from an Organization Receiving Federal

Funds, in violation of 18 U.S.C. §§ 666(a)(1)(A) and

2(“the Conversion Count”); Counts 20-23, Perjury, in

violation of 18 U.S.C. § 1623(a); and Count 24,

Obstruction of Justice, in violation of 18 U.S.C. §

1503. ECF No. 29. On November 25, 2019, filed a

Motion to Dismiss Count 19 of Indictment 2 (“Motion

to Dismiss 2”). ECF No. 41. The Court denied

Defendant’s requested relief in both Motions to

Dismiss in an order dated January 13,2020. ECF No.

48.

Defendant’s jury trial began on February 25,

2020 and lasted ten days. ECF Nos. 56-59, 61-64, 68,

84. At the close of the Government’s evidence.

Defendant moved for a judgment of acquittal on

Counts 1-17, 19, and 20-23. ECF No. 63. The Court

denied Defendant’s motion for a judgment of

acquittal on Counts 1-17 and 19 withheld its ruling

on Counts 20-23. Id. At the conclusion of all the

evidence, Defendant renewed his motion for

judgment of acquittal on the aforementioned Counts

and added an additional motion for judgment of

acquittal on Count 24. ECF No. 68. The Court

withheld its ruling on Count 24 and maintained its

rulings on all other Counts. Id. On March 10, 2020,

the jury returned the following verdict: guilty on

Counts 1-21, 23-24 and not guilty on Count 22. ECF

No. 86.

After trial, the period for filing of post-trial

motions was extended. ECF No. 97. On April 21,

2020, Defendant timely filed his Motion for

A50

Judgment of Acquittal. ECF No. 98. After being

granted an extension in time to file its response, the

Government responded on May 8, 2020. ECF No.

101. Defendant replied to the Government’s response

on May 12, 2020. ECF No. 102. Defendant’s

sentencing is scheduled for July 15, 2020. This

matter is ripe for disposition.

II. LEGAL STANDARD

After the government closes its evidence or after

the close of all the evidence, the court may consider

whether the evidence presented is sufficient to

sustain a conviction. Fed. R. Civ. P 29(a). The court

may reserve decision on a motion for judgment of

acquittal until after the jury renders a verdict. Fed.

R. Civ. P 29(b). A defendant may renew his or her

motion for a judgment of acquittal within 14 days

after a guilty verdict. Fed. R. Civ. P 29(c)(1).

When reviewing a motion for judgment of

acquittal after a guilty verdict, the court must

consider “whether, after viewing the evidence in the

light most favorable to the prosecution, any rational

trier of fact could have found the essential elements

of the crime beyond a reasonable doubt.” Musacchio

v. United States, 136 S. Ct. 709, 715 (2016)

(emphasis in original). This inquiry is a “limited

review [that] does not intrude on the jury’s role to

‘resolve conflicts in the testimony, to weigh the

evidence, and to draw reasonable inferences from

basic facts to ultimate facts.’“ Id. quoting Jackson v.

Virginia, 443 U.S. 307, 319 (1979). In meeting its

burden to prove each of the elements of the crimes of

conviction beyond a reasonable doubt, “[t]he

A51

government may rely on circumstantial evidence and

inferences.” United States v. Rodriguez-Soriano, 931

F.3d 281, 286 (4th Cir. 2019). Because the jury

resolves any conflict between differing reasonable

interpretations of the evidence, the court must

“assume that the jury resolved all contradictions in

testimony in favor of the government” after the jury

renders a guilty verdict. United States v. Moye, 454

F.3d 390, 394 (4th Cir. 2006) {en banc).

III. DISCUSSION

Defendant’s Motion claims that relief from the

guilty verdict against him is proper on Counts 1-18,

19, 20, 21, 23, and 24. ECF No. 98. The Court will

address some Counts individually and other Counts

collectively as appropriate.

A. Counts 1-17

As discussed in the Court’s order denying

Defendant’s Motion to Dismiss, Counts 1-11 (the

Misapplication Counts) and Counts 12-17 (the

Money Laundering Counts) are inseparable. ECF

No. 48 at 7. As a factual matter, it is undisputed that

the PAC funds at issue in the Misapplication Counts

were involved in monetary transactions, as defined

in 18 U.S.C. § 1957, the statutory foundation of the

Money Laundering Counts. In seeking acquittal on

Counts 1-17, Defendant maintains the following

contentions: the use of PAC funds at issue was legal;

and Defendant “acted in good faith based on the

advice of the PAC’s counsel and the informed

authorization of his employer.” ECF No. 98 at 6-7.

The Court also notes that Defendant references

A52

previously raised arguments regarding the scope of

18 U.S.C. § 666(a)(1)(A) in seeking acquittal. The

Court will address each of these contentions in turn.

1. The Jury Properly Found Illegal Use of Restricted

PAC Funds

State Entitlement Funds (“SEE”) are subject to

Virginia state law and the Virginia Department of

Aviation (“DOAV”), while airport revenue, Passenger

Facilities Charges (“PFC”), Small Community Air

Service Development grants (“SCASD”), and

Regional Airport Service Enhancement funds

(“RAISE”) are subject to federal law and the Federal

Aviation Administration (“FAA”). As a factual

matter, the Government’s evidence demonstrated

that PAC funds from SEF, airport revenue, PFC,

and RAISE were comingled and used to fund a loan

guarantee for PEX. Further, the evidence clearly

showed that Defendant used bank accounts with

misleading titles that inaccurately identified their

funding sources to pay on PEX’s defaulted loan,

transfer money between PAC accounts that were

supposed to have defined purposes, and conceal the

fallout from PAC payment on the PEX loan

guarantee. See e.g. ECF No. 109 at 82- 87 (discussing

the transfers between restricted PAC accounts

ordered by Defendant and his instructions designed

to obscure this wrongdoing). In fact, the bank

records detailing the transfer of funds between PAC

accounts with the foregoing titles was exhaustive

and, at times, bordered on cumulative. Cf. ECF No.

106 at 164 (documenting the following statement at

sidebar: “[t]he Court believes you’re putting on

A53

cumulative testimony here about the problems they

had trying to get People Express going”).

Defendant’s contention on the legality of using

PAC funds from the foregoing restricted sources for

the PEX loan guarantee is also deficient. The PAC

funds used to guarantee the PEX loan could only be

used for the following purposes: SEF for capital

projects, PFC for FAA approved projects, airport

revenue for projects benefiting the airport, and

SCASD and RAISE funds as reimbursable grants for

air service development after the incursion of

expenses related to flights operating at a loss. The

Government presented overwhelming evidence of the

limited purposes for these funds, including

testimony from state and federal regulators and

regulatory handbooks and materials that were in

effect at the time of the PEX loan guarantee. See e.g.

ECF No. 106 at 121 (confirming that a loan

guarantee was not an authorized use of federal

SCASD funds or the associated RAISE funds).

Multiple witnesses also confirmed that Defendant

had knowledge of the limited purposes of these funds

and the means to resolve any ambiguity about how

the funds could be used. See e.g. ECF No. 109 at 148

(“[Defendant] said if we had used airport revenue,

then we would lose our jobs”). Further, state and

federal regulators testified that Defendant concealed

incriminating financial transactions from required

disclosure documents, which was confirmed by

Government exhibits. See e.g. ECF No. 107 at 37-38

(documenting that the PAC’s use of SEF to for the

PEX loan guarantee was not reported to the DOAV

in the PAC’s required Entitlement Utilization

Reports).

A54

The Court previously declined to “examine the

machinations of the Virginia legislature” in denying

Defendant’s motion to dismiss the charges against

him at the pretrial stage. ECF No. 48 at 6. Once

again, any contention that the use of SEF, airport

revenue, PFC, SCASD, and RAISE to fund a loan

guarantee was legal at the time the funds were used

is still incorrect. State and federal regulators

testified in painstaking detail about the approved

uses of the funds at issue, operation of the relevant

regulations, and the opportunities Defendant had to

clarify the boundaries of the regulations. See e.g.

ECF No. 107 at 26, 38, 44, 46 (confirming that the

restricted PAC funds at issue could not be used for a

loan guarantee and that SEF were used for the PEX

loan guarantee without permission from the DOAV,

reporting through Entitlement Utilization Reports,

or any appropriate inquiry). Importantly, part of

Defendant’s wrongdoing was his intentional

mismanagement of the accounts containing

restricted funds, effectively comingling state and

federal dollars and obscuring a proper accounting of

PAC funds from public sources. The fact that the

Virginia legislature chose to clarify the permissible

uses of SEF (just one of the restricted funding

sources at issue) in statute after Defendant’s tenure

as Executive Director does not absolve him of

violating the state and federal regulations in effect

at the time of the PEX loan guarantee. It also does

not excuse the comingling of public funds in an

attempt to float the balance of restricted accounts

and obscure the problematic nature of the loan

guarantee. In sum, the Court finds no issue with the

jury’s conclusion that PAC funds from the foregoing

A55

sources were improperly used to fund the PEX loan

guarantee.

2. The Jury Properly Found Defendant Responsible

for Ordering the Misapplication of Funds

Defendant’s contentions that he “acted in good

faith based on the advice of the PAC’s counsel and

the informed authorization of his employer” are each

without merit. The Government presented several

witnesses who verified that Defendant knew that

restricted PAC funds could not be used to support a

loan guarantee but directed the PEX loan guarantee

anyway. See e.g. ECF No. 109 at 163, 188 (describing

Defendant as the “spearhead” for presentations on

PAC finances to the PAC Board and explaining that

his leadership style created a “very oppressive

environment” for the accountant who had concerns

about Defendant’s directives on PAC finances); ECF

No. 111 at 178 (documenting Defendant’s attempt to

characterize his management of the PAC’s SEF as

“allowable,” instead of eligible or ineligible). Multiple

witnesses also testified that the PAC Board relied on

the Defendant’s expertise to manage the PAC’s dayto-day operations, including its finances and

funding. See e.g. ECF No. 104 at 139-41

(documenting the PAC Board chair’s near-total

dependence on Defendant at the time of his offense

conduct). Further, the jury considered and rejected

Defendant’s claim that he was simply relying on the

PAC’s counsel for cover to justify his use of restricted

PAC funds after the Court instructed the jury on

this issue. See ECF No. 112 at 135-37 (stating the

“Reliance on Counsel” jury instruction). In sum, the

Government presented adequate evidence to support

A56

the jury’s conclusion that the Defendant—not the

PAC Board, PAC employees, or the PAC’s counsel—

was responsible for allocating restricted funds for a

loan guarantee to PEX. Therefore, Defendant’s

attempts to shift blame for the loan guarantee to

other people affiliated with the PAC provides no

basis for overturning the jury’s verdict.

3. Title 18, United States Code, Section 666(a)(1)(A)

Covers Defendant’s Conduct

Defendant has repeatedly challenged the

conclusion that 18 U.S.C. § 666(a)(1)(A) covers the

conduct alleged in Counts 1-19, which was not

initiated for his direct personal benefit, but did

result in a substantial loss of public funds. See e.g.

ECF No. 26 at 6 (arguing that a conviction under

this section is improper without a showing of “actual

theft or schemes that convey a personal benefit to

the defendant”).

Section 666(a)(1)(A) prevents the “agent of an

organization” receiving more than $10,000 of federal

funding

per

year

from

“intentionally

misappl[ying]...property that is valued at $5,000 or

more, and is owned by, or is under the care, custody,

or control of such organization.” To sustain a

conviction under this section, a defendant’s conduct

must result in an actual loss of public funds. See

United States v. Thompson, 484 F.3d 877, 881—82

(7th Cir. 2007) (invalidating a conviction where no

public funds were lost after an official took political

considerations into account in awarding a contract);

United States v. Jimenez, 705 F.3d 1305, 1311

(invalidating a conviction where it was not clear that

the defendant directed the misapplication of the

A57

funds at issue). Most recently, the United States

Supreme Court affirmed that a property fraud

application of § 666(a)(1)(A) cannot criminalize all

wrongdoing that constitutes “deception, corruption,

[or] abuse of power.” Kelly v. United States, 140 S.

Ct. 1565, 1568 (2020). A conviction for political

corruption is not permissible when “implementation

costs...[are] an incidental byproduct of their

regulatory object.” Id. at 1565. In short, limitations

on the applicability of § 666 focus on prosecutions of

officials who are accused of abusing state regulatory

power for political motivations.

However, “fraudulent schemes violate [the]

law...when...they are ‘for obtaining money or

property.’“ Id. at 1572. Nothing in the text of § 666

requires proof of a personal benefit to a defendant to

sustain a conviction and there is no case law

imposing such a broad limitation. See Thompson,

484 F.3d at 883 (disallowing criminal prosecutions

for “private gains” that do not result in the loss of

public funds). Further, a conviction for a scheme

wherein loss of public money or property was “an

object of the fraud” is still very much appropriate

under § 666. Kelly, 140 S. Ct. at 1573. Although

“misapplies” is an undefined term, it does cover

disbursement in exchange for services not rendered,

payment to suppliers who would not have received

any contract but for bribes, payment for services that

were overpriced to cover the cost of a bribe, or

payment for shoddy goods at the price prevailing for

high quality goods. Thompson, 848 F.3d at 881. It

follows

that

intentional,

unauthorized

distribution of public funds to a private entity falls

squarely within the meaning of misapplication as

found in § 666(a)(1)(A).

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In this case, there is no doubt that money was

both the motive and the object of Defendant’s

misapplication of PAC funds. While Defendant may

have believed using PAC funds for a loan guarantee

to PEX was in the best interest of PAC, it was the

PAC’s money that was lost after PEX defaulted on

the loan that Defendant ordered to be guaranteed.

Of course, this means the PAC was left responsible

for paying on the defaulted loan, resulting in a loss

of public funds and the inescapable conclusion that

the PAC’s money was the object of Defendant’s

scheme. Further, Defendant’s misapplication of

restricted PAC funds was not the product of a simple

mistake, an interpretive judgment, or a shady

political favor. See Thompson, 848 F.3d at 881

(rejecting an interpretation of § 666 “that turns

all...state law errors or political considerations in

state procurement into federal crimes”). Instead, the

Government presented evidence that Defendant

knew that the loan guarantee was not allowed under

state and federal regulations and did it anyway. See

e.g. ECF No. 109 at 72 (“[Defendant] said that we

were going to use $4 million in State entitlements,

there was $300,000 in the SCASD grant, and then

the $700,000 from RAISE funds”); id at 115 (“Mr.

Spirito did not want [information about the loan

guarantee divulged]” to state regulators). This sort of

intentional disregard for the restrictions attached to

public funds is exactly the sort of wrongdoing that §

666(a)(1)(A) is meant to address.

B. Count 18

Count 18 charges Defendant with Falsification of

Records in Federal Investigations. The relevant

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statute prohibits the knowing falsification of any

record or document with the intent to impede an

investigation of a federal agency. 18 U.S.C. § 1519.

Defendant’s Motion for Judgment of Acquittal

absorbs Count 18 into his arguments on Counts 1-17

and raises no independent basis for acquittal. See

ECF No. 98 at 6-7; ECF No. 102 at 5-6. At trial, the

Government’s evidence showed that Defendant

emailed regulators from the FAA, claiming that

“$3,510,642 VA State Entitlements allowable under

section 3.1.1.3.2 of the DOAV Airport Program

Manual...$299,513.00 U.S. DoT Small Community

Air Service Grant...$700,998.00 RAISE contribution”

was used to fund the loan guarantee for the benefit

of PEX. In fact, Defendant knew that airport

revenue and PFC were used to fund the loan

guarantee at the time he obscured this fact from

FAA investigators. See e.g. ECF No. 109 at 148

(“[Defendant] said if we had used airport revenue,

then we would lose our jobs”); id. at 148^9

(confirming that airport revenue was, in fact, used to

fund the collateral accounts supporting the PEX loan

guarantee). Therefore, the Government’s evidence is

sufficient to sustain a conviction on Count 18.

C. Count 19

Count 19 charges Defendant with Conversion of

Property from an Organization Receiving Federal

Funds for his use of a PAC credit card for personal

expenses during his tenure as Executive Director.

Defendant makes the following arguments in

support of acquittal on Count 19: (1) his use of the

PAC credit card was an authorized employment

benefit; (2) his use of the PAC credit card did not

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exceed $5,000, as required by § 666(a)(l)(A)(i); and

(3) the transactions at issue did not occur within I

year, as required by the Sixth Circuit in United

States v. Valentine, 63 F.3d 459 (6th Cir. 1995).

The Court and the jury have already rejected

Defendant’s contention that his use of a PAC credit

card to pay for an extended warranty on his vehicle

and vehicle accidents outside of the airport

insurance policy was an authorized employment

benefit. ECF No. 110 at 76 (“there’s some factual

issues left here, but there’s sufficient evidence in the

record for the jury to determine, either by direct

evidence or circumstantial evidence, that the

Defendant [converted more than $5,000 of PAC

property]”). Specific to the issue of the dollar amount

of the expenditures at issue, the Government

presented evidence that after the termination of

Defendant’s employment, an audit found $5,800 of

unauthorized expenditures on Defendant’s PACissued credit card. ECF No. 98-2 at II (documenting

that Defendant reimbursed the PAC with two checks

for his unauthorized expenditures, one for $5,000

and another for $800); see also ECF No. 110 at 70

(discussing credit card receipts leading to the

conclusion

that

Defendant’s

unauthorized

expenditures were at least $5,241). Finally, the

Court again rejects Defendant’s request to impose a

one-year temporal limitation on his conversion of

PAC funds. ECF No. 110 at 69-70 (“the Court is not

inclined to follow the Sixth Circuit precedent. The

Fourth Circuit is going to have to set its own

precedent on this because the Court has an issue

[here]”).

Therefore,

Defendant

presents

meritorious grounds for acquittal on Count 19.

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D. Counts 20, 21, and 23

Defendant faces perjury convictions related to

his deposition testimony in his civil suit against the

PAC after he was terminated from the position of

Executive Director. Count 20 charges Defendant for

his sworn statement that he never gave

authorization to use airport revenue for the loan

guarantee and told the PAC Board airport revenue

could not be used for such a purpose. Count 21

charges Defendant for claiming that the Board—not

the Defendant—was in full control of the decisions

made about the loan guarantee. Count 23 charges

Defendant for denying his role in designing the

collateralization schedule for the PEX loan

guarantee and advancing the plan to the PAC Board

for approval. The Defendant’s perjured testimony

can be found in Indictment 2, was played to the jury

during trial, and provided to the jury again in the

Court’s Jury Instructions. ECF No. 29, ECF No. 110

at 40-44, and ECF No. 112 at 154-61.

“Whoever under oath...in any proceeding before

or ancillary to any court or grand jury of the United

States knowingly makes any false material

declaration” shall be guilty of perjury. 18 U.S.C. §

1623(a). A perjurious statement must be “material to

the proceeding in which it is given.” United States v.

Zagari, 111 F.3d 307, 329 (2d Cir. 1997). A false

statement is material if it has “a natural tendency to

influence, or [is] capable of influencing, the decision

of the decisionmaking body to which it is addressed.”

United States v. Gaudin, 515 U.S. 506, 509 (1995)

(internal quotations omitted). The issue of

materiality is a mixed issue of law and fact to be

decided by the jury in all but the most extraordinary

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cases. Id. at 522-23. The power to prosecute the

declarant of materially false statements made in a

civil deposition is a critical element of a properly

functioning judicial system and is authorized under

§ 1623(a). See e.g. In re Sealed Case, 162 F.3d 670,

673-74 (D.C. Cir. 1998) (discussing Monica

Lewinsky’s perjured affidavit after she was

subpoenaed to testify in a civil case brought against

President Clinton by Paula Jones); United States v.

Forde, 740 F. Supp. 2d 406, 412 (S.D.N.Y. 2010)

(holding that a declarant may be prosecuted for

perjury if their statement in a civil deposition could

influence the decision making body or prevent the

discovery of admissible evidence in the underlying

suit).

As an initial matter, it is difficult to imagine a

scenario wherein a plaintiff provides a materially

false response to a relevant and substantive question

without subjecting him or herself to perjury. In this

particular case, the jury was well aware that

Defendant was the plaintiff in a civil suit against the

PAC after he was terminated from his position of

Executive Director because he testified to this fact

himself. ECF No. 111 at 137 (“I was involved in a

civil suit...they were going to ask me questions about

the People Express loan and the Airport’s

involvement while my civil suit was in federal

court.”); see also ECF No. 110 at 40 (documenting

law enforcement’s awareness of Defendant’s

testimony in Kenneth R. Spirilo v. Peninsula Airport

Commission, docketed 4:18cv58). In the same

segment of Defendant’s direct examination, he

confirms that he was the plaintiff and that he was

suing the PAC. ECF No. 111 at 137.

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Based solely on Defendant’s own testimony, the

following issues were made plain to the jury: (1)

Defendant’s testimony in his civil suit against the

PAC included claims about the management of

restricted PAC funds; (2) Defendant’s claims

regarding the management of restricted PAC funds

were material to his firing from his position as

Executive Director; and (3) the subject of

Defendant’s civil suit against the PAC was his firing

from the position of Executive Director. ECF No. 110

at 40-44 (admitting Defendant’s deposition

testimony and playing the relevant clips to the jury).

Quite simply, materiality is not in question because

the jury knew that Defendant’s misapplication of

PAC funds was relevant to his firing and the issues

in his civil case, just as it is relevant to his criminal

wrongdoing in this case. Therefore, Defendant’s

Motion for Judgment of Acquittal on the perjury

counts is wholly without merit.

E. Count 24

Count 24 charges Defendant with Obstruction of

Justice for transmitting a copy of his deposition

testimony in his civil case against the PAC “to an

investigator with the Virginia State Police...in

connection with a federal investigation.” ECF No. 29

at 32.

The “Omnibus Clause” of 18 U.S.C. § 1503

prohibits “persons from endeavoring to influence,

obstruct, or impede the due administration of

justice,” which includes a federal grand jury

investigation. United States v. Aguilar, 515 U.S. 593,

598-99. A conviction for obstruction of justice is not

proper without knowledge of a pending proceeding

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and satisfaction of the “nexus” requirement. Id. at

599. In order to satisfy the nexus requirement, the

defendant’s endeavor must have the natural and

probable effect of interfering with the due

administration of justice. Id. Further, knowledge of a

grand jury proceeding or making false statements to

an investigating agent are not sufficient standing

alone to constitute a violation of the Omnibus Clause

of § 1503. Id. (emphasis added).

A simple examination of the record confirms that

federal investigators were not even aware of

Defendant’s perjured civil testimony until after he

had already been indicted for misapplying the

restricted PAC funds. Compare ECF No. 3 (listing

the filing date of Indictment 1 as May 13, 2019) with

ECF No. 29 at 32 (noting that Defendant’s perjured

civil testimony was given on May 16, 2019); see also

id. (filing Indictment 2 on September 9, 2019). In

other words, it was impossible for Defendant’s

perjurious civil testimony on the loan guarantee to

have interfered with the federal investigation in the

instant case for the following reasons: (1) federal

investigators already knew Defendant was lying

about the loan guarantee in his civil deposition

testimony; and (2) the grand jury had already

decided there was probable cause to indict

Defendant

for

Misapplication

and

Money

Laundering anyway. In such a situation, a false

statement cannot have “the natural and probable

effect of interfering with the due administration of

justice” necessary to satisfy the nexus requirement.

See Aguilar, 515 U.S. at 601 (negating an

obstruction conviction wherein the evidence went no

further than the defendant testified falsely to an

investigating agent). Moreover, Defendant was

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properly convicted for perjury for his false deposition

testimony in his civil case against the PAC. Id. at

601 (“testif[ying] falsely to an investigating

agent...all but assures that the grand jury will

consider the material in its deliberations”); see supra

Part III.D. (affirming Defendant’s convictions for

perjury that were brought forth by a grand jury in

Indictment 2). The Government’s attempt to tack on

an additional obstruction charge in addition to the

perjury counts is not supported by precedent as a

legal matter and unnecessarily duplicative as a

practical matter. Therefore, Defendant’s Motion for

Judgment of Acquittal on Count 24 is granted.

IV. CONCLUSION

For the foregoing reasons, Defendant’s Motion

for Judgment of Acquittal is DENIED on Counts 121 and 23 and GRANTED on Count 24. The Court

DIRECTS the Clerk to provide a copy of this Order

to the parties.

IT IS SO ORDERED.

/s/ Raymond A. Jackson

United States District Judge

Newport News, Virginia

July 10, 2020

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FILED: June 28, 2022

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 20-4393

(4:19-cr-00043-RAJ-DEM-1)

UNITED STATES OF AMERICA

Plaintiff- Appellee

KENNETH R. SPIRITO

Defendant - Appellant

ORDER

The petition for rehearing en banc was circulated

to the full court. No judge requested a poll under

Fed. R. App. P. 35. The court denies the petition for

rehearing en banc.

For the Court

/s/ Patricia S. Connor, Clerk

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18 U.S.C. § 666

Theft or bribery concerning programs 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 State, local, or Indian tribal government, or any

agency thereof—

(A) embezzles, steals, obtains by fraud, or

otherwise without authority knowingly

converts to the use of any person other than

the rightful owner or intentionally misapplies,

property that—

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

(ii) is owned by, or is under the care,

custody, or control of such organization,

government, or agency; or

(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 business, transaction, or

series of transactions of such organization,

government, or agency involving any thing

of value of $5,000 or more; or

(2) corruptly gives, offers, or agrees to give

anything of value to any person, with intent to

influence or reward an agent of an organization

or of a State, local or Indian tribal government, or

any agency thereof, 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;

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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.

wages, fees, or other compensation paid, or expenses

paid or reimbursed, in the usual course of business.

(d) As used in this section—

(1) the term “agent” means a person

authorized to act on behalf of another person or a

government and, in the case of an organization or

government, includes a servant or employee, and

a partner, director, officer, manager, and

representative;

(2) the term “government agency” means a

subdivision of the executive, legislative, judicial,

or other branch of government, including a

department, independent establishment,

commission, administration, authority, board,

and bureau, and a corporation or other legal

entity established, and subject to control, by a

government or governments for the execution of a

governmental or intergovernmental program;

(3) the term “local” means of or pertaining to a

political subdivision within a State;

(4) the term “State” includes a State of the

United States, the District of Columbia, and any

commonwealth, territory, or possession of the

United States; and

(5) the term “in any one-year period” means a

continuous period that commences no earlier

A69

than twelve months before the commission of the

offense or that ends no later than twelve months

after the commission of the offense. Such period

may include time both before and after the

commission of the offense.

18 U.S.C. § 1957

Engaging in monetary transactions in property

derived from specified unlawful activity

(a) Whoever, in any of the circumstances set forth

in subsection (d), knowingly engages or attempts to

engage in a monetary transaction in criminally

derived property of a value greater than $10,000 and

is derived from specified unlawful activity, shall be

punished as provided in subsection (b).

(b)(1) Except as provided in paragraph (2), the

punishment for an offense under this section is a

fine under title 18, United States Code, or

imprisonment for not more than ten years or

both. If the offense involves a pre-retail medical

product (as defined in section 670) the

punishment for the offense shall be the same as

the punishment for an offense under section 670

unless the punishment under this subsection is

greater.

(2) The court may impose an alternate fine to

that imposable under paragraph (1) of not more

than twice the amount of the criminally derived

property involved in the transaction.

section, the Government is not required to prove the

defendant knew that the offense from which the

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criminally derived property was derived was

specified unlawful activity.

(d) The circumstances referred to in subsection

(a) are(1) that the offense under this section takes

place in the United States or in the special

maritime and territorial jurisdiction of the

United States; or

(2) that the offense under this section takes

place outside the United States and such special

jurisdiction, but the defendant is a United States

person (as defined in section 3077 of this title, but

excluding the class described in paragraph (2)(D)

of such section).

(e) Violations of this section may be investigated

by such components of the Department of Justice as

the Attorney General may direct, and by such

components of the Department of the Treasury as

the Secretary of the Treasury may direct, as

appropriate, and, with respect to offenses over which

the Department of Homeland Security has

jurisdiction, by such components of the Department

of Homeland Security as the Secretary of Homeland

Security may direct, and, with respect to offenses

over which the United States Postal Service has

jurisdiction, by the Postal Service. Such authority of

the Secretary of the Treasury, the Secretary of

Homeland Security, and the Postal Service shall be

exercised in accordance with an agreement which

shall be entered into by the Secretary of the

Treasury, the Secretary of Homeland Security, the

Postal Service, and the Attorney General.

(f) As used in this section(1) the term "monetary transaction" means

the deposit, withdrawal, transfer, or exchange, in

A71

or affecting interstate or foreign commerce, of

funds or a monetary instrument (as defined

in section 1956(c)(5) of this title) by, through, or

to a financial institution (as defined in section

1956 of this title), including any transaction that

would be a financial transaction under section

1956(c)(4)(B) of this title, but such term does not

include any transaction necessary to preserve a

person's right to representation as guaranteed by

the sixth amendment to the Constitution;

(2) the term "criminally derived property"

means any property constituting, or derived from,

proceeds obtained from a criminal offense; and

(3) the terms "specified unlawful activity" and

"proceeds" shall have the meaning given those

terms in section 1956 of this title.

49 U.S.C. § 46301

(From United States Code Title 49 Transportation,

Subtitle VII Aviation Programs, Part A Air

Commerce and Safety, Subpart IV-Enforcement and

Penalties, Chapter 463)

(a) General Penalty.

(1) A person is liable to the United States

Government for a civil penalty of not more than

$25,000 (or $1,100 if the person is an individual

or small business concern) for violating(A) chapter 401 (except sections 40103(a)

and (d), 40105, 40116, and 40117), chapter

411, chapter 413 (except sections 41307 and

41310(b)–(f)), chapter 415 (except sections

41502, 41505, and 41507–41509), chapter

417 (except sections 41703, 41704, 41710,

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41713, and 41714), chapter 419, subchapter II

or III of chapter 421, chapter 423, chapter

441 (except section 44109), section 44502(b) or

(c), chapter 447 (except sections 44717 and

44719–44723), chapter 449 (except sections

44902, 44903(d), 44904, 44907(a)–(d)(1)(A)

and (d)(1)(C)–(f), and 44908), chapter 451,

section 47107(b) (including any assurance

made under such section), or section 47133 of

this title;

(B) a regulation prescribed or order issued

under any provision to which clause (A) of this

paragraph applies;

issued under section 41102, 41103, or 41302 of

this title; or

(D) a regulation of the United States Postal

Service under this part.

(2) A separate violation occurs under this

subsection for each day the violation (other than

a violation of section 41719) continues or, if

applicable, for each flight involving the violation

(other than a violation of section 41719).

(3) Penalty for diversion of aviation revenues.

The amount of a civil penalty assessed under this

section for a violation of section 47107(b) of this

title (or any assurance made under such section)

or section 47133 of this title may be increased

above the otherwise applicable maximum amount

under this section to an amount not to exceed 3

times the amount of revenues that are used in

violation of such section.

(4) Aviation security violations.

Notwithstanding paragraph (1) of this subsection,

the maximum civil penalty for violating chapter

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449 shall be $10,000; except that the maximum

civil penalty shall be $25,000 in the case of a

person operating an aircraft for the

transportation of passengers or property for

compensation (except an individual serving as an

airman).

(5) Penalties applicable to individuals and

small business concerns.

(A) An individual (except an airman

serving as an airman) or small business

concern is liable to the Government for a civil

penalty of not more than $10,000 for violating

(i) chapter 401 (except sections 40103(a)

and (d), 40105, 40106(b), 40116, and

40117), section 44502 (b) or (c), chapter

447 (except sections 44717–44723), chapter

449 (except sections 44902, 44903(d),

44904, and 44907–44909), or chapter 451,

or section 46314(a) of this title; or

(ii) a regulation prescribed or order

issued under any provision to which clause

(i) applies.

(B) A civil penalty of not more than

$10,000 may be imposed for each violation

under paragraph (1) committed by an

individual or small business concern related to

(i) the transportation of hazardous

material;

(ii) the registration or recordation

under chapter 441 of an aircraft not used

to provide air transportation;

(iii) a violation of section 44718(d),

relating to the limitation on construction or

establishment of landfills;

A74

(iv) a violation of section 44725, relating

to the safe disposal of life-limited aircraft

parts; or

(v) a violation of section 40127 or section

41705, relating to discrimination.

maximum civil penalty for a violation of

section 41719 committed by an individual or

small business concern shall be $5,000 instead

of $1,000.

(D) Notwithstanding paragraph (1), the

maximum civil penalty for a violation of

section 41712 (including a regulation

prescribed or order issued under such section)

or any other regulation prescribed by the

Secretary by an individual or small business

concern that is intended to afford consumer

protection to commercial air transportation

passengers shall be $2,500 for each violation.

(6) Failure To Collect Airport Security Badges.

Notwithstanding paragraph (1), any employer

(other than a governmental entity or airport

operator) who employs an employee to whom an

airport security badge or other identifier used to

obtain access to a secure area of an airport is

issued before, on, or after the date of enactment

of this paragraph and who does not collect or

make reasonable efforts to collect such badge

from the employee on the date that the

employment of the employee is terminated and

does not notify the operator of the airport of such

termination within 24 hours of the date of such

termination shall be liable to the Government for

a civil penalty not to exceed $10,000.

(b) Smoke Alarm Device Penalty.

A75

(1) A passenger may not tamper with, disable,

or destroy a smoke alarm device located in a

lavatory on an aircraft providing air

transportation or intrastate air transportation.

(2) An individual violating this subsection is

liable to the Government for a civil penalty of not

more than $2,000.

(1) The Secretary of Transportation may

impose a civil penalty for the following violations

only after notice and an opportunity for a

hearing:

(A) a violation of subsection (b) of this

section or chapter 411, chapter 413 (except

sections 41307 and 41310(b)–(f)), chapter

415 (except sections 41502, 41505, and 41507–

41509), chapter 417 (except sections 41703,

41704, 41710, 41713, and 41714), chapter 419,

subchapter II of chapter 421, chapter 423,

or section 44909 of this title.

(B) a violation of a regulation prescribed or

order issued under any provision to which

clause (A) of this paragraph applies.

or permit issued under section 41102, 41103,

or 41302 of this title.

(D) a violation under subsection (a)(1) of

this section related to the transportation of

hazardous material.

(2) The Secretary shall give written notice of

the finding of a violation and the civil penalty

under paragraph (1) of this subsection.

(d) Administrative Imposition of Penalties.

(1) In this subsection-

A76

(A) "flight engineer" means an individual

who holds a flight engineer certificate issued

under part 63 of title 14, Code of Federal

Regulations.

(B) "mechanic" means an individual who

holds a mechanic certificate issued under part

65 of title 14, Code of Federal Regulations.

pilot certificate issued under part 61 of title

14, Code of Federal Regulations.

(D) "repairman" means an individual who

holds a repairman certificate issued under

part 65 of title 14, Code of Federal

Regulations.

(2) The Administrator of the Federal Aviation

Administration may impose a civil penalty for a

violation of chapter 401 (except sections 40103(a)

and (d), 40105, 40106(b), 40116, and

40117), chapter 441 (except section 44109),

section 44502(b) or (c), chapter 447 (except

sections 44717 and 44719–44723), chapter 451,

section 46301(b), section 46302 (for a violation

relating to section 46504), section 46318, section

46319, or section 47107(b) (as further defined by

the Secretary under section 47107(l) and

including any assurance made under section

47107(b)) of this title or a regulation prescribed

or order issued under any of those provisions. The

Secretary of Homeland Security may impose a

civil penalty for a violation of chapter 449 (except

sections 44902, 44903(d), 44907(a)–(d)(1)(A),

44907(d)(1)(C)–(f), 44908, and 44909), section

46302 (except for a violation relating to section

46504), or section 46303 of this title or a

regulation prescribed or order issued under any

A77

of those provisions. The Secretary of Homeland

Security or Administrator shall give written

notice of the finding of a violation and the

penalty.

(3) In a civil action to collect a civil penalty

imposed by the Secretary of Homeland Security

or Administrator under this subsection, the

issues of liability and the amount of the penalty

may not be reexamined.

(4) Notwithstanding paragraph (2) of this

subsection, the district courts of the United

States have exclusive jurisdiction of a civil action

involving a penalty the Secretary of Homeland

Security or Administrator initiates if(A) the amount in controversy is more

than(i) $50,000 if the violation was

committed by any person before the date of

enactment of the Vision 100-Century of

Aviation Reauthorization Act;

(ii) $400,000 if the violation was

committed by a person other than an

individual or small business concern on or

after that date; or

(iii) $50,000 if the violation was

committed by an individual or small

business concern on or after that date;

(B) the action is in rem or another action in

rem based on the same violation has been

brought;

to a lien that has been seized by the

Government; or

(D) another action has been brought for an

injunction based on the same violation.

A78

(5)(A) The Administrator may issue an order

imposing a penalty under this subsection

against an individual acting as a pilot, flight

engineer, mechanic, or repairman only after

advising the individual of the charges or any

reason the Administrator relied on for the

proposed penalty and providing the individual

an opportunity to answer the charges and be

heard about why the order shall not be issued.

(B) An individual acting as a pilot, flight

engineer, mechanic, or repairman may appeal

an order imposing a penalty under this

subsection to the National Transportation

Safety Board. After notice and an opportunity

for a hearing on the record, the Board shall

affirm, modify, or reverse the order. The

Board may modify a civil penalty imposed to a

suspension or revocation of a certificate.

paragraph, the Board is not bound by findings

of fact of the Administrator but is bound by all

validly adopted interpretations of laws and

regulations the Administrator carries out and

of written agency policy guidance available to

the public related to sanctions to be imposed

under this section unless the Board finds an

interpretation is arbitrary, capricious, or

otherwise not according to law.

(D) When an individual files an appeal

with the Board under this paragraph, the

order of the Administrator is stayed.

(6) An individual substantially affected by an

order of the Board under paragraph (5) of this

subsection, or the Administrator when the

Administrator decides that an order of the Board

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under paragraph (5) will have a significant

adverse impact on carrying out this part, may

obtain judicial review of the order under section

46110 of this title. The Administrator shall be

made a party to the judicial review proceedings.

Findings of fact of the Board are conclusive if

supported by substantial evidence.

(7)(A) The Administrator may impose a

penalty on a person (except an individual acting

as a pilot, flight engineer, mechanic, or

repairman) only after notice and an opportunity

for a hearing on the record.

(B) In an appeal from a decision of an

administrative law judge as the result of a

hearing under subparagraph (A) of this

paragraph, the Administrator shall consider

only whether(i) each finding of fact is supported by a

preponderance of reliable, probative, and

substantial evidence;

(ii) each conclusion of law is made

according to applicable law, precedent, and

public policy; and

(iii) the judge committed a prejudicial

error that supports the appeal.

involving a penalty under this paragraph may

not be initiated later than 2 years after the

violation occurs.

(D) In the case of a violation of section

47107(b) of this title or any assurance made

under such section(i) a civil penalty shall not be assessed

against an individual;

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(ii) a civil penalty may be compromised

as provided under subsection (f); and

(iii) judicial review of any order

assessing a civil penalty may be obtained

only pursuant to section 46110 of this title.

(8) The maximum civil penalty the Under

Secretary, Administrator, or Board may impose

under this subsection is(A) $50,000 if the violation was committed

by any person before the date of enactment of

the Vision 100-Century of Aviation

Reauthorization Act;

(B) $400,000 if the violation was committed

by a person other than an individual or small

business concern on or after that date; or

by an individual or small business concern on

or after that date.

(9) This subsection applies only to a violation

occurring after August 25, 1992.

(e) Penalty Considerations. In determining the

amount of a civil penalty under subsection (a)(3) of

this section related to transportation of hazardous

material, the Secretary shall consider(1) the nature, circumstances, extent, and

gravity of the violation;

(2) with respect to the violator, the degree of

culpability, any history of prior violations, the

ability to pay, and any effect on the ability to

continue doing business; and

(3) other matters that justice requires.

(f) Compromise and Setoff.

(1)(A) The Secretary may compromise the

amount of a civil penalty imposed for

violating-

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(i) chapter 401 (except sections 40103(a)

and (d), 40105, 40116, and 40117), chapter

441 (except section 44109), section

44502(b) or (c), chapter 447 (except

sections 44717 and 44719–44723), chapter

449 (except sections 44902, 44903(d),

44904, 44907(a)–(d)(1)(A) and (d)(1)(C)–(f),

44908, and 44909), or chapter 451 of this

title; or

(ii) a regulation prescribed or order

issued under any provision to which clause

(i) of this subparagraph applies.

(B) The Postal Service may compromise the

amount of a civil penalty imposed under

subsection (a)(1)(D) of this section.

(2) The Government may deduct the amount

of a civil penalty imposed or compromised under

this subsection from amounts it owes the person

liable for the penalty.

(g) Judicial Review. An order of the Secretary or

the Administrator imposing a civil penalty may be

reviewed judicially only under section 46110 of this

title.

(h) Nonapplication.

(1) This section does not apply to the following

when performing official duties:

(A) a member of the armed forces of the

United States.

(B) a civilian employee of the Department

of Defense subject to the Uniform Code of

Military Justice.

(2) The appropriate military authority is

responsible for taking necessary disciplinary

action and submitting to the Secretary (or the

Under Secretary of Transportation for Security

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with respect to security duties and powers

designated to be carried out by the Under

Secretary or the Administrator with respect to

aviation safety duties and powers designated to

be carried out by the Administrator) a timely

report on action taken.

(i) Small Business Concern Defined. In this

section, the term "small business concern" has the

meaning given that term in section 3 of the Small

Business Act (15 U.S.C. 632).

14 C.F.R. § 13.15

Civil penalties: Other than by administrative

assessment (From Code of Federal Regulations Title

14 Aeronautics and Space, Chapter I Federal

Aviation Administration, Department of

Transportation, Subchapter B Procedural Rules,

Part 13 Investigative and Enforcement Procedures)

(a) The FAA uses the procedures in this section

when it seeks a civil penalty other than by the

administrative assessment procedures in § 13.16 or §

13.18.

(b) The authority of the Administrator to seek a

civil penalty, and the ability to refer cases to the

United States Attorney General, or the delegate of

the Attorney General, for prosecution of civil penalty

actions sought by the Administrator is delegated to

the Chief Counsel, each Deputy Chief Counsel, and

the Assistant Chief Counsel for Enforcement. This

delegation applies to cases involving one or more of

the following:

(1) An amount in controversy in excess of:

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(i) $400,000, if the violation was

committed by a person other than an

individual or small business concern; or

(ii) $50,000, if the violation was

committed by an individual or small

business concern.

(2) An in rem action, seizure of aircraft subject

to lien, suit for injunctive relief, or for collection

of an assessed civil penalty.

penalty proposed under this section, before referral

to the United States Attorney General, or the

delegate of the Attorney General, for prosecution.

(1) The Administrator, through the Chief

Counsel, a Deputy Chief Counsel, or the

Assistant Chief Counsel for Enforcement sends a

civil penalty letter to the person charged with a

violation. The civil penalty letter contains a

statement of the charges; the applicable law, rule,

regulation, or order; and the amount of civil

penalty that the Administrator will accept in full

settlement of the action or an offer to compromise

the civil penalty.

(2) Not later than 30 days after receipt of the

civil penalty letter, the person cited with an

alleged violation may respond to the civil penalty

letter by

(i) Submitting electronic payment, a

certified check, or money order in the amount

offered by the Administrator in the civil

penalty letter. The agency attorney will send a

letter to the person charged with the violation

stating that payment is accepted in full

settlement of the civil penalty action; or

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(ii) Submitting one of the following to the

agency attorney:

(A) Written material or information

that may explain, mitigate, or deny the

violation or that may show extenuating

circumstances; or

(B) A written request for an informal

conference to discuss the matter with the

agency attorney and to submit any

relevant information or documents that

may explain, mitigate, or deny the

violation; or that may show extenuating

circumstances.

(3) The documents, material, or information

submitted under paragraph (c)(2)(ii) of this

section may include support for any claim of

inability to pay the civil penalty in whole or in

part, or for any claim of small business status as

defined in 49 U.S.C. 46301(i).

(4) The Administrator will consider any

material or information submitted under

paragraph (c)(2)(ii) of this section to determine

whether the person is subject to a civil penalty or

to determine the amount for which the

Administrator will compromise the action.

(5) If the parties cannot agree to compromise

the civil penalty, the Administrator may refer the

civil penalty action to the United States Attorney

General, or the delegate of the Attorney General,

to begin proceedings in a U.S. district court to

prosecute and collect a civil penalty.

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14 C.F.R. § 13.16

Civil penalties: Administrative assessment against a

person other than an individual acting as a pilot,

flight engineer, mechanic, or repairman;

administrative assessment against all persons for

hazardous materials violations. (From Code of

Federal Regulations Title 14 Aeronautics and Space,

Chapter I Federal Aviation Administration,

Department of Transportation, Subchapter B

Procedural Rules, Part 13 Investigative and

Enforcement Procedures)

(a) General. The FAA uses the procedures in this

section when it assesses a civil penalty against a

person other than an individual acting as a pilot,

flight engineer, mechanic, or repairman for a

violation cited in the first sentence of 49 U.S.C.

46301(d)(2), or in 49 U.S.C. 47531, or any

implementing rule, regulation, or order, except when

the U.S. district courts have exclusive jurisdiction.

(b) District court jurisdiction. The U.S. district

courts have exclusive jurisdiction of any civil penalty

action initiated by the FAA for violations described

in paragraph (a) of this section if (1) The amount in controversy is more than

$400,000 for a violation committed by a person

other than an individual or small business

concern;

(2) The amount in controversy is more than

$50,000 for a violation committed by an

individual or a small business concern;

(3) The action is in rem or another action in

rem based on the same violation has been

brought;

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(4) The action involves an aircraft subject to a

lien that has been seized by the Government; or

(5) Another action has been brought for an

injunction based on the same violation.

assessing a civil penalty for a violation under 49

U.S.C. chapter 51, or a rule, regulation, or order

issued under 49 U.S.C. chapter 51, is issued only

after the following factors have been considered:

(1) The nature, circumstances, extent, and

gravity of the violation;

(2) With respect to the violator, the degree of

culpability, any history of prior violations, the

ability to pay, and any effect on the ability to

continue to do business; and

(3) Other matters that justice requires.

(d) Delegation of authority. The authority of the

Administrator is delegated to each Deputy Chief

Counsel and the Assistant Chief Counsel for

Enforcement, as follows:

(1) Under 49 U.S.C. 46301(d), 47531, and

5123, and 49 CFR 1.83, to initiate and assess civil

penalties for a violation of those statutes or a

rule, regulation, or order issued under those

provisions;

(2) Under 49 U.S.C. 5123, 49 CFR 1.83, 49

U.S.C. 46301(d), and 49 U.S.C. 46305, to refer

cases to the Attorney General of the United

States or a delegate of the Attorney General for

collection of civil penalties;

(3) Under 49 U.S.C. 46301(f), to compromise

the amount of a civil penalty imposed; and

(4) Under 49 U.S.C. 5123(e) and (f) and 49

CFR 1.83, to compromise the amount of a civil

penalty imposed.

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(e) Order assessing civil penalty.

(1) An order assessing civil penalty may be

issued for a violation described in paragraph (a)

or (c) of this section, or as otherwise provided by

statute, after notice and opportunity for a

hearing, when:

(i) A person charged with a violation agrees

to pay a civil penalty for a violation; or

(ii) A person charged with a violation does

not request a hearing under paragraph

(g)(2)(ii) of this section within 15 days after

receipt of a final notice of proposed civil

penalty.

(2) The following also serve as an order

assessing civil penalty:

(i) An initial decision or order issued by an

administrative law judge as described in §

13.232(e).

(ii) A decision or order issued by the FAA

decisionmaker as described in § 13.233(j).

(f) Notice of proposed civil penalty. A civil penalty

action is initiated by sending a notice of proposed

civil penalty to the person charged with a violation,

the designated agent for the person, or if there is no

such designated agent, the president of the company

charged with a violation. In response to a notice of

proposed civil penalty, a company may designate in

writing another person to receive documents in that

civil penalty action. The notice of proposed civil

penalty contains a statement of the charges and the

amount of the proposed civil penalty. Not later than

30 days after receipt of the notice of proposed civil

penalty, the person charged with a violation may (1) Submit the amount of the proposed civil

penalty or an agreed-upon amount, in which case

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either an order assessing civil penalty or

compromise order under paragraph (n) of this

section may be issued in that amount;

(2) Submit to the agency attorney one of the

following:

(i) Written information, including

documents and witness statements,

demonstrating that a violation of the

regulations did not occur or that a penalty or

the amount of the penalty is not warranted by

the circumstances.

(ii) A written request to reduce the

proposed civil penalty, stating the amount of

reduction and the reasons and providing any

documents supporting a reduction of the

proposed civil penalty, including records

indicating a financial inability to pay or

records showing that payment of the proposed

civil penalty would prevent the person from

continuing in business.

(iii) A written request for an informal

conference to discuss the matter with the

agency attorney and to submit relevant

information or documents; or

(3) Request a hearing conducted in accordance

with subpart G of this part.

(g) Final notice of proposed civil penalty. A final

notice of proposed civil penalty will be sent to the

person charged with a violation, the designated

agent for the person, the designated agent named in

accordance with paragraph (f) of this section, or the

president of the company charged with a violation.

The final notice of proposed civil penalty contains a

statement of the charges and the amount of the

proposed civil penalty and, as a result of information

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submitted to the agency attorney during informal

procedures, may modify an allegation or a proposed

civil penalty contained in a notice of proposed civil

penalty.

(1) A final notice of proposed civil penalty may

be issued (i) If the person charged with a violation

fails to respond to the notice of proposed civil

penalty within 30 days after receipt of that

notice; or

(ii) If the parties participated in any

procedures under paragraph (f)(2) of this

section and the parties have not agreed to

compromise the action or the agency attorney

has not agreed to withdraw the notice of

proposed civil penalty.

(2) Not later than 15 days after receipt of the

final notice of proposed civil penalty, the person

charged with a violation may do one of the

following:

(i) Submit the amount of the proposed civil

penalty or an agreed-upon amount, in which

case either an order assessing civil penalty or

a compromise order under paragraph (n) of

this section may be issued in that amount; or

(ii) Request a hearing conducted in

accordance with subpart G of this part.

(h) Request for a hearing. Any person requesting

a hearing, under paragraph (f)(3) or (g)(2)(ii) of this

section must file the request with the FAA Hearing

Docket Clerk and serve the request on the agency

attorney in accordance with the requirements in

subpart G of this part.

(i) Hearing. The procedural rules in subpart G of

this part apply to the hearing.

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(j) Appeal. Either party may appeal the

administrative law judge's initial decision to the

FAA decisionmaker under the procedures in subpart

G of this part. The procedural rules in subpart G of

this part apply to the appeal.

(k) Judicial review. A person may seek judicial

review only of a final decision and order of the FAA

decisionmaker in accordance with § 13.235.

(l) Payment.

(1) A person must pay a civil penalty by:

(i) Sending a certified check or money

order, payable to the Federal Aviation

Administration, to the FAA office identified in

the notice of proposed civil penalty, the final

notice of proposed civil penalty, or the order

assessing civil penalty; or

(ii) Making an electronic payment

according to the directions specified in the

notice of proposed civil penalty, the final

notice of proposed civil penalty, or the order

assessing civil penalty.

(2) The civil penalty must be paid within 30

days after service of the order assessing civil

penalty, unless otherwise agreed to by the

parties. In cases where a hearing is requested, an

appeal to the FAA decisionmaker is filed, or a

petition for review of the FAA decisionmaker's

decision is filed in a U.S. court of appeals, the

civil penalty must be paid within 30 days after all

litigation in the matter is completed and the civil

penalty is affirmed in whole or in part.

(m) Collection of civil penalties. If an individual

does not pay a civil penalty imposed by an order

assessing civil penalty or other final order, the

Administrator may take action to collect the penalty.

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(n) Compromise. The FAA may compromise the

amount of any civil penalty imposed under this

section under 49 U.S.C. 5123(e), 46301(f), or 46318

at any time before referring the action to the United

States Attorney General, or the delegate of the

Attorney General, for collection.

(1) When a civil penalty is compromised with

a finding of violation, an agency attorney issues

an order assessing civil penalty.

(2) When a civil penalty is compromised

without a finding of violation, the agency

attorney issues a compromise order that states

the following:

(i) The person has paid a civil penalty or

has signed a promissory note providing for

installment payments.

(ii) The FAA makes no finding of a

violation.

(iii) The compromise order will not be used

as evidence of a prior violation in any

subsequent civil penalty proceeding or

certificate action proceeding.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.