Opposition — Coleman v. United States

No. 78-1124

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, JR., CLERK

In the Supreme Court of the United States

OCTOBER TERM, 1978

NATHANIEL COLEMAN, PETITIONER

V,

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE SEVENTH CIRCUIT

BRIEF FOR THE UNITED STATES

IN OPPOSITION

WADE H. McCRreE, Jr.

Solicitor General

PHILIP B. HEYMANN

Assistant Attorney General

SIDNEY M. GLAZER

CHRISTIAN F. VISSERS

Attorneys

Department of Justice

Washington, D.C. 20530

In the Supreme Court of the United States

OCTOBER TERM, 1978

No. 78-1124

NATHANIEL COLEMAN, PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE SEVENTH CIRCUIT

BRIEF FOR THE UNITED STATES

IN OPPOSITION

OPINION BELOW

The opinion of the court of appeals (Pet. App. Al-A8)

_ is not yet reported.

JURISDICTION

The judgment of the court of appeals was entered on

December 18, 1978. The petition for a writ of certiorari

was filed on January 17, 1979. The jurisdiction of this

Court is invoked under 28 U.S.C. 1254(1).

QUESTIONS PRESENTED

1. Whether misappropriation of the labor of employees

paid with federal funds under the Comprehensive

Employment and Training Act of 1973 is punishable

under 18 U.S.C. 665.

(1)

2. Whether the trial court was required to define

certain terms used in its instructions to the jury.

3. Whether testimony referring to the Hatch Act was

properly admitted at trial.

STATUTE INVOLVED

18 U.S.C. 665(a) provides in pertinent part:

Whoever, being an officer, director, agent, or

employee of, or connected in any capacity with, any

agency receiving financial assistance under the

Comprehensive Employment and Training Act of

1973 embezzles, willfully misapplies, steals, or

obtains by fraud any of the moneys, funds, assets, or

property which are the subject of a grant or contract

of assistance pursuant to this Act shall be fined not

more than $10,000 or imprisoned for not more than

two years, or both; but if the amount so embezzled,

misapplied, stolen, or obtained by fraud does not

exceed $100, he shall be fined not more than $1,000,

or imprisoned not more than one year, or both.

STATEMENT

Following a jury trial in the United States District

Court for the Northern District of Indiana, petitioner was

convicted on one count of embezzling and willfully

misapplying property and funds subject to a federal grant

under the Comprehensive Employment and Training Act

(CETA), in violation of 18 U.S.C. 665. He was sentenced

- to a one-year term of imprisonment. The court of appeals

affirmed (Pet. App. Al-A8).

Pursuant to the provisions of CETA, the Department

of Labor entered into an agreement with the City of Gary,

Indiana. Under that agreement, the Gary Manpower Ad-

ministration (a city office responsible for funding) was

authorized to administer various employment programs,

including an Adult Work Experience Program

(“Program”) providing short-term sub-professional jobs

(Tr. 90-97). Salaries of Program employees were paid by

Gary Manpower with funds disbursed by the Department

of Labor (Tr. 96-97, 112-115; Pet. App. A3). Under a

subordinate agreement entered into between Gary

Manpower and the city’s General Services Department

(GSD), Program trainees were assigned to GSD for work

in that agency. Petitioner was the assistant director of

GSD (Tr. 125-137; Pet. App. B6-B8).

In April 1975, petitioner took control of a special five-

man crew of Program participants. Petitioner instructed

this crew to work in a mayoral primary campaign, to

provide labor for his private construction business, and to

perform menial chores around his home (Pet. App. A4).'

Petitioner used CETA trainees to construct and distribute

political signs (Tr. 166, 170-172, 373, 412) and to paint

houses for his construction company (Tr. 708-722). While

working for petitioner's company, they also built a dog

run and a shelter (Tr. 215-231), a residential foundation

(Tr. 694-707), and fences (Tr. 722-732, 648-687, 688-693).

In addition, petitioner used these employees throughout

the summer to provide maintenance work (Tr. 733-751)

and custodial services (Tr. 414-415, 419-423, 201-210)

under private contracts. While engaged in these activities,

the CETA employees were unavailable to perform the

public services for which they were paid under the federal

program.

ARGUMENT

1. Petitioner contends (Pet. 8-10) that 18 U.S.C. 665

proscribes only misappropriation of money or tangible

property subject to a federal grant, and that misap-

propriation of the labor of employees paid for by the

‘Under 29 U.S.C. 990, CETA funds may not be used to support

“political activities.” CETA funds may be used only to provide

“public services” beneficial to the community. 29 U.S.C. 845(c)(3).

federal government is not an_ offense. Petitioner

acknowledges (Pet. 8) that the decision below is the first

to consider this issue under Section 665, which alone is

reason for this Court to decline review of the issue at this

time. In any event, the decision below is correct.

The statute makes it a crime for any employee

connected with an agency receiving CETA funds to

embezzle, misapply, steal, or obtain by fraud “any of the

moneys, funds, assets, or property which are the subject

of a grant or contract of assistance ***.” This

prohibition provides broad protection against wrongdoing

by those entrusted with federal grants. By employing the

word “any,” by separately enumerating money, funds,

assets, and property, and by describing in various

alternative ways the prohibited means for misap-

propriating such wealth, Congress obviously manifested

an intention to sweep broadly. The terms used by

Congress do not lend themselves to restrictive interpreta-

tion. See, generally, United States v. Gilliland, 312 U.S.

86, 93 (1941); United States v. Culbert, 435 U.S. 371,

373 (1978). Nothing in the comprehensive language used

by Congress suggests that the statute should be limited to

“tangible” property interests.

As the court of appeals recognized, the right to receive

services stemming from the payment of money under a

contract of employment is a form of property interest.2 A

contractual right to services is a type of wealth similar to

other kinds of intangible property rights. See, e.g., In Re

tra Haupt & Co., 424 F. 2d 722, 724 (2d Cir. 1970).

‘There is, moreover, no significant difference between

Although the legislative history does not provide a definition of

the term “property,” the customary legal meaning of the term

“extends to every species of valuable right and interest,” including

— or intangible” interests. Black's Law Dictionary 1382 (1968

ed.).

diverting the labor of employees paid by the federal

government and diverting the funds used to pay them.

The money of the federal government is misappropriated

to the same degree by either device. As the court below

noted: “{wl]illful misapplication of services generated by

the granted funds is indistinguishable from willful

misapplication of funds themselves” (Pet. App. A7).

The construction proposed by petitioner would create a

gaping hole in the protection of the integrity of CETA

programs that was clearly Congress’s purpose in enacting

Section 665.

Petitioner’s assertion that the term “property” should

be limited to “tangible things” (Pet. 12) is, moreover,

refuted by the case law construing statutes similar to 18

U.S.C. 665. Thus, under 18 U.S.C. 641, which prohibits,

inter alia, theft of property belonging to the United

States, it is well settled that theft of intangible interests is

forbidden. See, e.g., United States v. DiGilio, 538 F. 2d

972, 976-978 (3d Cir. 1976) (misappropriation of various

resources including the “time” of a government employee

during “working hours”). See also United States v.

Lambert, 446 F. Supp. 890, 896 (D. Conn. 1978)

(misappropriation of information stored in a government

computer).? Similarly, under the Hobbs Act, 18 U.S.C.

1951, which forbids obtaining the property of another

person by threats of violence, it is settled that “property”

is “not limited to physical or tangible property or things

*** but includes, in a broad sense, any valuable right

considered as a source or element of wealth * * *.” United

The early case of Chappell v. United States, 270 F, 2d 274, 277

(9th Cir. 1959), relied on by petitioner, held that Section 641 does not

apply to intangibles such as services of government employees. Later

cases in the Ninth Circuit appear to have abandoned the tangible

property requirement. See United States v. Friedman, 445 F. 2d 1076,

1087 (9th Cir.), cert. denied, 404 U.S. 958 (1971). In any event, the

Ninth Circuit's prior interpretation presents no conflict here, because

a different statute is involved. See Pet. App. A6.

States v. Tropiano, 418 F. 2d 1069, 1075 (2d Cir. 1969),

cert. denied, 397 U.S. 1021 (1970). See also United States

v. Nadaline, 471 F. 2d 340, 344 (Sth Cir.), cert. denied,

411 U.S. 951 (1973); United States v. Santoni, 585 F. 2d

667, 672-673 (4th Cir. 1978), cert. denied, No. 78-843

(Feb. 21, 1979) (“the property extorted was the right

* * * to make a business decision free from outside pres-

sure wrongfully imposed * * *”).4

There is no ground for construing the language used by

Congress in 18 U.S.C. 665 in a narrower fashion. As

noted by the court of appeals:

Congress was entrusting large sums of non-federal

agencies to accomplish the purposes of CETA. A

principal purpose was providing paying jobs to

trainees. In § 665 Congress was exerting its power to

protect these funds from misuse at the hands of em-

ployees of these agencies. * * * Recognizing that

the term “property” is protean, capable of assuming

varied meanings depending on context, and that the

criminal law does not of necessity adopt the most

restrictive meaning as the “literal terms,” there is no

reason to suppose that Congress intended to

withhold protection from services purchased while

extending the protection to tangible property

purchased. * * * In the CETA context, we feel a

contrary result would accomplish an absurd inter-

pretation of the statute, one that should not be

imputed to Congress * * *.

‘The terms “property” and “goods” have frequently been construed

to embrace intangible rights and interests under other federal criminal

Statutes prohibiting theft and fraud. See, e.g., United States v.

Louderman, 576 F. 2d 1383, 1387 (9th Cir.), cert. denied, No. 78-5084

(Oct. 10, 1978) (scheme to defraud telephone company of confidential

information), United States v. Bottone, 365 F. 2d 389, 393-394 (2d

Cir. 1966) (interstate transportation of copies of papers disclosing

stolen trade secrets); United States v. Lester, 282 F. 2d 750, 755 (3d

Cir. 1960), cert. denied, 364 U.S. 937 (1961) (interstate transportation

of photocopies of stolen maps).

Pet. App. A6-A7.5

2. The district court defined the terms “embezzle” and

“convert * * * to one’s own use” in its charge to the jury

(Tr. 1047-1048). Petitioner argues that the court also was

required to define the terms “willfully misapplies,”

“steals,” and “obtains by fraud” (Pet. 17). However, as

noted by the court below, petitioner did not object to the

district court’s charge in compliance with Fed. R. Crim. P.

30, which required him to “stat[e] distinctly the matter to

which he objects and the grounds of his objection.”

Petitioner only objected in general terms and did not

direct the attention of the district court to the terms that

he now asserts required further definition (Tr. 993).

Moreover, petitioner did not tender instructions defining

the terms in question. In these circumstances, he has

waived the right to object. See United States v. Hollinger,

553 F. 2d 535, 546 (7th Cir. 1977); United States v. Milby,

400 F. 2d 702, 707 (6th Cir. 1968).

In any event, petitioner’s contention is without merit

because the terms in question required no further

elaboration. Each of the terms left undefined by the

district court was synonomous with wrongful taking and

was well within the common understanding of the jury.

See United States v. Orzechowski, 547 F. 2d 978, 985-986

(7th Cir. 1976), cert. denied, 431 U.S. 906 (1977); United

States v. Long, 534 F. 2d 1097, 1100 (3d Cir. 1976).

3. Petitioner’s final contention (Pet. 15) is that the

district court improperly admitted testimony referring to

the Hatch Act, 5 U.S.C. 1501 et seg., which proscribes

‘Although criminal statutes are to be strictly construed, they should

not be construed so strictly as to defeat the purpose of the legislature.

See, e.g., Barrett v. United States, 423 U.S. 212, 218 (1976); SEC v.

C.M. Joiner Leasing Corp., 320 U.S. 344, 354-355 (1943). Petitioner

received fair warning from the statute that his systematic diversion of

labor paid for by federal grants could constitute a misappropriation

of government funds and property interests. See, generally, United

States v. Powell, 423 U.S. 87, 93 (1975).

partisan political activities by state and local govern-

mental employees. At trial, a Labor Department officer

responsible for monitoring programs under CETA

described the employment and training arrangement

between the Department of Labor and Gary, Indiana. He

noted that approval of the federal grant was contingent

upon receiving assurances from the city that it would

comply with all legal requirements, including the Hatch

Act, and would prohibit political activities by program

participants (Tr. 91-97, 98-99).° He further testified that

officials involved in the administration of CETA projects

are not permitted to participate in political activities

during working hours, but disclaimed knowledge of the

“ins and outs of the Hatch Act” (Tr. 99).’

The district court was within its discretion in permitting

the representative of the Department of Labor to describe

the basic requirements of the CETA program. Petitioner's

disregard of those requirements was further evidence that

he intended to use the five CETA trainees for improper

purposes. By diverting the services of these employees into

partisan political activities, petitioner willfully misapplied

funds and property interests subject to the CETA grant,

in violation of 18 U.S.C. 665.

29 U.S.C. 990 specifically incorporates the Hatch Act's prohibition

of political activities by agency personnel.

’The General Services Department, of which petitioner was the

assistant director, supervised and trained CETA employees and

- issued checks on behalf of Gary Manpower to compensate them.

Petitioner was clearly involved in the administration of the CETA

program and therefore was not permitted to engage in political

activity or to require trainees to engage in political activity.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

WapeE H. McCreg, Jr.

Solicitor General

Puitip B. HEYMANN

Assistant Attorney General

SIDNEY M. GLAZER

CHRISTIAN F. VISSERS

Attorneys

MarcH 1979