# Petition — Diggs v. United States > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385006_1774%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1980 - **Citation:** 446 U.S. 982 ## Text ‘Gupreme Court, U. & | FILED FEB 29 i980 MICHAEL RODAK, JR., CLERK IN THE Supreme Court of the United States OCTOBER TERM, 1979 " €9-1348 UNITED STATES OF AMERICA, _.._ Respondent, V. titer. 2 CHARLES C. DicGs, JR, =~ etitioner. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT DAVID POVICH ROBERT P. WATKINS ROBERT B. BARNETT BERNARD J. CARL WILLIAMS & CONNOLLY Hill Building Washington, D.C. 20006 Counsel for Petitioner WILSON - EPES PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001 TABLE OF CONTENTS Page pe et ey» ee ii ah dae casdasisweemvanisencnsccienesorenses 1 EEE 2 STATUTORY PROVISIONS INVOLVED ................... 2 ly | 2 Seeameens OF tae CASE cn... 2 REASONS FOR GRANTING THE PETITION ........ 6 NE SDGESTA ES CT 18 ESSE SEE SO la ii TABLE OF AUTHORITIES CONSTITUTION : Page ie ae a eres enone 2,8 U.S. Commtivwitee, Bre. £, Bet. Banc... . and whether the employees’ expenditures were made at his direction. Congressman Diggs hired Jean G. Stultz in 1972 as a legislative assistant and in the following year promoted her to his personal secretary and staff office manager. In October 1973 Diggs placed Mrs. Stultz on both his personal staff and committee staff payrolls, for which she received two monthly salary checks of approximately 5 Defendant concedes that it “may have been improper for an employee to be compensated from the clerk-hire allowance for the payment of personal expenses.” Brief for Appellant at 28. As a tactical matter, defendant had no need to assert the propriety of those types of expenditures because the Government tried its case on the theory that either type of expenditure—for personal and busi- ness expenses or for congressional expenses—was illegal. See notes 31-32 infra and accompanying text. 5a $800 and $1,200.° Although Stultz deposited both pay- checks into her own checking account, she allocated the $1,200 monthly check to obligations of the defendant— either personal or congressional ones.* In August 1974 defendant removed Stultz from his personal staff payroll and substantially increased the salary she received from the committee staff payroll “almost to a figure to cover the total amount that [she previously received] in the two checks.” * From this increase in salary, Stultz con- tinued to pay the defendant’s personal and congressional creditors on a regular basis.® Mrs. Stultz testified that in March or April 1976 she informed the defendant that she “no longer wanted to be ® Her actual combined net monthly salary was $2,142.14. Her gross annual staff salary as of October 1973 was $19,000.00; her gross annual committee salary, $14,667.80, making a total gross of $33,667.80. See Gov’t Exhibit No. 75, Appendix for Appellee at 281. No argument is advanced that it was improper, standing alone, to compensate Mrs. Stultz from two payrolls. “A check payable to the order of “Cash” for $1,250.00, dated 2 November 1973, was the first expenditure of record. This check substantially was used to defray an arguably personal expense of the defendant ($1,000 toward a portrait of the defendant to hang in the House of Representatives), and the balance to cover expenses related to the Congressman’s official duties. S Record (28 Sept. 1978) at 43 (testimony of 7ean G. Stultz). Her gross annual salary was $36,000.00, with a monthly net of $1,846.75. See Gov’t Exhibit No. 75, Appendix for Appellee at 282. ® Over a two and one-half year period, from November 1973 through March 1976, Stultz expended a total of $20,413.16 toward the defendant’s personal and congressional obligations from her in- creased salary. Over one-half of that amount covered personal ex- penses of the defendant (e.g., life insurance premium payments, home mortgage payments, etc.), while almost one-third went toward congressionally related expenses (e.g., rent for the defendant’s dis- trict offices in Detroit, political contributions, printing costs). It cannot be said with certainty whether the balance covered personal or congressional expenses. See Gov’t Exhibit Nos. 76 & 77, Appendix for Appellee at 284. 6a a part of [it].”'° Her gross annual salary was reduced in April 1976 from $37,355.00 to $22,700.00. The de- crease in salary was accompanied by no changes in duties. One fact of importance on this appeal is whether the defendant’s bills were paid “at the direction of Congress- man Diggs,” as Mrs. Stultz testified,’? or on Mrs. Stultz’s own volition, as the defendant contends. Mrs. Stultz tes- tified that the defendant approached her with the notion that her salary be increased in order to pay certain of his bills, and that the scheme, after some initial objection on her part,’ was then set into motion: each month she would make a listing of all of the defendant’s accounts, she and the defendant would review this list, and the defendant then would direct her as to which bills were to be paid from the inflated portion of her salary." After this decision was reached, Stultz purchased either money orders or cashier’s checks, placed the defendant’s name on these instruments, and mailed them to the de- fendant’s creditors.* Defendant Diggs, on the other hand, denied increasing Mrs. Stultz’s salary for the purpose 10 Record (29 Sept. 1978) at 37. 11 Prior to her resignation on 30 August 1976, the defendant increased Mrs. Stultz’s salary to $37,355.00 for the menths of July and August 1976 so that she could pay her inflated taxes. For a complete breakdown of the fluctuations in Stultz’s salary, see Gov’t Exhibit No. 75, Appendix for Appellee at 281-83. 12 Record (28 Sept. 1978) at 106. 13 Mrs. Stultz testified that she participated in the scheme despite her reservations because she “felt that it was almost—you might almost say a condition of employment. [She] received no threats but it was by sort of innuendo.” Record (29 Sept. 1978) at 42. 14 Mrs. Stultz and the defendant referred to the overage in her salary as the “special account,” although no separate banking ac- count physically was established. 1° Mrs. Stultz also wrote personal checks to pay the defendant’s creditors. Stultz testified that she was allowed to retain the entire proceeds of her paycheck once each year for tax purposes. 7a of paying his bills, and he also denied directing her to make these payments. He testified instead that Mrs. Stultz “expressed a willingness” to discharge his obligations. Felix R. Matlock, one of the defendant’s field rep- resentatives in Detroit, also paid expenses of the Con- gressman from his salary. The bulk of these expendi- tures were made over an eighteen-month period from September 1975 to January 1977.16 With one minor exception,"’ all of these were congressionally related and most were in some way related to the operations of the defendant’s district offices in Detroit.'® Corresponding with that time period, the defendant significantly in- creased Matlock’s salary: Matlock’s annual gross salary jumped from $14,500.00 in July 1975 to $35,000.00 in September 1975, and to as much as $39,600.00 by the end of 1976.'® Again, the dispute does not center on whether the defendant authorized the increases in Matlock’s salary or whether Matlock actually paid the defendant’s distri + office expenses, but whether the two events were part and parcel of the same scheme, perpetrated by the de- fendant. Mrs. Stultz testified that Matlock’s salary was increased in order to pay the defendant’s district office expenses, while the defendant denied adjusting Matlock’s salary for this purpose. Both Matlock and Stultz tes- 16 Matlock paid a few, relatively insubstantial congressional ex- penses in 1973 and 1974. ‘7 The one exception being a money order, dated 6 July 1976, payable to North Carolina Mutual (for an insurance policy on Con- gressman Diggs) in the amount of $17.68. 18The expenditures, which are evidenced by copies of money orders or cashier’s checks, total $10,952.31 and include payments for such items as rent on the district offices (two actual offices and a mobile unit), media advertising costs, and electricity costs for the district offices. 19 See Gov’t Exhibit No. 78, Appendix for Appellee at 228. 8a tified that on the defendant’s instructions, Mrs. Stultz advised Matlock which bills were to be paid.” Consistent with and in confirmation of this, Matlock also asserted that he received orders from the defendant personally following Mrs. Stultz’s resignation in August 1976. Diggs, on the other hand, claimed that he did not instruct Matlock either directly or indirectly on which bills were to be paid. In December 1976 Matlock stopped making payments toward the defendant’s official expenses.” In the follow- ing month, the defendant reduced Matlock’s gross annual salary from $39,600.00 to $20,000.00 with no apparent change in duties.” Ofield Dukes, hired in April 1973 as a consultant, paid official expenses of the defendant at various times from June 1973 through January 1976.** Dukes testified that he received instructions on which bills to pay from Mrs. Stultz and that he was reimbursed for these expenditures through increases in his salary. His base pay of $12,000.00 was raised to as much as $37,300.00 in No- vember 1975, and finally dropped back to $12,000.00 in 20 Matlock then either sent the money to Washington or paid the bills directly through money orders or cashier’s checks. Matlock testified that he retained seven percent of his increased paychecks for tax purposes. 21 Matlock claimed he only adhered to the arrangement because he “didn’t want to make any waves.” Record (30 Sept. 1978) at 17. 22 The Government calculated that the total excess in Matlock’s salary from August 1975 through December 1976 was $26,962.95 computed over a base of $14,500.00 (Matlock’s gross annual salary as of July 1975). See Gov’t Exhibit No. 78, Appendix for Appellee at 288. 23 For example, Dukes on occasion paid for political advertising for the defendant. In two instances Dukes covered obligations of the House of Diggs (totaling $1,148.40) but insisted that these bills were paid inadvertently. 9a February 1976, when Dukes ceased to discharge the de- fendant’s obligations. Finally, the indictment alleges that Jeralee Richmond and George Johnson performed no congressionally related work while they were compensated from the congres- sional payroll. Defendant placed Jeralee Richmond on the congressional payroll in July 1974 at a salary of $8,500.00. She was employed at the House of Diggs’ Funeral Home in Detroit as a bookkeeper, and she was also expected to deal with problems of constituents who came to the funeral home. Richmond testified that while on the House rolls from July 1974 to August 1976, ap- proximately twenty percent of her time was apportioned to handling constituents’ problems and eighty percent to bookkeeping matters of the funeral home.”’ The de- fendant did not dispute her testimony. At no time dur- ing this period did Mrs. Richmond receive any com- pensation from the House of Diggs: her entire salary derived from the congressional clerk-hire funds.2° George Johnson, a certified public accountant in De- troit, was the defendant’s personal accountant and the accountant for the House of Diggs. From July 1973 to December 1974, Johnson received compensation from the congressional clerk-hire allowance. While on the House *4 The total excess in Duke’s salary, computed from a base of $12,000.00 was $15,945.81. See Gov’t Exhibit No. 80, Appendix for Appellee at 292. *° Mrs. Richmond originally was employed as a bookkeeper for the House of Diggs from 1949 to 1967. During that period, she handled the same sorts of matters that sh. did while on the congres- sional payroll—bookkeeping work and constituents’ problems—but received no compensation for the latter function from House unds. 26 Jeralee Richmond received a total of $20,291.64 from the con- gressional payroll. See Gov’t Exhibit No. 81, Appendix for Appellee at 294. 10a payroll, Johnson continued to render accounting services to the defendant personally and to the House of Diggs. Defendant does not dispute that fact, asserting, how- ever, that Johnson also aided him in his official capacity. Defendant testified that he hired Johnson as an adviser to draw upon Johnson’s “knowledge and expertise and involvement in the community with respect to black economic development projects.” *’ Johnson testified, on the other hand, that he did no “financial or accounting work for Congress” and that he had doubts about re- ceiving compensation from the clerk-hire funds.** As a result, Johnson quit the congressional payroll in Decem- ber 1974.” ; II. ANALYSIS The scheme to defraud set forth in the indictment has two subparts: (1) the allegation that the defendant “in- flated the salaries of Jean G. Stultz, Felix R. Matlock and Ofield Dukes in order to pay for various personal, business and House of Representatives’’ expenses of de- fendant Diggs,” and (2) the allegation that the defend- ant placed on the House of Representatives’ payroll Jeralee Richmond and George Johnson “who performed no work for the House of Representatives.” *° We will consider first that part of the alleged scheme to defraud 27 Record (4 Oct. 1978) at 85. 28 Record (30 Sept. 1978) at 172. 29 Johnson also testified that by the spring of 1973 the defendant personally owed him between $2,000.00 and $10,000.00 and that the House of Diggs was also indebted to him. He reduced the House of Diggs’ indebtedness by the amount of money he received as salary from the clerk-hire allowance, a total of $19,166.02. 30 The payroll transactions for employees Matlock, Richmond, and Johnson form the basis of the mail fraud counts; the payroll trans- actions for all five employees, the basis of the false statement counts. lla involving the increases in the salaries of Matlock, Stultz, and Dukes. A. The Scheme to Defraud: Inflated Salaries of Con- gressional Employees 1. The Clerk-Hire Allowance The Government tried its case against the defendant on the rationale that using clerk-hire funds to pay either the Congressman’s personal and business expenses or his official expenses was illegal. The Government combined in the same counts of the indictment transactions relat- ing to both types of expenditures.*' Although defendant admits that it “may have been improper for an employee to be compensated from the clerk-hire allowance for the payment of personal expenses,” ** he asserts that use ef the clerk-hire allowance to pay certain of the district office expenses was entirely proper. Thus, putting aside for a moment the question of the defendant’s intent in increasing his employees’ salaries, we must decide in the first instance whether drawing on clerk-hire funds to meet either the defendant’s personal or congressional: expenses was illegal. We hold that it was. The clerk-hire allowance is an appropriation by Con- gress providing compensation “[flor staff employed by each Member in the discharge of his official and rep- resentative duties.” ** On hiring an employee or on ad. 31 To simplify, we shall refer to the Congressman’s personal and business expenses as “personal expenses.” Although some of the counts involve only payments of congressional expenses, no count relates solely to payments of the defendant’s personal bills. 32 Brief for Appellant at 28. 38 Legislative Branch Appropriation Act, 1978, Pub. L. No. 95- 94, 91 Stat. 653, 667 (1977); Legislative Branch Appropriation Act, 1977, Pub. L. No. 94-440, 90 Stat. 1439, 1447 (1976); Legislative Branch Appropriation Act, 1976, Pub. L. No. 94-59, 89 Stat. 269, 220 (1976); Legislative Branch Appropriation Act, 1975, Pub. L. No. 928-371, 88 Stat. 424, 482 (1974); Legislative Branch Appropri- 2a justing the amount of compensation that an employee will receive, a congressman must submit a “Payroll Au- thorization Form” to the House of Representatives Of- fice of Finance, marking on the form either the entry entitled “Appointment” or the one designated “Salary Adjustment.” The obvious reading of this payroll form is that the monies received will accrue to the employees’ sole use and benefit as salary for services rendered. It rules out by implication any other use of the funds. In Diggs’ case the defendant submitted the payroll forms to the House Office of Finance approving the in- creases in the salaries of Stultz, Matlock, and Dukes with the knowledge,** undeniable after the first remittitur, that the increment would be used to pay his personal and official expenses. These payments benefited not the em- ployees but the defendant himself. Obviously the defend- ant directly benefited from the payments to his personal creditors and to the creditors of his business, the House of Diggs. Equally clearly the defendant profited from the payment of his congressional expenses. Payment of these bills enabled the defendant to provide services to his constituents and thus furthered his prospects for reelection.** Defendant argues nevertheless that using clerk-hire funds to compensate employees for paying district office expenses fell within his discretion to determine both the salaries and responsibilities of his employees, provided those responsibilities relate to the Congressman’s “of- ation Act, 1974, Pub. L. No. 93-145, 87 Stat. 527, 535 (1973). See 2 U.S.C. §57(a) (1) (1976) (Committee on House Administration may fix the amount of the allowance for clerk-hire). 34 The defendant’s actual intent will be discussed infra. 35 While it could be argued that the constituents of his District also profited from the arrangement, the point is that the employees who by law were the intended recipients of the money reaped no benefit. 13a ficial and representative duties.’’** The phrase “official and representative duties,” so the argument goes, is sufficiently broad to encompass an employee’s responsi- bility for paying congressional expenses.*7 We disagree. The defendant’s argument erroneously equates a con- gressman’s discretion to define the duties of an employee with the unfettered power to divert monies intended for one purpose to another, completely unauthorized purpose. During the period relevant to the indictment, the Com- mittee on House Administration had fixed an allowance for district office expenses at $500 per quarter or $2,000 per annum.** Thus the allowance for clerk-hire and the allowance for district office expenses were separate and distinct.** No House regulation or order authorized the commingling of these funds, either directly, or, as in this case, indirectly.*° Had Congress intended that the clerk- 36 See, e.g., 2 U.S.C. § 92 (1976) (establishing maximum number of employees on clerk-hire; granting discretion to Member to set salaries, within fixed minimum and maximum amount, and to remove employees from the rolls at any time with or without cause). 37 “Official and representative duties” was not defined in the legislative history to the Appropriations Acts, or the applicable House regulations. 38 See, e.g., House Administration Comm. Order No. 8 (effective 1 Oct. 1973); House Administration Comm. Order No. 15 (effec- tive 18 Dec. 1974). Defendant makes no argument that he did not receive this money. In addition, members of Congress were reimbursed from separate allowances for their travel, the travel of their staff, and expenses for office telephones and office equip- ment. See 2 U.S.C. § 57(a) (1) (1976); Record (3 Oct. 1978) at 73- 74 (testimony of John Lawler, Chief of the Office of Finance). 39 That the district office allowance may have been inadequate to meet office expenses, see Brief for Appellant at 24, has no legal significance. 40 We note that the dissent’s assertion that the inquiry of the so-called Obey Commission into the “perceptions and understanding of members of the House of Representatives about the allowance system,” Record (4 Oct. 1978) at 37, revealed “significant ambigu- l4a hire funds be used to pay expenses of the district office it could have so provided.** ity” among congressmen concerning the proper use of the clerk- hire allowance needs a bit of clarification. See Dissenting opinion at 8-9. On cross-examination, Mr. Victor Fischer, Director of Survey Research for the Commission, admitted that the actual survey administered to the members of Congress included no ques- tions concerning the congressmen’s use of the clerk-hire funds for the defraya! of their congressional or personal expenses. See Record (4 Oct. 1978) at 55-56. Mr. Fischer’s perception that Congressmen other than Representative Diggs inflated the salaries of their em- ployees to pay congressional expenses thus derived solely from dis- cussions with members of his Commission, see id. at 56-58. No congressman was ever asked directly whether this was indeed the practice that he followed because of the apparent “sensitivity of the issue.” See id. at 58 (testimony of Victor Fischer). 41 The legal standard is the law and rules Congress has passed, not the conduct some may have engaged in. “[F]Jacing up to reality,” in our colleague’s phrase, may tell us that congressmen other than Diggs convinced themselves that there was an “am- biguity” associated with the clerk-hire rules, but the “reality” of other offenders does not change the law; for this court the law is plain. Our colleague would be on more comfortable (albeit mistaken) ground as a matter of legal reasoning if he were to conclude that using clerk-hire funds for either the defrayal of the defendant’s congressional or personal expenses was not clearly improper. He argues in essence that the regulations governing the clerk-hire funds were vague, that there was considerable doubt concerning the propriety of using these funds for the defrayal of congressional expenses, and that therefore the judge’s instruction on good faith was clearly erroneous. If the regulations were as vague as the dissent contends, then, as a matter of logic, how can anyone say for sure that the use of the clerk-hire funds to defray Diggs’ personal expenses was clearly improper? How can our colleague draw a principled distinction between the propriety of drawing on clerk-hire funds to meet Diggs’ personal expenses and the propriety of drawing on those same funds to meet Diggs’ con- gressional expenses when the dissent supposedly is unclear as to exactly what the regulations did and did not permit? He offers no explanation other than the implicit one that he was influenced by the politics involved (e.g., what he terms “facing up to reality”). This fatal flaw in the dissent’s logic underscores the fact that the only sensible and principled interpretation that can be given to the standard governing clerk-hire funds is one which 15a After ‘the events relevant to the defendant’s conviction had already taken place, the House Administration Com- mittee published Committee Order No. 30 (Transfer Among Allowance), effective 3 January 1977.47 Com- mittee Order No. 30 permits the transfer of up to $15,000 from the clerk-hire allowance to two other funds, from which allocation then may be made to cover other ex- penditures, including “Official Expenses Outside the Dis- trict of Columbia.” The order has no retroactive effect.* Adoption of the order to permit the transfers here at issue thus strongly suggests that this practice was not permitted prior to the effective date of the order. Even if the order were retroactive, it would not justify the defendant’s conduct in this instance. A congressman may transfer funds from the clerk-hire allowance to the allowance for official expenses provided he certifies to the House Office of Finance of his election to do so.* Diggs certified the opposite. If the new order had been in effect, Diggs made false statements even by that standard. In defense, Diggs cites the testimony of the Chief of the House Office of Finance, Mr. John Lawler, for the notion that the clerk-hire funds could be applied to dis- trict office expenses. When questioned by the prosecutor recognizes that these funds were intended for the sole use and personal benefit of the employee. This clear standard was violated when Congressman Diggs indirectly used the clerk-hire funds to pay either his congressional or his personal expenses. 42 See Supplemental Certified Index to Record (filed 31 Aug. 1979). 43 Despite language in the dissenting opinion which may be taken to suggest the contrary, Judge Leventhal does not appear to disagree with our interpretation that House Order No. 30 has no retroactive effect. 44 See STAFF OF COMM. ON HOUSE ADMINISTRATION, 96TH CONG., REGULATIONS AND ACCOUNTING PROCEDURES FOR ALLOWANCES AND EXPENSES OF COMMITTEES, MEMBERS AND EMPLOYEES 136 (Comm. Print 1979). 16a regarding the purpose of the clerk-hire allowance, Mr. Lawler testified : It’s used to pay compensation of employees in the performance of official duties.*° When pressed further on whether the allowance “in- clude{d] any expenses which were incidental to the em- ployment,” Mr. Lawler responded: The regulations in that time period didn’t have any specific definition as far as official duties. It’s silent on the question of what it might include.*° Rather than providing support for the defendant’s posi- tion, Mr. Lawler’s rather cautious testimony can be taken to do no more than state the obvious: it was within a congressman’s discretion to define the parameters of an employee’s responsibilities so long as those responsibilities related to the congressman’s “official and representative duties.” Lawler’s testimony cannot be interpreted to mean that a congressman also had the discretion, under the guise of compensating his employees, to appropriate clerk-hire funds for purposes other than those intended by the appropriation and duly certified by the congressman. 2. Mail Fraud With these conclusions in mind, we turn now to the law applicable to the mail fraud and false statements statutes.*7 The basic elements of the offense of mail fraud under 18 U.S.C. § 1841 are “(1) a scheme to de- fraud, and (2) the mailing of a letter, etc., for the pur- 45 Record (3 Oct. 1978) at 66. 46 Jd. 47 The mail fraud counts regarding salary inflation related only to transactions and mailings involving Felix Matlock’s paychecks; the false statement counts to transactions involving the salaries of Dukes, Stultz, and Matlock. 17a pose of executing the scheme.” *® Because only “a scheme to defraud” and not actual fraud is required, proof of fraudulent intent is critical.* In this case, the testimony concerning the defendant’s intent was conflicting. Briefly recalling the evidence, the key witness for the government, Jean G. Stultz, testified that the defendant increased her salary and the salaries of Felix Matlock and Ofield Dukes for the purpose of using the inflated portions to pay the defendant’s expenses. Mrs. Stultz also asseverated that the payments she made “were always ... at the direction of Congressman Diggs.” ® The defendant’s testimony essentially was that Jean Stultz voluntarily paid his bills to ease his financial situation. Far from being voluntary, Stultz testified that she “felt that it was almost—you might almost say a condition of employment.” ™ Stultz also claimed that the defendant directed her to instruct Matlock and Dukes on which district office ex- penses to pay from their inflated salaries. Matlock and Dukes both corroborated the fact that Stultz directed them to make these payments, and Matlock further as- serted that he received his instructions from the defend- ant personally after Mrs. Stultz resigned in August 1976. He added that he went along with the scheme only be- 48 Pereira V. United States, 347 U.S. 1, 8 (1954); See Weiss v. United States, 122 F.2d 675 (5th Cir. 1941): “The law does not define fraud; it needs no definition; it is as old as falsehood and as versable as human ingenuity.” Jd. at 681, quoted in United States v. Reid, 533 F.2d 1255, 1264 (D.C. Cir. 1976). 49 See, e.g., United States v. Brown, 540 F.2d 364, 374 (8th Cir. 1976) ; United States v. Reid, 533 F.2d 1255, 1264 (D.C. Cir. 1976) ; United States v. Regent Office Suply Co., 421 F.2d 1174, 1180-81 (2d Cir. 1970). 50 Record (28 Sept. 1978) at 106. 51 Record (29 Sept. 1978) at 42. 18a cause he “didn’t want to make any waves.” * While the defendant admitted that Dukes and Matlock paid cer- tain congressional expenses, he disclaimed any intention of inflating their salaries for this purpose. This was the issue the defendant’s own testimony made in regard to his intent. It was entirely within the province of the jury to re- solve the conflicting testimony. The jury concluded that the defendant personally devised and directed a scheme to divert portions of the three employees’ salaries to meet his personal and official expenses. We hold that there was ample evidence to support this conclusion. Second, we find that the actual scheme to defraud has clearly been established. No House regulation or order authorized the use of the clerk-hire allowance for pur- poses other than the sole use and benefit of the staff of a congressman; the money was to go to individual em- ployees for their personal salaries and subsequent per- sonal use or it was not to be expended at all. Defendant submitted payroll authorization forms to the House Office of Finance approving the increases in his employees’ salaries while concealing the fact that these monies would be diverted to the Congressman’s own benefit. His con- duct amounted to no less than a scheme to take illicit kickbacks from his employees in the form of payments of his personal or congressional expenses. The courts have held that kickback schemes involving the use of the mails run afoul of the mail fraud statute: [T]he mail fraud statute is violated when some or all of the following factors are present: a duty to disclose an interest with a concomitant failure to do so; an attempt to cover-up through false pretenses; a taking of money or property or rights of another through the use of kickbacks, extortion, bribery, tax 52 Record (30 Sept. 1978) at 17. 19a evasion, perjury, or violation of some state or fed- eral statute; a use of the United States mails.” The defendant defrauded the public of not only substan- tial sums of money but of his faithful and honest services.”* The final element under the mail fraud statute is a use of the United States mails “for the purpose of execut- ing the scheme.” *> One must “cause” the mails to be used to satisfy this requirement. In Pereira v. United States the Court held that a defendant “causes” the use of the mails where he “does an act with knowledge that the use of the mails will follow in the ordinary course of business, or where such use can reasonably be fore- seen, even though not actually intended.” ** In addition, although the schemer need not “contemplate the use of the mails as an essential element,” the mailings must be “sufficiently closely related to [the] scheme to bring his conduct within the statute.” ** 53 United States v. Bush, 522 F.2d 641, 646 (7th Cir. 1975) (emphasis added), cert. denied, 424 U.S. 977 (1976). See e.g., United States v. Rabbitt, 583 F.2d 1014 (8th Cir. 1978), cert. denied, 439 U.S. 1116 (1979); United States v. Brown, 540 F.2d 364, 374-75 (8th Cir. 1976); United States v. Barrett, 505 F.2d 1091 (7th Cir. 1974); cert. denied, 421 U.S. 964 (1975). But see United States v. McNeive, 536 F.2d 1245 (8th Cir. 1976). 54 See, e.g., United States v. Brown, 540 F.2d 364, 374 (8th Cir. 1976 (“a public official may be prosecuted under 18 U.S.C. § 1341 if he devises a scheme whereby bribes or kickbacks are accepted in the course of conduct of his office, since such conduct operates to defraud the citizens of his government of their right to his honest and faithful services’). 55 United States v. Maze, 414 U.S. 395, 400 (1974) (quoting Kann v. United States, 323 U.S. 88, 94 (1944)). 56347 U.S. 1, 8-9 (1954) (citing United States v. Kenofskey, 243 U.S. 440 (1917) ). 57 Td. at 8. 58 United States v. Maze, 414 U.S. 395, 399 (1974) (footnote omitted). 20a Applying these principles to the case at bar, we hold that the mailings were reasonably foreseeable and were sufficiently closely related to the defendant’s scheme to bring his conduct within the coverage of 18 U.S.C. § 1341. The paychecks were mailed to Felix Matlock from Wash- ington, D.C., to Detroit, Michigan. It was “reasonably foreseeable” that Matlock would receive these checks via the United States mails by virtue of the simple fact that Matlock lived and worked in Detroit. That the checks somehow could have been delivered otherwise than through the mails is immaterial.» Moreover, a sufficiently close nexus existed between the fraudulent scheme and the mailings of the checks. The checks contained the actual proceeds of the fraud and thus constituted the “lifeblood of the scheme” from the defendant’s viewpoint.” Mani- festly, these mailings were in furtherance of the scheme to defraud. 3. False Statements Having concluded that the defendant violated the mail fraud statute, we address the question of whether the defendant was also guilty of transgressing 18 U.S.C. § 1001. The courts have interpreted section 1001 to re- quire that the false representations made to the “depart- ment or agency” be material. The test of materiality is 59 See, e.g., United States v. Talbott, 590 F.2d 192, 195 (6th Cir. 1978). Congressional employees could receive paychecks in only one of three ways: by personal delivery to the employee via inside mail, by deposit in one of five local banks, or by the United States mail. See Record (27 Sept. 1978) at 25-27, 106-07 (testimony of John Lawler); Brief for Appellee at 44. 60 United States v. Reid, 5383 F.2d 1255, 1264-65 (D.C. Cir. 1976). 61 See, e.g., United States v. Talkington, 589 F.2d 415, 417 (9th Cir. 1978); United States v. Krause, 507 F.2d 118, 118 (5th Cir. 1975) ; Weinstock v. United States, 231 F.2d 699, 701 (D.C. Cir. 1956); Freidus v. United States, 223 F.2d 598, 601 (D.C. Cir. 1955). Oo ar errant a 21a whether the statement “has a natural tendency to in- fluence, or was capable of influencing, the decision of the tribunal in making a [particular] determination.” * Proof of actual reliance on the statement is not required; the Government need only make a reasonable showing of its potential effects.™ In this case, the defendant was accused of falsifying the payroll authorization forms submitted to the House of Representatives Office of Finance for his employees Stultz, Matlock, and Dukes. In seeking the payroll in- creases for these employees, Congressman Diggs failed to disclose to the Office of Finance the real purpose for which the monies were intended—the defrayal of his personal and congressional expenses. Had the defend- ant revealed these intentions, it reasonably could be ex- pected that the Office of Finance would not have honored the payroll requests or at least would have referred the matter to the appropriate House committee for advice.® 62 Weinstock v. United States, 231 F.2d 699, 701-02 (D.C. Cir. 1956). 83 See United States v. Talkington, 589 F.2d 415, 417 (9th Cir. 1978) ; United States v. Beer, 518 F.2d 168, 172 (5th Cir. 1975). hei The Office of Finance clearly is a “department or agency” within the meaning of the statute. See United States v. Bramblett, 348 U.S. 503 (1955). 65 The House Committee on Standards of Official Conduct is em- powered to “give consideration to the request of any Member, officer, or employee of the House for an advisory opinion with respect to the general propriety of any current or proposed con- duct.” RULES OF THE Z1OUSE OF REPRESENTATIVES, H.R. Doc. 416, 93d Cong., 2d Sess. § 698 (1975) (rule X(e)(1)(D)). This Com- mittee issued an advisory opinion on 11 July 1973, which stated that “it [was] improper to levy, as a condition of employment, any responsibility on any clerk to incur personal expenditures for the primary benefit of the Member or of the Member’s congressional office operations.” Advisory Op. No. 2, Comm. on Standards of Official Conduct of the House of Representatives, Appendix for Appellant at 177, 178. See notes 68-69 infra and accompanying text. This strengthens the argument that the Office of Finance would have honored the payroll requests, at least without some further investigation. 22a We hold, therefore, that the defendant’s omissions were material. 4. Jury Instructions The defendant assigns as error part of an instruction that the trial judge gave to the jury for both the mail fraud and false statement offenses on the question of the defendant’s intent: The question is whether the defendant at the time he approved the payroll authorizations representing that certain employees would be paid specific sal- aries intended that those employees would actually receive and have the complete use of those salaries, or did he intend that a portion of the salary would be remitted by the employee for the payment of his obligations. What I have said respecting good faith as a defense in a mail fraud charge is also applicable to false official statement charges.” 66 See also Bramblett v. United States, 231 F.2d 489 (D.C. Cir.), cert. denied, 350 U.S. 1015 (1956); Romney Vv. United States, 167 F.2d 521 (D.C. Cir.), cert. denied, 334 U.S. 847 (1948). 67 Record (6 Oct. 1978) at 19. The entire instruction on the issue of good faith provides: Now, ladies and gentlemen, an important concept of law in any case where specific intent is a requisite element is the concept of good faith. I wish to say this to you about good faith. Good faith constitutes a complete defense to one charge[d] with the defense of which fraudulent intent is an essential element. One who acts with honest intention is not chargeable with fraudulent intent. One who acts on the basis of any opinion honestly held by him or a belief honestly entertained by him is not chargeable with fraudulent intent, even though such opinion is erroneous, such belief is a mistaken belief. Evidence which establishes only that a person has made a mistake in judgment or an error in management or was care- less does not establish fraudulent intent. [Footnote continued on page 23a] 23a The defendant claims that the instruction deprived him of his good faith defense and erroneously directed the jury, as a matter of law, that diverting employees’ sal- aries for payment of congressional expenses was unlaw- ful. The defendant’s contentions are without merit. The charge to the jury must be considered in two parts. The first aspect of the charge concerns the defendant’s intent at the time he approved the adjustments in the salaries of his employees. This part does no more than pose the question of good faith exactly as the defendant himself had presented the issue at trial. The defendant denied ever having increased the salaries of his employees with the intention of using the excess to pay his bills; the testimony of his employees was uniformly to the con- trary. The defendant claimed they volunteered the money; the employees said payment to Diggs of part of their inflated salaries was virtually a condition of employment. The employees also pointed to the remarkable rise in their salaries when they began payments to or for Diggs and the immediate drastic reduction when each ceased being a part of the scheme. The trial judge properly called upon the jury to resolve this issue. Viewing the 67 [Continued] In order to establish fraudulent intent on th e part of a person, it must be established that such person ciieatinaty and intentionally attempted to deceive another. Good faith is a defense to an offense such . as l one of the elements of which is fraudulent intent. ce ae The question is whether the defendant i approved the payroll authorizations Rae aes iia caren employees would be paid specific salaries intended that those employees would actually receive and have the complete use of those salaries, or did he intend that a portion of the salary would be remitted by the employee for the payment of his rege bi obey said respecting good faith as a de- e in a mail frau i i i cect pameln charge is also applicable to false official Id, at 18-19. Nai | a eee ere. | 24a disputed portion of the instruction in connection with the whole charge, we find that the instruction correctly informed the jury on the question of the defendant’s good faith. The second aspect of the instruction involves the pro- priety of combining under the term “obligations not only the payments of the defendant's personal and busi- ness expenses but the payments of his congressional ex- penses as well. We need not reiterate the reasons for our conclusion that diverting employees’ salarves to meet ei- ther the defendant’s personal or official expenses was unlawful. The judge merely combined under one heading two kinds of illegal payments; he was not required to deal with each separately in the instruction. | We hold that no error may be attributed to the instruction. 5. House Committee Advisory Opinion Defendant also claims that the Government predicated its theory of prosecution of the allaged violations on an advisory opinion of the House of epresentatives, thus unconstitutionally casting this court into the role of in- terpreting the internal rules of the House. The “ag? sory opinion, issued by the Committee on Standards ) Official Conduct of the House of Representatives, sug- gests that “it is improper to levy, as a condition of em- ployment, any responsibility on any clerk to incur per- sonal expenditures for the primary benefit of the ew or of the Member’s congressional office operations. i f its Proceedings, 68 ‘Bach House may determine the Rules 0 nunish its Members for disorderly Behaviour, and, with the er currence of two thirds expel a Member.” U.S. Const. art. I, § 5. 69 Advisory Op. No. 2, Comm. on Standards of Official Conduct of the House of Representatives (issued 11 July 1973), aaa for Appellant at 177, 178. Other relevant portions of the documen provide: pil * The opinion clearly would prohibit any Member from retain- ing ar sou on his clerk-hire allowance under either an pe tne ne