Reply Brief for the US — United States v. Dailey

Supreme Court brief1951

Ask Donna

What actually matters in this document.

Text

——-———_,

| ahem on ee es

: =e : OCTOBER TERM, 1951

8 “No. 162 Ppa rat 5

Unsrep Staves or AMERICA, APPELLANT

as : i, Vv. Z a a . 4

Ane _ Arnoup L, eden

* y ‘ ate = * al he an

“a ow APPEAL. FROM. HR UNITED STATES DISTRIOT couRT:

ron THE DISTRICT OF. COLORADO |

REPLY BRIEF FOR THE UNITED STATES

UNDER THE CRIMINAL APPEALS: ‘ACT ONLY THE QUES-

_ TION” PXSSED_ UPON IN THE DISTRICT COURT 1s OPEN

IN. THIS COURT -

‘The suspension provision here involved applies 3

~ to offenses ‘inyolving fraud or attempted fraud

against the United States *,* *.” Appellee

‘Dailey suggests in his brief i in this Coiirt for the

first time that the offense with ‘which he is charged

does not involve fraud against the United Stites.

.. This point was“not raised in the°court below and a

-was not the basis of flectsion below. We there-.

fore do-not believe that. it ‘can be considered’ by

this Court on the Government’ 8 appeal under

the Criminal ‘Appeals Act. ca NS ap

978172—Si——1b @

Bice "2

United States‘y- Borden, 308. U. . 188, 193, is, : :

we think, controlling, It held that in a case aris-

“ing under the Criminal. Appeels Act, ““When the

District Court has rested. its decision upon the :

_ construction of the underlying statute this’ Court

is not at liberty to go beyond the question of the —

correctness of that coristruction - arid . consider *

: other objections: to the indictment: The: ndeaak

ment’ Ss. appeal does’ not open the whole case.’

Its compelling applicability becomes pute

~ when ‘the. decision is considered in relation , to

the contentions made,’ The Borden case involved

"a Brosecution char ging combination’ and con-

‘: spiracy in violation of Section 1 of the Sherman

Anti-Trust: Act. The defendants included milk

distributors, a- cooperative marketing association :

of prodticers, a labor union whose members were

engaged | in the distribution of the milk, and offi-

__‘eers. of all of these organizations, “Various chal-

. lenges: were made to the indictment by demurrers

and motions to quash: The: labor union defend- .

. nts contended that by virtue of certain provi-

- , sions of the. Clayton Aet and of the Norris-La-

Guardia Act, neithér the union nor its officers .

Was subject to prosecution under Section I of the

Sherman Act. .This objection | was. not passed —

upon by the. District Court. | It held, so far as

- here relevant, that the production and marketing”

of milk products wére removed from the. purview .

of the Sherman Act by the. Agricultural - Market-

ing Agreement Act of 1937, and that the defend-

3 : eae oe

ants. cooperative marketing association of pro--

. , ducers and its officers and agents were alse exempt

_ from prosecution under the. Sherman Act by. vir-<

tue of: the Capper-V olstead Act. Consequently,

the Dist?ict Court sustained the demurrerk and

... dismissed the indictment.

This Court held that i‘s euieitietton. ‘tated on

that. portion of the Criminal Appeals Act which

pertnits review where a decision quashing or

sustaining: a denturrer to: an indietment is based: ~

upon the “construction of the statute upon which -

the - indictment. is founded. ” Jt examined - the

correctness of the , construction - ‘placed by the

. Distriet Court on the Sherman Act and the ‘effect |

"on it of? the Capper -Volstead and Agricultural

Marketing Agreement Acts, and concluded that>”

they did not preclude the prosecution under See

_- tion 1 of the Sherman Act. It then made’ the -.

: ‘following: holding, bearing particularly on’ the —

ciaim of the labor union, and-on the specific prob-

Jem before this Court in the instant case: .*

ie ee Haying dealt with the construction placed

2 by the court below upon the Sherman Act, *

+ our jurisdiction on this‘appeal is exhausted.

+ We are -not-at liberty to consider other

'. objections to the indictinent or questions

which may arise, upon the trial with respect .

to the; merits of the charge. For it is web.

4 settléd that where the: District Court has

en based its. decision on a particular construc-

| tion°of the underlying statute, the review .

here under the Criminal Appeals Act is

confined ‘to the question of the propriety”

- of that construction. [Pp 206-207 +

* * } # . *

Similarly: the contention . of the defend-

ants who’ are labor officials that the Sher-

man Act does not apply to, labor unions or

labor union activities is not. open on this.

appeal. The District Court did not con-

‘strue the Sherman Act as inapplicable to

these defendants and the Government’s

_ appeal, under the restriction of the: Crimi-

‘nal Appeals Act, does ‘not. reeant that _

question [p. 208]._

Tene this Court held. that, even fiacah the

- labor union raised a question of statutory con-.

struction which, had it been deeided favorably _

. te the union by the. court below, could haye been |

“appealed under the Criminal Appeals Act, and

_ whieh, if upheld, would have precluded prosecu-

tion of the union, the question was not open on

_the Governmént’s appeal from. the District Court’s

decision. That is the situation here. |

The Borden case draws on a long line of cases

whieh emphasized the limited scope of the Crimi-—

nal Appeals Act, in opening the record of the case

~ in this. Court. Many of them concern only a

| refusal by the Court to, permit challenges, to de-

feets in the indictment which do not. concern.

matters of eonstruction.. _ Nonetheless, the lan-.

‘genage of the Court shows’ what was early -Fecog-

at nized. to be effective limits of the Act."

*In United States v. Gilliland, 312 U. S. 86, the district

>. court dismissed an indictment-under the false claims statute,

; oxy s . 4 x : \

. “

. : . °°

Negi aS

In United States v. Keitel, 211 U. $. 370, 397— .

- 399, after sustaining the District Court’s construe-

tion of the statute involved, -this @ourt. said: -\-

Finaily, we come to.the two contentions

cs of the Government which we have ‘hitherto

.. temporarily put acide, and to the various

contentions on the part of the defendants

. in error, insisting either ‘that the court be-

_ low misconstrued the indictment, or that

there were such defects in the indictment "—

that it was rightly quashed, irrespective of —

the construction of the statutes which led

the court below to do so. But we do not

think we have: jurisdiction on this writ of

error. to. aatles these questions. [The

Criminal Appeals Act]. * .* plainly

shows that in giving to the United States

- section 35 (A) of the Criminal Code, on the ground that no -

pectiniary loss to the Government was involyed. It did not -

- pass on an additional objection that the Connally Act, by

dealing comprehensively with hot oil violations, made sec-

tion 35 (A) inapplicable to.such vidlations. This Court,

- after reversing the district court and holding section 35 ( A) :

_ applicable, also held that the Conaally Act did not effect a

partial repeal of that section: But reversal on the question |

passed 6n by the distri ict court necessarily’ required a holding»

that section 35 (A) was still in. fore, as a basis of liability. — :

This is not incdnsistent with: Béerden. The, decision there

that the Sherman Act was not rendered inapplicable by the

Capper-Volstead and Agr icultural Marketing Agreement -

” Acts did not expressly or. implicitly affect the contention

_. that labor unions and their offic ials were exempt by the Clay-

. ton Act. Equally, a decision that the “suspension ict em-

braces offenses committed after December 31, 1946, does not

expressly or implicitly affect, the contention that the offense

committed by Dailey does not involve fraud.

the right to invoke the authority of this

court by-direct writ of error in the cases for

which it ptovides contemplates ves ing

- this court with jurisdiction only to revtew

the particular-question decided by the court |

below. for which the statute provides. In

other ‘words, that’ the purpose of . the

- statute was to give the United States the .

a non

right to seek a review of decisions of the |

“ lower court concerning the subjects ém-

braced within the clauses _ of the. statute,

“and not to open here: the whole ease. We

- think this conclusion arises not only be-

~veanse the giving of the exceptional right

to review in favor of the United States is”

limited by the very’ terms of.the statute —

to authority to reexamine the particular

* decisions which the statute embraces, -but

also beeause of. thé whole. context, which -

_@learly indicates that the _purpose was to

confine the vight- given to*a review of the.

_ decisions enumerated in the statute, leaving

all other questions to be controlled by the

general mode of. ae ans governing the

‘same. :

| In United ‘States vy, Kissel, 218 U. ‘8. 601,

decided very shortly after the Keitel case, Mr.

__ Sustice Holmes, for the Court, made it clear that -

_the narrow scope of review on appeal was not

affected by the fact that the ‘appeal arose out of |

~ the granting of a plea in bar. This, of course,

is-the tiature of the order in the case now before

- the Court. _ Kissel was an anti-trust case in which |

- the District Court had sustained a plea of the

statute of Hasitaticas, At — 606-607, the

Court said:

ues s the only ‘question efor. us

* * * is whether the plea in bar can be -

sustained. That this court. is confined to

-a consideration of the ‘grounds of decision

mentioned in the statute when an indict-

ment is quashed was. decided in United —

-States v. Keitel, 211 U. S. 370, 399. We |

think that there is a similar limit when the:

‘ease comes up under the other clause of

the act, from a ‘‘judgment sustaining a

_ Special plea i in bar, when the defendant has

_ not been ‘put in. jeopardy. * his being so,

we are not conce erned with ‘the technical -

sufficiency. or redundancy of the indict-

ment, or-even, in the view that we presently

shall expxess, with any consideration of:

.the: nature of the overt acts alleged. |

Similar holdings and language may) ‘be found —

in United States v. Miller, 223 U. 8. 599; United

States v. Carter, 231 U. S. 492, 493; United

States v. Moist, 231 U. S. 701; United States v.

Colgate & Co., 250 U.-S..300; Rift: States v.

’ Shrader’s Sons,-252 U.-8. 85, 98; United Biikea,

“ry, Yuginovich, 256 U. S. a a And see, more -°

recently, Uniteo States v. Hastings, Be: :

: 188, ae es |

*e * the sonmtrastion of. the’ indict-

| nient and its. sufficiency merely as a plead- ~

ing, as distinguished from the construction

e: "9?

of the indictment: as that court gives it. -

| And where that -court has rested its de-

. cision upon the invalidity or construction

8 ‘

‘ of the statute, are questions for the District

Court. “We must accept the construction ,

of the statute: which. underlies the indict- |

merit, this Court-will not go: beyond those

| ‘grounds and consider other a to i |

the. indictment. sit eotehios

The propriety of giving this limited scope to |

the act has received fairly recent approval in a

: “eoneurring opinion of Mr. J ustice Frankfurter. cee

es May United ‘States v. Petrillo, 332 U. 8. 1, 14,he ~ |

¢ stated:

‘The case is gees under the Criminal Ap- iS 5

_ peals Act of 1907, 34 Stat. 1246, as amended

by the Act of May 9,.1942, 56 Stat. 271, | 7

* * * whereby a.direct review, can be

had of a district court. judgmént setting —

aside an. indictment or informatione. if the |

‘decision of the district conrt is based —

‘upon the invalidity or construction of. the

_statute upon which the indictment: or in- - -

formation is founded. ’’ Our decisions have

construed this to mean that review can-be

“had here only if a district court’s decision

-_ was based exvlusively upon the invalidity

or construction of a statute. A criminal -.

ease cannot be reviewed here if questions

of criminal pleading—defeets not arising — q

from the statute under consideration—en- ~

ter into a decision sought to.be reviewed.

* * * Tf both the sufficiency of erim-

—Inal.pleaditig and the validity or ¢onstruc-_

2 . R ‘

- * ‘

: . a

mi : = .

e oe ae

. ‘ .

’

tion of the underlying statute-were i in issue

before the District Court, and views as to -

both .were interwoven in the court’ ’s deci- ’

"sion, this’ Court has no jurisdiction” to en-—

a fertain the appeal. * * * On the other

hand, if the question of constitutional con-—

struction. was the isolated ground of deci- —

nner iag ek ae

gio bya district court dismissing a féderal:.

prosecution, that is the only question to be.

‘considered here and it must be considered

_. within the scope given. it by the district —

court. Other questions: may be: imbedded “

in the case which may eventually come. to

‘the surface. But they are not brought to

the surface here- under the limited, specific -

ay review given by: ‘the Criminal. Appeals Act.

anole

and to stafatory or - constitutional questions e

not passed upon by a district court, that

: - Mr. Chief Justice Hughes had ehectaie ©

when he said; ‘The Government ’s appeal |

Thus,

States v. Borden * * *..

we ‘think that. under the holdings. and ae oe :

does not. cpen the whole case.’ - United |

guage of this: Court, the. issue of: fraud sought to —

be raised’ by Dailey is ‘not properly subject to

-eonsideration on aly, » appedl under the Criminal ;

Appeals NS oe

TR sxe i The general rule, on ~ihikih appellee relies, that snap belles

, may support @ judgment on any ground apparent of record

is not-in- point’ here because of the narfow scope. of review

under the Criminal Appeals Act.

o7siT1— 51— * 2

ARAL aca

Aes

Hens

ues

eee

. the. question . as to whether the offense charged in- |

- >. THE ‘CRIME, CHARGED: INVOLVED FRAUD | ON THE

‘ UNITED: STATES WITHIN | THE saaeceig OF THE

“SUSPENSION PROVISION - |

~-A’suming that appellee has i; aeling to raise

: volves fraud’ Within the: meaning of the suspen-

sion statute, the «judgment of othe district court.

' . should. nevertheless be-” reversed. “The statute

suspends the running ofslivhitations for “any of- _

_ fense- against the laws*of the United States (1).

3 involving defrauding or attempts to defraud the

é United - States or any agency thereof = by

‘conspiracy or not, and in any manner. yas

eae ; The indictment is laid winder former Section 354A ‘

oo ge: the Criminal Code, 18 U.S. C. (1946 ed.) 80

(reenacted: as 18 U. ‘Ss. C. 1001), -which punishes =

one, who “knowingly. and willfully” makes a

“false or fraudulent’? statement. in, any’ Sng{ter: Se

within the jurisdiction of any department or

agency of the United States. As Specifically, the | :

indietment charges: that appellee knowingly and '-

“Willfuily, made a false and fraudulent statement.

as to his assets in a matter within the Jasbitietin

neétion Ww ith ‘the defendant’ S seat fet:

Farmers Home Administration services” CR. 1). F

- A mere reading. of the. indictment, We submit,

makes it cleat that it charges an offense: rs: ;

“defrauding the U nited States” is Fi ini any © |

ef $ q ad

}

% y

2 ;

ee suspension ‘provisien ‘should be «onstrued, broadly’

to. encompass frauds against the .Goverfiment,

‘however they, may arise,” and that. no ‘technical

“mechanical concepts were. inteniled to hs 8 its

x My gis ; ness é.

° & ; . .

' manner,” > within the meaning of the suspension es

statute. *) es a Ig

Appellee argues that to be within the . purview yo eee

- of the’s susperpion statute the offense ‘charged must _

? be laid - under: a statute which (1) by , definition :

makes intent to defraud:the United Stites an ele-

ment of ‘the offense; ‘and -(2) -requixes proof: of

_ peeuniary loss to the United States. Nothing: in

"the languagstor the legislative ‘history of the sus-

' pension” provision; how ever, supports this con-

struction._ On the contrary, they show that the

Scope. = ea j ; y BRAS =i

A. The eeuiiasia’ of ‘the suspension, provision

tudueaisi ‘that tt should be broadly construed. — :

‘The language. of the statute indicates its broad :

intent. ‘The use ofthe word “involving”? in con-

nection: with fraud” sugtests that the fraud <le-

‘ment of the offense is not ‘to be measured with

preéision, but: that’ some relationship between the’

.. offense and fraud will. susie <The provision Te- :

fers to “any offense,’’~ Tt refers to offenses “in- -

ae: volving defrauding e ‘United States ‘whether

by conspiracy or not”’ ‘and “in, -any -mannér 7

‘This, again, -is Janguage of generality. It indi. |

: ‘cates a specific corigressional purpose not t to. have

“a.

_—

‘>

i See ee

- de . *

° 3 Fate reo 2» 4 ‘ .:

. ; , # :

iy sae fe AAR: Pi: ;

PEE ee ee ee ae

~ the. basic aims ‘of this. legislation thwarted by 2

-teglinical construction, Rog : : Macrae 3)

ig OB he langtjage - is ‘inconsistent with a “purpose te

| to inelude only limited kinds of fraud, or to in-_

~ elude frauds which’ arise only under neathy” drawn * 6.

: provisions: "saying, in so many awords, “This

involves fraud.” The sdanguage used jndicates”

recognition tliat the kind of .cqnduct with which

the provision . deals. is. not ‘subject to Precise

_ moulding: To deny bread application >: of this °

. provision is to deny ‘¢ffectiveness..to a common

and useful legislative technique, for signaling to

, courts that the proper: touchstone for a,

; construction problems is liberality. ve ae

ap i | Aside from these internal evidences of broad

_. purpose, we must ascribe logie to the provision.

The singling out f cases involving fraud for sus- "

| “pension of” the Patus te ef fimitations: ‘obviously

_ stems ‘from thie fact that fraud, may not be dis-

_ coveréd until'a considerable time- after the offense,

hase been. committed. That -factoy is involved

whether the spoils be eash or privileges ; the im-

ies pairment of: government ‘funetions is as effective. © -

Theré is no logic to drafting a statute whieh is.

concerned with protecting the Government against

che effects:of deceptive behavior, and. then limit-

@ eo 4

tlie

. , 2 ¢y “s P:.? ee . . 4 . ;

aie a conspiracy ptovision does not, wo submit, justify ap-

pellee’s contentio - that the otherwi ise generil words which

were tisedl acquife suc 'de nly‘a narrower meaning than they

normally bear... Bae < a

ro°

ing it to those cases wheré the ‘deceptiow’ eanées:

the Government pecuniary ér proprietary losses,

“or to those where the fraud is neatly’ spelled out. -

“Such. an ‘dpproach ighores , the underly’ ng poly

against deceits. Fe ae

13. The legislative history of. the ferpmsion

Act. also indicates that it should be broadly CON.

strecd.—The legislative: materials relating: to the

_ Suspension Att emphasize, we. submit, the cor-

rectness of our yiew of. the statute, and demon-

strate that Congress had Section 354. specifically

in’ mind when .it legislated on:this question. The

statute was initialy-enacted- as the Act of August —

24, 1942; 56 Stat. 747, and provided

ie * * * Phat the running of any exist:

oe ing statute sof “Tmhitations appliéablé to

offenses. involving the | defrauding: or at-

“tempts to.defraud the Unitec States or any

agency ‘thereof, wh®ther by conspiracy or

gee 8 and i in any manner, and now indictable :

cunder any existing statutes, shall be sus-

pended until June Bb, 1945, or until such .

, exrher tine as the ‘Congress by concurrent

resolution, or the President, may desig-

nate. nica oe key .

alts purpose was to suspend the + running of the |

statutes : of limitation applicable te offenses - in-,

volving, the defrauding of the Government, As —

the Committee Reports *. state, experience during 2;

the first W orld. War showed | that méiny -olfenses

ineotving fraud on, the Government were barred

* TT. Re p. No, 2051 and S. Rep. No. 144, 7th Cong. 2d sess.

| because they had nak been diseovered, within time. :

to prosecute during théthree year period of limi- .

tations. “In jee words of both ee

? Duri ‘ing. ‘aonmal ‘times the. ‘present 3 “year. eo

are %

_stahite of limitations: may “afford’*the De-

partment. of Justice sufficient time tg in-—

-Vestigate, discover, and. ‘\ather evidence to

_- prosecute frauds. against: the Government.

‘The: United States, however, is engaged in

&* _gigantic’ war program. Huge sums of --

_* meney are Being expended for materials

and,-equipment in order .to: earry ‘on the

war successfully. ‘Although steps-have been | -

* taken to ‘prevent and to. prosecute frauds -

against: the Government, .it is recognized

that in the varied dealings opportunities

2. Will no doubt be presented for unscrupu-

s lous persons to defraud the Government or _ 4

some agency. ‘These fraudssmay be diffi-

—° eult, to diseover as. is oftert true of this.

: type 0 of ‘offense and Inmany of them tay not

come to light for some titne to come.. The

law-enforeement braréle of the Government

‘is also busily. engaged in its many duties, :

| _tineluding the enforeement of the coplonege,

-sabétage, and, other laws. z

Your committee is of the opinion that

‘

action should he- ‘taken at this time " ex- \4

volving fraud on the Government.. Act pf November 17, 1921,

24 Dowden The exterision was Peyensat in a. Act of

27,- sit 4B Stat. 51.

In 1921 a proviso was added to the ies year statute of i

Jimitations extending the period to six years for offenses ing .

‘ tend the- limitations statute so that frauds

_ may be discovered and punished even after:

the termination of the present conflict, and | —— ae

_ to insure that the limitations statute’ will

- not operate, under stress. of present-day :

events, for the protection ‘of those who

| would defraud or attempt to defraud the ~

a. United, States, cee =

- While these repoPla i make vide that cits

as ‘concerned, with frauds arising out of: the

“armament pi rogram, its recognition .that. the law

‘enforcement’ branch’ of the ‘Government was too

oo busily engaged in ‘other duties to be able to tn-- ;

cover. many hidden frauds suggests - thet the sie.

"statute was ; infenfed to cover, not only pecuniary

. fraud, but also any attempt to. detraud the United a,

3 aren} in bad manners - ‘ :

” ‘Settlement Act of 1944, which provided in Sec-

‘tion 19, the enforcement provisioti, - as follows ?

ARS Riek 0: 5 epee see ON e

- (b) The first section of iy Act of Ae ene

ote ial 24, 1942°(56 Stat: 747; titlé 18, U.S.C.

. Br ‘Supp. TI, see. 590a), 3 is amended to read gs ee

‘0 "follows: ‘

“The running of any ‘existing statute es

limitations applicable to any offense against.

‘the laws.of the United. States ( 1) involving

ettadiling er attempts to defraud the’

_ United States. or any agency thereof

> whether by conspiracy ‘or. not,. anid in any Ss

manner, or. (2) committed. in connection

ing, canegelation or’ other. termination or |

Ue ae |

‘ | |

‘ re - 16 , ly

with the- negotiation, procurement, award,

perform ce, payment for, interim financ-

settlement, Of any contract, subcontract, or

purchase order which is connected with.or -

Telated - to the “prosecution of the present

. war, or with any disposition pf termination

inventory by ant war contractor or Gov- ~

ernment agency, shall be suspended until

as three years afger the termination of. hostili- :

; ties i in the present war as pr oclaimed by the -

- the two Houses of Congress, THis ‘seetion “

shall apply to acts, offenses, or transactions ~

where the existing statute of lin limitations:

- has not yet fully run, but it shalh \not-apply . .

to acts, offenses, or tizinsactions which are

already barred: by’ Pepreone of f existing es

President or by a concurrent resolution of

aw.’

“Fiohise Report, 1590, 78th Cia: 2d ‘Sess., p. 28,

explained this provision ‘as follows:

‘Subsection (b). amends the Act of. Au- \

_ gust 24, 1942 (56 Stat. 747). - This amend- >

ment suspends until 3 years after the ter-

ss minatiori of hostilities the running of arty

_ existing statute of limitations applicable to_

‘any Federal offense involving fraud, against oe

. the United States or connected* with the.

‘negotiation, procvrenient, award,. perform-

- ance, payment, for interim financing, ean-

“The

celation or other termination, or oe

“i any war contract.

Suspension _of limitations provision was

farther broadened in: the Surplus ic apled Act

of 1944, 58 Stat, 765; 781, to iidinals any enee

-coramitted in connection with the care and poneuee.

--and disposal of property under that act.. © |

_ These amendments in no way show an intention ~

to restrict the meaning of the word ‘‘fraud’’ in

the first clause. As. to- ‘contract settlement wi ‘

surplus property offenses, Congress suspended the

statute of limitations even though fraud may not

be. involved. Thus, in” these. limited fields, the.

statute is suspended although the crimes may not —

‘be hidden. These amendments indicate. congrés-"

- Sienal recognition that, because of the hugeness *

of the programs involved, Jaww.enforcemeént agen-

cies might be unable to handle even open and no-

torious crimes. They thus tend to confirm our °

_ view of the ‘suspension provision as designed ‘to: *

" give law enforcement agencies more time to un-

cover and. prosecute crime because of the ¢ongres-

sional recognition that suéh agencies were pre-_

occupied with matters more directly arising out)

of the war, | hee : ee

>. Phat Congress, in using the: term “fraud”? W as’

not construing it in any narrow sense isghown by

\ Seetion’ 19 (d) of the: ‘Contract Settlement Act —

\ of 4944, enacted at: the same time as the suspen-

‘sion provision - embodied in 19- (b).. Section 19

+ (a) provided ( 58 Stat. at 668) :

+ \ -(d) The’ provisions of ‘section 30-A. of |

ae \ the Criminal Code (18 U. 8. C., see. 80) ©

: Nana apply to any statement, representa-—

— bil}, ‘Teoeipt, _ voucher Navi, acount,

o + ’

oie

olnien: estifienls,: affidavit, or deposition

“yp made or used or caused:to be made or used: -——

| for any purpose under this ;Act or ‘under g

“any regulations pursuant. to this Act. es |

- Of this subsection, ss me 1890, 78th Cong, 2d

_ SPSS, stated (p. 28): Rin al 2

on | Bubeection - (a) deals. with the criminal

_ penalties:for fraud. It. m&kes élear that

the provisions of sectiow 35-A of, the Crim- 4

inal Code (18 U. S.. Cs ‘see. 80) also apply

to any such. staterient, ‘representation, or . *

“be imade or used for’ any pur pose under the 1

act... Section 35-A imposes criminal pen- = ®

_alties ap to 10 years” imprisqgment for’. |

fraudulent actions involving the Govern- :

ment. 1 eo :

“This laber ofefraud. was “attached to crimes under.

the Fillse- Clainrs Act at the very?time when the

provisions oft the suspension act, suspending lirni-

> tations on erjne® involving fraud, were before

- Congress: It indicates elearly that: Corigress did |

"not: think of fraud: in any restricted, technical i

sens se, and specifically that Congress deemed prose-

--cutions under Section So7A within the geal of

the Suspension Act.. -

C. An offense under the False Claime Acti is an

offense involving the defrauding of the United

| States. —Appellee’s argument ‘that the suspension

—acteapplies only to-statutes -where by ‘defiriition |

: intent to defraud the United States if made_an

element of the offense stems fromsthe decision of

eg «2 :

: 3 ;

‘19 Spears

this Court in United States v. Noveck, 971 U. S.

20k... ‘This Court ' there held : that the proviso ee

attached ts the statute -of limitations 4 in 1921,’ the ~

janguage of which is similar to that of the pres-

ent suspension provision, did not apply to an in-

-dictment for perjury, even though that perjury

was in. regard to income tax due, because: the

_ “purpose: to. defraud the. United §tates is not an —

- .élement of-tie crime defined in § 125, on which

a ~-*the indictment. is based” (p. gies sia oh e

The Court observed" | at 204) ae | :

‘purpose the proviso was sto apply the six year o?

period to @very case in which defrauding: or an at-

tempt to defraud the ‘United | States is an ingredi-

“ent under the statute defining the offense. There

‘ ale several such offenses. Section 37 affords an

‘illustration.’ But ‘perjury as “defined ‘by. 125

does. not contain’ ny’ such element.” VP a

. -Wé -may ‘assume for present purposes ‘tha, ae

bs. & under: the Noveck decision, fraud against the

\ ‘\

FRS S. 1044, as s arnendded, 18 U:6.C. Lag ed.] sb which \

‘sy o4 read as follows" O° an

‘“No person shall be. shascated Srlad. or punished: for we

a ‘ offense, not capital, except as provided in sect ionsl046, unless, N

oo” the indictment is found, or the information -is instituted,

within three yedrs next after such offense shall have been om. ~

anitted:: Provided, however, That in offenses involving the ©

| defr auding or attempts to defratid the United States or any

agency thereof, whether by censpiracy or not, arid in any >

manner; and-now indictable under any existing statutes, the -

. period of limitation shall be six -yea?s. * * *”

_ ° This is, the general conspiracy section, now § 371 of the -

ar. riminal Code. 7 | |

—

~ United States. must he | an “ingredient” “under the

statute defining | ‘the crime. Fraud against the |

United States must ‘thus be factually. relevant —

* to the proof of the. crime. But this does not neces- -

sarily 1 mean that thie statute taust speli out intent.

—~*"fo defr aud the United States as an element of the

statutory definition. The N oveck decision is con-

_ sistent with the position that if, under the statute —

involved, . the elements which must’ be proved.

| “necessarily. establish fraud against ‘the. United

States, ‘then fraud is ‘“involved’’.

N oveck was indicted under the general perjury —

statute which does not distinguish between those.

falsehoods: Which involve the United States and.

. those which do. not. . Fér example e, perjurg in the —

~ course’ of private litigation will not directly affect

the interests: of the United States, pecuniary or

otherwise. Fraud on the United States, is ‘thus

~ not an essential element of the crime of perjury

_ as defined by the statute... kite / ; |

The Falsé Claims Act, on the other. hand, .ap-

plies only. to false claims against or Statements:

to the United States. Those statements must be

know ingly. and willfully faise or ‘fraudulent.

_ Any now ingly false claim or statement must 2,80

“faeto be an interference with the proper func- ae

‘tioning of a government agency and thus: ipso

facta an inter ference with the proper functioning

of the goveriment of the United States, It thus.

“trust necessarily Yesult in the defrauding. of the=+

aa U nited States.

21>

It is significant that. in the Nevesk case this

- Court referred to the general conspiracy statute.

as an 6xampteofthe.type.of statute ‘which made -

_ fraud»an ingredient of the offense. For many

years before that decision, this Court had made °°

it plain that a conspiracy to defraud the Govern-

‘ment includes, not only causing it pecuniary loss,

but also interfering by deception or trickery with.

the lawful functioning of any department of. og

Government. Haas v.. Henkel, 2¥6 U.S. i

: 479-480, and cases cited; pos lg a o 3

United States, 265 U.S. 182, 188. The making of | :

ee a,false and fraudulent statement to a department |

awe vf. the Government is such an interference with

- the lawful functioning of that department. See:

‘United States -y. Gilliland, 312/.U. 8. 86, 93.

“Moreover, as we have {noted above, Congress at

. the time it extended the suspension provision. in

the Contract Settlement Act, specifically: : referred

‘to crimes under Section oA as erimes 3 involving

fraud. | | y

eet Appellee’ s relidnee on U ited States Vv. ‘Schar-

ton, 285 U. 8. 518, and United States v. McElvain,

272 U.S. 633, is misplaced. Those decisions — S

“ / . turned on the fact that the cases involved offenses i

' under the internal revenue laws, which carried

3 io own Separate limitations provisions, ‘In vd

* McEIMin' case, the Court held that the. 1921

“vise could not extend toa conspiracy to deffand fe

the United_ States by attempting to violzte, the.

internal revenue laws, because the ‘basi¢’ statute

ae]

: of limitations, to which the proviso was viattached, :

did. not operate on internal revente ’ violations.

the special internal revenue: limitations statute,

which ‘contained a proviso similar to the 1921

general proviso. Since ériminal violations of the

~ +, internal revenue laws: usually involve fraud

A revenue. statutes which rhade intent to defraud

against. the . United - States, the Court found it 5

necessary to distinguish hetween those interrral —

a definitional element of the offense and” those

: which’ didnot. The artificial distinction thus

drawn was shortly corrected by amendment. of

' the provision, Braverman v. United States, 317 |

U8. 49; 54-55." 5." It cannot be assumed that in

on™, -

mas “5

earrying over the language of the general 1921

proviso in the World War IT. suspension’ act, -

3 Congress~intended to adopt a judicial annie ae

tion based on the special situation arising under -

_ the internal revenue laws which Congeess ‘had

immediately corrected. AR

Moreover, in both ‘the Hcketvain: na dehorton:

eases, ‘the Court noted ‘that it was construing poo

the pr ovisos narrowly precisely. because’ they were

ppovisos. — The Wartime Suspension of Limita- —

tions ae ‘ere involved was separately enacted

——

to forward a general policy. This very placement,

as opposed to its earlier placement as-ani. adden- 7

~ Ys

we Commiittes reports on the amendment specifi: willy 5 re Stecred

to the Scharton case, See H. Rept. 1492, 72d Cong. ‘Ist’ sess:

(1932), p. 29. - ware

| dum to the basic tnnitstione provision, suggests -

that it should be more broadly construed. .

‘The. World War IT suspension srovision,; was »

ies -gpecifieally held to.apply to an indictment under

pec

the False Claims “Act in United States ¥;- Gott- | |

. fried, 165 F. 2d 360 (C. A. 2), certiorari denied, |

333. U. 8. 860. There the defendants. had filed—

_ a false statement with the Office of Price Admin-_

istration as to their: 1941 sugar consumption. in

order to get.a larger 1942 ‘allocation. The court «

adverted to the definition of fraud in conspiracy ~

Cases as including any conduct caleuléted: to ob- —

struct or impair the efficiency of the United States

or. destroy , the value of its ‘operations or reparts

It then observed that it saw no reason for read-—

ing the words ‘defrauding the. United States”

in the suspension provision any less. broadly. It

~ obviously appreciated that under both. statutes,

the range of possibilities for defeating the aims

of Government was ‘wide, and that both had a |

‘sifnilarly broad purpose, however different their:

technique, to aid the Government. to preter. itself

in an es ssentially indefinable area.*. tek

DD, The fraud involved need not tbe pecuniary

fraud. —The pontits. alnstidy ipa as to the lan-.

The Gottfried case was in many Ww ays an application of an_

oat Second Cirenit case, Miller v. United States, 24 F. 2d

353, ecrtiorari denied, 276 U.S. 638, where the words “involv-

ing fraud” in the 1927 proviso: pow to apply to a con-

-spiracy to defrand th United States.by depriving it of tha

impartial services of its employees. It there appeared that .

defendant in ‘conspitacy y With the then Alien sien Cus-:

—— ry '

_ guage, legislative history, and judicial constric-

tion of the suspension provision, . have in large

at part already answered appellee’s contention that oe

fraud fer the purpose of the. suspension provi- 7

sion must. involve ——: fraud on n the United :

oS SS rcs: a

Certainly the. language of the provision draws

no such distinction. ‘Nor, as we have-shown, does

the legislative. history support such a view. On

‘the contrary, the legislative history indicates that

Congress thought of “offenses under Section 354

.. Without distinction as_ ‘offenses involving fraud ~~

- on the United States. |

Appellee seeks: support for his position. in.

| United States v. Cohn, 270 q 3m Sc 339. where the

Court in dealing with, Section 35 of the. Criminal

- Code, as if read at, that time, said (pp. 346~347) _

| ae fraud in its ‘“primary’”’ meaning meant. -

: “cheating the Government out of property or =

money’’ and that only the setondary. meaning ae

3 cnenngnet “interfering with or _—e one

todian. fei [ the thes Attorney Geckiak had arranged. to ve

* .an improper claim of some six,and one-half milliox. dollars ee

- akiowed mai the funds under the control of the custodian. eee

| The tndicti

t was framed-under the provisions of the gen-

eral conspiracy statute, and the court in holding it not barred - -

- by the statute of limitations, observed that the word “fraud:

_ was’ used comprehensively in bet provisions, - ° Tao :

See aiso Weinhandler v. United § States, 20 F. 24°559 (Ci Ak, a

2) /ertiorari deried, 275 U.S. 534, where an Spibseaiienst for

embezzloment.- ‘Was held to be subject to the 1921 proviso on

tive ground that the word embezzlement rtsel¢ Limplied frauds

lent conduct.

eed

25°

_ of its lawful governmental functigffe by deceitful a

~ and fraudulent. means.” The Court was there

dealing ‘with Section 35. before its amendment —

in a ease in which’ the’ party acutally. cheated :

was not the United’ States but:the consignor of .—

goods.” The Court emphasized that the word tae

frauding’’ was used j in that statute ‘int connection ee

with the words ‘cheating or swindling.’ indicating -

that it is to be construed i in the manner in which

- those words are ordinarily: used, as relating to

. the. fraudulent. causing of pecuniary or property

_loss,’” a meaning further emphasized by, other

provisions of - the section in which the word *de-

" fraud’ is used in reference to the obtaining of |

_- money or other property from the Government

‘context of the entire section, which deals with the.

2 Wrongful obtaining of money and other p1 noperty

of the Government, with no reference to the im-

pairment ‘or obstruction of ee :

_. functions.”

Before’ the pethioe | ‘suspension ‘provision was

passed, however, Section 35 had been amended. |

>In the Cohn case, goods had been shipped: to the Unitéd

States ander a bill of lading. ‘The bank to which the bil!

_ been sent was instructed not to surrender it until defendant —

had made certain payments, Without having made the pay-

ments, defendant represented to the United States customs

officials that the bill was delayed, posted bond for its produc- fa

tion, and tock the goods, “The party who was “cheated” in ‘a ~

- proprietary sense was the consigner’ of the aoods, rot the -..

‘United States.

PS “08 edie

= . —g: 8

e aon 26 or : : bas s'

Ban its present form and ‘this. Court in Batted"

_ States v. Gilliland, 312 U. 8: 86, refused to apply

to the amended statute ‘the narrow concept- of af:

fraud it had applied in the Cohn case. It noted |

that the. language indicating the limitation. it had

? earlier enforced liad been changed. -It observed :

“(p. 93). that “The amendment indicated the con-

gressional intent to protect: the authorized fune-

tions of governmental departments and agencies

from the perversion which rhight result from the

: deceptive practices described: We see no reagsul ~

why this apparent intention should be Frustrated

_ by construction.” - :

The. ‘only ease. qwhich: supports the proposititin .

: cf that a pecuniary qr proprietary loss to the United |

States is a prerequisite: to the applieation of the -

_ suspension provision is Marzani v. United States, -

468° F. 2d 123 (C. A. D. C.); affirmed by an equally

divided Court, 335, 0. s. 895; and reaffirmed by an. —

equally divided Court on reargument, 336 U. S.

922." That cdse held the suspension provision in-

2 applicable toa prosecution under:thé False Claims".

ya Act for: false swearing in. investigations of the

oem lt should ber noted that this comdtusion affoctedwnly

i counts under) sing the general sentence imposed | om Mar- —

zani, with the resuic that the Government: was not in a posi-

tion directly to petitioa for certiorari on, this issue. The

_ issue ®as not raised by Marzani’s petition but was argued by

‘the Government in “support of the judgment below. In the .

absence of «n opinion, we do not’ know whether this Court

conside red that the Government had standing. to raise the .

- issue, / | ee. oo !

ee f-

“

» . oi Sam Se I

oe defendant’ s fitness for federal employment, on

| the: ground that. the offenses invelved no pecuni-

ary loss to the United States. |

"The Marsa@iit opinion based its sisodiieas on

the N oveck, McElvain and Scharton ‘decisions, dis- >

cussed supra, but none of thpse edses lend support _

eto ‘the holding that fraud under the ‘suspension ee

provision means ‘pecunifiry: loss: "As noted above,

_ those decisions discuss. the. necessity’ that fraud

be an ‘ingredient of the crime, but not that the

fraud - ‘ingredient ‘be pecuniary. There was liq

oceasion for ‘such discussion in the M cHlvain and :

Scliarton cases, since the: ‘e¥asion of taxes sf

: charged “necessarily involved a pecuniary toss to

“the United States. And the. Noveck decision, as

we Tave. hitherto pointed out, specifically men-

‘tioned the general conspiracy statute as an exam-

-.. ple of an offense where fraud. is ingredient. of %

_ the crime. By so. doing, it negatived the pecu- .—

_. niary: less requivément, since it was well estab-

lished, prior to the Noveck ease; that a conspiracy |

‘to defraud’ covered interference. with goverti-

. mental functions. -Haas v. Henkel, 216 U. 8. ie °

462, 479-480, and eesés RE Ey ep os

Petitioner's arguinent, based an the cain

hse, is effectively answered by Judge Learned

Hand’s opinion in United Staies v. Gottfried,

165 ¥. 2d 360,. 368, certiorari den! ed, 333 U. sf

"860, as follows: — ‘ |

Vent oa, Bg ie argument—drawn - ‘from —

the Congressional. debates—is that. this lan-

_— —— ee

ot oe: ing to commend. it, except so_ far as the -

8. >

4 guage shcaiea be confined to frauds of £ those

who contracted with the United States or.

supplied jt with materials, and that it does. —

not vinclude interference even’ though

- fraudulent which results in no pecuniary

loss. Textually - this reasoning has noth-

word “fraud,’’ may imply pecuniary loss;

and, whatever might be said as a new.mat- .

. ter for so circumscribing that word, it‘-has

.. been the law, at least since 1910, that in

cS ae ‘statute under which this indictment

was drawn, “fraud”? includes any conduct,

“ealculated to obstruct. or impair its” (the.

the value Of its operations and reports.’’

.¢ We see no reason for reading the worlls,” ie

“défrauding the United ‘States’’ “in the.

° statute of limitations now in question less

comprehensively ; : certainly nag! was not

enough ground for that in the debates of

°°

Congress. ‘Besides, the purpose of the.

amendment was not to let crimes BY in ie |

_ punished which had been comniitted in the

harly-burly of war, an overriding mative

which perfectly fits the situation at bar." geet

The Gottiriod view was adopted in: United ‘States v.

: Bridges, 6 F, Supp. 922, ya (NLD. Cal), now on appeal im o.

- the Ninth Circuit.

requireme nt. /

United States v. Obermejer, 186 F. 2d 243. L(C. A. 2), cere

tiorari denied, 340 U. S. 951, a later decision of the Second —

Circuit, shows a narrowing view by that cireuif, of the fraod |

: ingredient, teqtirement as applied to a statute where fraud »

is less cléarly spelled -out than in the False Claims Act >. i

United States’) ‘efficiency and destroy. ce

¥ oF o:

volved in Gottfried and the instant ease, but ‘does not, at all

affect the force of the Gottfried decision : on ni pecunis ury loss

-f

3 Cf. PA 7

> $ ee Poe Y

. A ¢ x

LG > .

rt “

—_ , a 7

"We dabimit that this i is clearly the onenen view;

that the language: and legislative: history. of the

‘syspension statute and decisions of this Court all

' ° establish that crimes under ‘the False Claims Act .

are crimes involving fraud under the suspension

—=—provisién. Loree ee ee

as Respectially enbenitted. ee

‘ a PHILip B PERLMAN,

| Solicitor General.

CINERNEY,

om °o

S a

Re ne Times M.-

. ‘ = wu . x

y Re re | Assistant Attorney General.

| cena ean a Ropert 8S. ERDAHI, ~~

Se ea Joux R, WILKINS, ay se ee

: oe “moe Attorneys.

| qPrcencom 1951. of | |

bf tee th < G6 Py

: > . re 2 | md ; ws

5 es ? € ee Rs & ;

—— S,

* y . 77

‘i: Pape ees rai oe ; ZA <"

“yt GOVERNMENT PA. HTING OFFICE (1981

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.