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United States v. Elsbery

decided: June 25, 1979.

UNITED STATES OF AMERICA, APPELLEE,
v.
JAMES W. ELSBERY, DEFENDANT-APPELLANT.



Appeal from a judgment entered in the United States District Court for the Eastern District of New York (Hon. Mark A. Costantino), convicting appellant for making materially false statements in a matter within the jurisdiction of the United States Department of Health, Education and Welfare, in violation of 18 U.S.C. §§ 1001 and 1002. The Court of Appeals held that (1) the evidence was sufficient to sustain the conviction; (2) there were no reversible errors at trial; and (3) the pre-indictment delay did not offend the Sixth or Fifth Amendments.

Before Oakes and Gurfein, Circuit Judges, and Pierce, District Judge.*fn*

Author: Gurfein

This is an appeal from a judgment of the United States District Court for the Eastern District of New York (Hon. Mark A. Costantino) convicting Dr. James W. Elsbery, after an eleven-day jury trial, on ten counts of making materially false statements in a matter within the jurisdiction of the United States Department of Health, Education and Welfare, in violation of 18 U.S.C. §§ 1001 and 1002. The defendant was acquitted on 16 other counts of mail fraud under 18 U.S.C. § 1341.*fn1

The defendant is a professional educator. During the 1972-1973 and 1973-1974 school years, his wholly-owned company, Elsbery Systems Analysis, Ltd. (ESA), entered into nine contracts with the New York City Board of Education to evaluate programs for the disadvantaged. Five of the contracts were funded by the Department of Health, Education and Welfare; misstatements in connection with these federally-funded contracts were the grounds for the prosecution under 18 U.S.C. §§ 1001 and 1002. Each of the contracts was "cost-plus," meaning that ESA would be paid for the actual costs of performance plus a profit, with a maximum total dollar amount of payment for each contract.

To permit ESA to receive partial payment during the course of performance, the City Board of Education was billed periodically by means of invoices, designated as OD-14 forms, that set forth employees' hours, salaries and other expenses incurred. ESA submitted its first OD-14 in February 1973, and it was referred to an official in the comptroller's office for review and verification. Shortly before the comptroller's agent was to inspect ESA's books, however, Elsbery contacted his own accountant, Ben Cohen, and informed him that the employees had not actually been paid at the rates described in the OD-14, but that the full amount of money allocated for salaries would be paid to the employees in the future. Cohen communicated this information to the comptroller's agent, who responded that payment of the salary expenses claimed on the OD-14 would depend upon the existence of corporate letters of intent indicating that ESA would ultimately pay the employees at the full rate indicated on the invoice.

Accordingly, when the official visited ESA as scheduled he was shown letters of intent addressed to several employees that purported to show an agreement to pay them at the rates designated in the OD-14.*fn2 On that basis, and on the basis of Elsbery's representations about the salaries that would be paid, the invoice was approved and payment was made, as were all the remaining payments on the contracts between ESA and the City Board during the 1972-1973 school year.

The same procedure was followed with respect to the 1973-1974 year contracts: the comptroller's agent was shown letters of intent to pay employees' salaries that matched the rates set forth in the invoices and he approved payment by the City to ESA.

At trial, evidence was adduced to show that a number of the employees named on the OD-14s had not received the full salaries for which they were designated. It also appeared that they had never been told that they were entitled to the amounts which had been claimed as their salaries on the invoices. As it turned out, the difference between the sum claimed for salaries on the invoices and the actual salaries paid amounted to roughly $100,000.

In mid-1974, the City Board of Education called the attention of the United States Attorney for the Eastern District of New York to the ESA contracts. The City and the United States Attorney started separate, although cooperative, investigations into the ESA affair. On February 9, 1978, a federal grand jury indicted Elsbery on ten counts of making false statements and sixteen counts of mail fraud. The mail fraud counts were based upon the fact that the City sent its payments to ESA through the mail.*fn3

On this appeal, Elsbery raises three issues. First, he argues that there was insufficient evidence upon which to convict him of a violation of 18 U.S.C. §§ 1001 and 1002. Second, he contends that reversible errors occurred during trial. Finally, he asserts that his federal indictment was delayed contrary to his constitutional rights.

Sufficiency of the evidence.

As appellant concedes, the disputed issue at trial was whether Elsbery intended to pay ESA's employees the full sums which ESA had collected as salary reimbursements from the Board of Education. There was sufficient evidence at trial to warrant the jury's inference that Elsbery did not intend to pay his employees the amounts which he represented to the City would be paid. An actual discrepancy between the salary reimbursements requested by ESA and the actual disbursements to the employees was proved. There was testimony by some of the former employees, moreover, that they had no expectation that any additional payments or bonuses were owing. There was also some evidence that ESA had billed for hours never worked.

Appellant points to evidence that some employees had been vaguely promised bonuses. He argues that the evidence supports his contention that he intended to pay the employees in full, and that payment was merely postponed until such time as ESA's overall financial condition would permit it. This was, indeed, the question for the jury which it resolved against the appellant. The verdict is not subject to challenge because the jury might have drawn an inference other than guilty intent from the evidence. "(T)o be sufficient as a matter of law, circumstantial evidence need not exclude all possible inferences but those of guilt." United States v. Lubrano, 529 F.2d 633, 636 (2d Cir. 1975), Cert. denied, 429 U.S. 818, 97 S. Ct. 61, 50 L. Ed. 2d 78 (1976); Accord, United States v. Fiore, 467 F.2d 86, 88 (2d Cir. 1972) (alternative holding), Cert. denied, 410 U.S. 984, 93 S. Ct. 1510, 36 L. Ed. 2d 181 (1973); United States v. Grunberger, 431 F.2d 1062, 1066 (2d Cir. 1970).*fn4

Appellant also contends that his acquittal on the mail fraud counts prevents conviction on the false statement counts. He reasons that by acquitting him of mail fraud, the jury necessarily found that the OD-14s were filed in good faith. Acquittal on one count of an indictment, however, does not preclude reliance upon facts relevant to that count in assessing the sufficiency of evidence for conviction on a different count. Collateral estoppel does not run between Simultaneous inconsistent verdicts. See Dunn v. United States, 284 U.S. 607, 52 S. Ct. 40, 76 L. Ed. 520 (1932); United States v. Beverly, 562 F.2d 201, 205 (2d Cir. 1977), Cert. denied, 434 ...


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