United States v. Adler Decision: Affirmed

48 F. App'x 463
CourtCourt of Appeals for the Fourth Circuit
DecidedOctober 18, 2002
Docket01-4877
StatusUnpublished
Cited by1 cases

This text of 48 F. App'x 463 (United States v. Adler Decision: Affirmed) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Adler Decision: Affirmed, 48 F. App'x 463 (4th Cir. 2002).

Opinion

OPINION

PER CURIAM.

Harvey Adler was indicted and tried before a jury for numerous violations of 18 U.S.C. § 1001, a criminal provision of the False Claims Act. A jury found Adler guilty of nine of ten counts of submitting inflated billing invoices to the Housing Authority of Baltimore City. Adler now appeals, challenging two of the trial court’s jury instructions, the enhancement of his sentence pursuant to U.S.S.G. § 3C1.1, the trial judge’s failure to recuse himself sua sponte, and the sufficiency of the evidence on one of the counts. Finding no merit in any of these claims, we affirm the judgment of the district court.

I.

Harvey Adler (“Adler”) was president and sole owner of Adler Services Group (“ASG”), a company that maintained and repaired heating systems. On June 14, 2000, a federal grand jury in the District of Maryland returned an indictment charging Adler and Scott Dower, ASG’s former vice-president of operations, with ten counts of making false statements about matters within the jurisdiction of the United States Department of Housing and Urban Development (“HUD”) in violation of 18 U.S.C. § 1001. Each count charged Adler and Dower with submitting false and fraudulent invoices that inflated the number of hours worked at specific HUD-funded properties between 1995 and 1997.

The indictment alleged that “from in or before October 1992 and continuing until in or about December 1997,” Adler and Dower “devised a plan to defraud HABC and HUD” by submitting inflated billing invoices that contained materially false and fraudulent statements. Dower pleaded guilty and agreed to testify for the government. Jury selection and trial commenced on July 16, 2001.

Between October 1992 and December 1997, ASG sought and was awarded several contracts, commonly called purchase orders, with the Housing Authority of Baltimore City (“HABC”). The contracts called for preventive maintenance and emergency service of oil- and gas-fired residential furnaces at public housing units. * The purchase orders covered the cleaning and inspection of furnaces for a flat rate fee, additional minor repair work on a time and materials basis up to a maximum dollar amount, and emergency or service calls for furnace repair. At trial Thomas Dawson, an HABC employee who was responsible for purchasing supplies and services, testified that any changes to the purchase orders had to be done in writing.

The evidence presented at trial established that Adler directed ASG employees to falsify their labor hours on invoices submitted to HABC at various times throughout the contract relationship. Carl Andrews, the technician who supervised all of the preventive maintenance work from 1992 to 1996, testified that the invoices created by the billing system ASG used until 1996 were usually overcharged. Andrews also testified that HABC was sometimes billed for work that was never completed.

*466 John Palumbo, a former ASG technician, testified about the facts underlying count two of the indictment, relating to a property on Odell Avenue. Palumbo reviewed a number of government exhibits relating to work performed on January 2, 1996. The exhibits showed that thirty hours were billed for work performed on January 2, 1996, but that Palumbo had only worked eight hours that day. Adler could not produce any time sheets or work orders reflecting that any other technicians performed services on that day. Palumbo testified that sometimes other helpers accompanied him to the properties, but that he did not know if anyone accompanied him on January 2.

Adler’s defense consisted of two main points: (1) that none'of the invoices were overbilled prior to 1996, including the January 2 Palumbo invoice; and (2) that Adler only began overbilling in the fall of 1996 after HABC authorized him to do so. Shortly before the 1996-1997 heating season began, HABC removed the preventive maintenance work from ASG’s contract. According to Adler, this made it very difficult for ASG to make a profit because the preventive maintenance work constituted such a large part of the contracts. Shortly thereafter, at a meeting with Dower and three other ASG employees, Adler instructed them to start including a two-hour minimum on each billing invoice so that ASG could cover its costs. Dower testified that in November 1997, Diana Bell, an ASG employee who processed invoices, went to Adler with a stack of invoices with inflated hours. Dower heard Bell tell Adler that she did not have any documentation to support the inflated hours, but Adler responded “I don’t care what you have to do. This bill is entirely too low.” In addition, a number of other ASG employees testified that they falsified their labor hours on work orders and time sheets pursuant to Adler’s orders.

Adler testified at trial, but did not deny instructing his technicians to add a two-hour minimum to their work orders. Instead, Adler justified the falsified invoices by testifying that Terry Downey, the comptroller at HABC, had given him permission to inflate hours in order to cover ASG’s indirect costs. Adler testified that Downey “directed [him] in the rebilling process to incorporate the indirect labor charges in a line item on the rebilling and then roll those hours into the labor charges.” Adler admitted, however, that Downey never put anything to that effect into writing.

Both the government and the defense subpoenaed Downey for the trial, but neither side called him to testify. Downey had refused to speak with defense counsel before trial. The government did, however, produce copies of the government investigators’ reports compiled from interviews with Downey. And Downey was physically present in the courthouse at several points during the trial.

After the close of evidence, the government asked the court to instruct the jury that both sides had subpoenaed Downey, and that he was therefore equally available to both sides as a witness. Adler’s counsel objected to the instruction because Downey had refused to talk to him before testifying. The district judge told the parties he would only give the instruction if Adler’s counsel made some sort of missing-witness argument asking the jurors to draw an adverse inference from the government’s failure to call Downey. Adler’s counsel did argue this point during his closing. Thus, the court instructed the jury “that Mr. Downey ... was equally available to both the defense and the government in this case.” Upon Adler’s request, the judge also instructed the jury on the “good faith” defense.

*467 On July 26, 2001, the jury returned a verdict of not guilty as to count one and guilty as to the remaining counts two through ten. At sentencing, the district judge determined that Adler committed perjury on the witness stand and therefore enhanced his base offense level two points for obstruction of justice. See U.S.S.G. § 3C1.1 (2002). The court then sentenced Adler to forty-one months imprisonment and three years of supervised release for each count, with all nine sentences to run concurrently with each other. The court also ordered Adler to make a restitution of $235,000 and to pay a special assessment of $900.00. Adler now appeals.

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