United States v. Anderson

879 F.2d 369
CourtCourt of Appeals for the Eighth Circuit
DecidedJuly 13, 1989
DocketNos. 88-5134 to 88-5137, 88-5139 and 88-5188
StatusPublished
Cited by31 cases

This text of 879 F.2d 369 (United States v. Anderson) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth 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. Anderson, 879 F.2d 369 (8th Cir. 1989).

Opinion

WOLLMAN, Circuit Judge.

The defendants, Colin Brooks Anderson, Kathryn Anderson, Larry Vincent Nurre, Richard Carl Lundin, Lundin Construction [372]*372Co., Inc., and Donald Richard Showalter, appeal their convictions of knowingly and willfully making false statements to the United States Government, in violation of 18 U.S.C. § 1001, and conspiring to defraud the United States, in violation of 18 U.S.C. § 371. We affirm the judgments of the district court;1

Section 8(a) of the Small Business Act authorizes the Small Business Administration (SBA) to enter into contracts with the federal government and then to subcontract them out, or “match” them, to small businesses. 15 U.S.C. § 637. Beginning in 1969, several Presidents issued Executive Orders directing federal aid for minority business enterprises. Since then, section 8(a) has been utilized to assist socially and economically disadvantaged persons or businesses participate in the free enterprise system. To become certified for the 8(a) program, a business must establish that it is socially or economically disadvantaged, is owned by a minority person and not a mere front for a non-8(a) business, is actually controlled by a minority person, and will be performing at least 15 percent of the government contract. Involvement in the 8(a). program is advantageous because contracts are awarded to minority businesses without competition and at rates higher than those awarded to non-8(a) businesses.

In January 1980, Kathryn Anderson, owner and president of Kathy’s Kranes Corp., contacted Donald Showalter, a minority business specialist for the SBA, to inquire about the 8(a) program. Anderson applied for certification for the program based on her minority status as a woman, a Native American, and a physically handicapped person. The SBA ultimately granted Anderson 8(a) certification on June 26, 1981.

Prior to certification, Kathy’s Kranes had completed a few small construction jobs and an $80,000 paving job. In November 1981, however, Anderson indicated to Showalter that she believed Kathy’s Kranes could do the Winona Reach E-2 Flood Control Project, which had an estimated value of $750,000. She claimed that Kathy's Kranes had a bonding capacity of $1.5 million. This, however, was not true.

To perform a job the size of the Winona project, Anderson needed to find a contractor that could provide her with the required bonding capacity and other financial assistance. Anderson had disclosed this to the SBA in her initial application for certification: “We are currently negotiating with a large dirt contractor in the southern part of Minnesota to ‘big brother’ our corporation relative to favored status equipment rates, partial bonding and job joint ventures.” The SBA had earlier instituted a sponsorship program for established businesses, but this program had been abused and eliminated before Anderson entered the 8(a) program.

In late November 1981 Anderson was introduced to Richard Lundin, a nonminority businessman, and on January 8, 1982, Anderson, Lundin, Kathy’s Kranes, and Lundin Construction Co., Inc. entered into a management agreement. The management agreement provided that (1) Lundin Construction would immediately provide Kathy’s Kranes with a full-time management employee; (2) Lundin Construction would act as Kathy's Kranes’ primary and exclusive subcontractor; (3) the parties would originate a joint checking account that required signatures by both parties for the disbursement and receipt of all payments; (4) Lundin Construction would receive 60 percent and Kathy’s Kranes would receive 40 percent of the profits earned for jobs on which Lundin Construction worked; (5) on all other jobs, Lundin would receive 25 percent of net quarterly profits earned by Kathy’s Kranes; (6) Lundin Construction would advance $50,000 working capital, furnish bonds for contracts ranging from $1,000,000 to $5,000,000, and establish a working line of credit of $200,000; (7) Lundin and Lundin Construction would have access to Kathy’s Kranes’ books and records; (8) Kathy’s Kranes would immedi[373]*373ately issue to Lundin 19 percent of Kathy’s Kranes’ outstanding stock upon payment by Lundin; and (9) the parties agreed to modify the agreement if the District Counsel for the SBA found that it did not comply with SBA rules and regulations.

Although the agreement required approval by the SBA District Counsel, Anderson instructed her attorney to send the agreement to Showalter. Even though the agreement violated several SBA rules, Showalter took no action and did not submit the agreement to the District Counsel for approval. In fact, Showalter, without authorization, informed the bond agent that the agreement “in no way” impeded Kathy’s Kranes’ status as a socially and economically disadvantaged contractor in the 8(a) program. A week after Anderson entered the management agreement, she submitted a Revised Business Plan to Showalter. Although Anderson was requested to “describe any tie-in arrangements with general contractors or subcontractors or other trade affiliations,” the submitted plan contained no reference to Lundin or Lundin Construction.

In April 1982, Kathy’s Kranes began to negotiate with the Army Corps of Engineers, which was in charge of the Winona project. At the negotiations, Larry Nurre, chief operations manager for Lundin Construction, was introduced as a representative of Kathy’s Kranes. Lundin hired Bob Park as general manager for Kathy’s Kranes. Although Nurre and Park both prepared the Winona project proposal, the proposal said that it had been prepared by someone working solely for Kathy’s Kranes.

In late April, Colonel John Atkinson began to question Kathy’s Kranes’ financial ability to do the project. Showalter attempted to reassure Atkinson, but Atkinson was unpersuaded. On May 3, 1982, Atkinson notified the SBA that he was withdrawing the project from Kathy’s Kranes, unless more financial assurances were provided.

On May 24, 1982, Lundin sent Atkinson the following letter:

This letter is to insure you that I will not in any manner be assuming the majority ownership or the control, or the management of Kathy’s Kranes & Construction Corporation.
I have agreed to and will invest $50,000 into Kathy’s Kranes and Construction Corporation, as capital cash insertion for stock representing 19 percent ownership of the firm. * * *
As a separate action, I have guaranteed re-payment of funds provided to Kathy’s Kranes Corp. for a $200,000 line of credit from the Northwestern National Bank of Mankato, Minnesota, particularly for the Corp[s] of Engineers project, Winona Reach E2. * * * My guarantee does not give me or my firm any ownership, management, or control interest’s [sic] in those rights, whatsoever. It is highly unlikely that I will ever have to provide funds, under this guarantee.
In summary my sole involvement with Kathy’s Krane[s] and Construction Corporation will be limited to that of a minority shareholder, specifically a shareholder having 19 percent ownership. [emphasis added]

After receiving this letter, Atkinson phoned Lundin and asked why Lundin was making the investment.

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Bluebook (online)
879 F.2d 369, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-anderson-ca8-1989.