United States v. Gregory W. Frazier, Cross-Appellee

53 F.3d 1105, 42 Fed. R. Serv. 96, 1995 U.S. App. LEXIS 9077

• Court: Court of Appeals for the Tenth Circuit
• Decided: April 20, 1995
• Docket: 94-4000, 94-4026
• Status: Published

Opinions

BALDOCK, Circuit Judge,

for the Court in Parts I, II, III, and V, with SEYMOUR, Chief Judge, and VAZQUEZ, District Judge, concurring. VAZQUEZ, District Judge, for the Court in Part IV, with SEYMOUR, Chief Judge, concurring, and BALDOCK, Circuit Judge, dissenting.

Defendant was charged in Counts I, III, IV, VI, VIII, IX, X, and XI of an eleven-count indictment. A jury found Defendant guilty of violating 18 U.S.C. §§ 666 and 1001, Counts I and III of the indictment, respectively. The district court dismissed Counts VII and IX of the indictment at trial and the jury acquitted Defendant of the remaining counts. The district court granted Defendant’s motion for judgment of acquittal on his 18 U.S.C. § 1001 conviction. Defendant appeals his conviction under 18 U.S.C. § 666 and the district court’s application of U.S.S.G. § 2Fl.l(b)(3)(A) to enhance his sentence. The government cross-appeals the district court’s grant of Defendant’s motion for judgment of acquittal. We have jurisdiction pursuant to 28 U.S.C. § 1291, 18 U.S.C. § 3742(a), and 18 U.S.C. § 3731.

Defendant was the president of the National Indian Business Counsel, a non-profit corporation doing business as United Tribe Service Center (“UTSC”). The UTSC existed to provide technical and social services for Alaskan natives and American Indians in the State of Utah. The United States Department of Labor (“DOL”), provided funding for the UTSC under the authority of the Job Training Partnership Act (“JTPA”), 29 U.S.C.A. §§ 1501-1781. JTPA and DOL regulations mandated that the funding be used solely for providing training to UTSC participants in job-search skills and techniques. In particular, one regulation required Defendant to secure DOL approval for any purchase of computer equipment over $500. ApltApp. at 250. Defendant certified he would spend the federal grant money as required by regulation.

Defendant was indicted for, inter alia, intentionally misapplying property valued at $5,000 or more and owned by or under the care, custody or control of the UTSC, 18 U.S.C. § 666 (Count I), and making false statements to a government agency, 18 U.S.C. § 1001 (Count III). At trial, the government introduced testimony and evidence to show Defendant falsely certified training had been provided at the UTSC using government funds. In fact, Defendant used the government funds to purchase computers. The record reflects Elizabeth David, who was the owner of the Computer Training Institute (“CTI”) in Utah, signed a contract in June 1988 specifying she would provide computer training to UTSC participants for $10,-000. Defendant then directed Ms. David to sign backdated invoices and cover letters showing CTI had provided the computer training and directed Betty Windy Boy, UTSC vice-president of services, to stamp the documents as received and file them in UTSC flies “for back up for the checks that were being submitted.” Aplt.App. at 441. Even though the computer training services were never provided, Defendant authorized a $10,000 check from the UTSC to Ms. David. With $8,206.64, Ms. David purchased computers and computer equipment and had the computers and equipment delivered to the UTSC. Ms. David kept for herself the remaining $1,798.36 balance.

The government also introduced an audit report prepared by Sorenson, May & Company (“Sorenson”) to bolster its case.¹ Soren-son has been under contract to perform regulatory compliance audits for the DOL for ten years and was twice directed by the DOL to audit the UTSC. After performing the second audit, Sorenson concluded in its audit report that the CTI had not provided computer training services for the UTSC and that the UTSC had in fact used government funds to purchase computers and computer equipment.

After hearing the evidence, the jury convicted Defendant of violating both 18 U.S.C. §§ 666 and 1001. Defendant filed a motion for judgment of acquittal on his conviction under § 1001. The district court granted Defendant’s motion for judgment of acquittal.

Prior to sentencing, a presentence report was prepared. The report indicated Defendant was eligible for a two-level sentence enhancement under U.S.S.G. § 2Fl.l(b)(3)(A) because he misrepresented he was acting on behalf of an educational agency during the commission of his offense. Defendant objected to the court’s use of § 2Fl.l(b)(3)(A) to enhance his sentence but the court overruled his objections. The court sentenced Defendant on Count I of the indictment to five years probation, with ten months home detention, and ordered him to pay $8,207 restitution and a fine of $7,500. This appeal followed.

On appeal, Defendant argues: (1) the district court erred in admitting the audit report; (2) the evidence was insufficient to support his conviction on Count I of the indictment; (3) Counts I and III of the indictment are multiplicious; and (4) the court incorrectly applied U.S.S.G. § 2Fl.l(b)(3)(A) to him at sentencing. In its cross-appeal, the government argues the court erred in granting defendant’s motion for judgment of acquittal on Count III of the indictment. We address Defendant’s contentions in order, then move to the government’s cross-appeal.

I.

Defendant first argues the district court erred in admitting Sorenson’s audit report because the report was hearsay.² We review the district court’s decision to admit evidence for abuse of discretion. United States v. McIntyre, 997 F.2d 687, 698 (10th Cir.1993), cert. denied, — U.S. -, 114 S.Ct. 736, 126 L.Ed.2d 699 (1994).

Both parties agree the audit report was hearsay. However, the government contends the report was nevertheless properly admitted as a “business record” under Fed. R.Evid. 803(6), which provides an exception to the hearsay rule for:

A memorandum, report, record, or data compilation, in any form, of acts, events, conditions, opinions, or diagnoses, made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make the memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness, unless the source of information or the method or circumstances of preparation indicate lack of trustworthiness.

We agree with the government’s position. We apply the requirements of Rule 803(6) to the facts of this case. See United States v. Cestnik, 36 F.3d 904, 907 (10th Cir.1994) (applying requirements of Rule 803(6) to Western Union “to-send-money” forms).

The record reflects the audit report was made in the course of Sorenson’s regular business activity and that it was the regular practice of Sorenson to create such a report. Sorenson had been under contract with the DOL for ten years to perform regulatory compliance audits and had twice audited the UTSC. As an accounting firm, Sorenson regularly prepared audit reports. Our review of the record convinces us the audit report qualifies in all respects as a business record.

Defendant contends however that the report is untrustworthy because it was prepared for purposes of litigation. Defendant explains that the DOL suspected Defendant of misappropriation of funds before it ordered Sorenson to audit the UTSC. The government responds the audit was not prepared for purposes of litigation but was instead a regulatory compliance audit, ordered by the DOL as part of its ongoing responsibility to assure its grantees complied with federal regulations. Based upon our review of the record, we cannot say the district court abused its discretion in admitting the report. Moreover, we are persuaded the report was trustworthy for three reasons. First, the report prepared by Sorenson had business significance apart from its use in the prosecution of Defendant because Soren-son was bound by contract to prepare the report and was interested in insuring the report was accurate. See United States v. McIntyre, 997 F.2d 687, 700 (10th Cir.1993) (“[i]n some cases, the interests of the business may be such that there exists a sufficient self-interest in the accuracy of the log that we can find its contents to be trustworthy”), cert. denied, — U.S.-, 114 S.Ct. 736, 126 L.Ed.2d 699 (1994). Second, Soren-son had ten years experience in preparing regulatory compliance audit reports for the DOL. Third, Sorenson was a neutral third party with nothing to gain from any possible litigation against Defendant. All three factors lend trustworthiness to the audit report. See 4 Christopher B. Mueller & Laird C. Kirkpatrick, Federal Evidence § 450, at 534-36 (2d ed. 1994) (listing as factors showing trustworthiness “extent to which the matter recorded is important to the business outside the context of litigation,” experience of preparer, and absence of motive on behalf of preparer). We conclude the court did not err in admitting the audit report.³

II.

Defendant next argues the evidence was insufficient to support his conviction on Count I of the indictment for violating 18 U.S.C. § 666. “We review the sufficiency of the evidence to determine if a reasonable juror could find beyond a reasonable doubt, from the evidence along with reasonable inferences, that ... [Defendant] was guilty.” United States v. Deninno, 29 F.3d 572, 576 (10th Cir.), amended, 1994 U.S.App. Lexis 25622 (Aug. 8, 1994). “We view the evidence in the light most favorable to the government.” Id.

Under 18 U.S.C. § 666, the government had to prove that Defendant: (1) was an agent of an organization, state, local, or Indian tribal government, or any agency thereof, (2) embezzled, stole, obtained by fraud, or otherwise without authority knowingly converted to the use of any person other than the rightful owner or intentionally misapplied property, (3) that is valued at $5,000 or more, and (4) that was owned by, or under the care, custody, or control of such organization, government, or agency. 18 U.S.C. § 666(a). Defendant contends the government did not prove elements two and three — i.e., intentional misapplication and property valued at $5,000 or more. We disagree on both elements.

First, we conclude the government introduced sufficient evidence to prove Defendant intentionally misapplied UTSC property. Elizabeth David testified that Defendant knew no computer training services had been provided and yet directed her to sign backdated invoices and cover letters certifying the training was provided. Betty Windy Boy testified Defendant knew no computer training had been provided and yet directed her to stamp the invoices as received and backdate them “for back up for the checks that were being submitted.” Ms. David further testified she received a $10,000 check signed by Defendant for the training and stated Defendant told her to purchase computers with the money. Aplt.App. at 357-58. Based on all of this evidence, a reasonable juror could have concluded Defendant intentionally misapplied property owned by or under the care, custody or control of the UTSC.

Second, we conclude the government introduced sufficient evidence to prove the misapplied property was valued at $5,000 or more. Ms. David and Ms. Windy Boy testified that Defendant prepared and certified on invoices that Ms. David provided $10,000 in computer training services for the UTSC. Although Defendant certified $10,000 in federal grant money would be used for computer training services, Defendant instead directed $8,206.64 of the funds be used to purchase computers and computer equipment and $1,793.36 be given to Ms. David for her personal use. Based on this evidence, a reasonable juror could have concluded Defendant misapplied the entire amount of UTSC property — i.e., $10,000 — which is double the amount the government was required to prove under § 666.

III.

Defendant next argues that Counts I and III of the indictment are multiplicious.⁴ “ ‘Multiplicity refers to multiple counts of an indictment which cover the same criminal behavior.’ ” United States v. Meuli, 8 F.3d 1481, 1485 (10th Cir.1993) (quoting United States v. Dashney, 937 F.2d 532, 540 n. 7 (10th Cir.), cert. denied, 502 U.S. 951, 112 S.Ct. 402, 116 L.Ed.2d 351 (1991)), cert. denied, — U.S. -, 114 S.Ct. 1403, 128 L.Ed.2d 76 (1994). “The same act or transaction may constitute separate offenses if each offense requires some fact not required to establish the other.” Id. Whether an indictment is multiplicious is a question of law which we review de novo. United States v. Fleming, 19 F.3d 1325, 1330 (10th Cir. 1994), cert. denied, — U.S.-, 115 S.Ct. 93, 130 L.Ed.2d 44 (1994).

Count I of the indictment charged Defendant with a violation of 18 U.S.C. § 666. Count III of the indictment charged Defendant with a violation of 18 U.S.C. § 1001. Defendant cites us to no case holding 18 U.S.C. §§ 666 and 1001 are multiplicious and we have found none in our research. After reading and comparing the two statutes, it is apparent to us 18 U.S.C. § 666 requires proof of several facts not required to establish a violation of 18 U.S.C. § 1001. We conclude Counts I and III of the indictment are not multiplicious. See Meuli, 8 F.3d at 1486.

IV.

1 . The court admitted the report over Defendant's objections.

2 . At trial Defendant objected to the audit on the basis that it was hearsay, cumulative and not proper expert opinion. On appeal Defendant argues only that the document was hearsay.

3 . Because we conclude the audit report was properly admitted under the business records exception, we need not decide whether the report would also be admissible as a public record under Fed.R.Evid. 803(8).

4 . We address this issue because in Part V of this opinion we reverse the court's grant of Defendant’s motion for judgment of acquittal on his conviction under § 1001.