United States v. Zwick ( 1999 )

Opinions of the United
1999 Decisions States Court of Appeals
for the Third Circuit
12-15-1999
United States v. Zwick
Precedential or Non-Precedential:
Docket 98-3641
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Filed December 15, 1999
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 98-3641
UNITED STATES OF AMERICA
v.
JAMES J. ZWICK,
Appellant
On Appeal from the United States District Court
for the Western District of Pennsylvania
(Criminal Action No. 97-cr-00182-1)
(District Judge: The Honorable William L. Standish)
Argued: July 15, 1999
Before: ROTH, RENDELL, Circuit Judges, and
POLLAK,* District Judge
(Filed December 15, 1999)
SHELLEY STARK, Esquire
[ARGUED]
Office of Federal Public Defender
960 Penn Avenue
415 Convention Tower
Pittsburgh, PA 15222
Counsel for Appellant
_________________________________________________________________
* Hon. Louis H. Pollak, Senior Judge of the United States District Court
for the Eastern District of Pennsylvania, sitting by designation.
ROBERT S. CESSAR, ESQUIRE
[ARGUED]
Office of U.S. Attorney
633 U.S. Post Office & Courthouse
Pittsburgh, PA 15219
Counsel for Appellee
OPINION OF THE COURT
RENDELL, Circuit Judge.
In this appeal, we are asked to construe 18 U.S.C.S 666,
a criminal provision entitled "Theft or bribery concerning
programs receiving Federal funds" ("the Act" or "the
statute"). Appellant James J. Zwick claims that the District
Court misinterpreted the statute when it upheld his three-
count conviction for bribery under S 666(a)(1)(B) without
proof of a connection between the offense conduct and
federal funds or programming. We conclude that the
District Court erred in interpreting the statute in this
respect and will therefore remand for further proceedings
consistent with this opinion. Zwick also challenges the
District Court's failure to reduce his offense level by an
additional point for acceptance of responsibility pursuant to
U.S.S.G. S 3E1.1(b). Because we find that the District Court
erred in its application of this Guideline provision, we will
vacate this aspect of the sentencing order and direct the
District Court on remand to award the additional one-point
reduction if it determines that Zwick timely provided
complete information to the government or timely notified
the government of his intent to plead guilty to enable the
government and court to conserve their resources.1
I.
Appellant James J. Zwick was an elected member of the
Ross Township Board of Commissioners, the governing
body of Ross Township, Pennsylvania. Zwick and his fellow
_________________________________________________________________
1. We reject Zwick's remaining challenges to the application of the
statute to his particular situation, as we discuss more fully below.
2
commissioners made policy decisions for the Township,
including fixing salary levels, executing contracts,
authorizing bids, and adopting budgets. In November of
1997, the government accused Zwick of abusing his
position to obtain illegal benefits and filed afive-count
indictment charging him with three counts of theft or
bribery concerning federal programs under 18 U.S.C.S 666,
one count of mail fraud under 18 U.S.C. SS 2 & 1341, and
one count of bank fraud under 18 U.S.C. SS 2 & 1344. The
District Court had jurisdiction over Zwick's case pursuant
to 18 U.S.C. S 3231.
Initial efforts at negotiating a guilty plea failed when the
government declined to accept a conditional plea, which
would have preserved Zwick's legal challenge to the
application of S 666 when there is no connection between a
defendant's conduct and federal funds or programming.
After declining to accept the plea, the governmentfiled a
superseding indictment, which contained all of the charges
in the original indictment, and added another count of theft
or bribery under S 666, another count of bank fraud, and
three more counts of mail fraud. Again, Zwick was willing
to plead guilty to the bank fraud and mail fraud counts,
but continued to seek a conditional guilty plea on the S 666
counts. During a status conference on January 27, 1998,
Zwick informed the District Court of his intention to plead
guilty to the fraud counts, and the District Court scheduled
the plea hearing for February 2, 1998. Further plea
negotiations were derailed, however, when articles appeared
in the Pittsburgh Post Gazette and North Hills News Record
on January 28, 1998 and January 29, 1998, declaring that
Zwick would plead guilty to the fraud charges. Zwickfiled
a motion with the District Court to dismiss the indictment
based on prosecutorial misconduct, alleging that, by
providing information for the articles, the government had
violated its obligation to refrain from making extrajudicial
statements regarding the possibility of a guilty plea. The
District Court denied Zwick's motion. Zwick ultimately
entered a guilty plea to the fraud counts on March 9, 1998.
The case against Zwick on the S 666 charges proceeded
to trial on March 10, 1998, after a brief continuance so that
Zwick could enter treatment for his gambling addiction.
3
Although Zwick waived his right to a jury trial and
requested a bench trial, the government opposed this
request, so the case was tried to a jury. Zwick was
convicted on counts one, two, and three of the four S 666
charges.
Because Zwick makes several challenges to the
sufficiency of the evidence to support his conviction under
S 666, we will review the relevant facts adduced at trial
regarding the alleged bribes. In count one, the government
alleged that Zwick solicited a bribe from Christopher Kaclik,
the owner and developer of the Shannopin Square II office
building located in Ohio Township. Kaclik first became
associated with Zwick in 1994, when he applied for sewer
access for the predecessor to Shannopin Square II,
Shannopin Square I. At that time, Kaclik testified that
Zwick told him "anything you need to get done in the
Township of Ross, I can help you out." In May or June of
1996, during the building of Shannopin Square II, Zwick
met with Kaclik at the development site and offered to
secure the necessary votes for approval of the sewer taps in
exchange for a donation to the "Men's Summer League for
Ross Township," a basketball league run by Zwick. Kaclik
wrote a check for $5,000, made out to "James Zwick," with
a notation reading "Men's Summer League 1996
Basketball." At Zwick's suggestion, Kaclik also provided
Zwick with a blank check for $7,500, which Zwick falsely
represented he would put toward the $17,500 required to
reserve the sewer taps. When Kaclik discovered that Zwick
had personally endorsed and cashed the checks, he asked
that Zwick return the money. After repeated phone calls to
Zwick, Kaclik received $2,500 from Zwick.
Count two involved Zwick's dealings with the Fosnights,
who had obtained an option on property in Zwick's ward in
Ross Township to build and operate an assisted living
facility there. To complete their project, the Fosnights were
required to obtain approval from the Ross Township Board
of Commissioners for various permits, including a
conditional use permit and site plan approval. On
September 9, 1996, after the Township Planning
Commission had already recommended approval of the
conditional use permit, the Board of Commissioners voted
4
to table the permit for further investigation. After that
meeting, Zwick contacted Tim Fosnight and set up a
meeting with him and his brother Aaron at the project site.
Zwick offered to help them obtain the required permits in
exchange for a $15,000 donation to construct a playground
on the grounds of his "pet" project, North Hills Affordable
Housing ("NHAH"). Zwick explained that he could require
the Fosnights to pay for a new traffic light and traffic
studies, which could involve significant costs of up to
$100,000 and lead to considerable delay, but he would not
do so if such a "donation" was made.
The Fosnights made four payments to Zwick totaling
$10,500. Zwick directed them to make out the first two
checks to "CSC"2 and "Cash" totaling $4,500. Zwick cashed
both, and the funds were never received by NHAH. The next
two checks, totaling $6,000, were made out to NHAH.
Nonetheless, upon receipt of the funds, Judith Eakin,
Director of NHAH, wrote Zwick two checks for $6,000 as
payment for the telephone system Zwick was installing for
NHAH, the project Zwick told the Fosnights their
contribution would fund. Two months later, Zwick informed
Eakin that more money was needed to purchase equipment
that would complete the telephone system. When Eakin
told Zwick that NHAH had no additional funds available for
the telephone system, as no additional funds were in hand,
Zwick assured Eakin that a further donation would be
forthcoming from the Fosnights, and that, if the anticipated
donation were not to be received in timely fashion, Zwick
would personally guarantee the sum in question. In
reliance on Zwick's personal guarantee, Eakin was
authorized by her board president to advance Zwick the
money required to purchase the equipment. Accordingly, in
the ensuing two weeks, Eakin issued Zwick two checks
totaling $7,440 made out to "Jim Zwick" as payment for the
phone system. Shortly thereafter, Eakin agreed to issue
Zwick two "replacement" checks for $7,740 when Zwick
informed her that his accountant said the earlier checks
should have been issued to his company, Jim Zwick
Communications Systems, and not to him personally.
Although Zwick provided Eakin with a check for $7,740 to
_________________________________________________________________
2. CSC is an abbreviation for the name of Zwick's company. App. 427.
5
replace the check issued to him personally, when NHAH
attempted to cash it, it was returned from the bank due to
an irregular signature. NHAH never received these funds.
Zwick provided the Fosnights with a traffic study from
his office so they would not have to finance their own, and
the Fosnights did not make a contribution to the costs of
constructing a traffic light. Zwick voted for the approval of
the Fosnights' conditional use permit. He also moved to
approve the Fosnights' final site permit but abstained from
voting on it, explaining that he might put a bid on the
telephone work for the project and did not want to create
the appearance of a conflict of interest.
Count three charged that Zwick had solicited bribes from
Justin Ruff, the owner of Admiral Lawn Service, when he
asked Ruff for "performance bonds" in exchange for
ensuring that Ruff was awarded landscaping contracts with
Ross Township. Although bonds were required for contracts
over $10,000, Ross Township commissioners were not
authorized to solicit or accept them, and certainly not
entitled to cash them. Performance bonds were supposed to
be kept in escrow and returned once the project was
complete. In the summer of 1996, Ruff gave Zwick two
blank checks for $3,500 in connection with a landscaping
contract in Denny Park, Ross Township. Although Ruff was
awarded the contract and performed the work, his checks
were never returned to him; Zwick had cashed them and
kept the proceeds. Zwick eventually repaid Ruff after Ruff
repeatedly asked him to do so. Zwick continued to solicit
bribes from Ruff in connection with various projects,
including $4,500 for a $45,000 project that included
cutting grass and dragging ball fields in Ross Township.
Ruff repeatedly refused to pay Zwick after becoming aware
that Zwick's requests violated Ross Township's policy
regarding performance bonds.
After he was convicted on the three counts, Zwick filed a
motion for judgment of acquittal pursuant to Federal Rule
of Criminal Procedure 29. The District Court denied the
motion on October 5, 1998. The Probation Office prepared
a Presentence Investigation Report recommending that
Zwick be awarded a two-point reduction for acceptance of
responsibility pursuant to U.S.S.G. S 3E1.1(a). However, the
6
Probation Office Report did not recommend awarding the
extra one-point reduction available under S 3E1.1(b)
because the government had to prepare for trial on the
bribery counts. The District Court found that the Probation
Office's conclusion was a reasonable one "[b]ased on the
unusual circumstances and procedural posture of this
case." The District Court also considered that Zwick raised
factual issues at trial, rather than limiting himself to legal
arguments. The District Court sentenced Zwick to
concurrent terms of thirty-three months as to each count,
to be followed by five years of supervised release. Zwick
filed the instant appeal. We have jurisdiction pursuant to
28 U.S.C. S 1291.
II.
Zwick contends that the evidence as to all three counts
of his S 666 conviction is insufficient because the
government failed to prove the existence of any connection
between his conduct and federal funds or programming.
Specifically, he argues that S 666 requires such a
connection, or, alternatively, that the statute is
unconstitutional as applied to him. We exercise plenary
review over questions of statutory interpretation. See United
States v. Hayden, 64 F.3d 126, 128 (3d Cir. 1995).
The federal bribery statute at issue, 18 U.S.C.S 666,
provides in pertinent part:
S 666. Theft or bribery concerning progr ams
receiving Federal funds
(a) Whoever, if the circumstance described in
subsection (b) of this section exists --
(1) being an agent of an organization, or of a Sta te,
local, or Indian tribal government, or any agency
thereof --
. . . .
(B) corruptly solicits or demands for the benefit of
any person, or accepts or agrees to accept,
anything of value from any person, intending to be
influenced or rewarded in connection with any
7
business, transaction, or series of transactions of
such organization, government, or agency involving
anything of value of $5,000 or more;
. . . .
shall be fined under this title, imprisoned not more
than 10 years, or both.
(b) The circumstance referred to in subsection (a) of
this section is that the organization, government, or
agency receives, in any one year period, benefits in
excess of $10,000 under a Federal program involving a
grant, contract, subsidy, loan, guarantee, insurance, or
other form of Federal assistance.
Prior to the enactment of S 666 in 1984, the limited scope
of the federal bribery statute and general theft of property
statute hampered the federal government's efforts to reach
crimes affecting federal interests due to tracing
requirements and limitations on application to non-federal
employees. See 18 U.S.C. SS 201, 641. By its terms, S 666
fills these particular voids; it imposes no title or tracing
requirements and covers non-federal employees. The
government only must prove the basic elements of the S 666
offense. However, as Zwick's challenge reveals, the law is
unsettled as to what S 666 requires. In Salinas v. United
States, 522 U.S. 52, 118 S. Ct. 469, 475 (1997), the
Supreme Court resolved one significant issue, namely, that
the government need not show federal funds actually were
involved in or affected by an alleged bribery transaction.
Yet, the Court specifically left open the question before us,
that is, to what extent the statute "requires some other
kind of connection between a bribe and the expenditure of
federal funds." Id. at 474. We had prior occasion in this
Circuit to examine the scope of S 666, see United States v.
Cicco, 938 F.2d 441, 444 (3d Cir. 1991), but we have not
addressed the specific question before us in this case. It is
instructive to review the approaches taken by federal courts
that have considered the extent to which S 666 requires a
relationship between the offense conduct and federal funds
or programs.
8
A. Pre-Salinas
Prior to Salinas, courts evaluated the requisite
relationship under S 666 between a corrupt act and federal
funds or programming from a number of different
perspectives. Several courts viewed the statute's"plain
language" as lacking any requirement, either implicitly or
as an element of the offense, that the government prove
federal money was directly involved in, or traceable in some
way to, the corrupt transaction. Bolstering their view was
the rationale that Congress sought to "cast a broad net" in
protecting the integrity of agencies receiving federal funds
and thus enacted S 666 with the specific intent to eliminate
any tracing requirements that previously had obstructed
prosecution efforts. See United States v. Westmoreland, 841
F.2d 572, 576-578 (5th Cir. 1988) (holding that direct
involvement of federal funds in transaction is not an
essential element of bribery charge under S 666); see also
United States v. Pretty, 98 F.3d 1213, 1218-1219 (10th Cir.
1996) (finding that the defendant was chargeable under
S 666 even if actual money could not be traced to a federal
program); United States v. Paradies, 98 F.3d 1266, 1288-89
(11th Cir. 1996) (agreeing with Westmoreland that S 666
does not require that the government trace the flow of
federal funds to a particular project); United States v.
Valentine, 63 F.3d 459, 464-65 (6th Cir. 1995) (holding that
government does not need to prove that the
misappropriated funds actually came from a federal
program in a theft case); United States v. Simas, 937 F.2d
459, 463 (9th Cir. 1991) (concluding that the government
was not required to trace federal funds to the project at
issue to establish a S 666 violation).
Interpreting a different subsection of S 666, others held
that the program touched by bribery need not be the direct
and actual recipient of $10,000 per year in federal funds.
See United States v. Coyne, 4 F.3d 100, 109-110 (2d Cir.
1993) (finding that S 666 lacks any requirement that the
program at issue be the actual recipient of federal funds);
United States v. Little, 889 F.2d 1367, 1369 (5th Cir. 1989)
(same).
When asked to uphold convictions or find defendants
guilty with no proof of a federal interest in the corrupt act,
9
however, some courts were reluctant to do so. See United
States v. Foley, 73 F.3d 484, 488-493 (2d Cir. 1996)
(reversing Foley's conviction after government did not prove
that corruption in some way touched on federal funds);
United States v. Frega, 933 F. Supp. 1536, 1540-1541 (S.D.
Cal. 1996) (dismissing indictment for failure to allege that
"federal funds were corruptly administered, were in danger
of being corruptly administered, or even could have been
corruptly administered."). Courts in this camp expressed
concern that interpreting S 666 to have no federal interest
requirement would make a federal offense out of routine
local bribery, dramatically changing the state-federal
balance without an express Congressional directive that it
intended to do so. See Frega, 933 F. Supp. at 1540.
Courts finding that a federal connection is required were
comfortable reaching this result even though they agreed
that S 666 does not require tracing of funds or proof of an
effect on federal funds and programs. For example, the
Ninth Circuit's holding in Simas, that tracing is not
required, did not prevent the District Court for the
Southern District of California from concluding in Frega
that S 666 requires a federal connection. Likewise, the
Court of Appeals for the Second Circuit held thatS 666
does not require that the corrupt act actually affected
federal funds in United States v. Bonito, 57 F.3d 167, 172-
173 (2d Cir. 1995), but concluded in a subsequent case
that S 666 does require proof that the corruption has some
connection with federal funds. See Foley, 73 F.3d at 493. A
circuit split was created between the Second and Fifth
Circuits when the Fifth Circuit held that a defendant's
conduct fell within S 666 without specifically requiring a
connection between the corrupt act and the federal funds,
other than the fact that the accepters of the bribes were
local government agents with duties relating to a federally-
funded program. See United States v. Marmolejo, 89 F.3d
1185, 1203 (5th Cir. 1996), aff'd, Salinas v. United States,
118 S. Ct. at 474.3 Neither Foley nor Marmolejo was a
_________________________________________________________________
3. Marmolejo and Foley also parted ways regarding how to determine
whether the transactions at issue are equal to or greater than $5,000 in
value.
10
unanimous decision.4
B. Salinas
On certiorari from the Fifth Circuit's Marmolejo decision,
the Supreme Court did not resolve the broad question
before us of whether defendants can be prosecuted under
S 666 absent a federal interest in the offense conduct, but
instead addressed the narrower question of whether S 666
applies only when the bribe has a demonstrated effect on
federal funds. Salinas, 118 S. Ct. at 472. 5 The Court found
that the statute's "expansive, unqualified language, both as
to the bribes forbidden and the entities covered, does not
support the interpretation that federal funds must be
affected to violate S 666(a)(1)(B)." Id. at 473. The Court
acknowledged that it could depart from a statute's clear
language upon an extraordinary showing of contrary
intentions in the legislative history. See United States v.
Albertini, 472 U.S. 675, 680 (1985). However, because the
statute was enacted to expand the application of federal
bribery provisions to non-federal employees, the Court
found that it would be "incongruous" to restrict S 666 so
_________________________________________________________________
4. In the Foley dissent, Judge Lumbard argued, in essence, that there is
no federal connection requirement. Foley 73 F.3d at 494-497 (Lumbard,
J., dissenting). Rather, the plain language of S 666 simply outlaws bribes
to agents of organizations that receive federal funds: "It is sufficient
that
Foley was an agent of a government that received $10,000 in federal
funds and that he took a bribe involving something worth at least
$5,000." Id. at 495. Taking the opposite view in the Marmolejo dissent,
Judge Jolly endorsed the Second Circuit majority's reasoning in Foley;
he argued that the Marmolejo majority misinterpreted its earlier decision
in Westmoreland, on which it relied, and that S 666 was not intended to
criminalize all acts of bribery involving entities that happened to
receive
some federal funding. Marmolejo, 89 F.3d at 1201-1204 (Jolly, J.,
dissenting).
5. Salinas, a deputy sheriff for Hidalgo County, Texas, was convicted
under S 666 for accepting benefits from a federal prisoner in his custody
in exchange for allowing the prisoner to have "contact visits" with his
wife and girlfriend. See Marmolejo, 89 F.3d at 1191. Hidalgo County had
an agreement with the federal government to house federal prisoners in
exchange for grants for improving its prison as well as payment per day
for each federal prisoner housed. Id.
11
that it applies only when a demonstrated effect on federal
funds is shown. Salinas, 118 S. Ct. at 473. Significantly,
the Court found only that the "text of S 666(a)(1)(B) is
unambiguous on the point under consideration here." Id. at
475 [emphasis added]. The Court did not reach a holding
on whether another kind of federal connection was required
under S 666, believing that the facts of Salinas' case
presented a sufficient connection:
We need not consider whether the statute requires
some other kind of connection between a bribe and the
expenditure of federal funds, for in this case the bribe
was related to the housing of a prisoner in facilities
paid for in significant part by federal funds themselves.
And that relationship is close enough to satisfy
whatever connection the statute might require.
Id. at 474. The Court accordingly rejected a challenge to the
constitutionality of the provision, at least as applied to
Salinas:
Furthermore, there is no serious doubt about the
constitutionality of S 666(a)(1)(B) as applied to the facts
of this case. Beltran was without question a prisoner
held in a jail managed pursuant to a series of
agreements with the Federal Government. The
preferential treatment accorded to him was a threat to
the integrity and proper operation of the federal
program. Whatever might be said about S 666(a)(1)(B)'s
application in other cases, the application of
S 666(a)(1)(B) to Salinas did not extend federal power
beyond its proper bounds.
Id. at 475.
C. Post-Salinas
Courts clearly have recognized that Salinas left open the
question of whether S 666 requires that a federal interest be
implicated by the offense conduct. See United States v.
Dakota, 188 F.3d 663 (6th Cir. 1999) (finding that in
Salinas, "the nature of any necessary connection is left
unanswered"); United States v. Santopietro, 166 F.3d 88, 93
(2d Cir. 1999) (finding that the Supreme Court "was careful
12
to note that the statute survived the constitutional as-
applied challenge because the benefit obtained by means of
the bribe -- the preferential treatment -- ``was a threat to
the integrity and proper operation of the federal
program.' "). Therefore, Salinas has not prevented courts
from reaching conflicting conclusions on whether S 666
requires proof of a federal interest in the offense conduct.
The Sixth Circuit held post-Salinas that S 666 does not
require proof of a connection between the offense conduct
and federal funds or programming. See Dakota, 188 F.3d at
668 (finding no connection requirement based on its
determination in its pre-Salinas decision in Valentine, a
theft case, and providing no additional case cites or
reasoning). Taking the opposite view, the Second Circuit
held that its holding in Foley -- that some federal
connection was required -- remained good law post-
Salinas. See Santopietro, 166 F.2d at 93. The District Court
of Massachusetts determined post-Salinas that S 666 was
unconstitutional as applied to the defendant in that case,
reasoning that the conduct at issue was not related to a
legitimate national problem as required by South Dakota v.
Dole, 483 U.S. 203, 207-08 (1987) and thus Congress
exceeded its bounds under the spending clause. See United
States v. McCormack, 31 F. Supp. 2d 176 (D. Mass. 1998).6
_________________________________________________________________
6. Judge Gertner comprehensively evaluated whether "S 666 give[s]
federal authorities a blank check to prosecute ostensibly significant acts
of corruption involving the Malden Police Department just because the
department receives a certain level of federal funds." Id. at 181. While
expressing the view that the relevant language inS 666(a)(1)(B), "in
connection with any business or transaction," is ambiguous and requires
an examination of legislative history, id. at 186 (citing Foley, 73 F.3d
at
490 - 492 and Frega, 933 F. Supp. at 1543), Judge Gertner concluded
that Salinas foreclosed her from so ruling based on Salinas' holding that
S 666(a)(1)(B) is clear and unambiguous. McCormack, 31 F. Supp.2d at
186. Yet, the Court acknowledged that Salinas expressly left open the
possibility that S 666(a)(1)(B) is unconstitutional as applied to cases
that
lack some connection between the corrupt activity and federal funds or
programming. The Court also found McCormack's prosecution under
S 666 deficient in another respect relating to the "$5,000 value"
requirement. Id. at 189.
13
III.
Zwick asks us to add our voice to the chorus of opinions
regarding the need to prove that a federal interest was
implicated by corrupt acts in a S 666 prosecution. To reach
our own determination of whether S 666 requires such
proof, we begin by examining the statutory language itself.
See Collinsgru v. Palmyra Bd. of Educ., 161 F.3d 225, 233
(3d Cir. 1998) (evaluating the Individuals with Disabilities
Education Act) (citing United States v. Ron Pair Enters., Inc.,
489 U.S. 235 (1989)).
Section 666(a)(1)(B) requires proof that a bribe was given
"in connection with" any business or transaction of an
agency described in subsection (b), namely those receiving
funds under certain federal assistance programs. The
language does not state explicitly that the government must
show a connection between the bribe and federal interests.
Yet, the title of S 666, "Theft or bribery concerning
programs receiving Federal funds," implies that a federal
connection is anticipated, as does the statute's reference
only to "agents" of entities receiving federal funds who
accept bribes "in connection with" the business of the
organization receiving federal funds.
The wording of this statute is far from straightforward in
many respects. Our reading of the statute, and the struggle
of other courts to construe its meaning, lead us to conclude
that S 666 can hardly be described as "plain to anyone
reading the Act." Gregory v. Ashcroft, 501 U.S. 452, 467
(1991) (interpreting Federal Age Discrimination in
Employment Act).7 The only thing plain about the statute is
that it yields two plausible alternative interpretations on
the issue raised by Zwick. While noting that the fact
_________________________________________________________________
7. We find that nothing in Salinas prevents us from determining that
S 666(a)(1)(B) is ambiguous on the issue of whether there is a federal
connection requirement, thus we disagree with the determination on this
point reached by the District Court in McCormack. See McCormack, 31
F. Supp.2d at 186 (finding that "Salinas has shut off this avenue of
analysis."). Salinas found S 666(a)(1)(B) clear and unambiguous only on
the question of whether the government must prove that the corrupt
activity had a demonstrated effect on federal funds or programming.
Salinas, 118 S. Ct. at 475.
14
pattern in Salinas satisfied any federal connection test that
S 666 might require, the Supreme Court pointedly skirted
the issue of whether the statute clearly mandated such a
connection, suggesting that the possibility of more than one
interpretation is valid. The most literal interpretation --
that the statute lacks a federal connection requirement --
is troubling from an interpretative standpoint in that it
broadens the range of activity criminalized by the statute
and alters the existing balance of federal and state powers
by encompassing acts already addressed under state law in
which the federal government may have little interest. We
cannot embrace such a broad reading of this federal
criminal law unless that is the clear directive from
Congress. Given the statute's ambiguity on this question,
we will consult the legislative history. See Director, Office of
Workers' Compensation Programs v. Sun Ship, Inc., 150
F.3d 288, 291 (3d Cir. 1998); Collinsgru, 161 F.3d at 233.
Before proceeding further, it is worth reviewing our prior
analysis of S 666, albeit on a different issue, in United
States v. Cicco, 938 F.2d at 444. In Cicco , we considered
whether S 666 is sufficiently broad to cover the solicitation
of election day services in exchange for municipal
employment.8 On appeal, we recognized that the statutory
language could be construed literally to cover Cicco's
conduct, but found that "the language of the drafters of
S 666 is also consistent with an intention of focusing solely
on offenses involving theft or bribery" in a classic sense.
Cicco, 938 F.2d at 444. Thus, we found that the statute
was ambiguous and turned to the legislative history. Id.9
_________________________________________________________________
8. The District Court entered a judgment of acquittal in Cicco after
determining that Congress did not intend S 666 to apply to Cicco's
actions and that the government's interpretation of the statute was
unconstitutionally vague and deprived Cicco of fair notice. Id. at 444.
9. In outlining our approach in Cicco, we stated that examining the reach
of a federal criminal statute requires close attention to statutory
language, legislative history, and purpose to strictly determine the scope
of forbidden conduct. Id. (citing Dowling v. United States, 473 U.S. 207,
213 (1985)). We learned through our legislative history review in Cicco
that Congress enacted S 666 to "protect federal funds by authorizing
federal prosecution of thefts and embezzlement from programs receiving
substantial federal support even if the property no longer belonged to the
federal government . . . [and] to enlarge and clarify the class of persons
subject to the federal bribery laws" to go beyond only those who can be
considered federal public officials. Cicco, 938 F.2d at 445 (citations
omitted).
15
As in Cicco, we now face a choice between a highly literal
interpretation -- that no federal interest requirement is
specifically set forth in the statute -- and a plausible, albeit
more contextual, alternative. Thus, as in Cicco, we will refer
to the legislative history for assistance in determining what
Congress intended. See Collinsgru, 161 F.3d at 233.10
The legislative history of S 666 explains that the statute
was enacted to correct deficiencies in existing law by
"creat[ing] new offenses to augment the ability of the United
States to vindicate significant acts of theft, fraud, and
bribery involving Federal monies that are disbursed to
private organizations or State and local governments
pursuant to a Federal program." S. REP. NO. 98-225, 369-
370 (1984) (emphasis added), reprinted in 1984
_________________________________________________________________
10. Examination of and references to the legislative history are not
uncommon among the decisions that analyze S 666. The Supreme Court
in Salinas referred to Congress' intentions in enacting S 666, although it
did not review or cite Congressional reports directly. See Salinas, 118 S.
Ct. at 474 (recounting Congress's intent in enactingS 666 based on a
"chronology [of case law] and the statutory language" and rejecting
Salinas' interpretation of the legislative history). See also Bonito, 57
F.3d
at 172 (citing legislative history noted by Bonito and ultimately
rejecting
Bonito's arguments); Valentine, 63 F.3d at 463 (reviewing legislative
history to determine whether it supported Valentine's argument);
Westmoreland, 841 F.2d at 576-577 (reviewing legislative history " ``as an
additional tool of analysis' with the recognition that our inquiry will
result in ``a limitation on the plain meaning of the statutory language'
only under exceptional circumstances") (quoting Garcia v. United States,
469 U.S. 70, 75 (1984)); Frega, 933 F. Supp. at 1542-1543 (reviewing
legislative history after finding statute ambiguous because interpretation
not requiring federal connection would alter federal-state balance absent
a clear Congressional directive). Courts interpreting subsection (b) have
followed a similar course. See United States v. LaHue, 170 F.3d 1026,
1030 (10th Cir. 1999) ("Like other courts that have wrestled with an
interpretation of section 666(b), we look to the legislative history and
the
underlying purpose of the statute for guidance"); United States v.
Copeland, 143 F.3d 1439, 1442 (11th Cir. 1998) (having reached the
conclusion on a "plain reading of S 666(b), we normally would not engage
in any additional analysis. However, since some circuits have found
S 666(b) to be ambiguous on its face, it is worth noting that our
conclusion is consistent with the statute's legislative history."); Coyne,
4
F.3d at 109 (reviewing legislative history regarding whether program at
issue must be actual recipient of federal funds).
16
U.S.C.C.A.N. 3182, 3510-11. A similar expectation is
reflected in the stated purpose of the statute, described as
protecting the integrity of vast sums of money distributed
through Federal programs from theft, fraud, and undue
influence by bribery. Indeed, the title of the relevant section
of this portion of the legislative history, "Program Fraud
and Bribery," suggests that Congress envisioned that a
federally funded program would be the target or victim of
the corrupt activity punishable under S 666.
There is no doubt that the legislative history promotes a
broad interpretation of the term "Federal program involving
a grant, a contract, a subsidy, a loan, a guarantee,
insurance, or another form of Federal assistance" to
supplement the application of federal bribery and theft
statutes. S. REP. NO. 98-225, 369-370. However, those gaps
to be filled by this statute relate to elements in the federal
bribery and theft statutes that increased the difficulty of
reaching crimes in which there was a real federal interest.
Under the theft of federal property statute, 18 U.S.C. S 641,
the federal government could prosecute only when it could
establish that the stolen property was property of the
United States, which often was impossible if title had
passed before the property was stolen or when federal
funds were so commingled with non-federal funds that the
federal character of those funds could not be shown.
Perhaps more relevant for our purposes was the federal
bribery statute, 18 U.S.C. S 201, which was construed to be
inapplicable to some or all employees of private
organizations receiving federal funds, making it more
difficult for federal authorities to prosecute bribery even
when federal interests were at stake. The goal was to
overcome impediments to reaching actions in which there
was a federal interest, not to federalize crimes in which a
federal interest was lacking.
Not surprisingly, the Senate Report notes that the intent
of the statute is "to reach thefts and bribery in situations
of the types involved in the Del Toro, Hinton, and Mosley
cases cited herein," three cases in which the corrupt
transaction clearly implicated federal interests. S. REP. No.
98-225, 369-370. In United States v. Del Toro, 513 F.2d 656(2d Cir. 1975), the defendants conspired to bribe Pedro
17
Morales, the Assistant Administrator of the Harlem-East
Harlem Model Cities Program, a program that wasfinanced
and supervised by the United States Department of
Housing and Urban Development ("HUD"). The federal
government paid one hundred percent of the cost of the
program, and eighty percent of its salaries, including
Morales's salary. Id. at 658, 661. The defendants wanted
Morales to use his position with the program to secure
Model Cities an office space lease in a building for which
one of the defendants was the rental agent. Id. at 658.
Because Morales was a city employee, and not a federal
one, however, the Second Circuit Court of Appeals
concluded that Morales was not a "public official" for
purposes of S 201: "We do not believe that Morales was
acting ``under or by authority of any such department,
agency, or branch' of the federal government. He was a city
employee, carrying out a task delegated to him by his
superior, another city employee." Id. at 662. Yet, the federal
interest in Morales' corrupt transaction is apparent: the
bribed official administered a program significantly funded
by federal monies and the bribe was related to the program
administered by the official.
In the other two decisions cited in the Senate Report, the
Seventh Circuit determined that non-federal employees
could be considered "public officials" for purposes of S 201,
but this decision turned on the fact that the defendants
exercised considerable discretion in the administration of
federal funds and the bribery related to the defendant's
administration of the program, which for our purpose
suggests that a federal interest clearly was implicated. See
United States v. Hinton, 683 F.2d 195, 198-200 (7th Cir.
1982); United States v. Mosley, 659 F.2d 812, 816 (7th Cir.
1981). In Hinton, the defendants were officials of United
Neighborhoods, Inc., a non-profit corporation that had
entered into a contract with the City of Peoria to administer
funds that HUD awarded to Peoria. The defendants had
discretion in administering the federal funds, and the
federal funds paid the defendants' salaries and the entire
cost of the program they administered. Significantly, the
bribery related to rehabilitation contracts that fell within
18
the purview of the program and were paid with federal
funds. Hinton, 683 F.2d at 196-99.11
In Mosley, the defendant, an employee of the State of
Illinois Bureau of Employment Security ("IBES"), was
convicted of receiving bribes in exchange for giving
preferential treatment to Comprehensive Employment and
Training Programs Act ("CETA") applicants when he
evaluated and referred applicants for CETA-funded jobs.
Mosley, 659 F.2d at 813. The federal government funded
the CETA program, the CETA jobs, and all of IBES's costs,
including Mosley's salary. Id. As in Hinton, the defendants
could be considered public officials because the program in
Mosley was funded by the federal government, the
defendant exercised discretion in the administration of
federal funds, and the bribery related to the defendant's
administration of the program. Again, the federal interest is
clear.
The Senate Report's examples of intended S 666 offenses
involved situations in which the corrupt acts clearly
implicated a federal interest, as the acts were closely tied to
the funded programs.12 Another comment in the Senate
_________________________________________________________________
11. In affirming Hinton, the Supreme Court determined that individuals
employed by private organizations that receive federal funds may be
covered by S 201, at least if an individual possesses "some degree of
official responsibility for carrying out a federal program or policy."
Dixson
v. United States, 465 U.S. 482, 499-500 (1984). In limiting the
parameters of its holding, however, the Supreme Court cautioned:
By finding petitioners to be public officials within the meaning of
section 201(a), we do not mean to suggest that the mere presence of
some federal assistance brings a local jurisdiction and its
employees
within the jurisdiction of the federal bribery statute or even that
all
employees of local organizations responsible for administering
federal grant programs are public officials within the meaning of
section 201(a). To be a public official under section 201(a), an
individual must possess some degree of responsibility for carrying
out a federal program or policy . . . individuals who work for
block
grant recipients and business people who provide recipients with
goods and services can not be said to be public officials under
section 201(a) unless they assume some duties of an official
nature.
Id. at 500.
12. See also LaHue, 170 F.3d at 1031 ("In all three cases [Del Toro,
Hinton, and Mosley], the organization in question received federal
19
Report illustrates that an entity's receipt of federal funds
does not automatically establish a federal interest in
corrupt activity of employees of that entity:
For example, if a government agency lawfully
purchases more than $10,000 in equipment from a
supplier, it is not the intent of this section to make a
theft of $5,000 or more from the supplier a Federal
crime.
S. REP. NO. 98-225, 370. Thus, nothing in the legislative
history suggests that Congress intended to go well beyond
the examples in Del Toro, Hinton, and Mosley to make S 666
applicable when no federal interest is implicated by certain
offense conduct.
Not only does the legislative history of S 666 lead us to
conclude that the statute should be read to incorporate a
federal interest requirement, but several well-established
principles of statutory construction dictate this result.
According to the Supreme Court, ambiguity in the language
of a criminal statute should be resolved in favor of the
defendant. See United States v. Bass, 404 U.S. 336, 347
(1971) ("In various ways over the years, we have stated that
``when choice has to be made between two readings of what
conduct Congress has made a crime, it is appropriate,
before we choose the harsher alternative, to require that
Congress should have spoken in language that is clear and
definite.' ") (quoting United States v. Universal C.I.T. Credit
Corp., 344 U.S. 218, 221-22 (1952)). Congress has not
"clearly and definitely" instructed thatS 666 should be
applied even absent some federal interest in the offense
conduct. We should refuse the broader reading urged by
the government and adopt the narrower construction of the
activity criminalized by this provision. See also LaHue, 170
F.3d at 1029 (in evaluating another subsection ofS 666,
"we must exercise particular restraint in interpreting federal
criminal statutes") (citing Dowling, 473 U.S. at 214).
_________________________________________________________________
program funds as the intended recipient, and each was charged with the
responsibility for administering or spending the federal grant monies to
benefit the intended beneficiaries.").
20
The Supreme Court also has instructed us that we
should not interpret a statute in a manner that significantly
alters the federal-state balance unless Congress has clearly
indicated that it intended to do so. See Bass, 404 U.S. at
349 ("In traditionally sensitive areas, such as legislation
affecting the federal balance, the requirement of clear
statement assures that the legislature has in fact faced,
and intended to bring into issue, the critical matters
involved in the judicial decision."); see also McCormack, 31
F. Supp.2d at 186-187; Frega, 933 F. Supp. at 1540 (citing
Bass). If we adopted the government's interpretation that
S 666 requires no connection between the offense conduct
and federal funds or programming, S 666 would criminalize
a host of corrupt acts committed by state agents, among
others, by virtue of the fact that all states receive at least
$10,000 in federal funds per year. See McCormack, 31 F.
Supp.2d at 186. This result raises significant federalism
concerns, turning traditionally local conduct into a matter
for federal enforcement involving a substantial extension of
federal law enforcement resources. See Bass, 404 U.S. at
350. We will not transform S 666 into a general federal anti-
corruption statute when Congress has not clearly expressed
its intention to do so. See McCormack, 31 F. Supp.2d at
186 (expressing concern about adopting government's
interpretation); Frega, 933 F. Supp. at 1540. As the
Supreme Court stated in Bass, "consistent with our regard
for the sensitive relation between federal and state criminal
jurisdiction, our reading preserves as an element . . . a
requirement suited to federal criminal jurisdiction alone."
404 U.S. at 351.13
_________________________________________________________________
13. In interpreting the illegal gratuity statute, 18 U.S.C. S
201(c)(1)(A),
Justice Scalia stated for an unanimous Court that"a statute in this field
that can linguistically be interpreted to be either a meat axe or a
scalpel
should reasonably be taken to be the latter. Absent a text that clearly
requires it, we ought not expand this one piece of the [illegal gratuity]
regulatory puzzle so dramatically as to make many other pieces misfits."
United States v. Sun-Diamond Growers of California, ___ U.S. ___, 119 S.
Ct. 1402, 1410 (1999) (holding that S 201(c)(1)(A) requires that the
government prove a link between a thing of value conferred upon a
public official and a specific official act for or because of which it was
given). We point out, however, that SS 201 and 666 are not necessarily
parallel in their applications, so these remarks do not dictate a
substantive outcome here. See United States v. Jennings, 160 F.3d 1006,
1015 fn 4 (4th Cir. 1998) (outlining distinctions between application of
two provisions but not deciding whether S 666, like S 201, prohibits
gratuities).
21
Finally, when a statute is unclear, we will construe it so
as to avoid constitutional concerns, assuming that such
construction does not amount to a rewriting of the statute.
See Albertini, 472 U.S. at 680. InterpretingS 666 to have no
federal interest requirement produces serious concerns as
to whether Congress exceeded its power under the
Spending Clause in enacting this statute. See McCormack,
31 F. Supp.2d at 187-89.14 To pass muster under the
Spending Clause, legislation regulating behavior of entities
receiving federal funds must, among other things, be based
upon a federal interest in the particular conduct. See South
Dakota v. Dole, 483 U.S. 203, 207 (1987). Applying S 666 to
offense conduct, absent evidence of any federal interest,
would appear to be an unconstitutional exercise of power
under the Spending Clause.
Thus, we hold that S 666 requires that the government
prove a federal interest is implicated by the defendant's
offense conduct. In so holding, we part ways with the Sixth
Circuit's holding in Dakota and agree with the result
reached by the Second Circuit, as expressed most recently
in Santopietro, and the District Court for the Southern
District of California in its pre-Salinas Frega decision.
Given that the Supreme Court found a sufficient federal
connection existed in Salinas, we surmise that a highly
attenuated implication of a federal interest will suffice for
purposes of S 666.15 We can conceive of several ways in
which the government could prove a federal interest in a
S 666 in light of this threshold. The amount of federal funds
could provide the requisite federal implication, even if the
purpose of those funds has no explicit relationship to the
subject of the bribe. If, for example, in a given year, the
_________________________________________________________________
14. According to the Second Circuit, "Salinas may be read to indicate
that the ``threat to the integrity and proper operation of [a] federal
program' created by the corrupt activity is necessary to assure that the
statute is not unconstitutionally applied." Santopietro, 166 F3d at 93
(citing Salinas, 118 S. Ct. at 475).
15. In Salinas, the Supreme Court found that the federal government's
interest in the housing of federal prisoners in federally-funded local
facilities was sufficiently implicated when a prison official accepts
bribes
from a federal prisoner in exchange for permitting the prisoner to have
conjugal visits. See Salinas, 118 S. Ct. at 474.
22
greater part of a township's budget came from federal
funds, bribery of a township agent for any purpose might
be said to implicate federal interests. Absent that situation,
the offense conduct would have to somehow implicate a
particular substantive federal interest, as the Supreme
Court found it did in Salinas, where federal funds were
being provided to house federal prisoners in local prisons.
Examples from other cases may be illustrative. The
Second Circuit found a sufficient federal connection in
Santopietro when real estate developers made corrupt
payments to defendants to secure defendants' influence
with city agencies overseeing housing and urban
development programs that were the beneficiaries of federal
funds. See Santopietro, 166 F.3d at 93 - 94. The Second
Circuit concluded that "this is not a case where the
transactions sought to be influenced concerned one
department of a city and the requisite $10,000 of federal
funds were received by a totally unrelated department." Id.
However, the Court noted that the federal interest
requirement "would not permit the Government to use
section 666(a)(1)(B) to prosecute a bribe paid to a city's
meat inspector in connection with a substantial transaction
just because the city's parks department had received a
federal grant of $10,000." Id., at 93.
The District Court in Frega concluded that bribing state
court judges to influence decisions in certain cases did not
produce the requisite federal interest when California
received federal funds for purposes not related to the state
courts. See Frega, 933 F.Supp. at 1542 - 1543. The Court
hypothesized, however, that some circumstances involving
state court judges might produce the requisite federal
connection, such as if the state court system received
federal funding for the purpose of appointing counsel in
death penalty habeas proceedings, and a state court judge
accepted a bribe in exchange for appointing a particular
attorney as habeas counsel. See id.
There was evidence at Zwick's trial revealing that the
federal funds were provided to Ross Township for
reimbursement for emergency snow removal and funding of
a project to prevent stream bank erosion.16 These uses bear
_________________________________________________________________
16. The government presented proof that Ross Township received in
excess of $10,000 in federal funds in a one-year period from two
23
no obvious connection to Zwick's offense conduct, which
involved sewer access, use permits and landscaping
performance bonds. However, we will not direct the entry of
a judgment of acquittal because the District Court ruled
that S 666 did not require, and thus the government need
not present proof, that Zwick's conduct implicated a federal
interest.17 Instead, we will vacate Zwick's conviction and
remand for a new trial.
IV.
Zwick raises several other challenges to his S 666
conviction that we find to be without merit. In connection
with the conduct charged in count one, Zwick argues that
there was insufficient evidence establishing that he acted
as an agent of an entity that received the requisite amount
of federal funds as S 666 requires. Zwick contends that the
evidence presented at trial shows that Zwick was acting as
an agent of Lowries Run, not as an agent of Ross Township.
The government's theory at trial was that Zwick had offered
to obtain sewer access for Kaclik in his capacity as an
_________________________________________________________________
sources. First, Ross Township applied for federal reimbursement under
a Presidential Declaration of Major Disaster for costs associated with the
blizzard of 1996 and consequently received $30,587 in June of 1996
from the Federal Emergency Management Agency ("FEMA"). The funds
first flowed through the Pennsylvania Emergency Management Agency
("PEMA"), but they were segregated from other Commonwealth funds
prior to distribution to Ross Township. Second, the United States Army
Corps of Engineers carried out and funded a $326,200 project, to which
Ross Township contributed $65,300, to prevent the erosion of a stream
bank in Ross Township.
17. At a pretrial conference, counsel discussed with the District Court
whether S 666 requires a showing of a federal interest in Zwick's
conduct. Counsel for the government informed the District Court that
"there are crucial issues as to what would be admissible and arguable at
trial that turn on what the jury instructions that you issue will be. For
example, we would need a determination on whether there does or does
not need, as we maintain, need to be a nexus between the bribe and
receipt of federal funds by Ross Township." App. 269. In response, the
District Court stated at least twice that "there doesn't have to be any
relationship." App. 270, line 9, App. 271, lines 3-4.
24
agent of Ross Township, not of Lowries Run, and the
government did not offer any proof that Lowries Run
received federal funds. Zwick concludes that his conviction
on count one should be reversed.
Under S 666(b), the government must establish that at
least $10,000 in federal funds within a one-year period
were received by the entity for which the defendant was
acting as an agent. A defendant advancing a claim based on
insufficiency of the evidence carries a heavy burden, as we
apply a particularly deferential standard in reviewing this
type of claim. United States v. Dent, 149 F.3d 180, 187 (3d
Cir. 1998). We do not weigh the evidence or determine the
credibility of the witnesses. Id. Rather, viewing the evidence
in the light most favorable to the government, we will
sustain the verdict if any rational trier of fact could have
found the essential elements of the crime beyond a
reasonable doubt. Id.
The Lowries Run Sanitary Authority ("Lowries Run") is a
joint venture between Ross Township and the McCandless
Township Sanitary Authority; two of the members of its
governing board are appointed by Ross Township, and two
are appointed by McCandless Township. Lowries Run board
members need not be commissioners from Ross Township.
Zwick was selected as a member of the Lowries Run board,
but not in his capacity as a Ross Township commissioner.
Lowries Run operates independently from Ross Township; it
has its own bank account that is administered by the
McCandless Sanitary Authority, and money that it receives
belongs to Lowries Run, not Ross Township.
At trial, Kaclik testified that he could have applied to
either Ross Township or Lowries Run for sewer access for
his project, Shannopin Square II. Kaclik testified further
that he understood that, in exchange for his money, Zwick
would influence Ross Township to approve Kaclik's sewer
access application; although he had the option of tapping
into either the Ross Township or the Lowries Run sewer
system, he preferred the Township option because it was
less expensive. App. 732, 758-59. Thomas D. Lavorini,
Manager of Ross Township, testified that he believed Kaclik
approached Ross Township about obtaining access to the
Ross Township sewer line, and that Lavorini may have had
25
a discussion with Zwick about Kaclik's request. App. 658-
59. Kaclik also testified that Zwick had told him he would
obtain the necessary Republican and Democratic votes and
that Zwick cashed Kaclik's check so that the Township
would not know the source of the money. App. 733, 740-
41. Both of Zwick's comments suggest Zwick was offering to
deal with the Township, and not Lowries Run, on Kaclik's
behalf.
The substance of Kaclik's testimony suggests that he had
some confusion regarding the difference between the
Township and Lowries Run, and there was documentary
evidence that the only formal application Kaclikfiled was
with Lowries Run. App. 751-52, 761-62. However,
assuming a jury found Kaclik and Lavorini credible, this
evidence is not so compelling that it could have prevented
a jury from finding, based on the evidence before it, that
Zwick was acting as an agent of Ross Township during the
sewer access transactions. Thus, we reject Zwick's
argument.
With respect to count two, Zwick also argues that the
government failed to establish that Zwick intended to be
influenced "in connection with any business, transaction,
or series of transactions of such organization, government,
or agency involving anything of value of $5,000 or more."
See 18 U.S.C. S 666(a)(1)(B) (emphasis added). According to
Zwick's interpretation of S 666, the transaction or
transactions must be worth at least $5,000 to Ross
Township, not to the other entities involved. He also claims
that the transactions involved in count two were not worth
$5,000 or more as S 666 requires, but rather worth only
$700, the cost of the conditional use permit and thefinal
site plan that Zwick offered to help the Fosnights obtain.
First, we disagree with Zwick's reading of the statute
regarding valuation of the $5,000 element. We find that the
plain language of the statute does not require that value be
measured from the perspective of the organization,
government, or agency. See 18 U.S.C. S 666(a)(1)(B)
(prohibiting bribery "in connection with any business,
transaction, or series of transactions of such organization,
government, or agency involving anything of value of $5,000
or more" (emphasis added)); see also Santopietro, 166 F.3d
26at 93 ("there is no requirement that the corrupt
transactions are worth $5,000 or more to the entity
receiving the federal funds"); United States v. Marmolejo, 89
F.3d 1185 (5th Cir. 1996)18 (finding that the $5,000 value
element was designed to limit application of S 666 to
significant corrupt transactions, not to restrict the manner
in which or the perspective from which that value is to be
calculated). See also United States v. Apple, 927 F. Supp.
1119, 1126 (N.D. Ind. 1996) (concluding that the
government is not required "to show that the thing that
held value of over $5,000 held that value for" the entity);
United States v. Vona, 842 F. Supp. 1534, 1536 (W.D.N.Y.
1994) (finding that the Act does not require that the
defendant gain $5,000 or that the victim lose $5,000, but
that "as long as the overall transaction or the target of the
bribe is valued at $5,000 or more, the element of the crime
is satisfied"); United States v. Mongelli, 794 F. Supp. 529,
530 (S.D.N.Y. 1992) ("The $5,000 triggering provision
should thus be interpreted as intended to require that
substantial matters of that actual value be involved, not
that the agency be at risk of losing that amount.").19
Second, we reject Zwick's argument that the transactions
at issue were worth less than $5,000. Significantly, the
Fosnights agreed to pay Zwick $15,000 for his assistance,
which indicates that the value of the transactions was well
_________________________________________________________________
18. In Marmolejo, defendant local officials agreed to provide a prisoner
with conjugal visits in exchange for $6,000 a month and $1,000 for each
visit. Id. at 1191. To value the transactions at issue, the Court looked
to
"traditional valuation methods," specifically, what a person in the
marketplace would be willing to pay for the transaction. Id. at 1193.
19. We also reject Zwick's argument that we should follow the Second
Circuit in requiring that the value be determined from Ross Township's
perspective. For this argument, Zwick relies on the Second Circuit's
ruling in Foley that the transaction must be valued from the perspective
of the entity receiving the funds. Foley, 73 F.3d at 493. Regardless of
the
merits of Zwick's claim, the Second Circuit has since abandoned that
construction. See Santopietro, 166 F.3d at 93 ("[T]o the extent that Foley
required the Government to plead and prove that the transaction
involved something of value to the governmental entity that received the
requisite amount of federal funds, that narrowing construction of the
statute must . . . be discarded."). Thus, Zwick's reliance on Foley is
misplaced.
27
above $700 and the $5,000 minimum. App. 424 - 425. See
Marmolejo, 89 F.3d at 1194 (finding that the value of the
conjugal visits was more than $5,000, because the prisoner
was willing to pay $6,000 a month plus $1,000 per visit for
them). There was evidence at trial that the Fosnights would
have lost the $10,000 they paid to the owners of the
property had their conditional use permit not been
approved. App. 420-21, 465. The overall value of the
Fosnight project was $4.6 million, and Ross Township
would receive $90,000 in tax benefits from the project on a
yearly basis, as well as $6,939 in permit fees before the
project could go forward. App. 439, 442. The Fosnight
project was clearly a significant transaction within the
intended reach of the statute. Because we believe that there
was substantial evidence from which the jury could have
found that the $5,000 element was satisfied, we reject
Zwick's challenge to the calculation of value underS 666
with respect to count two.
We also are not persuaded by Zwick's argument,
applicable to all counts, that the District Court improperly
instructed the jury that the future value of the transaction
can be taken into account. Zwick cites the Sixth Circuit's
decision in Valentine that the government could not
aggregate the values of numerous thefts that occurred over
a three-year period in order to meet the $5,000 threshold
under S 666(a)(1)(A), the theft provision. See Valentine, 63
F.3d at 464. Valentine is simply inapposite. Under the theft
provision, the stolen property must be worth $5,000, while
the bribery provision looks to the value of the underlying
business or transaction. Compare 18 U.S.C.S 666(a)(1)(A)
(prohibiting theft of "property that . . . is valued at $5,000
or more") with 18 U.S.C. S 666(a)(1)(B) (prohibiting bribery
"in connection with any business, transaction, or series of
transactions of such organization, government, or agency
involving anything of value of $5,000 or more"). Further,
unlike in Valentine, the government in this case did not
attempt to proffer evidence of the value of transactions or
business outside of the statutory period in order to satisfy
the $5,000 threshold. Here, the references to Ross
Township's future revenues from the transactions were
actually evidence of their current value. Even without
reference to future revenues, there is substantial evidence
28
establishing that the present value of the transactions and
business involved in each of counts one, two, and three was
at least $5,000. The sewer taps that Zwick offered to obtain
for Kaclik were clearly worth more than $5,000, as Kaclik
was willing to pay $17,500 to ensure that he received them;
the contracts that were the subject of the bribery at count
three were worth $45,000; and the permits in count two
were worth more than $5,000 to the Fosnights, because, as
detailed above, they were willing to pay Zwick $15,000 to
ensure that they received them and would have lost
$10,000 if they did not receive them in a timely manner.
V.
Zwick's final contention is that the District Court erred in
failing to award him an additional point reduction in his
offense level for acceptance of responsibility pursuant to
U.S.S.G. S 3E1.1(b). We give great deference to the District
Court's evaluation of the defendant's acceptance of
responsibility, but exercise plenary review of the Court's
construction of S 3E1.1. See United States v. Ceccarani, 98
F.3d 126, 129 (3d Cir. 1996). We review the District Court's
determinations of fact for clear error. Id.
Section 3E1.1 provides:
(a) If the defendant clearly demonstrates acceptan ce of
responsibility for this offense, decrease the offense level
by 2 levels.
(b) If the defendant qualifies for a decrease un der
subsection (a), the offense level determined prior to the
operation of subsection (a) is level 16 or greater, and
the defendant has assisted authorities in the
investigation or prosecution of his own misconduct by
taking one or more the following steps:
(1) timely providing complete information to the
government concerning his own involvement in the
offense; or
(2) timely notifying authorities of his intention to
enter a plea of guilty, thereby permitting the
government to avoid preparing for trial and
29
permitting the court to allocate its resources
efficiently,
decrease the offense level by 1 additional level.
The District Court awarded Zwick the two-point
reduction provided in S 3E1.1(a). At issue here is the
Court's rejection of the one-point reduction under
S 3E1.1(b). Section 3E1.1(b) focuses on the timeliness of a
defendant's offer of information or notice of intent to plead
such that the defendant provides an opportunity to the
government and court to conserve resources. See U.S.S.G.
S 3E1.1, App. Note 6 ("For example, to qualify under
subsection (b)(2), the defendant must have notified
authorities of his intention to enter a plea of guilty at a
sufficiently early point in the process . . . ."); United States
v. Narramore, 36 F.3d 845, 847 (9th Cir. 1994) ("The
additional reduction in section (b) with which we are
concerned, is unlike the initial reduction in section (a), for
it does not rest upon the demonstration of contrition.
Section (b) allows the defendant to earn an additional
reduction by providing timely notice of his intention to
plead guilty, and it thus creates an incentive for an early
plea").
Parsing section 3E1.1(b), it directs the sentencing judge
to decrease the offense level by one additional level if 1) the
defendant is entitled to the two-point reduction under
S 3E1.1(a); 2) the defendant's offense level is 16 or greater;
and 3) the defendant satisfies either of the two
requirements provided in subparagraphs (b)(1) and (b)(2).
See United States v. Paster, 173 F.3d 206, 214-15 (3d Cir.
1999).
Zwick clearly satisfied the first two conditions under
subsection (b), in that he was awarded the two-point
reduction under S 3E1.1(a), and had an offense level of 22.20
_________________________________________________________________
20. Although the government argues in its brief that "it is difficult if
not
impossible, to find acceptance of responsibility in Zwick's pretrial and
trial conduct," see Brief for Appellee at 53, we limit our discussion to
whether Zwick satisfied either subparagraph (1) or (2) of S 3E1.1(b)
because acceptance of responsibility is not the element at issue in this
appeal and we assume it will be satisfied even after remand. In addition,
30
However, the District Court adopted the Probation Office's
conclusion that Zwick was not entitled to the extra point
under subsection (b) because the government was required
to prepare for trial,21 noting also that defendant made
factual arguments at trial.22
We believe that the District Court did not fully consider
the elements of subsection (b). To receive an additional
reduction for timely providing complete information to the
government, subparagraph one of S 3E1.1(b) requires that
the defendant timely provide complete information; it does
not require, either expressly or impliedly, that the
defendant actually forego his trial. See S 3E1.1(b)(1)
(providing for a reduction for a defendant for "timely
providing complete information to the government
concerning his own involvement in the offense"). Instead of
concluding that the one-point deduction was foreclosed
_________________________________________________________________
we also assume that, even after remand, Zwick's offense level will be at
level 16 or greater as subsection (b) requires. Although Zwick's offense
level may change if the District Court determines on remand that the
judgment on the S 666 counts is to be vacated, the offense level for the
fraud counts alone is 17, which satisfies the second requirement of
S 3E1.1(b) that Zwick's offense level be 16 or higher.
21. The Probation Office, in its Presentence Investigative Report ("PSR")
found:
The defendant entered a guilty plea to Counts 4, 5, 7, 8, 9, and 10
of the indictment. Ostensibly, he chose to go to trial over the
remaining counts of the indictment, believing he should not have
been charged with those offenses in federal court, instead that he
should have been charged in state court. During the presentence
interview, he admitted his conduct in all of the charged counts was
illegal. The government was, therefore, required to prepare for
trial
in this matter. In view of this, only a two-point reduction for
acceptance of responsibility is warranted.
PSR P 75.
22. Specifically, the District Court noted that the defendant's opening
statement informed the jury that the government had to prove
defendant's intent, and that defendant cross-examined Tim Fosnight as
to the defendant's voting activities at a Ross Township Planning
Commission hearing on the approval of a conditional use permit for the
Fosnights' project in an effort to require the government to prove intent.
31
simply because the government prepared for trial, the
District Court should have considered whether Zwick timely
provided complete information as the Guideline requires.
Likewise, subparagraph two of S 3E1.1(b) requires that
the defendant express his notice of intent to plead guilty
early enough to permit the court and government to
conserve resources, not that a guilty plea be entered in a
timely fashion or that the reduction is unavailable if the
case proceeds to trial. See S 3E1.1(b)(2). Permitting the
government and court to conserve resources, see WEBSTER'S
II NEW RIVERSIDE UNIVERSITY DICTIONARY 876 (defining "permit"
as "[t]o afford opportunity"), is not synonymous with the
actual conservation of resources. We recognize that other
courts, such as the Seventh Circuit Court of Appeals,
require actual conservation of resources as a condition to
receiving the point deduction under subsection (b)(2). See
United States v. Wilson, 134 F.3d 855, 872 (7th Cir. 1998)
("courts are still required to consider whether this
expressed intent actually resulted in conserving
Government and court resources."). However, we believe
that our reading is true to the plain language of the
Guideline and comports with the underlying purpose the
Guideline serves. This Guideline rewards the defendant's
willingness to acknowledge responsibility for criminal
wrongdoing in lieu of requiring all allegations to be proved
in a trial. As such, the Guideline is triggered by the
defendant's behavior, not by whether other factors out of
the defendant's control prevent the acceptance of the
defendant's plea. Surely the possibility of an extra point
reduction is not necessarily foreclosed, for instance, by the
government's rejection of a plea, for whatever reason. The
government's refusal to accept the plea and to avail itself of
the opportunity to conserve resources is not a per se
barrier to the one-point deduction. If the drafters of the
Guideline intended to limit the award of the point to
situations in which a plea was entered, or resources were
actually conserved, they could have crafted the language to
reflect this intention.
We recognize that conditional pleas raise unique issues,
which need to be evaluated on a case-by-case basis. 23 We
_________________________________________________________________
23. See United States v. Rogers, 129 F.3d 76, 80-81 (2d Cir. 1997)
(finding that conditional offer to plead guilty did not come early enough
32
also acknowledge that it may be a rare case in which
anything short of a timely entry of a guilty plea suffices for
purposes of S 3E1.1(b).24 However, because the District
Court did not fully address, let alone resolve, whether
Zwick's pre-trial activity entitled him to a reduction under
the specific terms of S 3E1.1(b), we will remand to the
District Court for consideration of whether Zwick timely
provided complete information to the government under
S 3E1.1(b)(1), or if his expression of his intent to plead
_________________________________________________________________
in the proceedings to satisfy S 3E1.1(b)(2) because it came after the case
was "effectively tried" with the motion to suppress); United States v.
Gonzales, 19 F.3d 982, 983-84 (5th Cir. 1994) (refusing to award an
additional point because Gonzales never entered an actual guilty plea;
the suppression hearing to which Gonzales wished to preserve a
challenge in his guilty plea was the equivalent of a full trial, requiring
full preparation and expenditure of resources by the government and the
court).
24. See United States v. Morillo, 8 F.3d 864, 872 (1st Cir. 1993) ("A
defendant who withholds a guilty plea until he stands poised on the
brink of trial has no entitlement to the soothing unguent of section
3E1.1(b)(2). Therefore, the court below acted appropriately in awarding
appellant a two-level, rather than a three-level, decrease for acceptance
of responsibility"); Narramore, 36 F.3d at 846-47 (holding that defendant
was not entitled to a reduction under S 3E1.1(b)(2) because he could
have informed government of intention to plead guilty, even though he
was waiting to actually plead guilty until after the court ruled on his
motion to suppress); United States v. Villasenor-Cesar, 114 F.3d 970,
975 n.4 (9th Cir. 1997) ("Like Narramore, Villasenor-Cesar could have
preserved the availability of the subsection (b)(2) adjustment if, instead
of pursuing a stipulated-facts trial, he had notified authorities of his
intent to plead guilty if the district court ruled against him on his
motion
to dismiss the indictment."); United States v. Covarrubias, 65 F.3d 1362,
1368 (7th Cir. 1995) ("Because defendant made no attempt to conserve
government and district court resources in his case prior to November 7,
the district court did not clearly err in denying him the additional
reduction" when defendant did not plead guilty until the day of trial, and
did not inform the government that he would be pleading guilty in the
event that the motion to suppress, which was decided on the morning of
trial, was denied); United States v. Williams , 74 F.3d 654, 657 (5th Cir.
1996) (agreeing with Covarrubias).
33
guilty was sufficiently timely under S 3E1.1(b)(2) to permit
the conservation of government and court resources. 25
VI.
For all of the foregoing reasons, we will remand this
matter to the District Court for a new trial. We also will
vacate the District Court's sentencing decision denying the
additional one-point reduction under S 3E1.1(b), and
remand to the District Court so that it may determine if
Zwick is entitled to a reduction under S 3E1.1(b) for timely
providing information to the government, or timely offering
notice of intent to plead guilty. We reject Zwick's other
contentions, and will affirm as to those issues.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
_________________________________________________________________
25. We also find that the fact that Zwick made legal arguments at trial
is inapposite with respect to S 3E1.1(b). Application Note two provides
that a defendant may be entitled to a reduction even if he goes to trial,
if he does so to "assert and preserve issues that do not relate to factual
guilt (e.g., to make a constitutional challenge to a statute or a
challenge
to the applicability of a statute to his conduct)." Although the note does
not explicitly provide that it applies only to S 3E1.1(a), a logical
reading
of the note compels this conclusion. The note espouses the principle that
a defendant may in some circumstances show contrition even if he
proceeds to trial; this has little to do with the timeliness of a
defendant's
offer of information or expression of intent to plead guilty, the focus of
S 3E1.1(b). See Villasenor-Cesar, 114 F.3d at 974. In addition, the note
is essentially a continuation of Application Note 1, which applies to
subsection (a).
34