Lyerly v. United States ( 1997 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
LEWIS B. LYERLY, d/b/a Lyerly's
Market,
Plaintiff-Appellant,
v.
No. 97-1076
UNITED STATES OF AMERICA; FOOD
AND CONSUMER SERVICE OF THE
UNITED STATES DEPARTMENT OF
AGRICULTURE,
Defendants-Appellees.
Appeal from the United States District Court
for the District of South Carolina, at Florence.
William B. Traxler, Jr., District Judge.
(CA-95-3754-4-21)
Argued: July 10, 1997
Decided: August 12, 1997
Before NIEMEYER, MICHAEL, and MOTZ, Circuit Judges.
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Affirmed by unpublished per curiam opinion.
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COUNSEL
ARGUED: Cameron Bruce Littlejohn, Jr., Columbia, South Carolina,
for Appellant. Frances Cornelia Trapp, Assistant United States Attor-
ney, Columbia, South Carolina, for Appellees. ON BRIEF: Richard
A. Harpootlian, RICHARD A. HARPOOTLIAN, P.A., Columbia,
South Carolina, for Appellant. J. Rene Josey, United States Attorney,
Columbia, South Carolina, for Appellees.
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Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
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OPINION
PER CURIAM:
Lewis B. Lyerly, d/b/a Lyerly's Market, appeals from a judgment
awarding actual damages and civil penalties to the United States
under the False Claims Act, 31 U.S.C. §§ 3729-3733. For the reasons
stated below, we affirm.
Lewis Lyerly is the proprietor of Lyerly's Market, located in Flor-
ence, South Carolina. As a retail grocery, the establishment became
eligible to participate in the food stamp program in 1979. In April
1994 the Food and Consumer Service (FCS) of the United States
Department of Agriculture was tipped off to alleged coupon traffick-
ing at Lyerly's Market. FCS began a sting operation in which under-
cover investigators sold $180 worth of food stamps to Lyerly's in
exchange for $100 in cash, in violation of 7 C.F.R.§ 278.2(a). Lyerly
subsequently redeemed these coupons with the government for their
face value.
Based on this investigation, FCS decided to revoke Lyerly's eligi-
bility to participate in the food stamp program permanently. Lyerly
brought suit seeking judicial review of this decision. The United
States counterclaimed for damages and civil penalties under the False
Claims Act. The district court affirmed Lyerly's permanent disqualifi-
cation from the Food Stamp program.1 The government's counter-
claim was tried to a jury, which returned a verdict for the United
States. The district court then calculated the damages. First, the court
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1 Lyerly does not contest the disqualification on appeal.
2
found that the United States had suffered $180 in actual damages,
which were trebled under 31 U.S.C. § 3729(a). Second, the court
awarded a civil penalty of $7500 for each of the three instances of
food stamp trafficking. The court thus imposed a total monetary pen-
alty of $23,040.
Three elements must be proven in a claim under 31 U.S.C.
§ 3729(a)(1): (1) the defendant presented or caused to be presented a
claim to an agent of the United States for payment; (2) the claim was
false or fraudulent; and (3) the defendant knew it was false or fraudu-
lent. The statute provides for civil penalties "plus 3 times the amount
of damages which the Government sustains." 31 U.S.C. § 3729(a). In
this appeal Lyerly challenges the award of damages, arguing that the
United States never proved that it suffered actual damages from Lyer-
ly's conduct. Lyerly fails to explain, however, the basis for this asser-
tion. The district court determined that the value paid out by the
government on the fraudulently sold food stamps, namely, $180, con-
stituted the actual damages from Lyerly's misconduct. See J.A. 251
("[T]he United States incurred damages in that the payment was made
for food stamps that were not used in accordance with the [food stamp
program], and the United States lost the face value of the food
stamps."). The government provided ample evidence to support this
determination. The government's investigative aide testified that she
exchanged $180 in food stamps for cash. J.A. 108-11. The parties
stipulated that "any food stamps which were received in Lyerly's
Market in the time period in question . . . were submitted to the
Department of Agriculture for payment as a claim." J.A. 32-33.
Another government witness testified that after food stamps are sub-
mitted for payment, the retailer's account is immediately credited.
J.A. 38. Thus, the government provided evidence that (a) Lyerly
accepted $180 in food stamps in exchange for cash; (b) Lyerly sub-
mitted these food stamps for redemption; and (c) Lyerly's account
was credited for the face value of those food stamps.
Courts have repeatedly calculated the face value of fraudulently
sold food stamps as actual damages under the False Claims Act. See
Brooks v. United States, 64 F.3d 251, 254 (7th Cir. 1995); United
States v. Truong, 860 F. Supp. 1137, 1138-39, 1140 (E.D. La. 1994);
Pena v. United States Dep't of Agriculture, 811 F. Supp. 419, 427
(E.D. La. 1992). Lyerly fails to present any authority to the contrary.
3
The only case he cites on this issue, United States v. Hibbs, 568 F.2d
347 (3d Cir. 1977), is inapposite. Hibbs involved a real estate agent
who lied on FHA mortgage insurance forms concerning the state of
the plumbing, electricity, and heating systems in the mortgagors'
homes. The mortgagors eventually defaulted on their FHA-insured
mortgages, causing FHA to suffer a loss. The Hibbs court found that
the total amount of the defaulted mortgages did not constitute actual
damages, because the agent's false claims were too attenuated from
the defaults to be deemed the cause of those defaults.2 Hibbs is distin-
guishable from this case, since in this case the government directly
lost the face value of the food stamps.
We conclude that the $180 paid to Lyerly in exchange for the
fraudulently purchased food stamps constituted actual damages to the
government. We therefore affirm.
AFFIRMED
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2 The court determined actual damages to be "the decrease in worth of
the security that was certified as being available, measured by the differ-
ence in value between the houses as falsely represented, and as they actu-
ally were." Hibbs, 568 F.2d at 351.
4