United States v. Willson

United States Court of Appeals
For the First Circuit
No. 11-2446
UNITED STATES,
Appellee,
v.
CHRISTOPHER D. WILLSON,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Rya W. Zobel, U.S. District Judge]
Before
Lynch, Chief Judge,
Souter,* Associate Justice,
and Selya, Circuit Judge.
James L. Sultan, with whom Kerry A. Haberlin and Rankin &
Sultan were on brief, for appellant.
Steven H. Breslow, United States Attorney's Office, District
of Massachusetts, with whom Carmen M. Ortiz, United States
Attorney, and Randall E. Kromm, United States Attorney's Office,
District of Massachusetts, were on brief, for appellee.
February 15, 2013
*
Hon. David H. Souter, Associate Justice (Ret.) of the
Supreme Court of the United States, sitting by designation.
LYNCH, Chief Judge. Christopher Willson, an engineer for
battery producer Electric Vehicles Worldwide (EVW), was convicted
of submitting false invoices and conspiring to defraud the Federal
Transit Administration (FTA) in connection with federal grants to
develop a battery for electric mass transit. Willson appeals,
arguing that the government's evidence was insufficient to support
his conviction and that the trial court erred in not giving his
requested jury instructions on condonation and reasonable
interpretation of regulations. We affirm.
I.
The government funding at the center of this case was the
result of an earmark that a Massachusetts Congressman secured
through an appropriations bill passed in October of 1999. The
Congressman hoped that EVW's proposals to develop technology for
electric mass transit -- initially an all-electric bus, eventually
just a battery -- would bring environmentally friendly "green" jobs
to Pittsfield, a city in his district that was struggling
economically. Accordingly, he earmarked FTA research funds for the
Pittsfield Economic Development Authority (PEDA), with the
understanding that the money ultimately would go to EVW.1 See
Department of Transportation and Related Agencies Appropriations
Act, Pub. L. No. 106-69, 113 Stat. 986, 1001 (1999).
1
At trial, EVW was also referred to as ElectraStor, LLC, a
wholly-owned subsidiary of EVW. We use EVW to refer to both
companies.
-2-
In late 1999 or early 2000, the PEDA in turn contracted
with the Pioneer Valley Transit Authority (PVTA), a local agency
with experience in federal grant administration, to manage the
earmarked funds for EVW. The PVTA, in March 2000, entered into a
consortium agreement with EVW, under which the PVTA would receive
funds from the FTA and then pass them on to EVW. The agreement
mandated that EVW match all grant funds "on a dollar for dollar
basis in cash, in kind, or with any other consideration which
qualifies for such match." It also mandated that EVW "take all
actions necessary or desirable to comply with applicable laws and
regulations relating to the . . . [f]unds." These regulations
included the FTA "Master Agreement," a document issued annually and
attached to all FTA grants, which required, inter alia, that grant
recipients strictly adhere to any funding match requirement and
that only "approved in-kind resources" be counted as matching
contributions.
In June 2000, the PVTA formally submitted to the FTA an
application for the earmarked funds. The application described
EVW's proposal in detail and recounted the relevant industry
experience of the company's principals, including its Chief
Executive Officer Michael Armitage. After finalizing a budget for
EVW's work, the FTA approved the application and signed a
cooperative agreement with the PVTA governing distribution of the
funds. This agreement, numbered MA-26-7050 (the "7050 agreement"),
-3-
limited the FTA's "[m]aximum . . . [p]articipation" in the project
to 50 percent of incurred costs. The FTA and PVTA later amended
the agreement three times to increase the funding amount and extend
the project period.
In the fall of 2000, EVW recruited Willson, at the time
an engineer at the battery producer Energizer, to serve as the
company's chief scientist. Willson joined the company in November,
and work soon began on developing a rechargeable battery for mass
transit. As agreed, the FTA funded EVW's development efforts
through payments administered by the PVTA. From approximately
December 2000 through March 2005, EVW submitted 27 invoices under
the 7050 agreement to the PVTA, where a grant manager and the
agency's chief financial officer reviewed them before forwarding
them to the FTA. Each invoice was a single page; it identified the
expenses for which EVW sought reimbursement and listed the
percentage of total project expenses "drawn and pending" from the
FTA as of the invoice date. The invoices indicated that the FTA's
total expenditures never exceeded 50 percent of the project costs,
although some invoices requested payment of more than 50 percent of
costs incurred within that specific invoice period. The FTA
ultimately paid all of these invoices.
The initial promise of EVW's battery work gave way to
technical problems in late 2002, which led to layoffs and employee
departures in 2003 and 2004. Willson's project manager departed in
-4-
mid-2004, leaving Willson to prepare the invoices himself. As
Willson later testified, he had no relevant experience and received
no training, nor did he read the FTA Master Agreement, any of the
FTA federal funding regulations, or the 7050 agreement between the
FTA and PVTA. Rather, Willson said he simply tried to copy what
his manager had done. At one point he proposed restating the
invoices, ostensibly so that he could better account for EVW's
expenses and the FTA's payments, but a PVTA official apparently
told him not to do so.
EVW did not overcome its technical problems, and by early
2005, with the 7050 agreement set to expire, the company had run
out of money. Instead of disclosing this information to federal
authorities, Willson asked the Congressman to secure continued
funding for the company's work, and in July 2005 he succeeded in
getting the FTA to enter into a new cooperative agreement with the
PVTA. This agreement, numbered MA-26-7101 (the "7101 agreement"),
superseded the 7050 agreement. The 7101 agreement continued to
fund EVW's battery development efforts which had started under the
7050 agreement, but it specifically did not cover expenses incurred
before it was issued (the "pre-award authority"). Moreover, the
7101 agreement retained the 50 percent funding match requirement
that limited FTA disbursements to no more than half of EVW's
development costs.
-5-
Over the remaining months of 2005, Willson submitted five
invoices to the PVTA (and ultimately the FTA) under the 7101
agreement. As before, each invoice was a single page that
identified the expenses for which EVW sought reimbursement and
listed the percentage of total expenses drawn and pending from the
FTA through the invoice date. The first invoice Willson submitted
under the 7101 agreement, however, began from a total
drawn-and-pending balance of zero, and the later invoices reflected
amounts drawn and pending under the 7101 agreement only. Each
invoice stated, incorrectly, that EVW was meeting its funding match
requirement.
In fact, EVW was by then desperate for money, and its
first two invoices depleted virtually the entire balance of FTA
funds available under the 7101 agreement. Accordingly, the FTA did
not pay any of the 7101 agreement invoices beyond the first two.
(Commerce Funding, a factoring company that advanced EVW funds
against the FTA distributions, paid the next two, seemingly unaware
that no further federal funds would be distributed.) In any event,
EVW received no federal funds after 2005.
In the spring of 2006, the federal Department of
Transportation (DOT) audited EVW. The audit team met with Willson
and CEO Michael Armitage. In her testimony at trial, DOT auditor
Mary Thomas paraphrased Willson as having admitted that "he
basically fabricated costs to place on the invoices in order to
-6-
look as though [EVW] had spent money." In fact, the audit
uncovered numerous irregularities in addition to fabricated costs.
The government brought criminal charges in May 2008,
indicting Armitage on various fraud and false-claims counts. A
superseding indictment, filed in April 2009, added Willson and EVW
itself as defendants. In March 2010, the district court granted
Willson's motion to sever, ordering that Armitage be tried
separately. A second superseding indictment, filed on June 4,
2011, charged Willson with nine counts of wire fraud, 18 U.S.C.
§ 1343, seven counts of false claims, id. § 287, one count of false
statements to a federal official, id. § 1001(a)(2), and a related
conspiracy count, id. § 371. The false claims counts against
Willson charged two false invoices under the 7050 agreement and
five false invoices under the 7101 agreement, and the wire fraud
counts were based on the advances EVW received on these invoices
from Commerce Funding. The false statements count was based on
Willson's comments to the DOT auditor, while the conspiracy count
charged an agreement between Willson and Armitage to prepare the
false invoices, deceive the DOT auditor, and defraud the FTA.
On June 6, 2011, Willson went to trial on the eighteen-
count superseding indictment. The "core" of the government's case
was that the invoices in question had falsely represented that EVW
was satisfying the 50 percent funding match requirement. With
respect to the 7101 invoices in particular, the government argued
-7-
that the funding match requirement had reset under the 7101
agreement, that Willson knew the requirement had reset and that EVW
could not meet it, and that Willson falsely represented that the
FTA was not paying over 50 percent of EVW's costs. He did all this
in order to pay himself and Armitage and to support a newly
established side venture, HSM Systems ("HSM"), that they co-
founded. In addition, the government argued that these invoices
were false because they each contained inflated, mislabeled, and
falsified costs.
The government presented testimony from several
witnesses, including the Congressman and Mary Thomas, and
introduced extensive documentary evidence concerning EVW's
financial activities. The government also introduced the testimony
of Julie Cashman, a Senior Auditor for the Defense Contract Audit
Agency, who conducted a forensic review of EVW's invoices to
determine whether "the 50 percent matching [requirement] was met,"
"the expenses claimed were eligible," and "the company had actually
spent the money that it had claimed [it spent]."
Cashman made two findings of particular importance. On
the basis of the company's bank statements, Cashman testified that
EVW had received approximately $780,000 in the 2005 calendar year,
of which $724,000 (or 93%) came from FTA grant payments. Yet each
of the 7101 invoices claimed that during this period the FTA's
share of EVW's expenses was no more that 50 percent. Additionally,
-8-
EVW had claimed approximately $1.6 million in eligible expenses
under the 7101 agreement, but had spent less than half that amount
($778,000). Second, in attempting to reconcile the 7101 invoices
with EVW's "source documents" -- that is, the bills, records, and
other data evidencing the company's actual expenses -- Cashman
found a bounty of individual errors and inconsistences on each
invoice.
The defense countered that Willson was a scientist, not
an accountant. The individual irregularities in Willson's invoices
were a product of his unfamiliarity with proper accounting
practices, innocent mistakes, or both. Willson also testified that
he understood the 50 percent funding match requirement to apply to
the battery project as a whole (that is, to the 7050 and 7101
agreements collectively), and defense counsel maintained that the
FTA had not covered more than 50 percent of EVW's costs since the
project's inception. Willson also said that he relied on PVTA and
FTA officials to review his invoices and catch any mistakes, and
that he assumed when these agencies covered the invoices that his
accounting practices were acceptable.
On June 21, 2011, the jury convicted Willson on the
remaining conspiracy count,2 six counts of wire fraud, and four
2
After the defense rested, Willson moved for a judgment of
acquittal. On June 17, 2011, the district court granted the motion
as to the count of obstructing a federal auditor and the portion of
the conspiracy count charging a conspiracy to obstruct the auditor.
-9-
counts of false claims based upon the government's charges
concerning the four 7101 invoices that Commerce Funding had
reimbursed. The jury acquitted Willson on the remaining counts of
wire fraud and false claims, which related to the two 7050 invoices
and the fifth and final 7101 invoice.
The district court denied Willson's post-verdict motions
for judgment of acquittal and a new trial, and Willson filed a
timely notice of appeal.
II.
Willson first argues that the district court erred in
denying his post-verdict motion for judgment of acquittal, Fed. R.
Crim. P. 29, because the government's evidence was insufficient to
prove beyond a reasonable doubt that he intentionally submitted
false or fraudulent claims or conspired to defraud the FTA. We
review a preserved challenge to the sufficiency of evidence de novo
"to determine 'whether any rational factfinder could have found
that the evidence presented at trial, together with all reasonable
inferences, viewed in the light most favorable to the government,
established each element of the particular offense beyond a
reasonable doubt.'" United States v. Poulin, 631 F.3d 17, 22 (1st
Cir. 2011) (quoting United States v. Medina-Martinez, 396 F.3d 1,
5 (1st Cir. 2005)); see United States v. Pires, 642 F.3d 1, 7 (1st
Cir. 2011). "We need not be convinced that a guilty verdict was
the only one available on the evidence, but merely that 'a
-10-
plausible rendition of the record' supports [it]." United States
v. Vázquez-Botet, 532 F.3d 37, 60 (1st Cir. 2008) (quoting United
States v. Ortiz, 966 F.2d 707, 711 (1st Cir. 1992)); see Poulin,
631 F.3d at 22 ("The court's only inquiry is whether the guilty
verdict 'is supported by a plausible rendition of the record.'"
(quoting Ortiz, 966 F.2d at 711)).
The jury convicted Willson on the counts for false claims
and wire fraud that stemmed from the first four 7101 invoices he
submitted in 2005. The government's evidence was sufficient for a
jury to conclude that these invoices were false or fraudulent
because they (1) misrepresented that EVW was satisfying the funding
match requirement and (2) sought reimbursement for ineligible,
inflated, and fictitious expenses.
EVW was in severe financial distress by early 2005.
Former EVW communications director Curt Pressier testified that
EVW's financial situation was "dire" and that the company stopped
matching the FTA's funding contribution in November of 2004. And
Willson himself testified that EVW was "out of money" by the end of
2004 and that he stopped drawing a salary in October of 2005.
Willson also informed Armitage in a May 2005 email, months before
EVW was awarded the 7101 agreement, that FTA funds would constitute
nearly 100 percent of EVW's cash receipts during FY 2005. The
government's expert confirmed that the actual figure for the FTA's
contributions, 92.85 percent, was not far from Willson's estimate.
-11-
During this period, Willson submitted the four 7101
invoices, which represented that EVW had incurred over $1.2 million
in eligible expenses from January to September of 2005, and sought
reimbursement from the FTA for just under half that amount. Each
invoice also stated that, to date, the FTA had covered no more than
50 percent of EVW's "drawn and pending" expenses. The logical
import of these representations is that, in order to comply with
the funding match requirement, EVW had contributed at least
$600,000 in non-federal funding to the battery project over this
nine-month interval. But EVW had almost no independent funding in
2005, let alone funding in excess of $600,000.3
Willson argues that even if the funding match requirement
did reset under the 7101 agreement, and his invoices were therefore
inaccurate, the government failed to show that he understood the
requirement had reset and submitted the 7101 invoices nonetheless.
3
Willson reverts to his trial court argument that, reading
the local share requirement to apply to EVW's cumulative expenses
over the 7050 and 7101 agreements, the four 7101 invoices
accurately represented that EVW had met its obligations. This
argument is unconvincing for a number of reasons. As an initial
matter, Willson's proposed construction of the funding match
requirement is based on a superseded version of the FTA's Master
Agreement. The only evidence countenancing that EVW contributed
over 50 percent of the battery project's cumulative costs is a
spreadsheet that Armitage gave to the DOT investigator during the
2006 audit. That spreadsheet contains almost no information on the
sources of EVW's outside capital and includes over $1.6 million in
"in-kind" contributions from Armitage himself and another
unidentified source. Moreover, there is no evidence to show that
these "in-kind" payments, assuming they were actually made, were
approved contributions under the Master Agreement.
-12-
Willson's purported belief that the funding match requirement had
not reset is easily rejected. Willson admitted that he was
directly involved in preparing the 7101 agreement application,
which stated that the "previously approved" budget amount for the
project was "$0.00" and identified EVW's "local share" as 50
percent of its future costs. Willson also reset his "rolling
accounting" to zero on the first 7101 invoice he submitted,
demonstrating that he understood the 7101 and 7050 budgets to be
distinct. Finally, Willson made several misleading statements to
federal authorities concerning EVW's financial status, supporting
the conclusion that he knowingly concealed EVW's inability to meet
the funding match requirement.
There was also ample evidence to show that individual
claims in the 7101 invoices were false or fraudulent. Julie
Cashman identified discrepancies in each of the 7101 invoices. In
some, Willson sought reimbursement for real but ineligible costs,
including EVW's debt payments to Armitage and its outstanding tax
liabilities. But in others, Willson flatly misstated the source,
timing, or both of EVW's expenses.4 This evidence corroborates
4
For example, on the second invoice, Willson claimed that
EVW spent $172,772.18 in April of 2005 on "licensing fees." He
later testified that this expense was actually incurred in 2002 for
an equipment purchase. Similarly, on the third and fourth 7101
invoices, Willson claimed $80,000 in expenses for equipment that he
knew EVW had not yet (and ultimately never) purchased, and another
$24,010 for "Debt and Interest" expenses that had actually been
used to purchase Armitage a new vehicle.
-13-
Mary Thomas's testimony that Willson admitted during the 2006 audit
to duplicating claims from earlier invoices and to fabricating and
inflating other expenses.
Willson offers explanations for each of these alleged
discrepancies, but the jury was not obliged to accept them. It is
also worth remembering that, throughout 2005, Willson and Armitage
were simultaneously managing their newly established business HSM.
At trial, Willson testified that he told the PVTA and FTA that
federal funds would not be diverted to HSM. However, the
government proffered evidence that Willson not only charged HSM
expenses to the FTA grant, but also attempted to conceal that fact
through mislabeling and redaction. This evidence lends additional
support to the government's argument that Willson knowingly
included false or fraudulent expenses on the 7101 invoices.
The government's evidence was also sufficient to convict
Willson of the alleged conspiracy with Armitage to defraud the FTA.
This count required proof of "an agreement, the unlawful objective
of the agreement, and an overt act in furtherance of the
agreement." United States v. Mubayyid, 658 F.3d 35, 52 (1st Cir.
2011), cert. denied 132 S. Ct. 2378 (2012) (quoting United States
v. Barker Steel Co., 985 F.2d 1123, 1127-28 (1st Cir. 1993))
(internal quotation marks omitted); see United States v.
Medina-Martinez, 396 F.3d 1, 5 (1st Cir. 2005). In a single
paragraph, Willson challenges the sufficiency of the government's
-14-
evidence as to the first element--the existence of a conspiratorial
agreement.5 His challenge fails.
A "conspiracy may be based on a tacit agreement shown
from an implicit working relationship." United States v. Patrick,
248 F.3d 11, 20 (1st Cir. 2001); see also United States v. Gomez,
255 F.3d 31, 35 (1st Cir. 2001) ("The conspiratorial agreement need
not be explicit and the proof thereof need not be direct."). There
is no dispute that Willson and Armitage worked closely together and
discussed EVW's financial troubles, including the company's
inability to meet the funding match requirement. Additionally,
both men took steps to hide EVW's financial troubles from federal
authorities. It is also clear that both Willson and Armitage
benefited from the conspiracy. During 2005, when almost all of
EVW's cash receipts came from federal funds, Willson received over
$100,000 from EVW, Armitage received over $200,000, and both used
FTA funding to support their side venture HSM. Thus, a reasonable
jury could easily find that a tacit agreement to defraud the FTA
existed between Willson and Armitage.
III.
The district court did not err by refusing to issue two
theory-of-defense instructions that Willson had requested.
Generally, "[a] criminal defendant is entitled to an instruction on
5
We bypass the government's argument that Willson waived his
challenge to the conspiracy count by failing to develop that
challenge. See United States v. Zannino, 895 F.2d 1, 17 (1st Cir.
1990).
-15-
the proposed theory of defense when the theory is a valid one, and
the 'evidence adduced at trial, taken in the light most flattering
to the accused, . . . plausibly support[s] the theory.'" United
States v. Djokich, 693 F.3d 37, 47 (1st Cir. 2012) (second and
third alterations in original) (emphasis omitted) (citation
omitted) (quoting United States v. Ramos-Paulino, 488 F.3d 459, 461
(1st Cir. 2007)); see also United States v. Powers, 702 F.3d 1, 8
(1st Cir. 2012) ("[A] defendant is entitled to an instruction on
his theory of defense provided that the theory is a legally valid
one and there is evidence in the record to support it."). "The
burden is on the defendant, as the proponent of the theory, to
identify evidence adduced during the trial that suffices to satisfy
this standard." Ramos-Paulino, 488 F.3d at 462. We treat
Willson's objections as preserved and our review is de novo.
United States v. Allen, 670 F.3d 12, 15 (1st Cir. 2012).
A court's "failure to give a requested instruction on the
defendant's theory of the case is reversible error only if the
requested instruction (1) was substantively correct; (2) was not
substantially covered elsewhere in the charge; and (3) concerned an
important point in the case so that the failure to give the
instruction seriously impaired the defendant's ability to present
his defense." United States v. Rose, 104 F.3d 1408, 1416 (1st Cir.
1997). Cases satisfying all three Rose factors are "relatively
rare." United States v. Gonzalez, 570 F.3d 16, 21 (1st Cir. 2009)
-16-
(quoting United States v. Prigmore, 243 F.3d 1, 17 (1st Cir. 2001))
(internal quotation mark omitted).
A. The Condonation Instruction
Willson proposed a two-paragraph "Good Faith"
instruction, which followed from his argument that he lacked the
requisite intent to defraud the PVTA and FTA. The first paragraph
informed the jury that good faith was "a complete defense to the
charges against [Willson]" because good faith was "inconsistent
with knowingly making false, fictitious, or fraudulent claims." It
also explained that it was "entirely the government's burden to
prove . . . beyond a reasonable doubt that [Willson] did not act in
good faith." See, e.g., United States v. Callipari, 368 F.3d 22,
33 (1st Cir. 2004), vacated on other grounds, 543 U.S. 1098 (2005).
The second paragraph then directed the jury to consider
any evidence of condonation on the part of PVTA or FTA officials.
Specifically, Willson had argued that he had relied on these
officials to review and correct his invoices, and that he
reasonably inferred when the FTA paid for the invoices that he "was
doing [them] well enough and everything was right." In that vein,
the second paragraph sought to instruct the jury as follows:
You may consider, for instance, any and all evidence of
the Pioneer Valley Transit Authority's and Federal
Transportation Administration's actions or omissions, or
deficiencies in the manner in which those agencies
implemented and enforced their rules, to the extent that
you find such evidence bears on the issue of whether
Christopher Willson had the requisite state of mind. You
may find that the Federal Transit Administration's and
-17-
Pioneer Valley Transit Authority's review and approval of
[EVW]'s invoices, or failure to alert [EVW] to problems
with the invoices submitted by Willson, if relied upon by
him, negates evidence, if there is any, that Christopher
Willson knowingly made false claims or acted with an
intent to defraud.
At the June 20, 2011 charge conference, the government
made only minor objections to the good faith instruction's first
paragraph, but opposed the condonation charge in its entirety. It
argued that the record did not evince any condonation on the part
of PVTA or FTA officials, and that, even if it did, the defense was
free to argue that point without the additional language. The
district court agreed.
Willson argues that the good faith instruction actually
given was insufficient and that he was "entitled to a specific
instruction on the relevance of [the] PVTA and FTA's 'condonation'
of the invoices at issue." He relies principally on our opinion in
United States v. Josleyn, 99 F.3d 1182 (1st Cir. 1996). There, the
defendant was charged with defrauding Honda, his employer, by
accepting kickbacks from prospective Honda dealers. Id. at 1184.
The court had instructed the jury on the defendant's "theory of the
case," which was that Honda "knew of and condoned; that is, gave
tacit approval to the activities . . . alleged in the indictment."
Id. at 1194 (emphasis added). The district court declined,
however, to issue the defendant's proposed instruction, which would
have told the jury that the government had to prove beyond a
reasonable doubt that Honda had not condoned his activities. Id.-18-
On appeal, this court found no error in the district court's
instruction, on the grounds that it had "unmistakably permitted the
jury to consider all the condonation evidence" and that "[n]o more
was required." Id.Even if we assume dubitante that Willson's proposed
condonation instruction is substantively consistent with our
decision in Josleyn, the district court rightly denied the
instruction on another basis. Taken in the light most favorable to
Willson, the record in this case does not plausibly support the
alleged condonation.
The dispute in Josleyn was over the language of the
district court's condonation instruction, not over the question of
whether condonation had occurred at all. By all accounts, the
defense in Josleyn had presented sufficient evidence to show that
Honda executives could have known that their representatives
accepted kickbacks and chose to look the other way. Josleyn, 99
F.3d at 1194 (noting that the government conceded that Josleyn's
evidence "would have permitted the jury to find that . . .
executives at the highest levels of Honda implicitly condoned" his
conduct); see also United States v. Josleyn (Josleyn II), 206 F.3d
144, 160 (1st Cir. 2000) ("The jury heard evidence as to the
management's alleged condonation and testimony that American Honda
consistently paid lower salaries and then conveniently looked the
other way and allowed bribe-taking to supplement those salaries.").
-19-
Indeed, this evidentiary support was essential to Josleyn's defense
that he lacked the requisite intent to defraud Honda. Without some
proof that Honda executives knew about the kickbacks, Josleyn could
not have reasonably believed that they "condoned" it. See Josleyn
II, 206 F.3d at 154.
In contrast, there is virtually nothing in the record
here to suggest that any PVTA or FTA employee could have known, let
alone did know, that the 7101 invoices contained the false
representations alleged in the indictment. The only support
Willson musters is his own testimony that Keith Henry, a PVTA
employee, corrected a few errors on some of the 7101 invoices
Willson submitted. This evidence says little, however, about
whether Henry condoned the false and fraudulent representations
that the government alleges these invoices contained. As Willson
acknowledged at trial, PVTA employees did not "get to see the
records . . . [or] look at all the files that support[ed]" EVW's
claimed expenses. Without this information at his disposal, Henry
could not have identified that EVW's funds were insufficient to
meet the funding match requirement or that the individual expenses
Willson claimed were inaccurate. Moreover, the government
introduced documentary and testimonial evidence to show that
Willson interfered with the ability of federal authorities to
identify these falsehoods by, inter alia, misrepresenting EVW's
finances during preparations for the 7101 agreement, concealing his
-20-
relationship with HSM, and mislabeling and redacting information in
individual invoices.
B. The Reasonable Interpretation of Regulations Instruction
The district court also properly rejected Willson's
proposed "reasonable interpretation" instruction. This instruction
related to Willson's argument that the funding match requirement in
fact permitted accounting over both agreements, such that EVW had
to match the total funds it received rather than its funding on an
agreement-by-agreement basis. Willson also claimed that the
funding match requirement fairly could be interpreted as allowing
EVW to meet its required share through various in-kind
contributions.
Willson's requested reasonable interpretation instruction
explained:
You may find that ambiguities exist in the regulations,
contracts, and rules that the prosecution alleges
governed the receipt of federal money from the Federal
Transit Administration by [EVW]. If you find that
ambiguities exist, then to prove that Christopher Willson
knowingly presented false claims upon the Federal Transit
Administration or that he intended to defraud, the
prosecution must prove beyond a reasonable doubt that the
claims were false under all objectively reasonable
interpretations of the regulations, contracts, and rules.
That is to say, Christopher Willson cannot be convicted
of knowingly presenting false claims or be found to have
intended to defraud the Federal Transit Administration if
there is an objectively reasonable interpretation of the
ambiguous regulations, contracts, or rules under which
the claims presented were actually valid.
To support his request for the instruction, Willson cited United
States v. Prigmore, 243 F.3d 1, 17 (1st Cir. 2001), in which we
-21-
held that defendants are "entitled to have their intent assessed in
the light of the interpretation of the underlying [legal]
requirements that is most congenial to their case theory and yet
also objectively reasonable."
At the charge conference, Willson modified his request
rather dramatically. He abandoned the suggestion that the jury
should determine whether his interpretation was objectively
reasonable, explaining that it was "really for the Court to make
that determination as a threshold matter." Indeed, the instruction
Willson initially requested by motion overlooked Prigmore's clear
rule that "if the evidence at trial gives rise to a genuine and
material dispute as to the reasonableness of a defendant's asserted
understanding of applicable law, the judge, and not the jury, must
resolve the dispute." 243 F.3d at 18. And Willson's counsel
argued that "if the Court finds that under an objectively
reasonable interpretation, for example, the 50-50 requirement, that
what he did was not improper, I think that we're entitled to this
kind of an instruction."6
Willson argues that the trial judge erred in refusing to
give his instruction under the three-part Rose test cited above.
See 104 F.3d at 1416. Specifically, he argues that the instruction
6
The government opposed the reasonable interpretation
instruction, noting that in response to a mid-trial motion in
limine Willson had filed, the government had not presented evidence
on the proper interpretation of the various contracts and
regulations at issue. Again, we bypass the government's argument
that the objection was not preserved.
-22-
he sought was substantively correct under Prigmore; that it was not
covered in the court's general good faith instruction or elsewhere
in the court's charge; and that it concerned his main theory of the
case such that not presenting it to the jury seriously impaired his
ability to mount a defense. For its part, the government largely
ignores the Rose factors and primarily argues that Willson failed
to meet his initial burden of demonstrating that the "evidence
adduced at trial, taken in the light most flattering to" him
"plausibly support[ed] the theory" encapsulated in his requested
instructions. Ramos-Paulino, 488 F.3d at 461. The government also
maintains that the regulations Willson cites as ambiguous had been
superseded at the relevant time, and that in any event Willson's
interpretation was not objectively reasonable.
Given the lack of evidence presented at trial as to what
(if any) interpretation of the relevant regulations Willson was
purportedly following in preparing the invoices, we find the
government's primary argument compelling. Willson appears to
believe that the Prigmore rule entitles defendants to a jury
instruction that effectively puts a thumb on the scale in their
favor whenever their attorneys can articulate a plausible-sounding
undeveloped argument that a given statute or regulation is
ambiguous. Not so.
The Prigmore rule is designed to protect defendants from
being convicted for conduct that they reasonably concluded was
-23-
legal or that they could not reasonably have known was illegal.
Indeed, we have been explicit that the rule is "rooted in the due
process-based 'fair warning requirement.'" Prigmore, 243 F.3d at17 (citing United States v. Lanier, 520 U.S. 259, 265–67 (1997));
see also United States v. Rowe, 144 F.3d 15, 21-22 (1st Cir. 1998)
(suggesting, in dicta, a rule like the one later adopted in
Prigmore, and quoting Dunn v. United States, 442 U.S. 100, 112
(1979), for the precept that "fundamental principles of due process
. . . mandate that no individual be forced to speculate, at peril
of indictment, whether his conduct is prohibited").
Accordingly, the core holding of Prigmore is that a court
must give an instruction presenting a defendant's interpretation of
the legal requirements he is charged with violating when the
defendant presents evidence that he actually held an objectively
reasonable belief that his conduct conformed to those requirements.
This, of course, was the situation in Prigmore itself. The
defendants in that case were charged with conspiring to defraud and
impair the functioning of the FDA by not filing reports and
information supplements required under certain conditions. See 243
F.3d at 3, 13-15. The defendants maintained that they reasonably
believed those conditions had not been met, because they
interpreted one key regulatory clause, "affecting the safety or
effectiveness of the device," as limited by a separate clause,
"intended . . . conditions of use." See id. at 15 (alteration in
-24-
original) (internal quotation marks omitted). How the defendants
interpreted these phrases was the "primary defense theme at trial,"
and they presented evidence that the interpretation they urged at
trial was consistent with the interpretation they had advanced in
previous communications with the FDA. Id. at 13-14. Because the
defendants' interpretation was objectively reasonable and supported
by evidence, we held that failing to so instruct the jury was
reversible error. Id. at 24.
Here, in contrast, Willson presented virtually no
evidence at trial that he actually held the interpretation that he
argues the court was obligated to present to the jury. By his own
admission, he never actually read any of the applicable
regulations. In fact, perhaps the best evidence as to what he
believed when preparing the invoices -- the contents of the
invoices themselves -- cuts against him. Specifically, the
invoices he submitted under the 7101 agreement reset the balance of
drawn and pending FTA funds to zero -- evidence that he understood
EVW was not allowed to carry over contributions it made under the
7050 agreement to meet the funding match requirement under the 7101
agreement. In the absence of evidence that he actually held the
interpretation he advanced at trial, Willson did not raise the
prospect that he faced conviction for conduct he reasonably
concluded was legal, thus violating the due process fair warning
requirement. Accordingly, Willson was well outside the heartland
-25-
of Prigmore, and the district court properly denied both his
request to evaluate the reasonableness of an alternate
interpretation and his proffered jury instruction.
As Willson does not argue that Prigmore's logic should be
extended, we reach no conclusion as to whether a Prigmore
instruction may be required in other circumstances as well.
Affirmed.
-26-