United States v. Copeland

United States Court of Appeals,
Eleventh Circuit.
No. 96-8404.
UNITED STATES of America, Plaintiff-Appellee,
v.
Virgil M. COPELAND, John J. Winders, Defendants-Appellants.
June 18, 1998.
Appeals from the United States District Court for the Northern District of Georgia. (No. 1:93-CR-
164-1), Owen Forrester, Judge.
Before COX, DUBINA and BLACK, Circuit Judges.
BLACK, Circuit Judge:
Appellants Virgil M. Copeland and John J. Winders appeal their convictions for accepting
and making illegal kickbacks and bribes and for filing false tax returns. We vacate their convictions
for bribery under 18 U.S.C. § 666 and § 2, but affirm their convictions on all other counts.
I. BACKGROUND
From the early 1980s until 1992, Appellant Virgil M. Copeland served as a manager in the
Facilities Operations Division of the Marietta, Georgia, plant of Lockheed Aeronautical Systems
Company (Lockheed). Copeland's responsibilities at Lockheed included finding off-site space for
Lockheed to lease, arranging for the relocation of transferred Lockheed executives, and choosing
contractors to perform building, maintenance, and repair projects.
Appellant John J. Winders was a licensed real estate appraiser and broker who assisted
Lockheed in acquiring real estate and off-site lease premises. Winders and Copeland have been
friends for over 20 years, and between 1991 and 1994, Winders earned approximately $100,000 in
commissions from Lockheed-related business that Copeland referred to him.
Appellants' convictions stem from their involvement in a series of transactions in which
Copeland improperly referred work to Winders and agreed on behalf of Lockheed to pay abnormally
high commissions to Winders. In return, Winders paid Copeland approximately $15,000. In
addition to his dealings with Winders, Copeland accepted payments from Robert Sherwood, a
self-employed contractor to whom Copeland awarded several Lockheed construction projects, and
William Mann, the owner of several contracting and construction companies that performed work
for Lockheed.
Following a jury trial, Copeland was convicted of five counts of accepting kickbacks, in
violation of 41 U.S.C. §§ 52-54 (Counts IV-V, VII-IX), five counts of bribery, in violation of 18
U.S.C. § 666 and § 2 (Counts X-XI, XIII-XV), and three counts of filing false tax returns, in
violation of 26 U.S.C. § 7206(1) (Counts XVII, XXI-XXII). Winders was convicted under the same
statutory provisions of three counts of providing kickbacks (Counts VII-IX), three counts of bribery
(Counts XIII-XV), and one count of filing a false tax return (Count XVI).
On appeal, Appellants assert, among other claims, that the Government failed to prove the
statutory prerequisites of 18 U.S.C. § 666.1 We agree, and therefore vacate the Defendants' bribery
convictions and remand to the district court for resentencing consistent with this opinion.
II. DISCUSSION
1
On appeal, Copeland raises the following additional claims: (1) extrinsic evidence was
improperly introduced into the jury room; (2) his rights under the Speedy Trial Act were
violated; (3) the evidence was insufficient to support the Anti-Kickback Act convictions; and
(4) the court made various errors in sentencing. Winders likewise asserts several additional
claims: (1) the district court improperly failed to sever his trial from Copeland's trial; (2) the
evidence was insufficient to support the Anti-Kickback Act convictions; (3) his due process
rights were violated by an improper amendment to the indictment; (4) the court improperly
admitted character evidence; and (5) the court improperly instructed the jury. After careful
consideration of each of these claims, we affirm the judgment of the district court. See 11th Cir.
R. 36-1.
The Anti-Bribery Act, 18 U.S.C. § 666, prohibits the unlawful acceptance or offering of
anything of value of $5,000 or more, if the person taking the bribe is an agent of an organization
subject to the statute.2 18 U.S.C. § 666(a). Whether an organization falls within the scope of the
statute is determined pursuant to § 666(b), which provides:
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.
18 U.S.C. § 666(b). In the present case, the Government alleges that Lockheed is an organization
within the scope of the statute because it is a prime contractor for the United States Department of
2
Section 666(a) provides:
Whoever, if the circumstance described in subsection (b) of this section exists—
(1) being an agent of an organization, or of a State, local, or Indian tribal
government, or any agency thereof—
(A) embezzles, steals, obtains by fraud, or otherwise without authority
knowingly converts to the use of any person other than the rightful owner or
intentionally misapplies, property that—
(i) is valued at $5,000 or more, and
(ii) is owned by, or is under the care, custody, or control of such
organization, government, or agency; or
(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 business, transaction, or series of transactions
of such organization, government, or agency involving anything of value of
$5,000 or more; or
(2) corruptly gives, offers, or agrees to give anything of value to any person, with
intent to influence or reward an agent of an organization or of a State, local or
Indian tribal government, or any agency thereof, 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; shall be fined under this title,
imprisoned not more than 10 years, or both.
Defense. In response, Appellants argue that a quid pro quo contractual relationship does not satisfy
the requirements of § 666(b).
In determining whether Lockheed falls within the scope of § 666(b), we must consider the
statute's text, legislative history, and purpose. See United States v. Rooney, 986 F.2d 31, 33 (2d
Cir.1993) (citing Dowling v. United States, 473 U.S. 207, 213, 105 S.Ct. 3127, 3131, 87 L.Ed.2d 152(1985)). In so doing, we recognize that "[c]ourts in applying criminal laws generally must follow
the plain and unambiguous meaning of the statutory language." Salinas v. United States, --- U.S.
----, ----, 118 S.Ct. 469, 474, 139 L.Ed.2d 352 (1997) (internal quotations and citations omitted).
Section 666(b) provides that the benefits an organization receives under a federal program
can be in the form of "a grant, contract, subsidy, loan, guarantee, insurance, or other form of Federal
assistance." 18 U.S.C. § 666(b) (emphasis added). A straightforward reading of this text indicates
that § 666(b) encompasses many situations in which the government receives consideration in return
for federal assistance. See United States v. Marmolejo, 89 F.3d 1185, 1189-91 (5th Cir.1996)
(applying § 666 to a county jail that received federal assistance in exchange for housing federal
inmates), affirmed in part sub nom. Salinas v. United States, --- U.S. ----, 118 S.Ct. 469, 139
L.Ed.2d 352 (1997); Rooney, 986 F.2d at 33-35 (holding that a government sponsored loan qualified
as a benefit under a federal program, even though the recipient was required to repay the entire loan
plus interest).
The scope of § 666, however, is not limitless; the statute clearly indicates that only those
contractual relationships constituting some form of "Federal assistance" fall within the scope of the
statute. 18 U.S.C. § 666(b); see Rooney, 986 F.2d at 34 (stating that "[t]he statute expressly equates
"benefits' with "Federal assistance.' "). Thus, organizations engaged in purely commercial
transactions with the federal government are not subject to § 666. See United States v. Stewart, 727
F.Supp. 1068, 1072-73 (N.D.Tex.1989) (holding that defense contractor was not an organization
within the scope of § 666 because it was engaged in purely commercial transactions with the
government); see also Marmolejo, 89 F.3d at 1190; Rooney, 986 F.2d at 34-35.3
Having reached this conclusion based on a plain reading of § 666(b), we normally would not
engage in any additional analysis. However, since some circuits have found § 666(b) to be
ambiguous on its face, it is worth noting that our conclusion is consistent with the statute's
legislative history, which provides in part:
[T]he term "Federal program involving a grant, a contract, a subsidy, a loan, a guarantee,
insurance, or another form of Federal assistance' [is to] be construed broadly, consistent with
the purpose of this section to protect the integrity of the vast sums of money distributed
through Federal programs from theft, fraud, and undue influence by bribery. However, the
concept is not unlimited. The term "Federal program' means that there must exist a specific
statutory scheme authorizing the Federal assistance in order to promote or achieve certain
policy objectives. Thus, not every Federal contract or disbursement of funds would be
covered. 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. 98-225 at 370 (1984), reprinted in 1984 U.S.C.C.A.N. 3182, 3511; see also Stewart, 727
F.Supp. at 1070-71 (citing report). This passage shows that Congress did not intend the statute to
3
The Government's contention that the Fifth Circuit's decision in United States v. Marmolejo,
89 F.3d 1185 (5th Cir.1996), abrogated the district court's decision in United States v. Stewart,
727 F.Supp. 1068 (N.D.Tex.1989), lacks merit. In Marmolejo, the Fifth Circuit concluded that
the "fact that the government received something in return for the assistance it provided" did not
preclude a finding that the county received benefits under a federal program. Marmolejo, 89
F.3d at 1190-91. The Government contends that this finding conflicts with the holding in
Stewart. Stewart, however, turned not on the fact that a quid pro quo relationship existed
between the involved entity and the government, but on the fact that the quid pro quo contractual
relationship was purely commercial in nature and lacked any semblance of federal assistance
under a federal program. Stewart, 727 F.Supp. at 1072. Thus, both Stewart and Marmolejo
support the conclusion that § 666 does not apply to purely commercial transactions. See Rooney,
986 F.2d at 34 (noting that Stewart is consistent with the view that purely commercial
transactions, but not all quid pro quo relationships, fall outside the scope of § 666(b) since
"[Stewart ] involved a defense contractor that supplied custom-made goods to the government,
which in essence is a purchase of equipment from a supplier.").
apply to the federal government's ordinary commercial transactions.4
Based on a plain reading of the statute, we conclude that the Government failed to prove that
Lockheed is an organization that receives benefits pursuant to a federal program as required by §
666(b). Nothing in the record indicates that Lockheed receives any form of federal assistance or is
in anyway engaged in something other than purely commercial transactions with the government.
The Government attempts to distinguish defense contracts from other commercial transactions by
noting that the government provides Lockheed with detailed specifications for aircraft and that
Congress annually appropriates specific sums for aircraft procurement, testing, and research and
development. Although these factors make defense contracts unique, they do not show that
Lockheed received benefits under a federal program through a contract or any other form of federal
assistance. See Stewart, 727 F.Supp. at 1072. Punishing the Appellants' conduct might further the
statute's goal of protecting the integrity of federal funds, but it is not the role of this Court to expand
the scope of § 666 to encompass such behavior. Id. at 1073 (citing United States v. Bowman, 260
U.S. 94, 102, 43 S.Ct. 39, 42, 67 L.Ed. 149 (1922)).5
III. CONCLUSION
4
The legislative history also makes reference to three previously adjudicated cases to which
Congress intended § 666 to apply. See S. Rep. 98-225 at 370 (1984), reprinted in 1984
U.S.C.C.A.N. 3182, 3511; see also Stewart, 727 F.Supp. at 1070-71. Although the facts of
those cases do not encompass all the situations to which the statute should apply, none of the
cases suggest ordinary commercial transactions fall within the scope of the statute. Stewart, 727
F.Supp. at 1070-71; see also Rooney, 986 F.2d at 35.
5
We note that the Supreme Court's recent decision in Salinas v. United States, --- U.S. ----,
118 S.Ct. 469, 139 L.Ed.2d 352 (1997), does not affect our conclusion in this case. Salinas dealt
with the issue of whether the alleged bribery must affect or involve federal funds. Id. at ----, 118
S.Ct. at 473. The Supreme Court unanimously concluded that the bribery does not need to have
a specific impact on federal funds, so long as the involved organization or governmental agency
received federal funding as required by § 666(b). Id. at ----, 118 S.Ct. at 474. Salinas therefore
does not address the issue raised by the present case.
The Government failed to prove that Lockheed is an organization that received, 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. Accordingly, we vacate the
Defendants' convictions for bribery under 18 U.S.C. § 666 and § 2, affirm their convictions in all
other respects, and remand for resentencing consistent with this opinion.
AFFIRMED IN PART, VACATED IN PART, AND REMANDED.