United States v. George Uzzell, United States of America v. Vernon Uzzell, 780 F.2d 1143, 4th Cir. (1986)
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Scribd Government DocsUnited States v. George Uzzell, United States of America v. Vernon Uzzell, 780 F.2d 1143, 4th Cir. (1986)
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Scribd Government Docs780 F.
2d 1143
UNITED STATES of America, Appellee,
v.
George UZZELL, Appellant.
UNITED STATES of America, Appellee,
v.
Vernon UZZELL, Appellant.
Nos. 84-5108, 84-5109.
United States Court of Appeals,
Fourth Circuit.
Argued Oct. 11, 1985.
Decided Jan. 9, 1986.
Frank W. Dunham, Jr. (Brian P. Gettings, Cohen, Gettings, Alper &
Dunham, Arlington, Va., on brief), for appellants.
Michael G. Middleton (J. Frederick Motz, U.S. Atty., Baltimore, Md.,
Linda Chathem Thomsen, Asst. U.S. Atty., on brief), for appellee.
Before ERVIN and WILKINSON, Circuit Judges, and HAYNSWORTH,
Senior Circuit Judge.
HAYNSWORTH, Senior Circuit Judge:
Two brothers, George and Vernon Uzzell, were convicted of conspiracy to file
false claims with the Small Business Administration in violation of 18 U.S.C.A.
Sec. 286. They contend that their filings with the SBA were not claims within
the meaning of Sec. 286 and that there was insufficient evidence of a
conspiracy.
We find no merit in either argument.
I.
3
The two brothers Uzzell acquired a machine shop, Genco Tool and Engineering
Co. At the same time, Vernon leased a sheet metal shop located in the same
building as Genco. Later, Vernon bought the sheet metal shop and changed its
name from Martec to Unifab. By 1979, Vernon's time was divided
approximately equally between Genco and Unifab.
4
In 1977 Genco became a participant in the SBA's "8(a) program." 15 U.S.C.A.
Sec. 637(a). That program is designed to "foster business ownership" and
"promote the competitive viability" of businesses owned and operated by
socially and economically disadvantaged individuals. Participating firms are
entitled to special consideration in the letting of government contracts.
A participating firm may also be entitled to "advance payments" on
government contracts it has obtained. See 13 C.F.R. Sec. 124.1-2 (1985). Such
advances are designed to provide working capital with which to perform the
government contract when the firm cannot obtain the needed capital in the
commercial market. Id. at Sec. 124.1-2(b)(ii). It is an interest-free loan,
dedicated to the contract, and lent on the assumption that the contract proceeds
will be used to repay the SBA. Id. at Secs. 124.1-2(d)(1), (a)(1).
When a participating firm obtains a government contract, it may apply to the
SBA for advance funding. If the participating firm shows that it lacks the
necessary capital with which to complete the contract, cannot readily obtain it
and will maintain proper financial records, the SBA may approve the
application. See id. at Secs. 124.1-2(b)(1)(i)-(iii).
Once a firm has been approved for advance funding of its government contract,
the regulations provide that disbursements shall be made when immediate
financial need is "verified" by the SBA. See id. at Secs. 124.1-2(c)(1)(ii)(A),
(d)(3). In practice, verification is based upon the contractor's submission of
invoices or cancelled checks together with a certification that the expense was
incurred in connection with the performance of the government contract.
In 1978, Genco was awarded two 8(a) contracts, and advance funding for each
was approved by the SBA. The SBA dedicated $175,000 for the first contract
to manufacture tank parts and $660,000 to the second contract to manufacture
missile parts. A number of advance funding disbursements were made by the
SBA on the basis of Martec invoices purporting to be for completed work. The
SBA had not been told of the close relationship between Genco and Martec. Of
course, it was not disclosed that Martec had not done the work, and it seems
unlikely that much of the advances went into contract performance. There was,
for instance, $317,000 advanced on a Martec invoice for production of parts on
the missile contract. That advance was deposited in a Martec account upon
which only Vernon could draw. He then drew checks on that account, one to
himself for $39,700; one to his brother George for $56,679; one to Martec itself
for $8,000; one to Genco for $74,000; one to Unifab, Martec's successor, for
$95,300; and checks to cash totalling $18,800, each of which was endorsed by
one of the brothers.
9
Genco went out of business without having repaid the SBA advances.
II.
10
In United States v. Cohn, 270 U.S. 339, 46 S.Ct. 251, 70 L.Ed. 616 (1926), the
word "claim" was given a narrow definition in the context of a criminal case.
The defendant had been convicted of fraudulently inducing the Customs
Service to release a shipment of Philippine cigars to him. The defendant's
demand was held not to have been a "claim," because the United States was
only a temporary custodian of the cigars and had no proprietary interest in
them. The Court held that a claim must be an assertion of a right "against the
Government, based upon the Government's own liability to the claimant." 270
U.S. at 346, 46 S.Ct. at 253.
11
In United States v. Neifert-White, 390 U.S. 228, 88 S.Ct. 959, 19 L.Ed.2d 1061
(1968), the word "claim" was given a much broader construction in the context
of a civil case. In that case the United States alleged that the defendant had filed
false loan applications with the Commodity Credit Corporation. A civil action
brought under the False Claims Act sought to recover a statutory forfeiture. The
Supreme Court held that the remedial nature of the civil action warranted a
broad reading of the word "claim" to include the filing of a false loan
application. 390 U.S. at 223, 88 S.Ct. at 962.
12
The defendants contend that in the context of this criminal case we must still
take our guidance from Cohn notwithstanding Neifert-White 's much more
expansive reading of the word "claim." We need not resolve that question,
however, for we think the submission of the advance funding request falls
comfortably within the Cohn definition of "claim."
13
Once a firm has been approved as a participant in the SBA's "8(a) program" and
the SBA has approved advance funding for a particular government contract,
the loan application process has been completed. Specific funds are dedicated
for the use of the firm in the performance of its contract. Each disbursement
must be approved by the SBA and by the firm, but approval by the SBA is
largely perfunctory. The SBA's approval is obtained by presenting invoices or
cancelled checks with a certification that they represent work in performance of
the contract. The situation is comparable to a construction loan in which a
lender makes a commitment before construction begins and obligates itself to
make advances based upon documentation, such as architect's certificates or
invoices of contractors. Within the statutory scheme the SBA's advance funding
approval is a commitment that, upon proper documentation, the advance will be
disbursed. Submission of the documentation is not a request for a discretionary
loan; it is a demand that the SBA fulfill its commitment.
III.
14
The district court denied motions for directed verdicts of acquittal. In making
those motions the defendants contended that the evidence was insufficient to
show that Vernon was aware of the submission of false claims and that George
could not be convicted of conspiring with himself. The predicate, however, is
groundless.
15
Far from being insufficient, the showing of Vernon's participation seems
overwhelming. He was an officer and part owner of Genco. He was the owner
and president of Martec on whose invoices the advances to Genco were made.
Checks representing the advances were deposited in a Martec account where
Vernon's was the only authorized signature, and funds from that account were
disbursed to himself, his brother George and their two companies.
16
There was more than an abundant basis for finding that Vernon was a knowing
participant in the fraudulent scheme.
IV.
17
The Uzzells were indicted and convicted of a violation of the general
conspiracy section of the False Claims Act, 18 U.S.C.A. Sec. 286, providing for
maximum punishment of 10 years imprisonment. There is a specific statute
proscribing the submission of a false statement for the purpose of obtaining
money from the SBA which carries a maximum term of imprisonment of two
years. 15 U.S.C.A. Sec. 645(a). The Uzzells were sentenced to terms of five
years' imprisonment, but four and one-half years was suspended as to each, so
that the actual required sentence service was only six months.
18
Prosecution of the defendants under Sec. 286 exposed them to harsher
sentences than those contemplated for fraud on the SBA under Sec. 645.
Criminal conduct, however, may be violative of more than one statute, and, in
the absence of constitutional considerations not present in this case, prosecution
under either statute is permissible. Moreover, Sec. 286 proscribes conspiratorial
acts, and it is not unusual to find conspiracy dealt with more harshly than the
underlying substantive crime. Thus, 18 U.S.C.A. Sec. 287 provides a five-year
maximum term of imprisonment for the submission of a false claim, whereas its
companion Sec. 286 provides a maximum of 10 years for conspiring to make
such a claim.
19
We find no infirmity either in the indictment or in the sentences.V.
20
The judgments of conviction are affirmed.
21
AFFIRMED.
