36 F.4th 191
4th Cir.2022Background
- Kenneth R. Spirito was Executive Director of Newport News–Williamsburg Int’l Airport and directed filling collateral accounts that secured a $5M TowneBank loan to startup airline People Express using various restricted airport/state/federal ("PAC") funds.
- People Express defaulted in early 2015; the collateral accounts were drained and millions were lost. Spirito was indicted on 24 counts (including §666 federal program fraud, §1957 money laundering, §1519 false statements, §1623 perjury) and a forfeiture allegation seeking a multi‑million dollar money judgment.
- Trial evidence showed Spirito chose which funds to pledge, labeled accounts misleadingly, delayed/omitted required reports, and made misleading statements to regulators; he also used an airport credit card for personal vehicle expenses (Count 19).
- Jury convicted Spirito on all counts except one perjury count; district court entered a preliminary forfeiture order before sentencing, sentenced Spirito to probation with home detention, and ordered restitution.
- On appeal Spirito challenged sufficiency of evidence on multiple counts, the district court’s refusal of a limiting jury instruction, exclusion of evidence about a 2017 change in Virginia law, and entry of the forfeiture money judgment without timely adversarial opportunity.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Sufficiency of evidence for §666 convictions (Counts 1–11) | Govt: Spirito intentionally misapplied PAC funds by directing unauthorized transfers to collateral accounts; evidence of concealment and knowledge supports intent. | Spirito: acted with PAC authority or as a permissible allocation/regulatory decision; no personal benefit; not an unlawful conversion. | Affirmed: jury could reasonably find Spirito acted without authority and intentionally misapplied funds; §666 covers unauthorized misapplication even without personal benefit. |
| Money‑laundering convictions (Counts 12–17) | Govt: laundering followed from the §666 misapplications and transfers to make loan payments. | Spirito: money‑laundering depends on infirm §666 convictions. | Affirmed: because §666 convictions sustained, related §1957 convictions stand. |
| False statement to FAA (§1519, Count 18) | Govt: Spirito’s 2017 email omitted/ misstated which funds were used and was knowingly false with intent to impede investigation. | Spirito: government failed to prove knowledge; conflicting testimony creates reasonable doubt. | Affirmed: evidence (including omissions, trial testimony, and concealment) supports finding the statements were knowingly false and intended to impede. |
| §666 aggregation for three credit‑card transactions (Count 19) | Govt: three transactions totaling >$5,000 suffice even if they span slightly more than one year. | Spirito: the conversions spanned more than one year; §666’s $5,000 threshold must be satisfied within a one‑year period. | Reversed/vacated as to Count 19: §666 requires the transactions aggregated to meet $5,000 occur within the same one‑year period; Spirito’s transactions spanned >1 year. |
| Perjury in civil deposition (Counts 20,21,23) — materiality | Govt: false sworn answers about role and use of funds were material to Spirito’s civil defamation suit and investigators. | Spirito: government failed to present evidence about the nature of the civil proceeding and thus materiality. | Affirmed: trial evidence established the deposition related to an ongoing civil suit about the loan; falsehoods were material under civil‑deposition standards. |
| Refusal to give limiting jury instruction (that regulatory violations alone are not crimes) | Govt: general instructions adequately required proof of intentional misapplication and specific intent. | Spirito: court should have instructed jury that handbook/rule violations are not per se crimes. | Affirmed: requested instruction was correct but substantially covered by charge (intent and unauthorized use required); no abuse of discretion. |
| Exclusion of 2017 Virginia statutory amendment and related letter | Spirito: post‑hoc amendment and Secretary’s letter show conduct was not unlawful in 2014 and negate criminal intent. | Govt: amendment does not retroactively legalize prior conduct; evidence of concealment and illegality was overwhelming. | Affirmed: exclusion proper; even if error, harmless given overwhelming evidence of illegality and concealment. |
| Forfeiture money judgment and notice / excessive‑fine argument | Govt: forfeiture was properly noticed in indictment/PREA and preliminary order; Spirito had opportunity to object but did not until after sentencing. | Spirito: preliminary order issued quickly denied meaningful opportunity to challenge; amount is excessive. | Affirmed: Spirito had notice of forfeiture and opportunity to object; Eighth Amendment challenge fails (plain‑error review). |
Key Cases Cited
- United States v. Kelly, 140 S. Ct. 1565 (2020) (§666 protects against property fraud but does not criminalize all dishonest regulatory acts)
- United States v. Powell, 680 F.3d 350 (4th Cir. 2012) (elements of §1519 false‑statement offense)
- United States v. Urlacher, 979 F.2d 935 (2d Cir. 1992) (§666(a)(1)(A) intentional misapplication may reach use for otherwise legitimate purposes)
- United States v. Valentine, 63 F.3d 459 (6th Cir. 1995) (one‑year temporal limitation applies to $5,000 aggregation under §666)
- United States v. Hines, 541 F.3d 833 (8th Cir. 2008) (aggregation within one‑year window allowed to meet §666 jurisdictional minimum)
- United States v. Newell, 658 F.3d 1 (1st Cir. 2011) (discusses aggregation and duplicity issues under §666)
- United States v. Wilkinson, 137 F.3d 214 (4th Cir. 1998) (perjury elements and materiality in civil deposition context)
- United States v. Bajakajian, 524 U.S. 321 (1998) (excessive‑fines analysis for forfeitures)
- United States v. Martin, 662 F.3d 301 (4th Cir. 2011) (notice of forfeiture at sentencing and appellate considerations)