United States v. GrahamUnited States v. Graham
Lead Opinion
Affirmed by published opinion. Judge MOTZ wrote the majority opinion, in which Judge MICHAEL joined. Judge GREGORY wrote a dissenting opinion.
OPINION
After the Government charged Robert E. Graham with 39 criminal offenses, he opted for a bench trial. The district court found him not guilty of all offenses except that charged in Count 14 — -embezzlement from his employer, an organization receiving in excess of $10,000 annually in federal funds. See
I.
A.
Graham served as executive director of two related nonprofit corporations — the Council on Aging, Inc. (“COA”) and All Care Home and Community Services, Inc. (“All Care”)- — for more than twenty years. The corporations, which shared a Board of Directors, provided services to the elderly and infirm and received well over $10,000 annually in federal funds.
For many years, Graham had no written employment contract with either corporation. However, in December 2001, he prepared and submitted employment contracts, which the Board’s president signed. The contracts raised Graham’s annual salary from $125,000 to $185,000.
In March 2002, COA agreed to assume responsibility for All Care’s administrative expenses, including Graham’s salary and benefits, and entered into an amended employment contract with Graham so providing. This amended contract contains the following sick-leave provision:
Beginning on the date of employment sometime around May 1975 until the termination of employment, [Graham] shall be entitled to accrue two days (16[]hours) per month paid sick leavetime. Sick leave may be accumulated from year to year. Sick leave benefits may be converted into cash compensation if used for illnesses or upon the termination of this contract.
Thus, the contract authorized Graham to convert his sick-leave benefits into cash compensation under only two circumstances- — “illness[ ] or ... termination of th[e] contract.”
Nevertheless, in January 2003, without meeting these conditions, Graham sought Board permission to convert some of his sick leave to cash. Graham offered the Board the following brief justification for the request: “I am requesting permission to buy out some of my sick leave. It shows in the books as an accrual. I can already bu[y] out my vacation.” The Board granted his request, and on that same day, Graham converted 1200 sick-leave hours to $106,728. Two more times in the spring of 2003, again without meeting the contractual conditions, Graham requested and received Board permission to convert some of his sick leave to cash. In all, during 2003, Graham converted sick leave to over $160,000 in cash.
Graham never again asked the Board to approve his conversion of sick leave to cash. But in both January and February 2004, again without meeting either of the contractual conditions, he converted sick leave to cash. In total, during 2004, Graham converted sick leave to over $30,000 in cash.
In response to ongoing state investigations of COA, the Board called an emergency meeting in March 2004, at which it revised the terms of Graham’s employment contract and ordered Graham to return the money he received for sick leave in 2003. That same month, Graham heeded his attorney’s advice and repaid all the money he had received for sick leave in both 2003 and 2004.
In July 2006, a federal grand jury in the Southern District of West Virginia returned a second superseding 39-count indictment against Graham. Both counts 13 and 14 charged him with embezzling money from COA by unauthorized conversion of sick leave to cash. See
Graham pled not guilty to all counts and waived his right to a jury trial. During his five-day bench trial, the Government offered substantial evidence that at all relevant times, the COA Board members were elderly (their average age exceeded 80), hard of hearing, financially unsophisticated, and strongly influenced by Graham. The Government argued that this evidence required the district court to find that Graham could, and did, take advantage of the Board at every turn and so find him guilty of all 39 counts in the indictment.
The district court refused to so find. Rather, after the trial, at which Graham did not testify, the court acquitted Graham of all crimes but that charged in Count 14 — embezzlement from his employer of $31,129 through sick-leave conversions to cash in 2004. Thus, the court found Graham not guilty of mail fraud, wire fraud, tax violations, embezzlement related to the purchase of a plasma television and the
The court explained its differing finding as to Counts 13 and 14 as follows:
Evidence establishes that, in 2003, defendant went to the boards of COA and All-Care and requested board approval prior to cashing in sick leave. The board’s sanction of defendant’s behavior, regardless of the ability of its members to fully comprehend the intricacies of the organizations’ finances, leads this court to conclude that defendant did not violate18 U.S.C. § 666(A)(1)(a) as to Count Thirteen. Even though the court doubts that the board members comprehended in detail all of the matters before them, they did consent. Their assent, regardless of their level of competence, creates a reasonable doubt as to Count Thirteen.
On the other hand, the evidence at trial did establish that defendant was guilty of Count Fourteen. It shows clearly that he did not return to the board and seek the same approval for his last buy out of sick leave even though he knew he was supposed to do
... [T]he conclusion is inescapable that Graham cashed in the sick leave [in January and February 2004] without the approval of his board, knowing he needed board approval, thereby effectively stealing the money or converting it to his own use.
From the evidence taken at trial it is clear that defendant, an employee, took this money from COA without having any board approval whatsoever. These transactions each constituted major changes of the sort that required board approval. The fact that Graham sought board approval for the [2003] cash-outs of sick leave is compelling evidence that he knew such approval was required. Graham cavalierly disregarded the board and treated large amounts of COA’s money as if it were his own, diverting it to his personal use and to the detriment of those whom COA and All-Care were created and funded to serve.
Id. at *3-4.
As to the other counts — related to the plasma television, SEP IRA plan, and federal taxes — the court concluded that although Graham’s conduct was “doubtlessly improper and unethical,” id. at *1, and “inconsistent with Graham’s duties as Executive Director,” id. at *2, the Government had failed to prove beyond a reasonable doubt that Graham harbored the requisite intent to commit the crimes charged. Id. at * 1-2, 4; see
The district court concluded that [t]he events leading to this indictment are improper and outrageous and cannot be condoned by the court. Graham failed miserably to fulfill his duties as a public servant, engaging in conduct that squandered public resources and adopting a life-style that reflected discredit upon COA and All-Care, their directors and employees. Bad conduct in and of itself, however, does not equal criminal conduct. To convict a defendant of a crime, the government must establish beyond a reasonable doubt by competent evidence each and every element of each and every crime charged. Except forCount Fourteen, the government has failed to do so.
Id. at *5. The court imposed on Graham a within-Guidelines sentence of two years in prison and a $10,000 fine, and ordered him to forfeit any portion of the funds charged as stolen in Count 14 that he had not already returned.
Graham appealed, and we reversed his sole conviction on sufficiency grounds. Graham,
We pointed to several other facts suggesting Graham did not intentionally steal from COA, including the Board’s decision to maintain Graham as executive director in March 2004 after the federal and state investigations of COA had begun, Graham’s decision to continue to obtain cash for sick leave after the federal investigation began in early 2003, and his filling out the proper paperwork and obtaining approval from the Board treasurer for all of the sick-leave conversions to cash. Id. at 286-87. Although we recognized that certain other facts — for example, that Graham’s conversions of sick leave ran afoul of COA’s written personnel policies — “may demonstrate that Graham is not eligible for the priesthood,” we found them “irrelevant so far as the district court’s determination of guilt is concerned.” Id. at 285 n. 5.
We issued our mandate on March 20, 2008, and on that same day the district court entered an order adjudging Graham not guilty. At that time, Graham had spent thirteen months in prison.
B.
On July 21, 2008, Graham filed an action in the United States Court of Federal Claims seeking damages from the Government for unjust conviction and imprisonment. See
Graham then moved for a certificate of innocence in the district court, which the court denied. After examining the relevant statutory language, the court concluded that § 2513 does not mandate the payment of public funds to everyone acquitted after being imprisoned. Rather, the statute “orders compensation to the truly innocent who have been prosecuted through no fault of their own.” United States v. Graham,
The court first catalogued the trial evidence, which it believed demonstrated that Graham was not actually innocent: Graham (1) “selected and controlled the Board[ ] ... which w[as] composed entirely of the elderly,” (2) took home an annual salary of $185,000, which was “excessive by comparison to the pay of others in similar positions,” (3) “used employees on company time to perform personal services for himself and his family,” (4) “bought ... a $6,000 television[ ] through COA to get a better price and avoid sales taxes,” (5) “manipulated a SEP IRA to benefit his family,” and (6) “assumed a lavish lifestyle including regular visits to a ‘gentlemen’s club.’ ” Id. at 685. This evidence led the court to conclude that “Graham operated [COA and All Care] for years as his own personal domain and for the financial benefit of himself and his family.” Id.
The court then explained why it found that Graham’s “misconduct or neglect cause[d] or br[ought] about his own prosecution.”
The district court expressly recognized that on appeal, we had “carefully reviewed the evidence against Graham on the count of conviction and concluded that it was insufficient to establish his guilt beyond a reasonable doubt.” Id. The comb did not challenge this holding. Rather, the court explained that while the evidence at trial had been found “insufficient to prove [Graham’s] guilt beyond a reasonable doubt,” this evidence left the court unconvinced “that Graham is in fact innocent, [or] that [Graham] did not by misconduct or neglect bring about his own prosecution.” Id.
Graham timely noted this appeal.
II.
This case presents our first opportunity to address
(a) Any person suing undersection 1495 of this title [which waives sovereign immunity for suits seeking money damages from the Government, to be filed in the Court of Federal Claims] must allege and prove that:
(1) His conviction has been reversed or set aside on the ground that he is not guilty of the offense of which he was convicted, ... as appears from the record ... of the court setting aside or reversing such conviction, ... and
(2) He did not commit any of the acts charged or his acts, deeds, or omissions in connection with such charge constituted no offense against the United States, or any State, Territory or the District of Columbia, and he did not by misconduct or neglect cause or bring about his own prosecution.
(b) Proof of requisite facts shall be by a certificate of the court or pardon wherein such facts are alleged to appear, and other evidence thereof shall not be received.
Thus, the plain language of
After setting forth these three requirements,
First, Congress clearly did not provide in the unjust conviction and imprisonment act an avenue for monetary compensation to all whose criminal convictions are reversed after incarceration. See Betts v. United States,
Second, and just as clear as its intent to permit only the “truly innocent” to receive a
Third, as every court to consider the question has held, “[t]he decision to deny a certificate of innocence is committed to the sound discretion of the district court.” Racing Servs.,
ly erroneous.” Betts,
III.
Graham does not challenge any of the above principles. Indeed, he expressly concedes that the district court had discretion to determine his entitlement to a certificate of innocence, and that we “must affirm” absent abuse of this discretion or unless the “findings underlying” it “were clearly erroneous.” Petr.’s Br. 4. Given our deferential review, however, even if we assume that the district court abused its discretion in finding Graham ineligible for a certificate of innocence under
Consistent with
In fact, when Graham informed his lawyer in 2004 of his sick-leave cash payments, his lawyer advised him that he could not legally cash in his sick leave, and recommended that he return the funds. J.A. in No. 07-4106, at 356. Although the attorney’s conclusion proved inaccurate as a matter of law, see Graham,
Graham relies heavily on the Seventh Circuit’s opinion in Betts, the only court of appeals decision to find an abuse of discretion in a district court’s denial of a certificate of innocence. Compare Racing Servs.,
We reject this narrow reading of subsection (a)(2) because it effectively reads “neglect” out of the statute. Each of the Betts court’s enumerated examples implicates some element of wrongful intent. Indeed, the Seventh Circuit appears to limit denial on “neglect” grounds to situations in which “a defendant has it within his means to avoid prosecution but elects not to do so.” Id. (emphasis added). Tellingly, the Betts court draws its examples of “neglect” from the discussion in Keegan of “willful misconduct,” see Keegan,
Moreover, even if we did accept the Betts construction of
Further, nothing in our opinion reversing Graham’s conviction foreclosed the district court’s finding that Graham’s neglect caused his prosecution. Rather, we expressly cabined our reversal, holding only that “a reasonable trier of fact could not find, beyond a reasonable doubt, that Graham knowingly stole any money from COA.” Graham,
What Graham refuses to recognize is that the Government’s failure to offer sufficient evidence to prove his guilt does not require the district court, in considering the same evidence, to find him entitled to a certificate of innocence. See, e.g., Racing Servs.,
The district court exercised its discretion to conclude that Graham, who presented no evidence in support of his application, failed to prove this. We can discern nothing “completely capricious and without rational basis,” Rigsbee,
In sum, the district court’s painstaking, fact-intensive analysis of the evidence that had been admitted during Graham’s five-day bench trial resulted in a conclusion consistent with
IV.
Before concluding, we must briefly respond to the dissent’s contention that we have misread the second clause of
The plain language of the statute forecloses this theory.
Rather, the plain language of the statute dictates that any “misconduct or neglect” that “eause[s] or bring[s] about” a petitioner’s prosecution renders him ineligible for a certificate of innocence. In the face of the unambiguous words of the statute, we cannot construe
Contrary to the dissent’s suggestion, our decision to give effect to the plain language of the statute, and our refusal to add to or disregard any of its language, does not “conflate[ ]” the first and second clauses of
Nothing in
In sum, it is the dissent that offers a “novel interpretation” of
acts of misconduct or neglect causing the petitioner’s prosecution. In fact, as noted above, even if we adopted the statutory construction of the Betts court, we would have to hold that the district court in this case did not abuse its discretion in denying Graham a certificate of innocence. For even the Betts court concluded that the disqualifying misconduct or neglect need only constitute “an affirmative act or an omission by the petitioner that misleads the authorities as to his culpability.”
Y.
We of course regret that Graham suffered imprisonment for an unsupported conviction. However, Congress has determined that this unfortunate fact alone does not establish eligibility for damages against the Government. Rather,
AFFIRMED
Notes
.
. The legislative history of
. It is not at all clear that the district court did abuse its discretion in relying on
. A casual reader might conclude from our analysis that federal courts of appeal have regularly had occasion to consider certificates of innocence. In fact, although Congress first enacted a certificate of innocence statute in 1938, Keegan,
. The dissent interprets a statute of its own creation. In addition to adding these words to
. The dissent’s interpretation of
. Surprisingly, the dissent advances a broader definition of "neglect” that Graham has never advocated, perhaps because he recognizes that, if adopted, that definition would doom even a suggestion of recovery under
Dissenting Opinion
dissenting:
Both the district court and the majority misconstrue
I.
In order to obtain a certificate of innocence and collect money damages for wrongful imprisonment, a petitioner must satisfy three requirements under
The majority relies on the substantial discretion afforded to the district court in determining whether or not a petitioner has successfully met his burden under the statute. See Maj. Op. at 166, 172. However, this case cannot rest on the district court’s discretion because the district court’s failure to correctly apply the statute is an error of law, which is necessarily an abuse of discretion. See Thorn v. Jefferson-Pilot Life Ins. Co.,
A.
The first two requirements under the statute,
The majority first contends that it is “unclear” if Graham met his burden to prove his actual innocence under
In overturning his conviction, we held that Graham was not required to return to the Board for permission to convert his sick-leave to cash. See id. at 286 (“Quite simply, Graham’s cash-outs in June and July of 2003 and January and February of 2004 were not contrary to the authority given to him by the Board.”). The majority makes much of the fact that Graham failed to seek the Board’s permission in light of the limitations his employment contract placed on his ability to convert sick-leave to cash. Per the terms of his contract, he was only allowed such a payout only upon illness or termination. However, we explicitly acknowledged those contractual conditions and held that “the Board’s decisions in January, March, and May of 2003 resulted in a de facto amendment that overrode these restrictions.” Id. (emphasis added). Graham’s employment contract term was thus altered by the party empowered to do so— the Board. Our decision reversing Graham’s conviction was therefore not based on some technicality or procedural issue, but rather on finding Graham “truly innocent” of the crime for which he was convicted. “[T]he record of ... the court reversing” Graham’s conviction thus demonstrates that the “conviction has been reversed or set aside on the ground that [Graham] is not guilty of the offense of which he was convicted,” as is mandated by
Additionally, in no way does the record below support the inference that Graham was guilty of some other, unindicted crime, as is prohibited by
Because Graham’s conviction was not overturned on procedural grounds, and nothing in the record indicates that the conduct for which Graham was acquitted somehow constitutes a different crime against the United States, Graham clearly met his burden under both
B.
Beyond the initial question of whether a petitioner is truly innocent, the final clause of
Congress made clear that the two inquiries are fundamentally different. A petitioner must show that the underlying conduct for which he was charged was “no offense against the United States, or any State, Territory, or the District of Columbia.”
Any other reading of the statute would be nonsensical. Why would Congress explicitly specify that a petitioner need only prove that the “acts, deeds, or omissions” for which he was charged “constituted no offense against the United States,” only to further require in the next clause proof that those same acts were not an offense against any private entity, public decorum or social mores? If Congress intended this result, surely it would not have limited a petitioner’s burden regarding the charged acts to offenses against the State; instead it would have remained silent or at minimum broadened the offenses to include more than actual crimes. But it did not do so. Instead, the statute clearly demarcates the sphere of charged acts as separate from the “misconduct or neglect” which “cause or bring about ... [the] prosecution.”
Rather than recognize the separate nature of the two prongs of
The majority rejects the Seventh Circuit’s decision in Betts v. United States, which also holds that the “misconduct and neglect” prong does not apply to the charged conduct, but rather requires some additional conduct which “mislead[s] the authorities into thinking [petitioner] had committed an offense.”
The majority’s strained statutory construction imputes to Congress a vision of government power that is anathema to the rule of law. Consider the statement that “Graham’s imprudent stewardship of COA, constituted a reasonable basis for Government officers to prosecute,” Maj. Op. at 173, regardless of the fact that being a “sub-par” executive is clearly not criminal.
Graham operated [COA and All Care] for years as his own personal domain and for the financial benefit of himself and his family. His $185,000 annual salary, excessive by comparison to the pay of others in similar positions, was supplemented by the generous cash-out of sick leave Graham arranged for himself. ... Graham used employees on company time to perform personal services for himself and his family; bought at least one expensive item, a $6,000 television, through COA to get a better price and avoid sales taxes; manipulated a SEP IRA to benefit his family; and assumed a lavish lifestyle including regular visits to a “gentlemen’s club.” “Bailey,” a dancer at Graham’s favorite club, on whom he lavished gifts and money, inquired where his money came from.
Graham,
Only probable cause to believe that a person committed acts that satisfy the elements of a crime gives the government reasonable basis to prosecute. The enduring principles on which our government was founded make it clear that the government does not have a reasonable basis to prosecute a person engaged in immoral or “bad conduct” if that conduct does not satisfy the elements of a crime. It is dangerous to suggest that any time a per
The purpose of
. The majority's reading of my view in dissent continues to ignore the fact that the statute requires a petitioner to show that his "misconduct or neglect” did not cause his prosecution. In zeroing in on the first clause of
. It is important to distinguish between conduct that could cause a government investigation and that which would cause a prosecution. Improper corporate stewardship could be grounds for government investigation to determine whether or not a crime has been committed. It would not be reasonable, however, to prosecute unless the government had probable cause to believe that the defendant's conduct satisfied all of the elements of the crime. This is another example of the majority’s failure to analyze the words actually used by Congress in the statute.
. When Congress uses "neglect” without otherwise specifying, it means "carelessness.” Pioneer Inv. Servs. Co. v. Brunswick Assoc. Ltd. P’ship,
The much easier reading of the statute, and the one that gives Congress' intended effect to the word "neglect,” is to read the "acts charged” and "misconduct or neglect”
. Even if we were to assume arguendo that neglect somehow constitutes negligence, Graham's failure to seek Board approval for converting sick-leave to cash cannot be considered negligent when there was no duty breached. The majority did not even define the standards under which it measured Graham’s alleged negligent conduct. In order for a cause of action to lie in negligence, the proponent must show there was a duty of care owed. In reversing Graham's conviction, we held that Graham was not required to return to the Board to obtain permission to cash-out his sick leave, see Graham,
. Again, conduct which is not criminal, but leads to a government investigation, is categorically different from conduct which causes one's prosecution.