Need I say more? It is a truism that materiality is an exceedingly easy element to prove in a prosecution brought under 18 U.S.C. Section 1001. It is even easier to sustain on appeal. But in U.S. v. Joseph Johnson, the Third Circuit held that the government failed to prove materiality under 18 U.S.C. Section 1001 (a) (2), which prohibits “knowingly and willfully… mak[ing] any materially false, fictitious, or fraudulent statement or representation” in a matter within the jurisdiction of the federal government. Joseph R. Johnson was a Bill Cosby supporter who filed a fraudulent pleading in a federal civil action brought by one of Cosby's alleged victims. Specifically, Johnson filed a praecipe that used the signature of the alleged victim's actual attorney, but which was filed without the attorney's knowledge and which contained unsupported allegations that Cosby's alleged victim had failed to report income. Almost immediately after the false pleading was discovered it was stricken from the record by the civil trial judge. Johnson was then indicted under Section 1001 for making a false material representation to the civil trial judge. Materiality requires evidence that the false statements were of the kind "capable of influencing the decisionmaker" and that "could have bearing on an actual decision entrusted to the decisionmaker." In Johnson, the only decisionmaker identified by the prosecution was the civil trial judge, who testified in general that he extracted information whenever he looked at the docket and then took action based on that information. But, according to the Third Circuit, "given the subject matter of the underlying litigation and posture of the case, there is no evidence that this false statement, even if considered by the Judge, could have been relevant, much less material, to any decision." In other words, the stricken meshugannah pleading would not have been relevant or admissible in the alleged victim's case. The only thing it was relevant to was the judge's decision to strike it from the docket, which was not enough. The Third Circuit, without explicitly saying so, seemed to believe that no proof the government might have offered would have sufficed to show materiality in this instance. Assistant Federal Defender Abigail Horn successfully argued the appeal for Johnson and congratulations are in order. I doubt there have been very many successful federal criminal defense appeals on the materiality issue.
Tag: materiality
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In United States v. Russell, the First Circuit pays lip service to the materiality requirement in 18 U.S.C. Section 1035 (a) (2), prohibiting false statements in connection with the payment of health care benefits, but in reality reads this element out of the statute. After losing his job, appellant applied for and received health care benefits under a state-subsidized health care program in Maine. He was charged with making false statements/omissions to Dirigo Health Care Agency in order to obtain these benefits, by omitting the extra cash income he earned through work he performed at a friend's business. Appellant argued, to the jury and on appeal, that the government failed to prove the materiality of his statements/omissions, since he would have qualified for the subsidy even if he had accurately reported his income. In rejecting appellant's argument, the First Circuit correctly stated the standard materiality definition. But in describing the evidence presented by the government as to materiality, the Court stated the following:
"At trial, the jury heard testimony from Dirigo's director that
there was a limit on the income an applicant could earn in 2008 and
2009 to be eligible for an 80% health care subsidy like the one
Russell was awarded. The jury learned that Dirigo does not employ
investigators to verify statements made by applicants on subsidy
applications and that the agency therefore has to rely on
applicants' statements in determining eligibility. The agency
requires the applicant to sign a certification to help it ensure
that all the representations made by the applicant are true.
Russell was awarded a $7,500 subsidy in 2008, and a $4,100 subsidy
in October 2009, based on his representation in his application
that he was neither employed nor receiving income. He signed the
accompanying certifications attesting to the truthfulness of his
statements in those applications."None of this establishes that the amount of unreported income omitted by Russell could have affected the subsidy he received. The trial judge, though rejecting appellant's Rule 29 argument, assessed zero amount of loss and refused to order restitution, because appellant's unreported cash earnings could not be determined and there was no evidence that he earned enough to be disqualified from the subsidy program. As the trial judge put it, "if he had told the truth, the result would have been the same."
The First Circuit analyzed the issue this way:
"Whether Russell's statements were material was
ultimately a question for the jury. But the record clearly
supports a finding that Russell received income in the amount he
reported, plus some additional sums that he did not disclose. Had
he forthrightly stated on his application that he had unspecified
amounts of undocumented cash income above the precise amounts he
reported, it is reasonable to believe that Dirigo might well have
determined that he failed to meet his burden of proving
eligibility. As we said, the government need only prove that the
false statement had a 'natural tendency to influence, or [is]
capable of influencing, the decision.' Neder, 527 U.S. at 16
(quoting Gaudin, 515 U.S. at 509) (alteration in original). Given
the evidence presented at trial, we believe that a rational fact
finder could conclude that they were material."The Court's analysis seems to shift the burden of proof. The evidence, at least as specifically described in the Court's own opinion, fails to show what the unreported income was and whether it could have affected the subsidy amount. This is the government's burden to prove, not Russell's. If the unreported income did not reach a certain threshold, it simply was not capable of influencing the decision to grant Russell a subsidy. Russell is under no legal burden to prove the precise amount of unreported income he earned. If the evidence was there, the First Circuit should have clearly set it out in its opinion. The materiality element is easy enough to prove as it is. There is no reason to read it out of the statute entirely.
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