I previously posted about an interesting case involving the Eleventh Circuit’s interpretation of one of the public bribery statutes, 18 U.S.C. § 666.
Well, the Eleventh Circuit is at it again. This time, it didn’t turn out as well for the defendant.
In United States v. Chafin, the Eleventh Circuit interpreted a different section of the statute—the exemption for “bona fide salary, wages, fees, or other compensation paid, or expenses paid or reimbursed, in the usual course of business.” This was an issue of first impression.
In short, the court held unless the federal government’s funds were provided specifically for a salary (and not just for general personnel or operating expenses), then the exemption did not apply. This decision narrows the exemption, giving the government greater latitude to charge individuals under the statute.
Section 666, Redux
Section 666 reads:
(a) 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.
(b) 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.
In other words, someone who works for a “covered entity” cannot take anything valued $5000 or more from the entity, provided that the “covered entity” receives federal program benefits of $10,000 during any one-year period.
Critical for this case, however, is § 666(c):
This section does not apply to bona fide salary, wages, fees, or other compensation paid, or expenses paid or reimbursed, in the usual course of business.
The Facts: Sheriff Chafin’s Alleged Scheme
The defendant in this case, Richard Chafin, was the elected sheriff in Brooks County, Georgia for almost 20 years. During his last two years in office, Mr. Chafin instructed the accountant for the local jail to draft 225 checks with a combined total of over $65,000 out of the commissary account so that the sheriff could pay confidential informants.
Mr. Chafin asked that the checks be made out to him so that he could cash them before paying informants to maintain their confidentiality. Mr. Chafin maintains that he did in fact pay the informants. However, multiple convenience store employees claim that he cashed the checks and used the cash to buy lottery tickets for himself.
When a new sheriff came to town (literally), an accountant reviewed the department’s records and noticed Mr. Chafin’s unusual transactions. There was no documentation to back up his claims that the funds were used to pay confidential informants.
The Georgia Bureau of Investigation (GBI) investigated and questioned Mr. Chafin. Mr. Chafin explained that a majority of the money went to pay Joshua Wolfe, a confidential informant. Unfortunately, Mr. Wolfe committed suicide away shortly after the new sheriff took office. Mr. Wolfe’s family did not believe that he had received so much cash.
Mr. Chafin was charged with one count under § 666(b) and one count of obstruction by hindering the communication of information about a potential federal offense to federal officials, in violation of 18 U.S.C. § 1512(b)(3). The obstruction count was based on misstatements he supposedly made to the GBI during the investigation.
The Outcome at Trial
After the close of the government’s case, Mr. Chafin made a Rule 29 motion. One of his arguments was (as summarized by the Eleventh Circuit):
He also claimed that the government failed to prove that he was guilty of federal-program embezzlement because the evidence did not show that the federal-funds threshold in 18 U.S.C. § 666(b) was met. According to him, because most of the federal funds Brooks County received were used to pay the witness advocate’s salary, and because § 666(c) excepts bona fide salaries paid in the usual course of business, the government had not shown that the county received more than $10,000 in federal funds during the one-year statutory period.
The court reserved ruling. The defense then rested without putting on any affirmative evidence.
Ultimately, the district court denied Mr. Chafin’s Rule 29 motion and found him guilty on both counts. (It was a bench trial.) The court concluded that the embezzled funds came partly from an annual grant of almost $34,000 to Brooks County from the Federal Office for Victims of Crime.
He was sentenced to two 13-month concurrent prison sentences. He has served his time but is still on supervised release (so his appeal is not moot). He moved for a new trial, was denied, and then filed this appeal.
Mr. Chafin’s Argument
Mr. Chafin’s primary argument on appeal was on the sufficiency of the evidence with respect to the $10,000 federal funds threshold requirement. Usually, a sufficiency argument is a losing one. Here, however, the facts were not in dispute—only the meaning of the statute to which they were applied.
So there was a glimmer of hope.
Mr. Chafin argued that that the government failed to show that the $10,000 federal funds threshold was met. He argued that the plain meaning rule meant that the use of the words “this section” in subsection (c) should be applied to the whole statute, including the $10,000 threshold requirement in subsection (b).
This interpretation was key because of the $33,997 in federal funds received by Brooks County, at least $25,000 was used to pay the salary of the county’s witness advocate. Under his argument, then, the salary amounts should be excluded under § 666(c) and the remaining amount of federal funds was below the $10,000 threshold.
Mr. Chafin Wins . . . and Then Loses.
The court first applied the well-settled principles of statutory interpretation to conclude that the words “this section” in § 666(c) applies to the entire section:
After considering the overall statutory scheme, we conclude that the phrase “[t]his section” in § 666(c) is unambiguous and that the statutory scheme is consistent and coherent. . . . We thus hold that subsection (c)’s exception applies to subsection (b)’s federal-funds threshold. Accord Mills, 140 F.3d at 633 (“[T]he bona fide salary exception of subsection (c) must be read to apply to all of § 666.”); United States v. Nichols, 40 F.3d 999, 1000 (9th Cir. 1994) (explaining that § 666(c) “excludes local agencies that receive federal funds only as ‘bona fide salary, wages, fees, or other compensation paid, or expenses paid or reimbursed, in the usual course of business.’”).
The Eleventh Circuit then applied subsection (b) to subsection (c). It found that there was more than one way to read the statute:
When applied to § 666(b), we conclude that § 666(c)’s exception has more than one reasonable interpretation. For example, it could mean that a bona fide salary paid by the federal government in the usual course of business to a covered entity does not count toward the federal-funds threshold. Alternatively, it could mean that federal funds designated for the payment of a bona fide salary by a covered entity in the usual course of business do not count toward the federal- funds threshold. The meaning of subsection (c)’s exception for purposes of subsection (b) is thus ambiguous.
Harkening back to 1L year of law school, when there is an ambiguity in a statute, the court may look to legislative history.
Unfortunately for Mr. Chafin, when the court looked to the legislative history of the exception to rectify the ambiguity, it found that Congress intended the exception only to “plug gaps” that might otherwise “criminalize acceptable business practices.”
Based on this legislative history, the Eleventh Circuit concluded that § 666(c) should have a very narrow reading. It had to determine what types of payments were excluded under subsection (c).
Because the federal funds supplied to Brooks County were not specifically directed to pay the salary of the witness advocate, the exception did not apply to the facts in this case.
[We] hold that subsection (b)’s federal-funds threshold is satisfied only if during the statutory period a covered entity receives more than $10,000 in “benefits . . . under a Federal program” after excepting any “bona fide salary, wages, fees, or other compensation paid, or expenses paid or reimbursed” to that entity by the federal government in the usual course of business.
***
These grants [received by Brooks County] were intended to cover some of the personnel and operating costs associated with the witness-advocate position in the sheriff’s office, including the witness advocate’s salary. However, while these grants provided the county with federal funds to pay the witness advocate’s salary, these funds were not salary payments from the federal government to Brooks County. Thus, the funds that paid the witness advocate’s salary are not excepted when calculating the federal-program benefits Brooks County received for § 666(b) purposes.
Mr. Chafin’s conviction under § 666 was affirmed.
This is a fine line, it seems. If the federal government was not specifically paying the salary of a local government employee—as opposed to paying general personnel costs—then the exemption in subsection (c) will not apply. It seems unlikely that federal funds will be given with such specific instructions, so under the Eleventh Circuit’s interpretation, this exemption will rarely be applied.
Mr. Chafin Gets a Partial Win
Mr. Chafin did win on his challenge to his obstruction conviction. The question on appeal was whether the government had to prove that he intended that his statements be received by a federal judge or federal investigator, or only that the federal judge or investigator actually received them.
Relying on a recent Supreme Court decision, however, the Eleventh Circuit explained:
The [Supreme] Court held that to support a conviction under § 1512, “the Government must show that there was a reasonable likelihood that a relevant communication would have been made to a federal officer.”
The court here found that the government presented no evidence suggesting that Mr. Chafin knew that there was a reasonable likelihood that his misstatements would be conveyed to federal officials. On the contrary, he was told by the GBI that the local District Attorney had instigated the investigation. Thus, the §1512 conviction was vacated and remanded.