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United States v. Thomas

United States Court of Appeals, Fifth Circuit

January 30, 2017

UNITED STATES OF AMERICA, Plaintiff-Appellee
v.
VANDALE THOMAS, Defendant-Appellant

         Appeal from the United States District Court for the Eastern District of Louisiana

          Before DAVIS, ELROD, and HIGGINSON, Circuit Judges.

          PER CURIAM.

         Defendant-Appellant Vandale Thomas was convicted of theft from a program receiving federal funds, money laundering, and payment structuring arising out of work he performed for the New Orleans Traffic Court. Thomas appeals his convictions and sentence. For the reasons stated below, we AFFIRM his convictions and sentence.

         I.

         Defendant-Appellant Thomas was a contractor for the New Orleans Traffic Court ("Traffic Court") who provided various accounting services for the court.[1] At trial, the government presented evidence that Thomas overbilled the Traffic Court for his services, sometimes billing for over twenty-four hours of work in a single day. Thomas would bill for services he did not provide, bill at a rate in excess of his contracted hourly rate, and backdate transactions in an attempt to conceal his activities. Thomas processed his own invoices and issued checks to himself after obtaining the signature of either the Traffic Court's judicial administrator or one of the Traffic Court judges. Between 2008 and 2011, Thomas received between $600, 000 and $800, 000 for billed services that he did not provide. After a five-day jury trial, Thomas was convicted of three counts of theft from a program receiving federal funds under 18 U.S.C. § 666; three counts of money laundering under 18 U.S.C. § 1957; and five counts of illegal payment structuring under 31 U.S.C. § 5324(a). The district court sentenced Thomas to three years of imprisonment. Thomas timely filed a notice of appeal.

         II.

         Thomas first argues that 18 U.S.C. § 666 should not have been applied to his conduct and that the evidence is insufficient to demonstrate that the elements of section 666 were met. Reviewing the sufficiency of the evidence, we ask whether "any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." United States v. Cooper, 714 F.3d 873, 880 (5th Cir. 2013) (quoting Jackson v. Virginia, 443 U.S. 307, 319 (1979)). We review de novo an interpretation of a federal statute. United States v. Reyes, 239 F.3d 722, 733 (5th Cir. 2001).

         Section 666 makes it a crime for an agent of a state or local government or agency to embezzle, steal, obtain by fraud, or otherwise without authority knowingly convert to his own use property that is worth $5, 000 or more that is owned or under the care, custody, or control of that government or agency if that government or agency "receives, in any one year period, benefits in excess of $10, 000 under [a] Federal program." 18 U.S.C. § 666(a)-(b); see also United States v. Smith, 804 F.3d 724, 728 (5th Cir. 2015). As properly instructed to the jury using this Circuit's pattern jury instructions, the elements of section 666 are: (1) Thomas was an agent of the City of New Orleans; (2) the City of New Orleans was a local government that received in any one-year period, benefits in excess of $10, 000 under a Federal program; (3) Thomas knowingly embezzled, stole, obtained by fraud, or converted to the use of any person other than the rightful owner without authority, property that was owned by or under the care or control of the City of New Orleans or an agency thereof; and (4) the property had a value of $5, 000 or more. See United States v. Phillips, 219 F.3d 404, 409 (5th Cir. 2000) (applying the same elements).

         As this court has previously observed, the definition of "agent" under the first element of section 666 is broad. Id. at 411; see also United States v. Harris, 296 F.App'x 402, 404 (5th Cir. 2008) (unpublished) (noting that section 666 "defines agent very broadly"). Further, "the funds in question need not be purely federal, nor must the conduct in question have a direct effect on the federal funds. The statute possibly can reach misuse of virtually all funds of an agency that administers the federal program in question." Phillips, 219 F.3d at 411. However, our understanding of the statute's reach must account for "how organizationally removed the employee is from the particular agency that administers the federal program." Id. In United States v. Phillips, we cautioned that the term agent "should not be given the broadest possible meaning . . . but instead should be construed in the context of § 666 to tie the agency relationship to the authority that a defendant has with respect to control and expenditure of the funds of an entity that receives federal monies." Id. at 415. In other words, the question of whether a defendant qualifies as an agent "within the meaning of section 666 turns on whether [the defendant] was authorized to act on behalf of [the entity receiving federal monies] with respect to its funds." Id. at 411. After our decision in Phillips, the Supreme Court provided further clarification of section 666's statutory framework and highlighted the type of evidence that juries and courts should consider. In Sabri v. United States, the Court emphasized that the critical inquiry is the nexus between the criminal activity and government entity receiving federal funds, not the nexus between the criminal activity and any particular federal funds. 541 U.S. 600, 604-05 (2004).

         The jury in this case was instructed using our pattern jury instructions, which incorporate these critical nuances and limiting principles. For example, they instruct the jury on the statutory definition of "agent" under section 666 and provide the jury with this court's narrowing "nexus" requirement that the alleged criminal conduct be sufficiently connected to the government entity receiving the federal funds: "It is not necessary to prove that the defendant's conduct directly affected the funds received by the agency under the Federal program. However, there must be some connection between the criminal conduct and the local government receiving the federal assistance." Additionally, the district court here made clear to the jury that the government's theory of prosecution was that:

the Traffic Court of New Orleans is a department of the City of New Orleans, and that Mr. Thomas, being the Chief Financial Officer of the Traffic Court, was an agent of the City of New Orleans because Mr. Thomas was authorized to act on behalf of the City of New Orleans with respect to its funds.

         Neither party challenges the sufficiency of the district court's jury charges. "Because the jury was required to find that all of the elements of § 666(a)(1) were met in order to find [Thomas] guilty, we review the evidence in the light most favorable to the Government as the prevailing party at trial." Harris, 296 F.App'x at 404.

         The parties agree that the City of New Orleans received benefits in excess of $10, 000 annually during the time period at issue and that the misappropriated funds had a value of $5, 000 or more. However, Thomas argues that his conviction should be vacated because there was insufficient evidence to support the jury's verdict that he was an "agent" of the City of New Orleans within the meaning of section 666; in other words, Thomas argues that there was an insufficient connection between his criminal conduct and the local government receiving federal assistance.

         We stress the importance that the government meet its burden of proving that this critical federal nexus exists. See Phillips, 219 F.3d at 413-14 ("[A]lthough the conduct prohibited by section 666 need not actually affect the federal funds received by the agency, there must be some nexus between the criminal conduct and the agency receiving federal assistance.") (emphasis in original) (quoting United States v. Moeller, 987 F.2d 1134, 1137 (5th Cir. 1993)); cf. United States v. Izydore, 167 F.3d 213, 220 (5th Cir. 1999) (reversing a wire fraud conviction because the government failed to provide sufficient evidence of the interstate nexus element, "an immutable requirement"). Without holding the government to its burden to prove the requisite federal nexus, we risk "turn[ing] almost every act of fraud or bribery into a federal offense, upsetting the proper federal balance." Fischer v. United States, 529 U.S. 667, 681 (2000).

         Regrettably, the government neglected to focus its brief on much of the trial record evidence supporting the nexus between Thomas's fraudulent activity and the government entity receiving federal funds-specifically the City of New Orleans. At oral argument, we entreated the government to point us to record evidence that Thomas had authority to act on behalf of the City of New Orleans with respect to the City's funds, but the government was unable to do so. Nevertheless, our own review of the record reveals sufficient evidence to support the jury's reasonable determination that Thomas was the City's "agent" under Phillips and that he had authority to act on behalf of the City with respect to the City's funds. We therefore conclude that the evidence presented to the jury, when viewed in the light most favorable to the government, was sufficient to support the verdict.

         At the most general level, the jury heard not only direct witness testimony explicitly stating that the Traffic Court is a department of the City of New Orleans and that Thomas was an agent of both entities, but also supporting evidence demonstrating the close organizational connection between the City and its Traffic Court, as well as evidence showing that Thomas was authorized to act on behalf of both the City and the Traffic Court with respect to those entities' funds. Thomas oversaw and managed Traffic Court bank accounts, including accounts containing City funds, and had "full authority to make entries into the [accounting] system, to generate checks from the system, to reconcile the system, [and] to move funds, moneys across [accounts] in the system."

         Despite this evidentiary record, Thomas urges that our decision in Phillips nonetheless forecloses a finding by the jury that he was an agent of the City of New Orleans under section 666. We disagree, not only because the jury was properly instructed on the law using our court's pattern jury instructions-which digest and incorporate our holding in Phillips-but also because the facts of Phillips are distinguishable.[2]

         In Phillips, we held that a former tax assessor of St. Helena Parish, Louisiana, was not an "agent" of St. Helena Parish within the meaning of section 666. Phillips, 219 F.3d at 413. We based this determination in large part on the legal separation created by Louisiana law between the Tax Assessor's Office and the Parish, noting that "[t]he Louisiana Constitution, as well as statute, establish assessment districts as independent of parish government" and that "the activities of the assessor are supervised by the Louisiana Tax Commission, a state board controlled by state officials." Id. at 412; see also Harris, 296 F.App'x at 404 (distinguishing Phillips on the ground that the court in Phillips "ruled that the defendant . . . was not an agent of St. Helena Parish under § 666(d)(1), because Louisiana law completely separated the tax assessor's office from the parish government" (emphasis added)). We further observed that the Tax Assessor's Office had "a separate retirement system and health and life insurance benefits" and that, despite some statutorily-required support provided by the Parish, the Assessor's Office "is almost wholly self-funded by tax millage." Id. at 412. Importantly, there was "nothing in the record to indicate that [the tax assessor] had any ability to control or administer employees or programs or funds of the parish." Id. at 413. Despite this separation, the district court in Phillips provided the jury with the conclusory instruction that, "[u]nder Louisiana law, ...


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