The opinion of the court was delivered by: STANTON
In January, 1976 Shelton Blumhof and Howard Saltiel formed Blusal Meats, Inc. ("Blusal"), which sold meat wholesale to food stores. During 1976 to 1978 the United States Department of Agriculture conducted an investigation concerning suspected violations of food stamp program regulations by Blusal and its principals. As a result of that investigation Blusal, Saltiel, Blumhof and a third individual were indicted in the Southern District of New York in May, 1979.
The indictment charged them with conspiracy and violation of the Food Stamp Act, 7 U.S.C. § 2011 et seq., and other federal criminal statutes. In June, 1979 Blusal, Saltiel and Blumhof pleaded guilty to certain counts of the indictment. Blusal was fined $5,000, Saltiel was sentenced to six months imprisonment, and Blumhof was sentenced to six months imprisonment, a $10,000 fine, and three years of probation.
In May, 1980 the Department of Agriculture began an administrative proceeding to recover sums Blusal allegedly obtained through improper food stamp transactions. In March, 1983 the Department of Agriculture ruled that Blusal had made false claims totalling $2,535,000 under the food stamp program.
The motions before the court involve three related cases. The first ("Action I") was brought by Blusal in the Supreme Court of the State of New York, Bronx County, in November, 1983 against the United States and the United States Department of Agriculture ("the government"), alleging that the administrative proceeding which resulted in the $2,535,000 claim against Blusal violated its rights under the United States and New York constitutions. The government removed the case to this court and counterclaimed under the False Claims Act ("FCA"), 31 U.S.C. § 3729 et seq., alleging that during 1976 to 1978 Blusal accepted and redeemed stolen food stamps. In July, 1984 Blusal's claim was dismissed on consent.
The second action ("Action II") was brought by the United States in this court in December, 1984 against Saltiel and Blumhof under the FCA, alleging that during 1976 to 1978 they improperly accepted and redeemed food stamps in their capacity as officers of Blusal.
The third action ("Action III") was brought by the United States in this court in January, 1985 charging Blusal with breaching its contract with the United States Department of Agriculture, under which Blusal was authorized to participate in the food stamp program, and with unjust enrichment.
In Action I Blusal moves pursuant to Fed. R. Civ. P. 12 (b)(6) for dismissal of the government's counterclaim, and pursuant to Fed. R. Civ. P. 56(b) for partial summary judgment on the counterclaim. In Action II Saltiel moves pursuant to Rule 12(b)(6) for dismissal and pursuant to Rule 56(b) for partial summary judgment. In Action III Blusal moves pursuant to Rule 12(b)(6) for dismissal, and Blusal and the United States cross move pursuant to Rule 56 for summary judgment.
Blusal's motion for dismissal of the government's counterclaim is granted in part.
The government alleges that Blusal, through the actions of its officers and employees, violated the FCA, §§ 3729(1)-(3), by knowingly accepting, acquiring, possessing and presenting for redemption stolen food stamps, and by knowingly making and using false records and statements to obtain the payment of false claims.
(Answer and Counterclaim I, paras. 8-13.) Those allegations are sufficient to state claims under §§ 3729(1) and (2).
The elements of a claim under § 3729(1) are: (1) that the defendant presented or caused to be presented to an agent of the United States a claim for payment or approval; (2) that the claim was false or fraudulent; (3) that the defendant knew the claim was false or fraudulent; and (4) that the United States suffered damages as a result of the false or fraudulent claim. The elements of a claim under § 3729(2) are similar: (1) that the defendant made or used, or caused to be made or used, a record or statement to get a claim against the United States paid or approved; (2) that the record or statement and the claim it supported were both false or fraudulent; (3) that the defendant knew the record or statement and the claim it supported were false or fraudulent; and (4) that the United States suffered damages as a result of the false or fraudulent claim. See United States ex rel. Fahner v. Alaska, 591 F. Supp. 794, 798 (N.D. Ill. 1984); United States v. Lawson, 522 F. Supp. 746, 750 (D. N.J. 1981); United States v. Klein, 230 F. Supp. 426, 433 (W.D. Pa. 1964), aff'd mem., 356 F.2d 983 (3rd Cir. 1966). Under both sections the United States may recover costs and a $2,000 civil penalty for each FCA violation in the absence of proof of damage to the United States. United States v. Silver, 384 F. Supp. 617, 620 (E.D.N.Y. 1974), aff'd mem., 515 F.2d 505 (2d Cir. 1975).
The government's allegations in its counterclaim are not sufficient, however, to state a claim under § 3729(3). The elements of such a claim are: (1) that the defendant conspired with one or more persons to get a false or fraudulent claim allowed or paid by the United States; (2) that one or more conspirators performed any act to effect the object of the conspiracy; and (3) that the United States suffered damages as a result of the false or fraudulent claim. See Hageny v. United States, 215 Ct. Cl. 412, 570 F.2d 924, 934 (1978); Murray & Sorenson, Inc. v. United States, 207 F.2d 119, 123 (1st Cir. 1953); United States v. Cripps, 460 F. Supp. 969, 975 (E.D. Mich. 1978); United States v. Kates, 419 F. Supp. 846, 851-852 (E.D. Pa. 1976); cf. United States v. Plotke, 725 F.2d 1303, 1307 (11th Cir.), cert. denied, 469 U.S. 843, 105 S. Ct. 151, 83 L. Ed. 2d 89 (1984) (criminal conspiracy under 18 U.S.C. § 371 consists of agreement to commit crime and commission of an overt act in furtherance of the conspiracy). Proof that a false claim was actually presented to or paid by the government as a result of the conspiracy is not necessary for a defendant to be held liable for the civil ...