The opinion of the court was delivered by: I. LEO GLASSER
This action arose from the administration of a Community Development Block Grant Program ("CDBG Program") and a Section 235 Housing Program and from the alleged misuse of Housing and Urban Development ("HUD") funds in those programs by the Village of Island Park, New York ("Island Park" or the "Village") between 1979 and 1983. The government filed this action on March 22, 1990; it filed an amended complaint on May 8, 1990. The government has named as defendants the Incorporated Village of Island Park and its present Mayor (Jacqueline Papatsos) and trustees (Charlotte Kikkert, Philip Taglianetti and James Fallon), in their official capacities (collectively, the "Village Defendants"); former officials of the Village, including former Mayor Michael Parente ("Parente"), former trustees James Brady ("Brady") and Francis R. McGinty ("McGinty") and former trustee and HUD employee Geraldine McGann; and six of the couples who were awarded Section 235 homes in the Village (the "Homeowner Defendants").
The amended complaint asserted eight causes of action: (1) violation of the False Claims Act, 31 U.S.C. §§ 1329 et seq.; (2) fraud; (3) violation of the Fair Housing Act, 42 U.S.C. §§ 3601 et seq.; (4) breach of fiduciary duty; (5) aiding and abetting breach of fiduciary duty; (6) unjust enrichment; (7) constructive trust; and (8) erroneous payment of funds. Upon defendants' motion for summary judgment dismissing the claims as time barred, this court dismissed the claims for fraud, breach of fiduciary duty and aiding and abetting breach of fiduciary duty in their entirety; dismissed the claims for violation of the False Claims Act, unjust enrichment and erroneous payment of funds to the extent they related to events prior to March 22, 1984; and dismissed the claim for violation of the Fair Housing Act to the extent the government sought civil penalties. United States v. Island Park, 791 F. Supp. 354 (E.D.N.Y., April 24, 1992) (Island Park). The underlying facts and circumstances are set out in that opinion, familiarity with which is assumed.
The Village Defendants have cross-moved for summary judgment dismissing the causes of action for False Claims Act violations and erroneous payment of funds and have moved for additional time to conduct discovery with respect to the government's claim under the Fair Housing Act. Parente, Brady and McGinty have adopted the Village Defendants statement of facts and memoranda of law and have also moved to dismiss the causes of action for False Claims Act violations and erroneous payment of funds, as well as for additional time to conduct discovery on the Fair Housing Act claims. The Homeowner Defendants have moved for summary judgment dismissing all remaining claims against them.
Pursuant to Local Civil Rule 3(g), the government has submitted a Statement of Material Facts as to which it contends there is no genuine issue to be tried. Several of the contentions in the government's 3(g) statement relate to matters with respect to which defendants Daniel McGann and James Brady asserted their Fifth Amendment privilege against self-incrimination at deposition. Those defendants now attempt to controvert those contentions by submitting affidavits in opposition to the government's motion for summary judgment. The government has requested that those affidavits be stricken. Thus, prior to determining whether the undisputed material facts in this action warrant summary judgment, this court must determine whether to admit those affidavits.
The privilege against self-incrimination may be invoked by defendants in civil as well as criminal proceedings and during the discovery process as well as during trial. Because of the potential for abuse of the privilege by defendants who use it to obstruct discovery only to waive it and subject the plaintiff to surprise testimony at trial, the courts recognize the appropriateness of imposing sanctions for a civil defendant's assertion of the privilege during discovery. Thus, a decision to assert the privilege during pre-trial depositions may be valid grounds for precluding a defendant from testifying at trial, Gutierrez-Rodriguez v. Cartagena, 882 F.2d 553, 575-77 (1st Cir. 1989), as well as for striking affidavits opposing summary judgment motions, In re Edmond, 934 F.2d 1304, 1308-09 (4th Cir. 1991); United States v. Parcels of Land, 903 F.2d 36, 43 (1st Cir.), cert. denied, 498 U.S. 916 (1990).
This principle has been accepted by several district courts in this circuit, SEC v. Drexel Burnham Lambert Inc., 837 F. Supp. 587, 606 n. 6 (S.D.N.Y. 1993), aff'd on other grounds, 16 F.3d 520 (2d Cir. 1994); United States v. 4003-4005 Fifth Avenue, 840 F. Supp. 6 (E.D.N.Y. 1993); United States v. Talco Contractors, Inc., 153 F.R.D. 501, 506 (W.D.N.Y. 1994); SEC v. Cymaticolor Corp., 106 F.R.D. 545, 549-50 (S.D.N.Y. 1985); SEC v. Benson, 657 F. Supp. 1122 (S.D.N.Y. 1987), and is consistent with the well-settled principle that a defendant's direct testimony should be stricken if he or she invokes the Fifth Amendment on cross-examination to shield that testimony from scrutiny, Bagby v. Kuhlman, 932 F.2d 131, 135 (2d Cir. 1991), cert. denied, 502 U.S. 926, 116 L. Ed. 2d 281, 112 S. Ct. 341 (1991); Klein v. Harris, 667 F.2d 274, 289 (2d Cir. 1981) (citing Brown v. United States, 356 U.S. 148, 154-57, 2 L. Ed. 2d 589, 78 S. Ct. 622 (1958)).
In view of Brady's and McGann's repeated invocation of their fifth amendment privilege at deposition, their "eleventh hour" attempt to avoid the consequences of asserting that privilege by submitting affidavits in opposition to the government's summary judgment motion constitutes an abuse of the discovery procedure which should not be permitted. Accordingly, the affidavits of Brady and McGann are precluded.
Furthermore, the government may rely on the defendants' assertion of their Fifth Amendment privilege to confirm matters supported by other independent evidence. As this court has previously held, an adverse inference may be drawn in a proceeding against a defendant who invokes the privilege against self-incrimination. United States v. Private Sanitation Industry Association, 811 F. Supp. 808, 812 (E.D.N.Y. 1992), aff'd 995 F.2d 375 (2d Cir. 1993) (citing Baxter v. Palmigiano, 425 U.S. 308, 318, 47 L. Ed. 2d 810, 96 S. Ct. 1551 (1976)). However, liability should not be imposed based solely upon the adverse inference. United States v. Bonanno Organized Crime Family of La Cosa Nostra, 683 F. Supp. 1411, 1452 (E.D.N.Y. 1988) (citations omitted), aff'd, 879 F.2d 20 (2d Cir. 1989). The government must produce "independent corroborative evidence of the matters to be inferred" before liability will be imposed. Id.
The Village joined the Nassau County Consortium, which was formed to participate in the "Nassau County Community Development Program pursuant to Title I of the Housing and Community Development Act of 1974, as amended." Pl's 3(g) St. P 7. The Secretary of HUD approved the Consortium's application for a Community Development Block Grant (CDBG) to finance a community development program for the Village. Id. CDBG funds may be used for such things as acquiring real property, site improvement, and building public works and playgrounds, but not for the construction of new housing or to provide housing assistance or subsidies for occupants. 42 U.S.C. §§ 5305(a)(1), (2), (4) et seq.; 24 C.F.R. § 570.207(b)(3). A unit of local government is eligible to receive CDBG funds only if it certifies to HUD that it is following a current housing assistance plan (HAP) that meets certain statutory requirements. 42 U.S.C. §§ 5304(c)(1). The unit of local government is required to facilitate achieving the goals for assisted housing in the HAP. 24 C.F.R. § 570.903(e)(2).
The Village entered into Cooperation Agreements with Nassau County, pursuant to which it agreed that the County would allocate CDBG funds "according to a formula based on population and need in conformance to goals and objectives of the application [for CDBG funds]." Cooperation Agreements (Exhibit 2 in Support of Plaintiff's Motion) P 9; Plaintiff's Analysis of Material Facts Not in Dispute ("Pl's Analysis"), at 8, fn 8. The Village also agreed that the County had sole responsibility for "the analysis of needs, the setting of objectives, the development of community development and housing assistance plans. . . ." and that the parties would comply with Title VI of the Civil Rights Act of 1964. Pl's 3(g) St. P P 9, 11; Cooperation Agreements P P 2, 10. The parties agreed that "no person shall on the ground of race, color, sex or national origin be excluded from participation in, be denied the benefits or otherwise be subjected to discrimination under any program or activity for which the parties receive federal financial assistance . . . " Pl's 3(g) St. P 11; Cooperation Agreements P 2.
As part of its HAP, the County initiated a Section 235 housing program on scattered sites throughout the County, including the Village. Pl's 3(g) St. P 10. Under Section 235 of the National Housing Act, HUD assists low income purchasers of homes by insuring their mortgages against default and by making a portion of their monthly mortgage payments. 12 U.S.C. §§ 1715Z(i), (a). The housing is built by a private developer who obtains mortgage commitments from a HUD-approved lender. A developer who applies to build Section 235 housing in a community with a HUD-approved HAP will be approved only if the application is consistent with the HAP. 24 C.F.R. § 235.39(a). Upon HUD approval, Section 235 funding sufficient to subsidize the mortgages on the proposed houses is reserved for the ultimate purchasers.
The Village received approximately $ 650,000 in federal CDBG funds from the County, which it used to purchase or improve land for sale to builders who thereafter applied to HUD to reserve Section 235 funds for the ultimate purchasers of the homes. Pl's 3(g) St. P P 12, 13; Village Defendants' Counter-Statement, at 6. A county-wide AFHMP filed by Nassau County contemplated "a concentrated outreach to attract those families who might not traditionally be expected to purchase a home in a given area" and stated that "proposed housing in non-minority areas will be marketed aggressively to minority groups." Pl's 3(g) St. P 16.
Forty-four homes were built in the Village under the Section 235 program. The homes were built in three phases, commencing in 1979: Phase I consisted of five homes which were constructed by the Halandia Group; Phase II consisted of 22 homes, and Phase III consisted of 17 homes constructed by Ocean Park Properties. Pl's 3(g) St. P 14; Village Defs' Counter-St. P 17, at 7. In its 1981 guidelines for homeowner selection for the Section 235 program, the Village recognized "the obligation to take care of our own qualified residents [as] the first and foremost reason for the building of subsidized housing in the Village." Pl's 3(g) St. P 14.
The AFHMP which was approved for Phase I of the Section 235 program in the Village was prepared by the County. Pl's 3(g) St. P 17. In the AFHMP, it was represented that the program would be advertised locally as well as in Long Beach community newspapers to "offer outreach to broader spectrum of citizens in the specific target area, including the minority population within the adjacent Long Beach community." Id. The Phase I AFHMP, which was submitted by Halandia, set forth the anticipated occupancy goals as "four whites" and "one black or hispanic." Pl's 3(g) St. P 15. In its February 14, 1980 letter approving the AFHMP, HUD stated that "the selecting or giving of preference to prospective purchasers in order to achieve projected goals is not permitted. Transactions should be entered into on a first-come-first-serve basis. The principal standard applied in determining compliance with the Affirmative Fair Housing Marketing Plan is diligent good faith effort." Pl's 3(g) St. P 18.
According to the 1970 census, the Village had a population of 5,396 of which 75 were black; in 1980, the Village's population was 4,387, with 23 blacks constituting .47% of its population; in 1990, the Village had a population of 4,810 with 30 blacks, or 0.6% of its population. Pl's 3(g) St. P 1. The black population of the entire Nassau County Consortium was 9.5% in 1980. Id. Although the Village Defendants assert that these census figures are inaccurate, they have not submitted any evidence in support of their assertions.
Michael A. Parente was Mayor of the Village from 1968 until 1990 and James G. Brady was a trustee of the Village from 1966 until 1990. Pl's 3(g) St. P P 2-3. Harold Scully ("Scully") was Village Clerk from 1955 to 1986 and served as Village Clerk during the entire time that the HUD Section 235 program was being administered in the Village. Pl's 3(g) St. P 4. The government contends that Scully was responsible for administering the Section 235 program in the Village; the Village Defendants do not deny that Scully administered the Program but contend that private builders bore responsibility for its administration. Pl's 3(g) St. 5; Village Def's Counter-Statement, at 4-5. Ann Leonard was Deputy Village Clerk from 1976 to 1986, and is currently Village Clerk. Pl's 3(g) St. P 6.
Scully testified that he understood that under the selection process required by HUD, the Village could accept letters from persons interested in the program only after an advertisement for the housing program appeared. Pl's 3(g) St. P 25. The preselected persons, including the Ciccimarros, delivered their application letters to Village Hall before or at 9 a.m. of the day they had been told the newspaper ads would appear for Phase I. Pl's 3(g) St. P P 26, 27.
The Ciccimarros do not deny that they were called and notified before the advertisement was to appear or that they delivered their application before 9 a.m. on the date that the newspaper ad was scheduled to appear. Janet Ciccimarro asserts that the Ciccimarros were economically qualified for the HUD mortgage, that the application for the program was truthful and that she and her husband were unaware of the Village officials' intent to "manipulate availability of housing" to "defraud the United States and HUD of "money and the right to have the Program administered fairly and honestly" or to exclude blacks and Hispanics from housing in the Village. Aff. of J. Ciccimarro, P P 3A, B. Michael DeLessio, a former Village employee has submitted a declaration asserting that in the fall of 1979, Anthony Ciccimarro told DeLessio that he had spoken to his cousin Alfonse D'Amato and that D'Amato was getting him a Section 235 house in the Village. Pl's 3(g) in Opp. P 7; Delessio Decl. P 4. (The government has also submitted Scully's testimony that D'Amato told him to give the Ciccimarros a house and that he adjusted his list of participants to include the Ciccimarros after discussing that request with Mayor Parente. Pl's Counter-3(g) St. P 3.)
Between Phase I and Phase II, Scully interviewed between 50 and 100 persons for Section 235 homes, none of whom were black. Pl's 3(g) St. P 29. Scully told interested individuals from outside the Village that they were not eligible for the program. Id.
An AFHMP for Phase II was submitted by Ocean Park Properties to HUD on September 14, 1981. Pl's 3(g) St. P 30. In a cover letter submitted with the AFHMP, which was prepared by the County, the County certified that the anticipated occupancy goals were consistent with those of the County-wide AFHMP for Section 235 housing. Id. The anticipated occupancy goals for Phase II were 3 whites, 17 blacks and 4 Hispanics. The County-wide AFHMP stating that proposed housing in non-minority areas would be aggressively marketed to minority groups, was enclosed as part of the Phase II AFHMP. Id. The AFHMP also indicated that advertisements would be placed in the Independent Voice and the Amsterdam News to "provide outreach to areas . . . including the minority population within the adjacent community of Long Beach" and that the "goals for anticipated occupancy for minorities in the Section 235 housing in the Incorporated Village of Island Park are greater than the averages of the Village and County." Id. The AFHMP also provided for meetings with community organizations such as the Hempstead offices of the NAACP and the Alliance of Minority Group Leaders, Inc. Id.
In its letter approving the Phase II AFHMP, HUD restated its position that the occupancy estimates were goals, not quotas and reiterated that transactions must be entered into on a first-come first served basis. Pl's 3(g) St. P 31.
Minutes of a November 12, 1981 meeting of the Village Board state that "The Mayor reported that the Village was accepting letters from those interested in the Section 235 Housing Project." Pl's 3(g) St. P 32; Village Def's Counter-St. P 29, at 13. The advertisements for both Phase I and Phase II directed persons interested in the Section 235 program to write to the Village at Village Hall. Id.
Scully testified that he selected Phase II purchasers by contacting 22 persons from a pre-selected list on November 18, 1981, before advertisements for Phase II first appeared. Pl's 3(g) St. P 32. Ann Leonard confirmed that on November 18, she heard Scully telling people that an advertisement would appear in Newsday and that they should bring a letter in the next day. Pl's 3(g) St. P 33. Scully testified that the purpose of calling persons before the ad appeared was to ensure that the persons who were on the final list of pre-selected purchasers would receive a home. Pl's 3(g) St. P 34. The Village Defendants do not deny Scully's actions but maintain that they were "unaware of Scully's manipulation of the Section 235 Program" and that his acts were not authorized or ratified by the Village or any trustee. Village Defs' Counter-St. P 41, at 14. Twenty-two letters were stamped received at Village Hall at 9:00 a.m. on November 19, 1981. Pl's 3(g) St. P 35.
Scully testified that Brady arranged to have his niece and her husband, the Guerins, put on the list of pre-selected purchasers. Pl's 3(g) St. P 36. Brady invoked the Fifth Amendment when questioned about this at his deposition.
Id. The Guerins were among those whose letters were date-stamped by Ann Leonard on November 18, 1981 as having come in before 9:00 a.m. Id.
Scully testified that the Moores and DiDomenicos were also on the final list of twenty-two, and that they were telephoned on November 18, 1981. P's 3(g) St. P P 37, 38. Both the Moores' and the DiDomenicos' letters were date-stamped by Ann Leonard on November 19, 1981 as having come in before 9:00 a.m. Id. Scully testified that Mayor Parente left a note in his own handwriting requesting that Trustee McGinty's sons be included in the final list and that one of McGinty's sons was called on November 18. Pl's 3(g) St. P 39. Although the Village Defendants deny certain of these assertions relating to the existence of a list of pre-selected applicants and assert a lack of awareness as to Scully's activities, the Village Defendants have not submitted any affidavits or other supporting evidence in support of their position.
Neither have the Homeowner Defendants who purchased Phase II houses specifically denied Scully's activities; they have instead denied knowledge of the "alleged manipulation of the availability of Section 235 housing in Island Park." Aff. of M. Guerin P 5, Aff. of J. DiDomenico P 5, Aff. of D. Moore P 4. Nor do the Homeowner Defendants deny being called in advance of the appearance of the newspaper ads or delivering their application letters to Village Hall by 9:00 a.m. on November 19, 1981; rather, they deny being told prior to November 19, 1981 that they "would receive" a Section 235 house or that they "would be selected" to receive such housing. Id. They also deny being advised of the "availability" of the Phase II housing prior to the general public. Id. Although the Homeowner Defendants assert that they (or in the case of Moore, her father) read the newspaper ad, they do not assert having read that ad prior to delivering their application letters to Village Hall. Aff. of M. Guerin P 3; Aff. of J. Didomenico P 4; Aff. of D. Moore P 3.
In response to the Homeowner Defendants' (including the Ruoccos) motion for summary judgment dismissing the complaint against them, the government has submitted additional materials to refute the assertions of lack of knowledge.
The declaration of Michael DeLessio attests to a conversation in the fall of 1979 in which Ruocco told him that he was getting a Section 235 house in the Village. Pl's 3(g) St. in Opp. P 22; DeLessio Decl. P 3. DeLessio also attests that he saw Brady and the Guerins looking at the site where their Phase II house was eventually built on at least one occasion prior to November 1981, Pl's 3(g) St. in Opp. P 24, and that both DeLessio and Joseph DiDomenico were promised Phase II houses by Masone approximately three months prior to November 1981. Pl's 3(g) St. in Opp. P 26. DeLessio attests that Masone told him and DiDomenico that they would be informed before the ad would appear and, sometime between November 16 and November 18, 1981, they were informed by Scully that the ad would appear on November 19 and they should put their letters of interest in the mail slot before 9:00 a.m. Pl's 3(g) in Opp. P 27. DiDomenico and DeLessio slipped their letters into the mail slot at Village Hall at approximately 6:00 a.m. on November 18, at which time DeLessio saw through the mail slot that there were other letters on the floor. Pl's 3(g) St. in Opp. P 28. DeLessio also attests that his wife called Joseph DiGiacomo, Donna Moore's father, prior to November 19, 1981 to inform him that they were getting a Section 235 house and suggested that he speak to Masone about getting a house for his daughter. Pl's 3(g) in Opp P 29. DiGiacomo told DeLessio that after all he had done for the Village the Village should give his daughter a house. Id.
No AFHMP was submitted to HUD for Phase III, and the availability of Phase III homes was not advertised by the Village. Pl's 3(g) St. P 41. According to Scully's testimony, the Village was advised of the need to act quickly because the program was about to expire and it was suggested that the Village select Phase III purchasers from the unsuccessful applicants for Phase II. Id. Although there were an insufficient number of qualified Village residents who had applied during Phase II to fill the Phase III houses, Scully refused to consider or contact non-Village residents who had applied during Phase II. Pl's 3(g) St. P P 42 - 43. Instead, the Village Board and Scully let people know about the availability of Section 235 housing. Pl's 3(g) St. P 44.
The McGanns did not apply for Section 235 housing during Phase II, but Geraldine McGann allegedly used her influence to get a house for her son during Phase III. Pl's 3(g) St. P P 45 - 46. Scully testified that Mrs. McGann reviewed and approved the list of Phase III purchasers, which included her son. Pl's 3(g) in Opp. P 16. When questioned about his mother's use of influence to get him a Section 235 house and his knowledge of that influence at deposition, Daniel McGann asserted his privilege against self-incrimination. Pl's 3(g) in Opp. P 17. Geraldine McGann also asserted her Fifth Amendment privilege when she was questioned about whether she discussed the section 235 program with her son. Id.
It is undisputed that no blacks received any of the forty-four homes constructed in Island Park under the Section 235 Program. Pl's 3(g) St. P 49.
I. Summary Judgment Standards
Summary judgment "shall be rendered forthwith if . . . there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). In order for the moving party to be successful, it must "point out to the district court . . . that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). In opposing a properly supported summary judgment motion, "an adverse party may not rest upon the mere allegations or denials of [its] pleading, but [its] response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e) (emphasis added). The non-movant, however, "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). "The mere existence of factual issues [pertaining to immaterial facts] will not suffice to defeat a motion for summary judgment." Quarles v. General Motors Corp., 758 F.2d 839, 840 (2d Cir. 1985).
"The moving party is 'entitled to a judgment as a matter of law' [if] the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof." Celotex, 477 U.S. at 323. In deciding a summary judgment motion, the court need not resolve disputed issues of fact, but need only determine whether there is any genuine issue to be tried. Eastman Mach. Co., Inc. v. United States, 841 F.2d 469, 473 (2d Cir. 1988). A genuine factual issue exists if there is sufficient evidence favoring the nonmovant such that a jury could return a verdict in its favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). The nonmoving party, therefore, must come forward with facts, and not doubts as to the veracity of the moving party's allegations: "Rule 56(e) . . . requires the nonmoving party to go beyond the pleadings and by her own affidavits, or by the 'depositions, answers to interrogatories, and admissions on file,' designate 'specific facts showing that there is a genuine issue for trial.'" Celotex, 477 U.S. at 324.
A. Village Defendants' Liability for Scully's Acts.
The government's assertion of the Village's liability under the False Claims Act is based in large part on Scully's actions in administering the Section 235 program. The Village's liability for Scully's activities is premised on the principles of agency. A principal is liable even for criminal acts of an agent if those acts are within the scope of his actual or apparent authority. United States v. Twentieth Century Fox Film Corp., 882 F.2d 656, 660 (2d Cir. 1989), cert. denied, 493 U.S. 1021, 107 L. Ed. 2d 741, 110 S. Ct. 722 (1990); United States v. Bi-Co. Pavers, Inc., 741 F.2d 730, 737 (5th Cir. 1984).
An agent's acts are within the scope of his actual authority if "it is the kind of work he is employed to perform, occurs within the authorized limits of time and space, and is actuated, at least in part, by a purpose to serve the master." W. Prosser, Torts § 70 at 461 (4th ed. 1971). Apparent authority is the authority which outsiders would normally assume the agent to have, judging from his position with the corporation and the circumstances of his conduct. United States v. Bi-Co. Pavers, Inc., 741 F.2d at 737; see also Restatement of Agency 2d, § 49, Comment c ("Acts are interpreted in the light of ordinary human experience. If a principal puts an agent into, or knowingly permits him to occupy, a position in which according to the ordinary habits of persons in the locality, . . it is usual for such an agent to have a particular kind of authority, anyone dealing with him is justified in inferring that he has such authority. . . ")
The doctrine of respondeat superior applies to the Village, an incorporated entity under the laws of the State of New York, see N.Y. Village Law, §§ 2-232, 234 (McKinney 1973). See Haehl v. Port Chester, 463 F. Supp. 845, 848 (S.D.N.Y. 1978); Marr v. Rife, 503 F.2d 735, 740 (6th Cir. 1974). Respondeat superior applies to violations of the False Claims Act committed by an employee of a corporation who is acting within the scope of his authority and, at least in part, for the employer's benefit. See Grand Union Co. v. United States, 696 F.2d 888, 891 (11th Cir. 1983); United States v. Hangar One, Inc., 563 F.2d 1155, 1158 (5th Cir. 1977). A corporation is also liable for violations of the False Claims Act committed by an employee who acted with apparent authority, even if the acts do not benefit the corporation at all. United States v. O'Connell, 890 F.2d 563, 567-68 (1st Cir. 1989).
Although the Village Defendants deny awareness of Scully's manipulation of the Section 235 Program and assert that his acts were not authorized or ratified by the Village or any of its Trustees, they do not deny that the administration of the Section 235 Program by Scully was within the scope of his duties. Scully was duly appointed Village Clerk, and in that capacity was Secretary to the Village Board and took care of the Village's day-to-day business. Pl's 3(g) St. P 4. The acts on which the government bases its cause of action under the False Claims Act were performed by Scully at Village Hall during business hours. The government has demonstrated that the Village was actively involved in the Section 235 program. The land on which the houses were built was purchased and improved by the Village with CDBG funds, eligibility and selection criteria were adopted by the Village Board and applications for Section 235 housing were addressed to Village Hall. Pl's 3(g) St. P P 12 - 14, 32. The Village recorded in its official minutes the Mayor's report that the Village was accepting applicants for Section 235 housing. Pl's 3(g) St. P 32. In addition, the program was part of the County Consortium's HAP and the Village, as a Consortium member and sub-grantee of CDBG funds, had agreed to cooperate with the Consortium in providing subsidized housing. Pl's 3(g) St. P P 9-11. The Village Board explicitly recognized that the Section 235 program would benefit Village residents. Pl's 3(g) P 14.
Furthermore, although the Village Defendants assert that Scully's illegal acts were not authorized, they do not submit any evidence that Scully's authority to administer the Section 235 Program was contested by the Village or any of its officers. In fact, the evidence indicates that Parente was willing to take credit for the Program and accepted a gift that the Section 235 homeowners gave him in appreciation of his involvement. Pl's 3(g) St. P 48. Thus, Scully's acts were of the kind he was employed to perform, occurred within the authorized limits of time and space, and were intended at least in part to benefit the Village. Accordingly, those acts were within the scope of his actual authority and, under principles of respondeat superior, can form the basis for the Village's liability under the False Claims Act.
Moreover, it is clear that Scully's administration of the Section 235 Program was consistent with his position and within the scope of his apparent authority. Advertisements that were submitted to newspapers by Scully as Village Clerk directed interested applicants to write to the Village at Village Hall. Pl's 3(g) St. P 32. In interviewing potential applicants for the Section 235 Program and responding to complaints about the administration of the Program on behalf of the Village Board, Scully was performing acts which third parties would normally assume to be within the scope of his authority. Pl's 3(g) St. P 51. In his correspondence with HUD in response to its request from the Village for information about the marketing of the Section 235 homes, Scully used Village stationery and held himself out as acting on behalf of the Village. Pl's 3(g) St. P 50. These acts were consistent with his position as Village Clerk and would justify the inference that he was acting within the scope of his authority. Thus, these acts can be used to establish violations of the False Claims Act by the Village.
B. Violations of False Claims Act: the Village Defendants.
The False Claims Act, 31 U.S.C. § 3729, et seq., provides that a person is liable if he, inter alia:
(1) Knowingly presents or causes to be presented, to an officer or employee of the United States Government . . . a false or fraudulent claim for payment or approval;
(2) Knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government;
(3) Conspires to defraud the Government by getting a false or fraudulent claim allowed or paid . . .
The government contends that the Village Defendants, Parente and Brady are each liable for separate False Claims Act violations for each post-March 22, 1984, claim by the Village for CDBG funds which were used in connection with the Section 235 program and for each monthly claim ...