DECISION AND ORDER
Before this Court is defendant's motion to dismiss Counts VI, VII, and VIII of the ten-count Superseding Indictment against him. Trial of this case is scheduled to begin August 22, 1995. The counts defendant moves to dismiss charge that he made false statements and conspired to make false statements in violation of 18 U.S.C. §§ 1001 and 2, and 18 U.S.C. § 371. The other counts of the Indictment charge violations of 18 U.S.C. §§ 371, 1957 and 2, 1623, and 982. Defendant moves to dismiss the false statements counts based on the May 15, 1995 decision of the United States Supreme Court in Hubbard v. United States, U.S. , 115 S. Ct. 1754, 131 L. Ed. 2d 779 (1995). Oral argument on defendant's motion was heard July 28, 1995.
For the reasons set forth below, defendant's motion to dismiss Counts VI, VII, and VIII of the Indictment is denied.
The parties do not dispute the operative facts underlying this motion.
In January 1991, the Drug Enforcement Agency ("DEA") executed a search warrant at the residence of William Hood in Lancaster, New York. (Daniels Aff. P 5; Response, p. 2.) Agents found a promissory note and agreement dated December 18, 1988, evidencing a $ 65,000 loan that Hood made to defendant and Anthony DeMola. Defendant and DeMola promised to repay the loan in equal monthly installments from February 1, 1989, until February 1, 1991. (Daniels Aff. P 7, exh. A; Response, p.2.) On January 21, 1991, Internal Revenue Service Special Agent Patricia Kalwara applied for a seizure warrant for Hood's rights under the loan on the ground that the loan proceeds were traceable to Hood's cocaine transactions. (Daniels Aff. P 8, exh. B; Response, p. 2.) The Hon. Edmund F. Maxwell, United States Magistrate Judge for the Western District of New York, granted the application. The warrant was filed in the Office of the Clerk of the Western District of New York on February 12, 1991, under Miscellaneous Docket No. Civ. 91-19. (Daniels Aff. P 9, exh. C.) The warrant, in short, directed defendant, DeMola, and Hood to pay the balance of what was owed under the loan.
On March 6, 1991, the parties appeared before Magistrate Judge Maxwell, who stayed execution of the warrant. (Daniels Aff. P 10, Response, pp. 2-3.) John Pieri, Esq., appeared on behalf of defendant in subsequent proceedings. According to defendant, Magistrate Judge Maxwell requested and directed that the parties meet in an attempt to settle this matter. (Daniels Aff. P 11.) Assistant United States Attorney ("AUSA") Richard D. Kaufman sent Magistrate Judge Maxwell a letter dated November 14, 1991, stating:
I have been in contact with John Pieri, Esq., who is representing Vincent S. Tracy concerning this matter. Mr. Pieri has assured me that Mr. Tracy is attempting to reconstruct whatever payments were made on the contract, which the Government has agreed to credit to obligator. I would recommend that we proceed in this voluntary, informal manner in an attempt to resolve some of the issues that will likely arise in any future litigation. However, if you determine that a status meeting should be held, please so advise.
(Daniels Aff. P 12, exh. D., Response, p. 3, n.2.)
Pier later provided AUSA Kaufman with two affidavits: (1) the affidavit of Anthony F. DeMola dated February 25, 1992, and (2) the affidavit of James D. DeMola dated February 3, 1992.
The affidavits stated that Anthony DeMola had repaid $ 20,000 of the debt to Hood from monies DeMola had borrowed from his father, James DeMola. (Daniels Aff. PP 13-14; Response, p. 3.) These affidavits, which contain statements the government claims are false, are the basis of the § 1001 counts against defendant. (Daniels Aff. P 5; Response, p. 3, n.3.) Pieri testified before the grand jury that he submitted the affidavits to AUSA Kaufman "for him to evaluate them and determine whether he would give us any credit for the monies that were indicated." Defendant testified that the affidavits "were prepared to be a claim to the Government to be negotiated." (Response, p. 4, exhs.) AUSA Kaufman testified that the affidavits were among a "number of things" Pieri provided during settlement negotiations.
Defendant moves to dismiss the false statements counts against him based on the Supreme Court's recent decision in Hubbard v. United States, U.S. , 115 S. Ct. 1754, 131 L. Ed. 2d 779 (1995). In Hubbard, the Supreme Court held that a federal court is neither a "department" nor an "agency" within the meaning of the federal false statement statute, 18 U.S.C. § 1001. Defendant contends that since he submitted the DeMola affidavits in connection with a federal court proceeding, § 1001 does not apply. The question this Court must decide is whether Hubbard proscribes the government from prosecuting under § 1001 a defendant who submits a false affidavit to the Office of the United States Attorney to negotiate the settlement of a seizure warrant pending in federal court. Based on the plain language of the statute and the breadth of Hubbard, this Court holds that it does not.
A. The Indictment and Section 1001
Counts VII and VIII of the indictment charge that defendant "did knowingly, willfully and unlawfully cause false, fictitious and fraudulent statements and representations to be made in a matter within the jurisdiction of the Office of the United States Attorney for the Western District of New York" ("U.S. Attorney's Office") in violation of 18 U.S.C. § 1001. Count VI charges that defendant conspired to violate § 1001 in violation of 18 U.S.C. § 371. Section 1001 provides:
Whoever, in any matter within the jurisdiction of any department or agency of the United States knowingly and willfully falsifies, conceals or covers up by any trick, scheme, or device a material fact, or makes any false, fictitious or fraudulent statements or representations, or makes or uses any false writing or document knowing the same to contain any false, fictitious or fraudulent statement or entry, shall be fined not more than $ 10,000 or imprisoned not more than five years, or both.
A 1955 Supreme Court decision, United States v. Bramblett, 348 U.S. 503, 509, 75 S. Ct. 504, 508, 99 L. Ed. 594 (1955), initially framed the issue of how § 1001 applies to statements made in judicial proceedings.
B. The Application of § 1001 under Bramblett and its Progeny
Section 1001 penalizes false statements made "in any matter within the jurisdiction of any department or agency of the United States." Section 6 of Title 18 defines "department" as "one of the executive departments . . . unless the context shows that such term was intended to describe the executive, legislative, or judicial branches of the government." In Bramblett, the Supreme Court rejected the argument that § 1001 only penalizes false statements made within the jurisdiction of executive agencies. The defendant in Bramblett was a former congressman who made false statements to the Disbursing Office of the House of Representatives. The Court, upholding his conviction, held that "department," as used in § 1001, "was meant to describe the executive, legislative and judicial branches of the Government." Bramblett, 348 U.S. at 509, 75 S. Ct. at 508.
Not long after the Supreme Court decided that § 1001 applied to matters within the jurisdiction of the judicial branch, federal courts carved out what became known as the "judicial function" or "adjudicative function" exception. The courts of appeals generally agreed that § 1001 applied to statements made to the judicial branch that related to their administrative or "housekeeping" function, but not those that related to their adjudicative function. In United States v. Masterpol, 940 F.2d 760, 766 (2d Cir. 1991), the Second Circuit adopted the "adjudicative function" exception already in place in other circuits. The court held that "section 1001 does not apply to statements made to a court acting in its judicial capacity." See also United States v. Inserra, 34 F.3d 83, 87-88 (2d Cir. 1994); United States v. Deffenbaugh Industries, Inc., 957 F.2d 749 (10th Cir. 1992); United States v. Holmes, 840 F.2d 246, 248 (4th Cir.), cert. denied, 488 U.S. 831, 109 S. Ct. 87, 102 L. Ed. 2d 63 (1988); United States v. Mayer, 775 F.2d 1387, 1388-92 (9th Cir. 1985); United States v. Abrahams, 604 F.2d 386, 393 (5th Cir. 1979); Morgan v. United States, 114 U.S. App. D.C. 13, 309 F.2d 234 (D.C. Cir. 1962), cert. denied, 373 U.S. 917, 83 S. Ct. 1306, 10 L. Ed. 2d 416 (1963). The Supreme Court reconsidered this entire method of analysis in United States v. Hubbard.
C. Bramblett Overruled: United States v. Hubbard
The Supreme Court specifically addressed in Hubbard the extent to which § 1001 applies to matters within the jurisdiction of the judicial branch. The defendant in Hubbard filed false, unsworn statements with a Bankruptcy Court in response to a trustee's motion to compel certain business records. When the falsity came to light, the defendant was charged with three counts of making false statements under § 1001. The Sixth Circuit affirmed his conviction, rejecting the "judicial function" gloss that other circuits had applied to Bramblett. Prompted by this split in the circuits, the Supreme Court granted certiorari.
Rather than decide whether a "judicial function" exception limited the scope of Bramblett, the Court explained that Bramblett itself "must be acknowledged as a seriously flawed decision." Hubbard, U.S. at , 115 S. Ct. at 1758. The Court discussed the errors of its analysis and explicitly overruled Bramblett, holding that "a federal court is neither a 'department' nor an 'agency' within the meaning of § 1001." Id., U.S. at , 115 S. Ct. at 1765.
Defendant argues on this motion that since a federal court is neither a "department" nor an "agency" within the meaning of § 1001, the government cannot prosecute him under that statute. He contends that Hubbard, read in light of certain prior decisions applying the judicial function exception, precludes the government from prosecuting any false statement made in connection with an ongoing judicial proceeding. This expansive reading of Hubbard, however, applied to facts of this case, would defeat the plain language of § 1001.
D. The Application of § 1001 to the DeMola Affidavits
Hubbard admittedly contains language that read in a vacuum apart from the language of the statute itself arguably supports defendant's expansive reading. For example, the Court begins, "as an initial matter . . . one might be tempted to conclude that § 1001 does not apply to falsehoods made during federal court proceedings." Id. at 1757. Defendant's claim is that Hubbard means § 1001 does not apply to any false statement made "in connection" with an ongoing judicial proceeding. That is not entirely accurate.
What the Court specifically held in Hubbard is that "a federal court is neither a 'department' nor an 'agency' within the meaning of § 1001." Id. at 1765. Since the defendant in Hubbard submitted the false statement to a Bankruptcy Court, not a "department or agency of the United States," his conviction did not stand.
Defendant in this case submitted allegedly false statements to an executive department, not a court. The undisputed facts before this Court are that defendant submitted allegedly false statements to the U.S. Attorney's Office to settle an outstanding seizure warrant. No court order or court rule directed defendant to submit the affidavits, which defendant did not file or otherwise submit to the court. Defendant sought no action from the court by submitting the affidavits to the U.S. Attorney's Office.
The parties do not dispute that the U.S. Attorney's Office is a department of the United States.
Nor can there be any dispute that defendant submitted the affidavits in a matter "within the jurisdiction of" the U.S. Attorney's Office. "The Supreme Court has stressed that the term 'jurisdiction' in § 1001 should be broadly construed." United States v. Bilzerian, 926 F.2d 1285, 1300 (2d Cir. 1991). "A department or agency has jurisdiction, in this sense, when it has the power to exercise authority in a particular situation." United States v. Rodgers, 466 U.S. 475, 479, 104 S. Ct. 1942, 1946, 80 L. Ed. 2d 492 (1984). See also United States v. Adler, 380 F.2d 917, 922 (2d Cir.) ("the word 'jurisdiction' as used in the statute must mean simply the power to act upon information when it is received"), cert. denied, 389 U.S. 1006, 88 S. Ct. 561, 19 L. Ed. 2d 602 (1967). The only department that had the power to exercise authority in this situation--to accept or reject the information in the affidavits in negotiating a settlement--was the U.S. Attorney's Office.
In other words, as the term "jurisdiction" is used in § 1001, defendant submitted the affidavit in a matter within the jurisdiction of the U.S. Attorney's Office, not in a matter within the jurisdiction of a court. The court did not have jurisdiction in the § 1001 sense because it did not receive nor did it have the power to act upon the affidavits submitted to the U.S. Attorney's Office. The U.S. Attorney's Office, not the court, had the power to negotiate a settlement of the outstanding seizure warrant based on the affidavits.
The plain language of § 1001 applies to the allegedly false statements defendant submitted to AUSA Kaufman.
A different situation might exist where false statements are made in a matter conceivably within the jurisdiction of both an executive department and a federal court. Hubbard unequivocally states that where the only "department" involved is a court, § 1001 does not apply. Hubbard leaves somewhat unclear whether § 1001 might apply, if ever, to statements filed in a case where an executive department is a party.
The Second Circuit more than hinted in Masterpol--albeit under the judicial function exception to Bramblett--that § 1001 could apply to a false statement relating to an "adjudicative function" if the government was defrauded as a party: "To the extent section 1001 is available at all to criminalize a false statement made during a judicial proceeding, D'Amato indicates that the section only proscribes statements issued during a court proceeding that defraud the government as a party, not the government as a court." Masterpol, 940 F.2d at 765. The Second Circuit was referring to its statement seventeen years earlier in United States v. D'Amato, 507 F.2d 26 (2d Cir. 1974), that
here the Government was not a party to the suit in which the alleged false statement was made, nor was the statement one which was intended to further a scheme to defraud the Government . . . . Our less expansive view of § 1001, that it does not apply where the Government is involved only by way of a court deciding a matter in which the Government or its agencies are not involved, receives some support from some of the cases in other circuits, though we do not necessarily have to agree with them to sustain our holding here.
Id. at 28. In Hubbard, the only "department" involved was the Bankruptcy Court, which we learned was not a department at all. What if an executive department is a party to a judicial proceeding and a false statement is made within the jurisdiction of both the court and the department? Justice Scalia suggests in his concurring opinion in Hubbard that § 1001 might not apply:
[Section 1001] does not actually prohibit any legitimate trial tactic. There remains, however, a serious concern that the threat of criminal prosecution under the capacious provisions of § 1001 will deter vigorous representation of opposing interests in adversarial litigation, particularly representation of criminal defendants, whose adversaries control the machinery of § 1001 prosecution.