UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 92-8277
UNITED STATES OF AMERICA,
Plaintiff-Appellant,
versus
MIKE MOELLER, PETER THOMAS
McRAE, and BILLIE QUICKSALL,
Defendants-Appellees.
Appeals from the United States District Court
for the Western District of Texas
(April 1, 1993)
Before POLITZ, Chief Judge, GOLDBERG and JONES, Circuit Judges.
POLITZ, Chief Judge:
This appeal involves the applicability of 18 U.S.C. § 666 to
the former Texas Federal Inspection Service. The government
appeals the dismissal of certain counts of the superseding
indictment against Mike Moeller, Peter Thomas McRae, and Billie B.
Quicksall. We vacate and remand.
Background
McRae and Quicksall were indicted for, inter alia, improperly
awarding TFIS consulting contracts to codefendants Russell Koontz
and Robert Boyd as compensation for their soliciting campaign
contributions to support the candidacies of Moeller or Jim
Hightower for Texas Agriculture Commissioner. Moeller was deputy
commissioner of the Texas Department of Agriculture. McRae was a
Special Assistant to Moeller at TDA until January 1988 when he
became associate director of TFIS. Quicksall held various
managerial positions at TFIS and TDA. All three were indicted for
violations of 18 U.S.C. § 666, theft or bribery concerning programs
receiving federal funds, and 18 U.S.C. § 371, conspiracy to commit
an offense or to defraud the United States.
TFIS was created to perform federal and state inspections of
agricultural products under a cooperative agreement between the
United States Department of Agriculture and the TDA.1 This
agreement provided for joint supervision of TFIS by a Federal
Supervising Inspector employed by USDA and a State Administrative
Officer appointed by TDA.2 The TFIS inspectors were not federal
employees but were licensed to perform federal inspections. They
performed shipping-point inspections where federal/state inspection
certificates were issued, receiving market inspections where
federal inspection certificates were issued, and they also enforced
Texas state produce regulations.
1
The agreement was entered under the authority of the
Agricultural Marketing Act of 1946, 7 U.S.C. §§ 1621-27, and
applicable Texas law. See Tex. Agric. Code art. 91.001-005.
2
For example, disbursement of TFIS funds required joint
approval of the Federal Supervisor and the Texas Commissioner of
Agriculture, or their respective designees.
2
The agreement authorized TFIS to charge fees for
shipping-point inspections,3 4% of which were remitted to the
Agricultural Marketing Service to offset federal overhead expenses
such as the salary of the federal supervising inspector.4 For the
relevant years, the fees TFIS remitted to AMS exceeded federal
overhead expenses. Fees not remitted by TFIS to USDA could be used
only for TFIS operating expenses. TFIS sometimes loaned inspectors
to USDA to conduct inspections at terminal markets;5 TFIS was fully
reimbursed for the cost of these inspectors. All monies collected
by TFIS for enforcement of state regulations were deposited in the
state treasury.
The defendants moved to dismiss those charges of the
indictment which predicated violations of 18 U.S.C. § 666, or
conspiracy to violate that statute, upon their actions as TFIS
officials.6 The district court granted that motion, finding that
3
The Agricultural Marketing Act authorizes collection of
fees to cover the cost of inspection of agricultural products.
7 U.S.C. § 1622(h).
4
Fees for inspections made pursuant to a cooperative
agreement with a state may be "disposed of in accordance with the
terms of such agreement." 7 C.F.R. § 51.44.
5
A terminal market is one from which agricultural products
are shipped out to markets outside the State of Texas. Generally,
inspections at terminal markets were performed by USDA-employed
inspectors.
6
As part of the bribery scheme, the defendants also
arranged for Boyd and Koontz to receive TDA consulting contracts.
The counts of the indictment predicated upon the TDA contracts were
not dismissed and are not subjects of this appeal.
3
TFIS did not receive $10,000 in benefits from a federal assistance
program as required by section 666(b). The trial court concluded
that the defendants' misconduct as agents of TFIS was not within
the court's subject matter jurisdiction. The government timely
appealed.
Analysis
In urging that the district court erred, the government
advances two theories: (1) TFIS received over $10,000 per year in
federal benefits, or (2) TFIS is a subdivision of TDA, which
indisputably receives the requisite amount of federal funding.
Finding that this matter is readily resolved under the second
postulation we pretermit consideration of the first.
The legislative history of 18 U.S.C. § 666 states that the
statute was "designed to create new offenses to augment the ability
of the United States to vindicate significant acts of theft, fraud,
and bribery involving Federal monies that are disbursed to private
organizations or State and local governments pursuant to a Federal
program."7 Section 666 provides in pertinent part:
(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 therof --
(A) embezzles, steals, obtains by fraud,
or otherwise without authority knowingly
7
S. Rep. No. 225, 98th Cong., 2d Sess. 369, reprinted in
1984 U.S. Code Cong. & Admin. News 3182, 3510.
4
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 . . . .
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.8
The government contends that TFIS is a subdivision of TDA and,
for purposes of jurisdiction, we may look to the federal assistance
TDA receives. We find this contention persuasive with a
refocusing. Taking the words of the statute at face value it is
apparent that for purposes of the conduct proscribed by
section 666(a)(1) the defendant must be an agent of the agency
8
18 U.S.C. § 666(a) and (b) (emphasis added).
Subsection (c) provides: "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
parties dispute whether subsection (c) qualifies either only
subsection (a), only subsection (b), or both (a) and (b). Because
we decide on other grounds, we pretermit this question as well.
5
receiving federal benefits in excess of $10,000.9 The critical
inquiry is not the role of the TFIS and whether it interposes a
separate entity shielding any violations of this statute, but the
role of the defendants. Specifically, we must determine whether
the defendants were agents of TDA as they performed their functions
for TFIS, the creation of TDA and the USDA.
We have recognized that in enacting section 666, "Congress has
cast a broad net to encompass local officials who may administer
federal funds, regardless of whether they actually do."10 Although
the conduct prohibited by section 666 need not actually affect the
federal funds received by the agency,11 there must be some nexus
between the criminal conduct and the agency receiving federal
assistance. In Westmoreland we held that so long as the agency
received $10,000 per year from a federal assistance program, its
agents are subject to section 666.12 The particular program
involved in the theft or bribery scheme need not be the recipient
9
There are only two requirements necessary to bring a
defendant within section 666. "First, the defendant must be an
'agent' of a 'government agency' that receives in excess of $10,000
from the federal government within a one-year period." Second, the
defendant must engage in conduct proscribed by section 666(a)(1)(A)
or (B). United States v. Simas, 937 F.2d 459, 463 (9th Cir. 1991).
10
United States v. Westmoreland, 841 F.2d 572, 577 (5th
Cir.), cert. denied, 488 U.S. 820 (1988); United States v. Snyder,
930 F.2d 1090 (5th Cir.), cert. denied, 112 S.Ct. 380 (1991).
11
United States v. Little, 889 F.2d 1367 (5th Cir. 1989),
cert. denied, 495 U.S. 933 (1990); Westmoreland.
12
841 F.2d at 576.
6
of federal funds.13
Of critical importance to our inquiry, section 666 defines
"government agency" thusly:
[T]he term "government agency" means a subdivision of the
executive, legislative, judicial, or other branch of
government, including a department, independent
establishment, commission, administration, authority,
board, and bureau, and a corporation or other legal
entity established, and subject to control, by a
government or governments for the execution of a
governmental or intergovernmental program.14
TFIS and TDA are both indisputably "government agencies" as thus
defined. TFIS is a legal entity established and subject to control
by the federal and Texas state governments for the execution of an
intergovernmental program. TDA is a subdivision of the executive
branch of Texas state government. If in their roles at TFIS, McRae
and Quicksall were agents of TDA, then TDA is a relevant agency for
purposes of section 666(b).
To determine whether TFIS employees were agents of TDA, we
need look no further than the cooperative agreement creating TFIS.
TFIS operated under the joint supervision of USDA and TDA. In
enforcing state produce regulations, TFIS performed discretionary
functions on behalf of TDA.15 TFIS enforced regulations promulgated
13
Little, 889 F.2d at 1369.
14
18 U.S.C. § 666(d)(2).
15
The agreement included among TDA's responsibilities:
Assume responsibility for training and supervising
inspectors in the interpretation and enforcement of such
State regulatory provisions of standardization,
compulsory inspection citrus maturity, citrus color-add,
7
by TDA and the funds collected for those regulatory functions were
remitted directly to the state treasury. Finally, the agreement
provided that upon termination, all remaining funds held by TFIS
would be transferred to any successor inspection service, or if no
successor was created, then "all such funds or property would
revert to [TDA] for its use or disposition."16 We find that for
purposes of section 666, McRae and Quicksall, in their positions at
TFIS, were agents of TDA -- an agency that receives more than
$10,000 per year in benefits from federal assistance programs.
Moeller's alleged conspiracy with them is also covered by
section 666.
The order of the district court dismissing Counts Five, Seven,
Eight, and a part of Count One of the superseding indictment is
VACATED and the matter is REMANDED for further proceedings.
or other requirements pertaining to fruits and vegetables
as [TFIS] shall enforce.
Furnish such forms, stationery, licensing applications,
equipment and administrative support as shall be
necessary to faithfully enforce such regulatory programs
of the State as the Commissioner of Agriculture, Texas
Department of Agriculture, shall request that [TFIS]
enforce.
(Emphasis added.)
16
In 1990, the TDA-USDA cooperative agreement terminated
and was not renewed. USDA entered an agreement with a private
organization, the Fruit and Vegetable Growers and Shippers of
Texas, to carry out TFIS's former functions.
8