United States District Court, W.D. Tennessee, Western Division
ORDER ADOPTING THE MAGISTRATE JUDGE'S REPORT AND
RECOMMENDATION AND DENYING MOTION TO DISMISS
T. FOWLKES, JR. U.S. DISTRICT COURT JUDGE.
the Court is Defendant Cleve Collins' Motion to Dismiss
the Indictment that was filed on February 17, 2017. (ECF No.
18). The United States of America filed a response in
opposition on March 21, 2017, and on April 3, 2017, Defendant
filed a reply. (ECF Nos. 24 & 25). The motion was
referred to the U.S. Magistrate Judge for a report and
recommendation pursuant to 28 U.S.C. § 636 (b)(1)(A).
(ECF No. 23). On May 18, 2017, the Magistrate Judge issued a
report and recommendation that the Court deny Defendant's
motion to dismiss. The Defendant filed timely objections on
May 23, 2017. (ECF No. 26 & 27). For the following
reasons, the Court finds the Magistrate Judge's report
and recommendation should be adopted and Defendant's
motion to dismiss the indictment Denied.
Magistrate Judge's report and recommendation contains
proposed findings of facts that summarize the events leading
to the federal indictment in this case. Defendant has not
objected to the Magistrate Judge's proposed findings of
fact. Therefore, the Court adopts the Magistrate Judge's
proposed factual findings of fact as the factual summary of
STANDARD OF REVIEW
United States District Court Judge may refer certain
dispositive motions, including motions to dismiss the
indictment, to a United States Magistrate Judge for proposed
findings of fact and conclusions of law pursuant to 28 U.S.C.
§ 636(b); U.S. v. Houston, Case No.
3:13-10-DCRF, 2013 WL 3975405 *1 (E.D. Tenn. July 29, 2013).
The District Judge may accept, reject or modify in whole or
in part, the Magistrate's proposed findings and
recommendations. U.S. v. Raddatz, 447 U.S. 667,
673-675 (1980) reh'g den., 448 U.S. 916 (1980).
See 28 U.S.C. § 636 (b)(1)(B).
criminal cases, the district judge is required to make a
de novo determination of those portions of a
Magistrate's report and recommendation to which specific
objections are made. Id. at 674-675. While most
actions by a Magistrate Judge are reviewed for clear error,
dismissal or quashing of an indictment or information and
motions to suppress evidence are among the motions in
criminal matters that are subject to de novo review.
U.S. v. Quinney, 238 Fed.Appx. 150, 152 (6th Cir.
207) and U.S. v. Curtis, 237 F.3d 598, 603 (6th Cir.
November 17, 2016, a federal grand jury returned the instant
indictment charging Collins with an alleged scheme to defraud
the United States in violation of 18 U.S.C. § 1031. The
alleged unlawful scheme to defraud reportedly began on or
about August 2009 and continued through February 2011. (ECF
No. 1, p. 3 ¶ 10). On May 14, 2009, the General Services
Administration (“GSA”) granted Don Brady
Construction, Inc., (“DBC”), a contract for
roofing and air conditioning improvements to the Ed Jones
Federal Building in Jackson, Tennessee. The initial contract
award was for the amount of $1, 479, 989.00, but with change
orders totaled $1, 502, 309.08. As Chief Operating Officer
(“COO”) of DBC, Collins was responsible for
ensuring that the work was done in compliance with GSA
specifications, obtaining progress payments from GSA as
authorized, and certifying that the payments were made to the
subcontractors and suppliers for their services. From August
2009 to February 2011, Collins is charged with repeatedly
procuring payments from GSA for work that was completed by
Jesse Bryant Roofing Company in the amount of $580, 050, and
failing to make payments to the roofing company as required.
Instead, Collins used the money for his own personal debts
and purchases, in violation of 18 U.S.C. § 1031. (ECF
No. 1, pp 3-5).
Collins raises three grounds in support of his motion to
dismiss the indictment: 1) the statute of limitations for the
offense has expired; 2) his alleged misrepresentations are
immaterial; and 3) he cannot be held criminally liable for
actions taken in his capacity as COO. (ECF Nos. 18 & 25).
The Government responds that the motion to dismiss should be
denied because: 1) the duration of the scheme is a factual
issue for the jury; 2) Defendant's statute of limitations
argument is premature and the seven-year statute of
limitations had not run because the underlying scheme to
defraud was a continuing offense; 3) Defendant's argument
that he made no material misrepresentations is without merit
and a fact question for the jury; and 4) individuals are not
insulated from criminal liability based on their employment
status. (ECF No. 24).
Magistrate Judge addressed the issues raised by Collins and
recommended that the Court deny the motion to dismiss the
indictment. First, the Magistrate Judge declined to consider
the exhibits attached to the motion to dismiss, and then
analyzed the language of the indictment. The Magistrate Judge
determined that: 1) the alleged facts, if proven, would
establish a criminal violation, and that violation would be
within the seven year statute of limitations in 18 U.S.C.
§ 1031(f); 2) the materiality of Collins' statements
regarding progress payment certifications are questions of
fact for the jury; and 3) Collins' argument that an
individual who violates the law while acting as a corporate
officer may not be charged criminally is without merit. (ECF
23, 2017, Collins filed objections to the report and
recommendation, objecting only to the Magistrate Judge's
determination that the allegations within the indictment, if
proven, establish a violation occurring within the seven year
statute of limitations. (ECF No. 27). As noted above, the
Magistrate Judge concluded that the indictment charged that
the scheme was executed between August 2009 to February 2011,
and therefore the indictment, filed on November 17, 2016, was
within the seven year statute of limitations.
argues that the crime alleged in the indictment was completed
and “executed” in August and September 2009, when
the first progress payment was submitted. Because the statute
of limitations began running at that time, the seven year
period expired before the indictment was returned. (ECF No.
27, p. 6). Collins asserts each subsequent payment only
carried out the scheme of the already completed offense. (ECF
No. 18, pp. 3-4 & ECF No. 25, pp. 2-4). Toussie v.
United States, 397 U.S. 112, 115 (1970); Pendergast
v. United States, 317 U.S. 412, 418 (1943); and U.S.
v. Reitmeyer, 356 F.3d 1313, 1317 (10th Cir. 2004). The
however, have repeatedly held that an indictment brought
under the healthcare fraud, bank fraud, or major fraud
statutes may properly charge, in a single count, a pattern of
executions, or submissions of fraudulent claims, as part of a
single, overarching continuing scheme.” U.S. v.
Mermelstein, 487 F.Supp.2d 242, 254 (E.D. N.Y. May 2,
2007). In Mermelstein, the district court noted that
sister courts rely on case law that construe similarly worded
statutes for the proper interpretation of these offenses.
Id. at fn.2 (citing U.S. v. Frequency
Electronics, 862 F.Supp. 834, 838-39 (E.D.NY.
1994))(holding that the ...