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United States v. Gallagher

United States District Court, D. Maine

March 7, 2016

UNITED STATES OF AMERICA,
v.
TIMOTHY P. GALLAGHER, Defendant.

ORDER ON DEFENDANT’S MOTION TO DISMISS

Nancy Torresen United States Chief District Judge

The Indictment in this case alleges that between May of 2014 and January 5, 2015, the Defendant Timothy P. Gallagher, an agent of Stanford Management LLC (“Stanford”), an organization receiving in excess of $10, 000 under federal programs administered by the United States Department of Housing and Urban Development (“HUD”) and the United States Department of Agriculture (“USDA”), embezzled, stole, and converted to his own use without lawful authority, property worth about $80, 000 owned by Stanford, all in violation of 18 U.S.C. § 666(a)(1)(A). Indictment (ECF No. 20). The Defendant moves to dismiss the Indictment on the grounds that 18 U.S.C. § 666(a)(1)(A) is void for vagueness both as applied and facially. Def.’s Mot. to Dismiss (ECF No. 30). The Government objects to the motion. Obj. to Def.’s Mot. to Dismiss (ECF No. 32).

FACTS

The Government contends that it can prove the following facts at trial.[1] The Defendant was hired by Stanford in December of 2013 as a full-time construction project manager. Compl. ¶ 4. Stanford is a property management firm with several federally subsidized properties. Compl. ¶ 3. In 2013, Stanford received over $180, 000 from HUD. In 2014, Stanford received over $192, 000 from HUD and approximately $2, 000, 000 from the USDA. Compl. ¶ 3. Under federal regulations, managing agents of entities that receive federal subsidies must disclose any financial interests they have with any supplying entity. 7 C.F.R. 3560.102(g). The term given for such a covered relationship is an identity of interest (“IOI”) entity.[2] Under the regulations, a managing agent must receive agency approval to use an IOI firm prior to entering into any contractual relationships that involve agency funds. 7 C.F.R. § 3560.102(g). Managing agents cannot purchase goods and services from an IOI entity until the relationship has been disclosed and the agency has determined that the IOI entity’s “costs are as low as or lower than arms-length, open-market purchases.” 7 C.F.R. § 3560.102(j)(1)(vi).

In his role as a project manager, the Defendant was responsible for the oversight of scope, direction, monitoring and completion of at least nine Stanford construction projects. Compl. ¶ 4. Between May of 2014 and January 5, 2015, the Defendant hired a construction company, Harley Construction, to perform work through subcontractors at Stanford properties in Maine. Compl. ¶ 4. Over that period of time, the Defendant owned Harley Construction, a fact he concealed from Stanford by claiming that Harley was owned by Jon Branmeir. Compl. ¶ 4.

On December 31, 2014, the Defendant told a subcontractor that Stanford had scheduled a meeting for January 5, 2015, and the Defendant was worried that he would be fired and arrested because Stanford had learned that he owned Harley. Compl. ¶ 7. On January 5, 2015, Stanford fired the Defendant. Compl. ¶ 4.

On about February 17, 2015, a Stanford representative interviewed the Defendant, and the Defendant stated that Branmeir is a silent partner for Harley. Compl. ¶ 5. The Defendant said that he knew he had to disclose his interest in Harley, but he did not because it was a way to make money by acting as a general contractor on the projects. Compl. ¶ 5.

About two weeks after he was fired, the subcontractor that the Defendant had previously spoken with contacted the Defendant because the subcontractor had not yet been paid. Compl. ¶ 7. The Defendant told the subcontractor that Stanford wanted to talk to Branmeir prior to releasing any funds on the project. Compl. ¶ 7. The Defendant asked the subcontractor to pose as Branmeir. Compl. ¶ 7.

According to Stanford’s records, between May 14, 2014 and November 25, 2014, Stanford paid Harley Construction $251, 073 in federal funds for work performed at nine Stanford properties. Compl. ¶ 6. Androscoggin Savings Bank records reflect that Harley paid $171, 434 to subcontractors on those jobs. Compl. ¶ 6. The government alleges that the Defendant embezzled the $79, 639 difference. Compl. ¶ 6.

DISCUSSION

The Defendant argues that both § 666 and the accompanying regulations are unconstitutionally vague. The void for vagueness doctrine stems from the Due Process Clause of the Fifth Amendment. United States v. Williams, 553 U.S. 285, 304 (2008). “A conviction fails to comport with due process if the statute under which it is obtained fails to provide a person of ordinary intelligence fair notice of what is prohibited, or is so standardless that it authorizes or encourages seriously discriminatory enforcement.” Id.; see also United States v. Anzalone, 766 F.2d 676, 678 (1st Cir. 1985). A statute must give fair warning, “in language that the common world will understand, of what the law intends to do if a certain line is passed.” McBoyle v. United States, 283 U.S. 25, 27 (1931).

I. As Applied Challenge

In United States v. Zhen Zhou Wu, 711 F.3d 1, 15 (1st Cir. 2013), the First Circuit explained that “[o]utside the First Amendment context, we consider ‘whether a statute is vague as applied to the particular facts at issue, ’ for a defendant ‘who engages in some conduct that is clearly proscribed cannot complain of the vagueness of the law as applied to the conduct of others.’ ” Id. (quoting Holder v. Humanitarian Law Project, 561 U.S. 1, 18-19 (2010)); see also Maynard v. Cartwright, 486 U.S. 356, 361 (1988) (“Vagueness challenges to statutes not threatening First Amendment interests are examined in light of the facts of the case at hand; the statute is judged on an as-applied basis.”). The “void for vagueness doctrine” addresses two discrete due process concerns: “first, . . . regulated parties should know what is required of them so they may act accordingly; second, precision and guidance are necessary so that those enforcing the law do not act in an arbitrary or discriminatory way.” F.C.C. v. Fox Television Stations, Inc., 132 S.Ct. 2307, 2317 (2012).

The Defendant first asserts that the phrase “converted property without authority”[3] is so vague that it violates the Due Process Clause of the Fifth Amendment by failing to give fair notice of what conduct is prohibited. Def.’s Mot. to Dismiss 2. The cornerstone of a vagueness challenge is statutory ambiguity. United States v. Meade, 175 F.3d 215, 222 (1st Cir. 1999) (rejecting a fair warning/vagueness attack on a statute that contained “no ambiguity”). Such ambiguity raises the possibility that ordinary people will not ...


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