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United States v. Gorski

United States Court of Appeals, First Circuit

January 18, 2018

UNITED STATES OF AMERICA, Appellee,
v.
DAVID E. GORSKI, Defendant, Appellant.

         APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. F. Dennis Saylor, IV, U.S. District Judge]

          Tracy A. Miner, with whom Seth B. Orkand and Demeo LLP were on brief, for appellant.

          Randall E. Kromm, Assistant United States Attorney, with whom William D. Weinreb, Acting United States Attorney, was on brief, for appellee.

          Before Thompson, Kayatta, Barron, Circuit Judges.

          BARRON, Circuit Judge.

         A jury in the District of Massachusetts convicted David Gorski of conspiring between late 2005 and 2010 to defraud the United States, in violation of 18 U.S.C. § 371, by knowingly procuring government contracts for his construction company on the false premise that the company was owned and controlled by military veterans who became disabled in connection with their military service. The jury also convicted Gorski of four counts of wire fraud, in violation of 18 U.S.C. § 1343. The District Court sentenced Gorski to thirty months of imprisonment and entered an order of forfeiture, in the form of a money judgment, in an amount exceeding $6.7 million, which the District Court determined was the amount of the proceeds of Gorski's crimes.

         Gorski brings three challenges in this appeal. First, Gorski seeks to reverse the convictions on the ground that the government's evidence against him was insufficient. Second, he contends that the District Court should have at least ordered a new trial in light of certain statements that the prosecutor made during closing arguments, which Gorski claims violated his constitutional rights. Finally, Gorski challenges the forfeiture order and money judgment. We affirm.

         I.

         The charges against Gorski pertain to his role as founder and vice president of a general contracting and construction services company, Legion Construction, Inc. Gorski developed the plan for the company in late 2005. From 2006 to 2010, Legion took advantage of federal programs in which certain federal agencies awarded government contracts on a preferential basis to small businesses owned and controlled by military veterans who were disabled in connection with their military service. To be eligible for these programs, Legion, through Gorski in his role as the company's vice president, certified in its bids for government contracts that it was a "service-disabled veteran-owned small business, " or SDVOSB, within the meaning of the regulations governing the programs.

         To qualify as an SDVOSB under those regulations, an SDVOSB had to be of a certain size and had to meet the following two requirements.[1] See 38 C.F.R. § 74.1 (2010); 38 C.F.R. § 74.1 (2008); 13 C.F.R. § 125.8(g) (2005). First, one or more veterans who had become disabled in connection with their military service must have unconditionally owned at least fifty-one percent of the business seeking the contract. See 38 C.F.R. § 74.3 (2010); 38 C.F.R. § 74.3 (2008); 13 C.F.R. § 125.9 (2005). Second, one or more service-disabled veteran owners must have controlled the business. See 38 C.F.R. § 74.4 (2010); 38 C.F.R. § 74.4 (2008); 13 C.F.R. § 125.10 (2005).

         With respect to this latter requirement, the regulations during all relevant time periods specified several criteria that service-disabled veteran owners had to satisfy in order to establish that they controlled the business. For example, a service-disabled veteran owner must have held the highest officer position in the business, and, while holding the position, that service-disabled veteran owner, together with any others, must have controlled "both the day-to-day management and long-term decision-making" of the business. 38 C.F.R. § 74.4 (2010); 38 C.F.R. § 74.4 (2008); accord 13 C.F.R. § 125.10 (2005). In 2008, the regulations added an additional criterion to establish control: A service-disabled veteran had to be the highest compensated employee in the business, absent a showing that it would benefit the business for a non-veteran to earn more. 38 C.F.R. § 74.4 (2008); see also 38 C.F.R. § 74.4 (2010). And, beginning in 2010, to establish control over the management of the business, service-disabled veteran owners had to work full-time at the business. 38 C.F.R. § 74.4 (2010).

         Gorski, who is not himself a service-disabled veteran, certified on behalf of Legion in its bids for government contracts during the relevant time span that the company was compliant with the SDVOSB requirements. Over the years, Legion bid on and won over 200 government contracts based on Gorski's certifications that Legion was an SDVOSB. Those contracts were valued at over $110 million.

         In 2010, however, a rival company filed a protest with the Small Business Administration that challenged Legion's SDVOSB status with respect to a contract that the government awarded to Legion that year. Although the agency ruled in Legion's favor, a subsequent criminal investigation by federal law enforcement concluded that, from 2006 to 2010, Gorski had been unlawfully certifying Legion as an SDVOSB in order to fraudulently obtain government contracts for Legion.

         In October of 2012, the government charged Gorski in the United States District Court for the District of Massachusetts with one count of conspiracy to defraud the United States, in violation of 18 U.S.C. § 371, and four counts of wire fraud, in violation of 18 U.S.C. § 1343. With respect to the conspiracy charge, the indictment alleged that between late 2005 and 2010 Gorski agreed with "other persons and entities" to defraud the United States "by impairing, impeding, and defeating the lawful governmental function of [various federal agencies] in the implementation, execution, and administration of the SDVOSB program." The indictment further alleged that the conspirators carried out this agreement by, among other things, procuring government contracts for Legion after Gorski, on behalf of the company, falsely certified in the bids for those contracts between 2006 and 2010 that Legion was an SDVOSB.

         With respect to the four counts of wire fraud, the indictment alleged that, as part of this conspiracy to defraud the United States, on four occasions Gorski faxed or emailed documents in interstate commerce that were related to the fraudulent scheme. Finally, the indictment provided notice of the government's intention, upon a successful wire fraud conviction, to seek forfeiture pursuant to 18 U.S.C. § 981(a)(1)(C) and 28 U.S.C. § 2461(c) of any property constituting the proceeds of Gorski's crimes.

         Gorski was tried over the course of twelve days in June of 2016. At the close of the evidence, Gorski moved for acquittal on all counts based on what he contended was the insufficiency of the evidence against him. The District Court denied the motion, and the jury convicted Gorski on all counts. Gorski then renewed his motion for acquittal on all counts on the ground that the government had failed to put forth sufficient evidence that he had intended to defraud the United States. He also moved in the alternative for a new trial on the ground that certain statements made by the prosecutor in closing arguments improperly drew the jury's attention to his decision not to testify and thus also improperly shifted the burden of proof to him.[2]

         The District Court denied both motions. The District Court then sentenced Gorski to thirty months of imprisonment and fined him $1 million.

         In addition, the government moved for an order of forfeiture, in the form of a money judgment, in the amount of the proceeds traceable to Gorski's crimes. The government submitted that those proceeds consisted of all the money that Gorski and his wife received from Legion since its formation, including payments made to them after the end date of the charged conspiracy. The government alleged that those proceeds amounted to more than $6 million. Gorski filed an opposition to the government's motion. Gorski conceded that the proceeds of his crimes were subject to forfeiture, but he contended that those proceeds excluded both the money received by his wife from Legion and money that Gorski received from Legion after the end date of the charged conspiracy.

         After a forfeiture hearing, the District Court agreed with the government and entered a forfeiture order, in the form of a money judgment, in the amount of $6, 756, 205.65. The District Court then reduced Gorski's fine to $10, 000. Gorski now brings this appeal.

         II.

         Gorski first challenges the sufficiency of the evidence against him with respect to his convictions for both conspiracy to defraud the United States and wire fraud. Gorski preserved this challenge below in his motion for acquittal. We review the denial of that motion de novo, drawing all inferences in favor of the government. United States v. George, 841 F.3d 55, 61 (1st Cir. 2016) (citing United States v. Chiaradio, 684 F.3d 265, 281 (1st Cir. 2012)).

         A.

         To make out a case of conspiracy to defraud the United States under 18 U.S.C. § 371 against Gorski, the government had to prove that Gorski agreed with at least one other person to defraud the United States, that an overt act was taken by one of the conspirators in furtherance of that agreement, and that Gorski knowingly participated in the conspiracy. See United States v. Ngige, 780 F.3d 497, 503 (1st Cir. 2015) (citing United States v. Serunjogi, 767 F.3d 132, 139 (1st Cir. 2014)). A conspirator must have not only an "intent to agree" but also an "intent to effectuate the commission of the substantive offense." United States v. Piper, 35 F.3d 611, 615 (1st Cir. 1994).[3]

         The government's theory at trial was that Gorski agreed with others -- and then acted on that agreement -- to obtain government contracts for Legion by certifying that the company was an SDVOSB, even while knowing that Legion did not qualify as an SDVOSB under the applicable regulations. To prove that theory, the government introduced evidence to show that Legion was not compliant with the SDVOSB regulations in several ways, and that Gorski knew as much.

         On appeal, Gorski does not contend that the government put forth insufficient evidence to show that Legion failed to comply with the SDVOSB regulations and that, accordingly, Gorski certified that Legion was an SDVOSB on a false premise. For example, Gorski does not challenge the sufficiency of the government's evidence indicating that, although two service-disabled veterans -- Joseph Steen and Peter Ianuzzi -- alone or together held at least fifty-one percent of Legion's shares at all relevant times, their ownership was not "unconditional, " as required under the SDVOSB regulations. 38 C.F.R. § 74.3 (2010); 38 C.F.R. § 74.3 (2008); 13 C.F.R. § 125.9 (2005). Nor does he contend that the government's evidence was insufficient to support its theory that it was Gorski who actually controlled "both the day-to-day management and long-term decision-making" of the business, notwithstanding that either Steen or Ianuzzi formally occupied Legion's highest office as president at all relevant times. 38 C.F.R. § 74.4 (2010); 38 C.F.R. § 74.4 (2008); accord 13 C.F.R. § 125.10 (2005).

         Gorski does contend, however, that the government's evidence was insufficient to prove that he intended to defraud the United States. Accordingly, he contends that the evidence was insufficient to show that he had the requisite mens rea to commit the offense of which he was convicted, given that in his view the evidence showed at most only that he had certified that Legion was an SDVOSB when it was not, conduct which is not itself criminal.

         As an initial matter, we observe that the evidence sufficed to permit a jury to find that Gorski was aware that there were requirements under the SDVOSB program pertaining to a service-disabled veteran's ownership and control over the business. For example, an attorney whom Gorski had hired in 2007 to help restructure the company testified that Gorski had told her that he knew what the SDVOSB regulatory requirements were. Thus, the question with respect to Gorski's mens rea turns on whether the jury could have permissibly found that he also knew that Legion did not comply with those regulatory requirements when he certified that it did. And, we think the evidence was more than sufficient to permit a jury reasonably to so conclude.

         We begin with the government's evidence regarding the requirement that the ownership of an SDVOSB by one or more service-disabled veterans be "unconditional." The government submitted agreements from 2007 between Legion and, separately, Steen and Ianuzzi -- the two service-disabled veterans who held shares in Legion -- showing that Legion maintained a right to purchase their shares at a specified price before either of them could sell their shares to someone else. Gorski acknowledges as much, and he makes no argument that such a restriction on their stock ownership was permissible under the regulations.[4]

         Gorski nevertheless contends that he could not be found to have had the requisite mens rea to convict him because he contends that the evidence showed that he imposed the restriction only on the basis of the advice of his attorney who drafted "the offending provisions." But, this argument fails because the evidence showed that he had written a letter to the attorney specifying that the restriction should be included in the terms of the agreements. Thus, a jury would not have been required to believe that Gorski imposed the restriction solely on the advice of the attorney.

         The government also put forth evidence from which a jury could have permissibly inferred that it was implausible that Gorski believed at the relevant times that Legion was compliant with the other SDVOSB requirement -- namely, that one or more service-disabled veterans control the business's day-to-day management and long-term decision-making. See United States v. Serrano, 870 F.2d 1, 7 (1st Cir. 1989) (reasoning that a defendant's knowledge of a fraudulent scheme can be supported by circumstantial evidence showing that lack of such knowledge would be "implausible"). From Legion's founding until 2007, the evidence at trial showed, the only service-disabled veteran owner of Legion was Steen. And, the government offered testimony from multiple witnesses, as described below, supporting the government's theory that Gorski recruited Steen, who died in 2010, to serve as a president for Legion in title only and without any real responsibilities.

         For example, a veteran acquaintance of Gorski who was also Steen's friend, Louis Cimaglia, testified that Gorski identified Steen -- whom Gorski had not previously known -- to serve as the president of the company Gorski was creating after calling Cimaglia by phone and asking if he "knew a disabled veteran." According to Cimaglia's testimony, Steen happened to be sitting next to him at ...


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