United States v. Donna J. Johnson ( 2006 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 05-4470
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United States of America, *
*
Plaintiff - Appellee, *
* Appeal from the United States
v. * District Court for the District
* of Nebraska.
Donna J. Johnson, *
*
Defendant - Appellant. *
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Submitted: May 16, 2006
Filed: September 15, 2006
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Before MURPHY, JOHN R. GIBSON, and BENTON, Circuit Judges.
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JOHN R. GIBSON, Circuit Judge.
Donna Johnson appeals from her conviction of three counts of mail fraud in
violation of 18 U.S.C. § 1341 and the sentence imposed upon her. She argues that (1)
the evidence was not sufficient to support her conviction; (2) the district court1
committed reversible error in admitting evidence of other wrongs in violation of Fed.
R. Evid. 404 (b); (3) the district court erred in allowing testimony about the receipt
of "kickbacks"; and (4) the district court erred in rejecting a plea agreement it had
previously accepted. We affirm.
1
The Honorable Richard G. Kopf, United States District Judge for the District
of Nebraska.
Johnson was employed with the State of Nebraska between 1988 and 2002,
where she originally worked as an income maintenance worker, a position that was
later reclassified as a social services worker. As a social services worker, Johnson
was responsible for determining client eligibility for Nebraska public assistance as
well as authorizing and issuing benefits. The Nebraska Department of Health and
Human Services administered benefits through several different state programs,
including Temporary Assistance to Needy Families, Aid to the Aged, Blind and
Disabled, the Child Care Program, and the Food Stamp Program. Johnson would
input client data into the Nebraska Family Online Client User System (N-Focus),
which would then determine client eligibility for Nebraska public assistance.
Benefits include the issuance of treasury warrants, which are checks made out by the
State of Nebraska and issued, in most instances, to the recipient of the benefits.
Under the Child Care Program, however, the state paid daycare costs directly to the
beneficiary's daycare providers.
The superseding indictment charged that Johnson entered false or misleading
information into the State's computer program to qualify individuals for Nebraska
public assistance benefits who were not otherwise eligible. The indictment further
charged that Johnson manipulated N-Focus to authorize and certify the issuance of
benefits and payments to individuals not qualified to receive them. In exchange for
kickbacks, Johnson caused three State of Nebraska treasury warrants to be issued and
mailed to unqualified individuals.
Denay Ward was the subject of the charges in Count I of the indictment. She
stated that during a telephone conversation, Johnson informed her that despite the fact
that Ward already owned a washer and dryer, Ward was nonetheless entitled to a
check to purchase a washer and dryer. Johnson then informed Ward that she expected
to receive half of the money from the check. The treasury warrant that formed the
basis of Count I was a check for $375 that Ward received in the mail under the Child
Care Program, despite the fact that she was not using daycare at the time. Ward
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testified that over the course of two years, she received, via U.S. mail, some ten to
fifteen extra checks from Johnson, and that she gave half of each extra check back to
Johnson. The extra treasury warrants were issued under the Child Care Program as
well as Aid to the Aged, Blind and Disabled. The extra treasury warrants were issued
despite the fact that Ward was not entitled to them, she did not submit any receipts
or documentation for them, and she did not request them.
Count II involved a treasury warrant mailed to Gizelle Grayer. Johnson was
the social services worker for Grayer when Grayer telephoned her requesting
assistance. Johnson responded by issuing a Child Care treasury warrant in the
amount of $400, despite the fact that Grayer's child care costs were being paid by the
State of Nebraska directly to the child care provider. After receiving the check for
$400, Grayer gave half of the check back to Johnson. Grayer would eventually split
between three and five treasury warrants with Johnson.
Count III involved a treasury warrant mailed to Betty Coleman Oliver under
the Child Care Program. Oliver testified that at the time she received the treasury
warrant for $600, she was not incurring any childcare costs. After receiving the
check, Oliver met Johnson outside of her office and gave her half the amount of the
check in cash. Oliver identified four treasury warrants that she received and split
with Johnson. Oliver stated that she knew she was not entitled to any of the checks
issued under the Child Care Program because she was not incurring child care costs
at the time that Johnson issued the checks.
The district court heard from several other witnesses regarding benefits issued
by Johnson to individuals not entitled to receive them. LaQuitta Coleman testified
that she received a treasury warrant for $600, despite the fact that she had never
requested any extra benefits from Johnson. Coleman also testified that she was not
entitled to the check she received. Melanie Johnson testified that she received a
treasury warrant for childcare expenses in the amount of $900, and paid Johnson
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somewhere between $100 and $300. The money paid to Johnson, moreover, came
from the difference between the treasury warrant and the actual childcare expenses,
and was therefore a benefit to which Coleman was not entitled. Lawanda
McCullough testified that over the course of two years, she paid Johnson somewhere
between $500 and $600 from checks received under Aid to the Aged, Blind and
Disabled. Valerie Alexander testified that she called Johnson about receiving
additional money, and soon after their conversation, she received a check for $400.
Shortly after Alexander received the check from Johnson, Johnson called Alexander
and informed her that Johnson "needed [Alexander] to help her out." Alexander gave
Johnson a portion of the treasury warrant Alexander had received.
When the Nebraska Department of Health and Human Services began an
investigation based on an anonymous tip, an auditor determined that seventy-one of
Johnson's files contained fraudulent activity. The fraud investigator for the
Department of Health and Human Services, Jana McDonough, estimated that Johnson
paid $5,905 to individuals with no active application on file at all. It was estimated
by McDonough that the total amount in fraudulent payments made by Johnson was
$180,527.51.
On March 28, 2005, Johnson entered a plea of guilty with the district court.
At her sentencing hearing on June 24, 2005, Johnson testified regarding objections
she had to the presentence report. Under oath, Johnson contradicted statements
previously made in her petition to enter a guilty plea. The district court then rejected
the plea and plea agreement and set the matter for trial. The district court
nevertheless gave Johnson the opportunity to withdraw her sentencing testimony in
support of her objections to the presentence report, but Johnson did not elect to do so.
Following a jury trial, Johnson was convicted of three counts of mail fraud in
violation of 18 U.S.C. § 1341.
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I.
On appeal, Johnson argues that there was insufficient evidence to support her
conviction of mail fraud. When considering the sufficiency of evidence to support
a criminal conviction, "we review the evidence in the light most favorable to the
government and accept all reasonable inferences that support the jury's verdict."
United States v. Allen, 440 F.3d 449, 450 (8th Cir. 2006). We will uphold the verdict
if it is supported by substantial evidence, which is evidence from which a reasonable
jury could find the defendant guilty beyond a reasonable doubt. Id. The standard we
employ is a strict one, and we do not lightly overturn a jury's verdict. Id.
The jury found Johnson guilty of three counts of mail fraud. To establish mail
fraud, the government must prove that the defendant did the following: (1) voluntarily
and intentionally devised or participated in a scheme to defraud; (2) entered into the
scheme with intent to defraud; (3) knew that it was reasonably foreseeable that the
mails would be used; and 4) used the mails in furtherance of the scheme. United
States v. Hively, 437 F.3d 752, 760 (8th Cir. 2006).
Johnson argues that the evidence presented for all three counts of mail fraud
fails to establish that either Ward, Grayer, or Oliver were ineligible for benefits,
thereby preventing the government from proving that Johnson engaged in a scheme
with intent to defraud. While Johnson is correct that, as recipients of Nebraska public
assistance, Ward, Grayer and Oliver could have been entitled to receive child care
benefits from the State of Nebraska, they were not entitled to receive reimbursement
for childcare costs they never incurred.
Ward and Oliver testified that they were not entitled to the Child Care treasury
warrants that formed the basis of Counts I and III of the indictment because they were
not using daycare at the time that the treasury warrants were issued. While it is true
that they would have been eligible for assistance had they been incurring daycare
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costs, the government presented evidence of specific illegitimate payments. The
evidence was therefore sufficient to establish that Johnson was engaged in a scheme
to defraud when she issued and mailed treasury warrants to Ward and Oliver.
Grayer testified that she was not entitled to the Child Care treasury warrant that
formed the basis of Count II because at the time the treasury warrant was issued, all
daycare costs incurred by Grayer were being paid by the State of Nebraska directly
to the daycare provider. Evidence of an extra and unnecessary treasury warrant
mailed directly to Grayer is sufficient to establish that Johnson engaged in a scheme
to defraud when she issued and mailed a treasury warrant to Grayer.
II.
Johnson next argues that the district court improperly admitted evidence of
other wrongdoing by Johnson in violation of Fed. R. Evid. 404 (b). She argues that
because the government did not present sufficient evidence of mail fraud, it sought
to bolster its case by presenting evidence of other fraudulent overpayments made by
Johnson as well as kickbacks paid to Johnson by her clients. Johnson argues that the
evidence presented of other wrongful conduct was more prejudicial than probative.
We review evidentiary rulings for abuse of discretion and reverse only when
"an erroneous ruling prejudices the outcome of the case." United States v. Lopez, 384
F.3d 937, 942 (8th Cir. 2004), cert. denied, 126 S. Ct. 1078 (2006).
We have held that Rule 404(b), which governs the admission into evidence of
wrongful conduct other than the conduct at issue, applies "only to 'extrinsic' and not
to 'intrinsic' evidence." United States v. Swinton, 75 F.3d 374, 377 (8th Cir. 1996).
Evidence of other wrongful conduct is considered intrinsic when it is offered for the
purpose of providing the context in which the charged crime occurred. United States
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v. Forcelle, 86 F.3d 838, 842 (8th Cir. 1996). Such evidence is admitted because "the
other crime evidence 'completes the story' or provides a 'total picture' of the charged
crime." Id.
Johnson's receipt of kickbacks from clients to whom she directed fraudulent
treasury warrants is indispensable for providing the motive for the charges of mail
fraud. The kickbacks provide an explanation for why Johnson directed fraudulent
treasury warrants to several of her clients. See United States v. McGuire, 45 F.3d
1177, 1188 (8th Cir.), cert. denied, 515 U.S. 1132 (1995). We therefore conclude that
the admission of evidence concerning kickbacks received by Johnson was an
inextricable part of the government's case and that the district court did not abuse its
discretion in allowing the admission of such evidence.
Moreover, evidence of other overpayments was relevant to refute the defense
of mistake, which Johnson put at issue. Evidence of other wrongs, although
inadmissible to show that a person acted in conformity with the prior act, may be
admissible for other purposes, including "proof of motive, opportunity, intent,
preparation, plan, knowledge, identity, or absence of mistake or accident." Fed. R.
Evid. 404 (b). Such evidence is admissible if it is (1) relevant to a material issue; (2)
similar in kind and close in time to the crime charged; (3) proven by a preponderance
of the evidence; and (4) if the potential prejudice does not substantially outweigh its
probative value. United States v. Oman, 427 F.3d 1070, 1075 (8th Cir. 2005).
During trial, Johnson presented evidence that the office in which she worked
was a busy and demanding environment. Barbara Boettger, one of Johnson's co-
workers, testified that "[w]orking with a welfare clientele, there's constant phone
calls, appointments to review, and applications. So there's appointments with clients
on a regular basis. There's interruptions because clients would walk into the building
asking to see the caseworker. And the workload was excessive." Counsel for
Johnson stated during opening argument that there was "going to be evidence that
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mistakes were made." A central element of Johnson's defense, then, was that the
fraudulent overpayments made by Johnson were a result of a busy office environment
and not a part of any scheme by Johnson to defraud the State of Nebraska.
Johnson injected the issue of mistake or absence of mistake into the trial,
thereby making it relevant. See U.S. v. Misle Bus & Equipment Co., 967 F.2d 1227,
1234 (8th Cir. 1992). The district court limited the jury's use of evidence of
fraudulent overpayments by stating that such evidence was going to be presented only
for the purpose of whether Johnson "had the opportunity, had a plan, had the intent,
or had the knowledge to devise a scheme to defraud" the government. Second,
evidence of other fraudulent overpayments made by Johnson is similar in nature to
the charged conduct. Johnson was charged with three counts of mail fraud in relation
to fraudulent overpayments issued to her clients. The other wrongful conduct by
Johnson presented by the government was essentially the same in that it involved the
fraudulent issuance of treasury warrants to Johnson's clients. Third, there is sufficient
evidence the alleged acts occurred. Fourth, contrary to Johnson's argument, the
probative value of the evidence is not substantially outweighed by the danger of
unfair prejudice. Evidence of other fraudulent overpayments by Johnson is probative
of intent and a lack of mistake by Johnson in regards to a scheme to defraud the State
of Nebraska. The evidence was not "so inflammatory on [its] face as to divert the
jury's attention from the material issues in the trial." United States v. Adams, 401
F.3d 886, 900 (8th Cir. 2005), cert. denied, 126 S. Ct. 492 (2006) (internal quotation
omitted). We therefore conclude that the district court did not abuse its discretion in
admitting evidence of other fraudulent overpayments issued by Johnson.
III.
Johnson also argues that the government's use of the word "kickback" was
overly prejudicial and should have been excluded by the district court under Fed. R.
Evid. 403. When balancing the prejudicial effect and probative value under rule 403,
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we give great deference to the district court's ruling. United States v. Plumman, 409
F.3d 919, 928 (8th Cir. 2005).
While the use of the word "kickback" is certainly not favorable to Johnson, the
fact remains that "rule 403 of the Federal Rules of Evidence does not offer protection
against evidence that is merely prejudicial in the sense of being detrimental to a
party's case. The rule protects against evidence that is unfairly prejudicial, that is, if
it tends to suggest decision on an improper basis." Wade v. Haynes, 663 F.2d 778,
783 (8th Cir. 1981), aff'd sub nom., Smith v. Wade, 461 U.S. 30 (1983). Having
already determined that evidence of money given to Johnson by clients was properly
admitted by the district court as an inextricable part of the government's case, we also
conclude that allowing the use of the term "kickback" was not an abuse of discretion
by the district court. Webster's Third New International Dictionary (1981) defines
kickback as "a percentage payment exacted as a condition for granting assistance by
one in a position to open up or control a source of income or gain." The word
"kickback" is a term of generally understood meaning. Johnson gives us no reason
to believe that the evidence presented by the government demonstrated anything other
than the receipt of kickbacks or that there is a more apt way of describing Johnson's
conduct. The fact that the word "kickback" was harmful to Johnson's case is
insufficient to demonstrate that the basis of the jury's verdict was improper.
IV.
Finally, Johnson argues that the district court should not have rejected
Johnson's Rule 11(c)(1)(C) plea agreement after having once accepted it. Issues
concerning the interpretation and enforcement of a plea agreement are reviewed de
novo. United States v. Borer, 412 F.3d 987, 994 (8th Cir. 2005). Generally speaking,
"[a]ppellate courts have consistently prohibited district courts from interfering in the
plea bargaining process." United States v. Olesen, 920 F.2d 538, 540 (8th Cir. 1990).
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We have also held, however, that a district court may, upon a showing of fraud on the
court, intervene in a plea agreement. See Olesen, 920 F.2d at 541.
As the record indicates, Johnson contradicted her previous statements
regarding her guilt at the sentencing hearing. As a result of the conflicting stories,
the district court determined that Johnson "had probably obstructed justice and very
likely lied on the witness stand during her testimony in support of her objections to
the presentence report." In light of these findings, the decision by the district court
to reject Johnson's previously accepted plea agreement is permissible as an exception
for fraud on the court as outlined in Oleson. The district court therefore did not err
when it decided to reject Johnson's previously accepted plea agreement and again
give Johnson the choice to either plead guilty or go to trial.
V.
We conclude that there was sufficient evidence to support the jury's decision
to convict, the district court did not err in its evidentiary rulings, and the district court
did not err in rejecting Johnson's previously accepted guilty plea. We affirm.
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