United States v. Samim Anghaie ( 2015 )

  •              Case: 15-10454   Date Filed: 11/30/2015   Page: 1 of 13
                                                               [DO NOT PUBLISH]
                           FOR THE ELEVENTH CIRCUIT
                                   No. 15-10454
                               Non-Argument Calendar
                        D.C. Docket No. 1:12-cv-00102-RS-GRJ
    d.b.a. New Era Technology Inc.,
                      Appeal from the United States District Court
                          for the Northern District of Florida
                                  (November 30, 2015)
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    Before HULL, MARTIN, and ROSENBAUM, Circuit Judges.
          Samim Anghaie and Sousan Anghaie appeal the district court’s final
    summary judgment against them in a False Claims Act (FCA) case brought by the
    United States. Samim Anghaie is a former University of Florida professor. The
    government alleged that he and his wife Sousan made false statements to win four
    contracts for research funding through grant programs administered by NASA and
    the United States Air Force. The Anghaies were convicted of criminal charges
    based on the same allegations. The government then filed this civil lawsuit to
    recover damages and civil penalties. The district court took judicial notice of the
    record from the criminal case and awarded $2,746,631.37 in damages (three times
    the amount the government paid through the four contracts) plus a civil penalty of
    $231,000 ($11,000 for each of twenty-one false claims).
          The Anghaies make four claims on appeal. First, they claim two of the
    counts in the complaint are time-barred. Second, they claim summary judgment
    was not appropriate on the issue of liability. Third, they claim the district court
    made mistakes in calculating damages. And fourth, they claim the district court
    imposed an excessive fine. After careful review of the record and the parties’
    briefs, we vacate the two counts challenged as time-barred but otherwise affirm.
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          The Anghaies first claim that two of the counts in this case are barred by the
    statute of limitations. The FCA provides that no civil action may be brought after
    the later of either six years from the date of the violation or three years from when
    the government should have known of the violation. 31 U.S.C. § 3731. We
    review de novo a district court’s application of a statute of limitations. Berman v.
    Blount Parrish & Co., 
    525 F.3d 1057
    , 1058 (11th Cir. 2008).
          Counts 2 and 3 involve payments made in January and April 2006. The
    complaint was filed on May 11, 2012. The government has disclaimed its initial
    opposition to the Anghaies’ statute of limitations argument in light of the Supreme
    Court’s recent decision in Kellogg Brown & Root Servs., Inc. v United States ex
    rel. Carter, __ U.S. at __, 
    135 S. Ct. 1970
     (2015), which held that the Wartime
    Suspension of Limitations Act, 18 U.S.C. § 3287, does not apply to civil actions
    brought under the FCA. Counts 2 and 3 are barred by the statute of limitations, so
    the Anghaies prevail on this claim.
          The Anghaies next argue the district court should not have granted summary
    judgment on the issue of liability because some of the FCA counts in this case
    correspond to fraud counts on which they were acquitted in the criminal trial. For
    the remaining FCA counts, the Anghaies point to evidence of their alleged
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    misstatements as constituting disputed issues of material fact. We review a grant
    of summary judgment de novo, drawing all inferences in the light most favorable
    to the non-moving party. Palm Beach Golf Ctr.–Boca, Inc. v. John G. Sarris,
    D.D.S., P.A., 
    781 F.3d 1245
    , 1253 (11th Cir. 2015). Summary judgment is
    appropriate when there is no genuine issue of material fact and the moving party is
    entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a).
          Section 3279(a)(1) of the FCA authorizes a civil penalty plus treble damages
    for anyone who either (A) knowingly presents a false claim for payment to the
    government, (B) knowingly makes a false record that is material to a false claim
    for payment, or (C) conspires to violate either (A) or (B). 31 U.S.C.
    § 3729(a)(1)(A)–(C). The term “knowingly” does not require specific intent to
    defraud, only knowledge of the false information or deliberate ignorance or
    reckless disregard of its falsity. 31 U.S.C. § 3729(b)(1). The FCA further provides
    that “a final judgment rendered in favor of the United States in any criminal
    proceeding charging fraud or false statements . . . shall estop the defendant from
    denying the essential elements of the offense” in any civil FCA action that involves
    the same transaction. 31 U.S.C. § 3731(e). The district court relied on this last
    provision to find that the Anghaie’s criminal convictions estopped them from
    disputing liability for twelve of the counts alleged here and went to find no genuine
    issues of material fact for the remaining counts. We agree.
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          The Anghaies were convicted of wire fraud for making materially false
    statements in proposals for three contracts, as well as in the progress reports for
    one of these three. For a fourth contract, the jury convicted them only as to false
    claims in the final report. The trial judge told the jury that these charges required
    proof beyond a reasonable doubt that the Anghaies “devised or participated in a
    scheme to obtain money . . . based on false pretenses, representations, or promises .
    . . about a material fact.” The Anghaies were also convicted of conspiring to
    defraud the government. These convictions required proof beyond a reasonable
    doubt that the Anghaies agreed to accomplish an unlawful plan; that they knew the
    unlawful purpose of the plan and joined willfully; that they engaged in at least one
    of the charged overt acts; and that they knowingly committed that act with the
    purpose of accomplishing some object of the conspiracy. Based on their
    convictions, the Anghaies are estopped from denying either that they conspired to
    defraud the government or that they knowingly made false claims.
          The record from the criminal case further shows that the Anghaies’ false
    statements were material to the government deciding to pay false claims. First, all
    the fraud charges required the jury to find beyond a reasonable doubt that “the
    false pretenses, representations, or promises were about a material fact.” And the
    jury heard much evidence tying the Anghaies’ false statements to decisions to
    award money. For example, Bryan Palaszewski testified that he recommended
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    approving a contract based on the Anghaies’ false statements about the principal
    investigator on the project, the existence of a laboratory assistant, and the absence
    of subcontractors. Carol Cobbs gave similar testimony about two other contracts.
          Even though for one contract the Anghaies were convicted of lying only in
    the final report, the record still shows that the Anghaies’ false claims were material
    to them getting paid on this contract. For example, the proposal for this contract
    listed as the principal investigator someone who never worked on that contract.
    Mitat Birkan testified that it would “have been a problem” if he knew this earlier.
    He also testified that he would not have approved payments if he had known that
    research in the final report for this contract “had been taken wholly from a doctoral
    dissertation written in 1997 by one of Dr. Anghaie’s students.”
          The Anghaies claim that there remain specific disputed material facts related
    to whether their misrepresentations were material. They argue there are disputed
    facts about (1) whether the sentencing court rejected the summary of the core
    offense conduct in the Presentence Investigation Report (PSI) when it sustained
    some of the Anghaies’ objections; (2) whether Angelo Ferrari was inaccurately
    represented as a principal investigator; (3) whether Birkan considered Ferrari’s role
    important in recommending a contract; (4) whether the Anghaies had permission to
    use research performed by an unrelated researcher; and (5) whether invoices were
    required for any of the contracts. The Anghaies also reference vast swaths of the
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    trial record for the blanket assertion that “each of the testimonial excerpts cited by
    the government as ‘fact’ was put in dispute at the criminal trial.”
          None of these arguments raises a genuine issue of material fact. First, the
    sentencing court adopted the PSI’s summary of the core offense conduct. Second,
    the record from the criminal trial reflects that Ferrari was listed for a contract he
    never worked on. Third, Birkan testified that he considered Ferrari’s identity
    important when he recommended approving this contract. Fourth, the Anghaies’
    permission to use another researcher’s work was separate from the question of
    whether they made a false statement by including this work in their reports without
    attribution. And fifth, the issue was whether the Anghaies made false statements in
    their proposals and reports, not whether invoices were required.
          Neither these nor any of the Anghaies’ other factual points raise a genuine
    issue of material fact. This being the case, and because the Anghaies were
    convicted of conspiracy and fraud for making material misrepresentations as to
    each of the four contracts at issue, the district court did not err in granting
    summary judgment on the issue of liability.
          The Anghaies next argue that the district court erred in assessing damages
    for the full amount of the research contracts. They emphasize that the sentencing
    court in their criminal case stated that “no actual loss to the victims has been
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    established” and that the Anghaies “provided valuable innovative research” to the
    government. We review a district court’s award of statutory damages for abuse of
    discretion. See Adiel v. Chase Fed. Sav. & Loan Ass’n, 
    810 F.2d 1051
    , 1054–55
    (11th Cir. 1987). We review the district court’s findings of fact for clear error.
    Travelers Property Cas. Co. v. Moore, 
    763 F.3d 1265
    , 1268 (11th Cir. 2014).
          The Anghaies argue that the damages award conflicts with findings about
    restitution made in connection with their criminal sentences. But “[a]n order of
    restitution is not a judicial determination of damages.” United States v. Barnette,
    10 F.3d 1553
    , 1556 (11th Cir. 1994). The two remedies serve different purposes
    and are calculated in different ways. Restitution is “an equitable remedy” granted
    “only to the extent that justice between the parties requires.” Id. (quotation
    omitted). “Damages measure the amount of compensable loss a victim has
    suffered.” Id. Also, restitution is calculated based on factors such as a defendant’s
    financial resources, financial needs, and earning abilities. See 18 U.S.C. §
    3663(a)(1)(B)(i). In a damages action the sole question is whether the defendant
    wrongfully caused the loss. Even when a sentencing court does not impose
    restitution because a criminal fraud defendant did not intend or cause any loss, the
    defendant still may have caused damages as defined by the FCA.
          In this case, the district court here did not abuse its discretion in assessing
    damages for all the money the Anghaies earned through their false claims. There
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    is “no set formula for determining the government’s actual damages” for an FCA
    claim. United States v. Killough, 
    848 F.2d 1523
    , 1532 (11th Cir. 1988).
    Generally, the measure is “the difference between what the government actually
    paid on the fraudulent claim and what it would have paid had there been fair, open
    and competitive bidding.” Id. A defendant may also be liable for intangible harm:
    in Killough we held that kickbacks paid in exchange for government contracts
    caused a “diminution in the public’s confidence in the government,” even if the
    defendants may have won the contracts anyway as the lowest bidder. Id.
          The contracts at issue were awarded through the Small Business Innovation
    Research (SBIR) and Small Business Technology Transfer (STRR) programs. The
    statute establishing these programs provides that “[i]t is the policy of the Congress
    that assistance be given to small-business concerns to enable them to undertake
    and to obtain the benefits of research and development in order to maintain and
    strengthen the competitive free enterprise system and the national economy.” 15
    U.S.C. § 638(a). The government does not own the research it subsidizes through
    these programs or share in the profits from commercial applications. Instead,
    Congress expected beneficiaries to expand their research through privately funded
    sources after performing research for the government. 15 U.S.C. § 638(e).
          This Court has never identified the precise benefit to government agencies of
    the SBIR and STTR programs. The district court therefore looked to two out-of-
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    circuit decisions. The first also involved charges that a company lied when
    applying for an SBIR grant. See United States ex rel. Longhi v. United States, 
    575 F.3d 458
    , 461–62 (5th Cir. 2009). The Fifth Circuit explained that the purpose of a
    research grant is to “award money to eligible deserving small businesses.” Id. at
    473. Because the company’s fraud deprived the government of this benefit and the
    government received no tangible benefit from these contracts, that court affirmed
    damages based on the full amount of the contracts. See id.
          The district court also looked to United States v. Sci. Applications Int’l
    626 F.3d 1257
     (D.C. Cir. 2010), which involved allegations that a company
    made false statements to the Nuclear Regulatory Commission. Id. at 1263. The
    district court had awarded the government damages in the full amount of the
    payments made to the company. Id. at 1264. The D.C. Circuit held that “the
    government will sometimes be able to recover the full value of payments made to
    the defendant, but only where the government proves that it received no value from
    the product delivered.” Id. at 1279. Remanding on the damages calculation, it
    noted that “where the defendant fraudulently sought payments for participating in
    programs designed to benefit third-parties rather than the government itself, the
    government can easily establish that it received nothing of value from the
    defendant and that all payments made are therefore recoverable as damages.” Id.
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          The district court did not abuse its discretion by calculating damages based
    on the entire amount the government paid to the Anghaies. The evidence shows
    that the government would not have paid the Anghaies at all but for their fraud.
    Therefore, the difference between what the government paid and what it would
    have paid in open, fair, and competitive bidding was the full amount of the contract
    payments. Although this loss amount must be offset by any benefit conferred to
    government, the district court did not err in finding that the government received
    no benefit. The purpose of SBIR and STTR funding is to “assist small-business
    concerns to obtain the benefits of research and development performed under
    Government contracts or at Government expense.” 15 U.S.C. § 638(a), (b)(2).
    The Anghaies lied about why they deserved this funding. Their fraud deprived the
    government of the benefit of funding deserving and eligible research. The
    government is entitled to damages for this harm.
          In any event, the Anghaies do not claim they provided any tangible or
    calculable benefit. Instead, they claim they owe no damages because the
    sentencing court said the “value in this case is difficult to quantify, but it does
    appear that the defendants delivered cutting-edge innovative ideas.” Again,
    findings about restitution do not dictate whether the evidence supports damages for
    intangible harm. And the statement that the “value in this case is difficult to
    quantify” actually highlights the intangible nature of any benefit the Anghaies
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    might have conferred. The sentencing court even recognized that the Anghaies
    “were not entitled to receive” the funding and that “there is a loss but the amount
    cannot be determined.” It further specified that this loss was “not a pecuniary loss”
    but rather a loss of “opportunit[ies] to enter into SBIR and STTR contracts with
    qualified small businesses.”
           In light of its findings that the government received no tangible benefit and
    suffered a clear intangible harm, the district court did not abuse its discretion by
    imposing damages based on the full amount the government paid the Anghaies.1
           Finally, the Anghaies claim that the district court imposed excessive civil
    penalties. The FCA authorizes civil penalties between $5,500 and $11,000 per
    false claim. 2 The district court imposed an $11,000 penalty for each of the 21 false
    claims in the complaint. The Anghaies argue that this $231,000 total penalty “is
    ‘infinite’ times more than the actual loss,” which they claim is zero. They suggest
    that this disproportionate fine may even violate the Eighth Amendment. The
    government responds that its damages were more than $900,000. We have already
    explained how the district court calculation reached an acceptable damages
             That said, we expect the damage award will be lower once the payments identified in
    the time-barred counts are subtracted on remand.
            The FCA provides for penalties of $5,000 to $10,000. 31 U.S.C. § 3729. These
    amounts have been adjusted for inflation to $5,500 to $11,000. See 28 C.F.R. § 85.3(a)(9).
                      Case: 15-10454        Date Filed: 11/30/2015       Page: 13 of 13
    amount. The district court did not abuse its discretion by imposing a statutorily
    authorized fine that amounts to less than a third of that amount.3
              We affirm the district court’s judgment as to count 1 and counts 4 through
    22. The record from the Anghaies’ criminal case supports the district court’s
    holding that that the Anghaies violated the FCA for each of those payments. Once
    the district court established liability, it did not abuse its discretion by calculating
    damages based on the total amount paid to the Anghaies for these counts. Because
    counts 2 and 3 are time-barred, we vacate the judgment as to these counts and
    remand for a recalculation of damages and penalties consistent with this opinion
    and the concession by the government.
              AFFIRMED in part, VACATED and REMANDED in part.
        Again, we refer to the fines associated with the counts that aren’t time-barred.