United States v. Adler Decision: Affirmed , 48 F. App'x 463 ( 2002 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES OF AMERICA, 
Plaintiff-Appellee,
v.  No. 01-4877
HARVEY L. ADLER,
Defendant-Appellant.

Appeal from the United States District Court
for the District of Maryland, at Baltimore.
Andre M. Davis, District Judge.
(CR-00-301-AMD)
Argued: September 26, 2002
Decided: October 18, 2002
Before WILKINSON, Chief Judge, WIDENER, Circuit Judge,
and HAMILTON, Senior Circuit Judge.
Affirmed by unpublished per curiam opinion.
COUNSEL
ARGUED: Stephen Frederic Brennwald, BRENNWALD & ROB-
ERTSON, L.L.P., Washington, D.C., for Appellant. Kathleen
O’Connell Gavin, Assistant United States Attorney, Baltimore, Mary-
land, for Appellee. ON BRIEF: Thomas M. DiBiagio, United States
Attorney, Dale P. Kelberman, Assistant United States Attorney, Balti-
more, Maryland, for Appellee.
2 UNITED STATES v. ADLER
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
OPINION
PER CURIAM:
Harvey Adler was indicted and tried before a jury for numerous
violations of 18 U.S.C. § 1001, a criminal provision of the False
Claims Act. A jury found Adler guilty of nine of ten counts of submit-
ting inflated billing invoices to the Housing Authority of Baltimore
City. Adler now appeals, challenging two of the trial court’s jury
instructions, the enhancement of his sentence pursuant to U.S.S.G.
§ 3C1.1, the trial judge’s failure to recuse himself sua sponte, and the
sufficiency of the evidence on one of the counts. Finding no merit in
any of these claims, we affirm the judgment of the district court.
I.
Harvey Adler ("Adler") was president and sole owner of Adler Ser-
vices Group ("ASG"), a company that maintained and repaired heat-
ing systems. On June 14, 2000, a federal grand jury in the District of
Maryland returned an indictment charging Adler and Scott Dower,
ASG’s former vice-president of operations, with ten counts of making
false statements about matters within the jurisdiction of the United
States Department of Housing and Urban Development ("HUD") in
violation of 18 U.S.C. § 1001. Each count charged Adler and Dower
with submitting false and fraudulent invoices that inflated the number
of hours worked at specific HUD-funded properties between 1995
and 1997.
The indictment alleged that "from in or before October 1992 and
continuing until in or about December 1997," Adler and Dower "de-
vised a plan to defraud HABC and HUD" by submitting inflated bill-
ing invoices that contained materially false and fraudulent statements.
Dower pleaded guilty and agreed to testify for the government. Jury
selection and trial commenced on July 16, 2001.
UNITED STATES v. ADLER 3
Between October 1992 and December 1997, ASG sought and was
awarded several contracts, commonly called purchase orders, with the
Housing Authority of Baltimore City ("HABC"). The contracts called
for preventive maintenance and emergency service of oil- and gas-
fired residential furnaces at public housing units.* The purchase
orders covered the cleaning and inspection of furnaces for a flat rate
fee, additional minor repair work on a time and materials basis up to
a maximum dollar amount, and emergency or service calls for furnace
repair. At trial Thomas Dawson, an HABC employee who was
responsible for purchasing supplies and services, testified that any
changes to the purchase orders had to be done in writing.
The evidence presented at trial established that Adler directed ASG
employees to falsify their labor hours on invoices submitted to HABC
at various times throughout the contract relationship. Carl Andrews,
the technician who supervised all of the preventive maintenance work
from 1992 to 1996, testified that the invoices created by the billing
system ASG used until 1996 were usually overcharged. Andrews also
testified that HABC was sometimes billed for work that was never
completed.
John Palumbo, a former ASG technician, testified about the facts
underlying count two of the indictment, relating to a property on
Odell Avenue. Palumbo reviewed a number of government exhibits
relating to work performed on January 2, 1996. The exhibits showed
that thirty hours were billed for work performed on January 2, 1996,
but that Palumbo had only worked eight hours that day. Adler could
not produce any time sheets or work orders reflecting that any other
technicians performed services on that day. Palumbo testified that
sometimes other helpers accompanied him to the properties, but that
he did not know if anyone accompanied him on January 2.
Adler’s defense consisted of two main points: (1) that none of the
invoices were overbilled prior to 1996, including the January 2
Palumbo invoice; and (2) that Adler only began overbilling in the fall
of 1996 after HABC authorized him to do so. Shortly before the
1996-1997 heating season began, HABC removed the preventive
maintenance work from ASG’s contract. According to Adler, this
*HABC receives its annual funding from HUD.
4 UNITED STATES v. ADLER
made it very difficult for ASG to make a profit because the preventive
maintenance work constituted such a large part of the contracts.
Shortly thereafter, at a meeting with Dower and three other ASG
employees, Adler instructed them to start including a two-hour mini-
mum on each billing invoice so that ASG could cover its costs.
Dower testified that in November 1997, Diana Bell, an ASG
employee who processed invoices, went to Adler with a stack of
invoices with inflated hours. Dower heard Bell tell Adler that she did
not have any documentation to support the inflated hours, but Adler
responded "I don’t care what you have to do. This bill is entirely too
low." In addition, a number of other ASG employees testified that
they falsified their labor hours on work orders and time sheets pursu-
ant to Adler’s orders.
Adler testified at trial, but did not deny instructing his technicians
to add a two-hour minimum to their work orders. Instead, Adler justi-
fied the falsified invoices by testifying that Terry Downey, the comp-
troller at HABC, had given him permission to inflate hours in order
to cover ASG’s indirect costs. Adler testified that Downey "directed
[him] in the rebilling process to incorporate the indirect labor charges
in a line item on the rebilling and then roll those hours into the labor
charges." Adler admitted, however, that Downey never put anything
to that effect into writing.
Both the government and the defense subpoenaed Downey for the
trial, but neither side called him to testify. Downey had refused to
speak with defense counsel before trial. The government did, how-
ever, produce copies of the government investigators’ reports com-
piled from interviews with Downey. And Downey was physically
present in the courthouse at several points during the trial.
After the close of evidence, the government asked the court to
instruct the jury that both sides had subpoenaed Downey, and that he
was therefore equally available to both sides as a witness. Adler’s
counsel objected to the instruction because Downey had refused to
talk to him before testifying. The district judge told the parties he
would only give the instruction if Adler’s counsel made some sort of
missing-witness argument asking the jurors to draw an adverse infer-
ence from the government’s failure to call Downey. Adler’s counsel
did argue this point during his closing. Thus, the court instructed the
UNITED STATES v. ADLER 5
jury "that Mr. Downey . . . was equally available to both the defense
and the government in this case." Upon Adler’s request, the judge
also instructed the jury on the "good faith" defense.
On July 26, 2001, the jury returned a verdict of not guilty as to
count one and guilty as to the remaining counts two through ten. At
sentencing, the district judge determined that Adler committed per-
jury on the witness stand and therefore enhanced his base offense
level two points for obstruction of justice. See U.S.S.G. § 3C1.1
(2002). The court then sentenced Adler to forty-one months imprison-
ment and three years of supervised release for each count, with all
nine sentences to run concurrently with each other. The court also
ordered Adler to make a restitution of $235,000 and to pay a special
assessment of $900.00. Adler now appeals.
II.
Adler first argues that the district court made two errors in its jury
instruction on his good faith defense. The standard instruction on
good faith in the context of the crime of false statements is:
A statement made with good faith belief in its accuracy does
not amount to a false statement and is not a crime. This is
so even if the statement is, in fact, erroneous. The burden of
establishing lack of good faith and criminal intent rests upon
the prosecution. A defendant is under no burden to prove his
good faith; rather, the prosecution must prove bad faith or
knowledge of falsity beyond a reasonable doubt.
Modern Federal Jury Instructions, § 8.01. The district court instructed
the jury:
[T]he defendant in this case contends that the statements
which are the subject of this case were made in good faith,
in that they were made in reliance upon the authority of the
Housing Authority of Baltimore City. A statement made
with a good faith belief in its accuracy is not a false state-
ment under the relevant statute. The burden is upon the gov-
ernment to prove that the defendant did not act in good faith.
6 UNITED STATES v. ADLER
First, Adler argues that the district court’s instruction constituted plain
error because the court’s use of the word "accuracy" essentially gutted
Adler’s defense. Since Adler admitted to purposefully inflating the
invoices, Adler argues that the good faith defense should not have
hinged on Adler’s belief in the accuracy of the invoices. Instead, the
judge should have instructed the jury that it could find good faith if
it concluded that Adler believed he was authorized to submit the
inflated, inaccurate invoices. Second, Adler argues that the instruction
constituted plain error because it did not inform the jury that the gov-
ernment must disprove good faith beyond a reasonable doubt. We
review the instruction for plain error because Adler’s trial counsel did
not object to the district court’s proposed jury instruction on the good
faith defense. United States v. Olano, 507 U.S. 725, 731-32 (1993).
"[A] defendant in a criminal case cannot complain of error which
he himself has invited." United States v. Herrera, 23 F.3d 74, 75 (4th
Cir. 1994) (quotation omitted). Although the district court’s instruc-
tion differs slightly from the standard good faith instruction, that dif-
ference gives no support to Adler’s argument because both Adler’s
proposed instruction and the actual instruction contain the alleged
error that Adler complains of: the use of the word "accuracy." Adler’s
trial counsel did not even ask the court to change the word "accuracy"
to a word or phrase that he believes would have more properly con-
veyed the good faith defense in this case.
Next, Adler contends that the district court committed plain error
by not informing the jury that the government must disprove good
faith beyond a reasonable doubt. "When confronted by a claim of an
erroneous jury instruction, we do not conduct a search for technical
error. Rather, our inquiry is whether, taken as a whole, the instruction
fairly states the controlling law." United States v. Cobb, 905 F.2d 784,
788-89 (4th Cir. 1990). Here, the district judge instructed the jury at
least eight separate times about the need to find each element of the
offense beyond a reasonable doubt. Because the judge charged the
"beyond a reasonable doubt" standard throughout his charge, we find
that taken as a whole the instruction fairly states the controlling law.
No plain error occurred.
III.
Second, Adler argues that the district court erred when it enhanced
his sentence two points for obstruction of justice after finding that
UNITED STATES v. ADLER 7
Adler committed perjury on the witness stand. See U.S.S.G. § 3C1.1.
We review the district court’s findings for clear error. United States
v. Murray, 65 F.3d 1161, 1165 (4th Cir. 1995) ("Whether . . . [a
defendant] committed perjury is a factual determination made by the
sentencing court . . . [that must be] review[ed] for clear error.").
The record supports the district court’s finding that Adler willfully
gave false testimony concerning a material matter during his trial.
Adler’s main defense at trial was that he had authorization to submit
inflated invoices. However, the evidence suggested — and the jury
believed — that Adler’s testimony was false. The purchase orders
required all modifications, which would certainly include the authori-
zation to institute minimum billing requirements, to be in writing.
And Adler produced little support for his testimony that Downey
orally authorized Adler to overbill HABC. Adler instructed Dower to
inflate invoices. But not once did Adler tell Dower that HABC had
authorized the overbilling. Moreover, Adler testified that HABC
authorized him to submit the inflated invoices in the fall of 1996 as
a direct response to Adler’s complaint that ASG would be unable to
cover its costs without the preventive maintenance work. But the evi-
dence showed that ASG submitted false invoices beginning at least as
early as January 1995, while ASG was still performing preventive
maintenance work. And Andrews’ testimony that invoices submitted
between 1992 and 1995 were usually overcharged supports the jury’s
verdict. In light of the evidence, the district court’s finding that "Mr.
Adler lied on the stand on a material matter beyond a reasonable
doubt" was not clear error.
IV.
Third, Adler contends that the trial court abused its discretion by
instructing the jury that Downey was equally available as a witness
to both parties. We are unpersuaded. Adler knew as much about Dow-
ney’s potential testimony as the government did: the prosecution pro-
duced full copies of its interviews with Downey to the defense well
in advance of trial. Adler does not challenge the sufficiency of the
government’s production and apparently concedes that he and the
government stood on an equal footing in terms of the information
each possessed about Downey. See United States v. Abelis, 146 F.3d
73, 84 (2d Cir. 1998) (witness who refused to speak with defense
8 UNITED STATES v. ADLER
counsel was nonetheless adequately "available," because government
produced records of its conversations with the witness). Moreover,
Downey’s physical presence in the courtroom and availability for trial
testimony reinforces our conclusion that the trial court did not abuse
its discretion in finding that Downey was legally available to both
parties.
V.
We next turn to Adler’s contention that the district judge erred by
failing to recuse himself sua sponte based on the judge’s prior
employment relationship with HABC. This contention has no merit.
The judge’s employment with HABC ended 18 years prior to the
commencement of the alleged fraud, and 26 years prior to the actual
commencement of trial. Adler does not allege that the district judge
knew anything about the facts or people involved in this case. Instead,
he contends that because the judge worked for HABC "when he was
rather young . . . a bond had surely developed between HABC and
the judge." In so alleging, Adler misconstrues the scope of 28 U.S.C.
§ 455. It is well settled that "litigants are entitled to a judge free of
personal bias, but not to a judge without any personal history before
appointment to the bench." Sierra Club v. Simkins Indus., Inc., 847
F.2d 1109, 1117 (4th Cir. 1988).
VI.
Lastly, Adler contends that there was insufficient evidence to sup-
port a conviction on count two of the indictment. We have reviewed
the evidence with care and find it sufficient to support the jury’s ver-
dict.
VII.
"The purpose of § 1001 is clearly to protect the Government from
fraud and deceit." United States v. Fern, 696 F.2d 1269, 1273 (11th
Cir. 1983). During his eight day trial, Adler had every opportunity to
disprove the government’s strong evidence of ASG’s fraudulent bill-
ing practices. His basic complaint is that the jury did not find his
defense a credible one. Because we find no merit in Adler’s claims,
the judgment of the district court is
AFFIRMED.