United States District Court, D. Massachusetts
[Copyrighted Material Omitted]
For James H. Fitzpatrick, Defendant: Syrie D. Fried, LEAD ATTORNEY, Syrie D. Fried, Attorney at Law, Maynard, MA.
For Bernard J. Morosco, Defendant: Janice Bassil, LEAD ATTORNEY, Carney & Bassil, Boston, MA.
For USA, Plaintiff: S. Theodore Merritt, LEAD ATTORNEY, Brian Perez-Daple, Christopher R. Donato, United States Attorney's Office, Boston, MA.
DOUGLAS P. WOODLOCK,
UNITED STATES DISTRICT JUDGE.
Bernard Morosco moved to dismiss the indictment against him in this case, arguing that 18 U.S.C. § 371 is unconstitutionally vague as applied to him and that the indictment fails to allege each element of a conspiracy under § 371. James Fitzpatrick moved to join Morosco's motion dismiss, contending that Morosco's arguments applied equally to him but providing no additional argument. At a hearing on December 3, 2014, I allowed Fitzpatrick's motion to join Morosco's motion to dismiss but denied the motion to dismiss itself. This Memorandum provides an extended statement of my reasons for doing so.
A federal grand jury returned an indictment against Bernard Morosco, James Fitzpatrick, and Michael McLaughlin on October 29, 2013. The indictment charged the three defendants with conspiracy to defraud the United States, a violation of 18 U.S.C. § 371. I draw the following background information from the allegations set forth in the indictment.
The grand jury charged that the defendants conspired to manipulate evaluations of the Chelsea Housing Authority (CHA). The CHA is a Public Housing Authority that receives substantial funding from the United States Department of Housing and Urban Development (HUD), the federal agency that ensures that public housing authorities like CHA meet the standard of decent, safe, and sanitary housing for properties receiving federal funding. Ind. ¶ 2. Regulations concerning the Public Housing Assessment System used to evaluate housing authorities, including the physical condition of the property and housing units, are codified at 24 C.F.R. § 902 et seq. Ind. ¶ 4. The regulations require that HUD provide for " an independent physical inspection" of Public Housing Authorities " that includes, at a minimum, a statistically valid sample" of the units in the project. 24 C.F.R. § 902.22; Ind. ¶ 4.
The Real Estate Assessment Center (REAC) is the agency within HUD that performs these evaluations. Ind. ¶ 4. The inspections are conducted by independent contractors who have been trained and certified by REAC. A certified REAC inspector is given a password to access the secure REAC server that contains data on public housing authorities. Ind. ¶ 5. Once a REAC inspector is assigned a particular inspection, the inspector can download the housing profile of the Public Housing Authority from the REAC database. On the day of an inspection, the inspector confirms the accurate count of units and hits a " Generate Sample" button that, using an embedded algorithm, produces a statistically valid sample of units to inspect. Ind. ¶ 7. The REAC inspector inspects the selected units as well as common areas and building exteriors and inputs the assessment into a computer program. REAC later generates an Inspection Report based on the inspector's input. Thirty-five percent of the score is dependent on the physical inspection. A high score on the assessment means that the Public Housing Authority receives less frequent inspections,
less monitoring by HUD, and a three percent annual increase in capital funding from HUD. Ind. ¶ 8.
McLaughlin was the Executive Director of the CHA from 2000-2011, and Fitzpatrick was the Assistant Executive Director of Modernization and Capital Planning for the CHA from 2001-2012. Ind. ¶ 9-10. Morosco owned and operated a consulting business in Utica, New York that consulted with public housing authorities and other housing entities that receive government assistance. Ind. ¶ 11. Morosco was also a certified REAC inspector. CHA hired Morosco as a REAC inspection consultant in 2004, and Morosco continued to provide consulting services to CHA through 2011. Ind. ¶ 11.
The indictment alleges generally that the three defendants knowingly and unlawfully conspired from approximately 2006 through some time in November 2011 to defraud the United States and its agency, the Department of Housing and Urban Development, " by impairing, impeding, and defeating the proper operation of the physical condition assessment of the federally-funded housing units of the Chelsea Housing Authority by the Real Estate Assessment Center, which relies on a statistically valid random sample of units to inspect." Ind. ¶ 13.
Specifically, the conspiracy was organized so that Morosco would use his status as a certified REAC inspector to access the REAC database and software. He would provide information to Fitzpatrick and McLaughlin in advance of the inspection about which units of the CHA would be " randomly" chosen for inspection. Ind. ¶ 14. Once Morosco provided a list of the units to be inspected, McLaughlin and Fitzpatrick directed CHA employees to make any needed repairs to the identified units in advance of the REAC inspection. Ind. ¶ 15.
The indictment contains allegations of eighteen overt acts committed by at least one of the co-defendants in furtherance of the conspiracy. Morosco accessed information about future inspections using his REAC credentials in December 2006, January 2009, and March 2011, Ind. ¶ ¶ 17 a, h, n, and provided information about the units to be inspected to an employee of the CHA, Ind. ¶ ¶ 17 b, i, o. McLaughlin used this information to send CHA employees to perform repairs on the units that were going to be inspected. Ind. ¶ ¶ 17 c, j, p. Fitzpatrick provided Morosco notification about a future inspection, Ind. ¶ 17 f, and later sent Morosco an email about keeping information concerning the REAC inspections from the CHA manager, Ind. ¶ m. Morosco accompanied the REAC inspectors during their inspection. ...