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United States v. George

United States Court of Appeals, First Circuit

November 7, 2016

JOHN GEORGE, JR., Defendant, Appellee.


          William J. Cintolo, with whom Thomas R. Kiley and Cosgrove Eisenberg & Kiley, PC were on brief, for appellant.

          Ryan M. DiSantis, Assistant United States Attorney, with whom Carmen M. Ortiz, United States Attorney, was on brief, for appellee.

          Before Howard, Chief Judge, Selya and Kayatta, Circuit Judges.

          SELYA, Circuit Judge.

         It is familiar lore that in Lord Acton's words, "[p]ower tends to corrupt, and absolute power corrupts absolutely." John Emerich Edward Dalberg-Acton, Historical Essays and Studies (1907). The circumstances of this case remind us of that venerable precept.

         Here, the government charges that the defendant - an entrenched political satrap - used his political clout to divert federal funds granted to a state agency and, in the bargain, transgressed federal criminal law. A jury agreed and found the defendant guilty on charges of conspiracy and embezzlement from a federally funded organization. See 18 U.S.C. §§ 371, 666(a)(1)(A).[1] The district court sentenced the defendant to a 60-month term of immurement on the conspiracy count and a 70-month term of immurement on the substantive offense count (to run concurrently). As part of the sentence, the court directed the defendant to make restitution in the amount of $688, 772. Later, the court ordered the defendant to forfeit an additional $1, 382, 214 in ill-gotten gains.

         In this appeal, the defendant strives to challenge his conviction, his sentence, and the forfeiture order. After careful consideration of his asseverational array, we conclude that his variegated challenges to his conviction are without merit. We also reject his four claims of sentencing error, including one - a challenge to a position-of-trust enhancement - that requires us to address a question of first impression in this circuit. Finally, we do not reach his challenge to the substance of the forfeiture order because we conclude that the district court lacked jurisdiction to enter that order. Accordingly, we affirm his conviction and sentence, vacate the forfeiture order, and remand so that, once jurisdiction has reattached, the district court may address the question of forfeiture anew.

         I. BACKGROUND

         "We rehearse the facts in the light most hospitable to the verdict, consistent with record support." United States v. Maldonado-Garcia, 446 F.3d 227, 229 (1st Cir. 2006). In the process, we draw all reasonable inferences from the evidence in favor of the verdict. See id.

         Defendant-appellant John George, Jr., operated a bus system on behalf of a regional transit authority funded by the Commonwealth of Massachusetts and the federal government. This authority, known as the Southeast Regional Transit Authority (SRTA), is the governmental body responsible for providing transportation to certain cities and towns in southeastern Massachusetts. SRTA is strictly administrative: although it owns the buses, facilities, and equipment used to run the system, it does not itself operate any buses. Instead, SRTA contracts with a private entity that uses SRTA's resources to operate and maintain the bus system. SRTA's advisory board, composed of representatives of the municipalities that it serves, selects this entity.

         From 1980 to 1988, the defendant, a former Dartmouth selectman, served on SRTA's advisory board. In 1988 - after being elected to the Massachusetts House of Representatives - he resigned from that advisory board. Simultaneously, he arranged for his friend and political ally, Joseph Cosentino, to replace him.

         The defendant resigned from the legislature three years later and purchased Union Street Bus Company (USBC). The defendant effected this purchase through a corporation known as Trans-Ag Management, Inc. (Trans-Ag). The defendant was the sole owner and sole employee of Trans-Ag, and - aside from paying the defendant's salary and contributing to his pension - Trans-Ag's only function was to serve as the nominal owner of USBC.

         At the time of the purchase, USBC had a contract to operate the SRTA bus system through 1995. After the defendant assumed control of USBC, the contract was thrice renewed, the last renewal (for a five-year term) occurring in 2006 (the Agreement). The evidence of record supports an inference that the defendant maneuvered his way into the Agreement through collusion with Cosentino (by then, the defendant had lost the crucial support of the City of Fall River, purportedly over his refusal to hire one of the mayor's cronies, and felt threatened by competition for the contract from a national company). Among other things, the defendant brought in a high bidder to make his own bid appear more attractive and furnished Cosentino with questions meant to discredit his main competitor's bid.[2]

         Under the Agreement, USBC's expenses were, in effect, paid by SRTA with public funds: the Agreement bound SRTA to pay USBC the difference between USBC's operating expenses and USBC's operating income. Revenue from bus fares was USBC's exclusive source of operating income; its operating expenses included payroll, exclusive of the salaries of its corporate officers. In practice, this exclusion applied only to the defendant, as USBC had no other corporate officers. Withal, the Agreement specifically named the defendant as USBC's general manager, and SRTA separately paid USBC a management fee that gradually rose from $199, 714 for 2006 to $266, 711 for 2010. SRTA required preapproval of any capital expenditures proposed by USBC and funded approved expenditures as a distinct line item.

         The proof adduced at trial indicated that the defendant misused USBC's funds (reimbursed by SRTA) in several respects. Three instances involved paying individuals for full-time USBC jobs while they worked instead for the defendant's (unrelated) personal business, a farm. Some details follow.

         In 2010, USBC paid Sandra Santos, the defendant's girlfriend, approximately $100, 000 in total compensation (reimbursed by SRTA). At that time, Santos was employed by USBC as either an "administrative assistant" or "assistant administrator" (the record is inconclusive as to which title obtained). In any event, she was only sporadically at her office between 2005 and 2011: though USBC's office hours were 8:00 a.m. to 4:30 p.m., she typically appeared only "once or twice a week, if at all" in the summertime. A USBC employee testified that he could not recall Santos ever having worked her allotted forty-hour week. By like token, workers at the defendant's farm testified to her daily (though not continuous) presence at the farm stand, where she worked as a supervisor, frequently during USBC's regular business hours. The evidence at trial permitted a finding that, from May to September of 2010, Santos was absent from her job at USBC for 370.25 hours, costing USBC (and, thus, SRTA) $17, 772.

         Roy Rocha, a night supervisor at USBC and a long-time friend of the defendant, would routinely abandon his shift shortly after arriving and take a company car to work at the defendant's farm or do personal chores for the defendant. Rocha's sole compensation for this work was his USBC salary (reimbursed by SRTA). In 2010, the cost of that salary (including benefits) was approximately $90, 000.

         The record tells a similar tale with respect to Ronald Pacheco, a USBC mechanic. The defendant would peremptorily summon Pacheco from his USBC duties to do repairs at the farm. Additionally, Pacheco sanded and painted tractor parts belonging to the farm at the SRTA-owned garage using SRTA-owned equipment during his USBC shift. At USBC, the farm came first: when Pacheco's immediate superior (Al Fidalgo) asked to postpone Pacheco's assistance on a farm job to focus on urgent bus repairs, the defendant called Fidalgo's supervisor and insisted that Pacheco be sent to the farm forthwith.

         There was more. In early 2006, USBC paid $10, 000 in SRTA-reimbursable funds to Sousa Construction, ostensibly for terminal repairs. However, USBC's maintenance supervisor testified that he knew of no work done by Sousa Construction for USBC during that period. In addition, there was evidence that Santos and the defendant were then discussing remodeling the kitchen at the defendant's home, and that a Sousa Construction truck was seen there.

         Other examples of the defendant's misuse of SRTA resources populate the record. For instance, the defendant used SRTA trucks to plow snow at both his home and his farm. So, too, SRTA equipment for repairing air conditioning systems on buses was used by Pacheco at the defendant's farm. What is more, the defendant had Pacheco (during his USBC shift) install a SRTA-owned video surveillance system at the farm.

         From the defendant's standpoint, matters began to unravel when Cosentino, having assumed the SRTA administrator post, got religion. He began pushing back (albeit gently, at first) against inappropriate uses of SRTA resources. When Cosentino went further and advertised the upcoming contract renewal in a national magazine, the defendant threatened to have him fired - a threat that materialized in September of 2010. Despite Cosentino's firing, SRTA awarded a new contract to a rival firm, thus ending the defendant's reign.

         An investigation ensued. As a result, a federal grand jury indicted the defendant on August 5, 2014. The indictment charged the defendant with embezzling from an organization that receives federal funds, see 18 U.S.C. § 666(a)(1)(A), and conspiracy to commit an offense against the United States, see id. § 371. After a nine-day trial, the jury convicted the defendant on both counts.

         On July 29, 2015, the district court sentenced the defendant to a 70-month term of immurement on the embezzlement count and a 60-month term of immurement on the conspiracy count (to run concurrently). The court ordered the defendant to pay restitution in the amount of $688, 772. With the consent of both parties, the court reserved the question of forfeiture.

         The court entered its written judgment on July 30, 2015, immediately after denying the defendant's post-trial motion for judgment of acquittal. See Fed. R. Crim. P. 29(c). The defendant filed his notice of appeal the following day.

         On August 13, 2015 - while this appeal was pending - the district court held a hearing. On September 21, 2015, the court amended its judgment to direct that the defendant forfeit $1, 382, 214. The defendant did not file a second notice of appeal.

         II. ANALYSIS

         The defendant raises a gallimaufry of issues implicating his conviction, his sentence, and the forfeiture order. We deal sequentially with the more substantial of these issues. The defendant's other arguments are insufficiently developed, patently meritless, or both. As to those arguments, we simply reject them out of hand, without further elaboration.

         A. Sufficiency of the Evidence.

         The defendant's flagship claim challenges the sufficiency of the evidence. With respect to this challenge, we review the denial of his motion for judgment of acquittal de novo. See United States v. Chiaradio, 684 F.3d 265, 281 (1st Cir. 2012). Our basic inquiry is "whether, after assaying all the evidence in the light most amiable to the government, and taking all reasonable inferences in its favor, a rational factfinder could find, beyond a reasonable doubt, that the prosecution successfully proved the essential elements of the crime." Id. (quoting United States v. O'Brien, 14 F.3d 703, 706 (1st Cir. 1994)).

         In this case, the government had to prove beyond a reasonable doubt that the defendant was acting as an agent on behalf of a state agency or organization; that he embezzled, stole, obtained by fraud, knowingly converted, or intentionally misapplied $5, 000 or more of property belonging to or under the care, custody, or control of that agency or organization; and that the agency or organization received, in any one-year period, more than $10, 000 in federal assistance. See 18 U.S.C. § 666. The defendant concedes that he worked on behalf of SRTA; that SRTA was (and is) a state agency or organization within the purview of the statute; and that it received more than $10, 000 in federal assistance during each of the years in question. The question reduces, then, to the sufficiency of the government's proof of the second element.

         With respect to this element, the defendant asserts that the government did not prove that the salaries of his helpmeets were embezzled, stolen, obtained by fraud, knowingly converted, or intentionally misapplied. He makes this assertion in the face of abundant evidence that these individuals were routinely absent from USBC's premises during their normal working hours and were instead toiling at the defendant's farm. In the defendant's view, evidence of absence from the workplace is meaningless without evidence ...

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