U.S. v. Orrego

Full title: UNITED STATES OF AMERICA, Plaintiff, v. ADALBERTO ORREGO, also known as…

Court: United States District Court, E.D. New York

Date published: Jun 22, 2004

No. 04 CV 0008 (SJ) (E.D.N.Y. Jun. 22, 2004)

Opinion

No. 04 CV 0008 (SJ).

June 22, 2004

ADALBERTO ORREGO, Metropolitan Detention Center Federal Bureau of Prisons, Brooklyn, New York, Pro Se.

ROSLYNN R. MAUSKOPF, United States Attorney, Eastern District of New York, Brooklyn, New York, DENISE McGINN, Assistant U.S. Attorney Of Counsel, Attorneys for Defendant.

MEMORANDUM AND ORDER

STERLING JOHNSON, JR., District Judge

On January 5, 2004, Plaintiff, the United States of America ("the Government"), brought suit against Defendant, federal inmate Adalberto Orrego, a/k/a "Adalberto Orrego Buritica," pursuant to 28 U.S.C. § 2210-02 (Declaratory Judgment Act), 18 U.S.C. § 1341 (fraud injunction statute), N.Y.U.C.C. §§ 9-625 and 9-509 (N.Y.U.C.C. statutes), and 31 U.S.C. §§ 3729 et seq. (False Claims Act). The Government also sought preliminary and permanent injunctive relief against Defendant. The Government's Complaint alleged that Defendant recorded false and invalid Uniform Commercial Code ("UCC") "liens" against the real and personal property of United States District Court Judge Edward R. Korman ("Chief Judge Korman"), Assistant United States Attorney Tracy Dayton ("AUSA Dayton"), and Mr. Michael A. Zenk ("Mr. Zenk"), Warden of the Metropolitan Detention Center, Brooklyn ("MDC").¹

1 The Government also brought suit against the Secretary of the State for the State of New York ("Secretary of State") to obtain an order directing it to effectuate a termination of the liens filed or recorded, or caused to be filed or recorded, by Defendant. The Government and the Secretary of State have since entered into a stipulation settling the matter. (Pl.'s Mem. of Law in Supp. of Pl.'s Mot. For Summ. J. ("Pl.'s Mot.") at 1, n. 1.)

On February 4, 2004, this Court granted the Government's motion for a temporary restraining order. On February 13, 2004, this Court granted the Government's motion for a preliminary injunction and found that Defendant Orrego violated the temporary restraining order, but reserved on what sanction should be imposed. On February 23, 2004, the Court held that a contempt sanction of $5,000 was appropriate, in order to coerce Defendant's compliance with the Court's orders. The Government now moves for summary judgment against Defendant, and Defendant does not oppose the motion. For the reasons stated herein, the Government's motion is GRANTED, and the Government is awarded a judgment of $5,500.²

2 The facts of this case were detailed in this Court's February 23, 2004 Amended Memorandum and Order, and will not be repeated here.

DISCUSSION

I. Summary Judgment Standard

Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The court's function is not to resolve disputed issues of fact, but only to determine whether there is a genuine issue to be tried. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986);Eastman Mach. Co. v. United States, 841 F.2d 469, 473 (2d Cir. 1988).

The party seeking summary judgment has the burden of showing that no genuine factual dispute exists. See Cronin v. Aetna Life Ins. Co., 46 F.3d 196, 202 (2d Cir. 1995). Once the movant has made a showing that there are no genuine issues of material fact to be tried, the burden shifts to the nonmoving party to raise triable issues of fact. See Anderson, 477 U.S. at 250. Mere conclusory allegations will not suffice. Instead, the nonmoving party must present "significant probative supporting evidence" that a material factual dispute exists. Fed.R.Civ.P. 56(e); Anderson, 477 U.S. at 249.

A genuine issue for trial exists if, based on the record as a whole, a reasonable jury could find in favor of the nonmoving party. Id. at 249. In conducting its analysis, the court must draw all reasonable inferences and resolve all ambiguities in the nonmoving party's favor, and construe the facts in the light most favorable to the nonmoving party.Anderson, 477 U.S. at 254-255; Sutera v. Schering Corp., 73 F.3d 13, 16 (2d Cir. 1995). However, the court should grant summary judgment where the nonmoving party's evidence is merely colorable, conclusory, speculative, or not significantly probative. See Parker v. Chrysler Corp., 929 F. Supp. 162, 165 (S.D.N.Y. 1996).

II. Fraud Injunction Statute ( 18 U.S.C. § 1341)

The Government requests permanent injunctive relief under 18 U.S.C. § 1345 ("section 1345"), the fraud injunction statute. The statute provides that the Attorney General may commence a civil action in any Federal court when a person is "violating or about to violate this chapter [including 18 U.S.C. § 1341, which prohibits mail fraud]." 18 U.S.C. § 1345. A person violates the mail fraud statute if he devises "any scheme or artifice to defraud or for obtaining money or property by means of false or fraudulent pretenses, . . . [and] places in any post office . . . any matter or thing whatever to be sent or delivered by the Postal Service." 18 U.S.C. § 1341. Thus, to establish a violation, Plaintiff must show: "(1) a scheme to defraud (2) furthered by use of the mails (3) for the purpose of obtaining money or property." United States v. Tocco, 135 F.3d 116, 124 (2d Cir. 1998) (citation omitted).

1. Scheme to Defraud for Purposes of Obtaining Money or Property

In order to demonstrate a scheme to defraud, a plaintiff must show a specific intent to defraud. See United States v. Gole, 158 F.3d 166, 167-68 (2d Cir. 1998). "Although the Government must prove that the defendant had a specific intent to defraud, a showing of evil motive on the part of the defendant is not necessary, and such intent may be inferred through circumstantial evidence." United States v. William Savran Assoc., Inc., 755 F. Supp. 1165, 1181 (E.D.N.Y.,1991) (citations omitted). Indeed, the Government need only show "that some actual harm or injury was contemplated by the schemer" — it need not prove actual injury. United States v. Naiman, 211 F.3d 40, 49 (2d Cir. 2000) (citations omitted) (emphasis added). Furthermore, the "money or property" formulation in section 1341 extends beyond tangible property.United States v. Walker, 191 F.3d 326, 335 (2d Cir. 1999).

In this case, Defendant devised and executed a scheme to defraud for the purpose of obtaining money or property through the filing of false liens with the Secretary of State. These false liens contained false claims of payments due to Defendant by Chief Judge Korman, AUSA Dayton, and Mr. Zenk, all of whom were listed as Defendant's debtors. (Pl.'s Mot., Exs. 1A-C, E; Tr. at 15, 16, 20.) Defendant claimed that he had "copyrighted" his name and that these individuals had used his name in fulfillment of their official duties, without first obtaining permission to do so. Defendant's scheme to file liens against these government officials was therefore a fraudulent one.

Defendant also testified that he intended to obtain money from this scheme. (Tr. at 13 ("My intention was to assure my fees for the unauthorized use of my property"), 20 ("Q. By submitting this invoice to AUSA Dayton you intended for her to submit payment of six million dollars to you, is that correct? A. Yes.") He clearly contemplated harm to Chief Judge Korman, AUSA Dayton, and Mr. Zenk through the mere filing of the liens, with or without payment. (Tr. at 19 ("Q. And you knew by listing Warden Zenk on Ex. B and AUSA Dayton on C and E that you would be damaging their credit rating? A. Yes."); Tr. at 13.)

2. Furthered by the Use of Mails

To establish that a defendant furthered a scheme to defraud by the use of the mails, "the government must show that the defendant caused the mailing and that it was in furtherance of a fraudulent scheme." Tocco, 135 F.3d at 124. "[A] mailing is in furtherance of a fraudulent scheme when it is `incidental to an essential part of the scheme'." Id. (Citations and internal quotations omitted).

In this case, Defendant indisputably used the mails to further his scheme to defraud. Defendant testified that he mailed or caused the mailing of liens and related documents to Chief Judge Korman and AUSA Dayton, (Tr. at 15, 19-20; Exs. 1A, C, E), and then mailed or caused the mailing of the false liens to the Secretary of State for filing. (Tr. at 12-13, 18; Exs. 1A, B, C, E; Ex. 1D at 3.) This mailing of the liens and related documents was in furtherance of a scheme to defraud, as Defendant used the mails to file the false liens and submit the liens and related papers to Chief Judge Korman and AUSA Dayton.

3. The Ongoing Scheme Justifies Injunctive Relief

The Court finds that the government has shown by a preponderance of the evidence that Defendant violated the predicate statutes. The evidence shows that Defendant has devised an ongoing scheme that consists of demanding payment for debts not owed and filing liens for which he knows no legal basis exists and, in carrying out that scheme, has made use of the U.S. Postal Service. Defendant has testified that he intends to continue filing such liens against government employees that use his name in the course of their official duties. (Tr. at 21.) Because Defendant's scheme to defraud is continuing, injunctive relief pursuant to 28 U.S.C. § 1345 is appropriate.

The Court finds that permanent injunctive relief is appropriate because it will remedy the injustice perpetrated by Defendant in filing the frivolous liens as well as prevent Defendant from continuing to harass individuals and interfere with their performance of governmental functions. In addition, the Court grants the government its requested declaratory relief as is within the Court's power under the Declaratory Judgments Act, 28 U.S.C. §§ 2201-02.

III. New York Uniform Commercial Code (N.Y.U.C.C. §§ 9-625 and 9-509)

Under New York law, a debtor is entitled to $500 in statutory damages from a person who files a record that the person is not entitled to file under N.Y.U.C.C. § 9-509(a). See N.Y.U.C.C. § 9-625(e)(3).³ Pursuant to § 9-509(a), a person may file an initial financing statement only if: (1) the debtor authorizes the filing by (a) authenticating or (b) being bound to a security agreement or (c) acquiring collateral, or (2) the person holds an agricultural lien and the collateral at issue is only that related to the agricultural lien. Here, none of the listed debtors acquired collateral and Defendant does not have an agricultural lien. Therefore, the only way that Defendant could have been authorized to file a lien under the New York statute would have been if the purported debtors authorized the filing by authenticating or being bound to a security agreement.

3 Here, the United States sues on behalf of Chief Judge Korman, AUSA Dayton, and Mr. Zenk, all of whom were subject to these false liens for actions in their official capacity. If any of the alleged debtors were required to make payments to Defendant, the Government would be liable for such payments, as they would have been incurred in the fulfillment of their official duties. Thus, the United States is a debtor for these purposes.

Although Defendant purported to file a security agreement, Chief Judge Korman, AUSA Dayton, and Mr. Zenk could not have authenticated it before Defendant filed the initial financing statements against them, since Defendant did not send any copies of the lien-related documents to Chief Judge Korman and AUSA Dayton until March 12, 2003, see Ex. 1D (Certificate of Service), and has not yet sent anything to Mr. Zenk. (Tr. at 19-20.)

Defendant asserts that by using his name in official documents, the alleged debtors authorized him to file the lien. (Tr. at 15.) However, Defendant cannot bind these individuals simply by asserting, within the security agreement, that their use of his name will cause them to be bound. Additionally, no basis in law exists for Defendant's alleged copyright of his own name. Accordingly, this Court imposes statutory damages in the amount of $500 in accordance with N.Y.U.C.C. § 9-625(e)(3).

IV. False Claims Act ( 31 U.S.C. §§ 3729 et seq. )

Under the False Claims Act, 31 U.S.C. §§ 3729 et seq., any person who "knowingly presents, or causes to be presented, to an officer or employee of the United States Government . . . a false or fraudulent claim for payment or approval . . . is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, plus 3 times the amount of damages which the Government sustains because of the act of that person. . . ." The term "knowingly" means that a person "has actual knowledge of the information; acts in deliberate ignorance of the truth or falsity of the information; or acts in reckless disregard of the truth or falsity of the information. . . . [N]o proof of specific intent to defraud is required." 31 U.S.C. § 3729(b). The term "claim" includes: "any request or demand, whether under a contract or otherwise, for money or property which is made to a contractor, grantee, or other recipient if the United States Government provides any portion of the money or property which is requested or demanded, or if the Government will reimburse such contractor, grantee, or other recipient for any portion of the money or property which is requested or demanded." 31 U.S.C. § 1329(c).

The Court finds that Defendant's liens and lien notices are "claims" within the context of the False Claims Act. Defendant submitted an invoice in the amount of six million dollars to AUSA Dayton for the use of Defendant's name in the Complaint, Indictment, and Plea Agreement. (Ex. 1E; Tr. at 20.) This invoice was a false claim that violated the False Claims Act. 31 U.S.C. § 1329(c); see also United States v. Grossman, No. 01 CV 0603, 2002 WL 1349749, at *2 (S.D.N.Y. June 20, 2002). Defendant used the invoice in his attempt to get the false claim of debt paid. (See Tr. at 20 ("Q. By submitting this invoice to AUSA Dayton you intended for her to submit payment of six million dollars to you; is that correct? A. Yes.").

With regard to the scienter requirement, it is indisputable that Defendant submitted a false invoice to AUSA Dayton with no basis in law or fact and that he did so intentionally or with willful blindness or reckless disregard for the truth. See United States v. Anderson, No. 97 CV 821, 1998 WL 704357, *2 (N.D. Ill. Sept. 25, 1998) (finding summary judgment appropriate in the Government's favor against prisoner who filed false liens against federal employees after the prosecution of his criminal action).

Having determined that Defendant knowingly made a false claim, the Court finds that Defendant violated the False Claims Act and that there is no genuine issue of material fact for trial. As for damages, the Court finds that Defendant, an inmate with limited resources, is liable to the government in the amount of $5,000.00. The Court does not award the Government treble damages because the Government has not made a showing of damages.

CONCLUSION

For the foregoing reasons, the Court grants the Government's motion for summary judgment. In addition, the Court orders the following:

(a) All liens filed by Defendant against all present and former federal employees are declared null, void, and of no legal effect;

(b) Defendant is permanently enjoined from filing any lien or taking any steps to file any liens in any jurisdiction relating to any present or former federal employees, without first obtaining leave of this Court;

(c) Any and all filings in contravention to the permanent injunction are void ab initio, absent a court order to the contrary;

(d) Defendant must pay a civil penalty of $5,000 under the False Claims Act, 31 U.S.C. §§ 3729 et seq.;

(e) Defendant must pay $500 in statutory damages under the New York Uniform Commercial Code, N.Y.U.C.C. § 9-625;

(f) Defendant shall pay the United States' costs in this action in an amount to be determined; and

(g) Defendant's inmate account shall be attached for payments of the aforementioned civil penalty, statutory damages, attorney's fees, and costs, until he has completely satisfied all such payments.

IT IS HEREBY ORDERED AND ADJUDGED that the Court grants the Government's motion for summary judgment. Having found Defendant liable under the False Claims Act and the New York Uniform Commercial Code, the Court enters judgment in the Government's favor in the amount of $5,500.00.

SO ORDERED.