Opinion
22-3118
06-15-2023
LAURENE GRAMLING LAMBACH and CHRISTOPHER R. LAMBACH, Plaintiffs-Appellants, v. BRIAN CONTE and MILWAUKEE COUNTY, Defendants-Appellees.
NONPRECEDENTIAL DISPOSITION
Argued June 6, 2023
Appeal from the United States District Court for the Eastern District of Wisconsin. No. 21-CV-1032-JPS J.P. Stadtmueller, Judge.
Before MICHAEL B. BRENNAN, Circuit Judge AMY J. ST. EVE, Circuit Judge JOHN Z. LEE, Circuit Judge
ORDER
Based upon a municipal investigation into an allegation of theft by fraud and the statements of a number of witnesses, Laurene Lambach was arrested. She was released after one day and never charged with a crime. She sued Milwaukee County and the detective who spearheaded the investigation, asserting they violated her Fourth Amendment rights by arresting her without probable cause. See 42 U.S.C. § 1983. The district court entered summary judgment for the defendants. Because probable cause existed that a crime had been committed, which supported Lambach's arrest, we affirm.
I. Background
We view the facts in the light most favorable to Lambach, the nonmoving party. See Perry v. Sims, 990 F.3d 505, 511 (7th Cir. 2021).
Lambach managed three non-profit organizations in Milwaukee: She headed S.E.T. Ministry, Inc. ("S.E.T."), assisted with the financial operations of Interfaith Older Adult Programs, Inc. ("Interfaith"), and became executive director of the merger of those two organizations, Unison MKE ("Unison").
The fraud investigation that led to this suit is based on events from late 2017, prior to the merger. Interfaith received a grant from Milwaukee County where the County would reimburse Interfaith for qualifying purchases made within a certain timeframe. On December 31, 2017, the last day on which Lambach could request reimbursement from Milwaukee County under the grant, she ordered $17,000 worth of computer equipment for Interfaith. That same month the County received from Lambach a corresponding request for reimbursement for the purchase. Lambach also later reported to the County that she had used its grant money to buy the equipment. But the computer order was never filled, and Interfaith received no equipment.
A few months later, Milwaukee County launched a fraud investigation. It received an anonymous complaint alleging that Lambach had defrauded the County by using its grant money to buy computer equipment. Matthew Hart, who oversaw fraud investigations for the County, spoke with four witnesses about the allegations. Those witnesses suggested Lambach had falsified Interfaith's spending by cancelling purchase orders while still receiving the public funds. Hart referred the matter and his findings to the Milwaukee County's Sheriff's Office, where Detective Brian Conte took over the investigation.
Conte's inquiry yielded similar evidence. He interviewed six witnesses, including the four with whom Hart had spoken. Five were Interfaith employees who provided similar information. One explained that under Lambach's management, Interfaith underspent the grant money for 2017. The witness said that Lambach had placed the last-minute computer order on December 31, 2017, to snatch the remaining grant funds, but then cancelled the order even though she still requested reimbursement for the cost of the equipment. Other witnesses concurred. Unknown to Conte, these witnesses had started a competing business while they still worked for Interfaith and bid for jobs with the County.
Eventually, Conte requested warrants to search Interfaith's and S.E.T.'s offices. He swore that based on his investigation he had probable cause to believe that Lambach committed theft by fraud under Wis.Stat. § 943.20(1)(d) and that the premises contained evidence of it. A state judge issued the search warrants. While the police conducted the searches, Conte arrested Lambach. He later stated he did so to prevent her from destroying evidence. Upon arrest, Lambach received her Miranda warnings.
A few hours after her arrest, she asked Conte and two other officers to speak to Unison's corporate attorney, but she was not allowed to do so. Her husband retained a different lawyer with whom Lambach met the next day. In the meantime, after she asked for counsel, Conte did not question Lambach, and she later testified she did not speak to the police about the allegations against her. The day after her arrest a state judge determined that probable cause supported the arrest for theft by fraud. That night Lambach was released on bail. After her release, Conte subpoenaed her personal financial records, which did not show that she had personally taken any funds from Interfaith. Lambach was never charged with a crime.
B. Procedural
Lambach and her husband sued Conte and Milwaukee County in federal court. Among their claims, they alleged that Conte lacked probable cause to arrest Lambach, and that he and the County denied Lambach her right to counsel under the Fifth or Sixth Amendments. The defendants moved for summary judgment. They argued there was no violation of her right to counsel and that the information Conte received from Hart and the six witnesses supplied probable cause that she committed theft by fraud. Lambach replied that the witnesses were not credible because they held a grudge against her.
The district court entered summary judgment for the defendants. As relevant on appeal, the court concluded that undisputed facts showed Conte had probable cause to arrest Lambach. Before the arrest, Conte spoke with witnesses who responded consistent with one another and with the investigator that Lambach had acted to defraud the County. The detective was unaware that the witnesses had started a competing business. The court also ruled that the Sixth Amendment did not apply and that Conte did not violate Lambach's Fifth Amendment rights because no statements she made were used against her. Finally, the court ruled that a claim of municipal liability failed because Lambach had no viable right-to-counsel claim, and if she did, she failed to allege that a County policy deprived her of that right.
II. Discussion
On appeal, Lambach contends she presented a triable Fourth Amendment claim that she was arrested for theft by fraud without probable cause. We review de novo the district court's entry of summary judgment on this claim. Perry, 990 F.3d at 511.
At oral argument, Lambach waived her claims that Conte violated her Fifth or Sixth Amendment rights. See Oral Argument at 1:43. So, we do not discuss Lambach's right-to-counsel claims or her related attempt in her briefs to establish municipal liability for the same alleged violations.
Theft by fraud is defined as "[o]btaining title to property of another person by intentionally deceiving the person with a false representation which is known to be false, made with intent to defraud, and which does defraud the person to whom it is made." WIS. STAT. § 943.20(1)(d); see Wis. JI-Criminal 1453A.
According to Lambach, the facts here did not justify her arrest for theft by fraud. In her view, all the police knew when they arrested her was that "Milwaukee County awarded grants to S.E.T. Ministry and/or UNISON" and that Lambach "ordered some computers with the tail end of that money." But together with these facts that Lambach concedes, the police had additional facts:
■ Before Conte arrested Lambach, five witnesses from Interfaith, each who worked with her, told Conte based on their firsthand knowledge that Lambach had falsely informed the County that she was using its grant money to buy equipment.
■ Four of these witnesses gave that same information to Hart when he interviewed them.
■ Hart informed Conte that a witness provided records which showed that in December 2017, Lambach ordered $17,000 worth of computer equipment, which the County reimbursed, and that this witness informed Hart that Lambach cancelled the order.
Probable cause exists if, "based on the facts and circumstances at the time of the arrest, a reasonable officer would conclude that the suspect has committed .. a crime." Matthews v. City of East St. Louis, 675 F.3d 703, 706 (7th Cir. 2012). "[A]s long as a reasonably credible witness or victim informs the police that someone has committed a crime, or is committing, a crime, the officers have probable cause" to arrest. Id. The Supreme Court has called probable cause "a fluid concept-turning on the assessment of probabilities in particular factual contexts .. ." Illinois v. Gates, 462 U.S. 213, 232 (1983).
The facts Conte knew, viewed from the standpoint of an objectively reasonable police officer, amounted to probable cause that Lambach had committed theft by fraud under the requirements of Wisconsin Statute § 943.20(1)(d):
Obtaining property of another. The witnesses told Conte that Lambach as the CEO/Executive Director of Interfaith/Unison had obtained the property of another-the County-by using grant funds for the purchase order.
Making a false representation known to be false. The numerous witness statements allowed Conte to reasonably believe that Lambach made a representation she knew was false. She knowingly failed to amend, correct, or withdraw the expense reimbursement request that she submitted to the county for the amount of the Dell purchase order after she cancelled the order or learned it had been cancelled. This resulted in Interfaith/Unison neither paying for nor receiving the equipment, as Lambach had represented to the County.
Made with intent to defraud and which does defraud. Also based on the information described above, Conte could reasonably infer that Lambach intended to and did defraud the County by this false representation and failure to correct that representation. Several witnesses, including Jodi Bauer, Catherine Wood, and Vevette Hill-Nwagbaraocha, described Lambach's actions as "fraud" and relayed statements and/or conduct by her which permit the conclusion that she misrepresented the spending of grant funds.
Recall also that before and after Lambach was detained, state court judges determined that probable cause existed that a crime had been committed-first to issue the search warrants, and second following her arrest for theft by fraud. These determinations, bookends to Lambach's arrest, buttress our conclusion that probable cause existed to arrest her.
Lambach insists that the witnesses were biased against her, which she says destroys probable cause. But in deciding "to arrest someone for criminal conduct that he did not witness, a police officer may rely on information provided to him . by an eyewitness to the crime that the officer reasonably believes is telling the truth." Holmes v. Vill. of Hoffman Estates, 511 F.3d 673, 680 (7th Cir. 2007). Lambach concedes that Conte was unaware of the witnesses' potential bias, so she disputes that his belief could be reasonable that they were telling the truth. On our review, Conte's belief was reasonable for the same reasons witnesses are often deemed trustworthy: they offered responses that were consistent over time, the witnesses corroborated each other, and the witnesses' statements were consistent with the available documents. Moreover, once the probable cause threshold was met, Conte was under no duty to inquire further into the witnesses' backgrounds to tease out possible biases or grudges. See Matthews, 675 F.3d at 707 ("[T]his court has emphasized that once probable cause has been established, officials have 'no constitutional obligation to conduct further investigation in the hopes of uncovering potentially exculpatory evidence.'") (internal citation omitted).
Lambach makes three other arguments as to why probable cause was not present here. First, she proposes that Conte should have waited to review the results of the searches before arresting her. She relies on Sornberger v. City of Knoxville, 434 F.3d 1006 (7th Cir. 2006), to argue that an arrest is premature if a search could clarify who committed a crime. But in Sornberger the police had conflicting information-an eyewitness description of the suspect differed from the suspect's true appearance. Here, Conte had only consistent and corroborating information, obviating the need to await a search.
Second, Lambach suggests that probable cause was lacking because she was never charged. But "[p]robable cause does not depend on the witness turning out to have been right; it's what the police know, not whether they know the truth, that matters." Gramenos v. Jewel Cos., Inc., 797 F.2d 432, 439 (7th Cir. 1986). Some criminal investigations do not reach the level of probable cause, while others do. And countless investigations and arrests result in matters that the prosecutor decides do not or should not result in criminal charges. Just because an investigation and arrest did not result in criminal charges does not make the arrest false and violative of the constitutional rights of the individual arrested, and thus compensable in a claim under 42 U.S.C. § 1983.
Third, Lambach contends that Conte never had information that she took money personally. But theft by fraud does not require that the suspect retain the fraudulently obtained property for herself. See State v. O'Neil, 416 N.W.2d 77, 80 (Wis. Ct. App. 1987).
In her reply brief, Lambach also raises new, unrelated arguments, but these arrive too late and are thus waived. See Wonsey v. City of Chicago, 940 F.3d 394, 398 (7th Cir. 2019).
AFFIRMED