The opinion of the court was delivered by: GREEN
On March 4, 1986, plaintiff United States moved this Court for "partial" summary judgment
on the issues of liability and damages under the False Claims Act, 31 U.S.C. §§ 3729-3731.
Federal Rule of Civil Procedure 56(c) directs that summary judgment shall be granted "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." The Supreme Court recently emphasized that summary judgment is warranted when there is "no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986) (emphasis in original). "There is no issue for trial unless there is sufficient evidence favoring the non-moving party for a jury to return a verdict for that party. . . . If the evidence is merely colorable . . . or is not significantly probative . . . summary judgment may be granted." Id. at 2511 (citations omitted).
I. Collateral Estoppel Effect of the Criminal Conviction
The primary issue to be decided in determining whether there is a genuine issue of material fact with regard to the False Claims Act cause of action is whether the criminal conspiracy conviction of defendants George Uzzell and Vernon Uzzell under 18 U.S.C. § 286 is conclusive evidence in a civil case as to the necessary elements of a violation of 31 U.S.C. § 3729.
To establish civil liability under section 3729, the government must establish that defendants knowingly presented false, fictitious, or fraudulent claims upon the United States Government. See United States v. Lawson, 522 F. Supp. 746, 750 (D.N.J. 1981). Essentially, the same elements (in addition to conspiracy) must be proved by the government to obtain a criminal conviction for filing false claims under 18 U.S.C. § 286.
A criminal conviction is conclusive proof and operates as an estoppel on defendants as to the facts supporting the conviction in a subsequent civil action. Local 167 of International Brotherhood of Teamsters, Chauffeurs, Stablemen & Helpers of America v. United States, 291 U.S. 293, 298-99, 78 L. Ed. 804, 54 S. Ct. 396 (1934); Brown v. United States, 207 Ct. Cl. 768, 524 F.2d 693, 705 (1975). To apply the principle of estoppel, however, the trial court in the subsequent civil proceeding must examine the record to determine exactly what was decided in the criminal proceeding. Emich Motors Corp. v. General Motors, 340 U.S. 558, 569, 95 L. Ed. 534, 71 S. Ct. 408 (1951). Estoppel extends only to questions "directly put in issue and directly determined" in the criminal prosecution. Id. at 569; Brown at 705. The difficult problem, as recognized by the Emich Court, is discerning what matters were adjudicated in the antecedent suit. In aid of its determination, the trial court must look to the record, the pleadings, the evidence submitted, the jury instructions, and any opinions of the courts. Emich Motors at 569.
In the instant case, determining the scope of the prior criminal conviction of the defendants is not a difficult task. The indictment, the transcript of the criminal trial, the jury verdict, and the affirmation of the conviction by the Fourth Circuit Court of Appeals make clear that defendants are estopped from now denying their liability under the False Claims Act, 31 U.S.C. § 3729-3731.
On October 30, 1983, George Uzzell and Vernon Uzzell were indicted on seven counts of criminal conspiracy to defraud the United States Government by filing false claims under the "8(a)" program of the Small Business Administration (SBA), a program through which the SBA provides loans to small businesses owned by socially and economically disadvantaged individuals. 15 U.S.C. § 637(a).
Count 1 of the indictment alleged that defendants conspired to defraud the government by filing false claims (18 U.S.C. § 286); Counts 2 through 4 charged defendants with filing false claims as individuals (18 U.S.C. § 287); and Counts 5 through 7 charged them with filing false claims specifically with the SBA (15 U.S.C. § 645).
Count 1 is a comprehensive charge and lists the specific activities comprising the conspiracy charge as well as thirty-nine "overt acts" underlying the charge. Count 1 of the indictment charged, inter alia, that:
[12.] . . . George Uzzell and Vernon Uzzell did combine, conspire, confederate and agreee [sic] with each other to knowingly defraud the United States and the Small Business Administration by obtaining and aiding to obtain the payment and allowance of false, fictitious, and fraudulent claims.
13. It was a part of the said conspiracy that the co-conspirators would and did submit to SBA claims against the advance funds for work allegedly performed for Genco by Martec. The claims would be accompanied by Martec invoices which fraudulently alleged that Martec had performed and was going to perform work for Genco. In fact, Martec performed little or no work for Genco.
14. It was part of the said conspiracy that Martec invoices were presented to SBA by Genco for work performed by Genco employees. The conspirators would present claims for the work by the Genco ...