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UNITED STATES v. BOUCHEY

August 23, 1994

UNITED STATES OF AMERICA, Plaintiff,
v.
AMPARO B. BOUCHEY, et al., Defendants.



The opinion of the court was delivered by: STANLEY S. HARRIS

 Before the Court are defendant Wendell Harbour's motions to dismiss the complaint and amended complaint for failure to state a claim upon which relief can be granted. *fn1" The Court denies defendant's motions. Although "findings of fact and conclusions of law are unnecessary on decisions of motions under Rule 12," the Court nonetheless sets forth its analysis. See Fed. R. Civ. P. 52(a).

 Background

 The government contends that from 1987 to 1989, Harbour participated in an alleged conspiracy to charge the United States inflated rates for consulting services. In his capacity as a federal government employee, Harbour allegedly received a sum of money for approving budgets that contained the contested consulting fees. The government seeks damages and civil penalties based on the False Claims Act, federal conflict of interest statutes, and common law theories of payment under mistake of fact and unjust enrichment.

 At the times relevant to the allegations in the complaint, Harbour served as chief of the Minority Business Resource Center ("MBRC") within the Department of Transportation's ("DOT") Office of Small Disadvantaged Business ("OSDBU"). As MBRC chief, Harbour processed and reviewed the budgets of Capital Bank, which held a cooperative agreement to administer a loan program to minority, women-owned, and disadvantaged business enterprises. The government provided the funding for the loan program, while MBRC and OSDBU approved Capital Bank's budget proposals and provided reimbursements for the loans as called for in the budget.

 In 1988, Harbour approved Capital Bank's second annual administrative budget, which included an allocation of $ 150,000 for consulting services provided by Gudricch & Peers Group, Ltd. According to the government, Gudricch & Peers was controlled by defendant John E. Ricche, who had been providing consulting services to OSDBU on an independent basis for approximately $ 30,000 each year since 1982. In 1989, however, defendant Amparo Bouchey, who served as OSDBU director, was forced to terminate the independent consulting services performed by Ricche due to OSDBU's budgetary constraints.

 The government alleges that Ricche and Bouchey, knowing in advance that the independent consulting relationship was coming to an end, persuaded Capital Bank to pay Gudricch & Peers a significantly inflated rate for the same consulting services that previously had been performed by Ricche. At the completion of the scheme, Ricche was to provide a portion of the inflated charges to Bouchey in return for her leaving federal employment and joining Ricche's business. The government alleges that Harbour agreed to accept a sum of money to ensure that the inflated allocation met with MBRC approval.

 On April 25, 1989, Capital Bank prepared its first monthly invoice based on the budget approved by Harbour, which included $ 12,500 for Ricche and Gudricch & Peers. OSDBU performed a wire transfer of government funds to Capital Bank based on this invoice on May 3, 1989. On May 17, 1989, Ricche caused Capital Bank to credit Gudricch & Peers's checking account based on this transfer. An identical process took place during each of the following 11 months. The government contends that, as a result of Harbour's allegedly false, improper, and unlawful claims, it paid $ 150,000 for consulting services that were worth only $ 30,000. Harbour moves to dismiss all counts for failure to state a claim upon which relief may be granted pursuant to Fed. R. Civ. P. 12(b)(6).

 Discussion

 When considering a Rule 12(b)(6) motion to dismiss, a court should not grant the motion unless the plaintiff can prove no set of facts in support of its claim which would entitle it to relief. Schuler v. United States, 199 U.S. App. D.C. 23, 617 F.2d 605, 608 (D.C. Cir. 1979) (citing Conley v. Gibson, 355 U.S. 41, 78 S. Ct. 99, 101-02, 2 L. Ed. 2d 80 (1957)), vacated on other grounds, 628 F.2d 199 (D.C. Cir. 1980) (en banc). The complaint is construed liberally in the plaintiff's favor, and a court should give the plaintiff the "benefit of all inferences that can be derived from the facts as alleged." Id. However, the facts must be sufficiently described in the complaint to allow the court to draw such inferences. See Papasan v. Allain, 478 U.S. 265, 106 S. Ct. 2932, 2944, 92 L. Ed. 2d 209 (1986).

 Counts One and Two

 Counts One and Two allege that Harbour violated the False Claims Act by knowingly causing false or fraudulent claims and records to be made or presented to the United States. 31 U.S.C. §§ 3729(a)(1) and (2). To establish either of these claims under § 3729(a), the government must show: (1) the existence of a request for payment, and (2) that this request was fraudulent. See United States ex rel. Glass v. Medtronic, 957 F.2d 605, 608 (8th Cir. 1992). Here, the complaint alleges that 12 monthly invoices totalling $ 150,000 were presented to the government, thus satisfying the first element.

 To fulfill the second criterion, a fraudulent request for payment, the complaint must allege the supporting facts with a higher degree of particularity. See Fed. R. Civ. P. 9(b). A sufficient claim for fraud under Rule 9(b) must state the time, place, and content of the false misrepresentations, the fact misrepresented, and what was retained or given up as a consequence of the fraud. Kowal v. MCI Communications Corp., 305 U.S. App. D.C. 60, 16 F.3d 1271, 1278 (D.C. Cir. 1994). The claim also must state which individual made the misrepresentation. See United States ex rel. Joseph v. Cannon, 206 U.S. App. D.C. 405, 642 F.2d 1373, 1385 (D.C. Cir. 1981), cert. denied, 455 U.S. 999, 102 S. Ct. 1630, 71 L. Ed. 2d 865 (1982).

 Here, the complaint alleges that Harbour and his two co-defendants executed their scheme to defraud the government beginning in early 1988 and continuing until May of 1990. The complaint identifies Washington, D.C., as the location where invoices and payments integral to the alleged scheme were processed. Finally, the complaint contends that these invoices resulted in overcharges of $ 120,000 that were paid to Ricche and divided among the other two defendants. Based on these facts and the inferences that may be derived from them, the Court ...


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