False statements.

• Author: Preissel, Kara L.
• Position: Thirteenth Survey of White Collar Crime

1. INTRODUCTION

   Section 1001 of Title 18 of the United States Code(1) is a frequently used and far-reaching(2) statute that criminalizes false statements made directly or indirectly to the federal government.(3)

   The statute has evolved to criminalize a variety of deceptive statements.(4) Section 1001 covers offenses in three general categories: (1) falsification, concealment, or other cover-up of a material fact by any trick, scheme, or device, (2) the making of any materially false, fictitious, or fraudulent statements or representations; and (3) the making or use of any writing or document with knowledge that such document contains materially false, fictitious or fraudulent statements.(5) Most prosecutions in the third category fall into four subcategories. First, it is an offense to give false information for the purpose of receiving a monetary or proprietary benefit.(6) Second, it is an offense to resist monetary claims by the United States by giving false information.(7) Third, it is an offense to pursue a governmental privilege, such as employment or a security clearance using falsified information.(8) Fourth, it is an offense to give false information to frustrate lawful regulation.(9) Section II of this Article describes the five elements of a false statement offense. Section III then discusses several defenses to a charge under this statute. Next, Section IV presents the sanctions for this offense. Section 1001 violations may be penalized by a fine, imprisonment for not more than five years, or both.(10) Finally, Section V highlights several recent or ongoing developments in this area.

2. ELEMENTS OF THE OFFENSE

   In order to convict a defendant under [sections] 1001 for making false statements, the government must prove five elements: (1) the defendant made a statement; (2) the statement was false; (3) the statement was material; (4) the statement was made "knowingly and willfully;" and (5) the statement falls within executive, legislative or judicial branch jurisdiction.(11)

   1. Statements

      Section 1001 covers all statements, whether oral or written, sworn or unsworn, voluntary or required by law.(12) Such statements include false invoices and certifications,(13) false credit card statements,(14) checks naming false drawees (but not "bad" checks),(15) false applications to obtain official documents,(16) false identifications given to border agents,(17) false information given to customs agents,(18) false Medicare claims,(19) false radio distress signals broadcast to naval aircraft,(20) marriage vows given falsely to gain citizenship,(21) false information given to federal investigators,(22) and a wide variety of statements falsely made to other governmental entities, usually in attempts to profit under false pretenses.(23)

      Section 1001 also extends to affirmative acts of concealment even where no actual statement has been made.(24) Silence may constitute a false statement under [sections] 1001 when it serves to mislead or when the declarant has a duty to speak.(25) Courts, however, do not regard silence signifying a negative answer to a question, followed by subsequent answers that do not contradict the response implied by the silence, to be an act of concealment that can be prosecuted.(26)

   2. Falsity

      Falsity, the cornerstone of a [sections] 1001 offense, is established either by a false representation or by the concealment of a material fact.(27) To prove concealment, the government must show willful non-disclosure of a material fact through a trick, scheme, or device.(28)

      Courts disagree on whether [sections] 1001 itself imposes a general duty to be honest and forthcoming, or whether there must be a specific duty deriving explicitly or implicitly from an independent statute. The First, Sixth, Ninth, and Eleventh Circuits have called [sections] 1001 a "catch-all" provision which applies even when misrepresentations are not specifically prohibited by another statute.(29) In prosecutions for concealment of information, the Second, Third, and Seventh Circuits have held that to sustain a conviction the government must prove that the defendant had a legal duty to disclose material facts which he allegedly concealed.(30) This confusion is particularly evident in the area of Currency Transaction Report ("CTR") requirements.(31) Similar treatment is given to structuring of campaign contributions in order to circumvent the reporting requirements of the Federal Election Campaign Act of 1971.(32)

   3. Materiality

      To resolve a conflict among the circuits, Congress has included materiality as an element in the 1996 amendment to [sections] 1001.(33) Previously, to ensure that defendants were not liable for trivial falsifications, most circuits read a materiality requirement into the part of the statute prohibiting false statements and the creation of false documents.(34) A majority of the circuit courts considered materiality to be an essential element.(35) The Sixth Circuit, however, viewed materiality as a "judicially-imposed limitation" rather than an element of the offense which must be proved beyond a reasonable doubt.(36)

      Generally, courts consider a statement to be material if it has a natural tendency or capacity to influence a decision or function of a federal agency,(37) although it is not necessary for the statement to have actually influenced the agency.(38) The threshold for establishing materiality is minimal, and may not even require explicit evidence.(39)

      Additionally, the agency need not have actually believed or even received the false statement for the materiality requirement to be met.(40) A voluntary, non mandatory statement may also qualify as material.(41) Moreover, a statement may be material even if the maker derived no pecuniary or economic benefit at the government's expense.(42) However, courts have recognized an exception to the finding of materiality where the government itself supplied information that the defendant relied upon in making the statement.(43)

      In 1995, the Supreme Court, overruling prior precedent, stated that where materiality is considered an element of the offense, it is a mixed question of law and fact to be determined by the jury and must be proven beyond a reasonable doubt.(44) The Court, however, did not explicitly decide whether materiality is an element of all offenses under [sections] 1001.(45)

   4. Intent

      Knowing and willful intent(46) to make a false statement is a necessary element of a [sections] 1001 violation.(47) "Intent" under the statute encompasses the intent to deceive, to mislead, or to induce belief in false information.(48) The intent to "manipulate and pervert" a government agency's function satisfies the element, even where no intent to deceive in a "subjective or literal sense" exists.(49) The statute does not require the intent to defraud.(50)

      If a jury can infer that the defendant acted knowingly and willfully,(51) proof of actual knowledge or actual willfulness is unnecessary.(52) Similarly, a "reckless disregard of the truth" satisfies the intent element.(53) Furthermore, because intent refers to falsity, rather than materiality or jurisdiction, a defendant may be liable under the statute even if completely unaware of the statement's impact on a government branch or agency.(54)

   5. Jurisdiction

      The 1996 amendment to [sections] 1001 expands the jurisdiction of the statute to statements made "within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States."(55) The amendment also includes limitations on the application of [sections] 1001 to the legislative(56) and judicial(57) branches. The statute was amended to overrule the Supreme Court's 1995 decision in Hubbard v. United States.(58) As amended, the scope of [sections] 1001 is once again consistent with the Court's prior interpretation in United States v. Bramblett,(59) which had interpreted "department" to include Congress and the federal judiciary.

      A department or agency has jurisdiction in a matter if it has authority over that matter.(60) Jurisdiction exists even if the government has not lost money or property.(61) Moreover, jurisdiction exists regardless of whether the defendant conveyed the statement directly to the government.(62) The defendant need not know that a federal agency has ultimate jurisdiction over the statement for jurisdiction to exist.(63)

3. DEFENSES

   Historically, the most noteworthy defenses raised in [sections] 1001 prosecutions have been the "exculpatory no" and "ambiguity" defenses. Other defenses, including constitutional defenses, have met with less success.(64)

   1. Exculpatory "No"

      In January 1998, the Supreme Court, in Brogan v. United States, resolved a major split in the circuits regarding the validity of the "exculpatory no" defense.(65)

      Although [sections] 1001 appears on its face to apply to any false statement pertaining to a matter within the jurisdiction of a federal agency, at least seven circuits--the First, Fourth, Seventh, Eighth, Ninth, Tenth, and Eleventh--had previously limited the statute's reach with the "exculpatory no" doctrine.(66) This doctrine was a "judicially crafted exception to the statute created by various courts of appeals."(67) The various circuits interpreted the doctrine differently, but in sum, the doctrine held "that Section 1001 is generally not applicable to false statements that are essentially exculpatory denials of criminal activity."(68) The doctrine was meant to "balance the need for protecting the basic functions of government agencies with the concern that a criminal suspect not be forced to incriminate himself in order to avoid punishment under section 1001."(69)

      Courts adopting the "exculpatory no" doctrine based their rationale on legislative intent and the Fifth Amendment. First, these courts read the legislative history of [sections] 1001 to indicate that Congress sought to criminalize only false statements volunteered with the intent to induce government...