False statements and false claims.

• Author: Cohen, Thea
• Position: Twenty-Sixth Annual Survey of White Collar Crime

1. INTRODUCTION II. FALSE STATEMENTS A. Elements of a [section] 1001 Offense 1. Statements or Concealments 2. Falsity 3. Materiality 4. Intent 5. Jurisdiction B. Section 1001 Defenses 1. "Exculpatory No". 2. Ambiguity 3. Double Jeopardy 4. Other Defenses C. Sentencing under [section] 1001 III. FALSE CLAIMS A. Elements of a [section] 287 Offense 1. Presentation of a Claim 2. False, Fictitious, or Fraudulent Claims 3. Knowledge B. Section 287 Defenses 1. Intent-Based Defenses 2. Double Jeopardy C. Section 287 Enforcement 1. Enforcement Provisions 2. Sentencing D. Civil Prosecutions under 31 U.S.C. [section][section] 3729-3733 I. INTRODUCTION

   Sections 1001 and 287 of Title 18 of the U.S. Code make it a crime to (1) knowingly and willfully make a false statement to the United States or to any department or agency thereof, (1) and to (2) knowingly make a false claim upon or against the United States or to any department or agency thereof (2) respectively. In addition, 31 U.S.C. [section][section] 3729-3733 provide for the civil prosecution of false claims. (3) The three statutes, covered by a single statute from 1863 to 1948, contain very similar elements. (4) These similarities often allow prosecutors to choose the statute under which they desire to prosecute cases of fraud.5 However, because the statutes' language demonstrates that Congress intended to create two distinct violations, prosecuting a defendant under both [section] 287 and [section] 1001 does not violate the Double Jeopardy Clause of the Fifth Amendment. (6)

   While prosecutors may use the statutes interchangeably, some significant differences do exist. For example, while materiality is an element of [section] 1001 offenses, (7) the circuits are split on whether materiality is an element of [section] 287. (8) In addition, [section] 1001 requires that the prosecutor prove the defendant both knowingly and willfully lied to the government. (9) However, [section] 287 only requires that the defendant knowingly lied to the government. (10)

   In addition to the two criminal statutes, 31 U.S.C. [section] 3730(b) allows private citizens to bring a qui tam civil action on behalf of the government for a violation of [section] 3729. (11) Suits that are settled or successfully prosecuted under this statute impose civil penalties payable to the U.S. government and allow the qui tam plaintiff to receive a portion of the proceeds. (12)

   Section II of this article discusses criminal prosecutions brought under [section] 1001, the False Statements Act. Section III of this article addresses criminal charges brought under [section] 287, the False Claims Act. Finally, Section IV addresses the civil false claims statutes [section][section] 3729-3730.

2. FALSE STATEMENTS

   Section 1001 of Title 18 of the U.S. Code (13) is a broadly written (14) statute that criminalizes the act of making false statements to the United States government. (15) Title 18 also contains several more specific false statement statutes, including [section] 1014, which criminalizes false statements to influence loan and credit applications, (16) and [section] 1027, which criminalizes false statements related to Employee Retirement Income Security Act (ERISA) documents. (17) Although it is Department of Justice ("DOJ") policy in most circumstances to bring charges under a more specific statute when a choice between statutes is available, (18) in some cases the government will charge a defendant with a [section] 1001 violation in tandem with more specific statutes, such as [section] 287.19 Bringing a case under [section] 1001 rather than a more specific statute may also be an attractive option to a prosecutor because of the comparative malleability of that statute's elements. (20)

   In 2004, Congress amended [section] 1001 to enhance the penalties available if the offense involves terrorism. (21) Section 1001 was amended again in 2006, imposing an eight-year maximum for imprisonment if the offense involves the failure of a convicted sex offender to register under the Sex Offender Registration and Notification Act. (22)

   Section 1001 covers offenses spanning three broad categories: (i) falsifying, concealing, or otherwise coveting-up a material fact by any trick, scheme, or device; (ii) making materially false, fictitious, or fraudulent statements or representations; and (iii) making or using a writing or document with knowledge that such document contains materially false, fictitious, or fraudulent statements. (23) The last category criminalizes the use of a writing or a document to give: (i) false information for the purpose of receiving a monetary or proprietary benefit; (24) (ii) false information in order to resist monetary claims by the United States; (25) (iii) false information to pursue a governmental privilege, such as employment or a security clearance; (26) and (iv) false information to frustrate lawful regulation. (27)

   This following Section describes the five elements of a false statement offense under [section] 1001, discusses several defenses to a charge under [section] 1001, and explains the sanctions for this offense.

   1. Elements of a [section] 1001 Offense

      To convict a defendant under [section] 1001, the government must prove five elements: (i) the defendant made a statement or concealment; (ii) the statement was false; (iii) the statement or concealment was material; (iv) the statement or concealment was made "knowingly and willfully"; and (v) the statement or concealment falls within executive, legislative, or judicial branch jurisdiction. (28)

      1. Statements or Concealments

         Section 1001 covers all statements, whether oral or written, sworn or unsworn, voluntary or required by law. (29) Such statements include: false invoices and certifications, (30) checks naming false drawees, (31) false applications to obtain official documents, (32) false identifications given to border (33) or customs agents, (34) false Medicare claims, (35) false marriage vows given to gain citizenship, (36) false information given to federal investigators, (37) and a variety of false statements made to other governmental entities. (38) However, [section] 1001 does "not apply to a party to a judicial proceeding, or that party's counsel, for statements, representations, writings or documents submitted by such party or counsel to a judge or magistrate in that proceeding." (39) The precise scope of this exemption is a matter of some debate among the circuits. (40)

         Section 1001 can also extend to affirmative acts of concealment even where no actual statement has been made. (41) Concealing information with intent to deceive the government is covered by [section] 1001, as is concealing information with the intent to cause another to violate his duty to disclose. (42) Affirmative acts include both nondisclosures and misrepresentations of material facts. (43) In addition, silence may constitute a false statement under [section] 1001 when it serves to mislead or when the individual has a duty to speak. (44)

      2. Falsity

         Falsity, the cornerstone of a [section] 1001 offense, can be established by either an affirmative false representation or by the concealment of a material fact. (45) To prove the falsity element, the government must show a non-disclosure of a fact through a "trick, scheme, or device." (46) However, where an affirmative representation is made, no trick, scheme, or device must be proved. (47) Some circuits have found that a statement may be considered false for [section] 1001 purposes, even though it is "literally true," if it misleads federal agents. (48)

         Non-disclosure of a material fact will only violate [section] 1001 if the defendant was under a duty to disclose that information. (49) The circuits are split as to whether [section] 1001 mandates a duty to disclose or whether a separate statute, regulation, or form must create the duty. The majority of circuits require the duty to disclose be rooted in a "statute, governmental regulation, or form" that is independent of [section] 1001. (50) The Second, Sixth, and Ninth Circuits view [section] 1001 as a "catch-all" provision that imposes a general duty to disclose, thereby making the nondisclosure of a material fact an automatic violation. (51)

         The issue of whether or not there is a duty can arise in the context of the reporting requirements of the Federal Election Campaign Act of 1971. (52) This issue also arises under the Currency Transaction Report Act ("CTRA"), which requires domestic financial institutions to file currency transaction reports ("CTRs") describing transactions and identifying parties who transfer United States currency. (53)

      3. Materiality

         In an attempt to resolve a conflict among the circuit courts, Congress amended [section] 1001 in 1996 to extend the applicability of the materiality element of [section] 1001 to all of subsection (a). (54) By codifying a minimal materiality threshold, the amendment ensured that defendants would not be held liable for trivial falsifications. (55) The Supreme Court has ruled that materiality is a "mixed question" of law and fact and, consequently, is best resolved by a jury. (56)

         Both prior and subsequent to the enactment of the amendment, courts considered a statement to be material if it either: (i) actually influenced or (ii) has a natural tendency or capacity to influence a decision or function of a federal agency. (57) The false statement need not have actually influenced the agency for the materiality requirement to be met. (58) A voluntary, non-mandatory statement may qualify as material. (59) Moreover, a statement may be material even if the declarant derived no pecuniary or economic benefit at the government's expense. (60) However, courts have held a statement is not material where the government itself supplied the information that the defendant relied upon in making the false statement. (61)

      4. Intent

         Knowing and willful intent (62) to make a false statement is a necessary element of a...