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United States v. Bush

filed: June 28, 1995.


Appeal from the United States District Court for the Central District of California. D.C. No. CR-92-00364-Kn(GK). David V. Kenyon, District Judge, Presiding.

Before: Charles Wiggins, Alex Kozinski and David R. Thompson, Circuit Judges. Opinion by Judge Kozinski.

Author: Kozinski

KOZINSKI, Circuit Judge.

The Teamsters have been very, very good to Earl Bush. From 1987 to 1989, Bush worked both as a representative of the International Brotherhood of Teamsters (the International) and as an officer of Teamsters Local 399 (the Local). The Local paid him $100,000 in salary and the International paid him $64,000; both entities gave him generous car allowances; both paid his portion of the Social Security tax; and the International gave him a miscellaneous allowance of $10 for every day of the year. RT 209. It is true that these jobs required Bush to displace himself to such Teamsters trouble-spots as Palm Springs, Las Vegas and Honolulu, but both employers strove to ease this burden somewhat by paying Bush's travel expenses. The Local gave him a credit card to charge food and lodging while he was away on the Local's business. The charges Bush racked up on any given trip varied greatly: A week Bush spent in Hawaii cost the Local $2,496, while a trip to Las Vegas showed only a twenty-three dollar tab at a culinary oasis known as Bun Boy. The International, by contrast, used a per diem system: It paid Bush $130 for each day he was on the road on International business, regardless of actual expenses.

Bush's problems arose in part from his practice of collecting from both employers when he did business for both on the same trip, which happened frequently. In such circumstances, Bush collected his per diem from the International and then also charged some expenses to the Local's credit card. According to the government, this was not just bad form, it was fraud. The government also objected to the fact that both employers paid Bush's full Social Security tax (enabling him to get a tax refund of $3380), and that both gave him a monthly car allowance.

The government premised several counts of fraud on these "double-dipping" practices. The indictment also charged several counts of conversion on the more conventional theory that Bush had billed his employers for trips he had not taken.

Bush raises a variety of claims on appeal, the most interesting of which is that the government failed to prove his double-dipping was fraudulent.

I. Double-dipping

Because somewhat different issues are raised by the travel expense reimbursements, car allowances and Social Security contributions, we consider them separately.

A. The Travel Expenses

As the government presented this portion of its case to the jury, it did not dispute that Bush had actually traveled on union business and done work for both entities on the same day.*fn1 What the government sought to prove is that, by billing certain expenses directly to the Local via the union-issued credit card, and then collecting $130 from the International for the same day, Bush was recovering more than his actual expenses. The government did not, however, show that Bush used the Local's credit card to charge unauthorized items; all charges appear to have been for bona fide travel expenses such as meals and lodging. Nor did Bush make any misrepresentations in seeking per diem from the International. To obtain per diem, Bush was not required to provide receipts for out-of-pocket expenses or even to claim he had incurred such expenses. He had to claim only that he had traveled to a remote location and there busied himself with the International's affairs on the day or days in question. RT 266-67 (testimony of Walter Shea). Thus, had Bush boarded with relatives, or slept on a park bench and eaten sandwiches packed from home, he would nevertheless have been entitled to $130 for each day of his stay.

The question then is whether charging specific travel expenses to the Local and then collecting the per diem from the International (neither of which was in itself fraudulent) became fraudulent by virtue of their confluence. We think not. That Bush received $130 from the International does not diminish the fact that he was authorized to charge travel expenses on the Local's credit card. Neither the Local's bylaws nor any other policy required Bush to exhaust funds he received from other sources before he could charge his expenses. Nor did the International require Bush to pay travel expenses out of his own pocket before he could collect the $130 per diem. To the contrary: The International's constitution provides that the per diem is payable in addition to any reimbursements by subsidiary entities such as the Local.*fn2 The meals and lodging provided at the Local's expense were thus no different from meals and lodging provided by hospitable relatives or the Salvation Army.

The only evidence supporting the government's theory was testimony from two officers of the International who said they would have questioned or disapproved the per diems had they known that Bush's expenses were being covered by the Local. But these witnesses conceded there was no policy prohibiting the payment of per diems in such circumstances, RT 225; the only written policy on point was in the International's constitution.*fn3 Both officials knew that Bush was employed by the Local as well as the International, and that he and others frequently did business for both entities on the same trip. Both officials were deeply involved in approving travel reimbursements and Bell had authority to audit not only the International's own travel vouchers but also travel reimbursement records of the International's subsidiaries, such as Bush's Local. RT 219. The other witness, Shea, testified he was fully aware that persons employed by the International and one of the locals would bill the local for some expenses and then receive the full per diem from the International, RT 266-67, yet Shea did not disapprove per diem requests in such circumstances or issue a policy prohibiting the practice.*fn4 The record thus shows unmistakably that what Bush did was tolerated, if not actually approved, by the International's management. The two union officials' halfhearted about-face in the midst of the criminal trial, which itself grew out of a major investigation of Teamsters activity, cannot render fraudulent that which was effectively consented to by the supposedly defrauded entity.*fn5

The government relies heavily on United States v. Walsh, 928 F.2d 7 (1st Cir. 1991), but to no avail. In Walsh, the government proved that defendant "arranged to receive duplicate reimbursements for travel and other expenses while attending various union functions." Id. at 8. There is no indication that any of the entities in Walsh were paying defendant a flat per diem without requiring proof of out-of-pocket expenses. As best we can tell from the brief statement of facts in Walsh, the defendant there simply sent the same bills to two entities. Where each organization requires proof of out-of-pocket expenses, it might be fraudulent to seek reimbursement from one without disclosing that the same bills are also being covered by the other. ...

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