CAAF will hear oral argument in the certified case of United States v. Hines, No. 13-5010/AR (CAAFlog case page) on Monday, November 18, 2013, at 9:30 a.m. The case involves the fraudulent receipt of a housing allowance, and a determination by the Army Court of Criminal Appeals that the monthly receipt of the allowance constitutes a separate larceny for each month.

Active duty personnel are often entitled to a market-based and tax-exempt allowance for housing expenses called the Basic Allowance for Housing (“BAH”). This allowance is payable at an individual rate and at a higher “with dependents” rate, though junior enlisted personnel housed in barracks generally receive no significant allowance. The existence of this allowance encourages all manner of stunningly bad decision-making, such as hasty marriages by junior personnel (entitling them to move out of the barracks and receive an allowance at the higher “with dependents” rate), the purchase of unaffordable properties at inflated prices (as the tax-free nature of the allowance distorts the member’s true income), and numerous fraudulent schemes (because it’s “free money”).

Appellee was a Sergeant stationed at Fort Bragg, NC, in October, 2008, when he employed one such scheme by failing to inform the military of his divorce and subsequently asserting on numerous forms that he was still married. Over the following three years and multiple assignments Appellee received various undeserved allowances, including BAH at the higher “with dependents” rate (whether Appellee was actually entitled to the lower individual rate of BAH is an unresolved question of fact, and is discussed below).

The Government discovered Appellee’s fraud and aggregated the improperly-received monthly allowances to charge Appellee with two specifications of larceny and one specification of wrongful appropriation of military property, all of a value of more than $500. The aggregation of the monthly amounts is significant because the difference between the individual rate and the with-dependents rate of the BAH was less than $500 per month, and proving a larceny of property of a value of more than $500 increases the maximum authorized confinement by an order of magnitude: from one year per specification to ten.

Appellee then pleaded guilty, at a general court-martial composed of a military judge alone, to two specifications of false official statement, two specifications of larceny of military property of a value more than $500, and one specification of wrongful appropriation of military property of a value more than $500, in violation of Articles 107 and 121, UCMJ. He was sentenced to confinement for three months, total forfeitures, reduction to E-1, and a bad-conduct discharge. The convening authority disapproved the forfeitures but otherwise approved the sentence.

But on automatic review, the Army CCA rejected the Government’s aggregate theory of the case:

We reject the approach of the Navy and Marine Corps Court of Criminal Appeals and find that theft of BAH, under these circumstances, amounts to a separate larceny each month the money is received. See United States v. Rupert, 25 M.J. 531, 532 (A.C.M.R. 1987); contra United States v. Lepresti, 52 M.J. 644, 653 (N.M. Ct. Crim. App. 1999) (describing this type of theft as a continuing larceny of an aggregated amount). “For an accused to be convicted of larceny of property having a value of over [$500.00], the record must show either that one item of the property stolen has such a value or that several items taken at substantially the same time and place have such an aggregate value.” United States v. Christensen, 45 M.J. 617, 619 (Army Ct. Crim. App. 1997) (quoting Rupert, 25 M.J. at 532). See also United States v. Harding, 61 M.J 526, 528 (Army Ct. Crim. App. 2005). Here appellant never satisfactorily admitted to a single larceny in an amount over $500.00 and only providently admitted to a series of separate larcenies each in an amount less than $500.00 and each, at a month apart, at substantially different times. Therefore, we approve findings of guilty to reflect that lower amount. Id.; United States v. Hayes, 70 M.J. 454, 458 (C.A.A.F. 2012); United States v. Phillippe, 63 M.J. 307, 309 (C.A.A.F. 2006); UCMJ art. 45(a); Rule for Court-Martial [hereinafter R.C.M.] 910(h)(2).

United States v. Hines, No. 20120024, slip op. at 3 (A.Ct.Crim.App. May 24, 2013) (link to unpub. op.). The court modified the findings but affirmed the sentence as approved by the convening authority.

The Army JAG then certified two issues to CAAF in August:

I. Whether the Army Court of Criminal Appeals erred when it held that Appellee’s pleas to Specifications 1, 2, and 3 of Charge II were improvident because theft of basic allowance for housing and family separation allowance occurring over multiple months “amounts to a separate larceny each month the money is received.”

II. Whether the Army Court of Criminal Appeals erred when it held that Appellee’s pleas to Specifications 1 and 3 of Charge II were improvident because the military judge “never satisfactorily resolved the inconsistency between [Appellee’s] pleas to the entire amount [of basic allowance for housing] in light of his apparent entitlement to a lesser amount.”

The Government’s position on the first issue is that caselaw supports the aggregate theory of larceny rejected by the Army CCA and that without this theory the Government would be forced to charge such a larceny with a single specification (“on divers occasions”) that understates an accused’s criminality, or with many specifications (one for each month) that exaggerate an accused’s criminality. On the second issue, the Government argues that the record does not support the conclusion that Appellee was entitled to the allowance at the lesser, individual rate.

The Government’s caselaw-based argument has the potential to be exciting, until one reads the cases: United States v. Bolden, 28 M.J. 127, 129 (C.M.A. 1989); United States v. McNett, 21 M.J. 969 (A.C.M.R. 1986); and United States v. Lepresti, 52 M.J. 644 (N-M.Ct.Crim.App. 1999).

Bolden is about whether a service member may be prosecuted for larceny of government benefits normally paid to married persons if he participates in a marriage ceremony but never lives or even intends to live with the purported spouse. A single, prefatory, citation-free sentence mentions the “aggregate amount of the[] overpayments.” Hardly persuasive.

McNett is a pre-Campbell case about multiplicity, where the government charged violations of three separate Articles (92, 121, and 134) in a single, massive, combined charge and specification. Enough said.

Lepresti is the NMCCA case specifically rejected by the ACCA in its earlier opinion in this case (and is discussed below).

The Government’s alternative argument is practically equity-based:

Under the Army Court’s reasoning, the government could charge each theft of a fraction of a cent as a separate specification. This would quickly result in hundreds or thousands of convictions – one for every specification – for the thief. Such a result would exaggerate appellant’s criminality to an absurd degree in terms of the number of convictions and, as discussed in Lepresti and McNett, run afoul of the policy prohibiting unreasonable multiplication of charges.

The alternative solution contemplated by the Army Court would be that the government could charge the theft of a fraction of a cent on divers occasions. In this scenario, appellant would only be convicted of one specification of larceny of property under $500.00. As a result, his sentence would drastically underemphasize his criminality.

Gov’t Br. at 20-21 (emphasis added). It’s almost laughable that Army Appellate Government Division would raise the fear of an inadequately light sentence, since in this case Appellee pleaded guilty to a three-year scheme to defraud the Government and faced a maximum possible punishment that included confinement for more than 30 years, but the most confinement the Trial Counsel could win was a mere three months.

Moreover, even if CAAF joins the ACCA in rejecting the aggregate theory, it’s unimaginable that a prosecutor could not avoid “underemphasiz[ing]” an accused’s criminality in a larceny case. As discussed in a recent Columbia Law Review Sidebar article:

Prosecutors themselves understand just how much discretion they enjoy. As Tim Wu recounted in 2007, a popular game in the U.S. Attorney’s Office for the Southern District of New York was to name a famous person—Mother Teresa, or John Lennon—and decide how he or she could be prosecuted:

It would then be up to the junior prosecutors to figure out a plausible crime for which to indict him or her. The crimes were not usually rape, murder, or other crimes you’d see on Law & Order but rather the incredibly broad yet obscure crimes that populate the U.S. Code like a kind of jurisprudential minefield: Crimes like “false statements” (a felony, up to five years), “obstructing the mails” (five years), or “false pretenses on the high seas” (also five years). The trick and the skill lay in finding the more obscure offenses that fit the character of the celebrity and carried the toughest sentences. The, result, however, was inevitable: “prison time.”

The Government’s brief also ignores a regulatory quirk common in these “BAH fraud” cases: the fact that service members are entitled to the allowance as a general rule pursuant to the Joint Federal Travel Regulation (link to PDF).

U10002 HOUSING ALLOWANCE
A. General. Effective 1 January 1998, in general, a member on active duty entitled to basic pay is authorized a housing allowance based on the member’s grade, dependency status, and location. Rates are prescribed depending on the member’s grade and whether or not the member has a dependent. The location determines the rate, and whether the allowance is BAH or OHA. The BAH rate is based on median housing costs and is paid independently of a member’s actual housing costs.

A subparagraph explains that the allowance is not paid when the service member is provided government quarters free of charge (i.e., a room in the barracks).

C. GOV’T QTRS. A housing allowance (except partial BAH or BAH-Diff) is not authorized to a member who is assigned to GOV’T QTRS appropriate to the member’s grade, rank, or rating and adequate for the member and dependents, if with dependents (Part D for GOV’T QTRS).

While not specifically addressed in the briefs, it’s fair to assume that Appellee continued to live “out in town” after his divorce was finalized, entitling him to the individual allowance. This underdeveloped question of fact in this guilty plea case significantly weakens the Government’s argument on the second issue.

In his brief Appellee takes aim at the NMCCA’s decision in United States v. Lepresti, 52 M.J. 644 (N-M.Ct.Crim.App. 1999). Lepresti is a case we’ve never discussed, but it’s worthy of separate consideration.

The appellant in Lepresti was convicted of an unidentified number of (but at least six) specifications of larceny for his misuse of a friend’s checkbook and credit card. Two of the specifications addressed auto parts purchased during one telephonic transaction, but delivered at separate times due to a back order. The Government charged this as two separate larcenies based on the two separate deliveries of the parts, and the appellant argued that these two specifications were multiplicious based on the single purchase transaction. The NMCCA rejected the appellant’s multiplicity argument, but found that “the two specifications address a single continuing larceny.” Lepresti, 52 M.J. at 652. That court then made the following observation:

We analogize this situation to BAQ fraud type cases. There the service member draws allowances to which he is not entitled over an extended period of time, either because of a single false claim of dependency or a failure to report a change in dependency. Routinely, those cases are charged as a larceny of the total amount of funds the service member fraudulently received. See e.g. United States v. Helms, 47 M.J. 1, 2 (1997); United States v. Gray, 44 M.J. 585, 587 (N.M.Ct.Crim.App.1996)(citing single larceny specifications of BAQ fraud extending over an 11 month period). Furthermore, where we have seen it charged as a new larceny each pay period, we have consolidated the specifications into a single offense. United States v. Johnson, 39 M.J. 707, 711 (N.M.C.M.R.1993). We took that action because we found the multiple specifications violated the policy that one transaction should not be made the basis for an unreasonable multiplication of charges. Johnson, 39 M.J. at 711; see R.C.M. 307(c)(4) Discussion.

Lepresti, 52 M.J. at 653 (emphasis added). While Helms and Gray both involve aggregated specifications, neither discusses whether this is proper. But the NMCMR’s discussion in Johnson about an unreasonable multiplication of charges is a good contrast to its successor court’s action in Lepresti:

In his second assignment of error, appellant argues that the eight specifications under the larceny charge should be merged into one specification because they describe a continuous course of conduct of receipt of BAQ and VHA over 8 months. The Government chose to charge appellant with one specification for each of the 8 months because the allowances were paid on a monthly basis.

What is substantially one transaction should not be made the basis for an unreasonable multiplication of charges against one person. See, Discussion following Rule for Courts–Martial 307(c)(4), MCM. What happened here was essentially a single course of theft of Government funds over an extended period and not eight thefts. Therefore, the eight specifications shall be merged into one. We do not find any prejudice to the substantial rights of the appellant because the military judge considered the eight specifications as a single offense for sentencing purposes. Record at 23.

United States v. Johnson, 39 M.J. 707, 711 (N-M.Ct.Mil.Rev. 1993) (emphases added). The application of the doctrine of unreasonable multiplication of charges in Johnson is awfully straightforward, and it’s hard to see why the NMCCA couldn’t have followed its own published precedent and used this doctrine when it decided Lepresti. In fact, in light of Johnson, it’s hard not to see Lepresti as judicial overreaching.

But the main thrust of Appellee’s brief on the first issue is that the Government didn’t advance an aggregation theory at trial (instead grouping the larceny specifications by duty station) and that there is no statutory basis for aggregation. On the second issue, Appellee argues that the plea inquiry was insufficient to establish any single undeserved payment of more than $500.

In a reply brief the Government addresses Appellee’s assertion of a new theory advanced on appeal by highlighting that of the three specifications (two larceny, one wrongful appropriation), two are based on separate false documents, while a third is based on Appellee’s “failure to update his personnel records.” Reply Br. at 3. This third one will be the hardest for the Government to explain at oral argument, because Army regulations undoubtedly create a duty on Appellee to maintain accurate personnel records and he “fail[ed] to update his personnel records” every month he received the undeserved allowance. The rest of the reply brief is devoted to discussion of various cases, cited by both sides, that are at best only somewhat analogous. CAAF will likely be more intrigued by the Congressional intent in Article 121 than by distantly-related federal caselaw.

“BAH fraud” cases are a contentious blend of regulatory soup and moral self-righteousness, and caselaw practically demands a case-specific value judgment of whether a particular domestic arrangement is “legitimate” or “fraudulent.” This case avoids the most troubling aspects of the topic due to Appellee’s unambiguous false pretenses (his claim that he was still married after his divorce was final), but CAAF must still grapple with the complex regulations that govern the payment of this lucrative allowance. Whether this particular case will be narrowly-decided or will have broad application remains to be seen.

Case Links:
ACCA’s opinion
Appellant’s (Government) brief
Appellee’s brief
Appellant’s (Government) reply brief
Blog post: Argument preview

One Response to “Argument Preview: United States v. Hines, No. 13-5010/AR”

  1. k fischer says:

    I find US v. Poole, 24 M.J. 539, (A.C.M.R.) more applicable based on the Government’s charging decision, although arguing that the offense constituted a “continuous course of conduct” is interesting.  
     
    I had a case where the Government charged my client with numerous larcenies under 3 megaspec divided by the months of the larceny, all of which individually were less than $500.00, and two of which aggregated greated than $500.00.  He was facing 10 1/2 years confinement according to the Government.  The pre-32 offer was 18 months, which I rejected because I believed that the maximum punishment was 18 months confinement because the 3 mega specs alleged larcenies less than $500.00.  The CoJ threatened that the deal would go up if we went to a 32.  I told him his deal was stupid, and he argued that the judge would give him at least 2 years.  I didn’t tell him that he only charged 18 months.  After the 32, the CoJ said that the deal was 20 months because I made the Gov go to a 32.  I told him that my client didn’t need his stupid deal and would plead naked.  It made all the “fronting” that the TC and the CoJ did up to the guilty plea so much better when I saw the look on their face after the judge agreed with me and said the max confinement was 18 months.  My client paid back the money, plead naked, and got 6 months and a BCD.