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DIXSON v. UNITED STATES

*fn*: February 22, 1984.

DIXSON
v.
UNITED STATES



CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT.

Marshall, J., delivered the opinion of the Court, in which Burger, C. J., and White, Blackmun, and Powell, JJ., joined. O'connor, J., filed a dissenting opinion, in which Brennan, Rehnquist, and Stevens, JJ., joined, post, p. 501.

Author: Marshall

[ 465 U.S. Page 484]

 JUSTICE MARSHALL delivered the opinion of the Court.

These consolidated cases present the question whether officers of a private, nonprofit corporation administering and expending federal community development block grants are "public officials" for purposes of the federal bribery statute. 18 U. S. C. § 201(a).

I

In 1979, the city of Peoria received two federal block grants from the Department of Housing and Urban Development (HUD). The first was a $400,000 Community Development Block Grant; the second a $638,000 Metro Reallocation Grant. Both grants were funded through the Housing and Community Development Act of 1974 (HCDA), 88 Stat. 633, as amended, 42 U. S. C. §§ 5301-5320 (1976 ed. and Supp. V). Under that Act, the Secretary of HUD is authorized to dispense federal block grants to state and local governments and nonprofit community organizations for urban renewal programs such as the rehabilitation of residential structures, code enforcement in deteriorating areas, and the construction of public works projects.

The city of Peoria subsequently designated United Neighborhoods, Inc. (UNI), a community-based, social-service organization, to be the city's subgrantee in charge of the administration of the federal block grant funds.*fn1 UNI in turn hired petitioner Dixson to serve as the corporation's Executive Director and petitioner Hinton as its Housing Rehabilitation Coordinator. Petitioner Dixson was responsible for the general supervision of UNI's programs, including fiscal control and execution of contracts. Petitioner Hinton's duties included contracting with persons applying for housing rehabilitation assistance, and contracting with demolition firms.

[ 465 U.S. Page 485]

     A federal grand jury named petitioners in an 11-count indictment filed on March 12, 1981. The indictment charged that petitioners, as "public officials" under 18 U. S. C. § 201(a), had sought a series of bribes in return for "being influenced in their performance of an official act in respect to the awarding of housing rehabilitation contracts" in violation of 18 U. S. C. §§ 201(c)(1),(2).

According to the Government's evidence at trial, petitioners used their positions to extract $42,694 in kickbacks from contractors seeking to work on UNI's housing rehabilitation projects. One contractor testified how he was approached by petitioner Hinton and persuaded to pay petitioners 10 percent of each housing rehabilitation contract that petitioners awarded him. The contractor explained that on 10 occasions, he received first draw checks from UNI for 20 percent of the contract price, deposited the check at his bank, and paid half the amount of the check in cash to petitioners. A second contractor testified as to substantially the same arrangement.

Before trial, petitioners moved to dismiss the indictment on the grounds that they were not "public officials" within the meaning of the federal statute. Their motions were denied, and following a jury trial in the United States District Court for the Central District of Illinois, petitioners were convicted as charged. The District Court sentenced each to 7 1/2 years' imprisonment, to be followed by 3 years' probation. Petitioners appealed to the United States Court of Appeals for the Seventh Circuit, which affirmed. 683 F.2d 195 (1982). Both petitioners filed petitions for writs of certiorari, and we granted the writs. 459 U.S. 1085 (1982). We now affirm.

II

Petitioners' sole claim is that they were not "public officials" within the meaning of 18 U. S. C. § 201(a) and therefore not subject to prosecution under the federal bribery

[ 465 U.S. Page 486]

     statute.*fn2 Since our disposition of this claim turns on the relationship between petitioners and the Federal Government, we begin our discussion with an analysis of the HCDA block grant program and petitioners' role in administering that program.

Congress passed the HCDA to meet the social, economic, and environmental problems facing cities. 42 U. S. C. § 5301(a) (1976 ed. and Supp. V). The primary objective of the Act is "the development of viable urban communities." § 5301(c). While the HCDA addressed a national problem, Congress enacted the legislation as a federal block grant statute, under which the day-to-day administration of the federal program, including the actual expenditure of federal funds, is delegated to state and local authorities.

The HCDA creates a "consistent system of Federal aid," § 5301(d), by distributing funds committed by Congress through organizations outside the Federal Government, while

[ 465 U.S. Page 487]

     retaining federal control to assure compliance with statutory federal objectives and implementing regulations. Congress itself specified the 17 categories of community projects upon which HCDA grants can be spent. § 5305. Within the federal constraints, grant recipients design programs addressing local needs. To obtain federal funds, local communities must submit to the Secretary a plan made in accordance with national urban growth policies, and supplement the plan with annual performance reports. §§ 5304(a), (d). The Federal Government retains the right to audit the records of HCDA programs, § 5304(e), and to recover improperly expended funds. § 5311(b)(2).

HCDA grantees give assurances to HUD that they, and their subgrantees, will abide by specific financial accountability, equal opportunity, fair labor, environmental, and other requirements. §§ 5304, 5309, 5310; 24 CFR § 570.307 (1983). By administering HCDA funds, private nonprofit organizations subject themselves to numerous federal restrictions beyond those imposed directly by HUD. Like other recipients of federal grant funds, HUD grantees and subgrantees are subject to a uniform audit procedure, adopted by the Federal Government as "an integral element" of "full accountability by those entrusted with the responsibility for administering the programs."*fn3

UNI voluntarily assumed the status of an HCDA subgrantee when UNI and the city of Peoria signed five separate grant agreements in March and October 1979, pursuant to

[ 465 U.S. Page 488]

     which UNI hired petitioners. Under the first four of these agreements, the city promised to provide UNI with $492,500, and UNI committed itself to spend these funds on urban renewal projects and related administrative costs, such as salaries and fringe benefits for UNI employees. The agreements specifically allocated funds to petitioners' salaries: $16,000 of the city grants was for UNI's Executive Director and $15,500 was for a Rehabilitation Coordinator.

[ 465 U.S. Page 489]

     In a fifth agreement, Peoria promised UNI another $669,200 to be used "solely for a program operated by UNI which provides loans and grants to the rehabilitation of residential housing units in the designated Metropolitan Reallocation Grant Area." One anomaly in the five Peoria-UNI contracts is that, beyond this reference to the "Metropolitan Reallocation Grant Area" and to "312 loans,"*fn4 none of these first contracts explicitly refers to the federal Act or to UNI's new status of subgrantee.*fn5 UNI's application to participate in the federally funded program, however, unequivocally shows UNI's awareness of the Federal Government's relationship to, and interest in, the grant agreements. UNI's proposal to Peoria stated: "[We] wish to undertake a joint effort with the City of Peoria to achieve the common goals as set forth in the Housing and Community Development Page 489} Act to insure safe, sanitary and decent housing for all people." Record, Govt. Exh. 19. (Emphasis added.)

Moreover, there is no suggestion in the record that petitioners and other UNI executives failed to understand that they were involved in a federal program. As described above, the task of distributing HCDA funds is governed in numerous respects by federal statutes and regulations. Knowledge of the existence and applicability of these federal requirements and guidelines is presumed as a matter of law.*fn6 As a matter of fact, the federal interest in protecting the integrity of its block grant funds undoubtedly was driven home to petitioners when, in early 1980, in the midst of the period covered by the Government's indictment, Arthur Andersen & Co. conducted an audit of UNI's records in accordance with HUD's Audit Guide and Standards for Community Development Block Grant Recipients.

Petitioners' responsibilities included receiving applications for housing assistance and soliciting contractor bids for qualified rehabilitation proposals. According to UNI's organizational structure, petitioners were supposed to submit the bids on qualified proposals to UNI's Housing Committee for final approval, but, in fact, the Committee's review was a "mere formality."*fn7 As a practical matter, petitioners alone decided which property owners and contractors in the city of Peoria would be the beneficiaries of the federal funds made available to the city through the HCDA block grant program.

III

Petitioners contend now, as they have throughout this litigation, that, as executives of a private nonprofit corporation unaffiliated with the Federal Government, they were never

[ 465 U.S. Page 490]

     "public officials" as Congress defined that term. 18 U. S. C. § 201(a).

Under § 201(a), the term "public official" includes "an officer or employee or person acting for or on behalf of the United States, or any department, agency or branch of Government thereof, . . . in any official function, under or by authority of any such department, agency, or branch of Government." There being no basis for claiming that petitioners were officers or employees of the United States, the Government's sole contention is that petitioners acted "for or on behalf of" the United States "in an official function" under the authority of HUD.

Petitioners argue that they cannot be considered to have acted "for or on behalf of the United States" because neither they nor their employer UNI ever entered into any agreement with the United States or any subdivision of the Federal Government. In advancing this position, petitioners rely primarily on two Second Circuit decisions holding that a New York City employee involved in the administration of the federal Model Cities Program was not a public official under § 201. United States v. Loschiavo, 531 F.2d 659 (1976); United States v. Del Toro, 513 F.2d 656, cert. denied, 423 U.S. 826 (1975). Petitioners and these Second Circuit decisions rest on the premise that an individual does not work "for or on behalf of the United States . . . in any official function" without some formal bond with the United States, such as an agency relationship, an employment contract, or a direct contractual obligation.

The Government, in response, argues that the term "public official" has a broader sweep, covering not only parties in privity with the United States, but also any private individuals responsible for administering federally funded and federally supervised programs. The Government defends the decision of the Seventh Circuit in the instant cases which held that the "substantial federal supervision over the cities and all sub-grantees responsible for local distribution of grant funds" made petitioners' public officials for purposes of § 201.

[ 465 U.S. Page 491683]

     F.2d, at 197-198. The court reasoned that petitioners "were acting as federal agents in the sense of having discretion in administering the ...


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