United States v. Manning

After he pleaded guilty to misappropriating funds as a fiduciary, the district court sentenced Mr. Manning to 37 months’ imprisonment and ordered restitution in the amount of $26,437.34. About three years later, the government determined that Mr. Manning failed to include his $40,000 401(k) retirement account in his statement of net worth, which the probation officer had used to prepare the presentence report (PSR) for the misappropriation conviction. As a result, the probation officer did not include this amount in his suggested calculation of the restitution award.

The government prosecuted Mr. Manning for making a false statement under 18 U.S.C. § 1001. However, the district court determined that the “judicial function” exception in § 1001 applied to Mr. Manning’s false statement, because he made the statement in an adjudicative proceeding. Therefore, the district court dismissed the indictment. The government now appeals, arguing that the district court misapplied the judicial function exception. We agree, and reverse and remand.

I. BACKGROUND

This appeal arises from the government’s prosecution of Mr. Manning for one count of knowingly and willfully making a materially false, fictitious, or fraudulent statement or representation, in violation of 18 U.S.C. § 1001. The government maintains that on August 21, 2003, before he was sentenced for his conviction of misap*613propriation by a fiduciary under 38 U.S.C. § 6101(a), Mr. Manning gave a false statement to United States Probation Officer Tony Budzinsky, who was preparing the PSR. To determine the appropriate fine and restitution for the misappropriation conviction, Probation Officer Budzinsky inquired as to Mr. Manning’s net worth. In response, Mr. Manning failed to disclose his 401(k) retirement plan, which was worth approximately $40,000.

Probation Officer Budzinsky prepared a Net Worth Statement based on Mr. Manning’s representations, and subsequently prepared the PSR, relying on the Net Worth Statement. On January 16, 2004, the district court sentenced Mr. Manning to 37 months’ imprisonment and 36 months’ supervised release. The court did not assess a fine, but it did impose a $100 assessment, and it ordered restitution in the amount of $26,437.34.

The government discovered the omission of the $40,000 401(k) plan a few years after Mr. Manning’s sentencing. It then convened a federal grand jury, which indicted Mr. Manning on one count of making a materially false, fictitious, or fraudulent statement and representation “in a matter within the jurisdiction of the judicial branch of the United States,” in violation of 18 U.S.C. 1001.1 Aplt’s App. at 6. Before trial, the district court ordered the parties to address “whether the ‘judicial proceeding exception’ provision in 18 U.S.C. § 1001(b) is applicable to this case and whether said provision would invalidate the Indictment issued herein.” Aplt’s App. doc. 30, at 13.

At a hearing, the district court concluded that the “judicial proceeding exception” did apply because Mr. Manning made the statement to the probation officer when the probation officer was acting in a “judicial” rather than an “administrative” capacity:

Recognizing that there are no cases that I have been able to find that deal with the Section B exemption to the 1001-A violations, and recognizing that it seems clear that the intent of the legislation by the Congress was to prevent any chilling effect of the advocacy nature of judicial proceedings and therefore to distinguish between judicial and administrative proceedings, judicial proceedings falling within the exemption of Subsection B and administrative proceedings not falling into it, the Court is of the opinion that this is an adjudicative proceeding [ ], it is a matter which the probation office through legislative authority and direction, is working [o]n behalf of the Court gathering information for the presentence report. It is not an administrative proceeding []....

[Therefore the Court is of the opinion that the exemption is applicable to the factual circumstances as has been presented to the Court in this case.

Aplt’s App. at 46-47. Having found that § 1001(b) applied, the district court dismissed the indictment.

The government now appeals, arguing that § 1001(b) does not exempt false statements such as Mr. Manning’s. We agree that the statute does not insulate Mr. Man*614ning’s omission, and we therefore reverse and remand.

II. DISCUSSION

The government first argues that § 1001(b)’s plain language does not exempt Mr. Manning’s wrongful statement to Probation Officer Budzinsky because the judicial function exception is inapplicable in this case. Second, the government argues that, should this court decide to review § 1001’s legislative history, it is evident that Probation Officer Budzinsky acted in an administrative capacity that did not fall under § 1001(b)’s exception. Third and, in conjunction with its second argument, the government asserts that a probation officer’s role is an administrative one, and thus § 1001(b) cannot apply to Mr. Manning’s statements. We agree with the government that the plain language of § 1001(b) does not apply to Mr. Manning’s false statement and that the legislative history does not support an exemption for his false statement to a probation officer in this context.

A. Standard of review

We review a district court’s statutory interpretation de novo. United States v. Rx Depot, Inc., 438 F.3d 1052, 1054 (10th Cir.2006). “It is our primary task in interpreting statutes to determine congressional intent, using traditional tools of statutory construction.” St. Charles Inv. Co. v. Comm’r, 232 F.3d 773, 776 (10th Cir.2000) (internal quotation marks omitted). We begin by examining the statute’s plain language. United States v. Morgan, 922 F.2d 1495, 1496 (10th Cir.1991). If the statutory language is clear, our analysis ordinarily ends. Id; see also Edwards v. Valdez, 789 F.2d 1477, 1481 (10th Cir.1986) (“It is a well established law of statutory construction that, absent ambiguity or irrational result, the literal language of a statute controls.”). If the statute’s plain language is ambiguous as to Congressional intent, “we look to the legislative history and the underlying public policy of the statute.” United States v. LaHue, 170 F.3d 1026, 1028 (10th Cir.1999).

B. The False Statements Act

We begin with the False Statements Act’s plain language. Section 1001 reads in pertinent part:

(a) Except as otherwise provided in this section, whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully—

(1) falsifies, conceals, or covers up by any trick, scheme, or device a material fact;

(2) makes any materially false, fictitious, or fraudulent statement or representation; or

(3) makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry;

shall be fined under this title, imprisoned not more than 5 years or, if the offense involves international or domestic terrorism (as defined in section 2331), imprisoned not more than 8 years, or both....

(b) Subsection (a) 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.

18 U.S.C. § 1001(a)-(b) (emphasis added). Subsection (b) indisputedly creates exceptions for statements by parties and counsel in judicial proceedings. The exception set forth in § 1001(b) is commonly called the *615“ ‘judicial function’ exception.” See United States v. Deffenbaugh Indus., 957 F.2d 749, 752 (10th Cir.1992) (“Most circuits have recognized a ‘judicial function’ exception to the application of § 1001.... ”).

Since the statute’s amendment in 1996, we have not had occasion to comment upon the breadth of the judicial function exception. Beginning with the plain language of the statute, there is no debate that Mr. Manning was a party to a judicial proceeding and that he made a statement during that proceeding. The question is whether Mr. Manning’s failure to mention to Probation Officer Budzinsky the existence of the 401(k) account, which in turn Probation Officer Budzinsky omitted from the PSR submitted to the court, was a false statement “submitted ... to a judge.” 18 U.S.C. § 1001(b).

Clearly, if we read § 1001(b) strictly and literally (“to a judge ”), then the false statement, which was contained in the PSR, would not be covered by the judicial function exception. However, the government acknowledges (and we appreciate the government’s candor in so doing), that § 1001(b)’s exception must cover certain agents of a judge — such as a judge’s secretary or law clerk. Similarly covered might be the judge’s courtroom deputy clerk or bailiff, because clerical staff act as conduits to the judge.

Because the plain language of § 1001(b) leaves some doubt as to the scope of a judicial agency, we look beyond the statute’s plain language and consider (1) how the judicial function exception developed; (2) the statute’s legislative history; (3) the role of the probation officer in formulating the PSR; and finally (4) how Mr. Manning’s false statement fares against this backdrop.

1. History of the judicial function exception

Standing alone, the idea of exonerating someone for making a false statement to a judge seems incongruous. However, the exception developed out of a concern that the statute might be interpreted to “criminalize conduct that f[ell] well within the bounds of responsible advocacy.” Julie R. O’Sullivan, The Federal Criminal “Code” Is a Disgrace: Obstruction Statutes as Case Study, 96 J.Crim. L. & Criminology 643, 709 (2006). Moreover, an “extensive array” of other statutes “already exist[s] to penalize false statements within the Judicial Branch.” Hubbard v. United States, 514 U.S. 695, 714, 115 S.Ct. 1754, 131 L.Ed.2d 779 (1995) (listing 18 U.S.C. § 1621 (perjury); § 1623 (false declarations before grand jury or court); § 1503 (obstruction of justice); § 287 (false claims against the United States)).2

a. United States v. Bramblett, 349 U.S. 503 (1955)

Section 1001 as it stood in 1934 encompassed the concealing or covering up of a material fact, which led courts to question whether it could constitutionally apply when a defendant pleaded not guilty or when counsel moved to exclude hearsay testimony known to be true.3 See O’Sulli*616van, 96 J.Crim. L. & Criminology at 709. In Bramblett,

a former Member of Congress was charged under § 1001 for falsely representing to the House Disbursing Office that a named person was entitled to compensation as his official clerk. The district court had granted [Mr.] Bramblett’s motion for arrest of judgment following his conviction on the ground that he had not falsified a material fact “within the jurisdiction of any department or agency of the United States” because the Disbursing Office was not a department or agency within the meaning of § 1001.

United States v. Oakar, 111 F.3d 146, 151 (D.C.Cir.1997) (explaining Bramblett); see also Morgan v. United States, 309 F.2d 234, 237 (D.C.Cir.1962) (also explaining Bramblett). The Supreme Court rejected the argument that § 1001 only penalizes false statements made within the jurisdiction of executive agencies. The Court, held that “department,” as used in § 1001, “was meant to describe the executive, legislative and judicial branches of the Government.” Bramblett, 348 U.S. at 509, 75 S.Ct. 504 (emphasis added).

“In the wake of Bramblett, federal courts carved out the ‘judicial function’ exception to § 1001, under which § 1001 was found ‘not [to] apply to statements made to a court acting in its judicial capacity.’ ” United States v. Tracy, 108 F.3d 473, 476 (2d Cir.1997) (quoting United States v. Masterpol, 940 F.2d 760, 766 (2d Cir.1991)); see also Deffenbaugh Indus., 957 F.2d at 752; United States v. Holmes, 840 F.2d 246, 248 (4th Cir.1988); United States v. Mayer, 775 F.2d 1387, 1388-92 (9th Cir.1985) (per curiam); United States v. Abrahams, 604 F.2d 386, 393 (5th Cir.1979); Morgan, 309 F.2d at 237. “This judicially-crafted exception provided that if a false statement or concealment concerned a court’s ‘judicial function’ it was not actionable under § 1001; if, however, the conduct was addressed only to the administrative functions of the court, it was actionable.” O’Sullivan, 96 J.Crim. L. & Criminology at 709.

b. Hubbard v. United States, 514 U.S. 695 (1995)

The existence of the judicial function exception remained untested until 1995, when the Supreme Court decided Hubbard v. United States. “In Hubbard, the Court held that the judicial branch is not a ‘department’ under § 1001; in so doing, it overruled [Bramblett,], where, applying § 1001 to the legislative branch, the Court had broadly interpreted ‘department’ to describe the ‘executive, legislative, and judicial branches of the Government.’ ” United States v. Espy, 145 F.3d 1369, 1373 (D.C.Cir.1998) (internal citations omitted); see also Hubbard, 514 U.S. at 702, 115 S.Ct. 1754 (explaining that Bramblett itself “must be acknowledged as a seriously flawed decision”). Addressing the majority’s holding that § 1001 did not apply to the judicial branch, Justice Scalia’s concurrence warned that there “remains ... a serious concern that the threat of criminal prosecution under the capacious provisions of § 1001 will deter vigorous representation of opposing interests in adversarial litigation, particularly representation of criminal defendants, whose adversaries control the machinery of § 1001 prosecution.” Hubbard, 514 U.S. at 717, 115 S.Ct. 1754 (Scalia, J., concurring) (emphasis in original). It was in the wake of Hubbard that Congress decided to amend § 1001.

*6172. Legislative history behind the 1996 amendment

In May, 1995, Congressman Martini introduced H.R. 1678, which applied section 1001 to all three branches of the Federal Government, without exception. At a Crime Subcommittee hearing on June 30, 1995, witnesses expressed concern that the broad application of section 1001 to all three branches would chill advocacy in judicial proceedings and also undermine the fact-gathering process that is indispensable to the legislative process. In response to these concerns, Representative Martini introduced H.R. 3166 on March 27, 1996, which included a judicial function exception, exempting from the scope of section 1001 those representations made by a party or party’s counsel to a judge during a judicial proceeding .... H.R. 3166 applies section 1001 to all three branches of the U.S. Government, with two exceptions. First, the bill does not apply section 1001 “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 in that proceeding.” Such an exception is intended to codify the judicial function exception which has long been recognized by many Federal courts as necessary to safeguard from the threat of prosecution statements made in the course of adversarial litigation. Allowing the criminal penalties of section 1001 to apply to statements made in the course of adversarial litigation would chill vigorous advocacy, thereby undermining the adversarial process. The exception is consistent with the Court’s reasoning in [United States v. Bramblett, 348 U.S. 503, 75 S.Ct. 504, 99 L.Ed. 594 (1955)], and [Morgan v. United States, 309 F.2d 234 (D.C.Cir.1962)], and subsequent case law, which consistently distinguished the adjudicative from the administrative functions of the court, exempting from section 1001 only those communications made to the court when it is acting in its adjudicative or judicial capacity, and leaving subject to section 1001 those representations made to the court when it is functioning in its administrative capacity. Thus, false statements uttered during the course of court proceedings or contained in court pleadings would not be covered by section 1001. The language of the exception recognizes that a wide range of filings are an integral part of the adversarial process, and therefore goes beyond merely exempting “statements,” exempting as well “representations, writings or documents” submitted to the judge. Importantly, such filings made in judicial proceedings are already covered by other statutes, further limiting any supposed necessity of covering these filings with section 1001.

H. Rep. 104-680, 104th Cong., 2nd Sess. 1996, 1996 U.S.C.C.A.N. 3935, 3937-38 (footnotes omitted) (emphasis added).

As to the judicial function exception, the House Report continued:

[S]ubsection (b) provides that 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 in that proceeding. As such, section 1001 does not apply to representations made to a court that is acting in its judicial, or adjudicatory capacity; Rather, it applies only to representations made to a court acting in its administrative capacity .... The judicial function exception provided in subsection (b) is intended to codify the judicial function exception as articulated in Bramblett. Consequently, consistent with Bramblett, only those *618representations made to a court when it is acting in its administrative or “housekeeping” capacity are within the scope of section 1001. Such representations would include any filings not related to a proceeding before the court, such as submissions related to bar membership, and would also include the submission of infomation to another entity within the judicial branch, such as the probation service.

Id. at 3942-43 (emphasis added).

The 1996 amendment thus sought to reinstate the judicial function exception as it existed pre-Hubbard. In addition, Congress intended the exception not to encompass “submissions of information to ... the probation service.” Id. at 3943. Having concluded the judicial function exception is extant — indeed, codified — and has Congressionally delineated parameters, we consider its application to the case at hand: Was Officer Budzinsky’s preparation of the PSR and presentation of the PSR, containing Mr. Manning’s statements, equivalent to a party’s statement to a judge? To answer this, we consider the role of Probation Officer Budzinsky.

3. Role of the probation officer

In fashioning a restitution order, the court is required to “order the probation officer to obtain and include in” the PSR “information sufficient for the court to exercise its discretion in fashioning a restitution order.” 18 U.S.C. § 3664(a). United States v. Serawop, 505 F.3d 1112, 1118 (10th Cir.2007) (applying 18 U.S.C. § 3664(a)); see also 18 U.S.C. § 3663 (Victim and Witness Protection Act).

As amended by the Sentencing Reform Act, Federal Rule of Criminal Procedure 32 provides for focused, adversarial development of the factual and legal issues relevant to determining the appropriate Guidelines sentence. Rule 32 frames these issues by directing the probation officer to prepare a presentence report addressing all matters germane to the defendant’s sentence.

Burns v. United States, 501 U.S. 129, 134, 111 S.Ct. 2182, 115 L.Ed.2d 123 (1991) (citation omitted).

Pursuant to Rule 32(c)(2), the PSR is to contain (a) information about the history and characteristics of the defendant, including his prior criminal record; (b) the classification of the offense and the defendant under the Sentencing Guidelines, possible sentencing ranges, and any factors that might warrant departure from the Guidelines; (c) any pertinent policy statements issued by the Sentencing Commission; (d) the impact of the defendant’s offense upon any victims; (e) information relating to possible sentences not requiring incarceration, unless the court orders otherwise; and (f) any other information requested by the court. See id.; Fed. R.Crim.P. 32.

When preparing a PSR under Rule 32, “it is evident ... that the probation service is an arm of the court. It is not an investigative arm for the prosecution. A presentence report is prepared exclusively at the discretion of and for the benefit of the court.” United States v. Dingle, 546 F.2d 1378, 1380-81 (10th Cir.1976). “The purpose of the presentence report, including associated interviews, is neither prosecutorial nor punitive. It is essentially neutral in those respects. The probation officer acts as an agent of the court for the purpose of gathering and classifying information and informing the court in the exercise of its sentencing responsibility.” United States v. Rogers, 921 F.2d 975, 979-80 (10th Cir.1990) (emphasis added). Although the probation officer acts as the court’s agent, it seems the role is certainly more substantive than that of a message bearer; indeed, proba*619tion officers can exercise some discretion on their own.

There is little doubt that Probation Officer Budzinsky performed his duties as required by the district court pursuant to Rule 32. He filtered all the information he received from his investigation and prepared the Net Worth Statement and finally the PSR, which was subjected to adversarial testing by the parties. See Fed. R.CrimP. 32(i)(l)(c) (mandating that the parties be given an opportunity “to comment on the probation officer’s determinations and on other matters relating to an appropriate sentence”); Burns, 501 U.S. at 135, 111 S.Ct. 2182. Only after such testing does the court exercise its discretion and fashion a restitution order.

Given this background and the statute’s legislative history, we are informed in our analysis by a divided Ninth Circuit decision, which recently immunized a similar false statement to a probation officer. See United States v. Horvath, 492 F.3d 1075 (9th Cir.2007), reh’g en banc denied, 522 F.3d 904, 907 (Apr. 9, 2008) (“The worst aspect is in the majority deciding that we should be the entity to grant immunity under 18 U.S.C. § 1001(b), where Congress did not see fit to grant such immunity. If Congress had wanted to exempt statements made by a defendant to a probation officer, then Congress knew how to do it.”) (Bea, J., dissenting from denial of reh’g en banc). Mr. Horvath made a false statement (that he had served in the United States Marine Corps) to the probation officer during the presentence interview. The probation officer included this statement in the PSR, and the court ultimately relied on Mr. Horvath’s purported military service as a mitigating factor during the imposition of his sentence. The panel majority determined that § 1001(b)’s judicial function exception insulated the statement, because Mr. Horvath’s false statement was submitted, via “courier” (i.e. the probation officer) to the district court judge. “[A] defendant does not lose the protection of § 1001(b) simply by using an intermediary.” 492 F.3d at 1081.

However, we believe that the dissent’s logic and reasoning as to the role of the probation officer in this instance appears to be the better approach, and also squares with Congressional intent. The dissent agreed that documents or writing provided to a judge via a courier or a clerk or secretary, are “submitted” to a judge for purposes of § 1001(b). Id. at 1082 (Rymer, J., dissenting). However, Judge Rymer believed, and we agree, that a probation officer, in preparing the PSR pursuant to Rule 32, acts with greater authority than does a “courier pigeon.” Id. “[T]he probation officer’s obligation is to submit a report that contains information on the defendant’s history and characteristics, not from the defendant.” Id. Here, as in Horvath, the probation officer “picked and chose” what to include and exclude in the PSR, “based on his understanding of what is expected of him and what he believes is important for the court and the parties to know.” Id. at 1083. The process involves the probation officer’s exercise of his discretion, and not a mere transmission of information. See Horvath, 522 F.3d 904, 2008 WL 943951, at *9 (“[The probation officer is] not like a court reporter whose only responsibility is to take down what people say and transmit it verbatim. The probation officer also has the independent duty to figure out the truth and so advise the court. The probation officer is therefore not simply an extension of the court, even if he’s required to report all of defendant’s false statements.... The probation officer has a separate role to play as an investigator and truth-finder.”) (Kozinski, C.J., dissenting from denial of reh’g en banc) (citations omitted).

*620Furthermore, the dissent noted, preHubbard case law from the Ninth Circuit supported the determination that certain pre-sentencing misrepresentations are subject to prosecution under § 1001. See United States v. Gonzalez-Mares, 762 F.2d 1485 (9th Cir.1985) (stating that “probation officer’s questions regarding the use of aliases and pi*ior convictions were a routine exercise of administrative responsibility” and upholding conviction when false statements to probation officer “impaired the basic functioning of the probation department”); United States v. Plasceneia-Orozco, 768 F.2d 1074, 1076 (9th Cir.1985) (upholding a conviction of an individual who orally gave a false name to the magistrate at his arraignment stating “the magistrate’s inquiry of [defendant] as to his true identity was not an exercise of the magistrate’s judicial powers, but was a function of the magistrate’s administrative duties”); see also United States v. Barber, 881 F.2d 345, 350-51 (7th Cir.1989) (holding that defendant’s mailing of false recommendation letters to U.S. Attorney’s Office on behalf of another defendant was covered by § 1001 because facts presented “a unique setting and one ill-suited to regulation through the perjury statutes” and because sentencing recommendations are within jurisdiction of U.S. Attorney’s Office); Masterpol, 940 F.2d at 766 (holding defendant’s “spurious letters of recommendations” submitted to the court to influence sentencing were not covered by § 1001); Mayer, 776 F.2d at 1390-92 (adopting exception and finding submission of false letters of recommendation to sentencing judge within court’s adjudicative function).

Finally, the Horvath dissent persuasively concludes that to hold Mr. Manning’s false statement to the probation officer within the ambit of § 1001(a) also supports Congressional intent. Congress did not intend to allow defendants to avoid restitution obligations through lies or misrepresentations made to a probation officer.

While Congress obviously did intend to allow some false statements, ... to be made to a judge in the course of adversarial litigation to avoid chilling of advocacy on the margin between pushing the envelope and being misleading and lying, it did not immunize falsehoods altogether even in the judge’s arena as it drew a line at knowingly making a false material statement under oath. 18 U.S.C. § 1623. Additionally, the adversary system, counsels’ ethical obligations, and other means available to judicial officers kick in to further truth-seeking in the courtroom. Similar balances do not apply in the probation officer’s arena. Statements to probation officers are not made under penalty of perjury and the process is not adversarial. Absent § 1001, there are scant incentives for truth-speaking.

Horvath, 492 F.3d at 1083 (Rymer, J., dissenting). Indeed, the procedure for the issuance of a restitution order indicates that Congress intends to include all of a defendant’s assets in a restitution calculation. See 18 U.S.C. § 3664(d)(3) (“Each defendant shall prepare and file with the probation officer an affidavit fully describing the financial resources of the defendant, including a complete listing of all assets owned or controlled by the defendant ..., the financial needs and earning ability of the defendant and the defendant’s dependents, and such other information that the court requires relating to such other factors as the court deems appropriate.”). Congress did not intend to excuse Mr. Manning for omitting financial assets from his statement to Probation Officer Budzinsky. Horvath, 522 F.3d 904, 912 (observing that to hold otherwise “encourages defendants to lie during the pre*621sentence investigation”) (Bea, J., dissenting from denial of reh’g en banc).

This is a close and difficult case. While some aspects of the probation officer’s actions seem to be those of an agent, other functions allow discretion. Yet we cannot hold that Congressional intent encompassed allowing a defendant to conceal resources when such evidence is critical to the final judicial decision, at which time the advocates can have their say protected by § 1001(b). Thus, although it seems the government could have chosen another route, it was fully empowered to prosecute Mr. Manning under § 1001.

III. CONCLUSION

Mr. Manning’s statement to the probation officer that omitted mention of his $40,000 401(k) retirement account is a prosecutable offense under 18 U.S.C. § 1001(a) and is not excepted under the judicial function exception of § 1001(b). Accordingly, we VACATE and REMAND for trial.