United States v. Medeiros

647 F.Supp.3d 1130

UNITED STATES of America, Plaintiff, v. Nick L. MEDEIROS, and Bobby Greaves, Defendants.

Cr. No. 18-1966-JCH

United States District Court, D. New Mexico

Filed December 20, 2022

Paul Mysliwiec, U.S. Attorney's Office, Albuquerque, NM, Jonathon M. Gerson, Office of the U.S. Attorney, Albuquerque, NM, for Plaintiff.

Michael C. Gross, Gross & Esparza, PLLC, San Antonio, TX, Nicole Moss, The Law Office of Nicole W Moss, Albuquerque, NM, for Defendant Nick L. Medeiros.

John Convery, Pro Hac Vice, Hasdorff & Convery, P.C., San Antonio, TX, Marshall J. Ray, Law Offices of Marshall J. Ray, Albuquerque, NM, Sean Connelly, Pro Hac Vice, Connelly Law LLC, Denver, CO, for Defendant Bobby Greaves.

MEMORANDUM OPINION AND ORDER

JUDITH C. HERRERA, SENIOR UNITED STATES DISTRICT JUDGE

This matter comes before the Court on the Renewed Motion for Judgment of Acquittal (ECF No. 176) and the Motion for New Trial (ECF No. 177) filed by Defendants Nick L. Medeiros and Bobby Greaves ("Defendants"). The Government opposes the motions. The Court, having considered the motions, arguments, evidence, and applicable law, concludes that the renewed motion for judgment of acquittal should be granted as to Counts 2, 3, and 4, but denied as to Count 1, and the motion for new trial should be granted as the verdict was against the weight of the evidence and influenced by cumulative prejudice arising from multiple trial errors. The Court does not overturn a decision by a jury lightly, but finds it is necessary in this case to prevent a miscarriage of justice.

I. PROCEDURAL HISTORY

A. ALLEGATIONS IN THE SUPERSEDING INDICTMENT

Nick L. Medeiros and Bobby Greaves are brothers-in-law. They partially owned NJM, Inc. ("NJM"), a construction business established in 2012. (Superseding Indictment ¶¶ 10-12, ECF No. 66.) Defendant Medeiros is a service-disabled veteran ("SDV"), and according to the Superseding Indictment, he used that status to gain preferential construction contracts set aside for military veterans under the Service-Disabled Veteran-Owned Small Business Program ("SDVOSB") by giving subcontracting work to another construction business called JSR, Inc. ("JSR"), which is owned by Defendant Bobby Greaves and his wife, Nancy Greaves. (Id. ¶¶ 10-16.) As a result of Defendant Medeiros' SDV status, NJM allegedly applied for and received federal government construction contracts between 2012 and 2016 that are reserved for SDVOSBs. (Id. ¶ 16.) According to the Superseding Indictment, in obtaining these contracts, Defendants misrepresented the relationship between NJM and JSR to the United States Department of Veterans Affairs ("VA") and the United States Air Force ("USAF"). (Id. ¶ 21.) The Government alleged that Defendants submitted documents to the VA and USAF representing that NJM could perform significant portions of the contract work without using JSR employees or equipment, passed off JSR employees as NJM employees, used JSR employees and equipment to perform the contract work, and concealed NJM's inability to provide sufficient employees and supervisors to complete contracts without JSR's assistance. (Id. ¶¶ 21-22(c).)

The grand jury charged Defendants in Count 1 with conspiring to defraud the United States, conspiring to commit major fraud and wire fraud against the United States, and conspiring to make materially false statements and representations to influence a decision of an Executive Branch agency. Count 2 alleged that Defendants committed major fraud against the government by means of false and fraudulent pretenses to obtain a USAF contract valued at $1 million or more by falsely certifying that NJM met SDVOSB and Small Business Administration ("SBA") standards for independence and veteran control. Counts 3 and 4 asserted that on certain dates Defendants made materially false, fictitious, and fraudulent statements and misrepresentations to the government.

B. Trial and Post-Trial Motions

The Court held a seven-day jury trial in this matter. At the close of the Government's case, Defendants moved to acquit on all counts. The Court initially reserved ruling on the motion and stated its significant concerns about whether the Government proved the charges. Nevertheless, after expressing its reservations about whether the evidence was sufficient to show a criminal conspiracy, the falsity of statements, materiality, and criminal intent, the Court allowed the case to go to the jury.

After deliberating for less than three hours, despite voluminous exhibits and instructions, the jury returned a verdict finding Defendants guilty on all four counts. (See Verdict, ECF No. 170). The Court then denied Defendants' motion for judgment of acquittal in an oral ruling. On March 29, 2022, Defendants timely filed a Renewed Motion for Judgment of Acquittal (ECF No. 176) and a Motion for New Trial (ECF No. 177). Having reviewed these motions, the Court's initial concerns about the sufficiency of the evidence and the potential prejudice to Defendants in the way the trial unfolded have only grown.

This case is not the typical conspiracy case. It began, not through a protest from a competing bidder or a complaint from the USAF, SBA, or VA, but from a complaint from a whistleblower searching through publicly available files on the internet.

(See Mem. Op. and Order 25-26, ECF No. 124.) It is undisputed that Nick Medeiros is a service-disabled veteran who returned from military service to work in the construction industry for the family-owned business of his brother- and sister-in-law, Bobby and Nancy Greaves. It is further undisputed that Bobby and Nancy Greaves desired to help Nick Medeiros start and support a new veteran-owned small business and that Bobby Greaves worked with Nick Medeiros to help get NJM established as a SDVOSB. In that pursuit, Nick Medeiros and Bobby Greaves submitted mounds of evidence and paperwork to the VA and SBA that revealed involvement of Bobby Greaves and JSR in assisting Nick Medeiros and NJM to get the new business going. The SBA even approved a mentor-protégé agreement between JSR and NJM in November 2015. It is also undisputed that NJM received SDVOSB certification from the VA; that NJM was awarded certain contracts from the USAF as the prime contractor; that the USAF knew that NJM was teaming with JSR on the contract work; that no one filed a protest regarding the awarding of the Weapons Cleaning and Drop Zone USAF contracts to NJM; that NJM, using NJM and JSR employees, completed the work; and that there were no deficiencies cited for that work.

While those facts were undisputed, what was strenuously debated at trial was the falsity of a few statements submitted to the federal agencies among the many thousands of pages of documents submitted to them.¹ Also vigorously disputed at trial was the criminal, fraudulent intent of Defendants in submitting certain statements to various federal agencies in their efforts to gain SDVOSB status for NJM and to win certain government construction contracts. The affirmative false statements charged, however, were statements that were made in the context of a complex regulatory scheme, in which the determination of falsity and criminal intent depended upon Defendants' understanding of the regulatory environment and the flexibility of contract terms. The manner in which the case was charged required the jury to determine whether Defendants should have known that NJM was not a SDVOSB, a determination that the agencies themselves had yet to make based on multiple regulations and factors.²

The complicated nature of the case heightened the need to avoid the potential for further confusion. But the way in which the trial proceeded resulted in the admission of prejudicial evidence that should not have been admitted, argument and comments by the prosecution that could inflame and confuse the jury about the weight to give certain evidence, arguments of counsel that conflated critical elements, and an erroneous jury instruction. The multitude of errors leaves the Court with grave doubts that the jury properly weighed the evidence, especially considering how quickly they deliberated. For the reasons given below, the Court will acquit on Counts 2, 3, and 4 and grant a new trial on Count 1 (and should the Tenth Circuit reverse this Court's decision on Counts 2, 3, and 4, the Court concludes a new trial should be granted on all those counts as well).

II. MOTION FOR JUDGMENT OF ACQUITTAL

A. STANDARD

Under Federal Rule of Criminal Procedure 29(a), the court on a defendant's motion at the close of evidence must enter a judgment of acquittal for any charged crime for which the evidence is insufficient to sustain a conviction. Fed. R. Crim. P. 29(a). The court may reserve a decision on the motion, submit the case to the jury, and then decide the motion after the jury returns a verdict of guilty. Fed. R. Crim. P. 29(b). "If the court reserves decision, it must decide the motion on the basis of the evidence at the time the ruling was reserved." Id. Even after a jury has returned a verdict, a defendant may renew a motion for judgment of acquittal within 14 days after a guilty verdict. Fed. R. Crim. P. 29(c)(1). Where a court reserved ruling on the motion for judgment of acquittal until after trial, the court decides the sufficiency question on the basis of the evidence presented by the government. United States v. Finn, 375 F.3d 1033, 1037 (10th Cir. 2004).

In considering a motion for judgment of acquittal, the court must "ask whether a reasonable jury could find a defendant guilty beyond a reasonable doubt, viewing the evidence in the light most favorable to the government and drawing reasonable inferences therefrom." United States v. Vigil, 523 F.3d 1258, 1262 (10th Cir. 2008). A court conducting this inquiry does not weigh conflicting evidence or consider the credibility of witnesses, but instead determines whether the evidence, if believed, would establish each element of the crime....