United States v. Workman

71 F.4th 661

UNITED STATES of America, Plaintiff-Appellee v. James E. WORKMAN, Defendant-Appellant

No. 21-3839

United States Court of Appeals, Eighth Circuit

Submitted: January 10, 2023

Filed: June 22, 2023

Appeal from United States District Court for the Western District of Missouri - Kansas City

Todd M. Lantz, The Weinhardt Law Firm, Des Moines, IA, argued (James R. Hobbs, Marilyn B. Keller, Wyrsch Hobbs & Mirakian, P.C., Kansas City, MO, on the brief), for defendant-appellant.

Leigh Farmakidis, Asst. U.S. Atty., Kansas City, MO, argued (Teresa A. Moore, U.S. Atty., on the brief), for plaintiff-appellee.

Before SMITH, Chief Judge, WOLLMAN and LOKEN, Circuit Judges.

WOLLMAN, Circuit Judge.

A jury found James E. Workman guilty of three counts of wire fraud, violations of 18 U.S.C. § 1343; one count of theft of government money, a violation of 18 U.S.C. § 641; and two counts of Social Security fraud, one a violation of 42 U.S.C. § 408(a)(4) and one a violation of 42 U.S.C. § 408(a)(3). Workman appeals the district court's denial of his motion for judgment of acquittal, arguing that the evidence was insufficient to prove that he had had the requisite criminal intent to commit the offenses. He also appeals the district court's order for restitution in the amount of $168,456. We affirm the denial of Workman's motion, vacate the restitution and forfeiture orders, and remand for further proceedings.

I. Background

Workman was approved for disability benefits in September 2007, receiving benefits retroactive to July 2007. He was instructed at that time to inform the Social Security Administration (SSA) if he began working or if any of the information in his application changed. Nevertheless, Workman did not inform SSA when he and his wife began operating A.V. Heating & Cooling in 2009. When the SSA reviewed his disability eligibility in 2010, Workman reported that he was not working and did not believe that he was able to work. He reported that his typical daily activities consisted of household chores and watching television. He told a psychologist performing a medical review that he hoped to start a heating and cooling business in the future, but did not mention the already-existing A.V. Heating & Cooling.

A.V. Heating & Cooling grew during the following years. Workman and his wife incorporated the business as an LLC in 2014. Workman conversed with customers on the phone and conducted installations and repairs. He nevertheless again responded to a 2014 SSA inquiry by stating that he was not working. He also applied for benefits on behalf of three of his children in 2016.

Having received a tip that Workman was self-employed, the SSA began an investigation in 2016. Workman confirmed that he owned A.V. Heating & Cooling and reported that he worked on average 20 hours per week. He maintained that he did not believe he needed to report this work because he was not earning more than $1,000 per month. The SSA determined that Workman was self-employed and had not been eligible for benefits since February 2010, resulting in an overpayment to Workman of $168,456 since that time.

II. Judgment of Acquittal

We review de novo the district court's denial of Workman's motion for judgment of acquittal, viewing the evidence in the light most favorable to the government. United States v. Lewis, 895 F.3d 1004, 1008 (8th Cir. 2018). We will reverse only if "a reasonable fact finder could not have found all the elements of the offense beyond a reasonable doubt." Id. at 1008-09 (cleaned up).

Workman contends that the evidence presented at trial shows that he merely misunderstood his obligation to report work activity, and not that he had knowingly defrauded and stolen from the SSA. He accordingly argues that the government failed to prove that he had the requisite fraudulent intent to commit each of the offenses of which he was convicted. See United States v. Garbacz, 33 F.4th 459, 467 (8th Cir. 2022) (government must prove that defendant had intent to defraud for conviction under 18 U.S.C. § 1343); United States v. Rehak, 589 F.3d 965, 973 (8th Cir. 2009) (government must prove that defendant voluntarily, intentionally, and knowingly stole government funds for conviction under 18 U.S.C. § 641); United States v. Phythian, 529 F.3d 807, 812 (8th Cir. 2008) (for conviction under 42 U.S.C. § 408(a)(4), government must prove that defendant knowingly concealed event affecting his right to benefits with intent fraudulently to secure benefits he was not due); United States v. Henderson, 416 F.3d 686, 692 (8th Cir. 2005) (government must prove that defendant had fraudulent intent for conviction under 42 U.S.C. § 408(a)(3)).

The government presented evidence that Workman, together with his wife, had established a heating and cooling business in 2009, and that he personally took calls from customers and performed installations and service. The government also presented evidence that the SSA repeatedly informed Workman of his obligation to report work; that Workman did not report the establishment of his business or any earnings before 2016; that he denied working in 2010 and 2014; that he did not report his employment-related activities when listing his daily activities during his benefits review in 2010 or report any change to his activities in 2014; and that he told a psychologist during his benefits review that he planned to start a business in the future a year after he had already done so. A jury could reasonably disregard Workman's asserted reason for these inconsistencies—that he did not believe that he had to report "work" below a certain income threshold—and find that he acted with the intent to defraud the SSA by receiving benefits for which he was not eligible. See United States v. Morris, 723 F.3d 934, 939 (8th Cir. 2013) (concluding that a reasonable jury could disregard defendant's claim of a good-faith misinterpretation of SSA's definition of "work" and find that defendant knowingly or intentionally stole SSA funds when he reported to SSA that he did not work but represented to state board and an IRS agent that he was a practicing accountant); Phythian, 529 F.3d at 812 (concluding that jury could infer that defendant had intent to fraudulently secure disability benefits because she failed to report working despite being repeatedly advised of obligation to report it).

III. Restitution

The district court ordered restitution to the SSA under the Mandatory Victims Restitution Act, which requires "defendants convicted of a crime 'committed by fraud or deceit' to make restitution to the victim of the offense in the full amount of each victims' loss." See United States v. Spencer, 700 F.3d 317, 322 (8th Cir. 2012) (quoting 18 U.S.C. §§ 3663A(c)(1)(A)(ii), 3664(f)(1)(A)). We review for clear error the district court's finding on the amount of loss. Id. at 323. The district court determined that the SSA suffered loss in the amount of $168,456.

The government must prove by a preponderance of the evidence the amount of loss. United States v. Frazier, 651 F.3d 899, 903 (8th Cir. 2011). To meet its burden here, the government presented the SSA's determination that Workman became ineligible for benefits beginning February 2010. The SSA found that Workman had completed a trial work period between February and October 2009 and that he had been engaged in substantial gainful activity (SGA) since November 2009. Accordingly, the SSA determined that he became ineligible for benefits in February 2010, because the regulations allowed Workman to receive benefits throughout the trial work period and for three months thereafter. See 20 C.F.R. §§ 404.1592(a), 404.1592a(a)(2)(i).

The...