GARY R. JONES, Magistrate Judge.
The United States initiated this action by filing a Complaint pursuant to the False Claims Act, 31 U.S.C. § 3729, et seq. (FCA). Doc. 1. Plaintiff alleges that Defendants violated the FCA in connection with Small Business Administration (SBA) program contracts administered by the Department of the Air Force (AF) and the National Aeronautical and Space Administration, (NASA), both federal agencies.
Plaintiff has moved for summary judgment on all claims, and Defendants have moved for summary judgment on Counts 2 and 3 on statute of limitations grounds, and partial summary judgment as to damages on the remaining 20 counts of the Complaint. Docs. 20, 42. Each party has responded in opposition to the other party's motion. Docs. 33, 46.
For the following reasons, it is clear that Defendants' summary judgment motion asserting the statute of limitations as a defense to Counts 2 and 3 and contending that the United States incurred no damages is due to be denied as a matter of law. Accordingly, the undersigned recommends that Defendants' motion for summary judgment, Doc. 42, be denied. The United States' summary judgment motion, Doc. 20, raises separate and complex factual issues stemming from the lengthy criminal trial, and therefore Plaintiff's summary judgment motion will be addressed in a separate Report and Recommendation.
Pursuant to Federal Rule of Civil Procedure 56(c), the entry of summary judgment is appropriate only when the Court is satisfied that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." In applying this standard, the Court must examine the pleadings, depositions, answers to interrogatories, and admissions on file, together with any affidavits and other evidence in the record "in the light most favorable to the nonmoving party." Samples on Behalf of Samples v. Atlanta, 846 F.2d 1328, 1330 (11
The following facts are undisputed by the parties. NETECH was a Florida for profit corporation formed in 1989 by Sousan Anghaie and Samim Anghaie. Between 1999 and 2009, Samim Anghaie was employed full time as a professor at the University of Florida and served as the Director of the Innovation Nuclear Space Power and Propulsion Institute (INSPI) at UF, a UF-sponsored research center. The Complaint in this case concerns four funded contracts within the SBA's Small Business Innovation Research Program (SBIR) and Small Business Technology Transfer Program (STTR), as administered by NASA and the Air Force, that were awarded to NETECH for the development of an innovative nuclear fuel for aerospace applications: NNC07CA14C ("N14C"), NNM04AB19C ("N19C"), NNC06CA72C ("N72C"), and FA9550-06-C-0099 ("AF99").
Relative to these four and other contracts, the individual Defendants were charged in a superseding indictment on December 20, 2010, with sixty-two counts of violations of federal law including conspiracy, wire fraud, false statements to a federal agency, and money laundering. See Superceding Indictment, Case No. 1:09-cr-37-SPM-GRJ, Doc. 69.
Defendants were granted a Judgment of Acquittal on ten substantive counts of wire fraud and five substantive counts of money laundering (Counts 23-31, 42, 52-56) on the grounds that such counts were barred by the general federal five-year statute of limitations for criminal offenses. See Case No. 1:09-cr-37-SPM-GRJ, Doc. 114. The jury acquitted Defendant Samim Anghaie of eight substantive counts of wire fraud (Counts 10, 11, 32, 33, 34, 36, 38, 45). Id. Doc. 123. The jury acquitted Defendant Sousan Anghaie of nine substantive counts of wire fraud and one count of knowingly and willfully making and using false documents (Counts 10, 11, 32, 33, 34, 36, 38, 44, 45, and 61). Id. The jury was unable to reach a verdict on any of the counts involving allegations of money laundering or, as to Sousan Anghaie, on the count of making false statements (Counts 48-51, 57-60, 62). Id.
The Court entered a civil forfeiture judgment against Defendants in the amount of $390,252.91. Id. Doc. 151. The Court declined, however, to award restitution to the United States, finding that no actual loss to the United States, as the victim, had been established for purposes of restitution. Id. Doc. 238.
The instant Complaint alleges 22 counts of FCA violations. Count 1 of the Complaint alleges that Defendants engaged in a conspiracy to submit false claims in connection with the contracts, in violation of 31 U.S.C § 3729(a)(3). Counts 2-22 collectively allege that Defendants made false certifications and representations when initially submitting the contract proposals, when filing technical reports, and when submitting invoices for payment, on 22 separate dates under four contracts. Some of the claims are identical to the counts of conviction in the underlying criminal case, some of the claims are identical to counts in the indictment for which Defendants were acquitted, and some of the claims were not prosecuted in the criminal case. See Doc. 1; Case No. 1:09-cr-37-MP-GRJ, Doc. 69 (superceding indictment).
A successful FCA claim requires proof of the following: (1) a false or fraudulent claim; (2) which was presented, or caused to be presented, by the defendant to the United States for payment or approval; (3) with the knowledge that the claim was false. United States v. R & F Properties of Lake County, Inc., 433 F.3d 1349, 1355 (11th Cir. 2005). 31 U.S.C. § 3731(b)(1) provides that a civil action under the False Claims Act may not be brought more than six years after the date on which the violation of the Act is alleged. The limitations period for FCA claims is computed from "the date on which the violation of [the FCA] is committed," and the "violation" is the submission—not the payment—of a false claim. Smith v. United States, 287 F.2d 299, 303-04 (5th Cir.1961) ("The six-year period is to be computed from the time of `the commission of the act,' 31 U.S.C.A. § 235. The `act' in question is the filing of the false claim."). See also Graham County Soil & Water Conservation District v. United States ex rel. Wilson, 545 U.S. 409, 125 S.Ct. 2444, 2449 (2005) (time limit for FCA claims begins to run on the date the defendant submitted a false claim for payment). The FCA's six-year limitation period may be tolled for three years from the date when "facts material to the right [of] action are known or reasonably should have been known by the official of the United States charged with responsibility to act in the circumstances." 31 U.S.C. § 3731(b)(2).
With respect to the instant summary judgment motion, Counts 2-4 of the Complaint concern alleged false claims relating to contract N19C. Counts 2 and 3, which are the subject of Defendants' asserted statute of limitations defense, allege transactions on January 19, 2006, and April 7, 2006. Doc 1. These transactions were not the subject of the criminal prosecution. See Case No. 1:09-cr-37-MP-GRJ, Doc. 69 (superceding indictment). Defendants contend that they are entitled to summary judgment on Counts 2 and 3 because the six-year FCA statute of limitations expired prior to the May 11, 2012, filing of the Complaint. See Doc. 42; 31 U.S.C. § 3731(b)(1). Defendants further contend that 31 U.S.C. § 3731(b)(2) provides a "safety net" in the event the material facts underlying a complaint were not timely discovered. Defendants contend that NASA Special Agent Mazzella and the United States Attorney for the Northern District of Florida filed affidavits in a series of civil forfeiture cases on February 19, 2009, more than three years prior to the date the United States filed the instant action, reflecting that the Government was aware of all pertinent facts and law to support the present action. Accordingly, Defendants argue that pursuant to 31 U.S.C. § 3731(b)(1) and (2), Counts 2 and 3 are time-barred by the statute of limitations.
The United States argues that the FCA claims in this case were timely filed because the Wartime Suspension of Limitations Act ("WSLA"), as amended by the Wartime Enforcement of Fraud Act of 2008 ("WEFA"), 18 U.S.C. § 3287, suspends the FCA's statute of limitations for the United States' FCA claims. The Defendants' summary judgment motion does not reference the applicability of the WSLA and Defendants have not filed a reply contesting the United States' assertion that (1) the WSLA applies to civil FCA cases, and (2) the WSLA suspended the six-year limitations period with respect to the transactions alleged in Counts 2 and 3.
Prior to October 14, 2008, the WSLA provided that:
18 U.S.C. § 3287 (2000). On October 14, 2008, the Act was amended to expand its operation to times "[w]hen the United States is at war or Congress has enacted a specific authorization for the use of the Armed Forces, as described in section 5(b) of the War Powers Resolution (50 U.S.C. 1544(b))[.]" 18 U.S.C.A. § 3287 (West 2010). The 2008 amendment lengthened the suspension period to "5 years after the termination of hostilities as proclaimed by a Presidential proclamation, with notice to Congress, or by a concurrent resolution of Congress." Id.
For purposes of the 2008 amendment to the WSLA — and as the Court in the underlying criminal case concluded — the congressional authorizations for use of force in Iraq in 2001 and 2002
In this case, the transactions underlying Count 2 and 3 of the Complaint occurred on January 19, 2006, and April 7, 2006, prior to the October 14, 2008, effective date of the amended WSLA. Because the six-year limitations period under the False Claims Act had not yet expired when the WSLA was amended, and there has been no termination of hostilities pursuant to the WSLA, the limitations period remains suspended for the claims asserted in Counts 2 and 3.
Defendants contend that the United States is precluded from seeking damages in this case because the issue of damages was resolved in Defendants' favor in the underlying criminal case. Doc. 42. As support for this argument, Defendants' point to the Court's statements at sentencing that Defendant NETECH provided "valuable innovative research" to the Government under the contracts and that "no actual loss to the victims has been established in this case." 1:09-cr-37-SPM-GRJ, Doc. 238. The Court made these statements in connection with its conclusion that restitution should not be awarded to the United States. Id.
In response to this assertion, the United States argues that the measure of damages in a FCA case is different than a restitution award in a criminal case. The United States points to SBA regulations recognizing a presumption that the loss to the SBA or its participating agencies stemming from fraudulent participation in SBA programs is "the total amount expended on the contract, subcontract, cooperative agreement, cooperative research and development agreement, or grant whenever it is established that a business concern other than a small business concern willfully sought and received the award by misrepresentation." Doc. 46 (citing 13 CFR § 121.108). The United States further points out that the Court in the underlying criminal case entered a civil forfeiture judgment in the amount of $390,252.91, reflecting the amounts paid by the United States to Defendant in connection with the transactions for which Defendants were convicted of fraud. In addition, the FCA provides for an award of treble damages and a statutory penalty of $11,000 per fraudulent billing. See 31 U.S.C § 3729(a)(1).
The Eleventh Circuit has recognized that "[a]n order of restitution is not a judicial determination of damages. Damages measure the amount of compensable loss a victim has suffered. Restitution, by contrast, is an equitable remedy, `subject to the general equitable principle that [it] is granted to the extent and only to the extent that justice between the parties requires.'" United States v. Barnette, 10 F.3d 1553, 1556-57 (11
The Eleventh Circuit has also held that "[u]nder the [FCA], there is no set formula for determining the government's actual damages. . . . Case law indicates the measure of damages is generally determined to be the difference between what the government actually paid on the fraudulent claim and what it would have paid had there been fair, open and competitive bidding." United States v. Killough, 848 F.2d 1523, 1532 (11
In view of this authority, Defendants' assertion that the United States cannot seek civil damages under the FCA because the sentencing court declined to order restitution should be rejected.
In light of the foregoing, it is respectfully