MICHAEL F. URBANSKI, Chief District Judge.
On February 21, 2019, this court found defendant Yiheng Percival Zhang guilty of conspiracy to defraud the United States under 18 U.S.C. § 371 (Count One), aiding and abetting the submission of false statements under 18 U.S.C. §§ 2 and 1001(a)(2) (Counts Three, Four, and Five), and obstruction of justice under 18 U.S.C. § 1519 (Count Twelve). Zhang, with the consent of the government, waived his right to a jury trial, and this case was tried before the court.
Zhang has "moved for judgment of acquittal as to Counts One, Three, Four, and Five, arguing insufficiency of the evidence and claiming no reasonable fact-finder could convict on these counts. ECF No. 185. The government disagrees and urges the court to affirm the guilty verdict on these counts. Zhang did not move for acquittal as to Count Twelve, charging obstruction of justice.
After careful review of the trial record and arguments of counsel, the court concludes that the government submitted sufficient evidence for a reasonable fact-finder to find Zhang guilty of conspiracy and of aiding and abetting the submission of false statements as charged in Counts One, Three, Four, and Five. Accordingly, the motion for judgment of acquittal, ECF No. 185, is DENIED.
Though the court assumes the parties are familiar with the findings of fact outlined in the Findings of Fact and Conclusions of Law, ECF No. 184, the facts pertinent to Counts One, Three, Four, and Five are summarized below.
Zhang founded Cell-Free Bioinnovations, Inc. ("CFB") and served as its President and Chief Scientific Officer at all times relevant to these charges. ECF No. 184, at 5. A small research company, CFB relied exclusively on grant funding for its programs.
These three proposals fell into two categories of grants: Small Business Innovation Research ("SBIR") and Small Business Technology Transfer Research ("STTR"). ECF No. 184, at 9. Both categories aim to promote innovation in the private sector by providing early-stage capital to entrepreneurs.
Like all NSF solicitations, the solicitations to which CFB responded with the Inositol 1, Sugar Phosphate, and Inositol 2 proposals state that "[a]ny proposal submitted in response to this solicitation should be submitted in accordance with the revised NSF Proposal & Award Policies & Procedures Guide (PAPPG) (NSF 15-1), which is effective for proposals submitted, or due, on or after December 26, 2014." ECF No. 184, at 46; Ex. 2A, at 1 (relating to Inositol 1);
The government introduced extensive email evidence in which Zhang repeatedly discussed his scheme to obtain federal grant funds via the Inositol 1, Sugar Phosphate, and Inositol 2 grant proposals, for research that had already been completed in China.
Counts Three, Four, and Five of the superseding indictment charged Zhang with aiding and abetting false statements made in a matter within the jurisdiction of the executive branch of the Government of the United States, within the Inositol 1, Sugar Phosphate, and Inositol 2 grant proposals respectively. The superseding indictment alleged that these proposals "falsely represented the funds sought would be used to fund new research on certain matters, when, in fact, the funds were to be used for other purposes." ECF No. 63, at 9. Plainly, the superseding indictment provided Zhang with notice of the false statements charged such that he could prepare his defense. In particular, the superseding indictment identified (1) the three NSF proposals, (2) the false certifications, and (3) the reason the certifications were false. Nevertheless, Zhang filed a motion for a bill of particulars to which the court directed the government to respond. At a pretrial conference held on August 7, 2018, the government indicated that it would respond to the motion for bill of particulars that day that will provide defendant with some information. Crim. Mins., ECF No. 125. In its response, the government stated: `While the government's position is that the superseding indictment fairly apprises the defendant of the charges so that he can prepare a defense and avoid surprise at trial, the government is also providing the following information out of an abundance of caution." ECF No. 126, at 1. At a subsequent pretrial hearing held on August 24, 2018, the court inquired about the bill of particulars issue. Zhang's counsel stated that the response received was substantive, helpful, and alleviated concerns and had no issue to raise with the court. Crim. Mins., ECF No. 132.
The government's response to the motion for bill of particulars as to Counts Three, Four, and Five all follow a similar pattern. The response identified the same false representation, rationale, and omissions for each proposal. The false representation and rationale were:
ECF No. 126, at 2-3. As to all three counts, the response also listed omissions consisting of the "Failure to disclose the relationship between Yiheng Percival Zhang and the Tianjin Institute of Industrial Biotechnology, Chinese Academy of Sciences, Tianjin, China; (2) Failure to disclose that much, if not all, of the work set forth in the attached Proposal had already been done and/or funded in China; and (3) Failure to disclose the intended use of the grant funds."
The government alleged, and the court found, that Zhang worked to obtain competitive NSF awards for projects that he admitted had already been completed in China, in violation of grant requirements that the grants be for new work to be done in the United States. ECF No. 184, at 2. The court found that the evidence showed, beyond a reasonable doubt, that Zhang is guilty of aiding and abetting the submission of false certifications in the Inositol 1, Sugar Phosphate, and Inositol 2 proposals. ECF No. 184, at 52, 59, 61. In Count One, the court also found Zhang guilty of conspiracy to defraud the United States by making these false representations. ECF No. 184, at 40.
The court now turns to the merits of the motion for acquittal. Rule 29 of the Federal Rules of Criminal Procedure states that "the court may set aside the verdict and enter an acquittal" if the defendant so moves within 14 days of the verdict. Fed. R. Crim. P. 29(c).
"There is only one ground for a motion for judgment of acquittal. This is that the evidence is insufficient to sustain a conviction of one or more of the offenses charged in the indictment or information." 2A Charles A. Wright,
Counts Three, Four, and Five all involve charges associated with aiding and abetting the submission of false representations. To find Zhang guilty of these charges, the court must be convinced beyond a reasonable doubt that Zhang committed the specific crime as charged. The pertinent statute, 18 U.S.C. § 1001, states:
18 U.S.C. § 1001(a)(2). "The essential elements of a § 1001(a)(2) offense are, as follows: 1. [a] material statement or representation; 2. [w]hich is false, fictitious, or fraudulent, 3. [m]ade in a matter within the jurisdiction of a department or agency of the United States; and 4. [d]one knowingly and willfully."
For Counts Three, Four, and Five, criminal liability is premised on Zhang's conduct in aiding and abetting others to make false statements. 18 U.S.C. § 2 states:
"To prove the crime of aiding and abetting the government must show that the defendant knowingly associated himself with and participated in the criminal venture. To prove the element of association, the government must show that the defendant shared in the principal's criminal intent."
Count One charges Zhang with conspiracy to defraud the United States in violation of 18 U.S.C. § 371. The elements of a conspiracy under § 371 are: "(1) the existence of an agreement, (2) an overt act by a conspirator in furtherance of the objectives, and (3) an intent on the part of the conspirators to agree as well as to defraud the United States."
Zhang makes several arguments attempting to prove that there is insufficient evidence to support the verdict. First, Zhang argues that the verdict did not actually find Zhang guilty of the charges described in the bill of particulars, making his conviction inappropriate. Second, Zhang argues that the government's evidence and the verdict are improperly based on a theory of concealment rather than misrepresentation. Finally, Zhang argues that certain pieces of evidence were given undue and conflicting weight. None of these arguments is convincing; each will be addressed in turn.
The superseding indictment charged that each of the proposals "falsely represented the funds sought would be used to fund new research on certain matters, when, in fact, the funds were to be used for other purposes, and did not disclose that the work represented to be performed with grant funds had already been done." ECF No. 63, at 9. Because the proposals involved "literally hundreds of representations," Zhang requested a bill of particulars that would "[i]dentify all materially false, fictitious, and fraudulent statements and representations, including how these statements are materially false and fraudulent." ECF No. 111, at 10.
A bill of particulars is intended to "fairly apprise the defendant of the charges against him so that he may adequately prepare a defense and avoid surprise at trial."
Here, the government's response to the bill of particulars specifically identified the following certification in each of the three proposals as the false representation:
ECF No. 126, at 2-3. The government noted that this statement was false because "the defendant and CFB had no intention of complying with NSF award terms and conditions."
Zhang argues that, in its response to the bill of particulars, the government dropped the indictment's allegation that Zhang "falsely represented the funds sought would be used to fund new research when, in fact, funds were to be used for other purposes." ECF No. 186, at 3-4. This is not the case. Under
The government proved that the certification for each proposal was false because Zhang and his confederates at CFB never intended to abide by the grant's terms and conditions. These terms and conditions—expressly referenced in the superseding indictment—required that grant proposals be for new research and that awarded funds be used for the project indicated. It cannot be credibly argued that the response to the bill of particulars fundamentally altered the crimes charged in the superseding indictment. Rather, the response focused Zhang on the specific false certification at issue in Counts Three, Four, and Five and stated that "CFB had no intention of complying with NSF award terms and conditions." ECF No. 126, at 2-3. While the response was not fulsome as to why Zhang and CFB did not intend to comply with NSF award terms and conditions, the superseding indictment was very clear: "the submissions falsely represented the funds sought would be used to fund new research on certain matters, when, in fact, the funds were to be used for other purposes, and did not disclose that the work requested to be performed with grant funds had already been done." ECF No. 64, at 9, 11.
Nor can Zhang claim unfair surprise at trial. A bill of particulars is intended to "give the defendant the minimum amount of information necessary to permit the defendant to conduct his
Zhang contends that the verdict is unsupported because the government failed to introduce the relevant terms and conditions into evidence, the government did not present evidence that the certifications were false, and the court did not actually find the specific representation referenced in the bill of particulars false. These contentions are without merit.
On June 16, 2015, Principal Investigator ("PI") Chun You electronically signed a certification in the Inositol 1 proposal "agreeing to accept the obligation to comply with NSF award terms and conditions if an award is made as a result of this application." Ex. 2B, at 2; ECF No. 184, at 47-48.
The PAPPG (1) specifies that "[t]he same work cannot be funded twice;" and (2) requires grantees to "perform the project as proposed." Ex. 1A.3, at 15, 32. The program solicitation required that the proposal's budget "reflect the needs of the
Zhang stated on multiple occasions that this work had been funded before: he told unidentified Chinese individuals that "[w]hat we plan to do in this [Inositol 1] proposal has been done already;" he emailed his colleagues at CFB that "nearly all experiments in SBIR 1 (inositol) have been finished;" and he specified that "the inositol project was funded by Chinese funding agency, starting in the late of 2014." Ex. 2F, at 1; Ex. 1F, at 1; Ex. 1G, at 1. Zhang's emails indicate he had no intention of performing the project as proposed. He advertised his plans to his colleagues, writing "if [inositol] is funded, most of SBIR 1 will be used for CFB to support other projects." Ex. 1F, at 1. Zhang prepared the budget for the Inositol 1 proposal, with no intention of complying with the terms requiring that project funds be used as indicated. See Ex. 2C.
In April 2017, Zhang sent a letter to Virginia Tech stating:
Ex. 91.2r, at 2. This email demonstrates that Zhang knew his conduct in violating these specific policies was wrong. Zhang's admissions support the Findings of Fact and Conclusions of Law by establishing beyond a reasonable doubt that he knowingly and willfully aided and abetted the submission of two false proposals. ECF No. 184, at 50, 61.
Zhang argues that the relevant terms and conditions were not introduced into evidence. The court disagrees. The NSF award terms and conditions are not housed in a single place— the program solicitation itself makes it clear that the award terms and conditions are found throughout a number of documents.
Ex. 2A, at 14; Ex. 3A, at 12. Zhang attempts to narrow this list to the two documents referenced above in (4): the NSF Research Terms & Conditions and the Grant General Conditions. ECF No. 186, at 15, n.8. By the text of the program solicitations themselves, this is not the case. While Zhang is correct that neither the General Grant Conditions nor the Research Terms and Conditions were introduced into evidence, neither document is necessary to support a conviction in this case. As noted above, since compliance with the proposal is an enumerated condition in the solicitation, and proposals must be submitted in accordance with the PAPPG, the PAPPG forms part of the NSF's award terms and conditions. By introducing the PAPPG, the program solicitations, and other documents, the government introduced the relevant terms and conditions.
Zhang further contends that the government did not introduce evidence supporting the conclusion that the certifications were false. Again, this argument is unconvincing. As noted above, the government demonstrated that Zhang and CFB sought funding for research that he admitted had already been completed and did not intend to use as the project proposed. Both actions violate the terms set forth in the PAPPG. The evidence is sufficient to prove that the certification was false.
Finally, Zhang argues that the court did not actually find the certifications false. Not only did the certifications "form the basis for the false representation . . . charges," their falsity is precisely why the court found the Inositol 1 and 2 proposals to be false. ECF No. 184, at 15, 52, 61.
Count Four is similar to Count Three in many ways. Just as with the Inositol program solicitations, the Sugar Phosphate program solicitation required compliance with the PAPPG. The PAPPG stipulated that "[t]he same work cannot be funded twice;" and required grantees to "perform the project as proposed." Ex. 1A.3, at 15, 32. Zhiguang Zhu served as AOR for this proposal and electronically signed a certification "agreeing to accept the obligation to comply with NSF award terms and conditions if an award is made as a result of this application." Ex. 1B, at 2.
In its award letter, the NSF notified CFB and Zhang that the Sugar Phosphate grant was subject to the original solicitation terms. Ex. 1D.1, at 1. As PAPPG compliance was an explicit term of the solicitation, the award letter made it crystal clear that the PAPPG is among the terms and conditions contemplated by the certification. Ex. 1A.1, at 6; Ex. 1D.1.
Just as with Inositol 1 and 2, the award terms and conditions contemplated by the Sugar Phosphate certification are not found in a single document; instead, the NSF award terms and conditions are found across an array of documents, including the PAPPG and the program solicitation. As noted above, the "Award Conditions" section of the program solicitation contemplates terms and conditions drawn from a non-exhaustive list, including the award notice, the budget, the proposal, the applicable award conditions, and other announcements or issuances incorporated by reference. Ex. 1A.1, at 14. Zhang's attempt to narrow these terms and conditions to two documents not introduced into evidence therefore falls short.
Zhang was intimately involved with preparing the Sugar Phosphate proposal—he was initially listed as co-PI and helped prepare the proposal's budget. Ex. 1B; Ex. 1A.1. As with the Inositol proposals, Zhang's emails demonstrate that he and CFB had no intention of complying with the terms requiring new research and that the project be performed as proposed. Zhang notified his colleagues that the proposal was for research that had already been completed, writing: "[a]bout sugar phosphate project, the experiments have been conducted by one of my collaborators and my satellite lab in China." Ex. 1F, at 1.
Zhang further described how any awarded funds would be used. In May 2015, he wrote to Daniel Wichelecki, a CFB employee and the project's PI:
Ex. 1E, at 1. Zhang reiterated this plan in June 2015, writing "If this project is funded by STTR, most of money will be used to fund the other projects in CFB, too." Ex. 1F, at 1. Once the funds were awarded under the Sugar Phosphate proposal, Zhang confirmed with his colleagues that the money would actually be used for sweeteners, writing "[n]ow we have this money to support tagatose project." Ex. 1N.
As referenced in the verdict, Zhang's emails further demonstrate that his conduct was knowing and willful. He told colleagues in January 2016, regarding a different NSF proposal, that "I will put a lot of finished work into the proposal as planned work." Ex. 10H.1, at 1; ECF No. 184, at 57. His note `to Virginia Tech in April 2017, set forth above, demonstrates that he knew this conduct was wrong.
The evidence supports the verdict that the government proved beyond a reasonable doubt that "Zhang knowingly and willfully aided and abetted his colleague [Zhiguang Zhu] in submitting a grant proposal to NSF that was materially false." ECF No. 184, at 57.
Zhang alleges that the verdict is improperly based on a theory of concealment—properly charged under 28 U.S.C. § 1001(a)(1)—rather than on a false representation theory, as charged under 28 U.S.C. § 1001(a)(2). ECF No. 186, at 10. Zhang argues that "a court must overturn a conviction for false representations under § 1002(a)(2) if it is based on evidence of concealment and not on an actual false representation." ECF No. 186, at 12 (citing
As discussed in Part A above, the verdict in this case rested on the false representation submitted at the end of each proposal. ECF No. 184, at 15, 52, 57, 61. This certification specified that the signatory "agree[ed] to accept the obligation to comply with NSF award terms and conditions if an award is made as a result of this application." Ex. 1B, at 2; Ex. 2B, at 2; Ex. 3B, at 2. Zhang intended to violate these terms and conditions by proposing research that had already been completed and improperly applying portions of awarded funds to other projects. The certification, therefore, was an affirmative statement that falsely represented Zhang's intentions.
The thrust of Zhang's argument comes from the response to the bill of particulars, in which the government categorized these violations of the terms and conditions as omissions. ECF No. 126, at 2-3. While concealment and misrepresentation fall under different statutes, certain actions do not fit neatly into one category or the other.
The evidence relied upon in the verdict proved what was charged in both the indictment and the response to the bill of particulars: Zhang aided and abetted the submission of a false representation in several grant proposals. ECF No. 184 at 48-52, 55-61.
Zhang further argues that the court gave undue weight to Zhang's emails, which the defense characterizes as "extrajudicial" and "uncorroborated." ECF No. 186, at 19.
In fact, if Zhang
Zhang further argues that the verdict is inconsistent, as it credited expert biochemist Robert Edwards's testimony that the two proposals found on Zhang's hard drive were different than two of the proposals submitted to the NSF, yet convicted Zhang of submitting duplicative research. ECF No. 186, at 18. However, the court, sitting as the trier of fact, found both Edwards's testimony and Zhang's emailed statements credible. ECF No. 184, at 51. All that Edwards's testimony showed was that the two specific proposals on Zhang's computer were not identical to those submitted to the NSF. This extremely limited sample did not, and could not, prove what Zhang claims, that "the work Dr. Zhang completed in China was different from the work CFB proposed to NSF." ECF No. 186, at 18. Edwards's testimony does not vitiate Zhang's repeated statements that the research he included in NSF proposals had already been completed in China. ECF No. 184, at 51. To reiterate the Findings of Fact and Conclusions of Law:
ECF No. 184, at 51-52, 58.
For the reasons set forth above, the court will DENY defendant's motion for judgment of acquittal, ECF No. 185. The defendant's convictions on Counts One, Three, Four, and Five are
An appropriate Order will be entered.
