Monetary Damages Under § 2513, for Unjust Conviction and Imprisonment, Requires Showing of ‘Truly Innocent,’ Even After Acquittal

By: Houston Criminal Attorney John Floyd and Paralegal Billy Sinclair

Robert E. Graham, a West Virginia native, was indicted by a Federal grand jury for 39 criminal offenses. It is not uncommon for the United States Government, armed with an arsenal of prosecutorial resources through the U.S. Justice Department, to overcharge criminal defendants. It is a tactic designed to force criminal defendants into unwanted guilty pleas or to overwhelm juries with so much documentary evidence that jurors will almost automatically vote “guilty” on the flimsy premise that the defendant must have done something wrong to face so many charges involving so much “evidence,” even if there is no factual basis for the evidence.

But Graham was not intimidated by the Government’s arsenal of weapons. He refused to plead guilty, waived his right to a jury trial, and forced the Government into a position of proving his guilt beyond a reasonable doubt at a “bench trial” before a judge. The decision to indict and prosecute Graham was questionable at best—only prosecutors possessed with the power of arrogance would have sought and secured the indictment against him, especially on so many different charges involving essentially one criminal episode.

Graham was the executive director of two related non-profit groups: the Council on Aging, Inc. and All Care Home and Community Services, Inc. The two groups provided services to the elderly and infirm, and received more than $10,000 annually in federal funding. He had served as executive director of these two corporations for more than 20 years. His salary was $125,000 a year when hired in 1975. In 2001 his salary increased by the companies’ Board of Directors to $185,000. He did not have a written employment contract until his salary was raised in 2001.

In 2002, the Council on Aging agreed to assume administrative control of Graham’s contract, and, in fact, entered into an amended contract with him that provided a “sick leave” provision which allowed Graham to earn 16 hours of sick leave each month beginning with the date of his original employment and ending with termination of employment. The accumulated sick leave benefits could be converted into compensation if used for either illness or termination of the contract.

Beginning in 2003, Graham began to convert his accumulated sick leave into cash payments. He did so without meeting either condition for compensation entitlement as required by his employment contract. Graham simply presented a brief request to the Council on Aging Board of Directors for the sick leave compensation which said: “I am requesting permission to buy out some of my sick leave. It shows in the books as an accrual. I can already bu[y] out my vacation.” The board approved Graham’s request on three different occasions in 2003, allowing him to convert sick leave into more than $160,000 in compensation.

Then in January and February of 2004, without securing board approval, Graham converted sick leave hours into more than $30,000 in compensation. The State of West Virginia began investigating the Council on Aging that same year; and in response to that investigation, the Board of Directors called an emergency meeting in March 2004 and revised Graham’s employment contract. The board ordered Graham to repay the sick leave compensation he had received in both 2003 and 2004. Graham heeded the advice from his attorney and repaid all the money he had received as sick leave compensation in both 2003 and 2004.

Not satisfied with this gesture by Graham and with the progress of the state investigation (or lack thereof), federal prosecutors decided to go after the executive director themselves. They easily convinced a grand jury in July 2006 to indict him for mail fraud, wire fraud, tax violations, and embezzlement, and a number of lesser charges—all of which were related to the single sick leave compensation issue. During the five-day bench trial that same month, the Government presented substantial evidence that the Board of Directors for the Council on Aging were all elderly (their average age exceeded 80 years), were hard of hearing, lacked financial sophistication, and operated under the sway of Graham in approving his sick leave compensation. The federal district judge was not impressed. He issued written findings on August 30, 2006 which found Graham not guilty on all counts except one count of embezzlement. While the court found that the Board of Directors probably did not understand the ramifications of some of its actions, the fact that they approved Graham’s sick leave compensation created reasonable doubt as to his conviction. Graham appealed his embezzlement conviction to the Forth Circuit Court of Appeals, and in March 2008 that court reversed the conviction saying the government had not presented sufficient evidence to sustain the embezzlement conviction.

In effect, Robert Graham had been exonerated of criminal wrongdoing by two federal courts. Or had he?

In July 2008 Graham filed a civil action in the United States Court of Federal Claims pursuant to 28 U.S.C. § 2513 seeking monetary damages for unjust conviction and imprisonment. A prerequisite of § 2513 requires an individual seeking damages for unjust conviction and imprisonment to secure a “certificate of innocence” from the court in which the unjust conviction was had. Graham applied for a certificate of innocence in the U.S. District Court which had effectively exonerated him of guilt in all the charges brought against him by the Government. That court, through trial judge David A. Faber, denied Graham’s innocence certificate request in December 2008.

Judge Faber premised his decision on the reasoning that Congress did not enact § 2513 to compensate everyone acquitted of a crime after being convicted and imprisoned. The judge said the statute only compensates “the truly innocent who have been prosecuted through no fault of their own.” The judge said he had been “unable to reach … the conclusions mandated by 28 U.S.C. § 2513” necessary before a certificate of innocence can be issued; specifically, the court was not “persuaded that Graham is in fact innocent,” and therefore could not “conclude that he did not by misconduct or neglect bring about his own prosecution.” Judge Faber listed the following six examples of Graham’s misconduct that precluded a “certificate of innocence”:

  • He manipulated a SEP IRA to benefit his family.
  • He assumed a “lavish lifestyle including regular visits to a ‘gentlemen’s club.’”

The judge said this pattern of misconduct and Graham’s negligent failure to secure the Board’s approval before securing sick leave compensation in 2004 was enough evidence to conclude Graham had “brought about his own prosecution.” He added that simply because the Government had not proven Graham’s guilt beyond a reasonable doubt, he was not convinced that Graham was in fact innocent or that he had not engaged in misconduct that brought about his own prosecution.
Graham appealed to the Fourth Circuit again, and last month (June 16, 2010) the appeals court upheld Judge Faber’s finding that Graham was not entitled to a certificate of innocence. The appeals court based its decision on what it called three “inescapable conclusions”:

  • “First, Congress did not provide in the unjust and imprisonment act an avenue for monetary compensation to all whose criminal convictions are reversed after incarceration. Rather, ‘the phrasing of the Act and its legislative history proclaim the care with which its framers guarded against opening wide the door through which the treasury may be assailed by persons erroneously convicted’ … As the Eighth Circuit has recently recognized, § 2513 ‘compensates only the truly innocent.’”
  • Second, and just as clear as its intent to permit only the ‘truly innocent’ to receive a § 2513 certificate, Congress expressly directed that one seeking the certificate bear the burden of not only ‘alleg[ing]’ but also ‘prov[ing]’ entitlement to the certificate. Moreover, because it constitutes a waiver of sovereign immunity, ‘[t]he unjust conviction statute has always been strictly construed’ … Thus, § 2513 imposes a rigorous burden on those who seek a certificate of innocence.”
  • Third, as every court to consider the question has held, ‘[t]he decision to deny a certificate of innocence is committed to the sound discretion of the district court. Accordingly, we review a district court’s denial of a certificate of innocence for abuse of discretion … and ‘must affirm [that] decision unless the court abused its discretion, or unless the findings underlying its decision were clearly erroneous’ … When a district judge has exercised his substantial discretion to deny a certificate of innocence, ‘we cannot require him to stultify himself by certifying an opinion contrary to his real conviction—no matter what our own view might be—except, perhaps, in a case in which the refusal to certify innocence was completely capricious and without rational basis.’”

In dissent, Judge Gregory wrote: “It is indisputable that Graham’s conduct ‘constituted no offense against the United States’…Being over-paid, living a lavish lifestyle, and frequenting strip clubs, for better or worse, are not crimes in this country…It is dangerous to suggest that any time a person’s conduct offends the sensibilities of three judges or society at large, the government is privileged to incarcerate him.”

We also feel Judge Faber set the bar too high in the Graham case. First, we think the age issue surrounding the COA Board of Directors is distinctly troubling. The Government brought its case against Graham primarily because federal prosecutors believed he had the board under his control, and because of their age, they were too incompetent to even consider (much less grant) Graham’s request for sick leave compensation. If age is a prerequisite in determining informed decision-making, then virtually every decision handed down by the aged United States Supreme Court would be called into question.

The reality is that the Government elected to prosecute Robert Graham based more on the subjective conclusions drawn by overly aggressive prosecutors than by evidence indicating wrongdoing. That’s why prosecutors elected to indict him on 39 charges, all flowing from the single sick leave compensation issue. Prosecutors were not out to pursue justice, but to file enough charges and put together volumes of documents designed to “overwhelm” a jury into a finding of guilt. There is absolutely no rational basis for 39 criminal charges to be filed in order to hold an individual legally accountable for suspected criminal conduct involving a single core set of facts.

Second, Graham paid back all the sick leave compensation once the Board of Directors ordered him to do so in 2004. He consulted with his attorney who advised him that he had obtained the sick leave compensation outside the boundaries of his employment contract, and, therefore, should pay it all back as directed by the Board to clear up any legal misunderstanding.

That should have ended the matter. The two corporations got back every penny Federal prosecutors believed he had secured improperly from Board members “too old” to know what they were doing. Ironically, the Government did not think the members of the Board were age incompetent when they ordered Graham to repay the sick leave compensation in 2004. The simple reality is that overzealous prosecutorial zeal got in the way of rational decision-making. The trial and all its subsequent appeals cost taxpayers hundreds of thousands of dollars for no other reason than to appease Federal prosecutorial arrogance.

Robert Graham was sentenced to two years imprisonment and fined $10,000 for the single embezzlement conviction. He spent 13 months in prison before Judge Faber in March 2008 adjudicated him “not guilty” after the Fourth Circuit’s remand order. In effect, Graham lost 13 months of his life, approximately $2.4 million in lost wages, suffered irreparable damage to his professional reputation, and had incalculable grief and suffering inflicted on both him and his family.

And now the Federal Government is saying because Robert Graham lived a lavish lifestyle, was paid too much money, and bought a $6,000 television he somehow “brought about his own prosecution” by those overzealous Federal prosecutors and therefore is not entitled to damages for his unjust conviction and incarceration.

Cases like this not only leave a bad taste in the mouths of criminal defense attorneys but undermine both the integrity and credibility of our criminal justice system—especially those components managed by the United States Government.

NOTE: Background facts of the Robert Graham case were gleaned from the Fourth Circuit’s decision, United States v. Graham, 2010 U.S. App. LEXIS 12316 (4th Cir. June 16, 2010).

By: Houston Criminal Lawyer John Floyd and Paralegal Billy Sinclair