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United States v. Jackson

United States Court of Appeals, Seventh Circuit

June 13, 2017

United States of America, Plaintiff-Appellee,
Herman Jackson and Jannette Faria, Defendants-Appellants.

          Argued April 19, 2017

         Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 12 CR 00800 - Sharon Johnson Coleman, Judge.

          Before BAUER, POSNER, and HAMILTON, Circuit Judges.

          BAUER, Circuit Judge.

         A jury convicted Herman Jackson of two counts of mail fraud in violation of 18 U.S.C. § 1341 and nine counts of wire fraud in violation of 18 U.S.C. § 1343, as well as two counts of making a false statement in violation of 18 U.S.C. § 1001 for his role in the scheme. Jackson's former wife and codefendant, Janette Faria, was convicted of one count of mail fraud, six counts of wire fraud, and one count of making a false statement. Defendants-appellants timely appealed, raising several challenges, including to the sufficiency of the evidence. We affirm.

         I. BACKGROUND

         This case stems from a scheme to defraud the State of Illinois by falsely obtaining child care subsidies intended for low-income families. Between 2003 and 2011, Jackson operated three daycares in succession, all located in Cicero, Illinois: St. Peters Christian Academy; Jubilee Daycare Center; and ABC Cicero. Jackson housed the daycares in a building next to the Ark of Safety Apostolic Faith Temple where he served as pastor. Subsidies from the State of Illinois' Child Care Assistance Program largely funded the daycares. Before turning to the facts of this case, it is necessary to provide a brief overview of CCAP

         CCAP is designed to provide low-income, working families with affordable child care in order to allow parents to work, go to school, or pursue job training. CCAP requires eligible families to pay a portion of the cost of child care on a sliding scale according to family size, income, and number of children enrolled in daycare. A family's share of the cost is referred to as a co-payment, with the State paying the remaining costs through CCAP. The subsidies are paid directly to the childcare provider.

         Illinois Action for Children (AFC), a childcare resource and referral agency, administered CCAP in Cook County, Illinois. AFC sent childcare providers the applications for CCAP, and then processed the forms after they were completed. As part of the application, parents were required to report certain information, including the place of employment or the name of educational institution that they attended, the employment or school schedule, income, the number of children enrolled in daycare, the name of childcare provider, and the number of hours that the children were in daycare. Parents also had to provide documentation verifying their income, such as pay stubs or letters of employment.

         Eligibility for the program generally lasted six months. Toward the end of the six-month term, AFC sent the childcare provider a redetermination form, which was an abbreviated application requiring parents to resubmit most of the information contained in the initial application. Failure to submit a redetermination form resulted in a loss of the subsidy. Childcare providers submitted monthly reports to AFC, referred to as childcare certificate reports, which documented the days and hours that children covered under CCAP attended childcare. In turn, AFC issued payment by check or direct deposit to childcare providers.

         The crux of the government's case is that Jackson, along with Faria, submitted or directed the submission of dozens of CCAP applications, employment verification letters, redetermination forms, and monthly childcare certificate reports that contained materially false information. Specifically, the government contends that Jackson, along with Faria in connection with ABC Cicero, defrauded the State by: (1) billing for part-time children as though they attended full time; (2) billing for children who never attended the daycares; (3) billing for children who likely failed to qualify for subsidies because either their parents made too much money or were unemployed; and (4) billing for months of childcare services that were not provided because the daycares were not operational. In total, the State paid over $2.28 million in subsidies to Jackson's daycares.

         On October 11, 2012, a federal grand jury returned an indictment that charged Jackson with two counts of mail fraud, ten counts of wire fraud, and two counts of making a false statement. Faria was charged with one count of mail fraud, seven counts of wire fraud, and one count of making a false statement. The district court dismissed one count of wire fraud as to both defendants-appellants prior to trial. Jackson and Faria proceeded to trial on September 9, 2015. Two days later, Jackson fired his attorney and proceeded pro se, with the attorney serving on standby for the remainder of the trial. The following evidence was adduced at trial.

         A. St. Peters Christian Academy

         In 2002, Jackson opened St. Peters Christian Academy, which he owned and operated until it closed in early 2004. Jackson's ex-wife, LaKeisa Jackson, served as teacher, cook, and director of the daycare. Ms. Jackson testified that she and Jackson falsified information in paperwork submitted to AFC, including parental employment information, income verification letters, and the number of hours of childcare being provided. Jackson also falsified or directed Ms. Jackson to falsify information in applications and redetermination forms submitted for their own children. Ms. Jackson also testified that Jackson used the alias "Henry Walker" and directed her to use the alias "Maria Young" on AFC paperwork. The aliases were used to submit numerous false employment verification letters to AFC.

         Ms. Jackson stated that Jackson generally completed the childcare certificate reports, but occasionally directed her to do so. The State paid the maximum monthly reimbursement to the provider as long as the children attending the daycare received care for 80% of the days for which they were eligible. Jackson instructed Ms. Jackson to falsify the reports to ensure that the daycare received the maximum reimbursement for enrolled children. Ms. Jackson testified that Jackson became angered when she completed the reports with accurate attendance information because St. Peters lost money. The next time she completed the reports, Jackson stood over her to ensure the attendance rate was inflated sufficiently to receive the maximum subsidy.

         Hugo Gonzalez and Roxana Rios, both parents with children attending St. Peters, testified about Jackson's fraudulent conduct. Gonzalez stated that Jackson submitted an application on his behalf that significantly underreported his income. The application also stated that Gonzalez was a janitor at St. Peters; he actually worked at PepsiCo. Jackson signed the application using his alias, "Henry Walker." In addition, Jackson submitted childcare certificate reports for Gonzalez's child for more than a year after his child left the daycare in order to continue collecting subsidies. During that time, two recertification forms containing falsified information about Gonzalez's occupation and income were submitted to AFC with Gonzalez's forged signature.

         Similarly, Rios testified that the application submitted to AFC falsified her occupation and stated incorrectly that she worked full-time instead of part-time. Rios worked as a part-time teacher's assistant at St. Peter's, but her application stated that she was a janitor. Her application was signed using Jackson's alias. Jackson submitted monthly childcare certificate reports to AFC representing that Rios' daughter attended St. Peters from December 2002 through January 2004; Rios' daughter did not attend St. Peters during this period. A forged recertification form with falsified information was submitted to AFC on her behalf.

         Lasana McNealey, a former AFC supervisor, testified that Jackson provided him with cash payments in exchange for expediting processing of St. Peters' applications and recertification forms. McNealey also stated that after noticing that most of the applicants worked at St. Peters, he called the employer phone number listed on the applications in order to verify employment. He asked to speak with Henry Walker, who was listed as the contact on the employment verification letters. McNealey testified that after asking to speak with Henry Walker, Jackson answered the phone and verified the parents' employment. McNealey was fired in January 2004, in part because of "issues with Mr. Jackson's daycare center."

         Soon after McNealey's departure from AFC, subsidy payments stopped being disbursed to St. Peters, and the daycare closed. In total, more than $895, 000 in AFC subsidy payments were disbursed to St. Peters. Ms. Jackson testified that Jackson spent the subsidy payments on houses and luxury cars, as well as his church. The government presented financial records corroborating these purchases.

         B. Jubilee Daycare Center

         Jackson launched a new daycare in late 2005, operating out of the same space as St. Peters. Jackson recruited Denise Pugh to serve nominally as the owner of Jubilee; her name was used on the Illinois Department of Children and Family Services' application to open the daycare and on the incorporation documents filed with the State. Pugh was unemployed, lacked any daycare experience, and lived in a classroom on the second floor of the daycare. Pugh testified that if she permitted Jackson to open up the daycare in her name, she would have a "job for life." Ms. Jackson testified that the daycare was opening in Pugh's name so that "the licensing information and everything would be able to go through."

         Despite opening Jubilee in Pugh's name, Jackson remained responsible for the daycare. He made the hiring decisions, submitted monthly childcare certificate reports, and controlled the daycare's bank account. Pugh performed such tasks as opening the daycare, greeting parents and children, and assisting with the completion of applications. Initially, Pugh received no compensation for her employment; ...

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