Ethics and Honest Services: Promoting your book is one thing – fraud is quite another (or was it fraud?) … just ask Michael Jimenez and Marie Mason

July 26, 2011

The former fiscal manager for the Hillsborough County Head Start program goes on trial in federal court along with his wife and another Head Start employee on fraud charges.

Michael Jimenez is charged with conspiring with fellow Head Start employee Marie Mason to have the pre-school program buy $9,000 worth of books authored by Jimenez’ wife, Johana Melendez Santiago.

U.S Attorney Robert O’Neill is handling the government’s case personally. O’Neill is also the lead prosecutor in the government’s public corruption case against former Hillsborough County Commissioner Kevin White.

Jimenez, Melendez and Mason each face three felony counts related to the book sale including obtaining “by fraud” more than $5,000 from a government agency, and obtaining money by “false and fraudulent pretenses” that deprived citizens and Head Start clients of their right to “honest services.”Defense attorneys say their clients did not intend to defraud the government. The purchase of 750 copies of “Travel Boy Helps Sebastian,” a book that teaches children about germs, was not done covertly, and the county got good value for the money spent. The 47-page book retails on for about $25 and is available in English and Spanish.

“The county bought the books ‚Ķ. That’s not fraudulent,” said Jeffrey Brown, Melendez’ lawyer. “The county paid for the books and the county got the books.”

Details in the federal indictment closely mirror evidence unearthed by a Hillsborough County investigator last year. Emails showed Melendez contacted her husband on April 15, 2010, concerning a “book order.”

“Here’s a letter of presentation of my book in case they need justification,” Melendez wrote, adding, “I’ll have the quote sent immediately.” She followed up with an email to a Head Start procurement employee.

Six days later, Jimenez forwarded the presentation to the procurement employee.

Mason, the agency’s family and mental health director, initiated an internal purchase request form for the book on May 3 of that year.

Originally, the agency was going to purchase 2,000 copies of the book. But several employees told the county investigator they were pressured to reduce the order to 750 copies so it wouldn’t be reviewed by the county’s procurement office.

“It was further part of the conspiracy that the conspirators would and did keep the total price of the purchase of the books under $10,000 so that the process of purchasing the books would not have to go through the bid process,” the indictment stated.

O’Neill won a tactical victory Thursday when Bucklew denied a defense motion to exclude evidence that Jimenez and Mason had not disclosed a conflict of interest in approving the purchase of the book. Defense attorneys cited a U.S. Supreme Court ruling last year in Skilling v. United States that a fraud conviction cannot be based on conflicts of financial interest.

“Skilling says you can’t prove honest services fraud by anything other than bribery or a kickback,” said David Weisbrod, attorney for Jimenez.

The judge, however, agreed with O’Neill that the high court ruling did not say conflict of interest evidence could not be admitted, only that it could not be the basis of a conviction for honest services fraud.

However, the defense is expected to hammer at the points they say were raised in Skilling: No bribery or kickbacks took place, therefore there was no fraud.

O’Neill disagreed, saying in the hearing that the Supreme Court has defined “kickback” as any money, gratuity or gift provided directly to people for services or obtaining services.

Head Start, a school readiness program under the U.S. Department of Health and Human Services, is funded with federal and county dollars. When officials in the county’s Family & Aging Services Department learned of the book deal, they passed the information to County Administrator Mike Merrill, who ordered an internal investigation.

Based on the probe’s findings, Merrill tried to fire Jimenez in December. But federal rules require such a termination be approved by the executive committee of the Head Start Policy Council, a group consisting mostly of parents of children in the program.

When the group refused to fire Jimenez, Merrill took the next step under Head Start guidelines by referring the firing to a three-person committee made up of two county officials and the chairman of the policy council. They agreed in March that Jimenez should be fired.

Merrill also had recommended that Mason be fired, but the Head Start committee refused. After negotiations between Mason’s lawyer and the county, she was allowed to come back to work. Mason is now on administrative leave without pay pending the outcome of the trial.

An excellent article about this issue is found here.