Embezzlement-Theft or Bribery Concerning Programs Receiving Federal Funds - Title 18 U.S. C. § 666
Federal funds subsidize many state and local government agencies. So are many other organizations, such as schools and other agencies. The federal government seeks to protect these funds and ensure they're used properly.
Thus, if anyone steals or diverts funds from an organization receiving federal funding, it's a form of embezzlement and a crime under federal law. This is referred to as theft or bribery concerning programs receiving federal funds and is embodied in Title 18 U.S. Code Chapter 31 Section 666.
You could face significant time in federal prison if convicted of this crime. Federal program fraud is the theft of funds from a federal program. The government aggressively prosecutes these fraud-related cases.
18 U.S.C. 666 is the primary federal statute used by prosecutors to indict somebody of theft or embezzlement over $5,000 of a program that receives federal funding and is under the control of a government entity.
18 U.S.C. 666 says, “whoever embezzles, steals, obtains by fraud, or knowingly converts to the use of any person misapplies, property that is valued at $5,000 or more, and is owned by, or under control of the government, or corruptly solicits for the benefit of anyone, anything of value, intending to be influenced or rewarded any business, transaction, shall be fined under this title, imprisoned not more than ten years, or both.”
Put simply; federal program fraud is stealing from a federally funded program. It's an attempt to get money from the government or to fraudulently make an agency take a specific action using deception or fraud it would not usually take. Our federal criminal defense lawyers will examine this law in more detail below.
Overview of 18 U.S.C. 666
Under Title 18 U.S.C. 666, a federal crime is committed when a person steals, embezzles, or unlawfully obtains money from a program that receives federal funds.
The programs covered by this law include those administered by the government or receiving federal financial assistance of $10,000 or more in a given year. Specifically, the law targets the following:
- An agent of an organization or government entity receiving federal funds who steals, embezzles, or misappropriates funds or property exceeding $5000 in value;
- An agent of the above who solicits accepts, or agrees to accept a bribe in connection with diverting funds or property exceeding $5000 in value; or
- Anyone who offers a bribe to an agent of a federally-funded organization or government entity regarding diverting funds or property exceeding $5000 in value.
The penalties for stealing from agencies receiving federal funds can be quite severe. If you're convicted of violating 18 U.S.C. 666, you face up to 10 years in prison and a fine of up to $250,000 per count of embezzlement.
While the agencies most often prosecute alleged fraud violations under 18 U.S. Code 666, they can also use other statutes, such as;
- 18 U.S.C. 287 - making false, fictitious claims,
- 18 U.S.C. 371 - conspiracy to defraud the United States,
- 18 U.S.C. 664 - embezzling from an employee benefit plan,
- 18 U.S.C. 1001 - false documents or false statements to a federal agency,
- 18 U.S.C. 1341 - mail fraud,
- 18 U.S.C. 1343 - wire fraud,
- 31 U.S.C. 3279 - federal civil false claims act.
A conviction could make the defendant ineligible to do future business with the government. If you are a medical professional, you can be barred from accepting clients with Medicare and Medicaid.
What Are Some Examples?
EXAMPLE 1: Tim is an authorized employee of a local agency receiving federal subsidies to provide affordable housing solutions for the community. Tim has access to the books and allocates $10,000 of funds to subsidize the rent of his pal, Joe, who offers him a cut of the money in exchange.
Tim and Joe may be charged under 18 U.S.C. 666—Tim for diverting the money and accepting a bribe, and Joe, for offering the bribe.
EXAMPLE 2: Daisy is an accountant for an agency that provides after-school programming for at-risk youth. The agency receives federal funds to support its work. Daisy embezzles $7,000 from the agency's accounts and uses the money to pay for her child's private school tuition.
Daisy can be charged with a federal crime under 18 U.S.C. 666 because she stole from an organization that receives federal funds.
Further, federal program fraud often occurs in bid rigging that involves avoiding or eliminating fair competition in a government contract bid to drive up the contract's price artificially.
Also, defense contractor fraud includes over-charging the government for products, services, or inferior materials as part of a manufacturing process.
Defenses for Federal Government Program Fraud
If you've been accused or charged with violating 18 U.S.C. 666, you must know that defenses may be available. Some possible defenses against these types of charges are discussed below.
Perhaps we can argue that you didn't act with criminal intent. To be convicted under 18 U.S.C. 666, the government must be able to prove that you worked with criminal intent.
This means that you must have known that what you did was illegal and intended to commit the crime. If the government can't prove that you had this type of intent, you may be able to avoid a conviction.
Perhaps the allocation of funds was not embezzlement or theft. For example, if you allocated federal funds to a friend in need, federal prosecutors might try to charge you with embezzlement. Still, if that friend was qualified to receive the funds and you received nothing in return, this may work as a valid defense.
Perhaps we can argue that no federal funds were taken. This is a "gray area" of the law because it isn't apparent whether the federal crime only applies to theft of federal funds or theft from organizations receiving federal funds.
Suppose you diverted funds that the federal government did not expressly receive. In that case, your attorney might be able to argue that you did not violate U.S.C. 666, although you might still be charged with embezzlement under applicable state laws.
Perhaps the agency did not receive $10,000 in federal funds within a year. The law specifies that the "one-year period" for the agency to receive federal funds extends between 12 months before the offense and 12 months after.
If, for example, you diverted funds from the agency, but they didn't receive $10,000 or more in federal funds until over a year later, you may not be guilty under U.S.C. 666, although you may still be charged with other crimes.
Eisner Gorin LLP is located in Los Angeles, California. We provide legal representation across the United States. You can contact our law firm for a case review by phone or use the contact form..