The opinion of the court was delivered by: Christina A. Snyder United States District Judge
FINDINGS OF FACT AND CONCLUSIONS OF LAW
On May 13, 2008, a federal grand jury in the Central District of California returned a three-count indictment ("the indictment") against defendant Kathy Stamps. The indictment charges defendant in all three counts with mail fraud, a violation of 18 U.S.C. § 1341. The indictment also notifies defendant that the government will be pursuing criminal forfeiture of certain assets pursuant to 18 U.S.C. § 981(a)(1)(C), 21 U.S.C. § 853 and 28 U.S.C. § 2461(c). Following defendant's knowing and voluntary waiver of her right to trial by a jury, a bench trial was held on June 17, 2010. After carefully considering the arguments of the parties, the Court finds and concludes as follows:
1. Beginning on or about January 24, 2002, and continuing through in or about October 2004, in Los Angeles County, within the Central District of California, and elsewhere, defendant knowingly and with intent to defraud devised, participated in, and executed a scheme to defraud the United States as to material matters, and to obtain money and property from the United States by means of material false and fraudulent pretenses, representations, and promises, and the concealment of material facts.
2. Defendant directed her scheme to defraud to the United State Forest Service, where she was employed as an accountant for the Angeles National Forest ("the Angeles"). One of defendant's responsibilities at the Angeles was to administer the funds contributed to the Forest Service's Cooperative Works Program ("CWFS") pursuant to Title 16, United States Code, Section 498 ("the Act"). The Act authorized private vendors, also known as "cooperators," to contribute money to the United States Forest Service to pay for work projects on Forest Service land pursuant to a "cooperation agreement." Defendant was also responsible for administering the royalty payments provided by mining companies for minerals being extracted from the Angeles.
3. All of the mining royalties and other money contributed for work projects was deposited into what the Forest Service referred to as a "lock box," a bank account maintained by the United States Treasury at a local bank. Once the money was deposited into the lock box, it became public money and neither the mining companies nor the cooperators could access or withdraw that money.
4. The Forest Service kept track of the money being deposited into the lock box using the Foundation Financial Information System (or "FFIS"), its on-line accounting system. The Forest Service also labeled the money being deposited into lock box based on the purpose for which the it had been deposited. For example, mining royalties were typically labeled "5008" money, which meant the money had been deposited in exchange for using National Forest lands. Budget Clearing (or "BCBC") money is money that is presumed to belong to the government, but could not be assigned a more specific label. Suspense money is money that was expected to be refunded back to the depositor if the depositor complied with the terms of the agreement he had entered into with the Forest Service. Regardless of label, all of the money deposited into the lock box account is public money under the custody and control of the federal government, which means that a certifying officer must approve a refund of that money before it would be given back to the contributor.
5. If the mining companies or the cooperators believe that they are entitled to a refund, they are required to submit a request for a refund to the Budget and Finance Office where defendant worked. As the accountant for the Angeles, defendant had sole responsibility for processing the refund requests filed by the cooperators and mining companies. Defendant would submit those request to Charity Burton, a certifying official, for approval. The form defendant used to submit the request to Charity Burton was known as a Public Voucher. Charity Burton would not approve a Public Voucher, unless defendant attached supporting documentation. Typically, the Public Voucher request defendant submitted to Charity Burton would have as attachments (1) the letter requesting a refund, (2) the cooperation or mining agreement explaining how much money had been deposited, and (3) the FFIS printout showing how much of that money was still in the account. Charity Burton trusted defendant because of a friendship they had developed both inside and outside of work. As a result, Charity Burton never questioned the authenticity of the documents defendant submitted in connection with Public Vouchers and did not scrutinize those documents.
6. On or about May 16, 2002, defendant began executing her scheme to defraud the United States by renting a commercial mailbox with the address 122A E. Foothill Boulevard, Suite #244, Arcadia, California. Ex. 48. Defendant then incorporated "DKLD As One, Incorporated" ("DKLD"). Ex. 51. Defendant requested and received a tax identification number for DKLD, which was 43-XXX041. Ex. 53. On July 15, 2002, defendant used DKLD's name, DKLD's tax identification number, and the commercial mailbox address to enter DKLD into the FFIS accounting system as a Forest Service vendor. Defendant created the DKLD account in FFIS knowing that the Forest Service had never entered into any cooperative or mining agreements with DKLD.
7. The day before defendant entered DKLD into the FFIS system, she began submitting fraudulent Public Voucher requests to Charity Burton for approval. Defendant submitted a total of six fraudulent Public Vouchers to Charity Burton for approval knowing they were fraudulent. Each of those requests was fraudulent, in that it contained material misrepresentations, fraudulent pretenses, and concealed material facts. For example, defendant created fictitious letters to make it appear that either the cooperator, the mining company, or the project manager was requesting that money be refunded. Steve Bear, whose responsibility it was to prepare or receive the letters requesting a refund, testified that he had no record or memory of the fictitious letters or the refund requests.
8. Defendant also created fictitious cooperation agreements purportedly entered into between the Forest Service and DKLD, which she used to support three out of the six fraudulent Public Voucher requests she submitted to Charity Burton. Exs. 1 (Bates No. 2848), Ex. 5 (Bates No. 2838) and Ex. 13 (Bates No. 2825). All of the individuals who purportedly signed these fictitious cooperation agreements on behalf of DKLD, including Charles Snead, Jr., Roger Haga, and Michael Thau, testified that they have never heard of DKLD and never signed the fictitious cooperation agreement. Charity Burton and Maria Holguin were certain that defendant was the one who submitted all six of the fraudulent Public Vouchers, because defendant had sole responsibility for submitting those vouchers and her handwriting was each one of the requests.
9. The last three fraudulent Public Vouchers defendant submitted to Charity Burton for approval, which were charged in counts one through three of the indictment, involved over $1 million that had been deposited into the lock box by CAL MAT, a mining company with a legitimate mineral extraction agreement with the Forest Service.
Defendant was able to submit the fraudulent Public Vouchers on behalf of CAL MAT, in part, because she used her access to the FFIS system to fraudulently change CAL MAT's mailing address to 122A E. Foothill ...