Your Honors Dbk 08

7/31/2019 Your Honors Dbk 08

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Karron Oral Argument before the Second Circuit Court of Appeals

June 26, 2012

Your Honors, thank you for this opportunity to brief you on this very simple case.


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Karrons Written Statement for Argument before the 2nd Circuit Court of Appeals

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1. IntroductionThis case is about a NIST ATP Co-operative agreement for 2.1 million dollars;

specifically how the money was requested and how it was spent.


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2. Background:Here is how the agreement worked:

The money came in from the US Treasury account as advance requests(Point Left, Hello Money).

I then paid myself and others wages, bought computer equipment andtraveled presenting our research. (Point Right, Goodbye Money)

The foundational Patterson Criminal trial, for violation 18 United States Code Part

666(a)(1)(A) (Bribery, Embezzlement Act) (which I am appealing as a 2255

Habeas Corpus) only looked ONLY at spending (Look Right), and it did a

demonstrably very poor job. We demonstrate that here. Your honors, the

Patterson Criminal Trial did not look at the funding requests, the one of two

sources of the spending, at all.

District Court Judge Buchwald, after expressing reservation about all twenty cash

advance and reconciliation signed forms, threw out all but one. The judge did so

with the Governments express consent. The Court threw out:

1) All of the common-law fraud claims and


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2) Nineteen of the twenty signed document the Government presented as False

Claims Act claims.

I am taking the liberty to call that surviving claim The Claim.


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3. PointDefense: The Claim is not false. My signature in Box 16in that one Cash

reconciliation form SF-272, of December 19, 2001 is not false; the governments

funds were spent as affirmed in Box 16.


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4. The ClaimThe Claim covered the initial capital cash advance of One Hundred Fifty

Thousand dollars received on the 25 October 2001.


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5. Undercapitalized Grant Recipient

CASI was undercapitalized. When the funds arrived we had a negative bank

balance. We needed the money to pay program and non-program vendors and

capitalize CASI on the right track. These were non-program costs; paid out of

fully loaded Karrons Personnel line. Non-program costs were not paid with

Federal Funds. With the tax paid personal wages as funding, it was my right to

pay whatever I felt like. The money I contributed back to CASI was my net salary

funds. The money I contributed back to CASI source was the grant, but it was not

the government property funds. It was Karrons.


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6. Wages and Salary turned back to project.

Your honors, Personnel wages and salary were most certainly applied to the

project, and accepted by the auditors and the prosecutors as salary. What is

missing from the Patterson Criminal trial was that that Karrons personal salary

was almost entirely turned back to pay for program and program overhead and

non-program costs. As was Karrons right. It was Karrons money. As was what

Karron in fact did. See Reply Brief at 4 Paragraph 3 mid-page.


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7. Statutory Collateral EstoppelCollateral Estoppel do not apply because of the stringent Same Transaction

standard for statutory Collateral Estoppel spelled out at 31 United States Code Part

3731 FALSE CLAIMS PROCEDURE Subsection

I Quote:

a final judgment rendered in favor of the United States in any criminal

proceeding charging fraud or false statements, whether upon a verdict after

trial [] shall estop the defendant from denying the essential elements of

the offense in any action which involves the same transaction as in the

criminal proceeding.

End Quote

Your Honors, we do not have the same transaction in this case. Without a common

transaction, we cannot have common elements.

Why not? The 20 transaction claims, and the one surviving TheClaim in the

civil case were not even in evidence in the Patterson Court criminal trial. It was

not a topic at the Patterson Criminal Trial. On that lack of any foundation alone

the Buchwald Courts grant of Summary Judgment by Collateral Estoppel should be

remanded for trial. Nevertheless, there is much more; more than enough to vacate


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the Buchwald Courts summary judgment completely and put an end to this

miscarriage.


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8. Criminal Trial of the Patterson Court and the Civil Action in theBuchwald Court

The mens rea standards between the two district court cases are incongruent; there

is not even one common transaction as minimally required by USC 3731(d),

therefore logically there are no overlapping or common elements involving those

transactions. Because the set of common transactions is null, the common

elements of those transactions is also a null set. Q. E.D.


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9. The 75K AdvanceNow let us turn our attention to how these cash advanced funds were spent (Turn

Right, Goodbye Money). Form SF272, a one page FEDERAL CASH

TRANSACTIONS has Karrons signed attestation in Box 16

I QUOTE:

I certify to the best of my knowledge and belief that this report is correctand complete and that all disbursements have been made for the purpose and

conditions of the grant or agreement.Appendix 1(Government) at A-58

END QUOTE

The first cash advance form for this first reconciliation form has the approval

initials of the Grant Specialist Hope Snowden in the upper right corner. Appendix

(Government) at A-42. Based on that promise of a working capital cash advance,

Karron issued Purchase Orders for some one hundred thousand dollars of very

expensive computer hardware from SGI (Silicon Graphics, Inc.) who made the top

of the line super graphics workstations. Other Purchase Orders went out. Payroll

was accruing from the beginning of the project October 1. Utility bills exploded in

cost. Legal costs, insurance bills, all sorts of indirect costs resulted from jump-

starting this project. These are outlays and unliquidated obligations. CASI was

undercapitalized, but Karron had a budgeted salary base of 175K. Karron took an


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advance on salary of $75K out of that $150K initial advance to pay non-project

costs. On this transaction alone , the Buchwald court incorrectly attributed

misapplied funds as the linkage for ascribing falsity to the $150K capital cash

advance. However, as we now indisputably know, she was wrong. See Special

Appendix SPA-27 Footnote 13, BuchwaldsMemorandum and Order.

As exhaustively cited and argued in theKarronReply Brief at 7, Point 1, 3 and 4.

all the auditors, namely Belinda Riley, CPA, Melvin Spitz, CPA, Judge Patterson,

and all of the government witnesses (Particularly Government Grant Specialist

Snowden at 7 Point 1) agreed under cross examination that this 75K advance was

classified as personnel costs; Karrons personnel cost. As there was some 23%

allowed overhead on these funds money, the actual gross cost was 75K + 18K, or

$93K. We will see this 18K again mischaracterized as rent, below.


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10. de novo out of scope arguments by the governmentThe government now raises three side issues not considered or decided by the

Buchwald Court, and should be outside of the scope of this appeal: A parade of

naysaying government witnesses early testimony as circumstantial evidence, later

impeached, in the criminal trial do not contravene the utterly simple facts we

dissect out here for your consideration. However, you already have enough

foundation on which to overturn the Buchwald Court Judgment. The remainder of

these arguments are to assure this court that the claim is not false, and this court is

can rest assured that there is no basis whatsoever for any residual False Claims Act

culpability.


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11. SUFFICENCY OF GROUNDS FOR DISMISSALThe government has all but acceded to our argument the 75K advance as legitimate

personnel cost, not misapplied, as incorrectly asserted by the Buchwald Court. Our

Reply Brief exhaustively refutes that claim at 7. On that foundation alone this

Court has sufficient ground to overturn the Buchwald Court Judgment.


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12. 2255 Denial by Patterson Criminal CourtThe recent denial by the Patterson District Court of Karrons 2255 habeas corpus

is being appealed to this court. This will bring many of these same issues before

this court again. Your honors, please do not be distracted by all the smoke but no

heat in the prosecutions arguments.


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13. The remaining two issuesLet us dispatch the governments remaining Governments two issues:

1. The 30 day float rule and2. The Rent The application or mis-application 18K of other 75K balance

from the 150K advanced loan:

Recall, please, that these points were not raised by the Buchwald Court. These

points are only being raised now by the government here. The next two arguments

do not need to be made; this court already has enough foundation to vacate the

Buchwald Court decision based the manifest error of the Buchwald Courts faulty

interpretation of fact.


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14. The 30 Day Float RuleThere was no 30 day float rule in effect in the first quarter of the project. This is

a nasty canard. It is justprima facie wrong. There was no enumerated limitation

on the size of cash advances. See Karron ReplyBrief at 8 entitled (Point 2: The

30 Day Float Rule does not apply) There was no tolling for spending down

cash advances. As such, there was no limitation by law or rule on the size or

length of time cash could be advanced for Salary, as long as was justifiable and

Administratively Feasible. CASIs primative administration. This limiting rule

was not made part of the CASI Cooperative agreement until July 2002, when CASI

enrolled in the Treasury ASAP program with Amendment #4. See Karron Reply

Brief Page at 8 last paragraph, last sentence.


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15. The RentThe 18K rent was re-classified into gross Payroll as allowed payroll fringes, as is

reasonable based on the allowable 34% fringe rate. The Government Auditor

Riley estimated or used a 17% Fringe Rate.

The rent was both independently

1) offset by Karrons additional project funding and by the

2) re-classed rent as Payroll Salary evident by GX114.

See the Karron reply letter of June 4, docket item 101 in answer to the

Governments Letter of June 1.


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16. The Rent offset by Karrons OverfundingKarron's over funding of the first quarter direct and indirect costs in the amount of

$78,204 with bona fidesalary, offsets the Governments bid to coerce a linkage of

the $18K payments as knowingly misapplied rent from the projects $150K capital

cash advance. Karron Reply Brief at 15, Point 8.


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17. The Rent reclassified as Personnel in GX114There are only 53 checks paid to Karron in the first project year from CASI. The

GX110 schedule groups 15 checks totaling $129,850 as loan, 7 checks from

Karron for 37Kas loan repayments, 8 checks to Karron for $35,293.58 as net

payroll, and 30 checks marked as rent net for $60K. Nine of these checks

totaling 18K were written in the first project quarter period. GX110 gives the first

year sum of checks both to and from Karron as $188,143. GX114 calls out the

first year Karron salary as $200,488 and $19,183 as fringes for a gross salary

$219,671. The rent and 34% fringes on the checks marked rent must be included

as salary in order to sum up to the denominated salary in GX114 . The loan checks

were considered as bona fide salary advanced from the grant working capital

advance. Karron Brief at 9 (Point 3: Working Capital Advance). The checks

to Karron with memo annotations of rent in GX110 schedule were similarly

corrected and correctly re-classified into bona fide salary in the GX114

analysis. Q.E.D.Karron Brief at 12, Point 6.


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18. CONCLUSIONI thank this honorable court for granting us the time to hear our arguments. The

District Courts 4 Million dollar False Claims Act judgment against Karron has no

basis in fact or law. The extensive supporting facts are cited in excruciating detail

the Karron Reply Brief (first, not the originating brief) which cites into the ten

volumes of supporting appendices.

This court has multiple, overlapping and abundant grounds on which it has no

choice but to and must vacate the Buchwald District Courts ruling as utterly

unfounded in fact and law.


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19. THANK YOUIf the Court has questions or would like clarification, I am most pleased to answer

them at this time. I can fax to this Court and Mr. Byars answers to questions

requiring exact citations into the case appendix tonight on request.


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Contents

1. Introduction .......................................................................................................... 2

2. Background: ......................................................................................................... 3

3. Point ..................................................................................................................... 5

4. The Claim ............................................................................................................ 65. Undercapitalized Grant Recipient ....................................................................... 7

6. Statutory Collateral Estoppel ............................................................................... 8

7. Criminal Trial of the Patterson Court and the Civil Action in the BuchwaldCourt .........................................................................................................................11

8. The 75K Advance ..............................................................................................12

9. de novo out of scope arguments by the government .........................................14

10. SUFFICENCY OF GROUNDS FOR DISMISSAL ......................................15

11. 2255 Denial by Patterson Criminal Court ......................................................16

12. The remaining two issues ...............................................................................17


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13. The 30 Day Float Rule ...................................................................................18

14. The Rent .........................................................................................................19

15. The Rent offset by Karrons Overfunding .....................................................20

16. The Rent reclassified as Personnel in GX114 ................................................21

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CONCLUSION ..............................................................................................22

18. THANK YOU.................................................................................................23

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