## Facts

- The United States Army awarded Advanced Environmental Consultants, Inc. (AEC) an approximately $7 million contract to build, own, and operate a wastewater treatment plant at an Army depot in Tooele, Utah.
- The contract required AEC to use carbon filtration; contract modifications adjusted performance requirements and authorized carbon “change-outs,” leading AEC to submit reimbursement claims.
- Samir K. Sain, AEC’s sole shareholder and president, and AEC submitted multiple reimbursement claims allegedly supported by falsified invoices and documents.
- The government alleged defendants misrepresented the type and quantity of carbon used, claiming more expensive virgin carbon while using cheaper reactivated carbon and retaining the difference.
- The government also alleged falsification of technical data (including pollutant levels) and supporting paperwork (including checks and purchase orders) to substantiate the claims.
- A grand jury indicted Sain and AEC on 46 counts of major fraud against the United States under 18 U.S.C. § 1031; a jury convicted both on all counts.
- The district court sentenced Sain to 37 months’ imprisonment and supervised release, and sentenced AEC to probation and restitution of $597,124 (with Sain liable for any unpaid amount).
- Defendants appealed, raising statutory interpretation questions about § 1031 and additional challenges to the convictions and sentences.

## Issues

1. Under 18 U.S.C. § 1031, may the government charge a separate count for each “execution” of a single fraudulent scheme (e.g., each false claim), or only one count for the overall scheme?
2. Does § 1031’s $1 million contract-value requirement apply when the alleged fraud relates to contract modifications under $1 million, but the underlying contract exceeds $1 million?
3. Was the evidence sufficient to support the jury’s verdicts of major fraud?
4. Did the district court err in excluding defense expert testimony?
5. Can an individual corporate officer be convicted of aiding and abetting a corporation he owns and controls?
6. Were there reversible sentencing errors, including as to restitution?

## Decision

- The Third Circuit affirmed the convictions and sentences in all respects.
- The court held that § 1031 permits separate counts for each execution of the scheme, and that each false reimbursement claim could be charged as a separate violation.
- The court held that contract modifications under $1 million fall within § 1031 when they are modifications of an underlying government contract valued in excess of $1 million.
- The court rejected the sufficiency challenge, concluding the evidence supported findings of knowing, material misrepresentations supported by falsified documents and data.
- The court found no abuse of discretion in excluding the proffered expert testimony.
- The court rejected the claim that a controlling owner cannot aid and abet the corporation, holding individual liability was legally permissible on the record presented.
- The court found no reversible sentencing error.

## Legal Principles

- Under 18 U.S.C. § 1031, the unit of prosecution may be each completed “execution” of a fraudulent scheme; multiple false claims submitted under a qualifying contract can support multiple counts.
- For § 1031’s $1 million threshold, the relevant contract value is the value of the underlying government contract; modifications under $1 million do not remove conduct from the statute when made in connection with the qualifying contract.
- A corporate officer may be held criminally responsible for aiding and abetting the corporation’s fraud even if he owns and controls the corporation, if the elements of aiding and abetting are proven.
- On appellate review after a jury conviction, evidence is viewed in the light most favorable to the government when assessing sufficiency.

## Conclusion

The Third Circuit sustained major fraud convictions arising from inflated reimbursement claims on a multi-million-dollar Army contract, ruling that each false claim may be charged as a separate execution under the Major Fraud Act and that the statute’s $1 million threshold is satisfied by the value of the underlying contract even when individual modifications are below $1 million.


United States v. Sain, 141 F.3d 463 (3d Cir. 1998)