United States v. Wesley E. Hixon
1993 WL 64455, 987 F.2d 1261, 1993 U.S. App. LEXIS 4414 (1993)
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Rule of Law:
A conviction under 18 U.S.C. § 1001 for making a false statement or concealing a material fact cannot be sustained if the defendant's statement, based on a literal and reasonable interpretation of legal definitions, is factually correct, even if misleading. The government must provide evidence to negate any reasonable interpretation that would make the statement factually correct.
Facts:
- In 1974, Wesley E. Hixon began working for the Tennessee Valley Authority (TVA).
- On February 21, 1989, Hixon sustained a strained right knee in a work-related accident, leading to four surgical procedures and an inability to perform his job duties.
- Hixon submitted Form CA-8s to the Department of Labor (DOL) in July 1989, claiming short-term disability compensation and indicating "not applicable" for any salaried or self-employment during those periods.
- Hixon submitted Form CA-1032s to the DOL in November 1989 and April 1990, claiming continued disability benefits and answering "No" to questions regarding whether he was employed or self-employed during the covered periods.
- Hixon was the sole stockholder, President, Treasurer, registered agent, and sole Board member of Woods and Water Outdoor Consultants, Inc., a Georgia (Subchapter S) corporation that booked fishing, hunting, and outdoor vacations.
- While receiving disability benefits, Hixon worked numerous outdoor shows and took business/hunting trips for Woods and Water Outdoor Consultants.
- In August 1991, during an interview with TVA agents, Hixon initially claimed Woods and Water was his wife's business and that his involvement was minimal, but later admitted, "I’ve been employed since day one."
- On August 30, 1991, Hixon's employment at TVA was terminated due to his failure to report his activities to the OWCP.
Procedural Posture:
- A superseding indictment was filed charging Wesley E. Hixon with four counts of knowingly and willfully making a false material statement and representation and knowingly and willfully concealing by scheme, trick, and device a material fact, in violation of 18 U.S.C. § 1001.
- Hixon moved to dismiss the indictment, arguing it was duplicitous (charging multiple offenses in a single count), which the District Court denied.
- Hixon moved for a judgment of acquittal, arguing he was not guilty as a matter of law, which the District Court denied.
- A jury found Hixon guilty on all four counts.
- The District Court sentenced Hixon to a term of ten months incarceration on each count, to be served concurrently, and ordered him to make restitution of $20,089.64.
- Hixon appealed his jury conviction and sentence to the Sixth Circuit Court of Appeals.
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Issue:
Does a corporate officer and sole shareholder who works for their corporation make a false statement under 18 U.S.C. § 1001 by denying "self-employment" on government forms when, under applicable state law, a corporate officer is considered an employee of the corporation?
Opinions:
Majority - Kennedy, Circuit Judge
No, a corporate officer and sole shareholder who works for their corporation does not make a false statement under 18 U.S.C. § 1001 by denying "self-employment" on government forms, because, under Georgia law, a corporate officer is considered an employee of the corporation, making the statement literally and factually correct. To establish a violation of 18 U.S.C. § 1001 for a false statement, the statement made must be actually false. Under Official Code of Georgia Annotated Section 14-2-140(8), an "employee" includes a corporate officer. Hixon, as the President and sole owner of Woods and Water Outdoor Consultants, Inc., was an officer of the corporation and, therefore, legally an employee of that distinct legal entity. His statement on the disability forms that he was not self-employed was thus literally and factually correct, as he worked for the corporation, not for himself in a self-employed capacity. The government presented no evidence that Hixon personally received commissions or that there was a basis to disregard the corporate structure and pierce the corporate veil. Precedent from United States v. Gahagan, United States v. Vesaas, and United States v. Diogo indicates that a prosecution for a false statement under § 1001 cannot be based on an ambiguous question where the response may be literally and factually correct, and the government has the burden to negate any reasonable interpretation that would make the statement factually correct. The indictment also charged Hixon with concealing his "self-employment" and "ownership" of the corporation; however, since he was not legally self-employed, he could not conceal it, and the forms did not ask about corporate ownership. Therefore, there was insufficient evidence for the jury to find Hixon guilty beyond a reasonable doubt.
Concurring - Batchelder, Circuit Judge
No, a corporate officer and sole shareholder who works for their corporation does not make a false statement under 18 U.S.C. § 1001 by denying "self-employment" on government forms, because as an employee of the corporation under Georgia law, his statement was not false as a matter of law. Justice Batchelder concurred, agreeing with the majority that Hixon, as an officer of his corporation, was legally an employee of that corporation under Georgia law. Consequently, his statement that he was not self-employed was not false as a matter of law. The government failed to present any evidence that would permit a court to pierce the corporate veil and treat Hixon as self-employed rather than an employee of his corporation. Since the actual falsity of the statement is a required element of the offense, the government's failure to prove this element was fatal to the conviction. Although Hixon likely intended to make a false statement, he was not indicted for the false statement he actually made (concealing his corporate employment), but rather for one that was not legally false.
Analysis:
This case significantly clarifies the falsity element required for a conviction under 18 U.S.C. § 1001, emphasizing the importance of literal truthfulness in statements made to government agencies, even if such statements are misleading in context. It provides a strong precedent against prosecuting individuals for statements that are technically correct under a reasonable interpretation of relevant legal definitions, such as the distinction between a corporate employee and a self-employed individual. Future cases involving alleged false statements to the government will likely scrutinize the precise wording of questions and answers, and the government will bear a heavy burden to demonstrate unambiguous falsity, negating any alternative, factually correct interpretations, especially where corporate structures are involved.
