Document Description
Page
Docket Text
CASE CALENDARING, on submission for 06/26/2012,
SET.[609008] [111924]
CORRECTED REPLY BRIEF, on behalf of Appellant
Daniel B. Karron, FILED. Service date 04/12/2012 by
email. [610838] [111924]
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ATTENTION
MS. JENIFER
THOMPSON
CASE MANAGER
11-1924
(212) 857 8613
second corrected version
(remove this page before submission
GREY COVER)
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11-1924
To be argued by:
D. B. KARRON
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11-1924
To be argued by:
D. B. KARRON
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Table of Contents
Contents
Table of Contents .......................................................................................... i
Table of Authorities .................................................................................... iii
Cases ....................................................................................................... iii
Statutes .................................................................................................... iii
Regulations .............................................................................................. iii
Other Authorities ..................................................................................... iv
Reply Preliminary Statement ....................................................................... 1
Issue Presented for Review .......................................................................... 1
Statement of the Case................................................................................... 2
ISSUE: The Claim is not false. .............................................................. 2
a) The Patterson Court never even cited, much less adjudicated, The
Claim as a source of misapplied funds. .......................................................... 2
b) The $75,000 Payroll Advance (The 75K Advance), made to Karron
from the first (and only) $150,000 working capital advance from The Claim
was well recognized by the Patterson Court and OIG as bona fide tax paid
salary. ............................................................................................................ 3
c) The balance of working capital advance proceeds from The Claim
was used as affirmed by Karrons signature. .................................................... 3
e) Because of the above, The Claim as affirmed, was not a False
Claim Act claim on the United States Treasury. ............................................... 3
f) Arguments on The Claim are not estopped because it was never
even cited by the Patterson Court as fraudulent or false. The Claim was not
even an exhibit in The Patterson Court. Because of this, the Claim is not an
eligible FCA Same Transaction subject to FCA Statutory Collateral
Estoppel. .......................................................................................................... 3
i
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Table of Authorities
Cases
Cases
Statutes
Statutes
Regulations
Regulations
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iv
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A-137................................................................................................................... 15
A-138................................................................................................................... 12
A-167................................................................................................................... 11
A-169................................................................................................................... 13
A-171 3 ............................................................................................................. 13
A-193................................................................................................................... 11
A-205................................................................................................................... 14
A-218..................................................................................................................... 3
A-22....................................................................................................................... 4
A-220..................................................................................................................... 3
A-233.............................................................................................................. 13, 16
A-259................................................................................................................... 16
A-261................................................................................................................... 16
A-262.......................................................................................................... 8, 11, 16
A-263..................................................................................................................... 3
A-264..................................................................................................................... 3
A-265.......................................................................................................... 3, 7, 8, 9
A-271................................................................................................................... 13
A-272................................................................................................................... 16
A-285................................................................................................................... 15
A-290................................................................................................................... 16
A-292..................................................................................................................... 3
A-316.......................................................................................................... 3, 7, 8, 9
A-325.......................................................................................................... 3, 7, 8, 9
A-35..................................................................................................................... 10
A-358................................................................................................................... 13
A-361 footnote ..................................................................................................7, 16
A-364..................................................................................................................... 3
A-368................................................................................................................... 13
A-37................................................................................................................ 10, 14
A-380................................................................................................................... 15
A-384..................................................................................................................... 3
A-389................................................................................................................... 13
A-390................................................................................................................... 13
v
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A-391..................................................................................................................... 6
A-394.............................................................................................................. 13, 16
A-397.............................................................................................................. 13, 18
A-397ff ................................................................................................................ 18
A-40..................................................................................................................... 14
A-41..................................................................................................................... 14
A-415................................................................................................................... 18
A-427..................................................................................................................... 6
A-434................................................................................................................8, 13
A-437................................................................................................................... 12
A-438................................................................................................................... 18
A-447..................................................................................................................... 6
A-452................................................................................................................... 18
A-453................................................................................................................... 18
A-455................................................................................................................... 18
A-480..................................................................................................................... 7
A-489..................................................................................................................... 4
A-492..................................................................................................................... 7
A-58................................................................................................................ 1, 2, 3
A-65..................................................................................................................... 18
A-66..................................................................................................................... 18
A-67..................................................................................................................... 18
A-68..................................................................................................................... 18
A-70..................................................................................................................7, 16
A-72..................................................................................................................4, 10
A-75....................................................................................................................... 4
A-90....................................................................................................................... 8
A-92....................................................................................................................... 5
A-94ff .................................................................................................................... 4
Buchwald Judgment against Karron ...................................................................... 2
Buchwald Court Memorandum and Order at 27 ..................................................... 2
Buchwald Court Memorandum and Order at 27 2 ............................................... 3
Buchwald Court Memorandum and Order at 27 footnote 13 .................................. 6
Chukran Decl. Ex. C, at 1 ...................................................................................... 3
vi
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KA-15 .................................................................................................................4, 5
KA-161 .................................................................................................................. 4
KA-1699 .............................................................................................................. 16
KA-1718 .............................................................................................................. 12
KA-1719 .............................................................................................................. 12
KA-1731 .............................................................................................................. 12
KA-1735 .............................................................................................................. 17
KA-1771 ......................................................................................................... 11, 13
KA-1777 ......................................................................................................... 11, 13
KA-185 ................................................................................................................ 17
KA-20 .................................................................................................................... 4
KA-204 .................................................................................................................. 5
KA-206 ................................................................................................................ 17
KA-245 ................................................................................................................ 16
KA-247 ................................................................................................................ 14
KA-282ff ............................................................................................................. 16
KA-289 ................................................................................................................ 13
KA-29 ...............................................................................................................4, 12
KA-290 ................................................................................................................ 13
KA-2920 .............................................................................................................. 13
KA-2978 ................................................................................................................ 7
KA-299 ...............................................................................................................6, 7
KA-314 .................................................................................................................. 4
KA-319 .................................................................................................................. 3
KA-355 .................................................................................................................. 2
KA-379 ........................................................................................................... 16, 17
KA-42 ...............................................................................................................3, 11
KA-446ff ............................................................................................................. 12
KA-49 .................................................................................................................... 5
KA-5 .................................................................................................................... 16
KA-50 ...............................................................................................................5, 17
KA-56 .................................................................................................................... 4
KA-618ff ............................................................................................................. 17
KA-66 ...............................................................................................................5, 15
viii
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KA-670 .................................................................................................................. 8
KA-701 .................................................................................................................. 8
KA-703 .................................................................................................................. 8
KA-706 .................................................................................................................. 9
KA-707 .............................................................................................................8, 14
KA-76 .................................................................................................................. 15
KA-776ff ............................................................................................................. 17
KA-89 .................................................................................................................... 4
KA-92 .................................................................................................................... 4
KA-958 .................................................................................................................. 2
KA-977 .................................................................................................................. 9
KA-985 .................................................................................................................. 9
KA-987 .................................................................................................................. 2
Karron 56.1 Counterstatement at 28 3 ............................................................... 13
Karron 56.1 Counterstatement at 29 ....................................................................... 6
Karron 56.1 Counterstatement at 35 ................................................................ 13, 18
Karron Br. at 10, 24 ............................................................................................... 2
Karron Br. at 13 1 ............................................................................................... 1
Karron Br. at 16 ..................................................................................................... 8
Karron Br. at 18 ..................................................................................................... 3
Karron Br. at 22 2 ............................................................................................... 6
Karron Br. at 33 ................................................................................................... 15
Karron Br. at 7 1 ................................................................................................. 1
Karron Oral Argument at 15, Line 17 et seq .......................................................... 7
Karron Oral Argument at 3, Line 12 ...................................................................... 7
Karron Oral Argument before Buchwald Court Tr. Line 8 ..................................... 4
Sentencing Tr. at 10 Line 23 ....................................................................... 3, 7, 8, 9
Sentencing Tr. at 16 Line 15 ................................................................................ 13
Sentencing Tr. at 35 Line 20 ................................................................................ 16
Sentencing Tr. at 5 Lines 3-6 ............................................................................... 16
Sentencing Tr. at 6 Line 18 .................................................................................. 16
Sentencing Tr. at 6 Line 3 .................................................................................... 16
Sentencing Tr. at 61 Line 19 ....................................................................... 3, 7, 8, 9
Sentencing Tr. at 61 Line 23 ....................................................................... 3, 7, 8, 9
ix
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1
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Claim is a valid FCA false claim8. Should this Court find any residual culpability
in first issue, the second issue is to review the District Courts determination of
monumental $4,042,000 (Four Million Forty Two Thousand dollar) damages9 on
the entire project arising from The Claim.
Statement of the Case
Of the twenty putative false claims submitted by the Plaintiff to the
Buchwald District Court as FCA false and state law fraud claims, the Judge
expressed reservation about all of those twenty claims10 and disposed of all but one
document we have dubbed The Claim11.
Karrons tax paid personal salary was used to pay project direct, project
indirect, non-project corporate and personal costs13, as these funds were Karrons
personal property to with whatever she pleased to spend it on, or was required to
pay to support the project. Therefore, any payment for these unallocable costs,
as the sina qui non for culpability, must be paid from Government funds and not
from Karron funds. Culpability due to misappropriation of funds cannot attach to
payments from Karrons own bona fide salary, wages, [] or expenses paid or
reimbursed, in the usual course of business.14 Because of the restricted scope
of Appeal review, tracing funds is easily demonstrated from the record for the first
project quarter of The Claim. The District court tacitly recognized these issues15
when it expressed reservations on all of the twenty claims proffered by the
Government16 and declined to grant summary judgment on nineteen of the twenty
certifications sought by the Government.17
ISSUE: The Claim is not false.
a) The Patterson Court never even cited19, much less adjudicated, The Claim as
18
2
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patents31 as well as march-in rights and the statutory ATP Patent Procedure
32.33
As program director Marc Stanley has said [] we have obviously
determined that it[an ATP project] has great value to our country. 34 35
Karron Salary
Karron was required to Co-Funds Project Direct Costs, Indirect Costs.
The ATP budget calls out not only for the application of government funds. The
original budget form36 and Amendment #337 calls out a Recipient Share of Cost.
This is further broken down in the Estimated Multi-Year Budget into three
categories of cost, specifically Part 1, OBJECT CLASS CATEGORY Lines I,
Total Direct Costs Requested from ATP; J, Total Direct Costs Shared by Proposer;
K, Total Indirect Costs Absorbed by Proposer. These are re-iterated the form at
Part 2.; SOURCES OF FUNDS; A. ATP (Same as Line I); B. PI (Karron CoFunding); C. PI Indirect Costs absorbed
In addition, there are non-project overhead costs due to CASI, unfunded
project mandates such patent lawyer costs38. The payment of these costs is
supposed to be quite flexible, and they can be made up over the three years the
project was to have run.39 40
31
KA-15, 15 C.F.R. 278n (d)(11)(A) The United States may reserve a nonexclusive, nontransferable, irrevocable
paid-up license, to have practiced for or on behalf of the United States, in connection with any such intellectual
property,
32
KA-15, 15 C.F.R. Subtitle B, Ch. II (1101 Edition) 295.8(a)(2) Intellectual property rights;. (a)( (2) Patent
procedures
33
KA-314, Wessner, Charles W., ed., The Advanced Technology Program: Assessing Outcomes (Washington, DC:
National Academy Press, 2000). cf A-94ff, , KA-29
34
KA-29, Eisen Decl. Tr. of Marc Stanley KA-20 Q and A session 2:45:35 Tr. atTranscript Page 8.
35
KA-56, GX1 KA-89 The89The ATP Proposal kit calls out for These annual accomplishments should briefly (23 sentences maximum) define how the project would have benefits to the taxpayer by funding year should additional
out-year funding not become available (i.e., severability statements).
36
A-92, GX10, The original Cooperative Agreement (NIST-1252) contains an ESTIMATED MULTI-YEAR
BUDGET - SINGLE COMPANY. This Budget was later revised in an AMENDMENT TO FINANCIAL
ASSISTANCE AWARD Amendment 4, July 16, 2002.
37
KA-204, GX23, Amendment #3
38
KA-10, 15 C.F.R. Subtitle B, Ch. II (1101 Edition) 295.8 Intellectual property rights;;. (a)( (2) Patent
procedures KA-15
39
KA-66, GX1, ATP Proposal Preparation Kit for 2000. Exhibit 14, KA-134 (We recognize that unexpected
events occur frequently in R&D projects, and that budgets may need to be changed as a project proceeds. Don't fear
that by providing a multi-year budget beyond the first year, you will be locked into those details. ATP allows a
certain amount of flexibility in moving funds from one line item to another as circumstances change. By stating an
4
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Summary of Argument
The Buchwald District Court erred in The Claim because of the $75,000
payment (The 75K Advance) to Karron was 1) not false 2) not identified by the
Patterson Court to be a misapplication of government funds under 18 U.S.C.
666(a)(1)(A) (Bribery, Embezzlement Act).
Argument
The Buchwald Court assignment of falsity to The Claim is incorrect as a
matter of record and fact. The Court specified that The 75K Advance from the
The Claim $150,000 cash advance was misapplied and falsely affirmed to by the
amount for a given task, you will not be required to spend precisely that amount on that task. For example, if, in the
second or third year of your project, you find that you need to spend more on one task and less on another than
anticipated, that can be accommodated.)
40
KA-49, 15 C.F.R. 14.25 (63 FR 47156, Sept. 4, 1998, as amended at 66 FR 49828, Oct. 1, 2001) KA-50
Revision50Revision of budget and program plans. (f) The recipient may not transfer funds among direct cost
categories [] the cumulative amount of such transfers exceeds or is expected to exceed 10 percent of the total
Federal and non-Federal funds authorized [] (g) All other changes [] do not require prior approval. (m) Within
30 calendar days from the date of receipt of the request for budget revisions, DoC shall review the request and the
Grants Officer shall notify the recipient in writing whether the budget revisions have been approved. If the revision
is still under consideration at the end of 30 calendar days, the Grants Officer shall inform the recipient in writing of
the date when the recipient may expect the decision.
41
Karron Br. at 22 2 2
42
KA-299, U.S.A. v. Karron, 08-cv-10223 Docket 30, Decl. of Karron Exhibits Part 2, Ex. Group 22, DBK Personal
Taxes at 26, Ex. 108 at 28, Ex. 109 at 34, Ex. 110 at 40
43
A-447, Decl. of Dunlevy. CAC292, mid-page.
44
ibid.
45
A-427, Trial Tr. at 1066 Line 22 et seq (Benedict Cross).
46
U.S. v. Mills, 140 F.3d 630 (6th Cir., 1998)
47
A-391, Karron 56.1 Counterstatement at 29 Trial Tr. at 381 Line 15
5
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Appellant Karron. 48 The Patterson court specifically and explicitly recognized this
to be bona fide tax paid salary.49 50 51 As to the disposition of the balance of The
Claim $150,000 advance, or the other 75,000 of this first advance, the Buchwald
Court declined to assign specific linkage to any other misapplied funds and
specific culpability. Therefore, by establishing that The 75K Advance was bona
fide The Claim is not false and the Buchwald Court Judgment cannot be
sustained. Further, by showing (below) that the there are no misapplied funds that
can be connected to The Claim, the Buchwald Court Judgment must be vacated.
Standard of Review
False Claim Act culpability requires, at the very least, one specific claim on
the treasury of the U.S. that is proven false52, and that the person who presented
that claim53 knew it is false.54 If no specific false claim can be identified, there is
no culpability. The Patterson Court only looked at Check and American Express
Credit Card disbursements.55 The Buchwald Court only admitted The Claim on
the U. S. Treasury. There are no common elements or exhibits between The
Claim and the Patterson Court findings.56 If this Court finds no common basis
between culpable checks and credit card receipts made with funds from The
Claim, this judgment must be vacated.
Reply Argument
The Claim is not false
The Claim as signed by Karron is not false because The 75 K Advance
was bona fide Personnel Cost, as specified in the original budget.57 At this early
stage first quarter (The First Quarter) in the project, there are no issues of
overrunning any budget categories; all budget categories are under run. At the end
of the first quarter, there are three remaining quarters of project time with which to
make midcourse corrections and amendments based on retrospective spending
48
6
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experience. By the end of the first quarter Dunlevy58 shows that almost the entire
75 K Advance was turned back to pay Project costs. This offsets the rent59
question raised by the Buchwald Court in its decision,, and that question is
mooted for that reason (among others), but it is addressed never the less below.
Point 1: The 75K Advance was classified as Salary
The 75K Advance was well accepted as salary60 by three auditors61 and
the Patterson Court .62 63 64 65 The Government grant specialist Snowden grudging
agreed it was salary and could be used for any purpose Karron wanted .66 67 68 69
Riley agreed it was salary.70 71 Gurfein acknowledged it was salary.72 73 74 It is
beyond the scope of this Appeal to re-open this well settled matter. In its final and
sentencing analysis, the Patterson District Court found and established as fact that
this $75,000 transaction was classified as legitimate bona fide salary, as allowed
under the Safe Harbor provision 18 U.S.C. 666(c)75 and derivative case law.76
58
7
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77 78
The prior Patterson Court findings of fact can stand without this Court reassessing the supporting evidence.
In order to give this Court confidence in these prior findings of fact, the
following additional points of fact should dispel any shadows of doubt that the
Government Appellee attempts to cast.
The 75K Advance payments are salary earned but not paid by check
Both the Patterson Court79 80 81 and The OIG Auditor concurred that The
75K Advance was a loan credited toward salary. The OIG could not have said it
better (even though they have problems with addition82): viz:
[] loan account balances have been offset with legitimate loan reducing payments such
as the salary not paid to the ChiefTechnica1 Officer and retained by Computer Aided
Surgery to reduce the amount owed to NIST.83
77
8
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88
Thirdly, The Claim was on December 19, 2001, not November. The OIG
Audit states:
the ATP Special Award Conditions Section 9.c [emphasis added, italics as in original]. states
We dub this (above) the 30 Day Float Rule. The OIGs two Audit Report
citations to the ATP Special Award Conditions Section 9.c never existed for this
project in 200191. This clause was misquoted by the OIG Auditors. This misquote
was propagated by Prosecution in the Buchwald Court and again here. The Rule
did not become effective until Special Award Conditions Amendment 4 signed
2002 enabled overnight grant advance payment electronically by ASAP.92
Point 3: Working capital advance
The working capital advance is defined93 as a procedure whereby funds
are advanced to the recipient to cover its estimated disbursement needs for a given
initial period. If [] the recipient lacks sufficient working capital94, the Grants
Officer may authorize payment on a working capital advance basis. Under this
procedure, the Grants Officer shall provide for advancing funds to the recipient to
cover its estimated disbursement needs for an initial period []95
for Payments," System; and (2) indicate on the attached, those terms and conditions affected by any administrative
or statutory requirements. [ ] THE FOLLOWING SPECIAL AWARD CONDITIONS ARE AMENED: 11.c. [
4] Advances taken through the ASAP shall be limited to the minimum amounts necessary to meet immediate
disbursement needs. Advanced funds not disbursed in a timely manner must be promptly returned, via an ASAP
credit, to the account from which the advanced funding was withdrawn. Advances shall be for periods not to exceed
30 days. EFFECTIVE DATE JUL 23, 2002, SIGNED 7/29/2002
88
A-35, GX24 AMENDMENT TO FINANCIAL ASSISTANCE AWARD #4 Effective July 23, 2002
89
A-180, refers to a quote from GX62 Final Audit Report August 2004 (A-167)) and Invitation for Audit
Resolution (A-262)) Dated Aug 25, 2004.
90
A-180, part of GX62 Final Audit Report ATL AT~16095-4-0002 August 2004) [Also this quote appears in A193,, GX62 Draft Audit Report Audit Report No. ATL-16095-3-0001 /July 2003, GX62 Appendix II Page 5 of 6]
91
A-136, GX12 signed September 28, 2001 by Grants Officer Marilyn Goldstein and countersigned by Karron on
.October 5, 2001 cf , KA-1771, KA-1777KA-1771, KA-1777
92
Automated Standard Application for Payments (ASAP) is a web-based electronic payment and information
system []. ASAP allows recipient organizations receiving federal funds to draw from accounts preauthorized by
federal agencies. http://www.fms.treas.gov/asap/.
93
KA-42, 15 C.F.R. 14.2(rr)
94
A-180, Final Audit Report August 2004 (This money was put into an existing checking account with a balance
of less than $5,000.) [the actual CASI checkbook balance that day of October 26,2001 was negative $1,024.24 and
the bank balance was $24.61]
95
KA-46, 15 C.F.R. 14.22(f)
9
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the actual, immediate cash requirements of the recipient organization in carrying out the
purpose of the approved program or project. The timing and amount of advances of
funds shall be as close as is administratively feasible to the actual disbursements by the
recipient organization for direct program or project costs and the proportionate share of
any allowable indirect costs.96
96
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Dunlevy104 shows that almost the entire 75 K Advance was turned back to
pay Project costs. The First Quarter spending is summarized as follows 105: Total
Outlays for 2001 are $258,320 , with the Recipient Share of Outlays $41,682, The
Federal Share of Outlays are $210,000, The total un-liquidated obligations $5,538.
The first quarter is over co-funded by $48,320.
The only counter exhibit offered by the Government at the Patterson Court
was GX114106, at which the Judge exclaimed: Look at that. [GX114] This
mess.107 This mess is worse than any one recognized at the time. CASI received
a letter from Grant Specialist Browning in 2007 offering to close out the second
year project residual funds of $54,500.108 Reconciling that figure with the OIG
Audits revealed that the two OIG audit reports gave the wrong second year Federal
disbursement.109 110 The mess gets even worse. The two audit reports quote a
Special Award Conditions Section 9.c that does not exist.111 There was no 30
Day Rule in effect during the first project quarter.
Point 5: Amortizing The 75K Advance
The Government argues that if Karron had unilaterally increased her salary
by the maximum amount permitted without authorization from ATP [] Karron at
best would have been entitled to $21,250[ of The 75K Advance].112 This
argument fails as matters of law, fact and a little math. Let us do the math.
On the day the funding arrived, October 26, 2001113, Karron was already
owed approximately one-months salary (1/3 of a quarter salary). At the middle of
The Claim first quarter in November, the salary due would be 2 /3 of a quarters
salary. A daily amortization for The 75K Advance is compiled here. 115 With
104
11
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116
A-205 Final Audit Report August 2004 Appendix III at 11 5: Out of Pocket OOP, which includes such things
as travel to NIST for the ATP Kickoff Meeting in November and Program computer purchases made on personal
credit cards because the cards had all of the available credit for CASI as Karrons available credit.
117
G. Br. at 42 2 (This argument fails as a matter of law, as the terms [of ] ATP funding [] shall be for
periods not to exceed 30 days. (A-180; see also A-37).)
118
KA-46 15 C.F.R. 14.22(f) (1101 Edition)
119
A-40, SF 270, there is the approver initials HS handwritten in the upper right hand corner. Hope Snowden was
the Grant Specialist. One can only assume that she personally approved this initial advance and counter-initialed it
with her initials, H.S. . The form is signed by Karron on the reverse at A-41 on October 19, 2001. This form was
never even entered into evidence in the Patterson Court.. Snowden would not have approved such a large initial
advance without full knowledge of what she was funding. Her testimony at trial showed she grudgingly admitted
she did. cf KA-707
120
A-137, GX13 SPECIAL AWARD CONDITIONS (acronym SAC)
121
G. Br. at 11 footnote (A Commerce audit found that the improper rent charges included $18,000 from Karrons
first drawdown of funds from the ATP. (A- 180).
122
G. Br. at 41 1, line 2, line 2 (from the bottom of paragraph 1 going up) (Karron was clearly not entitled to
use ATP payments for rent (A-285), and yet rent undisputedly was paid from the first $150,000 draw-down (A180).)
123
A-180, Final Audit Report August 2004 is an unreliable evidence, impeached because 1) misquotes the total
second year spending (A-380) 2) mis cites special conditions Section 9.c which falsely incorrectly invoked the 30
Day Float Rule(cf Point 2), 3) was not used at the Patterson Court criminal trial, (The Patterson Court Relied
Exclusively on GX110 and GX114) 4) was not mentioned by the Buchwald Court.
124
SPA-180, Final Audit Report of Aug 2004. 3, Line 5 (the Chief Technical Officer wrote himself nine checks
$2,000 each for rent of office space covering the period January 2000 through September 2000.)
125
SPA-180, (Karrons first drawdown of funds from the ATP.)
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only gave a total amount as a general matter without specifying the transactions
that misappropriated Government Funds as rent. It is well beyond the scope of this
Appeal to re-litigate the of the Patterson Court findings. As the Buchwald Court
astutely observed the Government has failed to specify the precise aspect of
each of the twenty documents that is false.126 The rent was paid from The
75K Advance, and/or reclassified as salary. However, the Buchwald Court
declined to affirm, and therefore denied that issue by dismissing almost all of the
charges.
The Rent was not allowed.127 It was never allowed.128 The rent was
reclassified into salary129. GX114 includes rent checks (buried) in the salary line.
GX114130 is dissected at length in Karrons 56.1 counterstatement131. It was
prepared by Riley using canceled checks and American Express statements [as]
the main source documents,132 As such, it ignored Karron OoP, checks, credit
card and cash payments made on behalf of the ATP project for such things as
Travel. The Patterson Court Judge described it best.133 134 135 136 137 Simply put,
there are just not enough checks to and from Karron to make up the denominated
salary138 without including the rent checks and using the CASI personnel fringe
rate.139
Point 7: Budget Flexibility 10% Change Rule base: Annual or Total ?
126
SPA-27
KA-66 GX1 Chapter 1, Sections C.4 and C.5 of the November 2000 ATP Proposal Preparation Kit cf KA-76 (5.
What types of costs are unallowable?) Based on the assumption that it is an indirect or overhead cost, and is
allocable to multiple projects and applications.
128
It was never allowed as rent per se. The re-class was done un-heralded and unnoticed by the prosecution.
129
Karron Br. at 33. 10. The Explanation for the Karron Salary Line is to include Rent Checks
130
A-233
131
A-394
132
A-70, A-361 footnote
133
A-259, Sentencing Tr. at 5 Lines 3-6. COURT It seems to me this is just a rough calculation and not something
that a Court could rely on in a criminal case [N.B. but it was. This was recalled by the Jury in its deliberations at
KA-1699 and again in this Appeal A-233]
134
A-290, Sentencing Tr. at 35 Line 20 (MR. RUBINSTEIN: I submit to your Honor, that nobody from that
chart[GX114] or from the [GX]110 [GX110] backup could say how they ever arrived at this number.) cf GX114 at
A-233 and GX110 at KA-245 and at KA-282ff
135
A-261, Sentencing Tr. at 6 Line 3 (THE COURT: [] She has no tabulation putting [Exhibit] 114 into context
with her [] Exhibit 110. ) cf GX114 at A-233 and GX110 at KA-245 and at KA-282ff
136
A-262, Sentencing Tr. at 6 Line 18( It's a table saying salary. I don't care how she got the number [] Its
[]Salary)
137
A-272, Sentencing Tr. at 7 (COURT: It's denominated salary.)
138
A-272, Sentencing Tr. at 7 (COURT: It's denominated salary.)
139
KA-1124, Trial Tr. at 803 Line 19.
127
13
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NIST ATP program specific budgets change practices were not part of the
ATP statute140 and ATP rule141. The authority of these practices is unclear142 .
They were made part of ATP cooperative agreements by reference143. As of 2001,
ATP practices appear to have conflicted with superior general Department of
Commerce and National Institute of Science and Technology C.F.R. statutes
concerning the change base upon which to apply the 10% variation allowance.
ATP believed its change base was 10% of the last approved total annual
budget as Lide144 and Snowden testified145, and both the Defense and Prosecution
believed. In the GX2146 budget, it permits a change of plus and minus $83,650147
on the annual base without approval. Snowden testified that Program Specific
rules overrode regulations that are more general.148
However, governing rules15 C.F.R. 24.30149, 15 C.F.R. 14.25(f)150, and
GX3151, calls out a percentage base on the entire budget. In this instance that is
plus and minus $211,450, for a total swing of $422,900. Further, 15 C.F.R.
14.25(e)(4)152 claims it is the superior statute and specifies it may not be
overridden without approval from the OMB.153
140
14
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D. B. Karron, pro se Dated: April 12, 2012 in Long Beach, New York
154
G. Br. at 13 footnote
A-397 Karron 56.1 Counterstatement at 35: GROUND TRUTH QUARTERLY SPENDING BY REVISED
SF269A. Table 1 Ground Truth Grant Spending.
156
A-65 (line B is $9,573.40), A-66 ($8,213.64), A-67($($8,728.84), A-68($($8,726.84). The sum is $29,493.83
157
A-438 Decl. of Dunlevy Decl.
158
A-65 FINANCIAL STATUS REPORT A-269A Ex. C CHUKRAN Decl. Line B. $9,573.40.
159
A-397 The restated corrected line B for the first year as $78,204. Discussion is at SPA-19,, A-397ff
160
A-415 (SF-269a This is a corrected and revised final Statement for this 4th project Quarter.), A-452 ( Declaration
of Dunlevy, Section J, Discrepancies), A-453 ( (Decl. of Dunlevy Decl.,, Amended SF 269 A Report of Spending),
A-455 ( (Decl. of Dunlevy Decl., Co-Funding and Co-Funding discrepancies),
161
A-398 (GROUND TRUTH QUARTERLY SPENDING BY REVISED SF269A)
155
15
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Appendix
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CERTIFICATE OF COMPLIANCE
As measured by the word processing system used to prepare this brief, there
are no more than 15 pages or at most 7,000 words.
There are 6,884 words in this reply brief, exclusive of table of contents, table
of citations, statement with respect to oral argument, and certifications of do not
count toward the limitation.
D. B. KARRON
pro se
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Certificate of Service
Daniel B. Karron,
Defendant-Appellant,
CERTIFICATE OF SERVICE
11-1924-civ
v.
United States of America,
Plaintiff-Appellees.
I, D. B. Karron hereby certify under penalty of perjury that on April 12, 2012, I
served a copy of the Corrected Appeal Reply Brief by
___ United States Mail
___ Federal Express
___ Overnight Mail
___ Facsimile
_X_ E-mail to michael.byars@usdoj.gov
_X_ Hand delivery
on the following parties
For the United States of America
Michael J. Byars, Assistant United States Attorney
United States Attorney's Office, Southern District of New York
86 Chambers Street, 3rd Floor, New York, New York 10007
Signed, April 12, 2012 in Long Beach, New York
/s/__________________________
D B. Karron,
pro se
348 East Fulton Street
Long Beach, NY 11561
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Cross reference
Case: 11-1924 Document: 36
Karron Brief
Table of Authorities, Other Authorities
Cross reference to
Government Appendix (A-nnn),
Government Special Appendix (SPA-nnn) and
Karron Appendix (KA-nnn),
where nnn is an appendix Bates Stamp Page Number
Document and Ref
Appendix Ref
Karron Brief Ref
DXFFF ......................................KA-1737..... ......... 17
DXP-6.KA-1753...................................17
GXl KA-66.12
GX23..................................................KA-204.................................... 11
GX114..............................................A-233........................................... 21
GX2..................................................A-72................................... 25, 26
GX50................................................KA-1754....................................... 21
GX61................................................KA-1777...................................... 17
GX62................................................A-160...........................................,.25
Sentencing Tr. at 10 Line 23 ...............A-265..................17
Sentencing Tr. at 19 Line 10 ...............A-274.........................................10
Sentencing Tr. at 61 Line 19 ...............A-316.................................17
Sentencing Tr. at 61 Line 23 ...............A-316............................. 18, 23
Sentencing Tr. at 8 Line 2 ...................A-263........................................17
Sentencing Tr. at 9 Line 18 .................A-264........................................21
Sentencing Tr. at 9 Line 21 .................A-264........................................17
Trial Tr. at 1057 Line 9 .......................KA-1380...................................10
Trial Tr. at 1293 Lines 20-24 ...............KA-1619...................................21
Trial Tr. at 350 Line 5 ........................KA-670......................................18
Trial Tr. at 381 Line 15 .......................KA-701......................... 18, 22, 23
Trial Tr. at 383 Line 5 ........................KA-703...................................... 23
Cross reference to
A
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B
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Technologies................................................................................................ KA-314
PATTERSON COURT CRIMINAL TRIAL TRANSCRIPT
KA-319
D
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E
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G
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Index
H
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