Federated States of Micronesia v Fritz [2004] FMSC 47; 12 FSM Intrm. 602 (Chk. 2004) (20 August 2004)

FEDERATED STATES OF MICRONESIA
SUPREME COURT TRIAL DIVISION
Cite as FSM v Fritz, [2004] FMSC 47; 12 FSM Intrm 602 (Chk. 2004)

FEDERATED STATES OF MICRONESIA
Plaintiff

vs.

JACK FRITZ,
Defendant.

CRIMINAL CASE NO. 2003-1500

FINDINGS BY THE COURT UPON TRIAL

Andon L. Amaraich
Chief Justice

Trial: April 5-7, June 21-26, 28-30, and July 1, 2004
Decided: August 3, 2004
Memorandum Entered: August 20, 2004

APPEARANCES:

For the Plaintiff:
Matthew Crabtree, Esq.
Assistant Attorney General
FSM Department of Justice
P.O. Box PS-105
Palikir, Pohnpei FM 96941

For the Defendant:
Peter J. Stelzer, Esq.
Office of the Public Defender
P.O. Box 425
Colonia, Yap FM 96943

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HEADNOTES

Administrative Law; Criminal Law and Procedure
The Financial Management Regulations apply to the expenditure, obligation, and disbursement of funds. These Regulations were promulgated by the Secretary of Finance pursuant to statutory authority and have the force and effect of law. Under the statutes and regulations, funds cannot be used for any purpose other than for which they were allotted, and the Project Control Document is a legally binding document which sets forth the purposes for which the allotted funds must be used. FSM v. Fritz, [2004] FMSC 47; 12 FSM Intrm. 602, 604 (Chk. 2004).

Administrative Law - Statutory Construction; Criminal Law and Procedure
A former Secretary of Finance’s testimony as to his current understanding of the legal effect and the meaning of certain regulations can only be given little or no weight since it does not qualify as satisfactory "legislative history." The regulations speak for themselves. FSM v. Fritz, [2004] FMSC 47; 12 FSM Intrm. 602, 604 (Chk. 2004).

* * * *

COURT’S OPINION

ANDON L. AMARAICH, Chief Justice:

Trial was held in this matter on April 5-7, June 21-26, 28-30, and July 1, 2004. The court heard the testimony of Rose Nakanaga, Marlyn Albert, Jason Poll, Raify Saimon, Catalina Donre, Kait Kikku, Inspector Fletcher Poll, Henzel Akapito, John Ehsa, Senso Lorenzo, and Lt. Isoda Nakashima. Upon the defendant’s motion for acquittal at the close of the prosecution’s case in chief, FSM Crim. R. 29, the court entered a judgment of acquittal on counts VI and VIII. Based upon the witnesses’ testimony and the exhibits admitted into evidence, the court, on August 3, 2004, made and delivered orally from the bench the following

General Findings.

The court found defendant Jack Fritz;

on Count I of the information, Obligating Funds for Purposes Other than Permitted, 55 F.S.M.C. 221(3); 55 F.S.M.C. 223, guilty;

on Count II of the information, Obligating Funds for Purposes Other than Permitted, 55 F.S.M.C. 221(3); 55 F.S.M.C. 223, guilty;

on Count III of the information, Obligating Funds for Purposes Other than Permitted, 55 F.S.M.C. 221(3); 55 F.S.M.C. 223, guilty;

on Count IV of the information, Obligating Funds in Advance of Availability, 55 F.S.M.C. 221(2); 55 F.S.M.C. 223, guilty;

on Count V of the information, Liability for the Crimes of Another, 11 F.S.M.C. 301, Theft of National Government Property, 11 F.S.M.C. 601, not guilty;

on Count VII of the information, Liability for the Crimes of Another, 11 F.S.M.C. 301, Theft of National Government Property, 11 F.S.M.C. 601, not guilty;

on Count IX of the information, Solicitation, 11 F.S.M.C. 202 of national offense of obligating funds in advance of availability, 55 F.S.M.C. 221(2), not guilty;

on Count X of the information, Solicitation, 11 F.S.M.C. 202 of national offense of obligating funds for purposes other than those for which the allotment has been made, 55 F.S.M.C. 221(3), not guilty; and

on Count XI of the information, Solicitation, 11 F.S.M.C. 202 of national offense of obligating funds for purposes other than those for which the allotment has been made, 55 F.S.M.C. 221(3), not guilty.

These general findings are based upon the following

Special Findings,

which are based upon the court’s careful consideration of the witnesses’ testimony and the exhibits admitted into evidence. The court finds that the government has proven the following beyond a reasonable doubt.

Public Law No. 10-126, § 2(1) appropriated a lump sum of $175,000 to the Southern Namoneas Development Authority "for the purpose of funding health, education, infrastructure and other public projects." Pursuant troject Control Document approved by the FSM in October, 199, 1999 and which was attached to Advice of Allotment # 401C0009, dated November 1, 1999, twenty thousand dollars of these funds were allotted for the "Uman Social Project." Pursuant to the Project Control Document, the Uman Social Project funds had to "be used to build new Community Halls on the Island of Uman" because "[t]he population of Uman ha[d] grown substantially" and "more Community halls [we]re needed to meet [the] needs of the people." The project control document specified that the Uman Social Project funds were to be used for six new meeting halls. The Executive Director of the Southern Namoneas Development Authority was the allottee for the Uman Social Project funds.

The Financial Management Regulations, effective June 14, 1999, applied to the expenditure, obligation, and disbursement of funds for the Uman Social Project. These Financial Management Regulations were promulgated by the Secretary of Finance pursuant to statutory authority and "have the force and effect of law." 55 F.S.M.C. 228. Under the statutes and regulations funds cannot be used for any purpose other than for which they were allotted. The Project Control Document is a legally binding document which sets forth the purposes for which the allotted funds must be used. There are procedures, prescribed by regulation, by which an approved project’s purpose may be altered or amended. None of these procedures were utilized or attempted.

John Ehsa, a former Secretary of Finance and the Secretary of Finance who promulgated the 1999 Financial Management Regulations, testified as to his current understanding of the legal effect and the meaning of certain regulations. As a matter of law, such evidence can only be given little or no weight. Lonno v. Trust Territory (I), 1 FSM Intrm. 53, 61-62 (Kos. 1982) (legal memo prepared by an agency officer three years after the Secretarial Order it purported to explain or interpret and prepared for a specific lawsuit, does not qualify as satisfactory "legislative history" of the Secretarial Order); see also Etscheit v. Adams, [1994] FMSC 6; 6 FSM Intrm. 365, 381 (Pon. 1994) (pronouncements by a later legislature concerning the meaning of actions taken by an earlier legislature are generally unreliable); cf. Kosrae v. Sigrah, 11 FSM Intrm. 26, 30 (Kos. S. Ct. Tr. 2002) (former constitutional convention delegate’s live testimony concerning the legislative history of a constitutional provision not permitted). The regulations speak for themselves.

On December 20, 1999, Kait Kikku met with the defendant and asked the defendant for help in completing his private home on Uman. In response, the defendant gave Kikku a hand-written letter addressed to Jason Poll, the manager of Truk Development Enterprises, a commercial enterprise on Weno, Chuuk. Exs. 8, 9.[1] The letter stated that Kikku would be getting $2,000 for a meeting hall and asked Poll to help Kikku[2] out and to bill the Southern Namoneas Development Authority. This was before the proper documents had been prepared and approved in order for the Uman Social Project funds to be legally available for obligation. By means of this letter, the defendant authorized an expenditure of Uman Social Project funds. The defendant did this willfully, knowing that Kikku was going to use the funds for a purpose other than that for which the defendant knew the funds were allotted, and knowing that the funds were not yet available because the proper documents had not been prepared and approved.

On January 4, 2000, the defendant willfully addressed a memorandum to Acting Director Terno Este of the Southern Namoneas Development Authority. Ex. 4. That memorandum designated six recipients for the Uman Social Project funds. Two of those recipients were Kait Kikku and Gerhardt Pitiol. The memorandum authorized $2,000 each for Kikku and Pitiol[3] for "repair and renovations" of existing community halls. Repair and renovation of existing community halls was not a purpose for which the Uman Social Project funds were allotted. The defendant knew this when he sent the memorandum. Furthermore, repair and renovation of existing community halls was not consistent with the Uman Social Project’s justification that more community halls were needed on Uman because of Uman’s growing population. By means of this memorandum, the defendant authorized expenditures of the Uman Social Project funds. The funds were expended and then disbursed at later dates. An authorization of an expenditure can, and will, come before the actual expenditure, and an expenditure can take place before the actual disbursement of funds to complete or satisfy that expenditure. Disbursement of funds is the actual payment of money. An expenditure will often be, but not always, made before the actual funds are disbursed. This is analogous to a credit purchase. Authorization of an expenditure will necessarily come before the actual expenditure. In this case, the defendant authorized a later expenditure.

The defendant was at all relevant times an officer and an employee of the Federated States of Micronesia.

The court did not find that the prosecution had proven beyond a reasonable doubt the charges in counts V, VII, IX, X, and XI, and so entered a general finding of not guilty on each of those counts.

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^[1] Exhibits 8 and 9 are a copy of the one-page letter. It was originally written on long paper, the top _ of the letter is Exhibit 9, and the bottom _ of the letter is Exhibit 8. The main body of the letter is in both exhibits.

^[2] Using this letter, Kikku obtained construction materials from Truk Development Enterprises on December 21, 1999. These materials were used on his private home on Uman.

^[3] Pitiol used all $2,000 designated for him on his private home on the island of Fefan. None of Pitiol’s money was spent on any structure on the island of Uman.