In the Matter of the Proposed Debarment of JOHN R. GNAU, JR., P. O. Box 1000 at Loretto, PA 15940-1000 P.S. Docket No. 28/186 06/16/88 Cohen, James A. Judicial Officer APPEARANCE FOR POSTAL SERVICE: Sandra C. McFeeley, Esq. Office of Contracts & Property Law Law Department United States Postal Service Washington, DC 20260-1120 APPEARANCE FOR RESPONDENT: Anthony P. Interdonato, Esq. 4801 Massachusetts Ave., NW, Suite 400 Washington, DC 20016-2069
Respondent, John R. Gnau, Jr., contests a proposal to debar him and any company in which he has substantial interest or control because of his conviction of offenses in violation of Title 18, United States Code 201(f) and 371. A hearing at which Respondent was represented by counsel was held at Respondent's request.
FINDINGS OF FACT AND
PROCEDURAL BACKGROUND
1. In a plea hearing held on October 17, 1986, in the United States District Court for the District of Columbia, Respondent waived his right to an indictment and pleaded guilty to (1) conspiracy to defraud the Postal Service in violation of 18 U.S.C. 371 and (2) paying a gratuity to a postal official in violation of 18 U.S.C. 201 (Postal Service Exhibit (PS Exh.) 2, pp. 4-6). Respondent was "thoroughly conversant with all elements of the information" describing the violations on which the plea was based, having worked with both his counsel and the United States Attorney in its preparation (PS Exh. 2, pp. 8-9, 22-23). Before accepting the guilty plea, Respondent was admonished by the Court to listen carefully to the factual basis for the charges against him to afford him an opportunity to "quarrel or contradict the proffered evidence of the Government." (PS Exh. 2, p. 6). The Assistant United States Attorney thereupon summarized each paragraph of the 26 paragraph Information (PS Exhs. 1 & 2). With the exception of a portion of paragraph 18 of the Information Respondent had no objection to the charges contained therein (PS Exh. 2, pp. 22-23). Paragraph 18, also referred to as overt act 18, stated:
"On or about June 14, 1985, within the District of Columbia, unindicted coconspirator Voss told the Deputy PMG to award REI a noncompetitive contract for the production of 90 MLOCR systems for an aggregate price of approximately $162 million." (PS Exh. 1, p. 9)
Respondent's exception to the paragraph consisted of his alleged unawareness of the described act at the precise time it occurred, not his general unawareness of the described scheme itself (PS Exh. 2, p. 9).
2. Based upon the United States Attorney's presentation of the facts contained in the Information, the Court accepted Respondent's guilty plea, satisfied that Respondent, having had a "full opportunity" to quarrel with or contradict the evidence, had made his guilty plea "knowingly and advisedly." (PS Exh. 2, p. 23). The Court thereupon entered the convictions to the two counts (PS Exh. 2, p. 23). Respondent subsequently was sentenced to three years in prison and ordered to pay a $10,000 fine.
3. By Notice dated November 3, 1987, the Assistant Postmaster General (APMG), Procurement and Supply Department, United States Postal Service, notified Respondent that the Postal Service was considering debarring him and any company in which he had a substantial interest or control, including Gnau, Carter, Jacobsen and Associates, Inc. and Gnau and Associates, Inc., for a period of three years pursuant to section 1-604 of the Postal Contracting Manual.1/ The proposed debarment was based on Respondent's conviction.
4. Upon receipt of the notice of proposed debarment, Respondent requested a hearing for the purpose of challenging the APMG's finding that his debarment was in the best interest of the government and that the debarment should extend for a period of three years. Aside from admitting his conviction, Respondent denied the factual basis for the proposed debarment recited in the Notice and declared his intention to engage in extensive discovery in defending against the charges. He requested that no hearing date be set prior to February 1, 1988, and thereafter filed written interrogatories upon the Postal Service counsel representing the APMG. Much of the information sought by the interrogatories pertained to the factual basis for Respondent's conviction.
5. After considering the Postal Service's objections to the requested continuance the Judicial Officer on December 17, 1987, determined that Respondent had not shown that the hearing should be further delayed. The hearing was set for January 20, 1988.
6. On December 23, 1987, Postal Service counsel responded to Respondent's interrogatories. The response advised Respondent that the basis for the proposed debarment was his conviction of the two criminal offenses. It further stated that the facts underlying the debarment action were set forth in the notice of proposed debarment as well as the two count Information of the charges against Respondent and the transcript of the plea proceeding. The latter documents were filed with the notice of proposed debarment. Counsel objected to answering any interrogatory directed to a relitigation of the facts underlying the convictions. Thus, in responding to each interrogatory, counsel for the most part referred to the Information and plea transcript by reference and objected to providing any other information.
7. Respondent thereafter on January 5, 1988, filed a Motion to Compel Answers (to the interrogatories). He also requested that the hearing be delayed 30 days beyond January 20. On January 6, 1988, Respondent filed a Request for Production of Documents. In support of his Motion and Request Respondent primarily contended that the Postal Service's charges against him were premised on hearsay evidence and that discovery was needed to develop a full, fair and complete record to assist him in refuting
the Postal Service's charges.2/ The Postal Service opposed the Motion and Request, contending that all relevant documents had been provided to Respondent, as its case rested solely on certified copies of court documents pertaining to Respondent's guilty plea and conviction. Respondent's Motion and Request were denied in an Order issued January 14, 1988. The Order stated that the court certified documents constituted voluntary admissions against interest by Respondent and thus were not inadmissible hearsay. It further stated that, since Respondent knowingly and voluntarily admitted the substantial correctness of the facts recited in the Information and plea hearing, Respondent would not be allowed to litigate these facts in the debarment proceeding. It was ordered that the hearing proceed as scheduled.
8. Respondent did not appear at the hearing but was represented by counsel. Counsel requested a 30 day continuance to allow him additional time to prepare Respondent's defense. In the absence of a showing of good cause to support the extension, the request was denied and the hearing proceeded. The Postal Service presented its case, which consisted of three exhibits, the criminal Information, the plea transcript and a Memorandum of Agreement between Respondent and the United States of America. Counsel for Respondent presented no evidence on Respondent's behalf.
9. The background and overt acts recited in the Information and summarized at the plea hearing were admitted by Respondent and are deemed to be established for the purpose of this proceeding.
DECISION
Respondent contests the procedural rulings which denied him a continuance of the January 20, 1988, hearing and which precluded his efforts to obtain discovery regarding the facts underlying his offenses. With respect to the continuance, Respondent argues that his counsel was unprepared, that attempts to uncover facts necessary to his defense were unreasonably hampered by the Postal Service, and that such circumstances dictate good cause for granting the continuance. Respondent also argues that given the 13 month "delay" between the entry of conviction and initiation of this proceeding, no harm would result from a further delay. He further contends that failure to grant the continuance to pursue discovery would constitute a denial of due process and a "meaningful opportunity to be heard."
With respect to the discovery matter, Respondent argues that he is not precluded from denying the facts underlying his offenses for three reasons: (1) he is not, as Postal Service counsel suggests, collaterally estopped since the parties are not the same, and in any event the Postal Contracting Manual (PCM) reserves Respondent the right to produce information which could be used to show circumstances which would mitigate the debarment action; (2) a "gaping hole in the findings relating to his total offense behavior" exists due to overt act 18 being omitted from the admissions in the Information, and this gap cannot be remedied absent discovery and without which a fair decision cannot be made; and (3) he has a constitutionally protectible interest at stake "in having the true nature and extent of his conduct correctly determined..." and a "due process right to refute the charges," since an adverse decision could affect his reputation and future work prospects. He argues in this context that the Postal Service wrongly characterized the facts underlying his offenses and that the hearing which he was afforded did not meet due process standards to which he was entitled. See Matthews v. Eldridge, 424 U.S. 319 (1976).
None of the arguments presented by Respondent pertaining to the discovery issue support a holding that he is entitled to deny and place in issue the facts underlying his criminal offenses, either as they appear directly in the Information or as characterized by the Postal Service. Collateral estoppel aside, a conviction itself, without proof of the underlying facts, constitutes by clear and convincing evidence sufficient grounds to establish cause for debarment. The debarment proceeding is not a proper forum to challenge that conviction, and no duty exists to explore underlying facts. See Tempo Trucking and Transfer Corp. v. Dickson, 405 F. Supp. 506 (E.D.N.Y. 1975); Paul E. Jaquish, Jr., P.S. Docket No. 19/124 (P.S.D. April 12, 1985); S. Puma Co., Inc., GSBCA Nos. 6934-D, 6936-D, 83-1 BCA 16,349 (1983).
Respondent's post-hearing argument that the PCM reserves him the right to show mitigating circumstances is misplaced in view of his stated intention to utilize discovery for the express purpose of disputing the facts underlying his conviction. Moreover, even if establishing mitigating circumstances had been his goal, a review of the interrogatories shows them to seek little, if any, information which might reasonably be of a mitigating nature.
There is no merit to Respondent's argument that the alleged exclusion of overt act 18 from the guilty plea creates a "gaping hole" with respect to his "total offense behavior." Overt act 18 was not excluded from the guilty plea. The exception taken to overt act 18 was to Respondent's knowledge of the act at the precise time it occurred, not to knowledge of the act itself. In any event Respondent pleaded guilty to the two counts despite any exception taken to the language of overt act 18.
Respondent's due process argument is based on the contention that the Postal Service's characterization of the contents of the Information constitutes a separate "factual predicate" for the debarment action which has to be defended through the expedient of discovery. Respondent's position is without merit. In determining whether Respondent should be debarred little weight is given to the Postal Service's characterization of the contents of the Information. Rather, the contents of the documents themselves, which were entered as evidence, are relied upon. Respondent had adequate notice of the scope and subject matter of this proceeding, as well as every piece of evidence which was before the Judicial Officer. Refusal to expand the hearing by allowing underlying facts to be litigated, their characterization to be placed in issue, or to allow discovery thereon did not deny Respondent a meaningful hearing. See Electro-Methods, Inc. v. United States, 728 F.2d 1471 (Fed. Cir. 1984).
Neither the denial of the January 5 and 6 motions nor the last minute hiring of counsel prejudiced Respondent as he suggests. The motions focused on relitigation of the facts underlying the criminal offenses, matters outside the scope of the debarment proceeding. They did not attempt to obtain information which might tend to show mitigating circumstances in his favor. Additionally, the debarment action was commenced November 3, 1987. Respondent presented no excuse for waiting until the eve of the January 20, 1988, hearing to retain counsel. The fact that the Postal Service waited 13 months after Respondent's conviction to bring the action has no bearing on the denial of the continuance, since Respondent did not establish good cause for the request. Based upon such circumstances, the continuance was properly denied.
Based upon the seriousness of the cause presented and the lack of countervailing evidence by Respondent it is determined that debarment is warranted. Section 1-604.2 of the Postal Contracting Manual states that debarment "shall be for a reasonable, definite, stated period of time, commensurate with the seriousness of the offense or the failure or inadequacy of performance. As a general rule, a period of debarment shall not exceed 3 years." Mitigating circumstances may be weighed in arriving at an appropriate period. PCM 1-604.1c(1).
The standard for making this determination is the individual's present responsibility, i.e. his evaluation as a good business risk, which may be determined from prior acts. Integrity is a key factor in determining responsibility. See Roemer v. Hoffman, 419 F. Supp. 130 (D.D.C. 1976); Paul E. Jaquish, Jr., supra; Nathan Dal Santo, P.S. Docket Nos. 15/130 and 16/33 (P.S.D. June 10, 1983); Winnie Faye Owings, HUDBCA No. 80-468-D16, 81-1 BCA 15,048 (1981).
The record does not exhibit, nor has Respondent presented, any evidence of mitigating factors which bear on his present responsibility and which might temper the three year period of debarment proposed by the APMG. Without the existence of such evidence, it is concluded that three years is an appropriate period of debarment. The debarment shall therefore extend three years from the date of this decision.
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