The False Claims Act’s Liability Provisions (Part 6 of 7): False Pledges

The False Claims Act has seven liability provisions. Attorneys use some in almost every case, while others are rarely used. In a series of posts, each provision will be discussed.

The Act’s sixth liability provision is 31 U.S.C. § 3730(a)(1)(F), which provides that any person who “knowingly buys, or receives as a pledge of an obligation or debt, public property from an officer or employee of the Government, or a member of the Armed Forces, who lawfully may not sell or pledge property” is liable.

Simplified Example: A pawnbroker receives night vision goggles from a member of the armed forces as a pledge of collateral on a debt, knowing that the service member probably does not have authority to dispose of the night vision goggles.

The False Pledges provision is a little used section of the False Claims Act

In the early part of the twentieth century, the False Pledges provision was the subject of several cases involving soldiers who pawned their clothing and blankets brought under the criminal version of the False Claims Act (which was identical to then-existing civil version of the Act). In one case, the Northern District of Illinois observed that a defendant violated the False Pledges provision by purchasing and receiving in pledge clothing from soldiers:

“It appears that Edward Hart, the defendant, on a number of different occasions at his place of business in Highwood, Ill., purchased and received in pledge from soldiers employed in the military service of the United States at Ft. Sheridan certain articles of clothing, consisting of fur caps, fur gauntlets, capes, and coats, which articles had been previously issued to them as soldiers by the United States. On motion to take from the jury, the question arose as to whether certain articles of clothing, namely, caps, gloves, shoes, and coats, which had been issued to soldiers in the service of the United States, and by them sold and pledged to the defendant, are public property… Clothing is issued to soldiers by the United States for use by them in the capacity of soldiers. The government determines the character, quality, and quantity of clothing to be issued to the soldiers, and when the clothing is issued, although it is charged against the soldiers on their clothing account, they receive but a qualified interest therein.”

United States v. Hart, 146 F. 202, 202–03 (N.D. Ill. 1906). This court directed the jury to grant a verdict in favor of the United States. Id. at 203. In United States v. Smith, 156 F. 859 (C.C.D. Wash. 1907), the court observed “There are very good reason for [this law] being enforced, for there is nothing so demoralizing to the soldier and the service as this buying of clothing and uniforms by civilians.” Id. at 862. However, in another case, the Court found no violation because it was the soldier’s overcoat to sell. United States v. Michael, 153 F. 609, 615 (W.D. Tex. 1907).

In 2015, the Army owns military-issued clothing. Soldiers are responsible for replacing clothing lost through their own fault. However, unless they are discharged under less than honorable circumstances, soldiers are usually permitted to keep at least one set of clothing upon leaving service. Army Regulation 700-84, Logistics, Issue and Sale of Personal Clothing, at chps. 2-7, 5-2(c)(4)(b), 12, 14-16(b) (July 22, 2014). Soldiers can be court marshaled for theft of property owned by the military. United States v. Jimenez, 2011 CCA LEXIS 327 (N-M.C.C.A. Nov. 29, 2011) (M-4 rifle, Glock pistols, & night vision goggles); United States v. Roach, 65 M.J. 866 (A.C.C.A. 2007) (night vision goggles).

If you know of someone who has made false pledges, claims, or statements, or who has cheated the Government, protect yourself and explore potential remedies. You can obtain guidance from experienced legal counsel by contacting us.

Leave a Reply