11-1924 2nd Karron Reply Brief

8/2/2019 11-1924 2nd Karron Reply Brief

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Selected docket entries for case 111924

Generated: 05/18/2012 13:18:26

Filed Document Description Page Docket Text

05/14/2012 CASE CALENDARING, on submission for 06/26/2012,SET.[609008] [111924]

05/16/2012 84 Corrected Brief FILED (c) 2 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 8613second corrected version

(remove this page before submissionGREY COVER)

Case: 11-1924 Document: 84 Page: 1 05/16/2012 610838 39

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11-1924To be argued by:D. B. KARRON

FOR THE SECOND CIRCUIT

Docket No. 11-1924

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

DANIEL B. KARRON,

Defendant-Appellant.

ON APPEAL FROM THE UNITED STATES DISTRICT COURTFOR THE SOUTHERN DISTRICT OF NEW YORK

REPLY BRIEF FOR THE DEFENDANT-APPELLANT

DANIEL B.KARRON

pro se348 East Fulton StreetLong Beach, New York 11561

(516) 515- [email protected]


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11-1924To be argued by:D. B. KARRON


Docket No. 11-1924

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

DANIEL B. KARRON,


ON APPEAL FROM THE UNITED STATES DISTRICT COURTFOR THE SOUTHERN DISTRICT OF NEW YORK

REPLY BRIEF FOR THE DEFENDANT-APPELLANT

DANIEL B.KARRON

pro se348 East Fulton StreetLong Beach, New York 11561(516) 515- [email protected]


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Table of Contents

Contents

Table of Contents .......................................................................................... iTable of Authorities .................................................................................... iii

Cases ....................................................................................................... iiiStatutes .................................................................................................... iiiRegulations .............................................................................................. iiiOther Authorities ..................................................................................... iv

Reply Preliminary Statement ....................................................................... 1Issue Presented for Review .......................................................................... 1Statement of the Case................................................................................... 2

ISSUE: The Claim is not false. .............................................................. 2a) The Patterson Court never even cited, much less adjudicated, The

Claim as a source of misapplied funds. .......................................................... 2b) The $75,000 Payroll Advance (The 75K Advance), made to Karronfrom 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. ............................................................................................................ 3c) The balance of working capital advance proceeds from The Claim

was used as affirmed by Karrons signature. .................................................... 3e) Because of the above, The Claim as affirmed, was not a False

Claim Act claim on the United States Treasury. ............................................... 3f) 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


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Reply Statement of Facts ............................................................................. 3The Advanced Technology Program ......................................................... 3Karron Salary ............................................................................................ 4

Karron was required to Co-Funds Project Direct Costs, Indirect Costs. . 4Karrons Salary Figures ......................................................................... 5Karrons Salary funded contribution and overhead ................................ 5

Summary of Argument ................................................................................ 5Argument ..................................................................................................... 5Standard of Review ...................................................................................... 6Reply Argument .......................................................................................... 6

The Claim is not false ............................................................................ 6Point 1: The 75K Advance was classified as Salary............................... 7

The 75K Advance payments are salary earned but not paid by check . 8Point 2: The 30 Day Float Rule does not apply...................................... 8Point 3: Working capital advance ............................................................. 9Point 4: Tracing The 75K Advance ..................................................... 10Point 5: Amortizing The 75K Advance ............................................... 11Point 6: The Rent: Reclassified and/or Offset ......................................... 12 Point 7: Budget Flexibility 10% Change Rule base: Annual or Total ? 13Point 8: Challenge to Karron contribution figures fails ........................... 15

Conclusion ................................................................................................. 15Appendix ..................................................................................................... 1

CERTIFICATE OF COMPLIANCE ........................................................ 2Certificate of Service ................................................................................ 3Cross reference ......................................................................................... 1Karron Appendix Table of Contents ......................................................... 3Index ......................................................................................................... 8


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Table of Authorities

Cases

CasesDecl. of Dunlevy ............................................................................... 6, 8, 13, 14, 19

U.S. v. Harloff, 815 F.Supp. 618 (W.D.N.Y.1993) ................................................ 9

U.S. v. LaHue, 170 F. 3d 1026(10th Cir., 1999) .................................................. 9

U.S. v. Mills, 140 F.3d 630 (6th Cir., 1998) ........................................................6, 9

Statutes

Statutes15 U.S.C. 278n (2001) ...................................................................................... 17

18 U.S.C. 666(c) .......................................................................................... 1, 2, 9

31 U.S.C. 3729(a)(1) (2000) ............................................................................1, 7

31 U.S.C. 3729(b)(1) (2000). .............................................................................. 7

31 U.S.C. 3729(c) ............................................................................................... 131 U.S.C. 3729(c) (2000) .................................................................................1, 2

31 U.S.C. 3731(d) ............................................................................................... 4

31 U.S.C. 3731(e) ............................................................................................... 4

35 U.S.C. 123 ................................................................................................... 13

Regulations

Regulations15 C.F.R. (1101 Edition) 14.25 (d) ................................................................ 14

15 C.F.R. (1101 Edition) 14.25 (f) ................................................................ 14


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15 C.F.R. (1101 Edition) 24.30 Changes. (c)................................................ 14

15 C.F.R. 14.2(rr).............................................................................................3, 9

15 C.F.R. 14.22(b) ............................................................................................ 10

15 C.F.R. 14.22(f) .......................................................................................... 9, 12

15 C.F.R. 14.25 ................................................................................................... 515 C.F.R. 24 ...................................................................................................... 14

15 C.F.R. 295 (2001) ........................................................................................ 13

15 C.F.R. Subtitle B, Ch. II (1101 Edition) 295.8(a)(2) ................................... 4

15 C.F.R. 278n (d)(11)(A) ................................................................................... 3

37 C.F.R. 1.27(a) .............................................................................................. 10

Other Authorities

NOTE ABOUT FORMAT OF CITATIONS

A-nnn refers to the Government Appendix; SPA-nnn refers to the

Government Special Appendix, and is cited in this manner.

KA-nnn refers to the Karron Appendix, submitted with this Reply Brief.

A cross reference table for citations in the Karron Brief to these later

submitted appendices is included in this submission.

GXnnn refers to Government eXhibit nnn from the Patterson Court criminal

trial exhibits.

DXnnn refers to Defense eXhibit nnn from the Patterson Court criminal trial

exhibits.

G. Br. at nnn refers to the Government Brief in this Appeal.

Karron Br at nnnrefers to Karrons Brief in this Appeal.

Sentencing Tr at nnn refers to the Patterson Court Criminal Trial sentencing

transcript, included here in the Government Appendix.

Trial Tr at nnn refers to the Patterson Court Criminal Trial transcript,

included here in the Karron Appendix.

Karron 56.1 Counterstatement at nnn refers to the Buchwald Court Rule 56.1

Karron Counter Statement of Material Facts in Summary Judgement Motion

practice.

Other Authorities


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A-137 ................................................................................................................... 15

A-138 ................................................................................................................... 12

A-167 ................................................................................................................... 11

A-169 ................................................................................................................... 13

A-171 3 ............................................................................................................. 13A-193 ................................................................................................................... 11

A-205 ................................................................................................................... 14

A-218 ..................................................................................................................... 3

A-22....................................................................................................................... 4

A-220 ..................................................................................................................... 3

A-233 .............................................................................................................. 13, 16

A-259 ................................................................................................................... 16

A-261 ................................................................................................................... 16A-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


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A-391 ..................................................................................................................... 6

A-394 .............................................................................................................. 13, 16

A-397 .............................................................................................................. 13, 18

A-397ff ................................................................................................................ 18

A-40..................................................................................................................... 14A-41..................................................................................................................... 14

A-415 ................................................................................................................... 18

A-427 ..................................................................................................................... 6

A-434 ................................................................................................................ 8, 13

A-437 ................................................................................................................... 12

A-438 ................................................................................................................... 18

A-447 ..................................................................................................................... 6

A-452 ................................................................................................................... 18A-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


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Decl. of Chukran Ex. C .......................................................................................... 1

Decl. of Chukran Ex. C, at 1 .................................................................................. 2

Eisen Decl ......................................................................................................... 4, 12

Exhibit E Certified Audio Tr. ............................................................................... 12

Final Audit Report August 2004 ................................................... 10, 11, 13, 14, 15Final Audit Report August 2004, at 10 6 ........................................................... 10

G. Br. at 10 .......................................................................................................... 10

G. Br. at 10, 1 ...................................................................................................... 2

G. Br. at 11 footnote ......................................................................................... 8, 15

G. Br. at 13 footnote ............................................................................................ 18

G. Br. at 14 2 ....................................................................................................... 2

G. Br. at 29 3 ....................................................................................................... 9

G. Br. at 42 .......................................................................................................... 10G. Br. at 42 2 ..................................................................................................... 14

G. Br. at 44 1 ..................................................................................................... 14

G. Br. at 5 1 ......................................................................................................... 2

G.Br. at 41 1, line 2 ........................................................................................... 15

GX1 .............................................................................................................. 4, 5, 15

GX10 ..................................................................................................................... 5

GX110 ...................................................................................................... 14, 15, 16

GX114 ...................................................................................................... 13, 15, 16

GX12 .............................................................................................................. 11, 16

GX13 ................................................................................................................... 15

GX22 ................................................................................................................... 12

GX3 ..................................................................................................................... 17

GX-61 .................................................................................................................. 13

GX62 .............................................................................................................. 11, 13

KA-1 ................................................................................................................. 3, 14

KA-10 ............................................................................................................... 5, 16

KA-1114 ................................................................................................................ 2

KA-1122 ................................................................................................................ 8

KA-1124 .............................................................................................................. 16

KA-134 .................................................................................................................. 5

KA-142 ............................................................................................................. 4, 17


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KA-15 .................................................................................................................4, 5

KA-161 .................................................................................................................. 4

KA-1699 .............................................................................................................. 16

KA-1718 .............................................................................................................. 12

KA-1719 .............................................................................................................. 12KA-1731 .............................................................................................................. 12

KA-1735 .............................................................................................................. 17

KA-1771 ......................................................................................................... 11, 13

KA-1777 ......................................................................................................... 11, 13

KA-185 ................................................................................................................ 17

KA-20 .................................................................................................................... 4

KA-204 .................................................................................................................. 5

KA-206 ................................................................................................................ 17KA-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


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KA-670 .................................................................................................................. 8

KA-701 .................................................................................................................. 8

KA-703 .................................................................................................................. 8

KA-706 .................................................................................................................. 9

KA-707 ............................................................................................................. 8, 14KA-76 .................................................................................................................. 15

KA-776ff ............................................................................................................. 17

KA-89 .................................................................................................................... 4

KA-92 .................................................................................................................... 4

KA-958 .................................................................................................................. 2

KA-977 .................................................................................................................. 9

KA-985 .................................................................................................................. 9

KA-987 .................................................................................................................. 2Karron 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




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Sentencing Tr. at 7 ............................................................................................... 16

Sentencing Tr. at 7 Line 1819 ............................................................................ 8

SPA 27................................................................................................................2, 3

SPA-180 .............................................................................................................. 15

SPA-19 ................................................................................................................ 18SPA-27 ..................................................................................................... 1, 2, 6, 15

SPA-30 .................................................................................................................. 2

SPA-32 ...............................................................................................................1, 2

SPA-35 .................................................................................................................. 1

SPA-36 .................................................................................................................. 4

Trial Tr. at 1066 Line 22 et seq .............................................................................. 6

Trial Tr. at 127 Line 25: ....................................................................................... 12

Trial Tr. at 298 Line 17 ........................................................................................ 17Trial Tr. at 350 Line 5 ............................................................................................ 8

Trial Tr. at 381 Line 15 .......................................................................................... 8

Trial Tr. at 383 Line 5 ............................................................................................ 8

Trial Tr. at 386 Line 19 .......................................................................................... 9

Trial Tr. at 387 Line 4 ............................................................................................ 8

Trial Tr. at 456 Line 14 ........................................................................................ 17

Trial Tr. at 60 Line 10 .......................................................................................... 17

Trial Tr. at 61 Line 1 ............................................................................................ 16

Trial Tr. at 656 Line 1 ............................................................................................ 9

Trial Tr. at 664 Line 15 .......................................................................................... 9

Trial Tr. at 800 Line 3 ............................................................................................ 8

Trial Tr. at 803 Line 19 ........................................................................................ 16

Trial Tr. at 87 Line 1 ............................................................................................ 17

U.S.A. v. Karron, 08-cv-10223 Docket 30 ............................................................. 6

Wang, Andrew J.(1998) Key Concepts in Evaluating Outcomes of ATP Funding of

Medical Technologies. Journal of Technology Transfer Vol. 23 (2): 6165. ..... 4

Wessner, Charles W., ed., The Advanced Technology Program: Assessing

Outcomes ........................................................................................................... 4


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Docket No. 11-1924

UNITED STATES OF AMERICA,Plaintiff-Appellee,

v.DANIEL B. KARRON,


REPLY BRIEF FOR DEFENDANT-APPELLANT

Reply Preliminary StatementThis honorable Courts main, or possibly only, task in this Appeal is to deny(or affirm) the District Courts finding that the sole surviving

1 SF-272 CashTransactions Report of December 19, 20012(The Claim) is a False Claims Act(FCA) claim.3 4 This Court should reject the Buchwald District Court findingthat the $75,000 advance payment (The 75K Advance) was not a bona fide5

program personnel cost.6 After reviewing the evidence and arguments, if thisCourt agrees with the affirmation7 on The Claim, and agrees that it is not false,

but true, then all other issues in this Appeal are mooted. The Summary Judgmentof the District Court must then be vacated.

Issue Presented for ReviewThere are two issues presented to this Court. The second issue depends on

the first issue. That is because if there is no Claim there are no damages. Thepurpose of this appeal is to review the District Courts determination that The

1 SPA-27 Buchwald Court Memorandum and Order at 27 22 A-58,A-58, Decl. of Chukran Ex. C,, FEDERAL CASH TRANSACTIONS REPORT SF-272, Signed Dec. 19,2001.3 SPA-35, 31 U.S.C. 3729(c) (2000) (c) Claim Defined.4 SPA-35, 31 U.S.C. 3729(a)(1) (2000). Current 3729(a)(1)(B) Liability for Certain Acts5 SPA-32, 18 U.S.C. 666(c) Safe Harbor provision( This does not apply to bona fide salary, wages, fees, orother compensation paid, or expenses paid or reimbursed, in the usual course of business)6 Karron Br. at 7 17 A-58, Karron Br. at 13 1, quoting from the SF-272 of Dec. 19, 2001 signed by Karron, Box 15


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a source of misapplied funds.b) The $75,000 Payroll Advance (The 75K Advance), made to Karron from thefirst (and only) $150,000 working capital advance20from The Claim was wellrecognized by the Patterson Court and OIG as bona fide tax paid salary.212223c) The balance of working capital advance proceeds24 from The Claim was usedas affirmed by Karrons signature.e) Because of the above, The Claim as affirmed, was not a False Claim Actclaim on the United States Treasury.f) Arguments on The Claim are not estopped25 because it was never even cited

by the Patterson Court as fraudulent or false. The Claim was not even an exhibitin The Patterson Court.26 Because of this, the Claim is not an eligible FCA SameTransaction27 subject to FCA Statutory Collateral Estoppel.28

Reply Statement of Facts

The Advanced Technology ProgramThe ATP program invested public money in high risk, high reward

technologies.29 In return, the public acquired paid up30 government rights to

1:2008-cv-10223, from which this Appeal arises from.19The Claim is not even an exhibit in the Patterson Court Criminal Trial and cannot be a 31 U.S.C. 3731(d)same transaction. cf KA-31920 KA-42, 15 C.F.R. 14.2(rr) defines Working capital advance as a procedure where by funds are advanced to

the recipient to cover its estimated disbursement needs for a given initial period. cf KA-4621 A-316, Sentencing Tr. at 61 Line 19 (THE COURT: He got it [Salary] in the form of loans.)22 A-325, Sentencing Tr. at 61 Line 23 (THE COURT: He got it [Salary] in the form of loans. It's very simple)cfA-364, A-384, A-29223 A-265,A-265 Sentencing Tr. at 10 Line 23 (THE COURT: There are documents appended to the defendant's

papers which indicate that the withholding was taken timely.)cfA-218, A-220, A-263, A-264,A-265,24 KA-1, The $75,000 balance of the $150,000 proceeds out of The Claim. cfKA-125 31 U.S.C. 3731(e) [statutory collateral estoppel]26 A-58,Chukran Decl. Ex. C, at 1, STANDARD FORM 272 Dec 19, 2001 signed by Karron. The Claim was noteven an exhibit in the Karron Criminal Casecriminal case in the Patterson Court..27 SPA-36, 31 U.S.C. 3731(e) False Claims Procedure ([]final judgment rendered in favor of the United Statesin any criminal proceeding [shall][] estop the defendant from denying the essential elements of the offense inany action which involves the same transaction criminal proceeding charging fraud or false statements. [statutorycollateral estoppel]28 A-489, Karron Oral Argument before Buchwald Court Tr. Line 8 et seq 2-3 (The oral citation to 3731(d) should

be 3731(e).(cfA-22, (a))29 KA-314, Wang, Andrew J.(1998) Key Concepts in Evaluating Outcomes of ATP Funding of MedicalTechnologies.. Journal of Technology Transfer Vol. 23 (2): 6165. cf A-94ff,, KA-29,, KA-92 (Potential forBroad-Based Economic Benefits.)30 A-72, GX2 GENERAL TERMS AND CONDITIONS ATP August 2001 25. INTELLECTUAL PROPERTY a.cfKA-142, KA-161 (October 2001 revision) [A-75 (Aug),


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patents31 as well as march-in rights and the statutory ATP Patent Procedure32.33 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 SalaryKarron 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 Co-

Funding); 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.3940

31

KA-15, 15 C.F.R. 278n (d)(11)(A) The United States may reserve a nonexclusive, nontransferable, irrevocablepaid-up license, to have practiced for or on behalf of the United States, in connection with any such intellectualproperty,32 KA-15, 15 C.F.R. Subtitle B, Ch. II (1101 Edition) 295.8(a)(2) Intellectual property rights;. (a)( (2)Patent

procedures33 KA-314, Wessner, Charles W., ed., The Advanced Technology Program: Assessing Outcomes (Washington, DC:

National Academy Press, 2000). cfA-94ff, , KA-2934 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 (2-3 sentences maximum) define how the project would have benefits to the taxpayer by funding year should additionalout-year funding not become available (i.e., severability statements).36 A-92, GX10, The original Cooperative Agreement (NIST-1252) contains an ESTIMATED MULTI-YEARBUDGET - SINGLE COMPANY. This Budget was later revised in an AMENDMENT TO FINANCIALASSISTANCE AWARD Amendment 4, July 16, 2002.37 KA-204, GX23, Amendment #338 KA-10, 15 C.F.R. Subtitle B, Ch. II (1101 Edition) 295.8 Intellectual property rights;;. (a)( (2) Patent

procedures KA-1539 KA-66, GX1, ATP Proposal Preparation Kit for 2000. Exhibit 14, KA-134 (We recognize that unexpectedevents occur frequently in R&D projects, and that budgets may need to be changed as a project proceeds. Don't fearthat by providing a multi-year budget beyond the first year, you will be locked into those details. ATP allows acertain amount of flexibility in moving funds from one line item to another as circumstances change. By stating an


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Karrons Salary FiguresKarron Salary41 was $253,91342 Dunlevy shows Karrons tax paid salary for

the entire project period of $334,004.1243

Karrons Salary funded contribution and overhead

The total cost of the project is $1,524,264, of which the Federal Share was$1,345,500 and the CASI contribution was $178,764.44 This contribution camedirectly from Karrons after tax Salary. Karrons contribution is not doubledipping45 because it is bona fide46 after tax paid funds. As government grantspecialist Snowden testified at trial, you could do whatever you want with it [theafter tax salary funds] 47.

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 thePatterson Court to be a misapplication of government funds under 18 U.S.C.

666(a)(1)(A) (Bribery, Embezzlement Act).

ArgumentThe 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 theThe 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 thesecond or third year of your project, you find that you need to spend more on one task and less on another thananticipated, 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-50Revision50Revision of budget and program plans. (f) The recipient may not transfer funds among direct costcategories [] the cumulative amount of such transfers exceeds oris expected to exceed 10 percent of the totalFederal and non-Federal funds authorized [] (g) All other changes [] do not require prior approval. (m) Within30 calendar days from the date of receipt of the request for budget revisions, DoC shall review the request and theGrants Officer shall notify the recipient in writing whether the budget revisions have been approved. If the revisionis still under consideration at the end of 30 calendar days, the Grants Officer shall inform the recipient in writing ofthe date when the recipient may expect the decision.41 Karron Br. at 22 2 242 KA-299, U.S.A. v. Karron, 08-cv-10223 Docket 30, Decl. of Karron Exhibits Part 2, Ex. Group 22, DBK PersonalTaxes at 26, Ex. 108 at 28, Ex. 109 at 34, Ex. 110 at 4043 A-447, Decl. of Dunlevy. CAC292, mid-page.44ibid.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


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Appellant Karron. 48 The Patterson court specifically and explicitly recognized thisto be bona fide tax paid salary.495051 As to the disposition of the balance of TheClaim $150,000 advance, or the other 75,000 of this first advance, the BuchwaldCourt declined to assign specific linkage to any other misapplied funds andspecific culpability. Therefore, by establishing that The 75K Advance was bona

fide The Claim is not false and the Buchwald Court Judgment cannot besustained. Further, by showing (below) that the there are no misapplied funds thatcan be connected to The Claim, the Buchwald Court Judgment must be vacated.

Standard of ReviewFalse 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 presentedthat claim53 knew it is false.54 If no specific false claim can be identified, there isno culpability. The Patterson Court only looked at Check and American ExpressCredit Card disbursements.55 The Buchwald Court only admitted The Claim on

the U. S. Treasury. There are no common elements or exhibits between TheClaim and the Patterson Court findings.

56 If this Court finds no common basisbetween culpable checks and credit card receipts made with funds from TheClaim, this judgment must be vacated.

Reply Argument

The Claim is not false

The Claimas signed by Karron is not false because The 75 K Advancewas bona fide Personnel Cost, as specified in the original budget.57 At this earlystage first quarter (The First Quarter) in the project, there are no issues ofoverrunning any budget categories; all budget categories are under run. At the endof the first quarter, there are three remaining quarters of project time with which tomake midcourse corrections and amendments based on retrospective spending

48 SPA-27, Buchwald Court Memorandum and Order at 27 footnote 1349 A-316, Sentencing Tr. at 61 Line 19 (THE COURT: He got it [Salary] in the form of loans.)50 A-325, Sentencing Tr. at 61 Line 23 (THE COURT: [] It's very simple)51 A-265,A-265 Sentencing Tr. at 10 Line 23 (THE COURT: [] withholding was taken timely.) cf KA-2962(Baker, J.S. () THE USE OF SENTENCING FINDINGS AS A COLLATERAL ESTOPPEL WEAPON INSUBSEQUENT CIVIL LITIGATION, Notre Dame Law Review), specifically KA-2978 and KA-299 (conclusion)52 A-480, Karron Oral Argument at 3, Line 1253 31 U.S.C. 3729(a)(1) (2000). False Claims Liability54 31 U.S.C. 3729(b)(1) (2000). False Claims definitions knowing and knowingly55 A-70, A-361 footnote56 A-492, Karron Oral Argument at 15, Line 17 et seq.57 A-90, BUDGET OBJECT CLASS CATEGORY A, Personnel and B. Personnel Fringe Benefits (34%)


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experience. By the end of the first quarter Dunlevy58 shows that almost the entire75 K Advance was turned back to pay Project costs. This offsets the rent59question raised by the Buchwald Court in its decision,, and that question ismooted for that reason (among others), but it is addressed never the less below.

Point 1: The 75K Advance was classified as SalaryThe 75K Advance was well accepted as salary60 by three auditors61 and

the Patterson Court .62636465 The Government grant specialist Snowden grudgingagreed it was salary and could be used for any purpose Karron wanted .66 67 68 69Riley 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 andsentencing analysis, the Patterson District Court found and established as fact thatthis $75,000 transaction was classified as legitimate bona fide salary, as allowedunderthe Safe Harbor provision 18 U.S.C. 666(c)75 and derivative case law.76

58 A-434, Decl. of Dunlevy Decl..59 G. Br. at 11 footnote60 Karron Br. at 1661 Hayes, Spitz, Riley, Dunlevy62 A-316A-316 Sentencing Tr. at 61 Line 19 (THE COURT: He got it [Salary] in the form of loans.)63 A-325, Sentencing Tr. at 61 Line 23 (THE COURT: [] It's very simple)64 A-265, Sentencing Tr. at 10 Line 23 (THE COURT: []the withholding was taken timely.)65 A-262,A-262 Sentencing Tr. at 7 Line 1819.( THE COURT: It's denominated salary.)66 KA-670, Trial Tr. at 350 Line 5 et seq67

KA-701, Trial Tr. at 381 Line 15 (Rubinstein cross Snowden )68 KA-703, Trial Tr. at 383 Line 5 (Rubinstein cross Snowden)69 KA-707 Trial Tr. at 387 Line 4 (Rubinstein Cross of Snowden: Q. Are you aware that the money was paid backin August? [] THE WITNESS: Yeah.)70 KA-1122, Trial Tr. at 800 Line 3 (Rubinstein cross Riley Q. And is it fair to say that on a $175,000 salary, Dr.Karron would be paid approximately $14,000 a month gross? A. Correct. Q. And so if he borrowed $75,000 inOctober, within five months he basically would pay that back, correct? THE COURT: Answer, please. Q. 14 timesfive is 70, correct? A. Yes. Q. And October, November, December, January, February, by the end of February hewould have basically paid back the 75,000, correct? A. For the gross, correct. Q. And in May he got a net check for$5,019.84, right? A. Correct. Q. For a pay period April 1, '02 to April 30, '02, correct? A. Correct.)71 KA-706, Trial Tr. at 386 Line 19 (Rubinstein cross Snowden Q. And did you tell the agent that you spoke to Dr.Karron and requested the return of funds, of the $75,000? A. I made the statement, yes.)72 KA-985, Trial Tr. at 664 Line 15 (Rubinstein Cross Gurfein) Q. You are aware, sir, that Dr. Karron paid backthat $75,000 in that first year; you're aware of that? A. I am.73 KA-977, Trial Tr. at 656 Line 1 (Rubinstein Cross of Gurfein Q. Now, you told us about Dr. Karron in the firstmonth of the grant he took $75,000 for as a loan for his personal use, correct? A. Correct. Q. Now, he was earning$175,000 for the year, correct? A. Correct. Q. And that comes out to about $14,000 and change a month? A.Correct) cf 75K Amortization table KA-174 G. Br. at 29 375 18 U.S.C. 666(c) (Safe Harbor Provision)76 U.S. v. Mills, 140 F.3d 630 (6th Cir., 1998)


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77 78 The prior Patterson Court findings of fact can stand without this Court re-assessing the supporting evidence.

In order to give this Court confidence in these prior findings of fact, thefollowing additional points of fact should dispel any shadows of doubt that theGovernment Appellee attempts to cast.

The 75KAdvance payments are salary earned but not paid by checkBoth 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 itbetter (even though they have problems with addition82): viz:

[] loan account balances have been offset with legitimate loan reducing payments suchas the salary not paid to the ChiefTechnica1 Officer and retained by Computer AidedSurgery to reduce the amount owed to NIST.

83

Point 2: The 30 Day Float Rule does not apply

The Government makes the incorrect arguments that the cooperativeagreement also incorporated certain standard terms and conditions including thefollowing limitation on the amount of disbursements:[citation omitted] 84

Karron argues [] that her November 2001 certification was true because thisamount purportedly was properly advanced to her as salary i.e., funds that she couldspend as she pleased. []

This argument fails as a matter of law, as the terms and conditions of thecooperative agreement prohibit such advances of ATP funds. The agreement providesthat ATP funding shall be for periods not to exceed 30 days [citations omitted].

85

This argument is incorrect because of three misstatements of fact: The 30

Day Float Rule (definedbelow) was not specified in the Cooperative Agreementvia reference to the General Terms and Conditions.86 Secondly, the this rule wasnot law, a matter of law, or even part of the Cooperative Agreement untilAmendment #4 in 2002, which enabled overnight electronic payments by ASAP.87

77 U.S. v. Harloff, 815 F.Supp. 618 (W.D.N.Y.1993)78 U.S. v. LaHue, 170 F. 3d 1026(10th Cir., 1999)79 A-316, Sentencing Tr. at 61 Line 19 (THE COURT: He got it [Salary] in the form of loans.)80 A-325, Sentencing Tr. at 61 Line 23 (THE COURT: He got it [Salary] in the form of loans. It's very simple)81 A-265, Sentencing Tr. at 10 Line 23 (THE COURT: the withholding was taken timely.)82 A-390 footnote (They cant add, but they love to subtract.)83 A-180 Final Audit Report August 2004, at 10 684 G. Br. at 10 A-13685 G. Br. at 42 1.Original Citations: A-180, A-3786 A-72, GX2, GENERAL TERMS AND CONDITIONS ATP August 200187 A-35, GX24, Page 2. AMENDMENT NO. 04 [] REASON(S) FOR AMENDMENT This cooperativeagreement is being amended to (l) incorporate a special award condition on the " Automated Standard Application


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88 Thirdly, The Claim was on December 19, 2001, not November. The OIGAudit states:

the ATP Special Award Conditions Section 9.c[emphasis added, italics as in original]. states Advances . . . 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 . . . . Advances shall be for periods not to exceed 30 days.8990We 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 thisproject in 200191. This clause was misquoted by the OIG Auditors. This misquotewas propagated by Prosecution in the Buchwald Court and again here. The Ruledid not become effective until Special Award Conditions Amendment 4 signed2002 enabled overnight grant advance payment electronically by ASAP.92

Point 3: Working capital advanceThe working capital advance is defined93 as a procedure whereby funds

are advanced to the recipient to cover its estimated disbursement needs for a giveninitial period. If[] the recipient lacks sufficient working capital94, the GrantsOfficer may authorize payment on a working capital advance basis. Under this

procedure, the Grants Officer shall provide for advancing funds to the recipient tocover its estimated disbursement needs for an initial period []95

Recipients are to be paid in advance []. Advances of funds to a recipient organizationshall be limited to the minimum amounts needed and be timed to be in accordance with

for Payments," System; and (2) indicate on the attached, those terms and conditions affected by any administrativeor 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 immediatedisbursement needs. Advanced funds not disbursed in a timely manner must be promptly returned, via an ASAPcredit, to the account from which the advanced funding was withdrawn. Advances shall be forperiods not to exceed30 days. EFFECTIVE DATE JUL 23, 2002, SIGNED 7/29/200288 A-35, GX24 AMENDMENT TO FINANCIAL ASSISTANCE AWARD #4 Effective July 23, 200289 A-180, refers to a quote from GX62 Final Audit Report August 2004 (A-167)) and Invitation for AuditResolution (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 A-193,, 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-177792 Automated Standard Application for Payments (ASAP) is a web-based electronic payment and informationsystem []. ASAP allows recipient organizations receiving federal funds to draw from accounts preauthorized byfederal 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 balanceof less than $5,000.) [the actual CASI checkbook balance that day of October 26,2001 was negative $1,024.24 andthe bank balance was $24.61]95 KA-46, 15 C.F.R. 14.22(f)


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the actual, immediate cash requirements of the recipient organization in carrying out thepurpose of the approved program or project. The timing and amount of advances offunds shall be as close as is administratively feasible to the actual disbursements by therecipient organization for direct program or project costs and the proportionate share ofany allowable indirect costs.96

The requirement of 14.21 was satisfied and reflected in Amendment #297

The Accounting system requirement was satisfied and the special condition wasspecifically removed.98 Later on sometime in 2003 the successor accountant andauditor Hayes trashed the CASI accounting system and led to the continuingmayhem.99 The ATP program had indeed accommodated100 Karron.101

Point 4: Tracing The 75K Advance

The float is the time between the deposit of cash advance funds in thegrantees bank and payment of project obligations. A small entity102 (or what isnow recognized as a micro-entity103) such as CASI did not have the cash on hand

to pay program costs out of pocket and then apply to the program forreimbursement. NIST ATP, as a matter of policy, gave small entities advance

payment status and made Working Capital Advances (above). Because there wasno 30 Day Float Rule in effect, we can review the cash position of the grant bythe first quarter SF-269a reconciliation.

96 KA-46, 15 C.F.R. 14.22(b) cfA-437, KA-1718, A-437, KA-1718,KA-171997

KA-1718, GX22: Grant Amendment REASON(S) FOR AMENDMENT [#2]: This cooperative agreement isbeing amended to (1) revise administrative contact's name; (2) correct total estimated cost for budgeted year; (3)approve and incorporated revised budget dated 12/27/01; (4) remove Special Award Condition #9; and (5) andindicate on the attached those terms and conditions that affected by these actions.)98 KA-1718, GX22 (Condition #9: REQUIREMENT OF ACCOUNTING SYSTEM CERTIFICATION The aboveSpecial Award Condition placed in the original award document is removed, as the requirement has been satisfied)cfA-43799 A-437, Decl. of Dunlevy Decl.: (I believe that Karron had a rudimentary accounting system that was destroyed

by Hayes unsuccessful attempt to implement an overambitious and expensive quad entry fund accounting system offsite) cfKA-1731100 KA-446ff, Trial Tr. at 127 Line 25: (Lide - direct [KWOK] Q. What did you hope to accomplish going back thesecond time? A. What we hoped to accomplish was to have a discussion to try to iron out the budget differences,

because that had become a major issue in this grant, was to get a budget that the awardee could live with, and yetmet the government rules and regulations.)[N.B. There were never any human subjects in this project and a humansubjects waver was granted on that basis, but that is out of scope for this appeal. cfA-138, Section 10]101 KA-29, Eisen Decl Exhibit E Certified Audio Tr.... April 13, 2007 ATP Proposers' Conferences NIST RedAuditorium, 100 Bureau Drive, Gaithersburg, MD 20899 A[nswer]: [MARC STANLEY, ATP PROGRAMDIRECTOR] One of the things I pride myself on in this program and with my colleagues is that: We try not to betoo bureaucratic. We are very supportive of the companies that win awards from us,102 37 C.F.R. 1.27(a)(1)(person),(2)(small business concern)103 35 U.S.C. 123 The Leahy-Smith America Invents Act (AIA) created a new micro entity class for the DoC


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Dunlevy104shows that almost the entire 75 K Advance was turned back topay Project costs. The First Quarter spending is summarized as follows105: TotalOutlays for 2001 are $258,320 , with the Recipient Share of Outlays $41,682, TheFederal 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 Courtwas GX114106, at which the Judge exclaimed: Look at that. [GX114] Thismess.107 This mess is worse than any one recognized at the time. CASI receiveda letter from Grant Specialist Browning in 2007 offering to close out the secondyear project residual funds of $54,500.108 Reconciling that figure with the OIGAudits revealed that the two OIG audit reports gave the wrong second year Federaldisbursement.109 110 The mess gets even worse. The two audit reports quote aSpecial 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 AdvanceThe Government argues that if Karron had unilaterally increased her salary

by the maximum amount permitted without authorization from ATP [] Karron atbest would have been entitled to $21,250[ of The 75K Advance].112 Thisargument 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 alreadyowed approximately one-months salary (1/3 of a quarter salary). At the middle ofThe 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 A-434, Decl. of Dunlevy Decl. .105 A-397, Karron 56.1 Counterstatement at 35106 A-233, and see discussion about the issues with GX114 at A-394107 A-271, Sentencing Tr. at 16 Line 15108 A-389, KA-289, KA-290, KA-2920109 A-390 Karron 56.1 Counterstatement at 28 3 (But this error was not made here by the Plaintiff; the error is

propagated from the U.S. Department of Commerce Office of Inspector General August 2004 Report ATL-16095-4-0002, GX 62, at 10 and 12) at KA-1777, also cfGX-61 at KA-1771110 A-169 and A-171 3, 3, second line down, first number on the line, Final Audit Report August 2004 (A-358, ,A-368 ) The $545,000 should be $545,500 cfKA-1771, KA-1777111 A-180 . See section The 30 Day RuleRules does not apply. cfGX-61 at KA-1771, GX62 at KA-1777112 G. Br. at 44 1113 A-40, A-180, KA-247 (GX110)115 KA-1 The 75K Advance Amortization table, referencing only numbers already in evidence with citations .


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the timely inclusion of $6,860.65 in OoP116 expenses as expended on a weeklybasis, the 75K Advance is paid off on January 3, 2002, just shy of the end of theFirst Quarter in 69 days. Because the 30 Day Float Rule was not yet in effect,this is not against the Rule and clearly not against the law as a matter ofLaw117 or math.

A large initial Working capital advance requires approval.118 The requestfor funds119 was approved by the grants management team. Prior to ASAPimplementation in Amendment #4 in 2002, cash advances had to be forwarded tothe ATP management team to be approved for payment. Amendment #4, enablingASAP payments, retroactively obviated that requirement by deleting the clause inthe original special conditions document120, removing project managementapproval requirement from the ASAP cash advance method and initiated The 30Day Float Rule.

Point 6: The Rent: Reclassified and/or Offset

The Government cites121 122 the impeached123 OIG Audit report citation of$18,000124attributed to rent paid with The Claim125 funds. The Patterson Court

116 A-205 Final Audit Report August 2004 Appendix III at 11 5: Out of Pocket OOP, which includes such thingsas travel to NIST for the ATP Kickoff Meeting in November and Program computer purchases made on personalcredit cards because the cards had all of the available credit for CASI as Karrons available credit.117 G. Br. at 42 2 (Thisargument 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 wasthe Grant Specialist. One can only assume that she personally approved this initial advance and counter-initialed itwith her initials, H.S. . The form is signed by Karron on the reverse at A-41 on October 19, 2001. This form wasnever even entered into evidence in the Patterson Court.. Snowden would not have approved such a large initialadvance without full knowledge of what she was funding. Her testimony at trial showed she grudgingly admittedshe did. cfKA-707120 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 Karronsfirst 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 touse ATP payments for rent (A-285), and yet rent undisputedly was paid from the first $150,000 draw-down (A-180).)123 A-180, Final Audit Report August 2004 is an unreliable evidence, impeached because 1) misquotes the totalsecond year spending (A-380) 2) mis cites special conditions Section 9.c which falsely incorrectly invoked the 30Day Float Rule(cf Point 2), 3) was not used at the Patterson Court criminal trial, (The Patterson Court ReliedExclusively 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 transactionsthat misappropriated Government Funds as rent. It is well beyond the scope of thisAppeal to re-litigate the of the Patterson Court findings. As the Buchwald Courtastutely observed the Government has failed to specify the precise aspect ofeach of the twenty documents that is false.126

The rent was paid from The

75K Advance, and/or reclassified as salary. However, the Buchwald Courtdeclined to affirm, and therefore denied that issue by dismissing almost all of thecharges.

The Rent was not allowed.127 It was never allowed.128 The rent wasreclassified into salary129. GX114 includes rent checks (buried) in the salary line.

GX114130 is dissected at length in Karrons 56.1 counterstatement131. It wasprepared 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 asTravel. 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 denominatedsalary138 without including the rent checks and using the CASI personnel fringerate.139

Point 7: Budget Flexibility 10% Change Rule base: Annual or Total ?

126 SPA-27127

KA-66 GX1 Chapter 1, Sections C.4 and C.5 of the November 2000 ATP Proposal Preparation Kit cfKA-76 (5.What types of costs are unallowable?) Based on the assumption that it is an indirect or overhead cost, and isallocable to multiple projects and applications.128It was never allowed as rentper 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 Checks130 A-233131 A-394132 A-70, A-361 footnote133 A-259, Sentencing Tr. at 5 Lines 3-6. COURT It seems to me this is just a rough calculation and not somethingthat a Court could rely on in a criminal case [N.B. but it was. This was recalled by the Jury in its deliberations atKA-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 thatchart[GX114] or from the [GX]110 [GX110]backup could say how they ever arrived at this number.)cfGX114 atA-233 and GX110 at KA-245 and at KA-282ff135 A-261, Sentencing Tr. at 6 Line 3 (THE COURT: [] She has no tabulation putting [Exhibit] 114 into contextwith her [] Exhibit110. )cfGX114 at A-233 and GX110 at KA-245 and at KA-282ff136 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.


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NIST ATP program specific budgets change practices were not part of theATP 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 ofCommerce and National Institute of Science and Technology C.F.R. statutesconcerning the change base upon which to apply the 10% variation allowance.

ATP believed its change base was 10% of the last approved total annualbudget as Lide144 and Snowden testified145, and both the Defense and Prosecutionbelieved. In the GX2146 budget, it permits a change of plus and minus $83,650147on the annual base without approval. Snowden testified that Program Specificrules 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 isplus 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 beoverridden without approval from the OMB.153

140 KA-5, 15 U.S.C. 278n (2001)141 KA-10, 15 C.F.R. 295 (2001)142 KA-379, Trial Tr. at 61 Line 1: (LideDirect A. I helped prepare them, I used them, and they were given to me

as project manager.)cfKA-2994, KA-2942143 A-136, through GX12 Cooperative Agreement Award144 KA-379, Trial Tr. at 60 Line 10 Lide - Direct, Trial Tr. at 87 Line 1, Trial Tr. at 191 Line 1.145 KA-776ff, Trial Tr. at 456 Line 14146 KA-142 GX2: (9. PRIOR APPROVAL REQUIREMENTS147 KA-206 GX23: TOTAL ESTIMATED COST and OBJECT CLASS CATEGORY H. Total Direct Cost. (Line. Athru G) of $836,500.148 KA-618ff Trial Tr. at 298 Line 17149 KA-1735 15 C.F.R. (1101 Edition) 24.30 Changes. (c) Budget changes(1) (ii) []exceed or are

expected to exceedten percent of the current total approved budge t[][require approvals][emphasis added]150 KA-50 15 C.F.R. (1101 Edition) 14.25 (f) The recipient may not transfer funds [] in which the cumulativeamount of such transfers exceeds or is expected to exceed 10 percent of the total budget [][emphasis added]151 KA-185 GX3 OCTOBER 1998 DoC FINANCIAL ASSISTANCE STANDARD TERMS AND CONDITIONS,..04 b. [KA-189 ]Unless the Recipient is subject to 15 C.F.R. 24 [] (cumulative transfers of funds of an amountabove 10 percent of the total award must be approved [] This allows the Recipient to transfer funds amongapproved direct cost categories when the cumulative amount of such transfers does not exceed 10 percent of thecurrent (last approved) total budget.)152 KA-50 C.F.R. (1101 Edition) 14.25 (d) ([] (For nonconstruction awards, no other prior approvalrequirements for specific items may be imposed unless a deviation has been approved by OMB.)[emphasisadded, no derogation clause]153 KA-2942, KA-2946, KA-2997


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Point 8: Challenge to Karron contribution figures failsThe Government seeks to impugn that Karron submitted two contradictory

revisions for B. Recipient Share of Outlays154 to the Buchwald Court andimpeach these figures. This Table155 was a comparison of the four, first year SF-269a (Quarterly reconciliation) original forms as submitted to ATP against groundtruth figures in evidence at the Buchwald Court.156 The original figures were

prepared by CASI Accountant Hayes for submission by Karron.157 TheGovernment cited these original forms158 as part of its proffered twentydocuments. These document claims were rejected by the Buchwald Court.159 Theincorrect low contribution figure was restated with the correct contribution of$78,204160, larger than originally submitted to the government in 2002. Theunderstatement only harms Karron, not the Government161

Conclusion

The district courts summary judgment must be vacated because the DistrictCourt determination of the only instance of a False Claim is not false, and is true,as a matter of the record and a little arithmetic.

Signature

D. B. Karron,pro se Dated: April 12, 2012 in Long Beach, New York

154 G. Br. at 13 footnote155 A-397 Karron 56.1 Counterstatement at 35: GROUND TRUTH QUARTERLY SPENDING BY REVISEDSF269A. 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 $29,493.83157 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-397ff160 A-415 (SF-269a This is a corrected and revised final Statement for this 4th project Quarter.), A-452 ( Declarationof 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)


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Appendix


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CERTIFICATE OF COMPLIANCE

Pursuant to Rule 32(a)(7)(C) of the Federal Rules of Appellate Procedure,

the undersigned hereby certifies that this brief complies with the type-volume

limitation of Rule 32(a)(7)(B)(ii)

(7) Length.(A) Page limitation.A principal brief may not exceed 30 pages, or a reply brief 15 pages, unless it complies with Rule

32(a)(7)(B) and (C).(B) Type-volume limitation.(i) A principal brief is acceptable if:

it contains no more than 14,000 words; or

it uses a monospaced face and contains no more than 1,300 lines of text(ii) A reply brief is acceptable if it contains no more than half of the type volume specified in Rule

32(a)(7)(B)(i).(iii) Headings, footnotes, and quotations count toward the word and line limitations. The corporate

disclosure statement, table of contents, table of citations, statement with respect to oral argument, any addendumcontaining statutes, rules or regulations, and any certificates of counsel do not count toward the limitation.

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

April 12, 2012

Long Beach, New York


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Certificate of Service

Daniel B. Karron,Defendant-Appellant,

v.

United States of America,Plaintiff-Appellees.

I, D. B. Karron hereby certify under penalty of perjury that on April 12, 2012, Iserved a copy of the Corrected Appeal Reply Brief by

___ United States Mail___ Federal Express___ Overnight Mail___ Facsimile_X_ E-mail to [email protected]_X_ Hand deliveryon the following parties

For the United States of AmericaMichael J. Byars, Assistant United States AttorneyUnited States Attorney's Office, Southern District of New York86 Chambers Street, 3rd Floor, New York, New York 10007

Signed, April 12, 2012 in Long Beach, New York

/s/__________________________D B. Karron,

pro se348 East Fulton StreetLong Beach, NY 11561

CERTIFICATE OF SERVICE

11-1924-civ


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Cross referenceCase: 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...........................................,.25Sentencing 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...................................10Trial 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


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Government Appendix (A-nnn),

Government Special Appendix (SPA-nnn) and

Karron Appendix (KA-nnn),

where nnn is an appendix Bates Stamp Page Number

(continued)

Document and Ref Appendix Ref Karron Brief Ref

Trial Tr. at 383 Line 5 ..............................KA-703..........................18

Trial Tr. at 386 Line 19.............................KA-706............ 18, 23

Trial Tr. at 387 Line 4 ..............................KA-707.................... 18, 22

Trial Tr. at 388 Line 21 ............................KA-708.......................... 22

Trial Tr. at 513 Line 19.............................KA-834.......................... 23

Trial Tr. at 656 Line 1...............................KA-977.................... 18, 23Trial Tr. at 664 Line 15.............................KA-985.................... 18, 22

Trial Tr. at 800 Line 3 ..............................KA-1122........................ 18

Trial Tr. at 1271 Line 23 to 1272 Line 8...KA-1596........................ 17

UB-04 ........................KA-1809.......19


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Karron Appendix Table of Contents

VOLUME 1. (KA 1 through 313)

75K Amortization Schedule (with references into This Appendix)..KA-1

15 278n. Advanced Technology Program ..KA-5

DECLARATION OF ERIC A. EISEN. ESQ. IN RE OPPOSITIO TO

PLAINTIFFS MOTION FOR SUMMARY JUDGMENT....KA-204

15 CFR Subtitle A (1101 Edition) 14UNIFORM ADMINISTRATIVEREQUIREMENTS FOR GRANTS AND AGREEMENTS WITHINSTITUTIONS OF HIGHER EDUCATION, HOSPITALS, OTHER NON-

PROFIT, AND COMMERCIAL ORGANIZATIONS Subpart AGeneral.KA-38

GX1, ATP Proposal Preparation Kit (Kit)all the necessary guidelines for

developing an ATP proposal during fiscal year 2001

KA-66

GX2, GENERAL TERMS AND CONDITIONS ADVANCED TECHNOLOGY

PROGRAM August 2001

KA-142

DEPARTMENT OF COMMERCE FINANCIAL ASSISTANCE STANDARD

TERMS AND CONDITIONS October 2001

KA-161

GX3, DEPARTMENT OF COMMERCE FINANCIAL ASSISTANCE

STANDARD TERMS AND CONDITIONS October 1998

KA-185

GX23, FORM CD-451, U.S. DoC AMENDMENT TO FINANCIAL

ASSISTANCE AWARD Amendment #3.KA-204

GX110, OIG Auditor Spreadsheet by Payee Between 10/11/2002 and 6/30/2003

(second year, 37pages).. KA-208


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GX110, OIG Auditor Spreadsheet by Payee Between 10/1/2001 and 10/10/2002

(first year, 44 pages) KA-245

Browning Letter to CASI November 5, 2007 regarding disposition of un-liquidated

project funds..KA-290

Excluded Parties List lookup..KA-291

Letter F.R.C.P. 16 (a) (1) (G), May 16, 2008 Admission of expert testimony ofCertified Public Accountants 1) Joan Hayes and 2) Belinda RileyKA-292

Hazel Belinda Riley Expert Resume..KA-296

Karron Taxes, IRS Form 1040 for 2001, 2002, redacted, as prepared by Hayes

(2002 W-2 by Hayes, 1090 by Solomon) KA-299

Karron Taxes IRS Form 1040 for 2001, KA-299

Karron Taxes IRS Form 1040 for 2002 KA-304

VOLUME 2 (KA-314 through 610)

Wang, A. J. Key Concepts in Evaluating Outcomes of ATP Funding of MedicalTechnologies................................................................................................ KA-314

PATTERSON COURT CRIMINAL TRIAL TRANSCRIPT KA-319

VOLUME 3 (KA-611 through 910)

PATTERSON COURT CRIMINAL TRIAL TRANSCRIPT (all Volume 3)

VOLUME 4 ..(KA911 through 1210)

PATTERSON COURT CRIMINAL TRIAL TRANSCRIPT (all Volume 4)

VOLUME 5.. (KA-1211 through 1511)PATTERSON COURT CRIMINAL TRIAL TRANSCRIPT (all Volume 5)


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VOLUME 6 ....(KA-1512 through 1809)

GX22 Amendment #2.KA-1718

15 CFR Subtitle A (1101 Edition) 24.30....KA-17

Documents

11-1924 2nd Karron Reply Brief