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1014

Organization Receiving Benefits Under a Federal Program

Title 18 U.S.C. § 666(b) requires that the organization receive benefits in excess of $10,000 under a Federal program involving a grant, contract, subsidy, loan, guarantee, insurance, or other form of Federal assistance. This provision covers a wide variety of state and local government agencies, such as city police departments, county governments and private organizations such as hospitals. See United States v. Westmoreland, 841 F.2d 572 (5th Cir.), cert. denied, 488 U.S. 82 (1988); United States v. Smith, 659 F. Supp. 833 (S.D. Miss. 1987); United States v. Hart, 70 F.3d 854 (6th Cir. 1995), aff'd, 70 F.3d 854 (1995), cert. denied, 116 S. Ct. 1368 (1996); United States v. Sadlier, 649 F. Supp. 1560 (D. Mass. 1986).

Courts have interpreted this clause to require that the organization receive and administer the $10,000 in benefits, rather than merely be an indirect beneficiary. Thus the Ninth Circuit held that a college that receives no Federal funds directly, but merely receives indirect benefits in the form of its students' Federally funded tuition loans, is not covered by the statute. United States v. Wyncoop, 11 F.3d 119 (9th Cir. 1993). Similarly, an accounting firm hired to administer Federal housing funds by paying landlords from a Federal account was not an "organization receiving benefits." United States v. Webb, 691 F. Supp. 1164 (N.D. Ill. 1988).

Furthermore, 18 U.S.C § 666(c) specifically exempts benefits that are bona fide salary, wages, fees, or other compensation paid, or expenses paid or reimbursed in the usual course of business. Federal government money paid to purchase goods in a commercial transaction are not "benefits" under the statute. United States v. Stewart, 727 F. Supp. 1068 (N.D. Tex. 1989).

[cited in USAM 9-46.100]