Opinion
Case No: 05 C 6159.
June 29, 2006
REPORT AND RECOMMENDATION
I. INTRODUCTION AND FACTUAL BACKGROUND
Judge Lindberg has instructed me to conduct a hearing and issue a report and recommendation on the question whether Ms. Lukaneva filed a false In Forma Pauperis Application and Financial Affidavit to secure the appointment of counsel to represent her in her discrimination suit. Judge Lindberg's concern about the accuracy of the Application stemmed from disclosures made to him by Ms. Lukaneva's court appointed counsel of statements by Ms. Lukaneva that indicated that her claims of impecuniosity were false.
The obvious purpose of an In Forma Pauperis Application is to determine whether the applicant has sufficient assets to retain his or her own counsel. To that end, the Application that Ms. Lukaneva filled out asked for information about all manner of assets and sources of income, including: real estate, cash, stocks, bonds, securities, financial instruments, cars, boats, gifts, inheritances, any other kind of personal property with a value of more than $1,000, alimony, insurance policies, annuities, welfare, unemployment compensation, and disability payments. The Application neither said nor suggested that it was limited to assets in the United States. As a consequence of the answers provided by Ms. Lukaneva, Judge Lindberg was satisfied that Ms. Lukeneva qualified for appointed counsel, and he appointed Basileios Foutris to represent her in late November 2005.
Ms. Lukaneva does not contend she understood the Application only to require the itemization of assets in the United States.
At his first meeting with Ms. Lukaneva in December 2005, statements were allegedly made by her that caused Mr. Foutris to question the legitimacy of her claim of poverty. According to Mr. Foutris, she told him that her assets in Russia were so substantial that even a recovery of $100,000 would have no meaning to her — an admission that, if true, was hopelessly inconsistent with her claimed need for appointed counsel. She also said that she had previously retained a lawyer whom she "fired" because she was unhappy with him, that she had seen other counsel whom she considered retaining but did not because she did not want to — not that she was unable to — pay a $300.00 retainer, and that she was currently working 15 hours a day at the Walnut Room (in Marshall Field's), where she expected to make several thousand dollars in December alone. (Tr. 154; 178-185).
"Tr." refers to the transcript of proceedings of the evidentiary hearing conducted on May 18, 2006.
Having reluctantly concluded that continued representation of Ms. Lukaneva would constitute a fraud on the court, (Tr. 186), Mr. Foutris, on December 15th, informed Judge Lindberg in open court (at a side bar), of Ms. Lukaneva's statements. (Defendants' Trial Brief for Rule to Show Cause Hearing, Ex. B, Proceedings on December 15, 2005 before Judge Lindberg). Because this disclosure was "within a week of [his] meeting" with Ms. Lukaneva, his recall of what she had said "was crystal clear." (Tr.183). He described the conversation about her Russian assets this way: "She also indicated to me, which wasn't on the filing in which she requested appointment of counsel, that she had significant assets in Russia, such that even if she were to get $100,000, that would be nothing to her." (Ex. B at 3.). Judge Lindberg told Mr. Foutris he had done the right thing by reporting the matter to him. He excused Mr. Foutris and sent the matter here for a hearing. ( Id. at 4).
There was an apparent tension between appointing new counsel to represent Ms. Lukaneva in a hearing to determine whether she had filed a false affidavit to secure appointed counsel and requiring her participation without counsel, which she continued to insist she could not afford. Not to appoint counsel because she had allegedly abused the privilege begged the very question to be decided. Since the stakes were high — indeed they could scarcely have been higher viewed from the perspective of the consequences to Ms. Lukaneva's suit — and since she adamantly denied all the statements attributed to her by Mr. Foutris, I appointed Mr. Stephen Adatto to represent her at the hearing. Like Judge Lindberg's appointment of Mr. Foutris, my appointment of Mr. Adatto came to an unhappy end, but for very different reasons.
Mr. Adatto asked to be relieved of his appointment because, he contended, in his first meeting with Ms. Lukaneva she said perhaps the best way to resolve the case was to get a gun and shoot the Jews or the lawyers (Tr. 208). The principals of the Levy organization are Jewish as is Mr. Adatto. Ms. Lukaneva initially denied having made those statements with the same degree of intensity she denied the statements attributed to her by Mr. Foutris. In any event, Ms. Lukaneva was as adverse to Mr. Adatto's continuing as her counsel as he was to doing so, and she repeatedly refused any further appointments of what she described as "free lawyers," whom she concluded were all "worthless." Thus, the hearing on the rule to show cause proceeded on May 18, 2006 to its melancholy conclusion, with Ms. Lukaneva — quite skillfully — representing herself. ( See e.g., 133, 187 et seq.; 194-96; 203-05; 209).
Ms. Lukaneva, at the hearing on the motion to withdraw, denied having made the statement. At the hearing on the rule to show cause, she objected to the introduction of Mr. Adatto's testimony about the remark, and I sustained the objection. (Tr. 209).
Ms. Lukaneva was called as an adverse witness, and, later testified on her own behalf. Mr. Foutris also testified. What began as a limited factual inquiry involving statements about Russian assets and prior counsel became significantly expanded and dramatically revealed significant misstatements by Ms. Lukaneva in the In Forma Pauperis Application and Financial Affidavit, themselves.
The theme of Ms. Lukaneva's defense was that she did the best that she could and that she did not intend to deceive anyone, (Tr. 136-37; 218; 249-50; 260), and everyone but her was either wilfully deceptive or badly confused. (Tr. 141; 143; 148-151; 155; 157). The facts adduced at the hearing do not support Ms. Lukaneva's characterizations, and they compel the conclusion that Mr. Foutris was a credible witness and Ms. Lukaneva was not. Quite apart from my rejection of Ms. Lukaneva's denial of her conversation with Mr. Foutris, the evidence demonstrates that the Application contained knowingly false statements designed to conceal sources of income so as to maximize Ms. Lukaneva's chances for the appointment of counsel. These intentional misstatements constitute a separate basis for dismissal under 28 U.S.C. § 1915(e)(2)(A), which mandates dismissal of a case if the allegation of poverty on an in forma pauperis application is untrue. See Thomas v. Gen. Motors Acceptance Corp., 288 F.3d 305, 306 (7th Cir. 2002) (Posner, J.).
Following the May 18, 2006 hearing, Ms. Lukaneva filed a comprehensive and articulate 15-page brief with 12 exhibits, in which she confirmed that she "has voluntarily refused `help' of appointed counsel for the Show Cause Hearing as well as for her case." (Pl.'s Brief at 15; Tr. 219). In her brief, Ms. Lukaneva accused counsel for the defendants of "willful deceit." Id. at 13-15. Of course, alarms are not arguments, and a party's position is not invalid because one's opponent says so. Miller v. Lehman, 801 F.2d 492,500 (D.C. Cir. 1986) (Edwards, J. concurring).
Ms. Lukaneva declined the 14 days she was offered to file a post-trial brief, saying she needed only 7 days. (Tr. 261-62).
She also accused counsel for the defendants of being sly, of having twisted the evidence, and of having using cheap tricks during his examination of her at the hearing: if he "lived in the 17th century he would be burned at the stake for making false predictions." (Pl's Brief at 7).
For the reasons discussed below, it is my recommendation that Ms. Lukaneva's claim be dismissed with prejudice. Dismissal would further § 1915's deterrent purpose in preventing in form pauperis applicants from engaging in the type of conduct that the hearing revealed occurred in this case and would be faithful to and consistent with Seventh Circuit precedent — including the Seventh Circuit's affirmance of Judge Lindberg's dismissal in Mathis v. N.Y. Life Insurance. Co., 133 F.3d 546, 547 (7th Cir. 1998).
I. THE FACTS REVEALED AT THE HEARING A. Ms. Lukaneva's Motion For Appointment Of Counsel And The Accompanying In Forma Pauperis Application And Financial AffidavitMs. Lukaneva's complaint, which charges employment discrimination, was filed on October 25, 2005, ten months after she was fired by the defendants. On the same day, she prepared and signed a Motion for Appointment of Counsel in which she declared that she was "unable to afford the services of an attorney, and hereby request the Court to appoint counsel to represent me in this proceeding." These declarations were expressly stated to be made under the penalty of perjury. The motion was signed by Ms. Lukaneva and dated and filed on October 25, 2005. To the Motion, Ms. Lukaneva attached an Application to proceed in forma pauperis "detailing [her] financial status." (Defendants' Trial Brief, Ex. A).
In the In Forma Pauperis Application and Financial Affidavit, Ms Lukaneva "declare[d] that I am unable to pay the costs of these proceedings. . . ." The Application provided that the answers to the questions asked in it were "under penalty of perjury." (Defendants' Brief, Ex. B) (underlining in original). There followed a series of numbered questions. The Application ended with this statement directly preceding Ms. Lukaneva's signature:
I declare under penalty of perjury that the above information [Questions 1-8] is true and correct. I understand that pursuant to 28 U.S.C. § 1915(e)(2)(A), the court shall dismiss this case at any time if the court determines that my allegation of poverty is untrue.
The various answers provided by Ms. Lukaneva were intended to support her overall claim of impecuniosity. As we shall see, they were untrue in virtually every aspect.
B. The Testimony of Basileios Foutris And The Undisclosed Russian Assets
Mr. Foutris graduated from Loyola Law School in 2000. (Tr. 175). On November 1, 2005 he opened his own law firm. Three weeks later he was appointed to represent Ms. Lukaneva. (Tr. 177). Within a week, he met with Ms. Lukaneva (Tr. 183), and she made — so he said — the statements about money and assets in Russia and the other statements that he reported to Judge Lindberg. In light of the temporal proximity between his meeting with Ms. Lukaneva and his disclosures to Judge Lindberg, Mr. Foutris testified that Ms. Lukaneva's statements were "crystal clear" in his mind, and that what he told Judge Lindberg about her comments about Russian assets was "pretty much verbatim. . . ." (Tr. 183-84).
The statement constitutes an admission under Rule 801(d)(2)(A), Federal Rules of Evidence.
Ms. Lukaneva, having been called as the first witness at the hearing, had already denied making the statements. Principle, not money, is what she claimed she told Mr. Foutris animated her suit against the defendants, and it was in that context that she may have said something about a $100,000 award not being important. It was her position that he must have misconstrued what she said. (Tr. 142, et seq.). She went on to accuse Mr. Foutris of having made up the story to extricate himself from a case that he did not want to be in given his fledgling law practice. (Tr. 152, 170). This dual approach to his testimony continued in her post-trial brief, which accused Mr. Foutris of having "falsified facts" and of being "not only irresponsible but seem[ing] to be suffering from memory loss or . . . confus[ion]." (Pl's Brief at 5). Mr. Foutris conceded that she had told him that she was in the case as a matter of principle, but was adamant that that she had also said that she had assets in Russia. (Tr. 185). Mr. Foutris denied any confusion or any difficulty in understanding Ms. Lukaneva: since his parents were immigrants, he was, he said, accustomed to understanding people with accents. (Tr. 191).
Thus, I need not consider whether the statement was mere bluster. The defendants' contention that the issue is not whether she in fact had significant assets, but whether she made the statement to Mr. Foutris is incorrect. (Defendants' Post Hearing Memorandum at 11, n. 4). 28 U.S.C. § 1953(e)(2)(A) mandates dismissal of a case where the allegation of poverty is untrue. If, for example, Ms. Lukaneva told Mr. Foutris she had a million dollars in a Russian bank — and it was conceded by all that she did not — dismissal would not be authorized by § 1953(e). Ultimately, the defendants seem to realize this, for they argue that the inference may be drawn from the statement that she has "some assets in the Ukraine that she can fall back on and is not disclosing." But this is simply another way of saying that the statement is true.
Ms. Lukaneva had alternative theories of defense: (1) Mr. Foutris was a liar, who made up the Russian assets conversation to get out of a financially inconvenient appointment; (2) Mr. Foutris had a bad memory; (3) Mr. Foutris was confused; and (4) Mr. Foutris was hostile to her from the beginning because — she thought — he was Muslim, and she was Jewish (actually, as it turned out, he is Greek Orthodox Christian, and she is only half-Jewish) (Tr. 188-89; 216-17).
Who was telling the truth? Mr. Foutris or Ms. Lukaneva? I am convinced that this was not a question of misunderstanding. Either Ms. Lukaneva said what was attributed to her or she did not. As in so many cases, the ultimate question was one of credibility, Making judgments about who is telling the truth is often a tricky and risky business. Judges often overestimate their ability to sift true from false testimony by assessing demeanor, "which is a form of lie detector without the electrodes and graph paper." Djedovic v. Gonzales, 441 F.3d 547, 551 (7th Cir. 2006). Judge Posner has cautioned that it is extremely difficult to determine whether a witness is testifying truthfully, and, much pious lore to the contrary notwithstanding, demeanor is often an unreliable guide to truthfulness. See Consolidation Services v. Keybank National Association, 185 F.3d 817, 820 (7th Cir. 1999); United States v. Wells, 154 F.3d 412, 414 (7th Cir. 1998) (Posner, C.J.).
That difficulty can be magnified where the witness is "a foreigner." Djouma v. Gonzales, 429 F.3d 685, 687 (7th Cir. 2005). Unlike the situation in Djouma, where the witness spoke through a translator, Ms. Lukaneva, who functioned as a shop steward in her union, is admittedly fluent in English, (Tr. 29, 41, 48-51), and I had no difficulty in understanding her.
Nonetheless, demeanor continues to be thought a significant component of credibility determinations. See Thornton v. Snyder, 428 F.3d 690, 697 (7th Cir. 2005) ( en banc). Compare Ashcraft v. Tennessee, 322 U.S. 143, 171 (1944) (Jackson, J., dissenting) ("a few minutes observation of the parties in the courtroom is more informing than reams of cold record."); United States v. Bruscino, 687 F.2d 938, 941 (7th Cir. 1982) ( en banc). Indeed, the Supreme Court has said that the demeanor of a witness may satisfy the tribunal not only that the witness' testimony is not true but that the truth is the opposite of his story, "for the denial of one, who has a motive to deny, may be uttered with such hesitation, discomfort, arrogance or defiance, as to give assurance that he is fabricating, and that, if he is, there is no alternative but to assume the truth of what he denies.'" NLRB v. Walton Mfg. Co., 369 U.S. 404, 408 (1962).
Factors other than demeanor and inflection go into the decision whether or not to believe a witness. Phrased differently, credibility involves more than demeanor. Indiana Metal Products v. NLRB, 442 F.2d 46 (7th Cir. 1971). Documents or objective evidence may contradict the witness' story, or the story itself may be so internally inconsistent or implausible on its face that a reasonable fact-finder would not credit it. Indeed, where such factors are present, a court of appeals can find clear error in a finding of credibility based on demeanor, even though such determinations are, as a matter of practice, usually insulated from appellate review. Ginsu Products, Inc. v. Dart Industries, Inc., 786 F.2d 260, 263 (7th Cir. 1986).
In the instant case, Mr. Foutris' demeanor persuaded me that he was telling the truth. Beyond that, and more importantly, the overwhelming unlikelihood that Mr. Foutris, would have made up the story he told to Judge Lindberg and later repeated under oath leads inexorably to the conclusion that Mr. Foutris' testimony should be credited. As a lawyer, Mr. Foutris surely knew that if a court concluded that he had lied, he would have violated at least Local Rules 83.51.3, 83.53.3, 83.54.1 and 83.58.4, and disbarment by the Executive Committee of this Court would be a certainty. But that would only be the beginning: a referral to the United States Attorney's Office for investigation was likely, cf. In re Chavin, 150 F.3d 726 (7th Cir. 1998), and a referral to the Illinois Attorney's Registration and Disciplinary Commission would be mandatory. See Skolnick v. Altheimer Gray, 191 Ill.2d 214, 730 N.E.2d 4 (2000); Local Rule 83.58.3. A perjury conviction could result in a five year prison sentence ( 18 U.S.C. § 1621), and the loss of professional licensure would be a certainty.
Of course, Ms. Lukaneva's adamant denials that she never told Mr. Foutris she had assets in Russia must be weighed in the balance. When they are, they are found wanting. Ms. Lukaneva's overall demeanor was "evasive, [her] testimony unresponsive and [as we shall see] the selectivity of [her] recollections implausible." Pinpoint Inc. v. Amazon. Com, Inc., 347 F.Supp.2d 579, 583 (N.D.Ill. 2004) (Posner, J.) (sitting by designation).
To support her claim that she never told Mr. Foutris that she had assets in Russia — and that indeed she does not — Ms. Lukaneva poses the rhetorical question, "why, if I had assets in Russia, would I work for the Defendants doing what I'm doing and live the way I live?" Why she asks, if she were so flush, would she have run up a $27,000 credit card debt? She claimed she had no money to live on and owed money for taxes and rent. (Tr. 62, 219, 223). There are several answers. First, the evidence need not exclude every hypothesis except guilt. Compare Holland v. United States, 348 U.S. 121, 139 (1954). Second, "judges have no way of crawling into peoples' minds," Posner, Overcoming Law, 276 (1995), and the law does not require that they do so. Finally, trying to get something for nothing is not exactly an unheard of endeavor or one practiced only by those with a genuine need. See, e.g., Atlanta Journal and Constitution v. The Atlanta Dept. of Aviation, 322 F.3d 1298, 1315 (11th Cir. 2003) (the "multibillion dollar conglomerates" have had a free ride on the public's back and their hand in the public's pocket for years — getting something for nothing. "It is time for them to pay up").
Beyond the fact that there is no evidence, other than the implications to be drawn from Ms. Lukaneva's rhetorical question — which are at least moderately inconsistent with other evidence that came out of the hearing regarding lengthy trips Ms. Lukaneva regularly takes to the Ukraine — there are any number of reasons which might prompt someone who is not impoverished to falsify an in forma pauperis application. For example, the applicant may believe that lawyers are largely fungible, and thus there is no point in paying for that which can be obtained at no cost; or an applicant might entertain serious doubts about the merit of the case and conclude that it is worth pursuing only so long as there are no costs involved. Or, the answer may be as simple as that supplied by Mr. Foutris in response to Ms. Lukaneva's question, why would I come to you if I had money to hire a lawyer?: "Frankly . . . I thought you were trying to get a free attorney even though you could afford one." (Tr. 197).
Ms. Lukaneva has informed my courtroom deputy in a personal meeting that she will be out of the country for three months visiting relatives in the Ukraine, and she filed a "Submission Regarding Schedule" on June 26, 2006 in which she stated that she would be out of the United States from July 4 to September 26 and asked that no court dates be scheduled. My courtroom deputy on and prior to June 29th attempted to reach Ms. Lukaneva by phone to inform her of this opinion. Messages were left both times on her answering machine. She has not responded.
At the hearing, she claimed that she already had a ticket that cost $900 that was purchased by a friend, to whom she has repaid $700. The funds, it may be assumed, did not come from her parents, whom she claimed were elderly and had no assets or her brother with whom she apparently has little or no contact. She has no other relatives in the Ukraine. Ms. Lukaneva testified that she sometimes visits the Ukraine twice a year. (Tr. 21-29).
In assessing Ms. Lukaneva's credibility in connection with her denials of her conversation with Mr. Foutris, one must consider the truthfulness of the answers she gave on her Application and her trial testimony generally. While it is possible for a witness to lie about one aspect of a case while telling the truth about other aspects, the mendacious portions are fairly to be considered in determining overall credibility.
The hoary and once mandatory doctrine of falsus in uno, falsus, in omnibus, The Santissima Trinidad, 20 U.S. 283, 339 (1822), has given way to a more discerning approach that even allows the fact-finder to believe portions of testimony despite the existence of perjury as to other portions. Allen v. CTA, 317 F.3d 696, 703 (7th Cir. 2003). Lies during a trial may be deemed more egregious than a lie told prior to trial. United States v. Brown, 130 F.Supp.2d 552, 557 (S.D.N.Y. 2001). Both, of course, are equally admissible in determining credibility.
When it suited her purpose, Ms. Lukaneva's recollection of events was vivid. (Tr. 69). For example, she testified unhesitatingly how she had to make her own copies of documents because Mr. Foutris told her he did not have a fax machine and how he had just started a new practice. (Tr. 163). When it did not suit her purpose, however, Ms. Lukaneva conceded nothing, no matter how simple or unambiguous the question or how obvious or irrefutable the evidence. It was necessary to repeatedly admonish her because of her evasiveness and refusal to be responsive.
It was not simply that she was an intransigent witness. Far more importantly, her testimony on issue after issue was knowingly false. No issue was beyond her capacity for deception. Some of the matters included whether a 2005 calendar (which at one point she claimed was a detailed listing of her work in 2005) existed, when it had been destroyed — as she ultimately claimed, the proximity of her bank on Michigan Avenue to the Hilton and Sheraton Hotels where she grudgingly conceded she worked, whether between January and October 2005 she had in fact made more than $2,000 — that she did so was proved by her own exhibits, see discussion, infra, her brother's age (Tr. 27), the identity of the person she claims justified her claiming a deduction on her 2004 tax return as head of a household. On these and other questions raised by the defendants at the hearing, Ms. Lukaneva refused to yield or feigned ignorance or lack of memory. ( See, e.g., Tr. 26; 28; 50; 67-75; 116; 128-131; 136; 236; 250-54; 257; 263).
At her deposition, Ms. Lukaneva claimed that she had a calendar with detailed records of her 2005 employment. At the hearing, when questioned about the calendar, she was evasive, ultimately denying that there was such a detailed document and that in any event, she threw it away when she moved. Her testimony about the timing of the move was inconsistent and evasive. (Tr. 68-80; 129). I did not believe any aspect of Ms. Lukaneva's hearing testimony regarding the 2005 calendar. I concluded that that testimony was intentionally false and designed to conceal records which, if produced, would have been harmful to her claims of poverty.
Ms. Lukaneva's willingness to say whatever she deemed expedient at the moment is vividly illustrated by her claim that her repeated deposits at the Chase Bank on North Michigan Avenue reflected nothing beyond the fact that she likes going downtown and that there was no branch near her home. (Tr. 108; 112-117; 122). The purpose of this evasion was to provide an explanation that would allow her to claim that she was not working at the Sheraton and the Hilton which she tried to claim were not near the bank. She was ultimately forced to admit that the bank was close to the Sheraton and Hilton and the defendants' post-trial submission proves conclusively that there are several full service Chase branches within less than a mile of Ms. Lukaneva's home at 6748 N. Ashland. ( See Defendants' Reply Brief at 13, Ex. A; Tr. 112-114).
On her 2004 return, which she prepared, she took a deduction as a head of household. She conceded that she knew that the deduction depended upon a qualifying person living with her. She identified the person as an adult male friend from Russia, who stayed with her part of the year. (Tr. 164-68; 236). When I asked her to identify the individual she claimed she could not recall (Tr. 165), but promised she would identify him. She never did. When I asked how she could afford to support him, I did not receive a particularly informative answer. What was clear was that the head of household deduction could not be justified. The 2004 return was signed under the penalties of perjury. Lying under oath outside the particular proceeding is a persuasive datum that a witness' testimony in that proceeding is not credible. United States v. Maya-Azua, 30 F.3d 140 (9th Cir. 1993) (unpublished decision, 1994 WL 319132 at *2; United States v. Boyd, 833 F.Supp. 1277, 1347 (N.D.Ill. 1993). Compare United States v. Dawson, 434 F.3d 956, 957 (7th Cir. 2006) (Posner, J.).
C. The Misstatements In The In Forma Pauperis Application And Financial Affidavit 1.
The evidence at the hearing leads to the firm conclusion that Ms. Lukaneva made a number of material misstatements in the Application in order to show a diminished economic capacity because she was uncertain whether an accurate portrayal of the amount and sources of her income in the twelve months preceding the preparation of the Application would preclude her obtaining a free lawyer. Indeed, she conceded as much at the conclusion of her post-trial brief, where she stated that she excluded certain income because of her concern that the court might have thought she had sufficient funds to pay for counsel. (Pl's Brief at 13). And, at the hearing, she was finally forced to concede that although the Application required her to list her income from all sources for the preceding 12 months, she did so only for a 10 month period. (Tr. 249-250; 260).
She insisted however that this was just a "mistake." (Tr. 249-50; 260). I am persuaded that Ms. Lukaneva knew exactly what she was doing and that her denials at the hearing were contrived and knowingly false.
To fully understand the misstatements on the Application, it is necessary to review the specific questions and Ms. Lukaneva's answers. Question 2 asked whether Ms. Lukaneva was "currently employed?" The question did not distinguish between full time and part time employment or between regular and odd jobs. Ms. Lukaneva checked the box marked "no," and thus no amount was shown next to the designation "Monthly salary or wages." This was consistent with the representation under oath in the Motion For Appointment Of Counsel prepared on October 25th that the several lawyers with whom Ms. Lukaneva had spoken and seen wanted more money than she could pay "because [I am] unemployed." (Defendants' Brief Ex. A).
Ms. Lukaneva represented on the Application that her last employment was with Levy Restaurants and that it ended on January 3, 2005. The answer to Question 2 — when read in the context of the answer to Question 3 — clearly conveyed the impression that Ms. Lukaneva had essentially no employment between January 4 and October 25, 2005. She stated in her answer to Question 2 that her monthly salary or wage prior to her termination by Levy was "$3,000 +" per month. (Ex. A, Plaintiff's Brief).
The rub was that Ms. Lukaneva was working throughout the period from January 2005 to October 25, 2005, and thus had employers and income: $1,238 from the Hilton and $3,032 from the Sheraton. (Pl's Brief at 4). But this, she said, did not count because these were "odd jobs" not "regular employment." (Tr. 64-66; 232; Pl's Brief at 3). She also attempted to say that she thought that she could not have been employed since she was simultaneously receiving unemployment compensation. This theory was based on a pamphlet of the Illinois Department of Employment Security. (Pl. Brief, Ex. C, "Summary of Services"). Those portions of the pamphlet on which Ms. Lukaneva explicitly relied belie her claim.
The pamphlet states that one can be working and still receive unemployment benefits — precisely the opposite of Ms. Lukaneva claim. The only qualification to the receipt of benefits was that the "earnings for the week" had to be "less than the weekly benefit amount [she] would draw if [she] were completely out of work in the week." ( Id. at 19; see also Tr. 82). The pamphlet also stated that:
In Ms. Lukaneva's case, that amount was approximately $293. Thus, Ms. Lukaneva could earn on a weekly basis less than $293 and still receive benefits.
If you work part time for someone who is not your regular employer — for example, on an odd job and your earnings for a week are less than your weekly benefit amount, you must file your claim immediately as though you were entirely out of work. The five-week rule set forth above does not apply to you.
(Bold and italics in original).
The above-quoted provisions were underlined and highlighted by Ms. Lukaneva in her Exhibit C.
These provisions do not begin to support Ms. Lukaneva's claim that she thought that Question 2 only called for "regular employment," and that odd jobs did not count. Quite the contrary. They reflect what is obvious and what Ms. Lukaneva ultimately was forced to concede, namely that when you performed odd jobs, you were working, that "the person for whom [you] worked, even doing odd jobs, was, at least for that day and that odd job, [your] employer," and that wages from odd jobs was income. (Tr. 61-64; 87-91; 104; 122-123; 127-128; 154). In sum, Ms. Lukaneva's attempted reliance on the IDES pamphlet was pretextual and unsupportable.
That Ms. Lukaneva's listing of the Levy organization as her last employer was designed to conceal her income from the Sheraton and Hilton (and ultimately a portion of her income from the Levy organization) is confirmed by her unwitting admission in her post-trial brief that she did not list Hilton and Sheraton "as her last place of work in her Affidavit [because] the Court might have thought that [I] had obtained a permanent job and would have been able to pay for counsel which is not true." (Pl's Brief at 13). Even this post-hoc justification is unconvincing and contrived. The first instruction at the beginning of the Application conspicuously stated: " Wherever the answer to any question requires more information than the space that is provided, attach one or more pages that refer to each such question number and provide the additional information." (Defendants' Brief, Ex. A) (Italics in original).
Thus, Ms. Lukaneva could easily have explained that her work for the Sheraton and Hilton was part-time and unpredictable. She knew that she had to tell the truth, and that it was not okay for her to lie. (Tr. 136). She chose, instead, as her post-trial brief now admits, to omit information plainly called for, and she did so not to prevent any misapprehension on the court's part about the impermanency of her employment, but to conceal that she was employed by the Sheraton and the Hilton. That Ms. Lukaneva understood that a candid disclosure that she was working — in whatever capacity she was — might disqualify her for, as she put it, a free lawyer, is evidenced by her argument that Mr. Foutris should be disbelieved because she would never have told "a free lawyer" that she "worked." (Tr. 152).
Moreover, Ms. Lukaneva's post-hearing explanation varied from her hearing testimony in which she contended that she had not listed the Hilton or Sheraton in her answer to Question 2 because "I was unemployed that week, or October" and that she understood the application only to require that she list "regular employment." (Tr. 65-66). October 25, 2005 — the date on which Ms. Lukaneva completed the Application — was a Tuesday. Thus, Ms. Lukaneva could not honestly have concluded that she had not worked "that week" because the week had just begun. She had, however, worked at the Sheraton in the week immediately preceding the week of October 24th. On October 27th she was paid $196.84 by the Sheraton for the pay period 10/16/05 — 10/22/05. (Tr. 110; Defendants' Brief, Ex. G). The deposit was for $296.98. Ms. Lukaneva could not explain where the additional $100 came from. On October 24, 2005, Ms. Lukaneva made a deposit to her checking account of $586. (Defs.' Brief, Ex. H.). She guessed at the hearing that this was comprised of two, separate, weekly $293 unemployment benefit checks. (Tr. 110). But, Ms. Lukaneva also claimed that she did not hold unemployment checks because she obviously could not given her financial situation. (Tr. 125). One of two conclusions may be drawn from this deposit. First, either Ms. Lukaneva had sufficient funds from employment that she could afford to hold checks for a week or more or the deposit was in whole or part from gainful employment.
Honesty of purpose prompts frankness of statement; concealment is indicative of fraud. Crosby v. Buchanan, 90 U.S. 420, 454 (1874). Ms. Lukaneva did not intend to be frank and revelatory in her Application and the Motion For Appointment Of Counsel. She intended to mislead and she did so intentionally.
2.
Ms. Lukaneva's failure to list the Sheraton and the Hilton in Question 2 allowed her to falsely answer Question 3, which asked, " Apart from your income stated above in response to Question 2, in the past twelve months have you or anyone else living at the same address received more than $200 from . . . salary or wages." (Emphasis supplied). Ms. Lukaneva's answer was "$2,000." In fact, she had received approximately $5,322 in the twelve month period preceding the Application. Of this amount, approximately $900 was earned in November and December of 2004 and approximately $4,300 was earned in 2005. ( See Exs. A, D-G, Defendants.' Brief, Pl's Brief at 13, Tr. 87-90). At the hearing, she admitted that she had excluded the income earned in November and December of 2004 from the Sheraton and the Hilton. (Tr. 249-50; 260).
She variously said that this was a mistake and only an estimate. (Tr. 131, 250). Ms. Lukaneva takes issue with the inclusion of $143 from the Hilton that she was earned outside the twelve month period. She also objects to the inclusion of $635 from the Sheraton since this is the total earned during the entire "fourth quarter of 2004," not merely in the period October 25-31, 2004. (Pl. Brief at 3). Ms. Lukaneva has not, however, demonstrated that the inclusion of the $635 was either partly or totally incorrect.
In her post-trial brief, Ms. Lukaneva attempted to make the case (as she did at the hearing) that she did her best to calculate the amounts she made for the twelve months. She did not, she claimed, have all the necessary records to be precise, and "the two months of November and December at Levy seemed like a past life." (Pl's Brief at 3, 13). But this contention is belied by the concession that she intentionally did not list the Hilton and Sheraton as places of employment in 2005. Id. Excluding much of the Sheraton and Hilton income is consistent with and necessitated by their exclusion as employers in response to Question 2 of the Application.
The defendants also contend that Ms. Lukaneva failed to include $6,695 in income earned from the Levy organization in November and December 2004. (Defendants.' Brief at 3-4). The theory appears to run this way: Sheraton and Hilton-not Levy-were the last employers. Had Ms. Lukaneva answered Question 2 properly, Question 3a. required that she include the $6,695 earned in November and December 2004 from Levy. Since she did not, the Application understated her income by that amount.
Ms. Lukaneva's rejoinder is that the $6,995 was not included in the answer to Question 3a. because it was subsumed in the answer to Question 2a. in which she specified that at the time of her last employment, she was making "$3,000 +" per month, (Pl. Brief at 14). Since Question 3a. expressly informs the applicant to exclude any income included in Question 2, if Ms. Lukaneva honestly thought that the $6,995 was effectively part of the answer to Question 2a., its exclusion would have been proper.
It is all a question of intent, however. At the hearing, it was obvious that Ms. Lukaneva's "last employment" was not with the Levy organization, and that she knew it. Had she listed either the Sheraton or the Hilton, her answer to Question 3 would have required that she include the $6,995 paid by the Levy organization in November and December 2004 and the approximately $900 paid during that period by the Sheraton and Hilton. By answering the question in the way that she did, the $6,995 in salary need not have been explicitly stated as a dollar amount, thereby making Ms. Lukaneva's financial condition appear more dire that it was.
Significantly, Ms. Lukaneva did not testify at the hearing or claim in her post-trial brief that she really thought the $6,995 from the Levy organization was included in the answer to Question 2 which stated that while working for the Levys she made $3,000 per month. Rather, in her post-trial brief:, Ms. Lukaneva stated that, "Ms. Klein Free Counsel at the Federal Court brought to Lukaneva's attention [not her memory] that she had already declared in her Affidavit, Question 2(a) that until January 2006 [sic] she had worked at Levy earning $3,000 plus per month." (Pl's Brief at 14) (Emphasis supplied).
I am persuaded, however, that the exclusion of almost $7,000 paid by Levy was intentional and, that her failure to list the Sheraton or the Hilton as her last employer was motivated by her unwillingness to state explicitly that amount in answering Question 3, as she would have been required to do had she answered Question 2 accurately. By answering Question 2 as she did and by excluding $3,200 paid in November and December 2004 by the Sheraton and the Hilton, Ms. Lukaneva was able not to show in numbers some $10,000 in income.
In Ms. Lukaneva's Motion for Appointment of Counsel, she declared under the penalties of perjury that her attempts to retain counsel "in this proceeding" consisted of "call[ing] and talk[ing] to all `Legal Help' agencies, call[ing] Bar Ass. and s[eeing] 2 private attorneys. All want more money than I can pay because unemployed." (Defendants' Brief Ex. A) (Emphasis supplied). The representation of unemployment in the Motion reenforced and underscored the false impression that was sought to be conveyed by Ms. Lukaneva in her statements in the Application.
The material misrepresentations made by Ms. Lukaneva under the penalties of perjury bear not only on the credibility of Ms. Lukaneva's denials regarding her interaction with Mr. Foutris, but are a self-sufficient basis under § 1915(e)(2)(A) for dismissal of the case.
D. The Form Of The Relief To Be Accorded No fraud is more odious than an attempt to subvert the administration of justice. Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 251 (1944) (Roberts, J., dissenting)"The legal system offers many ways to deal with problems; perjury is not among them." Escamilla v. Jungwirth, 426 F.3d 868, 870 (7th Cir. 2005). Indeed, so compelling is the law's insistence that participants in judicial proceedings must be truthful, that even exclusionary rules designed to protect constitutional rights give way in the face of perjury. See Harris v. New York, 401 U.S. 222 (1971); Walder v. United States, 347 U.S. 62, 65 (1954). Section 1915(e)(2)(A) is but a particularized example of that insistence. It provides: "The court shall dismiss the case at any time if the court determines that . . . the allegation of poverty is untrue. . . ." Where the evidence demonstrates the falsification of information required on an in forma pauperis application, the "suit ha[s] to be dismissed; the judge ha[s] no choice." Thomas v. Gen. Motors Acceptance Corp., 288 F.3d 305, 306 (7th Cir. 2002). See also Mathis v. N.Y. Life Insurance, 133 F.3d 546, 547 (7th Cir. 1998) (affirming Judge Lindberg's dismissal).
Prior to its amendment in 1996 in the Prison Litigation Reform Act and its recodification from § 1915(d) to 1915(e), the court could dismiss the case in the event the allegations in support of an in forma pauperis application were untrue or if satisfied that the action is frivolous or malicious. Denton v. Hernandez, 504 U.S. 25, 27 (1992). The 1996 amendment changed "may dismiss" to "shall dismiss."
In Mathis, the false statements related to prior representation by appointed counsel and plaintiff's ownership of a home with $14,000 in equity.
The referral from Judge Lindberg instructed me to recommend whether Ms. Lukaneva should be held in contempt. In light of § 1915's mandate that Ms. Lukaneva's case be dismissed, I do not recommend that in addition she be held in contempt. That would constitute, I believe, a disproportionate sanction. The only question is whether the dismissal should be with prejudice. Eleby v. Unilever Food Solutions, 2006 WL 644022, *3 (N.D. Ill. 2006). In light of Ms. Lukaneva's claimed impecuniosity, monetary sanctions would have no meaning. If she has assets in Russia, as she told Mr. Foutris she does, they are beyond the reach of the court. The only effective sanction, and the one that is proportionate to and justified by the extent of Ms. Lukaneva's misstatements in her Application and Motion For The Appointment Of Counsel is dismissal with prejudice. Cf. Thomas, 288 F.3d at 307 ("Dismissal with prejudice may be the only feasible sanction for this perjury designed to defraud the government."). Dismissal with prejudice will serve the goal of both general and specific deterrence that is the desideratum of § 1915(c)(2)(A).
CONCLUSION
It is respectfully recommended that in light of the intentional misstatements made by Ms. Lukaneva in her In Forma Pauperis Application and Motion For Appointment Of Counsel that her case be dismissed with prejudice.