Theft of Public Money—Sue Linehan

The head of Rainbow, a nonprofit “representative payee” organization, has been indicted by a federal grand jury on theft of public money charges in Minnesota.^[1] Sue Linehan is accused of stealing “hundreds of thousands of dollars in Social Security payments from people who relied on her to pay bills such as rent and utilities.”^[2] Representative payee organizations, such as Rainbow, “help vulnerable people, such as those with dementia or drug addictions, use their benefit checks to pay for essentials.”^[3] The payee is authorized to receive federal entitlement funds such as Social Security payments, “often amounting to $600 a month for many clients…and then to work with the client to use that money to cover rent, food, clothing, utility bills and other costs. Whatever is left is usually supposed to be saved by the payee for the client.”^[4] The organization is then allowed to collect approximately $30 a month from the clients’ benefits.^[5]

The alleged theft occurred between 2001 and 2003, and during that period of time, Rainbow was “entitled to receive $436,000 in fees” but Ms. Linehan allegedly “stole a substantial amount of money beyond that.”^[6] Her ability to receive payments for clients was revoked in 2003; she filed for bankruptcy in 2004, and Rainbow lost its nonprofit status in 2005.^[7]

Theft of public money is covered by 18 U.S.C. § 641, which states that it is a crime for a person to steal or purloin money or any thing of value from the United States. The punishment for a violation of this statute is a fine, imprisonment for up to 10 years or both. Some cases have suggested that “it is an essential element of a violation of [section] 641 that the government suffer some actual property loss.”^[8] However, in recent years, that requirement seems to have been dropped. A number of courts have decided that “no one…has explained why Congress would have made property loss an element of a section 641 offense when, historically, there was no such element.”^[9] In short, in some circuits, “proof of the government’s loss is unnecessary in a section 641 prosecution.”^[10] However, since the matter is not completely settled, it is still an argument that should be made, even if it is difficult to do so.

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[1] Tom Ford, Nonprofit Leader Accused of Fleecing “Poorest of Poor,”, Minneapolis Star Tribune, Mar. 19, 2006.
[2] Id.
[3] Id.
[4] Id.
[5] Id.
[6] Id.
[7] Id.
[8] See United States v. Evans, 572 F.2d 455, 471 (5th Cir. 1978); United States v. Collins, 464 F.2d 1163, 1165 (9th Cir. 1972).
[9] See United States v. Milton, 8 F.3d 39, 44 (D.C. Cir. 1993); United States v. Barnes, 761 F.2d 1026, 1032-36 (5th Cir. 1985).
[10] Milton, supra note 9.