U.S. v. Johnson

• Decision Date: 28 April 1998
• Docket Number: No. 95-5021,95-5021
• Citation: 139 F.3d 1359
• Parties: 11 Fla. L. Weekly Fed. C 1272 UNITED STATES of America, Plaintiff-Appellee, Cross-Appellant, v. Edward A. JOHNSON, Defendant-Appellant, Cross-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1359

139 F.3d 1359

11 Fla. L. Weekly Fed. C 1272

UNITED STATES of America, Plaintiff-Appellee, Cross-Appellant, v. Edward A. JOHNSON, Defendant-Appellant, Cross-Appellee.

No. 95-5021.

United States Court of Appeals, Eleventh Circuit.

April 28, 1998.

Rehearing Denied June 25, 1998.

Gerald J. Houlihan, Houlihan & Partners, P.A., G. Richard Strafer, Miami, FL, for Defendant-Appellant, Cross-Appellee.

William A. Keefer, U.S. Atty., Madeline Shirley, Asst. U.S. Atty., Miami, FL, for Plaintiff-Appellee, Cross-Appellant.

Appeal from the United States District Court for the Southern District of Florida.

Before TJOFLAT and BIRCH, Circuit Judges, and RONEY, Senior Circuit Judge.

RONEY, Senior Circuit Judge:

Defendant Edward A. Johnson was convicted of crimes which focused on sales between 1982 and 1987 to Chilean purchasers of zirconium which was made into cluster bombs sold to Iraq. Although the export of the zirconium for this purpose was prohibited by laws of the United States, Johnson sought to defend the charges against him by establishing that the United States--in particular, Presidents Ronald Reagan and George Bush, the Central Intelligence Agency and high ranking members of the military--encouraged the Teledyne companies, Johnson's employers, to export the zirconium, knowing the purchasers would use it to manufacture cluster bombs for Iraq, because at that time the United States was secretly supporting Iraq in its war with Iran. The district court held that the defendant failed to make his case in this regard. Rulings made in connection with that decision are at the heart of this appeal. We affirm.

Defendant Edward A. Johnson was convicted by a jury on four counts: criminal conspiracy, 18 U.S.C. § 371, making false statements to the government, 18 U.S.C. § 1001, and two counts of exporting zirconium compacts in violation of the Arms Export Control Act ("AECA"), 22 U.S.C. § 2778. He appeals with issues relating to the "materiality" requirement of false statement prosecutions, the definition of the United States Munitions List referred to in the AECA, the use of classified information as evidence in criminal trials, and the proper jury instructions

for the defense of good faith reliance on the advice of counsel. The government cross-appeals Johnson's sentence.

CHARGES

The Arms Export Control Act authorizes the President to designate a special list of defense-related articles, known as the "Munitions List," which require a special license from the Department of State before they legally may be exported from the United States. See 22 U.S.C. § 2778(a)(1) (1994). Defense-related articles which also have non-military applications, known as "dual use" items, are excluded from the Munitions List and only require an export license from the Department of Commerce. See 22 C.F.R. § § 120.3-120.4 (1985).

Johnson was convicted for his role in a conspiracy to illegally export zirconium compacts to Chile. Although the zirconium compacts were used to manufacture cluster bombs, the end-use statements used to procure export licenses stated that the zirconium would be used in industrial explosives. Johnson was charged with criminal conspiracy, exporting zirconium compacts designed for use in cluster bombs without a license from the Department of State, and making false statements to the government. All of the charges required the government to prove that Johnson acted with specific intent to commit these crimes.

FACTS

Between 1983 and 1988, Teledyne Wah Chang Albany ("TWCA"), an American manufacturing company, exported over $3.5 million worth of zirconium to Chile. Zirconium is a rare metal with incendiary properties. The zirconium was sold to Carlos Cardoen, an international arms merchant based in that country. The zirconium was used as an incendiary agent in cluster bombs that Cardoen was selling to Iraq for use in the Iran-Iraq war. Most of the zirconium sold to Cardoen was in the form of manufactured zirconium compacts specifically designed for use in cluster bombs. In 1982, before zirconium shipments commenced, TWCA asked the Department of State Office of Munitions Control ("OMC") for a ruling on whether zirconium was on the Munitions List. It explained that TWCA wished to export zirconium for use in industrial explosives. In early 1983, OMC issued a commodities jurisdiction ruling stating that zirconium was a dual use item and therefore was excluded from the Munitions List. After receiving this favorable response from the Department of State, TWCA applied for export licenses from the Department of Commerce. Although Cardoen used the zirconium to manufacture cluster bombs, he provided TWCA with false end-use statements stating that the zirconium would be used as a booster material in industrial explosives sold to the mining industry. TWCA used these false end-use statements to procure export licenses from the Department of Commerce.

Edward Johnson was a sales manager of ordnance grade zirconium at TWCA. Although zirconium has civilian applications, the vast majority of Johnson's zirconium customers used the material to manufacture munitions, particularly cluster bombs. Beginning in 1982, Carlos Cardoen began placing large zirconium orders through Johnson. Most of Cardoen's orders were not for loose zirconium sponge, a raw material, but rather for zirconium sponge compacts, which are a manufactured component used in munitions such as cluster bombs. Throughout the period of the alleged conspiracy, Johnson continued to be one of Cardoen's primary contacts at TWCA. He accepted and processed all of Cardoen's zirconium orders and he negotiated pricing and shipping arrangements on behalf of TWCA.

PROCEEDINGS AT TRIAL

At trial, Johnson portrayed himself as a low-level salesman who had no idea that he was being used as a pawn in the international armaments game. He claimed that he had been duped into believing that the zirconium was being used to manufacture industrial explosives rather than cluster bombs, and that he had relied on management assurances that the zirconium shipments complied with export regulations. The jury was not convinced, and because Johnson received a fair trial, we will not disturb their verdict.

The evidence at trial provided ample grounds for a jury finding that Johnson was a knowing and willing participant in the conspiracy.

Johnson knew that TWCA faced potential environmental and safety liability if it did not find a profitable market for its excess zirconium. In 1984, Johnson traveled to Chile for meetings with Cardoen. He brought with him sample zirconium compacts which had been specifically designed for use in cluster bombs. The meetings in Chile centered around Cardoen's arms business, and included detailed discussions of zirconium's military applications. During later trips to Chile in 1987, Johnson visited Cardoen's cluster bomb factory and witnessed burn testing of zirconium compacts TWCA had provided Cardoen for use in his MK 83/84 bombs. Several witnesses testified as to Johnson's knowledge that the zirconium compacts exported to Cardoen were being used to manufacture Iraqi cluster bombs. James Meyerink testified that in 1984, he overheard Johnson and other employees of TWCA discussing that the zirconium would be used to manufacture cluster bombs and ridiculing the end-use statements they had provided to the government listing industrial explosives as the purpose of the exports. Richard Jenkins testified that Johnson told him that the zirconium pellets were being used to manufacture Iraqi cluster bombs. Augusto Giangrandi, Cardoen's assistant, testified that he had several meetings with Johnson in which they ironed out pricing and shipping details relating to the zirconium exports. Giangrandi testified that Johnson knew that Cardoen was supplying cluster bombs containing zirconium to Iraq, and that the volume of future zirconium orders from TWCA depended on Iraq's need for bombs. Giangrandi and Johnson also discussed the specific zirconium requirements of individual Iraqi bomb contracts Cardoen planned to bid for.

ISSUES ON APPEAL

Johnson raises four specific issues in this appeal. First, the district court committed reversible error when it held that Johnson's false statements were material as a matter of law, rather than submitting the issue to the jury. Second, the commodities jurisdiction ruling issued by the Office of Munitions Control precluded liability under the Arms Export Control Act or required a jury instruction on uncertainty in the law. Third, the district court made reversible evidentiary rulings, concerning classified information. Fourth, the court's supplemental jury instruction on his defense of good faith reliance on the advice of counsel incorrectly stated the law and misled the jury. We address each of these arguments in turn.

"MATERIALITY" OF FALSE STATEMENTS

In accordance with then-Circuit precedent, the district court ruled that the "materiality" element of a false-statement prosecution was a question for the judge, and directed the jury that the statements alleged were material. In United States. v. Gaudin, 515 U.S. 506, 115 S.Ct. 2310, 132 L.Ed.2d 444 (1995), the Supreme Court held that the Fifth and Sixth Amendments' guarantees of due process and jury trial required courts to submit the "materiality" element of false statement prosecutions to the jury. That holding applies retroactively to cases on direct appeal at the time Gaudin was decided, as was this case. Griffith v. Kentucky, 479 U.S. 314, 328, 107 S.Ct. 708, 716, 93 L.Ed.2d 649 (1987). The Supreme Court and this Court have held that a Gaudin error is subject to the harmless error standard of review. See Johnson v. United States, 520 U.S. 461, 117 S.Ct. 1544, 137 L.Ed.2d 718 (1997); United States v. Fern, 117 F.3d 1298 (11th Cir.1997).

Under this standard, "the government must show the absence of prejudice to the defendant's substantial rights." Fern, 117 F.3d at 1307. The government...