36 F.3d 154 (1st Cir. 1994), 93-1529, United States v. Holmquist

Docket Nº:93-1529.
Citation:36 F.3d 154
Party Name:UNITED STATES of America, Appellee, v. Stephen A. HOLMQUIST, Defendant, Appellant.
Case Date:September 28, 1994
Court:United States Courts of Appeals, Court of Appeals for the First Circuit

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36 F.3d 154 (1st Cir. 1994)

UNITED STATES of America, Appellee,


Stephen A. HOLMQUIST, Defendant, Appellant.

No. 93-1529.

United States Court of Appeals, First Circuit

September 28, 1994

Heard May 2, 1994.

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John H. LaChance, with whom Milly Whatley and LaChance & Whatley, Framingham, MA, were on brief, for appellant.

Robert L. Ullman, Asst. U.S. Atty., with whom Donald K. Stern, U.S. Atty., Boston, MA, was on brief, for U.S.

Before SELYA and BOUDIN, Circuit Judges, and CARTER, [*] District Judge.

SELYA, Circuit Judge.

Defendant-appellant Stephen A. Holmquist appeals his convictions on six counts of importing firearms by means of false statements in violation of 18 U.S.C. Sec. 542 and three counts of exporting restricted firearms in violation of 22 U.S.C. Sec. 2778. Holmquist's case has a certain labyrinthine quality. Having successfully negotiated the maze, however, we find appellant's claims to be without legal merit and, therefore, affirm the judgment below.


Appellant, a resident of Massachusetts, owned and operated ARMCO, a firm engaged in the retail sale of firearms. Apparently not content with the domestic market, and believing his entrepreneurial skills to be of sufficient caliber, appellant set his sights on the international scene. Between 1989 and 1991, he conducted several business transactions with individuals in the People's Republic of China. Since these transactions triggered the indictment in this case, we offer an overview of them. Where appropriate, we resolve evidentiary conflicts, and indulge reasonable inferences, in a manner compatible with the jury verdict. See, e.g., United States v. Maraj, 947 F.2d 520, 522-23 (1st Cir.1991).

In May of 1989, the U.S. State Department granted appellant's request for a license to export handguns to the People's Republic of China. However, following the tragic events that rocked Tiananmen Square in June of that year, the State Department declared that most firearms no longer could be exported to China. At the same time, the Department revoked or suspended all existing export licenses (including appellant's) and declared a moratorium on the issuance of new licenses. When appellant thereafter sought just such a license, the State Department sent back his application, unapproved and stamped "returned without action." Appellant did not reapply.

Despite the lack of a license or other formal authorization, appellant thrice smuggled restricted firearms to China between October 1989 and July 1990. He carried the weaponry on commercial flights out of Boston, nestled in his suitcases amidst other, more orthodox travel items. After arriving in China, appellant delivered the guns to either Mr. Ha, a high-ranking government official, 1 or Andrew Wong, a business executive. Based on the evidence anent these transactions, the jury convicted appellant on three counts of unlawful exportation.

China also served appellant as a source for importing firearms and ammunition into the United States. These importations, though not in themselves unlawful, ultimately became so when accompanied by appellant's apocryphal statements concerning the value of his wares. On six different occasions during 1990 and 1991, appellant undervalued imports, presumably to reduce the duty due. The prosecution was able to adduce virtually irrefutable proof of this duplicity: dual sets of invoices, one containing the price disclosed to Customs and the other containing the actual, higher price that appellant in fact had paid. Based on this well-documented pattern of deceit, the jury convicted appellant on six

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counts of entering goods by means of false statements.


Taking matters in reverse chronological order, we turn first to an examination of the import charges. These counts arise under a criminal statute that provides in pertinent part:

Whoever enters or introduces, or attempts to enter or introduce, into the commerce of the United States any imported merchandise by means of any fraudulent or false invoice, declaration, affidavit, letter, paper, or by means of any false statement, written or verbal, or by means of any false or fraudulent practice or appliance, or makes any false statement in any declaration without reasonable cause to believe the truth of such statement, or procures the making of any such false statement as to any matter material thereto without reasonable cause to believe the truth of such statement, whether or not the United States shall or may be deprived of any lawful duties ... [s]hall be [punished as provided].

18 U.S.C. Sec. 542 (emphasis supplied). 2

Appellant does not deny that he knowingly made false statements to Customs officials, thereby undervaluing his imports. Nonetheless, he contends that such statements do not fall within the scope of the statute of conviction because the phrase "by means of" indicates that no violation occurs unless the merchandise, absent the false invoice, statement, or practice, would have been excludable. And he says this was not the case regarding the Chinese munitions, as their importation was lawful. The government, by contrast, puts no stock in a causation requirement, dismissing appellant's argument as involving too cramped a reading of the statutory language. Because the parties' dispute boils down to a pure question of statutory interpretation, our review is plenary. See United States v. Gifford, 17 F.3d 462, 471-72 (1st Cir.1994); Liberty Mut. Ins. Co. v. Commercial Union Ins. Co., 978 F.2d 750, 757 (1st Cir.1992).

Whatever shadows cloud this record, one thing is very clear: even though no materiality requirement appears on the statute's face, section 542's first provision must be read to contain such a requirement; to justify a conviction, the prosecution must demonstrate that the false invoice, statement, or practice is related to the importation in some material respect. This is the construction recognized by virtually every court that has directly addressed the issue. See, e.g., United States v. Corcuera-Valor, 910 F.2d 198, 199 (5th Cir.1990); United States v. Bagnall, 907 F.2d 432, 435 (3d Cir.1990); United States v. Teraoka, 669 F.2d 577, 579 (9th Cir.1982). It also comports with our construction of the parallel civil statute, 19 U.S.C. Sec. 1592, explicated in United States v. Ven-Fuel, Inc., 758 F.2d 741, 761-62 (1st Cir.1985). We hasten to add that the inclusion of a materiality component is warranted by more than habit; such a requirement is pragmatically desirable because it permits courts to advance the statute's apparent purposes and, if necessary, to exclude trivial lapses from the statute's ambit. Cf., e.g., United States v. Corsino, 812 F.2d 26, 30 (1st Cir.1987) (explaining materiality requirement under 18 U.S.C. Sec. 1001, which prohibits, among other things, the submission of false statements in matters within the jurisdiction of any federal agency).

Yet, our recognition of a materiality requirement does not solve the interpretive riddle that this appeal presents; it is the nature of the materiality requirement--not its mere existence--over which the parties grapple. Appellant invites us to hold that materiality in this context is contingent on a crabbed construction of the term "by means of." Specifically, he argues that "by means of" is synonymous with "because of," and that a false statement is material under the first part of section 542 only if the importation of any particular item would have been

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forbidden in its absence. We decline the invitation.

In discerning the meaning of this portion of section 542, "[w]e start--as all statutory construction must start--by looking at the language of the law," United States v. Charles George Trucking Co., 823 F.2d 685, 688 (1st Cir.1987), and by examining the "ordinary, contemporary, common meaning" of the words, Perrin v. United States, 444 U.S. 37, 42, 100 S.Ct. 311, 314, 62 L.Ed.2d 199 (1979). Bearing this in mind, we are constrained to conclude that the phrase "by means of" is not synonymous with "because of"; while the former includes the latter, that hardly renders them coterminous. Rather, understood in an unforced way, saying that someone has effected an importation by means of a false statement is simply to suggest that the person has introduced a false statement at some significant stage in the process. The phrase does not mean that the person could not have used a true statement in tandem with the false statement, or that the importation could not otherwise have been achieved. See, e.g., Webster's New Universal Unabridged Dictionary 1115 (2d ed. 1983) (defining "by means of" as "by using; with the aid of; through"); Richard A. Spears, American Idioms Dictionary 43 (1987) (defining "by means of something" as "using something" or "with the use of something").

There is no basis for rejecting plain meaning here. Indeed, contrary to appellant's importuning, the principal problem with the "by means of" language is not ambiguity--its meaning is obvious--but, rather, the language's potential breadth. It is because of this problem that courts have read a materiality requirement into this portion of section 542. This requirement is intended to flesh out, not to eviscerate, the "by means of" language as that phrase resonates in the context of section 542. So viewed, it brings to the textual surface the commonsense notion that, to ground a conviction, there must be a significant nexus between the false statement and the importation.

We hold, therefore, in basic agreement with the Third Circuit, that a false statement is material under section 542 if it has the potential significantly to affect the integrity...

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