U.S. v. Lichenstein

• Decision Date: 01 February 1980
• Docket Number: No. 78-5752,78-5752
• Citation: 610 F.2d 1272
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Joseph LICHENSTEIN and Leo Bella, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1272

610 F.2d 1272

UNITED STATES of America, Plaintiff-Appellee, v. Joseph LICHENSTEIN and Leo Bella, Defendants-Appellants.

No. 78-5752.

United States Court of Appeals,

Fifth Circuit.

Feb. 1, 1980.

Rehearing Denied March 10, 1980.

Griffin Bell, Jr., George N. P. Pahno, Savannah, Ga., for defendants-appellants.

Kathrine L. Henry, Melissa S. Mundell, Wm. H. McAbee, II, Asst. U. S. Attys., Savannah, Ga., for plaintiff-appellee.

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

Before WISDOM, TJOFLAT and REAVLEY, Circuit Judges.

REAVLEY, Circuit Judge:

Appellants Bella and Lichenstein were charged with knowingly and willfully submitting a false statement to a government agency, 18 U.S.C. § 1001, by falsely designating as "vessel supplies" 1,150 cases of bonded scotch whiskey on a United States Customs form, and with conspiring to accomplish the same, 18 U.S.C. § 371. At trial the jury returned verdicts acquitting both men on the substantive count, but convicting on the conspiracy count. Appellants challenge their convictions on a variety of grounds: (1) that there was insufficient evidence either to avert defense motions for judgments of acquittal or to support the jury verdict; (2) that the trial judge erred in finding the falsification to be "material"; (3) that the inconsistency of the jury verdicts requires reversal; (4) that the longstanding practice of Customs in allowing without question the lading of similarly large consignments of whiskey and other goods as vessel supplies actively misled appellants regarding the criminality of falsely designating goods as vessel supplies; (5) that they were selectively prosecuted; and (6) that the prosecutor irreparably tainted the trial with recurrent references to extrinsic "smuggling" activities. We affirm the convictions.

Leo Bella, president of Ambrasco International Export Corporation of New York, primarily engages in the brokerage and exportation of machinery to South America. In September 1975 Bella arranged with Joseph Lichenstein, president of the Dave Streiffer Company a ship chandler, a dealer in vessel supplies to have 900 cases of scotch whiskey, purchased by Bella in Switzerland, imported under Streiffer Company's name and stored in the latter's bonded warehouse in New Orleans. In November 1975 Bella telephoned Lichenstein again to arrange the transfer of these 900 cases, plus an additional 250 cases to be purchased from Streiffer stock, to the port of Savannah, Georgia, to be laden aboard the Greek freighter CAPETAN GIANNIS. Bella inquired whether the whiskey might be transported and laden as "vessel supplies" (items to be consumed on board ship) rather than export cargo; Lichenstein assured him that it could be so designated even though both men knew the GIANNIS to be bound only for a fourteen-day voyage to Brazil with a crew of twenty-five.

In order to obtain release of the bonded whiskey from the Streiffer warehouse for transit to another United States port, Lichenstein was required to submit to Customs several prescribed forms 7512, indicating the eventual destination of the whiskey to be vessel supplies to be laden aboard the GIANNIS in Savannah, the quantities to be withdrawn, and the mode of transit to Savannah. ¹ A Customs Warehouse Officer Oscar H. Staines, stationed at Streiffer's bonded warehouse then released the whiskey according to these forms, and it was transported to Savannah via common carrier in sealed trailers. A Customs inspector in Savannah then validated the forms 7512 on November 18, 1975, to acknowledge that the whiskey had arrived satisfactorily and had not been diverted into domestic trade. Upon noticing the excessive quantity being laden as vessel supplies, however, he notified two other Customs special agents. These agents briefly questioned the captain of the GIANNIS about the intended lading of 1,150 cases of scotch as vessel supplies, and thereafter decided to question Bella in New York. For reasons not made clear at trial, the captain subsequently refused to have the suspect whiskey laden aboard, and the GIANNIS departed from Savannah later that same evening, November 18, before Customs' interviews with Bella could be completed. After speaking with Bella and Lichenstein, Customs seized the whiskey on November 20, 1975, and the indictments for false statements and conspiracy followed.

I.

The standard of review for sufficiency of the evidence to support either the jury's verdict or the trial court's denial of defendants' motion for acquittal is the same: whether, viewing the evidence and all reasonable inferences most favorably to the prosecution, a reasonable jury could find the evidence inconsistent with all reasonable hypotheses of the defendants' innocence. United States v. Zicree, 605 F.2d 1381, 1385 (5th Cir. 1979) (applying this standard to review of denial of motion for acquittal); United States v. Duckett, 550 F.2d 1027, 1030 (5th Cir. 1977) (applying this standard to review of jury verdict).

To sustain a conspiracy conviction there must be proof (1) of an agreement among two or more persons (2) to accomplish something that constitutes an offense against the United States, and (3) an overt act by one of them in furtherance of the conspiracy. United States v. White, 569 F.2d 263, 266 (5th Cir.), Cert. denied, 439 U.S. 848, 99 S.Ct. 148, 58 L.Ed.2d 149 (1978). As to each conspirator, the prosecution must show the existence of a conspiracy and that the accused knowingly participated in it. United States v. Barrera, 547 F.2d 1250, 1256 (5th Cir. 1977). There is little controversy that the required proof was given for the majority of these elements. Direct evidence, predominantly admissions by Bella and Lichenstein themselves, that Bella requested Lichenstein to withdraw the 1,150 cases of whiskey from his bonded warehouse as "vessel supplies" to be laden aboard the GIANNIS under this label, that Lichenstein responded to this inquiry that it would be "no problem," and that, accordingly, he had the whiskey removed from his warehouse and shipped to Savannah pursuant to Customs forms 7512 that he had caused to be executed falsely, designating the whiskey as vessel supplies as per Bella's request, amply demonstrates an agreement and knowing participation by both parties, as well as a key overt act in furtherance of the conspiracy (execution of the Customs forms).

Appellants, however, contend there was insufficient proof of any unlawful purpose of their agreement that is, they argue that their goal of representing the whiskey to Customs as "vessel supplies" would not, in the context of this case, constitute a violation of 18 U.S.C. § 1001. The elements of an offense under § 1001 are (1) a statement, that is (2) false (3) and material, (4) made with the requisite specific intent, (5) within the purview of government agency jurisdiction. United States v. Lange, 528 F.2d 1280, 1287 (5th Cir. 1976). Aside from the finding of materiality, a question of law examined below, appellants seriously controvert only the proof of specific intent.

Section 1001 proscribes only deliberate, knowing, willful false statements. Lange, 528 F.2d at 1288. The statement must have been made with an intent to deceive, a design to induce belief in the falsity or to mislead, but § 1001 does not require an intent to defraud that is, the intent to deprive someone of something by means of deceit. United States v. Godwin, 566 F.2d 975, 976 (5th Cir. 1978) (per curiam). To sustain the conviction of conspiracy to violate § 1001, the government must have proved at least this same degree of criminal intent as required for the substantive offense. United States v. Feola, 420 U.S. 671, 686, 95 S.Ct. 1255, 43 L.Ed.2d 541 (1975); United States v. Wieschenberg, 604 F.2d 326, 331 (5th Cir. 1979) (requiring proof of specific intent to sustain conviction of conspiracy to commit a specific intent crime). In a sworn statement given to a Customs agent and entered at trial (Gov't exh. no. 17), appellant Bella admitted that the whiskey "had to be invoiced as ship stores" in order to avoid its being entered on the export manifest "because there was no Brazilian import license available." Lichenstein admitted having stated in conversation with this same agent that he "didn't believe the crew would drink that much whiskey" and that "the whiskey was going into South America" (Supp.R. at 186-87, 356). These acknowledgements by appellants, coupled with the common sense inference that a twenty-five man crew on a fourteen-day voyage could not ingest 1,150 cases of scotch, adequately demonstrate the falsity of the designation of these goods as "vessel supplies" and appellants' knowledge of that falsity. Moreover, appellants deliberately made these misrepresentations, perhaps, as Bella's statement suggests, to facilitate unlading of the whiskey in South America.

Appellants creatively contend, however, that they made their knowing falsification with no intent to deceive. Rather, they claim, they acted in reliance on a longstanding practice of Customs to accept, unquestioningly, excessive quantities of goods as vessel supplies. Customs is charged with enforcing 15 C.F.R. § 371.9, a regulation that restricts the lading on board ships of goods as "ship stores" or vessel supplies to "reasonable quantities." Appellants adduced uncontroverted evidence that Customs had traditionally construed this provision very liberally, illustrating this by several transactions in which appellants, themselves, had been involved. ² In addition, appellants introduced evidence of an intra-agency communication between Customs Warehouse Officer Staines, stationed at the Streiffer warehouse, and his superiors to the effect that no limits were to be enforced on the quantities of whiskey allowed to be designated as vessel supplies (Def. exh. no. 7). In this context appellants argue that they had no intent to deceive Customs, but were simply acting in...