667 F.Supp. 974 (S.D.N.Y. 1987), 86 Crim. 384, United States v. Evans

Docket Nº:86 Crim. 384 (LBS).
Citation:667 F.Supp. 974
Party Name:UNITED STATES of America v. Samuel EVANS; Guriel Eisenberg; Rafael Israel Eisenberg; William Northrup; Avraham Bar'Am; Nico Minardos; Alfred Flearmoy; Hermann Moll; Ralph Kopka; Hans Bihn; Isaac Hebroni; John Delaroque; Bernard Veillot; B.I.T. Company, Import, Export, and Metals Limited; Dergo Establishment; Flear Holdings Incorporated S.A.; Intern
Case Date:July 10, 1987
Court:United States District Courts, 2nd Circuit, Southern District of New York

Page 974

667 F.Supp. 974 (S.D.N.Y. 1987)



Samuel EVANS; Guriel Eisenberg; Rafael Israel Eisenberg; William Northrup; Avraham Bar'Am; Nico Minardos; Alfred Flearmoy; Hermann Moll; Ralph Kopka; Hans Bihn; Isaac Hebroni; John Delaroque; Bernard Veillot; B.I.T. Company, Import, Export, and Metals Limited; Dergo Establishment; Flear Holdings Incorporated S.A.; International Procurement and Sales, Inc. and Vianar Anstalt, Defendants.

No. 86 Crim. 384 (LBS).

United States District Court, S.D. New York.

July 10, 1987

Page 975

[Copyrighted Material Omitted]

Page 976

[Copyrighted Material Omitted]

Page 977

Rudolph W. Giuliani, U.S. Atty., for S.D.N.Y., New York City, for plaintiff; Lorna G. Schofield, Asst. U.S. Atty., of counsel.

Grand & Ostrow, New York City, for defendant Samuel Evans; Paul R. Grand, Lawrence S. Bader, of counsel.

Neal J. Hurwitz, New York City, for defendant Rafael Israel Eisenberg; Brigid Hogeland, of counsel.

Power, Weiss & Marks, New York City, for defendant Guriel Eisenberg; Jonathan Marks, of counsel.

Michael H. Sporn, New York City, for defendant William Northrup.

Budd Larner Gross Picillo Rosenbaum Greenberg & Sade, New York City, for defendant Avraham Bar'Am; Larry J. Silverman, Shira A. Scheindlin, Richard A. Greenberg, of counsel.

William M. Kunstler, New York City, for defendant Nico Minardos; Ronald L. Kuby, of counsel.

Richard B. Lind, New York City, for defendant Alfred Flearmoy.

Charles T. Theofan, Garden City, N.Y., for defendant Herman Moll.

Pascarella, Illmensee & Carra, Garden City, N.Y., for defendant Ralph Kopka; Lawrence V. Carra, of counsel.

Louis R. Aidala, New York City, for defendant Hans Bihn.

SAND, District Judge.

This criminal case, according to the Government's view, exposes aspects of the hidden world of private international arms sales. The fourth superseding indictment charges numerous defendants--individuals and entities--with participating in five separate illegal conspiracies to sell and transfer American-made defense articles to a putative Iranian buyer named Cyrus Hashemi. Specifically, the present indictment charges, inter alia, that in order to gain approval of the contemplated transfers, defendants conspired to make false and fraudulent statements to agencies of the United States Government regarding the destination of the defense articles. Substantive counts based on false statements in documents actually filed with the United States are also alleged against certain defendants in connection with one of the planned transactions, the so-called "Dergo Establishment Arms Deal." The lead defendant, Samuel Evans, who is named in the substantive counts and as a participant in each of the alleged conspiracies, is said to have acted as the intermediary between the seller and the buyer in four of the five contemplated transactions.

None of the arms deals referred to in the indictment was ever consummated. In fact, Cyrus Hashemi, the putative Iranian buyer in each of the business deals, was an agent of the United States Government. Working with a corps of other Government informants, Hashemi entered into a series of tape recorded negotiations with individual defendants. As the transactions progressed, the sting operation was terminated and the arrests in this case were made.

The defendants have filed scores of motions, some of which have been previously decided. The Government, too, has moved to preclude certain testimony, references and argument at the trial. This Opinion addresses all issues raised in the pending defense motions except those which relate to discovery matters and to Cyrus Hashemi, who died after the Government's investigation ended. Also unaddressed in this Opinion are the motions relating to wire and mail fraud counts, including the motion

Page 978

filed July 6, 1987 by defendant Evans with respect to the Supreme Court's recent holding in McNally v. United States, 483 U.S. ----, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987). These matters will be addressed in a separate Opinion.


Defendants challenge the jurisdiction of the United States over the crimes alleged in the indictment on a number of grounds. First, defendants allege that jurisdiction was improperly procured through a fraud on the government of Bermuda. Second, defendants challenge the authority, and alternatively the intent, of Congress to prosecute the crimes alleged in the indictment. Specifically, defendants contend that the United States lacks jurisdiction over such crimes because the extraterritorial application of the Arms Export Control Act, 22 U.S.C. § 2778 ("AECA"), would violate international law. Defendants further urge this Court to dismiss the conspiracy counts of the indictment, 18 U.S.C. § 371, on the basis that the government impermissibly manufactured jurisdiction.

For the reasons stated below, the motions to dismiss based on these grounds are denied.

A. Jurisdiction was not Procured Through a Fraud on the Government of Bermuda

Defendants argue that the indictment should be dismissed because representatives of the United States committed fraud on the government of Bermuda, thereby defeating the jurisdiction of this Court. Defendants claim that because the offenses with which defendants are charged are not extraditable, the United States gained jurisdiction over five of the defendants--Evans, the Eisenbergs, Northrup, and Bar'Am--by convincing the government of Bermuda, through misrepresentation, to deport them to the United States. Defendants claim that United States representatives presented a misleading picture to Bermuda by portraying that the defendants were to be traveling into Bermuda to consummate billions of dollars in arms sales to "certain terrorist groups".

The defendants fault the United States first with failing to inform Bermuda that in fact, no arms were to be imminently sold. Rather, because defendants came to Bermuda to negotiate (or according to the United States, execute) contracts for arms sales that would never materialize, defendants argue that Bermuda should have been told that the United States was merely conducting a "sting operation." Defendants further charge that the United States committed fraud on Bermuda by informing its officials that defendants were attempting to sell arms to terrorists, when in fact, defendants believed they were dealing directly with the government of Iran.

The Court concludes that jurisdiction over the defendants was not procured by fraud. Even assuming, arguendo, the facts are as presented by defendants, the Bermuda officials were sufficiently apprised of the circumstances when they made the decision to deport. First, defendants do not dispute that Bermuda's knowledge of defendants' activities extended beyond the information contained in the purportedly misleading letter from the United States Customs Service to the Bermuda Attorney General indicating that defendants sought to "consummat[e]" a fraud to divert weapons "to certain terrorist groups." The Attorney General had also at his disposal information directly obtained from two meetings and briefing sessions with United States officials. More compelling, however, is the fact that the Bermuda court opinions that upheld the Deportation Order did not state that defendants sought to divert weapons to specific terrorist groups. Rather, the opinions contained statements--that are both consistent with defendants' version of their activities and factually accurate by most accounts--that the arms were destined for Iran, a country which "harbours and encourages terrorists."

Similarly, the Court finds based on the facts as presented by defendants, that even though Bermuda was not advised that the United States was engaged in a sting operation,

Page 979

it was informed of accurate information which was critical to Bermuda's deportation decision. That is, Bermuda was fully aware that the United States believed, rightfully or wrongfully, that defendants were prepared to proceed with a two billion dollar sale of arms to Iran, irrespective of whether arms actually and imminently would be diverted.

Not only as a matter of fact, but as a matter of law, defendants' jurisdictional claim must be rejected. We note at the outset that defendants have not pointed us to any applicable treaty provision conferring judicially enforceable rights on defendants. Under these circumstances, the Court must agree with the Government's contention that absent protest by Bermuda as to a violation of international law and where Bermuda has not sought defendants' return, defendants have no standing to assert that a fraud has been committed upon Bermuda. See, e.g., United States v. Davis, 767 F.2d 1025, 1030 (2d Cir.1985); United States v. Reed, 639 F.2d 896, 902 (2d Cir.1981). The rights arising out of treaties and applying in cases of extradition are rights belonging to the asylum state, with rights accruing to individuals being, at most, derivative through the state. See, e.g., United States ex rel. Lujan v. Gengler, 510 F.2d 62, 67 (2d Cir.), cert. denied, 421 U.S. 1001, 95 S.Ct. 2400, 44 L.Ed.2d 668 (1975); Shapiro v. Ferrandina, 478 F.2d 894, 906 (2d Cir.), cert. denied, 414 U.S. 884, 94 S.Ct. 204, 38 L.Ed.2d 133 (1973).

Even assuming that defendants had standing on their own to raise claims of fraud upon a foreign government, the law still does not support their contentions. The Court agrees with the Government, contrary to defendants' assertions, that the doctrine of specialty has not been violated in this case. The specialty doctrine holds that one may not be tried for a crime other than the offense for which one was extradited. United States v. Rauscher, 119 U.S. 407, 7 S.Ct. 234, 30...

To continue reading