720 F.2d 1327 (D.C. Cir. 1983), 82-2492, United States v. Lemire

Docket Nº:82-2492, 82-2493, 82-2526 and 82-2528.
Citation:720 F.2d 1327
Party Name:UNITED STATES of America v. Joseph C. LEMIRE, Appellant. UNITED STATES of America v. Jon T. STEPHENS, Appellant. UNITED STATES of America v. Lionel W. ACHUCK, Appellant. UNITED STATES of America v. INTERCONEX, INC., Appellant.
Case Date:November 04, 1983
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit

Page 1327

720 F.2d 1327 (D.C. Cir. 1983)

UNITED STATES of America

v.

Joseph C. LEMIRE, Appellant.

UNITED STATES of America

v.

Jon T. STEPHENS, Appellant.

UNITED STATES of America

v.

Lionel W. ACHUCK, Appellant.

UNITED STATES of America

v.

INTERCONEX, INC., Appellant.

Nos. 82-2492, 82-2493, 82-2526 and 82-2528.

United States Court of Appeals, District of Columbia Circuit

November 4, 1983

Argued Sept. 9, 1983.

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Appeals from the United States District Court for the District of Columbia (D.C. Criminal Nos. 81-00342-02, 81-00342-04, 81-00342-03 and 81-00342-05).

John W. Vardaman, Jr., and Robert Gold, Washington, D.C., with whom David E. Kendall, Jon T. Brown and James T. Reilly, Washington, D.C., were on brief for appellants.

William C. Bryson, Atty., Dept. of Justice, Washington, D.C., with whom Stanley S. Harris, U.S. Atty., Washington, D.C., was on brief for appellee.

Before WRIGHT, WALD and EDWARDS, Circuit Judges.

Opinion for the Court filed by Circuit Judge WALD.

WALD, Circuit Judge:

These appeals are from the convictions of three individual defendants and a corporation on four counts of wire fraud, in violation of 18 U.S.C. Sec. 1343 (1976), one count of transportation of the proceeds of fraud in interstate commerce, in violation of 18 U.S.C. Sec. 2314 (1976), and one count of conspiracy, in violation of 18 U.S.C. Sec. 371 (1976). The district court sentenced defendant Stephens to five concurrent five year prison terms and a suspended consecutive five year term, the suspension being

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conditioned on payment of $1 million restitution to Raytheon Company. It sentenced defendant Achuck to six suspended concurrent five year prison terms, suspension being conditioned on payment of $750,000 restitution to Raytheon. Defendant Lemire received six concurrent five year sentences. The three individual defendants were also fined $19,000 each, and defendant Interconex, Inc., was fined $24,000.

All four defendants challenge their convictions on the following grounds: (1) the district court misinstructed the jury on the requisite elements of wire fraud; (2) the instructions allowed the jury to convict on a theory of fraud different from that which the government presented at trial; (3) the district court erred in permitting the government's use of a non-expert summary witness; and (4) the district court erred in not admitting three defense exhibits into evidence. In addition, Achuck challenges the sufficiency of the evidence to uphold his conviction. Finally, both Achuck and Stephens challenge the district court's authority to set restitution as a condition of probation in this case. For the following reasons, we affirm the convictions and restitution conditions.

I. BACKGROUND

The evidence in this case is both complex and controverted, but certain uncontested facts set the stage for analyzing the defendants' appeals.

  1. The Uncontested Facts

    On June 16, 1976, the Raytheon Company contracted with the Kingdom of Saudi Arabia to construct a complex missile system and military base. As part of that project, Raytheon decided to provide housing for its personnel in Saudi Arabia. At the time Raytheon entered this contract, and throughout the period involved in this case, Roy Carver was the program manager for the entire project, and Raytheon's senior official in Saudi Arabia. Carver was involved in the alleged fraud and conspiracy but is not an appellant in this case. Defendant Joseph Lemire was the manager of several supporting subsidiaries of Raytheon and was responsible for procuring and shipping this housing to Saudi Arabia.

    Prior to Raytheon entering the 1976 contract, Lemire and Carver became acquainted with defendants Jon Stephens and Lionel Achuck, who are co-owners of defendant Interconex, an international freight forwarder. 1 Interconex had handled some of Raytheon's previous shipping to Saudi Arabia. When Lemire began to seek bids for the housing project, however, Interconex no longer provided any shipping for Raytheon because Raytheon had entered an agreement with Waterman Steamship Line to handle its shipping needs.

    At the time the alleged fraud occurred, Raytheon had a company-wide policy prohibiting employees from accepting anything of value from any organization that sought to or did provide goods or services for Raytheon. Every year, Lemire signed a card representing that he had complied with the conflict of interest policy. The policy also required Lemire to report any conflict of interest that arose after the card was signed. In addition, Raytheon had another company policy requiring that all companies making competing bids for contracts to provide Raytheon with goods or services be given the same bidding information at the same time.

    In late May of 1976, Lemire had his staff member, Mr. Waxman, contact International Modular Systems, Ltd. (IMS), a District of Columbia company that produces modular homes. On June 7, Stephens met with the representatives of IMS to discuss their provision of houses to Saudi Arabia and, as a result of the meeting, Interconex and IMS signed an agreement that they would work together to get the Raytheon contract and to develop other business. That agreement provided that IMS would bid on the Raytheon contract, and, if successful, IMS

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    would manufacture and deliver the prefabricated construction to port, and Interconex would ship and deliver the construction to the site in Saudi Arabia. On June 9, Lemire spoke to IMS on the telephone and discussed modular housing for Saudi Arabia. On June 21, Mr. Waxman notified modular house manufacturers, including IMS, of the contract specifications; he told them that the bids were to include shipping and that the bids were due by June 23. Raytheon received four bids, of which the IMS bid was lowest. The bids differed greatly in their shipping charges, with IMS charging the least amount--in this case, $91.11 per ton. 2 Lemire awarded the contract to IMS.

    When the housing contract was let, Lemire informed the Raytheon official responsible for approving procurement contracts that he had solicited bids C & F (cost and freight), that is, for both the housing and transportation. When questioned about his decision to have the manufacturers provide shipping, Lemire responded that the competitive bid for shipping would save Raytheon money. Raytheon's management then approved the contract.

    During this time, Achuck and Stephens made contractual arrangements allowing them to transfer funds into Winhall Insurance Company, a Bermuda based company in which each had a one-half interest. On June 10, they travelled to Geneva where Achuck obtained special power of attorney over a Liberian company, Generation Holding (GH), and Stephens obtained a similar power over Coralda Trust, Ltd., a company based in Lichtenstein. When IMS was awarded the Raytheon contract, it entered into a subcontract agreement with Interconex. Rather than have IMS pay Interconex the full $20.50 per square foot that the companies had agreed upon, IMS consented to pay $12.65 per square foot to Interconex and the remaining $7.85 per square foot to GH. When IMS was later awarded a second contract by Raytheon, it paid the same rate to Interconex, but paid $9.35 per square foot to GH. GH later funneled money to Coralda Trust which then transferred some of the funds to Winhall. In other transactions, GH transferred funds that ultimately ended up in a Cayman Island company owned by Carver and Lemire.

    In the fall of 1976, Raytheon began an investigation of the IMS contracts, and in particular the shipping rates. In the course of this investigation, a company official asked Lemire about who arranged the shipping for IMS and Lemire responded that he did not know. Raytheon also asked IMS and Interconex for cost information about the shipping, and both refused to supply the information. 3 Later in the fall, Raytheon got Interconex to cancel the fourth and final voyage upon which houses were being shipped. Raytheon itself chartered a boat to ship the houses, thereby achieving about $700,000 savings on the last trip. Tr. at 1148. Except for obtaining Interconex's release from the shipping contract for the fourth voyage and arranging shipping for the houses itself, Raytheon took no further action. The government investigation leading to the indictment was prompted by surveillance of Mrs. Carver by a member of the Saudi Royal family. The grand jury indicted the defendants and Mr. Carver on September 11, 1981. 4

  2. The Parties' Theories of the Case

    At trial, the government focused its proof primarily on its allegation that Interconex overcharged Raytheon for shipping. The government's theory was that Interconex was able to submit a lower bid than its

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    competitors because of contract specification information that Lemire provided it well in advance of the bidding. 5 This information enabled Interconex to calculate its rate based on knowledge that it could charter an entire vessel to ship the housing, rather than booking shipments with a common carrier. The government contended that this knowledge allowed Interconex to achieve inflated profits while still submitting the lowest bid. These excess profits were then divided among Carver, Lemire, Stephens and Achuck. It also argued that even if Interconex's shipping rate was not inflated in comparison to other bids and the Waterman Steamship rate, the scheme prevented Raytheon from saving money by chartering a boat itself, for the first three voyages. The government claims that Raytheon's agreement with Waterman was not an exclusive contract and covered small shipments only; thus it did not preclude Raytheon from chartering its own boat.

    The defense denied that Lemire gave Interconex any...

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