US v. Recognition Equipment Inc.

• Decision Date: 20 November 1989
• Docket Number: Crim. No. 88-0385.
• Citation: 725 F. Supp. 587
• Parties: UNITED STATES of America v. RECOGNITION EQUIPMENT INCORPORATED, William G. Moore, Jr., and Robert W. Reedy, Defendants.
• Court: U.S. District Court — District of Columbia

725 F. Supp. 587

UNITED STATES of America v. RECOGNITION EQUIPMENT INCORPORATED, William G. Moore, Jr., and Robert W. Reedy, Defendants.

Crim. No. 88-0385.

United States District Court, District of Columbia.

November 20, 1989.

Joseph B. Valder, Eric M. Acker, Asst. U.S. Attys., Criminal Div., Sp. Prosecutions, Washington, D.C., Vincent L. Gambale, U.S. Dept. of Justice, Criminal Div., Fraud Section, Washington, D.C., for U.S.

John P. Cooney, Julie R. O'Sullivan, R. Scott Thompson, H. Lin Shiau, Davis Polk & Wardwell, New York City, Linda Chatman Thomsen, Davis Polk & Wardwell, Washington, D.C., Morris Harrell, Marshall Searcey, Lori B. Finkelston, Locke Purnell Rain Harrell, Dallas, Tex., for REI.

Charles A. Stillman, Marjorie J. Peerce, Stillman, Friedman & Shaw, P.C., New York City, for Moore.

Robert S. Bennett, David S. Krakoff, Amy R. Sabrin, Dunnells, Duvall, Bennett & Porter, Washington, D.C., for Reedy.

MEMORANDUM OPINION AND ORDER

REVERCOMB, District Judge.

This matter is before the Court pursuant to Defendants' Joint Motion for Judgment of Acquittal. FED.R.CRIM.P. 29.

The Defendants have been indicted with one count of conspiracy to defraud the United States, 18 U.S.C. § 371, one count of theft, 18 U.S.C. §§ 1707 and 2, one count of receiving stolen property, D.C.Code §§ 22-3832(a), 22-3832(c)(1), 22-105, two counts of mail fraud, 18 U.S.C. §§ 1341, 2, and two counts of wire fraud, 18 U.S.C. §§ 1343, 2.

This Court finds that the government has failed to establish a prima facie case that the Defendants conspired to defraud the United States in violation of 18 U.S.C. § 371. The government's evidence is insufficient, even when viewed in the light most favorable to it, for a trier of fact to find guilt beyond a reasonable doubt. Much of what the government characterizes as incriminatory evidence is not persuasive of guilt when viewed in its full context. In fact, some of the government's evidence is exculpatory and points toward innocent conduct of the Defendants. The government has conceded that in the absence of a prima facie finding of conspiracy all of the other counts in the indictment must also fail. Accordingly, it is hereby ordered that Defendants' motion for judgment of acquittal pursuant to FED.R.CRIM.P. 29 is granted.

I. Rule 29 Standard

Rule 29 of the Federal Rules of Criminal Procedure provides: "The court on motion of a defendant or of its own motion shall order the entry of judgment of acquittal of one or more offenses charged in the indictment ... after the evidence on either side is closed if the evidence is insufficient to sustain a conviction of such offense or offenses." The purpose of this Rule is to implement "the requirement that the prosecution must establish a prima facie case by its own evidence before the defendant(s) may be put to their defense." United States v. Shafer, 384 F.Supp. 496, 497 (N.D.Ohio 1974) (quoting Cephus v. United States, 324 F.2d 893, 895 (D.C.Cir.1963)).

In considering a Rule 29 motion this Court must determine whether upon the evidence, viewed "in a light most favorable to the Government giving full play to the right of the trier of fact to determine credibility, weigh the evidence and draw justifiable inference of fact," a reasonable mind might fairly conclude guilt beyond a reasonable doubt.¹ United States v. Treadwell, 760 F.2d 327, 333 (D.C.Cir. 1985), cert. denied, 474 U.S. 1064, 106 S.Ct. 814, 88 L.Ed.2d 788 (1986) (citing United States v. Davis, 562 F.2d 681, 683 (D.C.Cir. 1977)); see also United States v. Reese, 561 F.2d 894 (D.C.Cir.1977); Curley v. United States, 160 F.2d 229, 232 (D.C.Cir.), cert. denied, 331 U.S. 837, 67 S.Ct. 1512, 91 L.Ed. 1850, reh'g denied, 331 U.S. 869, 67 S.Ct. 1729, 91 L.Ed. 1872 (1947). Although the evidence must be viewed in the light most favorable to the government, this Court is obligated to take a hard look at the evidence and accord the government the benefit of only "legitimate inferences." United States v. Singleton, 702 F.2d 1159, 1163 (D.C.Cir.1983). In other words, this court will not indulge in fanciful speculation or bizarre reconstruction of the evidence. Moreover, this Court is not required to view the evidence through dirty window panes and assume that evidence which otherwise can be explained as equally innocent must be evidence of guilt. This is clearly not the standard of Rule 29. See Curley, 160 F.2d at 233 (if "a reasonable mind must be in balance as between guilt and innocence, a verdict of guilt cannot be sustained"). Rather, in order to find a legitimate and nonspeculative inference of guilt the government must articulate a rational basis in the evidence upon which that inference can arise.

This Court must grant Defendants' motion for judgment of acquittal if it finds that the evidence, even if viewed in the light most favorable to the government, is such that a reasonable trier of fact would have a reasonable doubt as to the existence of any of the essential elements of the crime. United States v. Durant, 648 F.2d 747 (D.C.Cir.1981); see also United States v. Foster, 783 F.2d 1087, 1088 (D.C.Cir. 1986).

II. Conspiracy Count

The indictment charges that the Defendants, Recognition Equipment Inc. (REI or the Company), William G. Moore, Jr., the Chief Executive Officer and Chairman of the Board of Directors of REI, and Robert W. Reedy, Vice President for Marketing at REI, conspired with several unindicted coconspirators to defraud the United States Postal Service (USPS) in attempts to obtain a contract for the Company's multiline optical character reading (MLOCR) equipment.²

The unindicted coconspirators included: (1) Peter E. Voss who was, prior to May 30, 1986, a member of the Board of Governors of the United States Postal Service and was, at various times, a member of the Board of Governors Contingency Committee, a member of the Board of Governors Technology and Development Committee, a member of the Board of Governors Planning and Executive Resources Committee, and the Vice Chairman of the Board of Governors; (2) Sharon R. Peterson, who was an administrative assistant to Voss; (3) John R. Gnau, Jr., who was a principal of the consulting and public relations firms of Gnau, Carter, Jacobsen and Associates, Inc., John R. Gnau, Jr. and Associates, Inc., and Gnau & Associates, Inc. (GAI); (4) Michael B. Marcus, who was a Director and the Treasurer of Gnau, Carter, Jacobsen and Associates, Inc. and a Director, the Vice President and Treasurer of GAI; and (5) William A. Spartin, who was President of GAI and President and Managing Director of MSL International Consultants Limited, an executive placement firm, which was a subsidiary of the Hay Group.

To establish a prima facie case under 18 U.S.C. § 371, the government must prove that (1) an agreement existed among the Defendants to defraud the USPS; (2) the Defendants knowingly participated in the conspiracy with the intent to defraud the USPS; and (3) that one or more persons knowingly and willfully committed an overt act in furtherance of that objective. United States v. Treadwell, 760 F.2d 327 (D.C. Cir.1985), cert. denied, 474 U.S. 1064, 106 S.Ct. 814, 88 L.Ed.2d 788 (1986); United States v. Puerto, 730 F.2d 627 (11th Cir. 1984); United States v. Browning, 723 F.2d 1544 (11th Cir.1984). For purposes of analysis this Court separates the conspiracy count into two parts: the Voss/Gnau payoff scheme and the Spartin personnel scheme. This Court finds that the evidence, viewed in the light most favorable to the government, does not support a reasonable inference that the Defendants knew of either scheme and that accordingly the government has failed to establish a prima facie case that the Defendants joined a conspiracy.

A. Voss/Gnau Payoff Scheme

There is no doubt that a conspiracy existed between Voss, Gnau, Marcus, and Spartin whereby Voss received illegal payments from Gnau for referring REI to GAI. On May 30, 1986, Voss plead guilty to two counts of accepting a gratuity in violation of 18 U.S.C. § 201(g) and one count of embezzlement and misappropriation of government property in violation of 18 U.S.C. § 1707. See Criminal No. 86-195. On October 17, 1986, Gnau plead guilty to one count of conspiracy to defraud in violation of 18 U.S.C. § 371 and one count of paying an illegal gratuity in violation of 18 U.S.C. § 201(f). See Criminal No. 86-355. On January 20, 1987, Marcus plead guilty to two counts of aiding and abetting in paying an illegal gratuity in violation of 18 U.S.C. § 201(f). See Criminal No. 87-023. Spartin entered an agreement with the United States Attorney's office whereby he agreed to cooperate in the investigation in exchange for immunity from prosecution, if in fact prosecution would have been warranted, for any federal crime arising out of his activities involving the United States Postal Service. GEX BS1, BS4

Voss and Gnau had a criminal venture in operation before Voss had approached REI with the proposal that REI hire the services of Gnau. In December 1983 Gnau was promising Voss that if the USPS purchased some Chicago property that was owned by a GAI client that he "would take care of him." Tr. 619 Voss and Gnau had established a scheme whereby Gnau would send checks in the name of Decision Systems, Inc., for "industrial leads" or referrals to GAI. Tr. 621-22 Prior to the time that Voss had approached REI, Voss and Gnau had targeted several companies for whom GAI could provide postal-related representation and use Voss' USPS connection to their benefit. Tr. 620-37 No evidence has been presented that REI, Moore or Reedy knew of this criminal scheme.

1. The Voss Referral

The basic operative fact upon which the Government relies as indicia of conspiracy is that Voss in early September 1984 recommended to the Defendants the services of a specific consulting/lobbying firm for the promotion of the Defendants' product before the USPS. The government contends that a referral by a Governor of the USPS...