U.S. v. Wellman
| Decision Date | 02 October 1987 |
| Docket Number | No. 86-2344,86-2344 |
| Citation | 830 F.2d 1453 |
| Parties | UNITED STATES of America, Plaintiff-Appellee, v. Glenn WELLMAN, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Seventh Circuit |
George P. Lynch, Chicago, Ill., for defendant-appellant.
James T. Zuba, AUSA (Anton Valukas-USA), Chicago, Ill., for plaintiff-appellee.
Before FLAUM and RIPPLE, Circuit Judges, and ESCHBACH, Senior Circuit Judge.
Defendant-appellant, Glenn Wellman, was convicted of two counts of mail fraud (18 U.S.C. Sec. 1341 (1982)) relating to misrepresentations made regarding whether chemical tanks manufactured by his company complied with Department of Transportation and Coast Guard regulations. Wellman challenges his conviction on various grounds, contending that: (1) the delay in indicting him (just 1 day short of the 5-year statute of limitations) violated due process; (2) the trial court should have suppressed statements he claims he was "tricked" into making to the FBI and the United States Attorney; (3) the evidence was insufficient to support his conviction; (4) the trial court improperly limited his cross-examination of government witnesses, designed to detect supposed bias; (5) the trial court should have granted a continuance to allow him to produce the government's fingerprint expert to testify that a fingerprint analysis of certain documents in the case was negative for his fingerprints; (6) the government improperly attempted to prevent a witness from cooperating with him; (7) various evidentiary rulings of the trial court prejudiced him; and (8) the trial court's sentencing was improper. We find no error and therefore affirm.
The defendant, Glenn Wellman, was President and Chief Operating Officer of IWI Industries ("IWI") in Summit, Illinois. IWI had two subsidiaries, Itasco Products of Summit, Illinois, and Itasco of California (both referred to collectively as "Itasco" except where necessary to distinguish between the locations of the plants), that manufactured new portable shipping tanks and refurbished used tanks for use in the chemical industry. 1
In 1978, M-Chem Chemical Company, a manufacturer of chemicals used in the petroleum industry, learned that Itasco had reconditioned portable shipping tanks available for sale at substantially less than the cost of new tanks. In response to an inquiry from M-Chem, Wellman sent a letter regarding the tanks. With the letter, he attached a "drawing on a limited quantity of portable shipping tanks designed to meet Coast Guard approval" and noted that the "tanks are used but in 'like new' condition, and ... we would ensure that these tanks would meet Coast Guard specifications by submitting them to our DOT 2 testing procedures." Gov't Ex. M-Chem 2. Enclosed with the letter and the drawing was an "exemption" in the name of Petrolite Corporation. 3 The drawing attached by Wellman did not correspond to the Petrolite drawing upon which the exemption was based, although Wellman had the Petrolite drawing in his possession at the time the letter and exemption were sent. The tanks sent to M-Chem were constructed, with variations noted below, according to the drawing attached by Wellman rather than the Petrolite drawing. When M-Chem's vice-president called Wellman to ask about the fact that the exemption was in Petrolite's name, Wellman assured her that M-Chem could use the tanks under the exemption and that the next exemption would be issued in M-Chem's name. Additionally, he again assured her that the tanks complied with DOT Specification 57. 4
After M-Chem was satisfied that the tanks could legally be used for its purposes, and after it had business contacts in California inspect and photograph some of the tanks, M-Chem decided to order some of the used tanks. The tanks were generally ordered in lots of 10 (although sometimes more) and ranged from approximately $460 to $500 apiece in price. The first order was placed in late 1978 or early 1979. In mid-1979, however, Itasco ran out of the used tanks and told M-Chem that if it wanted additional tanks, it would have to order new tanks, manufactured by Itasco, which would cost slightly more. M-Chem did order some of the new tanks, at a cost of $786 each. M-Chem continued to order tanks throughout 1979.
In December of that year, however, M-Chem's president wrote Wellman to complain that many of the tanks in the most recent shipments did not comply with the parties' agreement or DOT specifications. Specifically, the tanks lacked fusible vent plugs and extended bottom drains with valve guards, 5 and many of them lacked DOT nameplates. 6 In addition to pointing out the defects, the letter noted that Wellman's apparent understanding that M-Chem had ordered 70 additional tanks which were to be held for later shipment, was in error. After receiving the letter, Wellman sent the necessary parts. M-Chem withheld payment for the tanks until the defects were cured.
M-Chem continued to order additional tanks from Itasco, although there were occasional problems with the tanks. In one instance, for example, tanks were shipped without identifying numbers, which Wellman subsequently supplied by mailgram. Additionally, when replacement parts, particularly lids and closures, for the tanks were needed, M-Chem ordered them from Itasco, through Wellman.
In mid-1980, M-Chem discovered that it had more serious problems with the tanks when a customer refused to accept M-Chem products shipped in the tanks because the tanks did not comply with government regulations. Upon doing some checking, M-Chem realized that the Petrolite exemption had expired in 1978, before any tanks had even been ordered, and that a replacement exemption had never been sent. Accordingly, M-Chem's vice-president again called Wellman to have him remedy the problem. Wellman assured her that a replacement exemption indeed existed and that he would send it.
At this point M-Chem contacted the Coast Guard. Following this contact, M-Chem's vice-president again called Wellman and indicated that M-Chem needed a copy of the exemption in its office in order to ascertain whether the tanks would serve M-Chem's purposes. Again, Wellman said he would send the new exemption. Still, however, no exemption was received. Subsequent conversations took place between M-Chem's vice-president and Wellman in which, in addition to repeating that he would send the exemption, he assured her that the tanks were "Coast Guard approved DOT 57 tanks." Tr. 78. After these assurances, M-Chem ordered additional tanks, although the price had risen to $946.
Following this order, M-Chem again contacted Wellman regarding documentation that the tanks complied with government regulations. Following this contact, on February 5, 1981, Wellman sent M-Chem a letter (the "count mailing" for count 1 of the indictment) in which he "confirm[ed] that the tanks previously purchased and currently on hand by your company are constructed as per DOT 57 and DOT 60 specifications as requested by the Department of Transportation and the U.S. Coast Guard." Gov't Ex. M-Chem 16. Additionally, he wrote that:
I am listing the approval numbers as requested and if there is additional information required, please contact me.
Department of Transportation, Title 49 CFR Section 178.251, 178.253, 178.253-5B, Part 6450.25 1, 64.61, 64.63, 54.15-13 and E-8347-A.
Recognizing that many of the numbers Wellman characterized as "approval numbers" were merely citations to the governing DOT regulations (although the reference to "Part 6450" appears to have been a typographical error), and not understanding what "E-8347-A" referred to, M-Chem's vice-president called Wellman to tell him, again, that an exemption was needed, not citations to regulations. Wellman promised to send the exemption. After an erroneous mailing of retest certificates, which M-Chem again had to straighten out over the phone with Wellman, a purported exemption was sent along with a letter on March 11, 1981 (the letter erroneously bore the year 1982), which stated, in pertinent part:
In followup to our recent telephone conversation, I am enclosing copies of our D.O.T. exemption E-8347-A which is self explanatory.
Gov't Ex. M-Chem 18a. 7
This letter was the "count mailing" for count 2 of the indictment.
M-Chem continued to order tanks from Itasco, through Wellman, until informed by DOT and Coast Guard representatives that the tanks did not meet DOT Specification 57 and could not be used. The exemption sent by Wellman turned out to be bogus, and thus could not be used for shipment of the tanks. When M-Chem informed DOT and the Coast Guard that if required to cease all use of the tanks it would be put out of business, DOT representatives told M-Chem that it could write DOT to obtain an emergency exemption which would allow use of the tanks if certain steps were taken to ensure that the tanks could safely be used. Among other things, M-Chem was required under the terms of the emergency exemption to provide the tanks with fusible vent plugs and to pressure test the tanks. M-Chem took those steps and continued to use the tanks.
When Coast Guard and DOT representatives inspected the Itasco tanks on hand at the M-Chem facility, they concluded that none of the tanks on hand either met DOT Specification 57 or were approved by the Coast Guard. The primary noncompliance items related to closures and venting devices found on the covers to the tanks, although some were also "out of test," meaning that they had not been retested within the last two years, as required by government regulations, and some lacked DOT nameplates.
An indictment was filed on February 4, 1986, charging Wellman with two counts of mail fraud and one count of forgery. After trial, the district court dismissed the forgery count, holding that there was no evidence of intent to defraud the United States, an essential element. The propriety...
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