U.S. v. Pervez

• Decision Date: 10 April 1989
• Docket Number: No. 88-1109,88-1109
• Citation: 871 F.2d 310
• Parties: UNITED STATES of America v. Arshad Z. PERVEZ Appellant.
• Court: U.S. Court of Appeals — Third Circuit

Page 310

871 F.2d 310

UNITED STATES of America v. Arshad Z. PERVEZ Appellant.

No. 88-1109.

United States Court of Appeals, Third Circuit.

Argued Oct. 19, 1988.

Decided March 6, 1989.

Order on Denial of Rehearing

April 10, 1989.

Stanley Weinberg (argued), Philadelphia, Pa., for appellant.

Amy L. Kurland (argued), Asst. U.S. Atty., Philadelphia, Pa., for appellee.

Before BECKER, HUTCHINSON and SCIRICA, Circuit Judges.

OPINION OF THE COURT

SCIRICA, Circuit Judge.

Defendant Arshad Pervez appeals his conviction on charges of conspiring to defraud the government in violation of 18 U.S.C. Sec. 371, attempting to export beryllium in violation of 50 U.S.C.App. Sec. 2410, and submitting false statements to the Department of Commerce in violation of 18 U.S.C. Sec. 1001. The principal issue raised by this appeal is whether defendant is entitled to a new trial in light of Mathews v. United States, 485 U.S. 58, 108 S.Ct. 883, 99 L.Ed.2d 54 (1988). We will vacate and remand to the district court for a new trial on the counts charging Pervez with conspiracy and attempting to export beryllium illegally. We will remand to the district court for a limited hearing to allow Pervez to proffer evidence of entrapment on the false documentation counts, United States v. Bay, 852 F.2d 702 (1988). We will affirm the district court on the remaining issues raised on appeal.

I.

Arshad Pervez, a native of Pakistan, moved to Canada in 1967. In 1986, Pervez incorporated his own import-export business, A.P. Enterprises, in Toronto. Pervez contracted with companies in Saudi Arabia and Pakistan to export pillows, food, mini-TVs, satellite antennas, computers, and lumber.

In October 1986, Pervez contacted a business acquaintance in an effort to locate a source of "maraging steel." He was referred to and eventually spoke with Mr. Del Guidice and Mr. Tomley at Carpenter Technology Corporation ("Carpenter"), a Pennsylvania company that manufactures specialty steel for use in high technology products and in the oil industry. In particular, Carpenter manufactures "maraging 350 steel," a steel with a high tensile strength, a limited market, and a very high cost.

Maraging 350 steel is used in the nuclear industry in gas centrifuge enrichment plants. Because maraging steel has nuclear application, its export is governed by the Export Administration Act and its regulations, 15 C.F.R. Sec. 368-99 (1988), which require a U.S. Department of Commerce export license for intended use in an unsafeguarded nuclear facility. ¹ Because of restrictions placed on the export of maraging steel, Tomley notified the Nuclear Regulatory Commission and met with United States Customs Service personnel, informing them that A.P. Enterprises was interested in purchasing maraging steel for export to Pakistan and that Pervez had alleged that the steel was to be "remelted." ² At the direction of the United States Customs Service, Tomley forwarded a price quotation to Pervez. Pervez then arranged to meet with Carpenter representatives to discuss the sale. In November 1986, Tomley and U.S. Special Customs Agent John New, acting undercover as an international marketing analyst for Carpenter, met with Pervez in Toronto. At this meeting, Pervez identified his client as Mr. Inam Ul-Haq of Multinational Corporation of Lahore, Pakistan. Tomley told Pervez that Carpenter previously had been directed by the United States Department of Commerce not to manufacture maraging steel for use in Pakistan because it was believed that the material was destined for Pakistan's unsafe nuclear facility. Tomley also told Pervez that Carpenter would not manufacture the steel unless Pervez obtained the proper license from the U.S. Department of Commerce.

During the course of negotiations with New, Pervez offered a variety of contradictory uses for maraging steel. At different times, Pervez stated that the end use would be the Pakistani equivalent of NASA, a research project sponsored by Karachi University's engineering program, the manufacture of rocket motors, the manufacture of high speed compressors and turbines, and the development of anti-tank weapons systems.

In a telephone conversation in December 1986, Pervez and New discussed the Export Administration's licensing requirements. New told Pervez that the Department of Commerce would not issue a license unless Pervez obtained a letter from Multinational stating the intended end use of the maraging steel. New informed Pervez that it might be necessary to make a cash payment to the Department of Commerce licensing officer to ensure the issuance of the license. Pervez said that he would be willing to pay $5000 to obtain the export license, but later asked if he could reduce the "kickback" to $3000.

New then requested Special Agent Frank Rovello of the U.S. Customs Service to meet with Pervez in Philadelphia. In this investigation, Rovello assumed an undercover role as a Department of Commerce Licenses officer. During their meeting on January 13, 1987, Pervez asked Rovello how to get a license to export maraging steel and what information to put on the application. App. at 1412a. Pervez told Rovello that he would present backup letters in support of the application. Rovello informed Pervez that the Department of Commerce needed a "letter from the purchaser saying exactly where they're located ... what they're going to use [the maraging steel] for, where they're [sic] plant is and where can someone from Commerce in Washington or the Embassy in Pakistan do an on site inspection ... that's what they'll probably require." App. at 1411a. When Rovello asked Pervez whether his purchasers would "allow somebody to see the process," Pervez responded, "I don't know about that." App. at 1413a. Pervez then gave Rovello $1000 as a downpayment to secure the export license. App. at 593a-94a.

The next day, Pervez toured the Carpenter plant in Reading, Pennsylvania. After the tour, Tomley, New and Pervez had dinner together, during which Tomley questioned Pervez on the end use of the maraging steel. Tomley told Pervez that he "had no intention of putting his company in jeopardy," and that he believed that Pervez had misrepresented the end use of the maraging steel in Pakistan. App. at 411a. Tomley then told Pervez that he thought the end use was the uranium enrichment plant in Pakistan. According to New, Pervez nodded his head in the affirmative in response to Tomley's remark. App. at 411a.

About one month later, Pervez mailed Tomley two end use statements which declared that the maraging steel would be used to manufacture high speed turbines and compressors. One end use statement purported to be from Noeem Pasha, General Manager of Multinational, and the other from the Pakistan Council of Scientific and Industrial Research.

For the purpose of its investigation, on March 31, 1987, the Department of Commerce issued a false "license" to Pervez to export the steel. Shortly thereafter, New met with Pervez in Toronto to review export documents and finalize the terms of the sale. At the meeting, Pervez told New for the first time that his buyer also wanted beryllium, a highly controlled specialty metal that also requires a validated export license from the Department of Commerce. When told that export of beryllium was also restricted, Pervez suggested that Rovello be contacted again. App. at 1639a. New and Pervez then discussed alternative methods to export the beryllium from the United States, including diverting it through other countries, identifying the shipment as something other than beryllium, or shipping it directly. When New expressed concern that shipping beryllium was illegal, Pervez remarked that "the United States won't mind a small piece." App. at 1649a. Pervez also stated that his customers in Pakistan were looking for other hard metals. New replied that he thought the other hard metals would be used in "another application in the plant at Kahuta," to which Pervez responded, "Could be." App. at 1651a. At the end of their meeting, Pervez told New that "the Kahuta client is ready." App. at 1674a.

On June 18, 1987, Pervez told New the dimensions and chemical formula of the beryllium over the telephone. App. at 1696a-98a. New again told Pervez that beryllium was a restricted material requiring an export license, and that it had a nuclear application. When Pervez inquired whether it could be shipped under another label, New stated, "You tell me what you want me to put on the box." App. at 1701a. Pervez then said that he wanted New to commingle the beryllium with the maraging steel for shipment to Pakistan. App. at 1701a-02a. During the same conversation, Pervez also inquired whether New could procure a "gamma scanning unit" for use in an "oil refinery." App. at 1705a. New recommended that Pervez inquire elsewhere for such a unit. Finally, in July 1987, Pervez drove to Philadelphia to facilitate the first shipment of maraging steel and to make another payment to Rovello. At that time, he was arrested.

On July 28, 1987, a federal grand jury returned an eight count indictment against Pervez and his co-defendant in Pakistan, Inam Ul-Haq. ³ Pervez was charged with conspiracy to defraud the government (18 U.S.C. Sec. 371), bribery (18 U.S.C. Sec. 201), interstate travel in aid of racketeering (18 U.S.C. Sec. 1952), submitting false statements to the Department of Commerce (18 U.S.C. Sec. 1001), and violating the Export Administration Act through the payment of a bribe for the export of maraging 350 steel and through the attempt to export beryllium (50 U.S.C.App. Sec. 2410). Pervez was convicted of conspiring to defraud the United States (Count One), and of submitting statements to the Department of Commerce that misrepresented the end use for the maraging steel (Counts Six, Seven, and Eight). He admitted the elements of the charges in Count Five (attempting to export beryllium), claiming entrapment, and was found guilty of the offense. He also admitted...