924 F.2d 410 (2nd Cir. 1991), 89-1365, United States v. Schwartz
|Docket Nº:||89-1365 and 89-1474.|
|Citation:||924 F.2d 410|
|Party Name:||UNITED STATES of America, Appellee, v. Solomon SCHWARTZ, Leon Lisbona, H. Leonard Berg and Grimm DePanicis, Defendants, Appeal of Solomon SCHWARTZ, H. Leonard Berg, Leon Lisbona and Grimm B. DePanicis, Defendants-Appellants. Nos. 835, 836, 758 and 759, Dockets 89-1363, 89-1364,|
|Case Date:||January 15, 1991|
|Court:||United States Courts of Appeals, Court of Appeals for the Second Circuit|
Argued March 12, 1990.
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Steven Alan Reiss, New York City, for appellant H. Leonard Berg.
Adina Schwartz (The Legal Aid Society, Federal Defender Services Appeals Unit, New York City, of counsel), for appellant Grimm B. DePanicis.
Irving Anolik, New York City, for appellant Solomon Schwartz.
Nathan Z. Dershowitz, New York City, (Victoria B. Eiger, Daniel R. Williams, Dershowitz & Eiger, New York, New York; Alan M. Dershowitz, Cambridge, Mass., of counsel), for appellant Leon Lisbona.
Ira Belkin, Asst. U.S. Atty., E.D.N.Y. (Andrew J. Maloney, U.S. Atty., E.D.N.Y., David C. James, Emily Berger, Asst. U.S. Attys., Larry H. Krantz, Special Asst. U.S. Atty., E.D.N.Y., Brooklyn, N.Y., of counsel), for appellee.
Before KEARSE, CARDAMONE and MAHONEY, Circuit Judges.
CARDAMONE, Circuit Judge:
Appellants are four individuals engaged in the business of exporting American-built arms to foreign purchasers. They planned during 1982-84 to ship ammunition, night vision goggles, automatic rifles and other military equipment to prohibited destinations in four separate deals: the first to export night vision devices to Argentina during the 1982 Falkland Island War between that country and Great Britain (Argentina Deal); the second to export firearms and ammunition to Iraq via the Netherlands and Belgium (Iraq Deal); the third involved a government sting operation in which appellants made plans to ship night vision devices to the Soviet Union, and actually shipped one as a sample to an undercover federal agent in West Germany (Soviet Deal); the fourth to ship a planeload of arms and ammunition to Poland (Poland Deal).
The four schemes were to be carried out in large part by HLB Security Electronics, Ltd. (HLB)--a company in the business of selling arms abroad--and the four appellants, Solomon Schwartz, H. Leonard Berg, Leon Lisbona, and Grimm DePanicis. Berg owns HLB, and Lisbona was alleged to be his silent partner. DePanicis is an HLB salesman, and Schwartz ran his own arms business, but acted as a partner with Berg and Lisbona for the four deals. Fortunately, only the Argentine arrangement came to fruition; appellants were caught, tried and convicted in the United States District Court for the Eastern District of New York (Platt, C.J.). From the facts in this extensive record developed during defendants' four-month jury trial, one may gather that arms merchants inhabit a shadowy world of intrigue and deceit, untrammeled by truth.
Defendants Schwartz, Berg, and Lisbona were convicted for (1) conducting a racketeering enterprise through a pattern of such activity in violation of 18 U.S.C. Sec. 1962 (RICO count); (2) three counts of wire fraud in violation of 18 U.S.C. Sec. 1343; (3) three counts of conspiracy to violate the Arms Export Control Act in violation of 18 U.S.C. Sec. 371; (4) two counts of making false statements to the U.S. State Department Office of Munitions Control in violation of 18 U.S.C. Sec. 1001; and (5) four counts of exporting arms in violation of the Arms Export Control Act. 22 U.S.C. Sec. 2778(b)(2) and (c). Schwartz and Berg were also convicted on one count of obstructing an agency proceeding in violation of 18 U.S.C. Sec. 1505. Defendant DePanicis was convicted of conspiring to violate the
The Argentina Deal
It is helpful in understanding the issues raised to recite briefly the activities involved in each of the four plans. Counts 2 and 3 of the indictment involved the sale of $7 million worth of night vision devices to an Argentine businessman, Mauricio Waicman, who purchased these devices for the Argentine military. Waicman informed appellants he was interested in purchasing large quantities of night vision equipment, as well as other military articles, for Argentine military forces to use against the British in the then ongoing Falkland Islands War. Appellants contacted Litton Industries (Litton), the primary producer of night vision devices, and attempted to place Waicman's order. Litton took steps to insure the equipment would not be illegally exported from the United States. In the first contract Litton made HLB agree to be "fully responsible for compliance with all laws and regulations pertaining to the export of night vision goggles." As HLB began placing larger orders for the goggles, Litton further required HLB to disclose the identity of its customer, provide information showing that appropriate documentation had been obtained by its customer, and have its customer state that the equipment would remain in the United States until the U.S. State Department's Office of Munitions Control (Munitions Control Office) issued the proper export licenses. A Litton executive testified at trial that until HLB met these conditions, Litton refused to sell it any equipment.
In responding to Litton's requirements, appellants did not disclose that the equipment was destined for Argentina, and that their customer was Waicman, the Argentine businessman. Rather, they told Litton that their customer was Texas Armaments Advisors--an inactive corporate shell controlled by Schwartz and a partner--and to convince Litton that the equipment was in fact going to Texas Armaments, appellants produced an HLB financial statement showing a $1 million account receivable balance owing from Texas Armaments that referred to the ordered equipment.
Testimony at trial established that the night vision goggles were smuggled into Argentina by couriers traveling on commercial airliners. A representative of the British Ministry of Defense testified that British forces recovered several of them from the Argentine military, and the serial numbers on seven of them matched the serial numbers on HLB and Litton business records, confirming that these were the same devices sold to HLB.
The Iraq Deal
Counts 4 through 7 of the indictment charged defendants with an attempt to send 110 boxes of firearms and ammunition to Iraq through the use of export licenses falsely stating the Netherlands as the ultimate destination. In the summer of 1982, appellants were approached by an Iraqi named Abu Marwan who sought guns and ammunition for delivery in Iraq, allegedly for the Iraqi National Police.
Appellants obtained an export license upon an application that falsely stated that the end destination was the Netherlands. Upon presenting the license to Customs officials, defendants were able to ship the guns and ammunition to a Netherlands-based company, Holland Arms. Defendants planned to "transship" the guns to Iraq after their arrival in the Netherlands, but the government refused to issue an export license. As a result, the guns and ammunition were detained in that country for many months. Eventually appellants succeeded in having the arms moved to Belgium while they attempted to devise alternate methods to get this military material to Iraq. Ultimately the arms were seized by the Belgian government and sent back to the United States.
The Soviet Deal
Counts 8 and 9 arose out of the government "sting operation." In the summer of 1983 appellants were approached by an undercover government informant--an arms dealer named Ben Jamil--whose cooperation resulted from a plea agreement relating to other illegal arms exports that he had been engaged in. Jamil wanted 400 Litton night vision goggles and told appellants the goggles would be sent either to the Soviet Union or East Germany. On instructions from the Customs agent supervising the investigation, Jamil asked that one set of goggles be sent to an address in West Germany, purportedly to allow the Soviet or East German purchasers to examine it as a sample. Appellants sent a pair of goggles to the West German address, where it was received by another Customs agent.
Surveillance tapes were made of the numerous conversations between Jamil and appellant Lisbona. On some of the later tapes, Lisbona told Jamil that he would not do anything "illegal" and that there was "a way to do it legally" with "proper" End User Certificates--documents submitted to the Munitions Control Office by an exporter stating the ultimate user of the arms shipped--indicating West Germany as the end user. On one recording, Jamil said, "but you know where they're going," to which Lisbona replied, "No, I don't want to know where."
Despite the fact that appellants made plans to proceed with the sale, the 400 night vision goggles were never actually shipped either to Jamil or the undercover agents.
The Poland Deal
Counts 10 through 14 cover an attempt to ship 500 automatic rifles and 100,000 rounds of ammunition from the United States to Poland using an export license falsely designating Mexico as the shipment's destination. Again, the government used a confidential informant, the pilot who was to fly the arms to Poland, to build its case.
The pilot, Joseph Haas, was approached by an acquaintance in December 1983 about flying a planeload of arms to Poland. Haas, who had previously worked as an informant for the Customs Service, contacted the Service and agreed to assist in the investigation. Thereafter, he engaged defendants in several conversations that were tape-recorded. During one recorded meeting, Schwartz gave Haas the details of the planned...
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