U.S. v. Browning

• Decision Date: 14 November 1980
• Docket Number: No. 79-1893,79-1893
• Citation: 630 F.2d 694
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. John Val BROWNING, Defendant-Appellant. *
• Court: U.S. Court of Appeals — Tenth Circuit

Page 694

630 F.2d 694

UNITED STATES of America, Plaintiff-Appellee, v. John Val BROWNING, Defendant-Appellant. ^*

No. 79-1893.

United States Court of Appeals Tenth Circuit.

Argued and Submitted Oct. 15, 1980.

Decided Nov. 14, 1980.

David M. Rosen, Sp. Asst. U. S. Atty., St. Louis, Mo. (Ronald L. Rencher, U. S. Atty., Salt Lake City, Utah, and Frederick R. Buckles, Sp. Asst. U. S. Atty., St. Louis, Mo., with him on the brief), for plaintiff-appellee.

Elkan Abramowitz, New York City (Adam E. Ritholz and Obermaier, Morvillo, Abramowitz & Fitzpatrick, New York City, and Herschel J. Saperstein and Michael F. Heyrend of Watkis & Campbell, Salt Lake City, Utah, with him on the brief), for defendant-appellant.

Before McWILLIAMS, BREITENSTEIN and DOYLE, Circuit Judges.

WILLIAM E. DOYLE, Circuit Judge.

The defendant above named, who was formerly President of Browning Arms Company, here appeals a conviction on an indictment which charged that Browning, with knowledge of an ongoing investigation which was being conducted by the United States Customs Service, endeavored to obstruct the due and proper administration of the Customs duties laws as to material matters by advising and suggesting that an exporter of the Browning rifles give incomplete and misleading answers to questions which had been propounded by the Customs Service, contrary to 18 U.S.C. § 1505. ¹

This prosecution grows out of the importation by Browning Arms Company of great numbers of .22 caliber semi-automatic rifles from a Parisian firearms concern named Fabrique Nationale d'Arms de Guerre, which company will be referred to as FN. FN manufactured these rifles in accordance with specifications and designs provided by Browning Arms Company. The problem arose because of the fact that during the latter half of the 1960's, the Browning .22 caliber rifle could not be competitive with domestically manufactured .22 caliber rifles if they were priced in excess of $25.00, because of the fact that the duty increases on imports that are valued between $25.00 and $50.00. Accordingly, FN and Browning agreed to maintain the price of the .22 semi-automatic rifles at $24.95. At the same time Browning Arms Company agreed to make additional payments to FN in excess of that stated in the invoice price. In the year 1965, the Customs Service changed its special Customs invoice Form No. 5515 so as to require disclosure of all assists which were not included in the invoice price. Notwithstanding the amendment to Form No. 5515, the Treasury Department, in April of 1965, published a Notice of Intention to Delay Requirements Revising Customs Form 5515, stating that the question on the form pertaining to assistance did not have to be answered. (Fed.Reg., April 19, 1965, at 5862). That question was not answered during the period 1965 through 1970, when there were nearly 200 invoices accompanying the shipment of .22 semi-automatic rifles from FN to Browning. Customs never requested that Browning answer the question.

It was not until 1970, when Browning Arms Company transferred production of these rifles from FN to Japan, that FN began to raise the invoice price of the rifles to reflect its true value. The invoice value is listed as $51.00 in the year 1971. Browning Arms instituted a new method of importing weapons in 1970, and the Customs Service sent investigators to see that Browning Arms was properly reporting under the new system. This investigation continued until 1975. Initially, the investigation was conducted by Trost and Regan. They discovered that various so-called "assists," the side payments paid to FN, amounted to as much as.$18.40 for each weapon. The so-called assists were defined by Customs as payment by importer to exporter for tooling, design, development and other similar financial assistance. They did not include part of the cost or value of the weapon.

Early in the investigation, Mr. Regan requested that Browning answer the question on the invoice pertaining to assistance. Browning responded that he was under the impression that the question did not have to be answered. But Regan wrote a letter to him saying that it was a part of the invoice.

After the transfer of production of the weapon to Japan and after FN raised the invoice price to a level of over $50.00, the investigators discovered that the company had not reported certain assists to the Customs Service from 1964 to 1970. Thereafter, the Customs Service, through Trost and Regan, conducted a full inquiry. They were unable to get sufficient information from the Browning companies, and another agent, one Duncan, was called into the case. Duncan concluded that it was necessary to investigate FN, and he communicated with one Rudman, a Customs Service representative, in Paris, France. Rudman met with FN officials several times and obtained answers needed by the investigators in St. Louis. He dealt with Heidebroek of FN. One of the questions asked of Heidebroek was why the price of the .22 caliber rifles had risen from $24.95 to over $50.00 in 1970. Heidebroek asked for time to research the answer. He then sent a letter to Mr. Browning, telling him of the visit by Mr. Rudman. This was March 25, 1974. Heidebroek explained that the United States Customs wished to know whether the invoice values contained the costs of tooling. He also attached 33 questions which had been asked by Rudman. One of the questions to FN sought to have FN supply the dollar amount of the costs not reflected on the invoice for the .22 rifles. Heidebroek sent this letter to the defendant, so that he could comment on the questions and supply information.

On June 4, 1974, Mr. Browning responded to the questions asked him by suggesting answers to the questions submitted in writing. One suggested answer said that, throughout the course of dealings with FN, Browning had stated the weapon had to cost below $25.00 or they could not place any orders, since the duty charged where the value was over $25.00 effectively killed sales of the rifles. The suggested answer went on to say that some time after May of 1970 it was realized that it would not long be possible to maintain the price at $25.00 by absorption in general overhead. "We, therefore, had to bring the price over the $25.00 level, even though we might lose this job entirely." The answer concluded that the price was accordingly allowed to increase, first to $34.50, then to $42.00, and finally, to $51.40.

As a result of the increase, the manufacture of this rifle was transferred to Japan. The defendant answered question 20 by telling FN to tell Customs that no documents existed. The answer suggested by Browning was for FN to tell Customs that one reason the price rose to $51.40 was because the side price was phased out in 1970. Also, defendant requested that FN tell Customs that the price had been maintained at $24.95 by absorbing the loss on this rifle under the general overhead of FN. The truth was that there was a side price which was paying the so-called loss, rather than the loss being absorbed in general overhead. Thus, the defendant's answer sought to conceal from Customs the existence of the side price, and to have Customs believe instead that any costs to FN above $24.95 were being absorbed in overhead. In his communications to Heidebroek, the defendant acknowledged that even though the goal was to avoid side payments, that this should not be admitted because side payments would amount to fraud.

The charge is predicated on an attempted corrupt obstructing or impeding of due and proper administration of the law, and the charge itself was tied to the giving of incomplete and misleading answers to questions which had been asked by the Customs Service. Browning's appeal is based upon the following contentions:

A. That there was insufficient evidence to sustain a conviction.

B. That the Customs investigation could not be regarded as "due and proper administration of the law within the meaning of § 1505," supra.

C. That the trial court erred in failing to instruct the jury that counseling literal and responsive answers to the questions presented constituted a defense of the charge, and,

D. That the government should be estopped from criminally prosecuting Browning.

A-1. Was the Evidence Sufficient to Sustain Appellant's Conviction for Obstructing Justice?

Was Appellant's Conduct Unrelated to a Material Issue in the Administrative Proceeding?

Appellant argues that the advice he gave to FN was not material to the Customs search. Appellant claims that in order to be convicted for obstruction of justice, the conduct constituting the alleged offense must have been material to the investigation. United States v. Ryan, 455 F.2d 728 (9th Cir. 1972).

Unquestionably, the conduct of the accused must have been material to the investigation, but we conclude that the conduct of Browning was materially related to the investigation.

Browning argues that Customs was interested in discovering the costs of the rifles and not the price; that the supplemental payments were material to the price only, and not the cost. The cost to manufacture these rifles remained stable regardless of the price the company paid for the rifles. Therefore, Browning further argues, any advice he gave pertaining to supplemental payments was only relevant to a non-material issue of the investigation.

The object of the Customs investigation was to learn the value of the rifles imported by Browning, whereby the duty could be assessed. Mr. Hintz, Director of Classification and Value Division for the St. Louis Customs District, stated that in assessing the duty due on an imported item the Customs Service determines the value and classification of the item. Mr. Trost, the import specialist from Customs, testified that value was the important element in determining the duty owed on imports. So also did Mr. William Rudman, Special Agent of the United States Customs Service, testify to that effect. The...