U.S. v. Gabriel

• Decision Date: 23 September 1997
• Docket Number: D,1598,Nos. 1597,s. 1597
• Citation: 125 F.3d 89
• Parties: 47 Fed. R. Evid. Serv. 1307 UNITED STATES of America, Appellee, v. James M. GABRIEL, Gerard E. Vitti, Defendants-Appellants. ockets 96-1654, 96-1655.
• Court: U.S. Court of Appeals — Second Circuit

Page 89

125 F.3d 89

47 Fed. R. Evid. Serv. 1307

UNITED STATES of America, Appellee, v. James M. GABRIEL, Gerard E. Vitti, Defendants-Appellants.

Nos. 1597, 1598, Dockets 96-1654, 96-1655.

United States Court of Appeals, Second Circuit.

Argued June 2, 1997.

Decided Sept. 23, 1997.

Nathan Lewin, Washington, DC (R. Stan Mortenson, Barry J. Pollack, Daniel J. Cloherty, Miller, Cassidy, Larroca & Lewin, Washington, DC, of counsel), for Appellant Gabriel.

Thomas Fitzpatrick, New York City (Patricia Moran, New York City, of counsel), for Appellant Vitti.

Elliott B. Jacobson, Assistant United States Attorney, Southern District of New York, New York City (Mary Jo White, United States Attorney, Guy Petrillo, Assistant United States Attorney, Southern District of New York, New York City, of counsel), for Appellee.

Before MESKILL, JACOBS and LEVAL, Circuit Judges.

MESKILL, Circuit Judge:

After a six-week jury trial before the United States District Court for the Southern District of New York, Rakoff, J., defendants were convicted of mail fraud, 18 U.S.C. § 1341, wire fraud, 18 U.S.C. § 1343, making false statements within the jurisdiction of a federal agency, 18 U.S.C. § 1001, and witness tampering, 18 U.S.C. § 1512(b). On appeal, the defendants challenge their convictions and their sentences on numerous grounds. We decide that (1) the district court properly refused to grant the defendants' motion for a bench trial; (2) the defendants were not prejudiced by the government's evidence or the prosecutor's comments; (3) although the district court erred in instructing the jury on the intent element of mail and wire fraud, the error did not prejudice defendants; (4) although We affirm defendants' convictions and remand for resentencing.

18 U.S.C. § 2(b), which makes principals liable for the acts of their innocent intermediaries, uses the term "willfully," the section does not require the government to prove a defendant knew his actions were unlawful; (5) although the Supreme Court has incorporated a "likely to affect" a judicial proceeding requirement into the omnibus clause of the obstruction of justice section, 18 U.S.C. § 1503, no such requirement should be incorporated into the witness tampering section, 18 U.S.C. § 1512(b); (6) there was no "retroactive misjoinder;" (7) one defendant should be resentenced because the district court did not determine whether the defendant committed trial perjury by clear and convincing evidence; (8) the district court's order imposing restitution on one of the defendants should be reconsidered in light of the Mandatory Victims Restitution Act of 1996; and (9) the district court should reconsider its order departing upward on a fine imposed on one of the defendants, as the court departed without providing the defendant notice.

BACKGROUND

Defendants-appellants James M. Gabriel and Gerard E. Vitti were both executive vice presidents at Chromalloy Research and Technology Division (CRT), a division of Chromalloy Gas Turbine Corporation. CRT is one of the nation's largest jet engine repair stations serving most of the world's airlines.

In 1992, the government learned that CRT was misrepresenting the nature of some of its jet engine repairs. After an extensive investigation Gabriel and Vitti were indicted on multiple counts of mail fraud, wire fraud and making false statements to the Federal Aviation Administration (FAA). Gabriel was indicted separately for witness tampering. After a six-week trial, a jury convicted Gabriel on two counts of mail fraud, two counts of wire fraud, two counts of making false statements to the FAA, and one count of witness tampering. Vitti was convicted on one count of wire fraud. We discuss the evidence that led to the convictions below.

A. The Bearing Seal Scheme

Pratt & Whitney (Pratt) manufactures JT9D jet engines commonly used on wide-bodied passenger jet aircraft. Due to internal wear, the bearing seals on JT9D engines require periodic repair. The repair consists of removing "knife-edges" from the bearing seal and welding on new knife-edges using "welding wire." Pratt's repair manuals mandated that welding wire "Inconel 901" be used for the repair.

In 1986, when attempting to use Inconel 901 to repair bearing seals, CRT experienced a proliferation of cracks in the replacement knife-edges. Apparently, CRT possessed neither the technology nor the expertise to repair the bearing seals using Inconel 901. Rather than forgo the business, Gabriel directed Jeffrey Thyssen, ¹ the CRT employee in charge of the welding, to use "Hastelloy W" welding wire instead of Inconel 901. Hastelloy W is softer than Inconel 901 and easier to work with. Although Thyssen informed Gabriel that Pratt's repair manual mandated that Inconel 901 be used for the repair, Gabriel nevertheless directed Thyssen to use Hastelloy W.

From 1986 to 1989, CRT repaired approximately 645 bearing seals with Hastelloy W. CRT returned the bearing seals to its customers with packing slips that falsely stated that the bearing seals had been repaired in accordance with Pratt's specifications.

In the summer of 1989, Air India was testing engines that CRT had repaired and five bearing seals failed. Air India sent the failed bearing seals to CRT and to Pratt for a determination why the seals had failed. Pratt's tests revealed that the seals had failed because of the improper use of Hastelloy W.

Aware that the improper use of Hastelloy W either had been or would be discovered, Gabriel and other CRT officials devised a plan to conceal the use of Hastelloy W. They decided to claim that Hastelloy W had been used accidentally and only to repair a limited CRT eventually entered into settlement negotiations with Air India over the failed bearing seals. During those negotiations, in an attempt to obtain more favorable settlements, Gabriel and Vitti falsely represented to Air India via fax that Hastelloy W had been used accidentally. CRT and Air India eventually settled their disputes.

number of seals, rather than disclosing that more than 600 other seals also had been repaired with Hastelloy W. In furtherance of this cover-up, Gabriel ordered the preparation of a back-dated document that falsely stated that it was CRT's standard procedure to use Inconel 901 for the bearing seal repair. This document was placed in CRT's files.

Based on the above, the jury found that (1) Gabriel committed mail fraud, because he misrepresented the nature of the bearing seal repairs to CRT's customers, some of whom paid CRT through the mails; (2) Gabriel and Vitti committed wire fraud based on the fax sent during settlement negotiations with Air India; and (3) Gabriel made false statements within the jurisdiction of the FAA, because the back-dated document that Gabriel ordered prepared was maintained in CRT's files, which were subject to FAA inspection. Vitti was acquitted on the false statements count.

According to the record, although hundreds of bearing seals were repaired with Hastelloy W and those bearing seals flew many hours, Air India is the only airline to experience any problems with these bearing seals. Moreover, we understand that by now all the improperly repaired bearing seals have been replaced, and that it is highly unlikely that the bearing seal scheme presents any continuing threat to air travelers.

B. The LPT Case Scheme

In 1990, Qantas Airline contracted with CRT to repair a low pressure turbine (LPT) case. Gabriel repeatedly misled Qantas into believing that CRT would perform the repair when Gabriel knew that the work was to be performed at a related facility in Florida with which Qantas earlier had experienced problems.

After the Florida facility repaired the LPT case, the LPT case was shipped to CRT for transhipment to Qantas. A CRT quality control inspector inspected the part and determined that it had been damaged and was "irreparable scrap." Nevertheless, Gabriel ordered the LPT case shipped to Qantas after some purely cosmetic work was done. The packing slip that accompanied the LPT case falsely stated that the LPT case was suitable to be returned to service. Moreover, Gabriel sent a fax to Qantas falsely stating that the LPT case was "100% serviceable."

Qantas put the LPT case into service, and the LPT case flew approximately 1,200 hours until the FAA discovered the improper repair and directed Qantas to remove the LPT case from use. Subsequent inspection revealed that the LPT case was unserviceable and that as a result of the improper repair, it had started to come apart.

Based on these events, the jury concluded that (1) Gabriel committed mail fraud, because Qantas paid CRT through the mails; (2) Gabriel committed wire fraud, because Gabriel represented via fax to Qantas that the part was "100% serviceable"; and (3) Gabriel made false statements within the jurisdiction of the FAA, because a copy of the false packing slip subject to FAA inspection was maintained in CRT's files. Vitti was acquitted on each of these counts.

C. Witness Tampering

When a grand jury began to investigate Gabriel's involvement in the LPT case scheme, CRT hired outside counsel to determine what had happened. When CRT's counsel asked Gabriel about the repair, Gabriel falsely stated that he had previously disclosed to Qantas that the LPT case was only partially serviceable. Further, in an attempt to support that story, Gabriel sent a fax to Donald Mealing, the Qantas representative with whom Gabriel had dealt. The fax was headed "ONGOING GOVT INVESTIGATION AT CRT," and stated, in pertinent part:

I am going to call you with our attorneys within the next several days.... The questions they will ask you are relative to (capitalization altered and emphasis added).

your memory of our meeting in [Sydney] at [Qantas] covering acceptance criteria and the very nature of this case that it was difficult to salvage. It is important that you think this through before they talk on the issue. Note I've cited the case had...