U.S. v. Josleyn

• Decision Date: 06 June 1996
• Docket Number: Nos. 95-2146,95-2147,s. 95-2146
• Citation: 99 F.3d 1182
• Parties: UNITED STATES of America, Appellee, v. Dennis JOSLEYN, Defendant, Appellant. UNITED STATES of America, Appellee, v. John W. BILLMYER, Defendant, Appellant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 1182

99 F.3d 1182

UNITED STATES of America, Appellee, v. Dennis JOSLEYN, Defendant, Appellant.

UNITED STATES of America, Appellee, v. John W. BILLMYER, Defendant, Appellant.

Nos. 95-2146, 95-2147.

United States Court of Appeals First Circuit.

Heard June 6, 1996.

Decided Oct. 15, 1996.

David W. Long, with whom Joseph E. Zeszotarski, and Poyner & Spruill, LLP,

were on brief, for defendant, appellant Billmyer.

Paul Twomey, Chichester, NH, with whom Twomey & Sisti Law Offices, was on brief, for defendant, appellant Josleyn.

Michael J. Connolly and Donald A. Feith, Assistant United States Attorneys, Concord, NH, with whom Paul M. Gagnon, United States Attorney, was on brief, for appellee.

Before SELYA, CYR and BOUDIN, Circuit Judges.

CYR, Circuit Judge.

A federal jury sitting in New Hampshire returned guilty verdicts against appellants John W. Billmyer and Dennis R. Josleyn for conspiring to defraud their former employer, American Honda Motor Company ("Honda"), by accepting money and other valuable consideration from prospective Honda dealers in exchange for lucrative dealership rights and sundry advantage. See 18 U.S.C. §§ 371 (conspiracy) & 1341 (mail fraud) (1994). Verdicts were returned also against Josleyn for racketeering, conspiracy, and mail fraud, see id. §§ 1962(c), 371 & 1341, relating, inter alia, to kickbacks received in connection with national sales training seminars and dealer advertising programs for Honda dealers. On appeal, Billmyer and Josleyn principally contend that New Hampshire was an improper venue for the franchise conspiracy charge in Count II and that there was insufficient evidence to support the guilty verdicts. We affirm the district court judgments in all respects.

I BACKGROUND ¹

Following the second OPEC oil embargo in 1979, American consumer demand for the energy-efficient automobiles manufactured by Honda skyrocketed, and remained strong for a decade thereafter. Just as demand in the United States surged, the Japanese government imposed export restraints on its carmakers, and Honda was unable to meet the demand for its automobiles in the United States. These uncommonly favorable market conditions endured throughout much of the 1980s, causing enterprising car dealers in the United States to compete fiercely (and sometimes unfairly) for exclusive Honda franchises in anticipation of the extraordinarily large profit margins available on such popular Honda models as the Civic, Prelude, and Accord.

Appellant John Billmyer joined Honda as a district sales representative in 1970, and rose rapidly through all four management levels in its field sales division. ² By 1977, Billmyer had been appointed regional sales manager for the eastern United States. By 1980, he held the top field sales position at Honda--national sales manager--and soon moved from its New Jersey office to headquarters in California. When Honda launched a line of luxury automobiles in 1985, Billmyer became national sales manager for the new Acura Division as well. He remained the top Honda field sales manager in the United States until he retired on March 31, 1988.

After Billmyer retired, he was succeeded as national sales manager by S. James Cardiges, his closest associate at Honda. Billmyer had hired Cardiges as the Honda sales manager for the Baltimore/Washington D.C. district in 1977, and rapidly promoted him through the ranks: from zone manager for the mid-Atlantic states in 1979, to zone manager for the west coast (the largest and most prestigious zone) in 1981, to regional sales manager for the western United States in late 1982. While western regional sales manager, Cardiges worked closely with Billmyer. The two often traveled to work together and took business trips within the United States and overseas. Finally, Cardiges succeeded Billmyer as national sales manager in 1988. He resigned in April 1992 by "mutual agreement" with Honda, to forfend termination.

Appellant Dennis R. Josleyn joined Honda in January 1983, and followed a similar path: assistant sales manager for the mid-Atlantic zone in 1985; mid-Atlantic zone manager in March 1987; and zone manager for the west coast, resident in California, in early 1991, a position he held until he resigned from Honda in April 1992.

Throughout appellants' tenure with Honda, corporate policy and procedures for awarding new Honda dealerships were set forth in the "Honda Automobile Dealer Appointment Procedures Manual." The first step was to identify a geographic area ripe for a new dealership--in Honda terminology an "open point"--through reference to marketing and demographic studies, data relating to competition, and an assortment of other information. Next, the district and zone sales managers for the area under consideration were to "prospect" for a qualified dealer to fill the "open point," then compose a slate of three or more suitable candidates. Honda policy directed that sales managers evaluate candidates according to their experience in automobile retailing, available capital, personal reputation, and the quality of their location and facilities, all with the ultimate aim that Honda dealerships be awarded to the best candidates.

Honda sales managers at each level, see supra note 2, were required to participate in recommending and approving candidates for any "open point." With the possible exception of Billmyer and Cardiges, in their respective capacities as national sales manager, no sales manager at any level possessed unilateral authority to award a new dealership. Furthermore, approval was required from managers representing the parts, service, and market-representation departments as well.

Once selected for an "open point" dealership, with the approval of sales managers at the district, zone, regional, and national levels, a successful candidate received a "Letter of Intent" ("LOI") from Honda via United States mail, authorizing the prospective dealer to open the new, exclusive dealership upon certain conditions, such as constructing a facility within a specified time. Until the franchise itself was issued to the prospective dealer, however, these LOI rights remained the property of Honda. Like its competitors, Honda exacted no fee for its dealership franchises. Nor were Honda personnel allowed to accept money or other consideration of significant value for assistance in obtaining a Honda franchise.

In addition to Honda policy and procedures governing new dealerships, its "conflict of interest" policy prohibited employees from accepting anything of significant value from a Honda dealer and from acquiring or holding any interest in a Honda or Acura dealership. The "conflict of interest" policy was disseminated among all Honda sales managers, who were required to sign disclosure forms indicating ongoing compliance. Sales managers at every level were duty-bound to ensure that their respective subordinates honored the policy prohibiting conflicts of interest, and report all violations to their senior manager or the Human Resources Department.

Notwithstanding these rigorous internal procedures, however, there were numerous violations of the "conflict of interest" policy. From the late 1970s through the early 1990s, sales managers at every level commonly accepted money and valuable gifts, including Rolex watches, furniture, and business suits, from prospective dealers vying for "open points" or from dealers seeking increased Honda automobile allocations. Yet their illicit activities apparently escaped notice by nonparticipating sales managers and dealers for years.

Finally, in 1991 an internal investigation was triggered by an uninvolved district sales representative in Arkansas who provided a Honda executive vice-president with evidence of payoffs involving Cardiges, then the national sales manager, and a zone manager. By early 1992, Honda had begun "cleaning house" and Cardiges had resigned. An extensive federal criminal investigation ensued.

On March 11, 1994, a federal grand jury in New Hampshire returned an indictment against Billmyer, Josleyn, Cardiges and two lower-level Honda sales managers responsible for the New England region, David L. Pedersen and Damien C. Budnick. ³ Superseding indictments were returned against Billmyer, Josleyn, and Cardiges in October 1994 and January 1995. Ultimately, Budnick, Cardiges, and Pedersen entered into plea agreements and cooperated with the government. Cardiges and Pedersen were key government witnesses at trial.

The second superseding indictment charged Josleyn and Cardiges, in Count I, with a pattern of racketeering in violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c) (1994). As Racketeering Act 1, it alleged that Josleyn and Cardiges had persuaded Honda to select a particular outside vendor (from which the defendants had received kickbacks) to conduct sales training seminars for Honda salespeople employed in New Hampshire and elsewhere in the United States. Racketeering Acts 2 through 8 related to regional advertising associations which pooled monies advanced by individual Honda dealers to defray their local Honda advertising costs. Josleyn and Cardiges were charged with causing Honda to match the contributions made by the Honda dealers to these regional advertising associations, on the condition that the advertising associations hire a particular vendor (controlled by Josleyn's brother) to provide the advertising services. After receiving payments from the regional advertising associations, the vendor allegedly made kickbacks to Josleyn and Cardiges. Other Racketeering Acts described in Count I alleged, inter alia, that Josleyn and Cardiges received kickbacks for awarding numerous LOIs to various dealership candidates in California, Maryland, New York, and other states.

Count II charged Billmyer, Cardiges, and Josleyn with conspiring to defraud Honda by accepting payments and other valuable consideration from dealers and...