U.S. v. Lachman

• Decision Date: 14 August 2003
• Docket Number: No. CR. 93-10193-DPW.,CR. 93-10193-DPW.
• Citation: 278 F.Supp.2d 68
• Parties: UNITED STATES of America, Plaintiff, v. Walter L. LACHMAN, Maurice H. Subilia, Jr., Fiber Materials Inc., Materials International, Defendants.
• Court: U.S. District Court — District of Massachusetts

278 F.Supp.2d 68

UNITED STATES of America, Plaintiff, v. Walter L. LACHMAN, Maurice H. Subilia, Jr., Fiber Materials Inc., Materials International, Defendants.

No. CR. 93-10193-DPW.

United States District Court, D. Massachusetts.

August 14, 2003.

Despena F. Billings, United States Attorney's Office, Boston, MA, for Plaintiff.

Alan M. Dershowitz, Cambridge, MA, Harold J. Friedman, Babcock & Gaythwaite, Portland, ME, Martha C. Gaywaite, Friedman, Gaythwaite, Wolf, & Leavitt, Portland, MN, Andrew Good, Silverglate & Good, Michael R. Schneider, Salsberg & Schneider, Harvey A. Silverglate, Silverglate & Good, Bruce A. Singal, Donoghue, Barrett & Singal, PC, Boston, MA, for Defendants.

MEMORANDUM AND ORDER REGARDING JUDGMENTS OF ACQUITTAL

[Originally issued under seal on July 18, 2003 as Docket No. 534]

WOODLOCK, District Judge.

                TABLE OF CONTENTS
                  I. BACKGROUND .............................................................. 70
                     A. General Regulatory Structure of Export Controls ...................... 70
                     B. Proof at Trial ....................................................... 73
                     C. Jury Instructions Concerning the Meaning of "Specially Designed" ..... 74
                        1. The Dhir and Webb pre-trial affidavits ............................ 74
                        2. The jury instructions ............................................. 77
                     D. Defendants' Post-Trial Motions ....................................... 78
                 II. ANALYTICAL FRAMEWORK .................................................... 79
                III. DEFENDANTS' POST-TRIAL SUBMISSIONS ...................................... 80
                     A. Evidence Going to the Commerce Department's Interpretation of the
                             Term Specially Designed ......................................... 80
                        1. Statements made by the U.S. delegation at COCOM meetings .......... 80
                        2. Public Statements by Commerce Department Officials ................ 82
                        3. Affidavits of former Commerce Department officials ................ 82
                     B. Evidence Concerning the History of the Term "Specially Designed" ..... 84
                        1. COCOM custom and usage ............................................ 84
                        2. Prior use of the term "specially fabricated" ...................... 85
                        3. History of the 1991 Revision of the MTCR Annex .................... 86
                IV. THE GOVERNMENT'S RESPONSE ............................................... 87
                

                  V. ANALYSIS ................................................................ 89
                     A. Indeterminancy and the Operative Regulatory Language ................. 89
                     B. Void for Vagueness Doctrine .......................................... 91
                        1. Fair notice ....................................................... 91
                        2. Fair enforcement .................................................. 94
                     C. Reprehensibility and Criminality ..................................... 97
                  VI. CONCLUSION ............................................................. 98
                

* * * * * *

I have found this case—as an intellectual matter—the most troubling criminal proceeding over which I have presided in nearly seventeen years as a trial judge. This is principally because, while I view the defendants' conduct as reprehensible in the most fundamental sense, I must conclude that their fundamentally reprehensible conduct was not in violation of the federal criminal law with which they were charged.

The case arose out of the export by the defendants of industrial equipment to India. That equipment, the government contends, was "specially designed" so that it could have an end use in connection with ballistic missile components having a nuclear capability. It has become evident as a result of unfolding discovery attendant to post-trial proceedings that in administering the operative language in the export regulatory scheme upon which the criminal proceeding was premised, the government provided alternative definitions to the critical phrase "specially designed." These definitions were sufficiently variable that intelligent persons confronting the language could not be certain of its meaning.

While I employed a "plain meaning" definition for the phrase when instructing the jury, the products of post-trial proceedings establish that this "plain meaning" provided not the only—or even the most common—definition employed by the government for the phrase in this regulatory scheme at the time of the conduct at issue. Indeterminacy to the meaning of the critical language is offensive to due process because it fails to provide the notice necessary to enable the affected population to identify what conduct is prohibited and thereby invites arbitrary and discriminatory enforcement. On the basis of what I have now come to know, following laborious post-trial proceedings in litigation subject to the constraints of the Classified Information Procedures Act, 18 U.S.C.App. 3, §§ 1-16, I have concluded that I am required to grant defendants' motion for judgment notwithstanding the verdict.

I. BACKGROUND

A. General Regulatory Structure of Export Controls

A detailed description of the regulatory structure involved in this case is necessary to give an appropriate context to the issues.¹

In furtherance of its plenary authority to regulate trade, Congress has vested various government bodies with the power to monitor and control the flow of certain commodities from the United States, as a means for protecting national security and executing foreign policy objectives. As a sort of catchall, the Export Administration Act of 1979 (the "Export Act"), 50 U.S.C.App. § 2401 et seq. (1988),² gave the Commerce Department authority over the export of all commodities and technology not subject to the specialized regulatory schemes of other government agencies or departments. Accordingly, the Commerce Department—and more particularly, its Bureau of Export Administration ("BXA")³—exercised export authority over the vast majority of goods exported from this country. Much of the complexity in this regime is driven by items that have a dual use—items that have both a commercial and military application.

Implementation of the Export Act is carried out through the Export Administration Regulations (the "Export Regulations"), which set out a complex set of definitions, guidelines, and licensing requirements and restrictions.⁴ To facilitate a uniform licensing scheme, the Commerce Department uses a licensing system that examines the destination of each good and classifies the item based on its general nature or capabilities. This system relies heavily on a commerce control list (the "Control List"),⁵ which classifies commodities subject to the Commerce Department's export controls. 15 C.F.R. § 399.1, Supp. 1 (1988) (now 15 C.F.R. § 774, Supp. 1 (2003)). The Control List system entails a five-character Export Control Classification Number ("ECCN") for each item included on the list. Each ECCN indicates the good covered, the functions, characteristics, or specifications of that particular good and the export licensing requirements involved. Id.

Matching an item to its appropriate ECCN is an exporter's first step in the licensing process. With certain exceptions, "the export from the United States of all commodities" is prohibited "unless and until a general license authorizing such export shall have been established or a validated license or other authorization for such export shall have been granted[.]" 15 C.F.R. § 370.3(a) (1988). General licenses exist as a standing matter: if the export of a good requires neither an application nor a document, then a general license attaches automatically.⁶ By contrast, a validated license, which authorizes the export of goods not covered by any of the general licenses, must be applied for by the exporter.⁷ Thus, the system depends on a substantial amount of self-policing.

At the same time, if an exporter is unsure whether its proposed export item requires a validated license, there are some avenues for clarification. Under practice in place in 1988, and continuing through the present, see generally 15 C.F.R. § 748.3 (2003), the exporter can request a commodity classification determination, or can apply for an advisory opinion. For advisory opinions, the BXA required information not only on the item to be exported, but the final destination, end-use and end-user. The BXA could then issue a non-binding advice letter stating whether a license is required. Both the commodity classification determination and the advisory opinions were confidential given the proprietary nature of the disclosures.

The regulatory structure of export controls is guided and defined not only by domestic bodies. Acting together with allies who shared the same export objectives, the United States formed the Coordinating Committee on Multilateral Export Controls ("COCOM") in the early 1950s. See Peter Swan, A Road Map to Understanding Export Controls: National Security in a Changing Global Environment, 30 Am. Bus. L.J. 607, 619 & n. 85 (1993). COCOM's purpose was to "establish and maintain a system of export controls designed to curtail or eliminate the availability of strategic technology to nations deemed potentially hostile." Id. Working together, the members of COCOM

compile[d] a list of goods and technologies considered to be either militarily sensitive or to have dual-use capabilities.... Each member nation then incorporated this list of controlled commodities and information ... into its respective export control regime, thereby ensuring consistent export treatment of strategic goods by Western allies.

Id. Commodity classifications transposed from a COCOM list were identified by the code letter "A" on the Commerce Department's Control List. See Note 9 infra. See generally John F. McKenzie, Implementation of the Core List of Export Controls Computer and Software Controls, 5 Software L.J. 1 (1992).⁸

B. Proof at Trial

As a matter of factfinding, the focus of the prosecution ...