U.S. v. Lowell

• Decision Date: 10 July 1981
• Docket Number: No. 80-2057,80-2057
• Parties: 28 Cont.Cas.Fed. (CCH) 81,407, 8 Fed. R. Evid. Serv. 1 UNITED STATES of America v. Arthur S. LOWELL, Appellant.
• Court: U.S. Court of Appeals — Third Circuit

Page 950

649 F.2d 950

28 Cont.Cas.Fed. (CCH) 81,407, 8 Fed. R.

Evid. Serv. 1

UNITED STATES of America v. Arthur S. LOWELL, Appellant.

No. 80-2057.

United States Court of Appeals Third Circuit.

Argued Jan. 15, 1981.

Decided May 8, 1981.

As Amended on Denial of Rehearing and Rehearing In Banc July 10, 1981.

Nathan Lewin (argued), Steven A. Reiss, Miller, Cassidy, Larroca & Lewin, Washington, D. C., for appellant.

William W. Robertson, U. S. Atty., Newark, N. J., Frank J. Marine (argued), Atty., Dept. of Justice, Washington, D. C., for appellee; K. William O'Connor, John Klein, Attys., Dept. of Justice, Washington, D. C., of counsel.

Before SEITZ, Chief Judge, and ROSENN and SLOVITER, Circuit Judges.

OPINION OF THE COURT

ROSENN, Circuit Judge.

This appeal centers on the conviction of the appellant, Arthur S. Lowell, for participation in a bribery conspiracy in violation of 18 U.S.C. § 371 (1976) involving a government contractor, Atlas Paint and Varnish Company, and the General Services Administration (GSA). Lowell was tried to a jury and convicted, along with his codefendant, Anthony Pionzio, in the United States District Court for the District of New Jersey; the codefendant was also convicted on several counts of violating the Travel Act, 18 U.S.C. § 1952(a)(3) (1976). Lowell alone appeals from his conviction and presents a two- pronged attack on the weight and probative value of the evidence upon which the jury found him a conspirator before and after the statute of limitations "cutoff" point, July 12, 1974. We affirm.

I.

Atlas Paint and Varnish Company (Atlas), a small manufacturer of paint owned and operated by the Tepperman family, sold its product almost exclusively to the federal government. Dennis Tepperman, who had worked at Atlas since 1962, became president in 1969 upon the death of his father, Meyer Tepperman. At that time, Dennis's mother Bunnie became the sole stockholder. About a year before, government dissatisfaction with Atlas contract compliance both as to time of delivery and quality of product had prompted Meyer to engage Arthur Lowell, a lawyer experienced in representing government contractors before GSA, to represent Atlas in its dealings with GSA. When Meyer died, Lowell remained in Atlas's employ. Aside from handling administrative litigation and negotiation with GSA, Lowell devoted one night per week to directing Atlas staff meetings. At these weekly meetings, Atlas's substantial production and quality problems were exposed and remedial measures directed. Lowell also recruited or helped to recruit Michael Foncellino and Thomas Accamondo, the two employees who, next to Dennis Tepperman, ultimately exercised the most responsibility for running Atlas. Foncellino, new to the paint business, joined Atlas in early 1970; Accamondo, a paint chemist, joined in July 1971.

Lowell, disappointed in his efforts to secure an equity interest in Atlas following Meyer Tepperman's death, severed his connections with Atlas toward the end of 1971. Finding Dennis Tepperman unable to convince his mother to allow Lowell to become a part owner of Atlas, Lowell delivered an ultimatum, in effect, in October of 1971. Either Bunnie would cut Lowell in for a share of equity participation in Atlas, or Foncellino, the newly-hired Accamondo, and her son would have to operate the company without him. The three officers, upset about Atlas's diminished prospects for success without Lowell's participation, pleaded for his retention. Bunnie, however, was adamant. In early 1972 Lowell received his last check from Atlas and terminated his employment. Dennis Tepperman, Foncellino, and Accamondo took charge.

Having described Lowell's relationship to Atlas, we turn to certain details of Atlas's operation that explain the motivation for bribery in this case. Although Atlas dealt with government offices located throughout the country, monitoring the quality of its product was the special responsibility of the New York City offices of GSA's vast bureaucracy. The Quality Control Division of the Federal Supply Service, Region II, performed this monitoring function together with GSA's New York laboratory. A related quality control bureaucracy existed in the Federal Supply Service's central office in Arlington, Virginia.

Quality monitoring of each Atlas shipment could be performed by GSA's New York laboratory, or, at GSA's option, by Atlas itself. The latter alternative, also known as the "Quality Assurance Manufacturers Program" (QAMP) afforded Atlas significant advantages in meeting delivery obligations to the procuring agencies. New York employees of the GSA had a certain input into the decision whether to permit Atlas into QAMP or to reject it. As might be expected, the legitimate criteria for participation had a great deal to do with Atlas's record on self-monitoring. Discrepancies between Atlas paint and government paint specifications could be discovered by the recipients of the paint or by the New York offices themselves in periodic inspections and laboratory tests of Atlas paint.

Early in 1972 Tepperman told Foncellino and Accamondo they were to make monthly payments to two of the GSA employees with responsibility for monitoring Atlas's continued eligibility for QAMP participation. Further, he advised them that such a scheme met with (the then-retired) Lowell's approval. For the next five years, Foncellino made monthly payments of $250 to Tony Pionzio, a supervisor and later a "branch chief" in the Region II Quality Control Division. Accamondo made monthly payments of $100 to Joe Montalbano, a chemist in the paint section of GSA's New York laboratory. Pionzio and Montalbano also received Christmas gifts, including gifts of money, during this same period. In spring of 1977, fears of detection caused by rumored investigations within GSA, and involving Pionzio himself, caused the three Atlas officers to terminate the series of payoffs at issue in this case.

In early 1979, federal investigators interrogated Tepperman, Foncellino and Accamondo. The three were granted use immunity in exchange for their complete cooperation with the Government in its pending investigation and prospective prosecution "involving employees of General Services Administration and Arthur S. Lowell." Subsequently, on July 12, 1979, Lowell, Pionzio and Montalbano were indicted for conspiracy to defraud the United States, violations of the Travel Act, and obstruction of justice. ¹ The indictment described a conspiracy beginning in November 1969 and lasting until March 1977 in which Lowell, Pionzio and Montalbano conspired with each other, with Dennis Tepperman, Foncellino and Accamondo, and with other unknown persons to defraud the United States. ² Because the statute of limitations for the conspiracy charge was five years, it was crucial that the conspiracy charged existed after July 12, 1974, and (for purposes of this appeal) that Lowell's part in the conspiracy had not been completely terminated by withdrawal prior to that date. With respect to the timing of Lowell's participation, the indictment alleged that: (1) Lowell "was employed by Atlas Paint and Varnish Company from April 1968, until December, 1971"; and (2) "In furtherance of the conspiracy (i)n and around March, 1977, (Lowell) spoke on the telephone with Foncellino."

Although Lowell and Pionzio were tried before Judge Whipple on the conspiracy and Travel Act counts, ³ Montalbano pleaded guilty and was sentenced in separate proceedings by District Judge Stern. Upon conviction, Lowell and Pionzio filed post-trial motions for acquittal and for a new trial which were denied. 490 F.Supp. 897 (D.N.J.1980). Only Lowell appeals.

II.

The focal point of this appeal is the statutory "cutoff" point, July 12, 1974. The jury's sole ground for linking Lowell to the conspiracy in the pre-cutoff period came from the lips of Dennis Tepperman, whose testimony could be suspect for a number of reasons. Tepperman, professing ignorance of the existence of any bribery prior to his succession to the presidency of Atlas, described his first day at work after his father's (Meyer's) death in November 1969. He testified that Lowell told him then, for the first time, that Meyer and Lowell had been making payoffs to two GSA employees and "that would have to continue." The two recipients were said to be Roger Carroll, an official in the central office of the Federal Supply Service (ultimately serving as Assistant Commissioner for Standards and Quality Control), and Sidney Friedman, the Region II employee ("quality control representative" or "quality assurance specialist," also referred to at trial as inspector), whose job it had been, almost until the time of Meyer's death, to visit the Atlas plant at least once a week. According to Dennis Tepperman, the Friedman payoff was made in one lump sum to cover several monthly payments that had been owed him since prior to Meyer's death. Tepperman testified that he overheard Lowell attempting to persuade Friedman to accept the money and was later told by Lowell that Friedman had accepted it. Tepperman further testified that the Carroll payoffs were given to Lowell at the rate of $500 per month.

Tepperman also testified that in either 1970 or 1971, Lowell told him that Pionzio and Montalbano would have to be paid off. ⁴ Thereafter, according to Tepperman, Lowell received the Pionzio payoffs from Tepperman at the rate of $250 per month, with a $500 bonus for Christmas, and the Montalbano payoffs at $100 per month, with a $100 Christmas bonus. It is undisputed that Lowell made no payments to Carroll, Pionzio or Montalbano beginning soon after the impasse in 1971 between Lowell and Bunnie. However, Dennis Tepperman testified that after Lowell's announcement of his intention to leave Atlas, the two had a conversation in which Lowell stated "that in order to stay in this business, I (Tepperman) would have to continue these payoffs. That is the way you do business in...