U.S. v. One Boeing 707 Aircraft

• Decision Date: 21 January 1985
• Docket Number: No. 83-2485,83-2485
• Citation: 750 F.2d 1280
• Parties: UNITED STATES of America, Plaintiff-Appellee-Appellant, v. ONE BOEING 707 AIRCRAFT, etc., et al., Defendants-Appellees, Servotech International Establishment, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1280

750 F.2d 1280

UNITED STATES of America, Plaintiff-Appellee-Appellant, v. ONE BOEING 707 AIRCRAFT, etc., et al., Defendants-Appellees Servotech International Establishment, Defendant-Appellant.

No. 83-2485.

United States Court of Appeals Fifth Circuit.

Jan. 21, 1985.

Jack R. Bailey, Houston, Tex., for defendant-appellant.

Daniel K. Hedges, U.S. Atty., Javier Aguilar, James R. Gough, C.J. (Neil) Calnan, Asst. U.S. Attys., Houston, Tex., for U.S Mary Lou Andrews, Houston, Tex., for One Boeing 707, etc., et al.

Appeals from the United States District Court for the Southern District of Texas.

Before CLARK, Chief Judge, JOHNSON, and WILLIAMS, Circuit Judges.

PER CURIAM:

This is a civil forfeiture case in which the government, upon a showing of probable cause, seized weapons and one Boeing 707 airplane which were involved in an illegal attempt to export arms to South Africa without a license. ¹ After a jury trial to determine whether the weapons and aircraft should be forfeited, the district court entered judgment granting forfeiture of the weapons to the government, but denying forfeiture of the Boeing 707, returning the airplane to its owner. The owners of the weapons appeal forfeiture while the United States cross appeals the denial of forfeiture as to the airplane. We affirm as to forfeiture of the weapons and reverse the denial of forfeiture as to the Boeing 707.

I

In early 1981, Gary Howard, an arms broker acting as agent for Balotta Trading Establishment, a Liechtenstein corporation, was contacted by another arms broker, representing Servotech International Establishment ("Servotech"). Servotech, a Liechtenstein corporation, was engaged in buying and selling various commodities, including arms and weaponry. This phone call to Howard on behalf of Servotech was in regards to purchasing weapons in the United States for delivery to the Republic of South Africa. Concerned about the possible illegality of this proposed transaction, Howard contacted the Customs Service. As a result of Howard's phone call, Customs entered into an undercover operation, teaming one of its special agents, Dan Winkler, with Howard.

In mid-April 1981, Howard was contacted again by Servotech's representative and introduced to Peter Towers, who along with John Parks, were agents for Servotech. After numerous conversations between Towers or Parks and Howard, Servotech, through Howard, entered into an agreement with Balotta, whereby Balotta would purchase weapons for Servotech for export to South Africa.

On April 27, 1981, Towers met with Howard and undercover Customs Agent Winkler. Their conversation was tape recorded. At this meeting, Towers announced the shipping arrangements for the weapons had been finalized and that a phony end use certificate showing Sudan as the final destination for the weapons would disguise the true destination of South Africa.

Soon thereafter, Towers made two wire transfers totalling approximately $1.2 million to Balotta's account at the Republic National Bank in Dallas. Howard was to use this money to purchase the weapons ordered by Servotech. However, as part of the undercover operation, Howard transferred approximately $629,000 to Customs, and Customs purchased the weapons ² for Servotech. Howard used an additional $10,000-15,000 to buy pistols for Servotech. Ostensibly, the remainder of the $1.2 million remained in Balotta's account. ³

On May 12, 1981, the weapons were delivered to Houston Intercontinental Airport by Customs agents posing as truck drivers. Towers and Parks were arrested while inspecting the weapons, but before any weapons were actually loaded on the waiting Boeing 707. Towers and Parks eventually pled guilty to wilfully attempting to export weapons without a license in violation of 22 U.S.C. Sec. 2778(a) and (b) and 22 C.F.R. 127.01. ⁴

Servotech had chartered the waiting Boeing 707 from Montana-Austria, GmbH, an Austrian based charter service. At the time the aircraft was seized, Montana-Austria had contracted with Servotech to fly a shipment from Houston to South Africa. Montana-Austria did not own the 707, but rather, leased it from Fg Flugzeugleasing GmbH ("Fg").

Fg is a West German corporation, wholly owned by Carl Press. During 1978, Fg leased the Boeing 707 to Montana-Austria. Under the lease agreement Montana-Austria was to use the 707 in routine charter flights of passengers and cargo to various parts of the world. The lease agreement contained a provision requiring Montana-Austria to abide by all national and international transport laws. ⁵ Fg was not involved in the daily operations of Montana-Austria, but periodically sent a representative to check on the charter service and assure proper adherence to all agreements.

On May 7, 1981, Montana-Austria sent a telegram to the Civil Aeronautics Board requesting confirmation to fly a cargo of steel fabricates to Khartoum, Sudan on May 12. A destination change to Johannesburg, South Africa was requested on May 11. ⁶ Press was notified of this change in destination and immediately instructed his representative in Vienna to check the flight documents and export licenses to make sure they were in order. The 707 was seized in Houston on May 12.

The basis of this civil forfeiture action is 22 U.S.C. Sec. 401 which prohibits the illegal exportation of war materials. Section 401 permits seizure of items used in connection with an attempt to export munitions illegally and permits forfeiture of all arms and vehicles seized pursuant to this statute.

Civil forfeiture laws require the government make a showing of probable cause before it seizes an item used in violation of its laws. See United States v. One 1978 Mercedes Benz, Four-Door Sedan, 711 F.2d 1297 (5th Cir.1983); United States v. One 1975 Ford Pickup Truck, 558 F.2d 755, 756 (5th Cir.1977); United States v. One 1973 Pontiac Grand Am, 413 F.Supp. 163, 165 (W.D.Tex.1976). A probable cause proceeding as to the arms and Boeing 707 was held on April 18, 1983. After a two-day hearing, the district court ruled the government had probable cause to seize the weapons and aircraft under the belief that Servotech's agents, Parks and Towers, were attempting to transport the weapons to South Africa in violation of Customs regulations.

After the court found probable cause, a jury was asked to determine the fact issues relating to forfeiture. Through special verdicts, the jury declared that (1) the weapons were the subject of an illegal export attempt; (2) Fg did not consent to or participate in the attempt; (3) Montana-Austria did consent to or participate in the illegal exportation attempt. ⁷

Fg sought a judgment in its favor arguing that the government should be denied forfeiture of the aircraft based on the jury's finding that it did not consent to or participate in the illegal export attempt. Servotech filed a Motion for Judgment Notwithstanding the Verdict. The district court entered judgment granting Fg's motion to deny forfeiture of the aircraft. Servotech's motion was not granted and the weapons were forfeited to the government.

II

We deal first with Servotech's appeal of the decision to forfeit the weapons to the United States. Servotech presents two arguments as to why forfeiture of the weapons should be denied. First, Servotech argues the government's conduct in its undercover operation was so outrageous as to make forfeiture a denial of due process. Second, Servotech argues as a matter of law its agents never attempted to export and no regulations existed to make exporting munitions illegal. These arguments are without merit.

A

Servotech argues forfeiture is unwarranted in this case due to government misconduct in the use of over zealous law enforcement techniques. Essentially, Servotech claims its due process rights were violated by the seizure and forfeiture of property (munitions and money) involved in a crime the government had such a heavy hand in committing. As Servotech states, at issue is whether law enforcement conduct fell below societal standards so that the public would regard such conduct an abuse of government power. Thus framed, we find the conduct of the government and its citizen informer, Gary Howard, perfectly proper and well within the confines of acceptable behavior by law enforcement officers.

Servotech's due process argument borrows heavily from concepts developed in the law of criminal entrapment. Servotech's position is that regardless of whether its agents, Towers and Parks, were predisposed to commit the crime, the conduct of Customs agents was so outrageous as to violate notions of fundamental fairness. Servotech contends that such behavior could prevent a criminal conviction, ⁸ and therefore should deny civil forfeiture as well.

Servotech's argument is not an entrapment argument. Rather, it is the due process aspect of entrapment and entrapment-like fact situations which involve undercover operations. Such operations often find law enforcement officials intimately involved in the commission of a crime. This circuit recognized a due process defense within the context of entrapment in United States v. Tobias, 662 F.2d 381 (5th Cir.1981). ⁹ However, Tobias indicated that a due process violation would be found in only "the rarest and most outrageous circumstances." Id. at 387. Outrageous conduct turns upon the totality of the circumstances. Id. Therefore, to determine whether due process has been violated in this civil forfeiture case, we look to the totality of the circumstances and balance government involvement against the extent of participation and predisposition of Servotech's agents to commit the crime. Id. ¹⁰

Of prime importance in rejecting Servotech's due process argument is that Gary Howard, who supplied the tip to the Customs Service, was at all times a private citizen. He was neither a paid informant nor employed by the government. The evidence showed that Howard did not initiate contact with Servotech. Rather, ...