U.S.A. v. Reyes, 00-1254

Citation270 F.3d 1158
Decision Date07 November 2001
Docket NumberNo. 00-1254,00-1254
Parties(7th Cir. 2001) UNITED STATES OF AMERICA, Plaintiff-Appellee, v. RANDY REYES, Defendant-Appellant
CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)

Appeal from the United States District Court for the Eastern District of Wisconsin. No. 98 CR 189--Charles N. Clevert, Judge. [Copyrighted Material Omitted]

[Copyrighted Material Omitted] Before COFFEY, RIPPLE and DIANE P. WOOD, Circuit Judges.

COFFEY, Circuit Judge.

On October 22, 1999, a jury convicted Defendant-Appellant Randy Reyes of crimes relating to the illegal exportation of military aircraft component parts destined for Iran. Reyes was vice president of sales and marketing for Siraj International, Inc., a broker of commercial and military aircraft component parts located in Oak Creek, Wisconsin. Reyes was found guilty of violating the Arms Export Control Act, 22 U.S.C. § 2778, and the International Emergency Economic Powers Act, 50 U.S.C. § § 1701-06, and he was sentenced to serve two concurrent prison terms of 41 months each followed by two concurrent two-year terms of supervised release. On appeal, Reyes challenges the conduct of prosecutors, the alleged inconsistency of the jury's verdicts, the sufficiency of the evidence, and the calculation of his sentence. We affirm.

I. BACKGROUND
A. The Arms Export Control Act and International Emergency Economic Powers Act

Section 38 of the Arms Export Control Act (AECA), 22 U.S.C. § 2778, and its attendant regulations, the International Traffic in Arms Regulations, 22 C.F.R. § 120-30, authorize the President of the United States ("President") to regulate and control the exportation of military and defense products through a licensing system administered by the State Department's Office of Defense Trade Controls. A license must be obtained before the export of any products or items designated as "defense articles" on the United States Munitions List. 22 C.F.R. § 121.1. Category VIII(h) of the Munitions List requires State Department licenses for the exportation of "components, parts, accessories, attachments and associated equipment" designed or modified for use on military aircraft. 22 C.F.R. § 121.1. Federal regulations also state that it is the policy of the United States to deny requests for licenses to export defense articles at any given time destined for certain specified countries, including Iran. 22 C.F.R. § 126.1(a).

On May 6, 1995, the President issued Executive Order 12959 pursuant to authority granted by the International Emergency Economic Powers Act (IEEPA), 50 U.S.C. § § 1701-1706.1 This order and its implementing regulations generally prohibit the exportation of any goods, technology or services from the United States to Iran without express authorization from the Office of Foreign Assets Control, a division of the Treasury Department. 31 C.F.R. § § 560.204, 560.501. This prohibition includes the exportation of any goods "to any person in a third country undertaken with knowledge or reason to know that such goods . . . are intended specifically for supply, transshipment, or reexportation, directly or indirectly, to Iran or the Government of Iran." 31 C.F.R. § 560.204(a).

B. Factual Background

The defendant Randy Reyes was employed by Siraj International ("Siraj"), a middleman/broker of aviation component parts--commercial and military, from October of 1996 until the spring of 1998. The principal actors at Siraj during the relevant time period were Reyes, the owner and president Jami Choudhury, and office manager Debra Martell. When an international customer placed an order with Siraj, Reyes or Choudhury, depending on who had responsibility for the particular client, was responsible for assuring that all exports complied with the AECA and IEEPA.2 Shortly after Reyes was hired by Siraj in October, 1996, he made contact with a customer named Texam Holding, Ltd., located in Geneva, Switzerland, and operated by Mehrad Banimostafavi (a/k/a Michael Bani).3 Reyes maintained Texam as his own client and handled virtually all transactions between Siraj and Texam.

At approximately the same time that Reyes made contact with Texam, another Milwaukee-area aircraft parts broker named International Aircraft Support Group (IASG) likewise began receiving orders from Texam. In January of 1997, Tina Bembenek (co-owner of IASG) received a purchase order from Texam requesting engine parts for an F-111 military aircraft, which in turn served to raise Bembenek's suspicion, for she was cognizant of the fact that only Iran and Australia flew the F-111. Bembenek called Bani (Texam) and inquired as to the end- user of the F-111 parts. According to Bembenek's testimony at trial, Bani told her that the parts were destined for Singapore. When confronted with Bembenek's statement that only Iran and Australia fly the F-111, Bani replied, "Let's send them to Australia."

In February, 1997, Bembenek was in Switzerland on unrelated business and arranged a meeting with Bani in Geneva. During this meeting Bani disclosed to Bembenek that he was an Iranian citizen living in Switzerland engaged in procuring military aircraft parts for Iran and at this time he provided Bembenek with a list of American companies with whom he did business. The list included Siraj International.

Upon Bembenek's return to the United States, she advised the U.S. Customs Service ("Customs") that Texam was acting as a front for Iran's procurement of military aircraft components. Thereafter Customs initiated an investigation into Texam and Bembenek agreed to assist in the investigation with the placing and receiving of telephone calls (recorded) with Bani and Reyes. In a recorded phone call to Reyes made on May 29, 1997, Bembenek informed him that she had received correspondence from Bani stating that Texam intended to ship military aircraft parts purchased from her company (IASG) to Iran. Reyes responded, "Oh-oh, double no-no," indicating that he knew that sales of military equipment to Iran were prohibited by federal law. Reyes further displayed his knowledge of the law as he informed Bembenek at that time that all of his Siraj sale documents included a written stipulation that parts sold to Texam were destined for Texam's stock, and he suggested to Bembenek that she might make use of the same "stipulation" to protect herself, stating "the only thing I can suggest is . . . stipulate on your orders that this is going to your stock there in Geneva. . . ."

Approximately three weeks after this conversation with Bembenek, on June 16, 1997, Reyes shipped a number of "junction covers" and fuel flometer brackets to Texam in Geneva, Switzerland without first having obtained the required licensing permits from the State Department. These aircraft parts were contained on the Munitions List since they were designed for exclusive use on TF-30 military aircraft engines, which are used on F-111, A-7, and F-14 military aircraft. This shipment from Milwaukee to Switzerland was seized by U.S. Customs officials at JFK airport on June 20, 1997. About the same time, Milwaukee U.S. Customs agents executed a search warrant at Siraj's Oak Creek, Wisconsin offices and seized a number of documents relating to Siraj's business dealings with Texam. The Customs Agents also found numerous documents in Reyes' office at Siraj, including but not limited to pamphlets detailing the State Department's registration and licensing process containing Reyes' handwritten notes, a partially completed draft of Siraj's registrant application containing Reyes' handwriting, and a copy of the Munitions List regulations with handwritten stars and checkmarks next to Category VIII (aircraft) and Category VIII(h) (aircraft component parts).4 Contemporaneous with the Siraj raid, Special Customs Agent John Heyer interviewed Reyes while on the premises, and during the interview Reyes admitted that Texam was his client, that he was aware that the shipment of aircraft parts destined to Iran was prohibited by federal law, and when questioned, further stated that Bani had informed him that the ultimate user of the airplane parts was either the Swiss Red Cross or Texam's stock. Contrary to his recorded telephone conversation with Bembenek of May 29, 1997, Reyes falsely stated to Heyer that he had never heard from any source that Texam supplied aircraft parts to Iran, and that he would not have exported any aircraft parts to Texam had he any reason to suspect that the parts were destined for Iran.

Upon the completion of the investigation, a grand jury on October 6, 1998 returned a five-count indictment against Reyes, Choudhury, Bani, and Siraj International, Inc. Count 1 charged all four defendants (the three individuals and the company) with conspiracy to violate the AECA and IEEPA by exporting Munitions List aircraft component parts from the United States destined for Iran without the necessary government licenses, contrary to 18 U.S.C. § 371. The conspiracy charge alleged three separate illegal shipments from Siraj to Texam in 1997, including the previously referred to shipment of June 16, 1997. Count 2 charged the same four defendants with willful violation of the AECA in connection with a January, 1997 shipment of military aircraft component parts from Siraj to Texam. Count 3 charged the four defendants with willful violation of the IEEPA in connection with a May, 1997 shipment from Siraj to Texam, and Counts 4 and 5 charged all the defendants with willful violations of the AECA and IEEPA in connection with the June 16, 1997 shipment from Siraj to Texam.

In March 1999, five months after return of the indictment and approximately nine months after Reyes voluntarily left Siraj, Ann Chiapetta purchased the assets of Siraj from Jami Choudhury and formed a new aircraft parts brokering business known as Avitek. Martell continued on as an employee of the new company until September 27, 1999, when Chiapetta discharged...

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