U.S. v. Steele

Decision Date15 July 1982
Docket NumberNos. 81-2130 and 81-2184,No. 81-2130,No. 81-2186,No. 81-2189,No. 81-2187,No. 81-2188,No. 81-2184,No. 81-2185,81-2130,81-2184,81-2185,81-2186,81-2187,81-2188,81-2189,s. 81-2130 and 81-2184
Citation685 F.2d 793
Parties10 Fed. R. Evid. Serv. 1116 UNITED STATES of America v. STEELE, Hoyt P., Appellant inUNITED STATES of America v. GENERAL ELECTRIC COMPANY, Appellant inUNITED STATES of America v. NAPLES, Robert, Appellant inUNITED STATES of America v. TWOMBLY, INC., Appellant inUNITED STATES of America v. SCHENECTADY TURBINE SERVICES, LTD., Appellant inUNITED STATES of America v. MOTHON, Charles, Appellant inUNITED STATES of America v. TWOMBLY, INC., Appellant into 81-2189.
CourtU.S. Court of Appeals — Third Circuit

Henry S. Ruth, Jr. (argued), Saul, Ewing, Remick & Saul, Philadelphia, Pa., for appellant General Electric Co. in No. 81-2184; James R. Bird, Shea & Gardner, Washington, D. C., of counsel.

Lawrence Iason (argued), Kasanof, Schwartz & Iason, New York City, for appellant Hoyt P. Steele in No. 81-2130; Robert Kasanof, Howard E. Heiss, New York City, of counsel.

William J. Rogers, Washington, D. C., David Richman (argued), Christopher J. Rillo, Pepper, Hamilton & Scheetz, Philadelphia, Pa., for appellant Robert Naples in No. 81-2195.

Donald Horowitz (argued), Cummins, Dunn, Horowitz & Pashman, Hackensack, N. J., for Twombly, Inc., appellant in Nos. 81-2186 and 81-2189.

Benjamin Lewis (argued), Lapatin, Lewis, Green, Kitzes & Blatteis, P. C., New York City, for appellant Schenectady Turbine Services, Ltd. in No. 81-2187.

Matthew P. Boylan (argued) Theodore V. Wells, Jr. (argued) Judy G. Russell, Lowenstein, Sandler, Brochin, Kohl, Fisher & Boylan, Roseland, N. J., for appellant Charles Mothon in No. 81-2188.

William C. Bryson (argued), Peter D. Isakoff, Joseph P. Covington, Barbara A. Corprew, Ihor O. E. Kotlarchuk, Dept. of Justice, Washington, D. C., William W. Robertson, U. S. Atty., D. N. J., Newark, N. J., for appellee.

Before ALDISERT, WEIS and BECKER, Circuit Judges.

OPINION OF THE COURT

ALDISERT, Circuit Judge.

The main question for decision in these consolidated appeals, in a complex criminal case involving payment of graft by one of America's largest electrical equipment manufacturing companies to a Puerto Rican official and the laundering of payments to him through a subcontractor based in Bermuda, is whether the indictments are barred by the statute of limitations. Three corporations and three individuals appeal from judgments of conviction and sentence entered on a jury verdict finding them guilty of wire fraud, mail fraud, interstate travel in aid of racketeering, and conspiracy. We affirm the conviction of appellant Twombly, Inc. on interstate travel charges brought in a separate indictment. We reverse all convictions under counts 2, 3, and 5 of the principal indictment, which relate to conduct occurring after November 5, 1975, when appellant General Electric revealed the scheme to the Governor of Puerto Rico, because we hold that the conspiracy ended as a matter of law on that date. We also reverse appellant Robert Naples' convictions on all counts because he withdrew from the conspiracy prior to the period of limitations. We set aside the convictions and remand for a new trial on the remaining counts 1, 4, and 7, because the defendants were denied reasonable notice and opportunity to defend against the specific factual theory on which the government based its argument that the conspiracy extended beyond the accomplishment of its principal objectives and into the period of limitations, and because we are unable to determine whether the jury's verdict was based on an impermissible ground.

I.

The theory underlying the prosecution is that the appellants and others conspired and succeeded in obtaining a multi-million dollar power plant construction contract for appellant General Electric by bribing a Puerto Rican public official, and that they thereby defrauded the government and people of Puerto Rico of the right to the official's faithful and disinterested services, in violation of the federal wire and mail fraud statutes, the Travel Act, and Puerto Rican law. The appellants allegedly created and transferred a "bribe fund" through a complex series of subcontract transactions designed to conceal its source and its payment. The substantive charges set forth in the two indictments relate to conduct that allegedly furthered this conspiracy. Indictment No. 80-73, returned on March 14, 1980, charged appellant Twombly, Inc. in a single count with interstate travel in aid of racketeering in violation of the Travel Act, 18 U.S.C. § 1952. Indictment No. 80-320 was returned on September 4, 1980, charging each appellant in seven separate counts. The two indictments were consolidated for trial. Twombly, Inc. was convicted of the Travel Act offense charged in indictment No. 80-73. Each defendant was acquitted on count 6 of indictment No. 80-320; and each was found guilty of wire fraud, in violation of 18 U.S.C. § 1343 (counts 1 and 2); mail fraud, in violation of 18 U.S.C. § 1341 (count 3); interstate travel in aid of racketeering, § 1952 (counts 4 and 5); and conspiracy, under 18 U.S.C. § 371 (count 7). Each defendant has appealed, and we ordered the appeals consolidated for briefing and oral argument.

The various contentions presented by the several defendants require us to consider whether the prosecution was time-barred as to some or all charges; whether Puerto Rico is a "State" as contemplated in the Travel Act, 18 U.S.C. § 1952; whether the government abused the grand jury process or evidentiary standards in obtaining the indictments; whether there was sufficient evidence to support the convictions of Schenectady Turbine Services, GE, and Twombly, Inc.; whether admission of Bermuda bank records, videotaped depositions, and the past-recollection-recorded testimony of witness Frank Ayer was impermissible; and whether a new trial should be granted because a mid-trial shift in the government's theory of the continuance of the conspiracy denied appellants reasonable notice and a fair opportunity to defend against the government's allegations.

II.

We begin by setting forth generally the facts underlying the prosecution, crediting all testimony in support of the judgment and indulging in all reasonable inferences favorable to the prosecution.

A.

In the spring of 1973, the Puerto Rico Water Resources Authority (PRWRA) invited a number of companies, including appellant GE, to submit bids for the construction of a large steam and gas turbine (STAG) power plant in Aguirre, Puerto Rico. The bid invitation required compliance with certain basic specifications, but it permitted substantial differences among the competing proposals. The Authority's evaluation of the competing bids was, therefore, necessarily complex and somewhat subjective. 1

In June 1973, several high-level employees of GE's Gas Turbine Division, including appellant Robert Naples, met to discuss bidding strategy. They agreed that GE would bid both as a prime contractor and as a turbine equipment subcontractor for another prime bidder, Hitachi America, Ltd.

Sometime during the summer of 1973, Richard Kask, an employee in GE's International Sales Division, met with former GE employee Vernon Twombly, the principal owner of appellant Twombly, Inc., which previously had done business in Puerto Rico. Kask said that he believed GE would need assistance in getting the contract, and Twombly indicated that he might be able to assist. Following that conversation, Twombly called appellant Charles Mothon, another former GE employee who was then a marketing representative for Hitachi. Twombly reported Kask's opinion that "help was needed" on the STAG contract, and he suggested that he and Mothon could work together. Mothon replied that he "would have to talk to his friends and find out what was possible." Mothon later called Twombly and indicated that he probably could help, and Twombly relayed that message to Kask. A few days later, Mothon suggested to Twombly that GE would have to pay about $1 million to "friends," a term that Mothon and Twombly understood to refer to persons receiving money in return for aid in obtaining a contract. Mothon indicated to Twombly that his "friend" in this instance was Carlos Velazquez Toro, the Chief of Operations of the PRWRA. Twombly relayed the $1 million figure to Kask.

The bids were opened on September 17, 1973. The competitors were permitted to review each others' bids in detail, according to the PRWRA's usual practice. Hitachi's bid was not competitive, eliminating GE's chance of participating as a subcontractor and leaving GE, Westinghouse (the low bidder), and two other bidders as contenders for the prime contract.

Mothon called Bruce Boni of GE's Gas Turbine Division, an assistant to appellant Robert Naples, a day or two after the bids were announced. Boni and Mothon discussed "what might have to be done if GE was really interested in pursuing the business," specifically the need to pay a "special commission," a topic familiar to both. Boni then suggested to Naples that GE employ Twombly, Inc. as a subcontractor and a conduit for payment of the bribe, if "the proper permission to go ahead" could be obtained. Boni thereafter discussed the matter with Frank Ayer of GE's International Sales Division, and Ayer promised to explore the question with others in that division.

Naples met on September 26, 1973, with appellant Hoyt Steele, a GE Vice President and head of the International Sales Division. Naples suggested that GE should hire Twombly, Inc. as its installation subcontractor and asked Steele to "approve a payment." Steele met the next day with several other officers of the International Sales Division. He instructed Richard Kask to advise Vernon Twombly that Twombly, Inc. would be awarded a STAG project subcontract. If "the question of additional funds (to) be made available"...

To continue reading

Request your trial
94 cases
  • U.S. v. Gibbs
    • United States
    • U.S. Court of Appeals — Third Circuit
    • June 19, 1984
    ... ... 18 Ammar, 714 F.2d at 254; United States v. Steele, 685 F.2d 793, 803-04 (3d Cir.1982), cert. denied, 459 U.S. 908, 103 S.Ct. 213, 74 L.Ed.2d 170 (1983); United States v. Gillen, 599 F.2d 541, 548 ... 801(d)(2)(E). It remains for us to consider Gibbs' contention that his constitutional rights under the sixth amendment Confrontation Clause were violated ...         The ... ...
  • U.S. v. Ammar
    • United States
    • U.S. Court of Appeals — Third Circuit
    • October 31, 1983
    ... ... 4712-13 (emphasis added) ...         These two references to a "prima facie" case, though troubling, do not persuade us that the district court adopted an improper standard. The first reference was made in a context unrelated to the issue of standard of proof and ... 13 Just as a defendant must produce ... Page 254 ... evidence showing that s/he withdrew from a conspiracy, see United States v. Steele, 685 F.2d 793, 803-04 (3d Cir.1982); United States v. Gillen, 599 F.2d 541, 548 (3d Cir.), cert. denied, 444 U.S. 866, 100 S.Ct. 137, 62 L.Ed.2d 89 ... ...
  • US v. Maling
    • United States
    • U.S. District Court — District of Massachusetts
    • April 23, 1990
    ... ... Second, it is clear that acts to conceal the conspiracy may in fact be used to extend the statute 737 F. Supp. 698 of limitations period provided a sufficient evidentiary foundation exists. See United States v. Steele, 685 F.2d 793, 803 (3d Cir.), cert. denied, 459 U.S. 908, 103 S.Ct. 213, 74 L.Ed.2d 170 (1982). Finally, as noted above under discussions of counts one and three, the defendants' arguments concerning the statute of limitations, which the defendants incorporate to their argument as to count ... ...
  • US v. Cannistraro
    • United States
    • U.S. District Court — District of New Jersey
    • July 22, 1992
    ... ... United States, 350 U.S. 359, 363, 76 S.Ct. 406, 408, 100 L.Ed. 397, reh'g denied, 351 U.S. 904, 76 S.Ct. 692, 100 L.Ed. 1440 (1956); United States v. Ismaili, 828 F.2d 153, 164 (3d Cir.1987), cert. denied, 485 U.S. 935, 108 S.Ct. 1110, 99 L.Ed.2d 271 (1988), United States v. Steele, 685 F.2d 793, 806 (3d Cir.), cert. denied sub nom. Mothon v. United States, 459 U.S. 908, 103 S.Ct. 213, 74 L.Ed.2d 170 (1982); Wander, 601 F.2d at 1260. A grand jury is prohibited from using hearsay evidence if "non-hearsay is readily available; ... the grand jury was also mislead into ... ...
  • Request a trial to view additional results
8 books & journal articles
  • RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS
    • United States
    • American Criminal Law Review No. 58-3, July 2021
    • July 1, 2021
    ...from the conspiracy is suff‌icient” (quoting United States v. Loya, 807 F.2d 1483, 1493 (9th Cir. 1987))). 191. United States v. Steele, 685 F.2d 793, 804 (3d Cir. 1982) (holding that the district court erred in denying defendant’s motion for acquittal where he made a successful prima facie......
  • Racketeer influenced and corrupt organizations
    • United States
    • American Criminal Law Review No. 60-3, July 2023
    • July 1, 2023
    ...United States v. Detelich, 351 F. App’x 616, 620–21 (3d Cir. 2009); see also Lothian , 976 F.2d at 1261. 193. See United States v. Steele, 685 F.2d 793, 804 (3d Cir. 1982). 194. Id. at 803–04 (rejecting government’s argument that silence following defendant’s resignation was evidence of con......
  • Racketeer Influenced and Corrupt Organizations
    • United States
    • American Criminal Law Review No. 59-3, July 2022
    • July 1, 2022
    ...from the conspiracy is suff‌icient” (quoting United States v. Loya, 807 F.2d 1483, 1493 (9th Cir. 1987))). 192. United States v. Steele, 685 F.2d 793, 804 (3d Cir. 1982) (holding that the district court erred in denying defendant’s motion for acquittal where he made a successful prima facie......
  • Racketeer influenced and corrupt organizations.
    • United States
    • American Criminal Law Review Vol. 49 No. 2, March 2012
    • March 22, 2012
    ...Cir. 2000) (finding that resignation alone from a criminal enterprise is not sufficient for withdrawal). (202.) United States v. Steele, 685 F.2d 793,803-04 (3d Cir. (203.) Id. (204.) See id. (rejecting government's argument that silence following defendant's resignation was evidence of con......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT