U.S. v. Whyte

• Decision Date: 12 March 2019
• Docket Number: No. 18-4123,18-4123
• Citation: 918 F.3d 339
• Parties: UNITED STATES of America, Plaintiff – Appellee v. William R. WHYTE, Defendant – Appellant, and Armet Armored Vehicles, Inc., Defendant.
• Court: U.S. Court of Appeals — Fourth Circuit

918 F.3d 339

UNITED STATES of America, Plaintiff – Appellee

v.William R. WHYTE, Defendant – Appellant,andArmet Armored Vehicles, Inc., Defendant.

No. 18-4123

United States Court of Appeals, Fourth Circuit.

Argued: December 12, 2018

Decided: March 12, 2019

ARGUED: Monica Taylor Monday, GENTRY LOCKE, Roanoke, Virginia, for Appellant. Jeffrey M. Smith, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee. ON BRIEF: Justin M. Lugar, GENTRY LOCKE, Roanoke, Virginia, for Appellant. Brian A. Benczkowski, Assistant Attorney General, Matthew S. Miner, Deputy Assistant Attorney General, Caitlin R. Cottingham, Trial Attorney, Fraud Division, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C.; Thomas T. Cullen, United States Attorney, Roanoke, Virginia, Heather L. Carlton, Assistant United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Charlottesville, Virginia, for Appellee.

Before AGEE, DIAZ, and HARRIS, Circuit Judges.

Affirmed by published opinion. Judge Agee wrote the opinion, in which Judge Diaz and Judge Harris joined.

AGEE, Circuit Judge:

A jury in the Western District of Virginia convicted William R. Whyte of three counts of major fraud against the United States, in violation of 18 U.S.C. § 1031 ; three counts of wire fraud, in violation of 18 U.S.C. § 1343 ; and three counts of presentation of false or fraudulent claims, in violation of 18 U.S.C. § 287. Asserting various errors by the district court, Whyte asks this Court to reverse his convictions.¹ For the reasons that follow, we affirm the judgment of the district court.

I.

This case involves parallel False Claims Act ("FCA"), 31 U.S.C. § 3729 et seq. , and criminal proceedings stemming from Whyte’s failure to provide multinational forces in Iraq with contracted-for armored vehicles. In December 2005, a U.S. Army officer—who was in Iraq as part of the Joint Contracting Command–Iraq (the "JCC-I")² —undertook the acquisition of armored vehicles that would be suitable for transporting senior Iraqi officials. Armet Armored Vehicles, Inc. ("Armet"), an American company owned and run by Whyte,³ received a contract in April 2006 to provide twenty-four armored vehicles to the JCC-I in exchange for approximately $4.8 million. Armet President Skinner and U.S. Air Force Master Sergeant Michael Hollon—as "contracting officer" on behalf of the U.S.—signed the contract, J.A. 3263, which stated that it was issued by the JCC-I and that payment would be made by the U.S. Army Corps of Engineers (the "USACE") Finance Center.

The contract further specified a delivery timeline: four vehicles were to be delivered within forty-five days of the award and the remaining twenty no later than July 31, 2006. In June 2006, the JCC-I awarded Armet a second contract for eight more armored vehicles, at the cost of approximately $1.6 million. These additional vehicles were to be delivered no later than ninety days from the second award date. Altogether, Armet was to provide thirty-two vehicles with the last set to be delivered by mid-September 2006.

Less than a month after the first contract had been signed, Armet began requesting progress payments. The JCC-I initially denied these requests as contrary to the terms of the contract, which specified payment upon delivery. Nonetheless, following the delivery of the first four vehicles in August and October 2006,⁴ Armet continued requesting such payments, noting at one point that a cash infusion was necessary for Armet to complete the remaining twenty-eight vehicles. Armet also sent emails stating it had "alternative business decisions to consider" if it did not receive such payments. J.A. 3415, 3417. In December 2006, the JCC-I issued a progress payment to Armet of $824,531.

Despite the payment, Armet delivered only two of the remaining twenty-eight vehicles over the next year. Instead, Whyte—while continuing to provide estimated delivery schedules to the JCC-I—directed Armet to prioritize other, higher-paying contracts. By March 2008, the JCC-I had terminated its contracts with Armet. As of that date, Armet had delivered six of the thirty-two vehicles and had been paid $2 million in delivery and progress payments.

Meanwhile, the DOD and the Federal Bureau of Investigation (the "FBI") had learned that Armet’s vehicles were potentially deficient and did not meet the contract specifications. Toward the end of 2006, Skinner had become a confidential informant for the FBI in relation to a separate national security investigation. Through him, the FBI had discovered armoring and ballistic weaknesses in the vehicles. The FBI informed the DOD of the defects. In response, the DOD began pulling the vehicles from the field. Ballistics and explosives testing by the FBI in 2008 confirmed significant deficiencies in the Armet vehicles. For example, at least three test shots "penetrated or perforated the roof of the [vehicle]." J.A. 1250. A test explosion punctured parts of the vehicle that held motor oil and transmission fluid, as well as three of four tires, and also caused pieces of metal to enter the interior of the vehicle. And every test shot penetrated the gunner turret, which was fabricated with only one sheet of steel despite a contract specification of two.

In July 2012, a federal grand jury in the Western District of Virginia indicted Whyte on twelve counts of major fraud against the U.S., wire fraud, and presentation of false claims.⁵ The Government⁶ requested Whyte’s extradition from Canada, which Whyte opposed.

In October 2012, Skinner filed a separate FCA civil suit in the Western District of Virginia as relator against Whyte and Armet. See United States ex rel. Skinner v. Armet Armored Vehicles, Inc. , No. 4:12cv00045, 2015 WL 6446226 (W.D. Va. Oct. 16, 2012). The Government opted not to intervene, and the case went to trial in June 2015. Skinner’s case-in-chief included his own testimony, a videotaped deposition of Whyte, and deposition testimony from a former Armet consultant. The jury returned a verdict in favor of Armet and Whyte, finding Whyte had not presented fraudulent claims for payment for the vehicles.

Whyte was eventually extradited from Canada to the U.S. in September 2016. He then sought to dismiss the Indictment, contending any criminal proceeding was collaterally estopped by the FCA action. The district court rejected this argument, concluding the Government was not precluded from filing the Indictment because it could not have been a party to an FCA suit in which it had not intervened: "The [G]overnment is not bound by the findings of a jury in which the [G]overnment was only a party in interest with no authority to participate in the action." United States v. Whyte , 229 F.Supp.3d 484, 491 (W.D. Va. 2017).⁷

Later, Whyte filed a second motion to dismiss the Indictment on the grounds that the Government could not prove the legal elements of the major fraud and false claims charges, which require that the Government or one of its agencies be the victim of the fraud. Whyte argued that even if he had engaged in the charged conduct, neither the Government nor one of its agencies had been defrauded because Armet had contracted with the JCC-I—which fell under the multinational MNF-I—and not a Government agency. The district court also denied this motion, concluding that payment of Government funds was sufficient to establish the Government as a party to the contract for the purposes of the major fraud and false claims charges.

Following a September 2017 trial, the jury convicted Whyte on all nine counts. The district court sentenced Whyte to seventy months’ imprisonment on the major fraud and wire fraud counts and sixty months’ imprisonment on the false claims counts, to be served concurrently.

Whyte now appeals and seeks reversal of his convictions on three grounds. Ground One contends that the district court erroneously concluded that the Government was not precluded from prosecuting Whyte for the same conduct as alleged and adjudicated in the FCA action. Ground Two asserts that the Government could not prove the elements of the fraud counts because a Government agency was not a party to the contract. And Ground Three contends that the district court deprived Whyte of his due process right to a fair trial because of allegedly improper comments by the Government. This Court has jurisdiction pursuant to 28 U.S.C. § 1291.

II.

We first consider whether Whyte’s criminal prosecution was collaterally estopped by the prior FCA action.⁸ This Court reviews "de novo a district court’s refusal to dismiss an indictment assertedly barred by collateral estoppel." United States v. Ruhbayan , 325 F.3d 197, 201 (4th Cir. 2003). The district court’s factual findings made "in connection with such a ruling are reviewed for clear error." Id.

A.

1.

The following elements determine whether collateral estoppel bars a criminal prosecution: (1) whether the issue in question is identical to the issue adjudicated in the prior proceeding; whether the issue was (2) actually and (3) necessarily determined in the prior adjudication; (4) "whether the resulting judgment settling the issue was final and valid[;] and (5) whether the parties had a full and fair opportunity to litigate the issue in the prior proceeding." United States v. Fiel , 35 F.3d 997, 1006 (4th Cir. 1994). In order for a prosecution to be barred under Fiel , "each of the[ ] five elements must be resolved in the movant’s favor." Ruhbayan , 325 F.3d at 202.

While there is some dispute among the parties as to the resolution of the first four factors, we can resolve this case by discussing only the fifth factor: did the Government have a full and fair opportunity to litigate the issue in the prior proceeding? Although this factor would typically be resolved by determining whether the Government was a party to the prior proceeding, our analysis is complicated under the FCA by the Government’s party status to an FCA action in which it did not intervene. Therefore, our resolution of this issue...