United States v. Whyte

• Decision Date: 26 January 2017
• Docket Number: Case No. 4:12–cr–00021–002
• Parties: UNITED STATES of America, v. William R. WHYTE, Defendant.
• Court: U.S. District Court — Western District of Virginia

229 F.Supp.3d 484

UNITED STATES of America,

v.William R. WHYTE, Defendant.

Case No. 4:12–cr–00021–002

United States District Court, W.D. Virginia, Danville Division.

Entered January 26, 2016

Filed January 26, 2017

Catherine Votaw, United States Department of Justice, Washington, DC, Stephen J. Pfleger, United States Attorneys Office, Charlottesville, VA, for United States of America.

AMENDED MEMORANDUM OPINION

Jackson L. Kiser, SENIOR UNITED STATES DISTRICT JUDGE

This matter is before the Court on Defendant William R. Whyte's Motion to Dismiss the Indictment. Defendant Whyte filed his Motion on October 20, 2016 [ECF No. 21]. The United States responded on November 17 [ECF No. 40], and Whyte replied on November 29 [ECF No. 44]. I heard oral arguments on the Motion on December 1. The matter is now ripe for disposition. For the reasons stated herein, I will deny Defendant Whyte's Motion to Dismiss.

I. STATEMENT OF FACTS AND PROCEDURAL BACKGROUND

Defendant William R. Whyte ("Whyte"), along with Defendant Armet Armored Vehicles, Inc. ("Armet"), was indicted on July 19, 2012, with three counts of major fraud against the United States, in violation of 18 U.S.C. § 1031 ; six counts of wire fraud, in violation of 18 U.S.C. § 1343 ; and three counts of false, fictitious, and fraudulent claims, in violation of 18 U.S.C. § 287. (See generally Indictment ¶¶ 28–47 [ECF No. 1].)

Armet is a business "that manufactures and supplies armored vehicles for government and commercial customers." (Id. ¶ 1.) Whyte is Armet's owner and CEO, and he personally manages and supervises all of the operations at Armet. (Id. ¶ 2.) The Indictment stems from contracts Armet secured to provide the government with armored vehicles for use in Iraq. Contract 0028 concerned 24 armored gun trucks for a total sales price of $4,779,693.36 (id. ¶ 6); contract 0047 concerned eight additional armored gun trucks for an additional $1,593,231.10 (id. ¶ 90). Both contracts specified that each armored gun truck have armor protection of a standard "at which armor-piercing bullets of a given caliber and velocity [would] not penetrate the armor." (Id. ¶ 11.) Further, "the undercarriage of each armored gun truck [was to] have armored mine plating protection and ... ‘[a]t a minimum, the protection level acceptable shall withstand blast underneath the vehicle from grenades and/or blasts of whatever nature equivalent to the strength of two DM51 German ordinance.’ " (Id. ¶ 12.)

After being awarded the contracts, the government contends that Armet failed to deliver any vehicles by the delivery date. (Id. ¶ 14). The government also maintains that, when delivered, the vehicles failed to meet the contract specifications with regard to the armor protection. (Id. ¶ 21–22.) The government asserts that Armet's invoices and request for a progress payment were "false and fraudulent because the armored gun trucks that [it] shipped did not comply with the ballistic and blast protection requirements of the Contracts and did not have run-flat tires." (Id. ¶ 25.)

On October 16, 2012, Frank Skinner ("Skinner"), Armet's former President, filed a qui tam action against Whyte and Armet alleging violations of the Federal False Claims Act, 31 U.S.C. § 3732. The government chose not to exercise its right to intervene in the civil case. See 31 U.S.C. § 3730(c)(2)–(3). Skinner's Complaint alleged twenty-five separate counts of fraud or fraud-related activities arising from the 0028 and 0047 contracts. At trial, the jury returned a verdict for Whyte and Armet on all counts, finding that neither Whyte nor Armet "knowingly presented, or caused to be presented, false or fraudulent claims for payment for ... armored vehicles that it fabricated." (Jury Verdict, U.S. ex rel. Skinner v. Armet Armored Vehicles, Inc., and William R. Whyte , 4:12–cv–45, 2015 WL 4508215, June 4, 2015 [ECF No. 166].)

Whyte was eventually extradited to the United States on or about September 23, 2016.¹ On October 20, 2016, Whyte filed the present Motion to Dismiss the Indictment, alleging that collateral estoppel barred all charges against him. At its core, Whyte alleges that the civil jury's verdict in U.S. ex rel. Skinner v. Armet conclusively established that no fraud was committed, and thus the ultimate question underlying the criminal charges has been fully prosecuted by the government. As such, he contends the criminal case must be dismissed. He also contends that several counts of the Indictment are barred by the applicable statute of limitations.

II. STANDARD OF REVIEW

"[C]ollateral estoppel insures that ‘when an issue of ultimate fact has once been determined by a valid and final judgment, the issue cannot again be relitigated between the same parties in any future lawsuit.’ " United States v. McClung , No. Crim. A. 97–0031–II, 1997 WL 671602, at *1 (W.D. Va. Sept. 23, 1997) (quoting Ashe v. Sw e nson , 397 U.S. 436, 443, 90 S.Ct. 1189, 25 L.Ed.2d 469 (1970) ).

An indictment that involves essential elements of facts and law which have been tried and decided in an earlier case should be dismissed. Ashe v. Swenson , 397 U.S. 436, 90 S.Ct. 1189, 25 L.Ed.2d 469 (1970) ; Brown v. Ohio , 432 U.S. 161, 97 S.Ct. 2221, 53 L.Ed.2d 187 (1977). In ruling on such a motion, the court must determine exactly what was decided at the earlier trial. United States v. Davis , 369 F.2d 775, 777 (4th Cir. 1966), cert. denied , 386 U.S. 909, 87 S.Ct. 858, 17 L.Ed.2d 783 (1967). It is the burden of the moving party to demonstrate that the issue they urge is foreclosed logically constituted the basis of the earlier jury verdict. Id. "Only those issues necessarily determined by the first jury are conclusive in a second trial." Id. However, "the inquiry ‘must be set in a practical frame and viewed with an eye to all the circumstances of the proceedings.’ " United States v. Davis , 460 F.2d 792, 796 (4th Cir. 1972) (quoting Ashe , 397 U.S. at 444, 90 S.Ct. 1189 ).

United States v. Computer Sciences Corp. , 511 F.Supp. 1125, 1137 (E.D. Va. 1981).

"A defendant may, at any time before trial, raise a motion alleging a defect in the indictment, including its failure to comport with the applicable statute of limitations." United States v. Maga l nik , 160 F.Supp.3d 909, 913–14 (W.D. Va. 2015) ; Fed. R. Crim. P. 12(b)(3). Upon consideration of such a motion, the government's allegations are presumed to be true, and the indictment is regarded "in a ‘practical,’ rather than ‘purely technical,’ manner." Id. (citing United States v. Matzkin , 14 F.3d 1014, 1019 (4th Cir. 1994)). The defendant is entitled to dismissal if he shows that the indictment's allegations, "even if true, would not state an offense." United States v. Thomas , 367 F.3d 194, 197 (4th Cir. 2004).

III. DISCUSSION

A. COLLATERAL ESTOPPEL

Collateral estoppel "means simply that when an issue of ultimate fact has once been determined by a valid and final judgment, that issue cannot again be relitigated between the same parties in any future lawsuit." Ashe v. Sw e nson , 397 U.S. 436, 443, 90 S.Ct. 1189, 25 L.Ed.2d 469 (1970).

To determine whether the issue should be precluded, the court must decide (1) whether the issue in question is identical to the previous issue, (2) whether it was actually determined in the prior adjudication, (3) whether it was necessarily decided in that proceeding, (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. In order for the determination of an issue to be given preclusive effect, it must have been necessary to a judgment.

United States v. Fiel , 35 F.3d 997, 1006 (4th Cir. 1994) (citing United States v. Nash , 447 F.2d 1382, 1385 (4th Cir. 1971) ).

Turning to the fifth Fiel factor, "[t]he persons bound by the prior factual finding include the actual parties of the prior proceeding. Courts have also extended the preclusion to non-parties where there is such a degree of affinity of interests of the person who was not a formal party to the prior proceeding, as to render the doctrine of collateral estoppel applicable." In re Goldschein , 241 B.R. 370, 374 (Bkrtcy. D. Md. 1999) (citing Va. Hosp. Assoc. v. Baliles , 830 F.2d 1308, 1312 (4th Cir. 1987) ). "Participation and control of the prior litigation by the party to be bound is necessary to the application of collateral estoppel to a non-formal party." Id. at 374–75.

The question is essentially a matter of fact, to be determined by looking for that measure of ‘practical control’ that makes it fair to impose preclusion. Preclusion is fair so long as the relationship between the non-party and the party was such that the non-party had the same practical opportunity to control the course of the proceedings that would be available to a party.

Id. (quoting Charles A. Wright, et al., Federal Practice and Procedure § 4451 (1981) ).

A "party" is defined as "[o]ne by or whom a lawsuit is brought." Party , BLACK'S LAW DICTIONARY (8th ed. 2004). Under the False Claims Act, if the government chooses not to proceed with the action, the relator "shall have the right to conduct the action." 31 U.S.C § 3730(c)(3) (2010). The government remains "the real party in interest in a qui tam action under the False Claims Act even if it is not controlling the litigation." United States ex rel. Walker v. R&F Properties of Lack County, Inc. 433 F.3d 1349, 1359 (11th Cir. 2005) ; see also Fed. R. Civ. P. 17(a). A "party in interest" is "[a] person entitled under the substantive law to enforce the right sued upon and who generally, but not necessarily, benefits from the action's final outcome." Real party in interest , BLACK'S LAW DICTIONARY (8th ed. 2004).

In a False Claims Act in which the government does not elect to intervene—such as Skinner's FCA action—the government is not a "party," although it remains a "party in interest." While the Federal Rules of Civil Procedure require that the action be brought in the name of the...