United States v. Frederick Ines Gordon, United States of America v. Edward Loeswick

Citation: 844 F.2d 1397Docket: 86-1061, 86-1062

Court: Court of Appeals for the Ninth Circuit; June 14, 1988; Federal Appellate Court

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Frederick Gordon and Edward Loeswick appealed their convictions for conspiracy, obstruction of justice, and perjury, stemming from their involvement in directing Lockheed subcontracts for the Trident Missile to Edler Industries, thereby excluding other bidders. They argued that their convictions should be overturned due to several reasons: Count I of the indictment was claimed to be duplicitous, hearsay testimony from a coconspirator was improperly admitted, exculpatory evidence under Brady was not disclosed, a perjurious statement was deemed immaterial, and the trial evidence was insufficient. The court reversed the conviction on Count I but affirmed the convictions on the remaining counts. 

The facts revealed that Gordon, a mechanical engineer at Lockheed, and Loeswick, president of Loeswick's, Inc., collaborated with Vernon Edler, president of Edler Industries, to provide inside information about Lockheed contracts. This included Engineering Material Requests, which allowed Edler to secure contracts by matching specifications and prices, resulting in lavish gifts for Gordon and Loeswick, including a trip to Puerto Vallarta and a request for a $15,000 payoff. A federal grand jury began investigating potential violations of the anti-kickback statute in 1983, leading to the indictment of the appellants.

Edler was granted immunity on May 15, 1984, and subsequently arranged a meeting with Loeswick, who was hesitant due to his attorney's advice. Despite his reluctance, Loeswick, Edler, and Gordon met on May 21, 1984, during which Edler recorded their conversation. They discussed Loeswick's commission, a trip to Mexico, expensive meals, and a $15,000 payment to Gordon. Loeswick later testified before the grand jury on June 19, 1984, making statements that led to four perjury counts against him (Counts IV through VII). Additional meetings occurred in June 1984 and January 1985 to discuss the investigation and file destruction. On February 19, 1985, an indictment was filed against Loeswick and Gordon, charging them with conspiracy to defraud the United States (Count I) and obstruction of justice related to the May 21 meeting (Count II). Count III charged Loeswick with obstruction from a June 26 meeting and Gordon with aiding and abetting. Counts IV through VII involved perjury charges against Loeswick. The district court granted acquittal on Count VI for Loeswick and Count III for Gordon. A jury convicted Loeswick on Counts I, II, III, V, and VII, while Gordon was found guilty on Counts I and II. Post-conviction motions for acquittal and a new trial were denied implicitly. On January 6, 1986, Loeswick received a sentence totaling two years and a fine of $10,000, while Gordon was sentenced to 18 months and fined $5,000. The execution of their sentences was stayed pending appeal. Appellants argued that Count I was duplicitous, charging two conspiracies in one count. The court noted that any objection based on this issue was waived due to not being raised before trial, as required by Federal Rule of Criminal Procedure 12(b)(2).

Appellants reference Mitchell v. United States to assert that objections to duplicity can be raised prior to or during a trial, noting that failure to do so constitutes a waiver. However, the objection in Mitchell was first made during an appeal, rendering the discussion dicta. In the current case, the objection was raised during trial, aligning with the rulings in Mastelotto and Westover, which adhere to Rule 12(b)(2) and emphasize that duplicity can be contested before trial based on the indictment's face, not trial evidence. This approach is consistent with the majority of other circuits. 

In this instance, Gordon raised the duplicity issue during a Rule 29 motion after the government's case-in-chief, without demonstrating good cause, leading to a waiver of the objection to the indictment's form. Nonetheless, appellants retain the constitutional right to a unanimous jury verdict under Article III, Section 2 and the Sixth Amendment, a claim they did not waive. 

Count I poses a risk of a nonunanimous verdict, charging Gordon and Loeswick with conspiracy to defraud the United States, specifically relating to the Trident Ballistic Missile Program, while also obstructing a Grand Jury investigation. To assess if Count I encompasses one or two conspiracies, the court will evaluate the overall agreement among conspirators based on factors such as the nature of the scheme, participant identity, transaction characteristics, and common goals.

Count I identifies two distinct conspiracies: one aimed at defrauding the United States regarding the Trident Missile Program and another intended to obstruct a grand jury investigation. The primary agreement among Gordon, Loeswick, and Edler involved leveraging insider information to secure government contracts for Edler Industries in exchange for kickbacks. There was no evidence of a prior agreement to cover up the crime, precluding the implication of a subsidiary conspiracy for concealment. The conspiracy to obstruct justice arose from a separate agreement after Loeswick received a subpoena, with evidence indicating that the last kickback transaction occurred in late 1983, while the obstruction conspiracy began in March 1984.

Due to the dual conspiracies charged in Count I, there was a risk of a nonunanimous jury verdict, as jurors might have convicted based on differing beliefs regarding the conspiracies. The trial judge failed to provide special interrogatories or curative instructions to mitigate this confusion. The jury's inquiry during deliberations about the necessity of finding guilt on both conspiracies highlighted this confusion. Consequently, the district judge's failure to address the potential for a nonunanimous verdict led to the reversal of the appellants' convictions on Count I.

On Count II, Gordon contended that the admission of hearsay statements from Loeswick against him was erroneous, as the government did not establish a prima facie case for the conspiracy to obstruct justice. The hearsay included recorded conversations between Loeswick and Edler. The standard for reviewing such admissions is ambiguous, with the Supreme Court in Bourjaily v. United States suggesting no clear error in the district court's fact-finding. Historically, this court used a stricter standard, reviewing the establishment of a conspiracy de novo. However, even under this stricter standard, the district court's decision to admit Loeswick's statements was upheld.

Under Federal Rule of Evidence 801(d)(2)(E), statements made by a coconspirator during the conspiracy's course and in furtherance of it are not classified as hearsay, provided the trial court determines, by a preponderance of the evidence, the conspiracy's existence and the defendant's involvement. Hearsay can be considered when making this determination, but there must also be additional evidence supporting the conspiracy and the defendant's participation. In this case, a taped conversation from May 21, 1984, involving Loeswick, Edler, and Gordon was sufficient to establish both the conspiracy to obstruct justice and Gordon's involvement, rendering Loeswick's statements admissible non-hearsay.

Gordon contested the sufficiency of the evidence against him for obstruction of justice, arguing that Loeswick's statements were inadmissible due to a lack of independent evidence of the conspiracy. However, as the district court correctly admitted the evidence, there was sufficient proof for the jury to find Gordon guilty beyond a reasonable doubt.

Additionally, Loeswick alleged a violation of Brady v. Maryland due to the government's failure to disclose pages from the Edler Industries Visitor's Register until after its case-in-chief. The court reviews Brady violation claims de novo. Edler, the government's key witness, testified about Loeswick's involvement based on a prior conversation with Gordon, while the undisclosed documents indicated Loeswick's visits to Edler Industries before the relevant phone call. Loeswick contended these documents constituted impeachment evidence, and the prosecution's delay in disclosing them violated his rights under Brady.

Under Brady, suppressing favorable evidence requested by the accused violates due process if the evidence is material to guilt or innocence, including impeachment evidence. For a Brady violation to warrant reversal, the undisclosed evidence must be material enough to create a reasonable probability that, if disclosed, the trial's outcome would have differed, thereby undermining confidence in the verdict.

No due process violation occurred regarding the Visitor's Register pages because the government provided the documents to the defense, which satisfies Brady requirements. Disclosure must occur when it is still valuable to the accused, and any delay only necessitates reversal if it prejudices the defense's ability to receive a fair trial. In this case, the defense had substantial opportunity to utilize the documents, having been disclosed before trial and allowing for their introduction as exhibits. Even if the documents were exculpatory, the timing of the disclosure did not constitute a Brady violation.

Loeswick's argument that his perjury conviction for Count V should be reversed due to the immateriality of the grand jury question is also addressed. The materiality of a statement in perjury cases is a legal question subject to de novo review. Count V charged Loeswick under 18 U.S.C. § 1623 for answering "No" to whether he was aware of any attempts to present a common story to the grand jury. The defense claims the question was immaterial since the grand jury was already aware of the truth from a prior conversation. However, materiality does not require proof that false testimony impeded the investigation; rather, it must be shown that the testimony was relevant to any issues under consideration. The government only needs to demonstrate that the false statement could influence the grand jury's investigation.

The grand jury investigated the interactions among Gordon, Loeswick, and Edler, focusing on whether Loeswick was aware of a plan to create a "common story," which was crucial for assessing the truthfulness of their testimonies. The court determined that prior knowledge by the grand jury did not diminish the relevance of Loeswick's statements, affirming his conviction on Count V. 

Loeswick argued the evidence was insufficient to prove his conspiracy to defraud the United States (Count I) and perjury regarding his lack of awareness of Gordon's information sharing (Count VII). The legal standard for sufficiency requires that, when viewed favorably to the prosecution, any rational juror could find the essential elements of the crime beyond a reasonable doubt. 

In his defense, Loeswick contested specific allegations, claiming the government's conspiracy commencement theory was disproven, and there was no credible evidence supporting that Gordon and Loeswick provided inside information to Edler. He also argued that the government’s documentation did not substantiate claims that Edler gained a competitive advantage from this information. 

However, Edler testified on these matters, leading to the conclusion that Loeswick's arguments centered on the credibility of Edler's testimony. Loeswick cited inconsistencies in Edler's statements and documentary evidence but provided limited examples. The court found that these inconsistencies did not discredit Edler’s testimony in its entirety, thus supporting the government’s charges against Loeswick.

Loeswick contests Edler's credibility, citing two potential motives for dishonesty. However, the jury's assessment of credibility, influenced by extensive cross-examination, is typically not subject to appellate review. Viewing the evidence favorably towards the government, if the jury accepted Edler’s testimony, it sufficiently supported Loeswick's conviction on Count I.

Count VII charges Loeswick with perjury regarding his lack of knowledge about unfair advantages given to a bidder. He argues the evidence is insufficient, claiming no inside information was shared with Edler Industries and that no competitive bidders existed. Edler’s testimony counters this, indicating he received insider information on several Lockheed subcontracts, which may have allowed Edler Industries to effectively compete despite time constraints. The jury’s acceptance of Edler’s credibility is upheld.

Loeswick also argues insufficient evidence of his predisposition to commit conspiracy and obstruction offenses, asserting these actions were solely at Edler's urging. Entrapment is a factual determination for the jury, with evidence viewed favorably for the government. He claims no predisposition existed until Edler's involvement, particularly during a meeting where Edler pushed for a coordinated story regarding the grand jury.

Five factors are considered to assess predisposition: the defendant’s character, whether the government initiated the criminal suggestion, if the defendant sought profit, any reluctance shown, and the nature of government inducement. While Loeswick lacks a prior criminal history, this alone does not negate predisposition, as one can be inclined to commit a first offense. The jury found sufficient evidence to conclude Loeswick was not entrapped, despite his claims of reluctance and external pressure.

Edler testified to two discussions with Loeswick concerning a grand jury investigation prior to Edler becoming a government informant, specifically addressing a repayment from Gordon that never occurred. While Loeswick disputes this, the jury could reasonably believe Edler. Loeswick was motivated by profit, receiving commissions on contracts awarded to Edler Industries, and his obstruction of the investigation aimed to protect his financial interests. The extent of Loeswick's reluctance is disputed; he initially expressed hesitance due to his attorney's advice but ultimately participated actively during meetings with Edler without any inducement offered. Edler sought to coordinate their narratives for the grand jury, which Loeswick agreed to. The evidence supports that Edler’s discussions were not initiated by the government and that Loeswick's initial reluctance was quickly overcome. Consequently, the jury could reasonably conclude that Edler was not entrapped.

The conclusion states that Count I of the indictment encompassed two conspiracies, with the district court failing to secure a unanimous verdict. The court’s admission of coconspirator statements was deemed appropriate, and evidence supported Gordon's conviction on Count II. The government provided Brady material in a timely manner, and the grand jury's inquiry was found material. Sufficient evidence supported Loeswick's convictions on Counts I and VII, affirming that he was not entrapped. The appellants' convictions on Count I are reversed and remanded for reconsideration of sentencing on the remaining counts, while the judgment on other counts is affirmed. The issue of a nonunanimous verdict was raised at trial through objections to jury instructions and requests for special interrogatories. The sufficiency of evidence question was addressed to prevent retrial due to insufficient evidence.