Court: Court of Appeals for the Seventh Circuit; November 7, 2001; Federal Appellate Court
Randy Reyes, the Defendant-Appellant, was convicted by a jury on October 22, 1999, for illegally exporting military aircraft component parts to Iran while serving as vice president of sales and marketing for Siraj International, Inc. He was found guilty of violations under the Arms Export Control Act (AECA) and the International Emergency Economic Powers Act (IEEPA), resulting in a sentence of 41 months in prison followed by two years of supervised release. Reyes appealed the conviction, challenging prosecutorial conduct, jury verdict consistency, evidence sufficiency, and sentencing calculations.
The AECA empowers the President to regulate military exports through a licensing system, requiring licenses for items classified as defense articles, particularly those designed for military aircraft. Additionally, the IEEPA prohibits exports to Iran without authorization, including indirect exports via third countries with knowledge of Iranian intent.
Reyes worked at Siraj International from October 1996 until spring 1998, where he was responsible for ensuring compliance with export regulations. He established a relationship with Texam Holding, Ltd., a Swiss company operated by Mehrad Banimostafavi, managing most of the transactions between the two entities. The court affirmed the lower court's decisions in Reyes's appeal.
Reyes initiated contact with Texam around the same time that International Aircraft Support Group (IASG), co-owned by Tina Bembenek, began receiving orders from Texam for military aircraft parts. In January 1997, Bembenek received a purchase order for F-111 engine parts, raising her suspicions since only Iran and Australia operated this aircraft. Upon inquiring, Bani from Texam falsely claimed the end-user was Singapore. During a February meeting in Geneva, Bani revealed he was an Iranian citizen procuring military parts for Iran and provided Bembenek with a list of American companies, including Siraj International.
Upon returning to the U.S., Bembenek reported Texam's activities to the U.S. Customs Service, which opened an investigation and enlisted her help in recording calls with Bani and Reyes. In a recorded call on May 29, 1997, Bembenek informed Reyes that Texam intended to ship parts to Iran. Reyes acknowledged the illegality of such sales and suggested Bembenek include a stipulation on her orders to protect herself. Shortly after, on June 16, 1997, Reyes shipped military parts to Texam in Switzerland without the necessary permits. These parts were designed for military aircraft and were subsequently seized by U.S. Customs at JFK airport on June 20, 1997. Concurrently, U.S. Customs agents executed a search warrant at Siraj's offices, seizing documents related to its dealings with Texam and discovering evidence of Reyes' awareness of the regulatory requirements, including handwritten notes on licensing processes and Munitions List regulations.
Special Customs Agent John Heyer interviewed Reyes during the Siraj raid, where Reyes admitted Texam was his client and acknowledged the illegal nature of shipping aircraft parts to Iran. Despite this, he falsely claimed he had no knowledge of Texam supplying parts to Iran and asserted he would not have exported to Texam had he suspected illegal activity. A grand jury indicted Reyes along with Choudhury, Bani, and Siraj International, Inc. on October 6, 1998, on five counts related to conspiracy and violations of the Arms Export Control Act (AECA) and the International Emergency Economic Powers Act (IEEPA), stemming from multiple illegal shipments from Siraj to Texam in 1997.
In March 1999, Ann Chiapetta purchased Siraj's assets and established Avitek, where Martell worked until her discharge in September 1999. Choudhury pled guilty to making a false statement to Heyer shortly before trial, leading to a plea agreement that included cooperation with the government. Siraj changed its plea to guilty for Counts 2 through 5, while Count 1 was dismissed.
Prior to Reyes' trial, Martell provided information to prosecutors about her termination from Avitek and made vague allegations regarding financial misconduct by Choudhury and Chiapetta. However, this information was not disclosed to Reyes before the trial. During the trial, Martell confirmed procedures regarding Texam communications and described her complicated relationship with Reyes, indicating disagreements but stopping short of stating she disliked him.
On October 22, 1999, a jury found Reyes guilty on Counts 4 and 5 for violations related to the AECA and IEEPA concerning a 1997 shipment, while acquitting him on Counts 1, 2, and 3. Following the trial, Reyes sought a judgment of acquittal on Counts 4 and 5 due to insufficient evidence, which was denied. Shortly before his sentencing, Reyes learned of Debra Martell's allegations of financial misconduct by Choudhury and Chiapetta, which he claimed constituted exculpatory evidence that the government failed to disclose. He filed a motion to stay his sentence pending a new trial or habeas corpus petition, arguing that this information would have been critical for his defense. The trial court denied the motion, and Reyes subsequently appealed.
In his appeal, Reyes raised four issues: (1) the government's failure to disclose Martell's termination and her suspicions violated his Fifth Amendment due process rights; (2) the guilty verdicts on Counts 4 and 5 were inconsistent with his acquittal on Counts 1, 2, and 3; (3) the evidence for Counts 4 and 5 was insufficient; and (4) the district court erred by sentencing him to a base level of 22.
Reyes argued he deserved a new trial based on the prosecution's obligation to disclose evidence under Brady v. Maryland, which mandates that the suppression of favorable evidence by the prosecution violates due process if material to guilt or punishment. The prosecution must disclose exculpatory evidence and facts that could impeach witnesses, regardless of specific requests from the defense. For a Brady violation to warrant a new trial, the defendant must demonstrate that the prosecution suppressed favorable evidence that was material to the trial outcome. Materiality requires a reasonable probability that the evidence would have changed the trial's result, and a mere possibility of benefit to the defense is insufficient to meet this standard.
Reyes seeks a new trial based on alleged non-disclosure of evidence that he claims would have enabled him to effectively cross-examine Martell and undermine her credibility. He argues that knowledge of Martell's termination would have allowed him to suggest motivations for her testimony against him, but the court finds this claim lacks merit. Martell's termination was disclosed during her trial testimony, contradicting Reyes' assertion of ignorance. The court emphasizes that due process under Brady does not require pre-trial disclosure if the information is available before it becomes too late for the defense to use it. Additionally, Reyes' claims regarding supposed favorable evidence related to Martell's suspicions about financial misconduct between Chiapetta and Choudhury also fail. The court notes that Reyes had no involvement in Martell's discharge or the sale of Siraj's assets, and Martell did not express any animosity toward him. Consequently, the court concludes there is no basis to connect Reyes to Martell's testimony or termination, and thus his claims of suppressed evidence lack substance.
Reyes' argument lacks merit as he was employed with Choudhury and Martell at Siraj for about 15 months, gaining comprehensive knowledge of the company's operations and environment. Martell's vague allegations did not provide Reyes with any new insights regarding Choudhury’s relationships or business practices. Reyes had the opportunity to subpoena Choudhury or Martell for trial testimony but chose not to. The information he claims was suppressed does not qualify as exculpatory, as it does not support a claim of innocence related to the charges against him. Thus, the failure to disclose this information could not have affected the trial outcome, rendering Reyes' Brady challenge baseless.
Regarding inconsistent verdicts, Reyes argues that his acquittal on Counts 1-3 implies the jury found the conspiracy objectives did not occur, and thus he could not be guilty of aiding or abetting counts related to AECA and IEEPA violations. However, inconsistent verdicts are not grounds for reversal, as juries may reach such outcomes for various reasons, including error or compromise. The legal system provides sufficient protection against jury irrationality through evidence sufficiency reviews.
Lastly, Reyes contends the evidence was insufficient to support his convictions on Counts 4 and 5. The standard for reviewing such claims is stringent; courts must view evidence in the light most favorable to the prosecution and uphold convictions as long as a rational jury could find the defendant guilty beyond a reasonable doubt. Reversal is only warranted if there is a complete absence of evidence supporting guilt.
Count 4 charged Reyes with knowingly exporting defense articles, specifically aircraft component parts, without a required license, in violation of the Arms Export Control Act (AECA). The government needed to prove beyond a reasonable doubt that Reyes willfully engaged in this conduct. The prosecution presented substantial evidence, including expert testimony regarding the military-specific use of the parts, documents from Reyes' office indicating his knowledge of export laws, and a recorded conversation where Reyes acknowledged the illegality of exporting to Iran without a license. This combination of direct and circumstantial evidence demonstrated Reyes' awareness of his legal obligations and his willful disregard for them, supporting the jury’s conviction on Count 4.
Count 5 charged Reyes with exporting goods to Iran, knowing the destination was an embargoed country, also without a license, in violation of the International Emergency Economic Powers Act (IEEPA). The government was required to prove that Reyes willfully attempted this export.
Reyes argues that the government did not provide enough evidence to prove his knowledge that the June 16, 1997 shipment to Texam was intended for Iran. However, evidence presented by the prosecution contradicts this claim. During an interview on June 19, 1997, Reyes admitted he knew shipping parts to a customer who would forward them to Iran was illegal, yet he falsely claimed he had no reason to suspect that shipments to Texam were going to Iran. The prosecution introduced a fax from Texam's Swiss bank dated March 3, 1997, indicating a payment for a shipment linked to Iran Aircraft Industries. Additionally, a fax dated May 19, 1997, from Texam to its Swiss bank explicitly mentioned an air shipment from Geneva to Tehran. Expert testimony from computer forensics confirmed that Siraj's fax machine received previous faxes from Texam related to shipments to Iran. Debra Martell testified that Reyes was the only Siraj employee authorized to handle faxes from Texam, which were considered his personal client. Considering this evidence, the jury could reasonably conclude that Reyes attempted to export parts without a license, knowing they would be forwarded to Iran, thereby violating the International Emergency Economic Powers Act (IEEPA). Reyes' challenge regarding the sufficiency of evidence for Count 5 is dismissed as meritless.
Regarding the calculation of his base level under the United States Sentencing Guidelines, the district court applied U.S.S.G. § 2M5.2(a)(1), which sets a base level of 22 for violations of the Arms Export Control Act (AECA). The only exception applies to specific cases involving a limited number of non-fully automatic firearms, which did not pertain to Reyes' situation. His arguments for a lower base level of 14 are deemed self-serving and irrelevant, as the guidelines are clear, and the trial judge acted correctly in setting his base offense level at 22.
The district court's judgment and sentence are upheld. The International Emergency Economic Powers Act (IEEPA) grants the U.S. President authority to regulate or prohibit exports in specific national security scenarios. In March 1997, Siraj registered with the State Department as an exporter of defense articles to obtain necessary export licenses. Bani, also indicted, has not yet submitted to the court's jurisdiction. At trial, Debra Martell identified Reyes' handwriting without objection, asserting her familiarity with it. Martell was fired shortly before Reyes' trial. The government did not investigate Martell's allegations about Siraj until five weeks post-Reyes' trial. Evidence presented included phone notes in Reyes' handwriting about foreign military sales, a list of aircraft parts from Siraj's warehouse, and a price quotation from a Siraj supplier requiring proof of a U.S. Government State Department license for order processing.
