Court Opinion

ID: 5593
Source: CourtListenerOpinion
Date Created: 2010-04-25 05:07:31+00
Date Added: 2024-06-11T09:38:00.621278
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                      FOR THE FIFTH CIRCUIT

                       -------------------
                           No. 92-7131
                       -------------------

     UNITED STATES OF AMERICA,

                                          Plaintiff-Appellee,

                             versus

     LANDEN MAX DULA and ACCRABOND CORPORATION,

                                          Defendants-Appellants.

                       - - - - - - - - - -
          Appeal from the United States District Court
            for the Northern District of Mississippi
                       - - - - - - - - - -
                          April 16, 1993

Before KING and EMILIO M. GARZA, Circuit Judges, and HALL*,
District Judge.

SAM B. HALL, JR., District Judge:

     Landen Max Dula and Accrabond Corporation were convicted by

a jury of wire fraud, mail fraud, and false statements.

Defendants now appeal their convictions, alleging a Brady

violation, a comment on the failure of Dula to testify, and a

violation of Fed. R. Evid. 404(b).    Defendants also allege that

the evidence was insufficient to prove Dula's intent to defraud,

and that the trial court erred in denying a motion for new trial

because the verdict was against the weight of the evidence.     As

     *
        District Judge of the Eastern District of Texas, sitting
by designation.
the Brady claim is not presented in the record, it is dismissed

without prejudice to the defendants' right to raise it in an

action under 28 U.S.C. § 2255.          As to all other issues, we find

no error, and affirm.

                   I.    FACTS AND PROCEDURAL HISTORY

     Landen Max Dula is the founder and president of Accrabond

Corporation, which is engaged in the sale of industrial sealants,

adhesives, coatings, and other chemical products for military,

government, and commercial aerospace use.             Accrabond manufactured

its own   line   of     products,    and    distributed     products   of   other

manufacturers.

     On May 16, 1991, Dula and Accrabond were indicted in the

Northern District of Mississippi on charges of wire fraud, mail

fraud, and false statements.         The 32 count indictment charged that

between January 1988 and September 1989, the defendants devised a

scheme to   defraud      and   obtain      money   under   false   pretenses    by

representing that products sold and supplied conformed to the

purchaser's specifications when they did not. Defendants were also

charged with     fraudulently       substituting     falsely   identified      and

nonconforming products,2 relabeling stale, outdated, and expired

products as fresh, recently acquired products with extended shelf

     2
        Many aerospace products carry manufacturer's lot numbers
to provide a mechanism for a manufacturer to trace and recall
defective lots. Accrabond provided its own lot numbers, or
purchased small quantities of a product in order to obtain an
authentic lot number.

                                        2
life,3 coloring, thinning, and altering the appearance of products

to conform to the appearance of other products and substituting the

for other products,4 and using false labels, shipping documents,

and   certificates   of   compliance   to   conceal   the   fraudulent

substitution of products.5

      The indictment alleged eighteen instances of the use of

interstate wire communications in violation of 18 U.S.C. §§ 2,

1343, and one of the mail in violation of 18 U.S.C. §§ 2, 1341 in

execution of a scheme to defraud thirteen aerospace and defense

supply companies.6   The indictment further charged the defendants

with thirteen counts of falsely certifying products for use in

defense contracts in violation of 18 U.S.C. §§ 2, 1001.

      3
        Most aerospace products such as those sold by Accrabond
carry a shelf life, beyond which they must be retested to
determine whether they still meet the standards of performance
prescribed by military specifications.
      4
        Any alteration of a product after manufacture, such as
thinning, dying, etc. may also change performance, and therefore
also requires retesting to determine if the product still meets
the military specifications.
      5
        Most of Accrabond's business was conducted by telephone
or fax transmissions, which were then entered into a computer,
which generated a sales order and a manufacturing order. The
order form also had a space for entering "blind notes," which
were used to instruct Accrabond employees on what substitute to
send for the product ordered, or what substitute had been
supplied to the customer on a previous order. The documents sent
to the customer, however, all described the product ordered, and
did not reveal that a substitute had been supplied.
      6
        The defendants were charged with illegally using wire
communications when accepting telephone purchase orders from
various customers. Further, the defendants allegedly submitted
false statements or entries by supplying fraudulent certificates
of compliance indicating that a particular product conformed to a
particular military specification.

                                  3
     After a ten day jury trial in December, 1991, Accrabond was

convicted on all but one count of wire fraud, and Dula was

convicted on six counts of wire fraud and five counts of false

statements.   On February 18, 1992, Accrabond was sentenced to pay

a fine of $248,000, and restitution in the amount of $8,238.32.

Dula was sentenced to a term of imprisonment of thirty-six months

on each count, to be served concurrently, as well as a fine of

$27,500.   The defendants filed a notice of appeal February 24,

1992, from the judgments entered by U.S. District Judge Neal B.

Biggers, Jr., and the court stayed execution of the judgment

pending appeal.

                           II.   ANALYSISA.   BRADY VIOLATION

     Defendants contend that the government violated the disclosure

requirements of Brady v. Maryland, 373 U.S. 83 (1963), by failing

to reveal test results showing that the product sold by Accrabond

performed as well as was required.7      Defendants claim that the

government was in possession of numerous reports of such tests,

which it failed to disclose despite repeated requests prior to

trial.   Specifically, Defendants pointed to inspection and testing

done by Martin-Marietta, as stated by a company spokesman the day

after the convictions.    See Northeast Mississippi Daily Journal,

     7
        In Brady v. Maryland, 373 U.S. 83, 87 (1963), the United
States Supreme Court held that the due process clause requires
the government to disclose all information that is favorable to
the accused and is material to either guilt or punishment. See
generally 3 Wright, Federal Practice and Procedure: Criminal 2d,
§ 557.2 (1982). The rule covers impeachment as well as
exculpatory evidence. See Giglio v. United States, 405 U.S. 150,
154 (1972).

                                  4
Sunday, December 15, 1991.        Defendants allege that this violation

prejudiced them by denying them exculpatory materials in trial

preparation and presentation, and by permitting the prosecutor to

make        false   statements   in   closing     argument     regarding   the

impossibility of inspecting the products supplied by Accrabond.8

       The     government   argues    that   it    has   not    violated   the

requirements of Brady since the information was equally available

to the Defendants,9 and the information is not material.10                  We

       8
        In closing argument, counsel for the Defendants argued
that while the government had alleged that faulty products sold
by Accrabond had endangered the performance of weapons such as
the cruise missile, the demonstration of the effectiveness of our
country's military technology in the Persian Gulf War, including
missiles made with materials sold by Accrabond, showed that the
products were not deficient. (Tr. 1755). In response, the
prosecutor stated in rebuttal that only an inspection of the
materials could have revealed what problems there might have been
with Accrabond products, and asserted that such an inspection
would have been impossible. (Tr. 1775-1776).
       9
        Brady does not oblige the Government to provide
defendants with evidence that they could obtain from other
sources by exercising reasonable diligence. When evidence is
available equally to the defense and the prosecution, the
defendants must bear the responsibility for their failure to
diligently seek its discovery." See, e.g., United States v.
McKenzie, 768 F.2d 602, 608 (5th Cir. 1985), cert. denied, 474
U.S. 1086 (1986)
       10
        A defendant must establish that withheld evidence
favorable to the accused is "material" in order to succeed on a
Brady claim. See United States v. Ellender, 947 F.2d 748, 756
(5th Cir. 1991). Suppressed evidence is material only if "there
is a reasonable probability that, had the evidence been disclosed
to the defense, the result of the proceeding would have been
different. A 'reasonable probability' is a probability
sufficient to undermine confidence in the outcome." United
States v. Bagley, 473 U.S. 667, 682 (1985)."
     In this case, the government argues that whether or not some
of Accrabond's products were not fraudulent or nonconforming was
not at issue, and is in fact irrelevant. Rather, the issue was
whether the products were falsely represented and certified.
See, e.g., United States v. Grimm, 568 F.2d 1136, 1138 (5th Cir.

                                       5
decline to       address   these    arguments    at   this   time   because,   as

indicated by oral argument, there is no evidence in the record

concerning the test results that the government is alleged to have

withheld in violation of Brady.              In the absence of a record, we

cannot fairly evaluate the merits of the defendants' claim.                    We

therefore dismiss the defendants' Brady claim without prejudice to

their right to raise the issue in a proceeding under 28 U.S.C. §

2255.11    See 3 Wright, Federal Practice and Procedure: Criminal 2d

§ 594 p. 453.

B.   COMMENT ON DULA'S FAILURE TO TESTIFY

     Dula also contends that the trial court erred when it denied

a motion for mistrial following a statement by the prosecutor in

closing argument that it claims called the jury's attention to the

fact that the Dula had elected not to testify.                Dula argues that

the failure of the trial court to declare a mistrial, or at least

give a curative instruction, denied him his Fifth Amendment rights.

     The Fifth Amendment prohibits a prosecutor from commenting

directly    or    indirectly   on    a   defendant's    failure     to   testify.

Griffin v. California, 380 U.S. 609 (1965); United States v.

1978) (evidence of noncriminal conduct to negate the inference of
criminal conduct is generally irrelevant); United States v.
Marrero, 904 F.2d 251, 260-261 (5th Cir. 1990), reh. denied, 909
F.2d 1479, cert. denied, 498 U.S. 1000.
     11
        This is similar to our procedure for ineffective
assistance of counsel claims. Where such claims are not raised
before the trial court, they cannot be resolved on direct appeal
since the district court has had no opportunity to develop the
record as to the merits of the allegations. See, e.g., United
States v. Higdon, 832 F.2d 312, 313-314 (5th Cir. 1987), cert.
denied, 484 U.S. 1075 (1988); United States v. Bounds, 943 F.2d
541 (5th Cir. 1991).

                                         6
Borchardt, 809 F.2d 1115 (5th Cir. 1987).               In deciding whether a

comment made by the government in its closing argument is a comment

on the defendant's failure to testify, a court must determine if

"the    prosecutor's    manifest     intention    was    to   comment   on   the

accused's failure to testify [or] was... of such character that the

jury would naturally and necessarily take it to be a comment on the

failure of the accused to testify."          United States v. Smith, 890
F.2d 711, 717 (5th Cir. 1989).

       However, the comments complained of must be viewed within the

context of the trial in which they are made.                  United States v.

Bright, 630 F.2d 804, 826 (5th Cir. 1980).              In this case, one of

the    defenses   set   forth   by   Dula   and   Accrabond     was   that   the

prosecution was instigated and directed by a rival, Products

Research Chemical Corporation (PRC), to carry out the "corporate

murder" of Accrabond in order to take over its market.                  Against

this background, Government counsel stated in closing argument:

            Well, let me talk about PRC just a minute. There's
       been nobody on this witness stand that really knows about
       what happened between PRC and Accrabond Corporation.

(Tr. 1784).       The government argues that the context makes clear

that the intent of the argument was not to comment on Dula's

failure to testify, but         to make the point that none of the

witnesses who had testified about the existence of a lawsuit by PRC

against Accrabond actually knew anything about it.

       It is not error to comment on the defendant's failure to

produce evidence on a phase of the defense upon which he seeks to

rely.    See, e.g., United States v. Bright, 630 F.2d 804, 825 (5th

                                       7
Cir. 1980).      Thus, the government's argument to the jury that "no

one has given you any reasonable explanation" in response to the

defendant's contentions is not error. See United States v. Warren,

550 F.2d 219, 227 (5th Cir. 1977), cert. denied, 434 U.S. 1016

(1978).

      In any case, the district court's instructions to the jury

emphasized      that   the    defendant   need   not   testify,   and        that   no

inference could be drawn from his failure to testify.                  (Tr. 1082).

Therefore, even if there was harm created by counsel's comments, it

was offset by the court's instructions.             See, e.g., United States

v. Smith, 890 F.2d 711, 716 (5th Cir. 1989)

C.    VIOLATION OF FED. R. EVID. 404(B)

      Defendants next contend that the trial court violated Fed. R.

Evid.      404(b)12    by    permitting   the    introduction     of    testimony

concerning an alleged prior bad act of Dula and Accrabond which was

not charged in the indictment.            During the trial, the government

elicited testimony regarding a sale of materials by Accrabond to

Pan   Metals,     a    Korean    corporation.      Rick   Drexler,       a    former

laboratory manager at Accrabond, told the jury that Pan Metals had

      12
            Federal Rule of Evidence 404(b) provides:

      Evidence of other crimes, wrongs, or acts is not admissible
      to prove the character of a person in order to show action
      in conformity therewith. It may, however, be admissible for
      other purposes, such as proof of motive, opportunity, intent
      preparation, plan, knowledge, identity, or absence of
      mistake or accident, provided that upon request by the
      accused, the prosecution in a criminal case shall provide
      reasonable notice in advance of trial, or during trial if
      the court excuses pretrial notice on good cause shown, of
      the general nature of any such evidence it intends to
      introduce at trial.

                                          8
ordered a Dow Corning adhesive, but had been sent a substitute

product, which "did not get by" Pan Metals.              (Tr. 969-971).      This

transaction was not among those alleged in the indictment.

       This court has set forth a two-part test for determining the

propriety of admitting evidence of "bad acts" not alleged in the

indictment.        United States v. Beechum, 582 F.2d 898, 911 (5th Cir.

1978), reh. granted, 563 F.2d 1782, opinion superseded, 582 F.2d
898, cert. denied, 440 U.S. 920 (1979).                   First, it must be

determined that the extrinsic offense evidence is relevant to an

issue other than the defendant's character.              Second, the evidence

must possess probative value that is not substantially outweighed

by its undue prejudice and must meet the other requirements of rule

403.13      Id.

       Evidence of an uncharged offense arising out of the same

transaction or series of transactions as the charged offense is not

an "extrinsic" offense within the meaning of Rule 404(b), and is

therefore not barred by the rule.              See, e.g., United States v.

Simpson, 709 F.2d 903, 907 (5th Cir. 1983), cert. denied, 464 U.S.
942.        The defendants were charged with conducting a continuing

scheme to defraud, characterized by the substitution of products,

and    it    was   necessary   for   the    government   to   prove   that    the

defendants had intentionally devised a scheme and artifice to

       13
             Federal Rule of Evidence 403 states:

       Although relevant, evidence may be excluded if its probative
       value is substantially outweighed by the danger of unfair
       prejudice, confusion of the issues, or misleading the jury,
       or by considerations of undue delay, waste of time, or
       needless presentation of cumulative evidence.

                                        9
defraud. In developing proof of intent and motive, the prosecution

may offer all of the surrounding circumstances that were relevant.

See, e.g., United States v. Mancuso, 444 F.2d 691, 695 (5th Cir.

1971) (other transactions connected with the offenses charged have

long been used to show a general pattern, the necessary criminal

intent, or the guilty knowledge of the defendant).

     In this case, the existence of a scheme to defraud is an

element of the offense of wire fraud under           18 U.S.C. § 1343.

Although Pan Metals' order was not one of those charged in the

indictment, it was relevant to the existence of a scheme and

therefore was independently admissible as direct proof of the

scheme charged.    United States v. Santagata, 924 F.2d 391, 393-394

(1st Cir. 1991).    In addition, the admission of the testimony did

not violate Rule 403, which allows a trial judge to exclude

probative    evidence   that   is   substantially   outweighed   by   its

prejudicial effect.      The balancing of probative value against

prejudicial effect is committed to the sound discretion of the

trial judge, a decision that is final in the absence of abuse of

discretion.   United States v. Maceo, 947 F.2d 1191 (5th Cir. 1991)

(citations omitted).    We find no such abuse here.

D.   SUFFICIENCY OF THE EVIDENCE OF DULA'S INTENT TO DEFRAUD

     Dula also argues that a review of the trial demonstrates that

the government failed to establish its wire fraud allegations

because it    introduced no evidence that the use of the wires was

preceded by an intent to defraud.

     To obtain Dula's convictions for the crimes of wire fraud

                                    10
alleged in the indictment, the government was required to prove

beyond a reasonable doubt that he aided and abetted the use of the

wires in furtherance of a scheme to defraud.             United States v.

Shively, 927 F.2d 804 (5th Cir. 1991), cert. denied sub nom Johnson

v. United States, 111 S. Ct. 2806 (to obtain mail fraud conviction,

government must prove scheme or artifice to defraud, specific

intent to defraud, and use of mails for purpose of executing

scheme); United States v. Shaw, 555 F.2d 1295 (5th Cir. 1977) (same

elements as to wire fraud).         Dula argues that the proof adduced by

the Government at trial that the orders were taken by phone, and

following these orders a decision may have been made to substitute

an alternative product, is inadequate.

     The above proof is sufficient, even standing alone, because

the sequence and timing of the phone calls is immaterial.               Once

membership   in   a   scheme   to   defraud   is   established,   a   knowing

participant is liable for any wire communication which subsequently

takes place or which previously took place in connection with the

scheme. See United States v. Westbo, 746 F.2d 1022, 1025 (5th Cir.

1984).   The crime of wire fraud did not terminate with the

telephone call, and acts occurring after the use of the wires can

be evidence "from which a jury could infer participation of the

scheme to defraud."     Id.; see also       United States v. McDonald, 837
F.2d 1287, 1293 (5th Cir. 1988) (intent can be proven by the scheme

to defraud, and may be inferred from other facts).

E.   VERDICT AGAINST THE WEIGHT OF THE EVIDENCE

     Finally, appellants contend that the trial court abused its

                                       11
discretion by denying a motion for new trial which asserted that

the weight of the evidence supported the defendants' acquittal.

     The decision to grant or deny a motion for new trial based on

the weight of the evidence is within the sound discretion of the

trial court.   An appellate court may reverse only if it finds the

decision to be a "clear abuse of discretion."          United States v.

Martinez, 763 F.2d 1297, 1312 (11th Cir. 1985).        Where the defense

has had an opportunity to question witnesses as to their biases,

and the jury has concluded that the witnesses are credible, the

trial court has broad discretion.        "It is the sole province of the

jury, and not within the power of this Court, to weigh conflicting

evidence and evaluate the credibility of witnesses." United States

v. Ivey, 949 F.2d 759, 767 (5th Cir. 1991), cert. denied sub nom

Wallace v. United States, 113 S. Ct. 64 (1992).            "This court's

review does not encompass weighing the evidence or judging the

credibility    of   witnesses....   [This     court]   must    affirm   the

conviction if a rational jury could have found the essential

elements of the crimes beyond a reasonable doubt."            United States

v. Thorn, 917 F.2d 170, 173 (5th Cir. 1990).

     Defendants argue that the Government's witnesses were not

credible witnesses because they were disgruntled former employees

of the defendants.      However, as stated above, that credibility

determination is best left for the jury.         The district court did

not abuse its discretion in accepting the jury's assessment of the

credibility of the witnesses and denying a motion for new trial on

the ground that the verdict was against the weight of the evidence.

                                    12
                         III.   CONCLUSION

     For the foregoing reasons, we AFFIRM the judgments of the

district court, but DISMISS the defendants' Brady claims, without

prejudice to their right to raise them in an action under 28 U.S.C.

§ 2255.

                                 13