Court Opinion

ID: 2967509
Source: CourtListenerOpinion
Date Created: 2015-09-22 02:43:53.164024+00
Date Added: 2024-06-11T12:46:17.698099
License: Public Domain

PUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT

UNITED STATES OF AMERICA,              
                 Plaintiff-Appellee,
                 v.                               No. 01-4155
ZIA HASSANZADEH,
              Defendant-Appellant.
                                       
           Appeal from the United States District Court
        for the Eastern District of Virginia, at Alexandria.
            Albert V. Bryan, Jr., Senior District Judge.
                           (CR-00-308)

                      Argued: September 28, 2001

                      Decided: November 13, 2001

        Before MICHAEL and MOTZ, Circuit Judges, and
               HAMILTON, Senior Circuit Judge.

Affirmed by published opinion. Judge Motz wrote the opinion, in
which Judge Michael and Senior Judge Hamilton joined.

                             COUNSEL

ARGUED: James Clyde Clark, LAND, CLARK, CARROLL, MEN-
DELSON & BLAIR, P.C., Alexandria, Virginia, for Appellant. Kath-
leen Marie Kahoe, Assistant United States Attorney, Alexandria,
Virginia, for Appellee. ON BRIEF: Kenneth E. Melson, United
States Attorney, Alexandria, Virginia, for Appellee.
2                   UNITED STATES v. HASSANZADEH
                              OPINION

DIANA GRIBBON MOTZ, Circuit Judge:

   After a bench trial, the district court convicted Zia Hassanzadeh of
aiding and abetting the making of a false statement and illegally
importing carpets of Iranian origin, in violation of 18 U.S.C.A. § 542
(West 2000) and 18 U.S.C.A. § 545 (West 2000) respectively, and
sentenced him to 18 months of imprisonment on each count, to run
concurrently. Hassanzadeh appeals, challenging his convictions and
sentence. We affirm.

                                   I.

   In February 2000, customs officials at Dulles Airport stopped a
shipment of eighty-three carpets that was en route to a company oper-
ated by Hassanzadeh. One carpet had a tag stapled to it that read
"Made in Iran," and approximately twenty were not marked in
English with a country of origin, as federal law requires. See 19
U.S.C.A. § 1304 (West 1999 & Supp. 2001). Customs officials had
the shipment appraised, and sixty-one carpets were eventually deter-
mined to have been made in the area currently known as Iran. An
Executive Order prohibits the importation of goods "of Iranian ori-
gin." See Exec. Order 12,613, 31 C.F.R. § 560.201 (1987).1

   On March 13, 2000, customs officials notified Hassanzadeh’s com-
pany that some of the carpets were not marked with a country of ori-
gin and that the shipment could not be released until all the carpets
were marked. Two days later, Ahmad Noor Kaker, a Hassanzadeh
employee, went to Dulles Airport, at Hassanzadeh’s direction, to
mark the carpets. Kaker put tags on the carpets that identified them
as coming from Russia or Turkey, and removed the tag reading
"Made in Iran" from the carpet that had carried it. Kaker later returned
    1
   A few months later, Iranian-origin carpets were exempted from the
embargo, without affecting open enforcement actions such as that against
Hassanzadeh. 65 Fed. Reg. 25643, 31 C.F.R. § 560.534 (2000). At pres-
ent, that exemption remains in effect. This opinion, however, addresses
the Executive Order and regulations as they existed at the time of Has-
sanzadeh’s offense.
                    UNITED STATES v. HASSANZADEH                       3
with Ahmad Firoz Hassanzadeh, Zia Hassanzadeh’s brother. They
took the carpets to a warehouse in Alexandria, Virginia, which was
owned by another of Zia Hassanzadeh’s companies.

   Customs officials obtained a search warrant for the warehouse,
where they eventually seized import documents, eighty-two carpets,
and some tags like the ones Kaker had attached to the previously
unmarked carpets at the airport. Some of the import documents had
been altered to replace references to Iranian provinces with references
to Turkey or Russia and to lower the stated purchase price of the car-
pets. For the shipper’s address, one invoice gave an address in Ger-
many that is the home address of Firoz Hassanzadeh. Officials also
discovered that the website of the Hassanzadeh business that owned
the warehouse advertised Persian carpets for sale.

   At the time of the search, customs officials questioned Firoz Has-
sanzadeh, Zia Hassanzadeh, and Kaker. Firoz Hassanzadeh explained
that he had altered the invoices to reflect what the supplier told him
was the true origin of the carpets, and that he could not explain why
his home address was listed on an invoice.

   Zia Hassanzadeh told customs officers that when the supplier, a
Turkish company, said it needed a German address, he suggested
using his brother’s address. He also told them that only after the car-
pets had reached his warehouse had he first learned that some of them
were Iranian; he learned this from an appraiser whose last name and
address he had forgotten at the time of the search (but who later con-
firmed his account). Zia Hassanzadeh said he had told Kaker to mark
all the large rugs as Turkish and all the small rugs as Russian. Finally,
he complained that he was being treated unfairly because, he
believed, the embargo on Iranian carpets was to be lifted within days.

   Questioned during the search, Kaker repeatedly denied having
removed any tags at the airport. When confronted with proof, how-
ever, he admitted removing the "Made in Iran" tag. A customs official
also overheard Kaker muttering to himself that he had made a mistake
in picking up the "Persians."

   At Zia Hassanzadeh’s bench trial, the court admitted evidence of
his prior conviction under § 545 for importing Iranian carpets. A pri-
4                   UNITED STATES v. HASSANZADEH
vate customs broker testified that she had faxed a notice giving a date
when the carpets should be available at the airport to a "Firoz" at the
import company. Both Hassanzadehs testified that they believed the
changes to the invoices were correct and that they had no intent to
import Iranian carpets illegally.

  Zia Hassanzadeh was convicted of one violation of 18 U.S.C. § 542
and one violation of 18 U.S.C. § 545. The district court specifically
found beyond a reasonable doubt, as to the § 545 violation, that Has-
sanzadeh "knew and intended to import and bring into the United
States these rugs well knowing that it was unlawful to do so." The
court sentenced Hassanzadeh to eighteen months’ imprisonment and
ordered sixty-one carpets forfeited.

                                   II.

  Hassanzadeh asserts that the district court abused its discretion in
admitting evidence of his 1997 conviction of violating § 545 by
importing carpets of Iranian origin. The district court admitted the
evidence as probative of knowledge.

   Hassanzadeh initially argues that knowledge is not an element of
§ 545, eliminating the probative value of the evidence of his prior
conviction. He is wrong. Section 545 prohibits anyone from "know-
ingly and willfully, with intent to defraud the United States, smuggl-
[ing] . . . any merchandise which should have been invoiced" or
"fraudulently or knowingly import[ing] or bring[ing] into the United
States, any merchandise contrary to law" or otherwise "facilitat[ing]"
smuggling "knowing" that the smuggled goods were illegally
imported. 18 U.S.C.A. § 545 (emphases added).

   Alternatively, Hassanzadeh contends that the prejudicial impact of
the evidence of his 1997 conviction outweighed its probative value in
violation of Federal Rule of Evidence 404(b). Evidence of a prior act
is admissible if (1) "relevant to an issue, such as an element of an
offense," and "not . . . offered to establish the general character of the
defendant," (2) "necessary in the sense that it is probative of an essen-
tial claim or an element," (3) reliable, and (4) not so prejudicial that
its prejudicial effect outweighs its probative value, "in the sense that
                    UNITED STATES v. HASSANZADEH                       5
it tends to subordinate reason to emotion in the factfinding process."
United States v. Queen, 132 F.3d 991, 997 (4th Cir. 1997).

   Hassanzadeh’s prior conviction for importing carpets of Iranian
origin is reliable and both relevant and necessary to establish knowl-
edge, an element of the instant offense; indeed, evidence of the 1997
conviction is particularly salient because it involves a recent § 545
offense identical to the one at issue here. See id. at 997. Moreover,
we have confidence that at the bench trial, the experienced district
judge was able to separate the emotional impact from the probative
value of this potentially prejudicial evidence. Schultz v. Butcher, 24
F.3d 626, 632 (4th Cir. 1994).

   Accordingly, the district court did not abuse its discretion in admit-
ting evidence of Hassanzadeh’s prior § 545 conviction.

                                  III.

   Hassanzadeh also argues that the evidence was insufficient to sup-
port his conviction under § 545. "The verdict . . . must be sustained
if there is substantial evidence, taking the view most favorable to the
Government, to support it." Glasser v. United States, 315 U.S. 60, 80
(1942).

   Oddly, the crux of this contention seems to be that the Government
failed to prove that Hassanzadeh acted knowingly. Specifically, Has-
sanzadeh maintains that there is no evidence that he knew of Kaker’s
actions at the airport, and considerable evidence that he did not know
the carpets’ origin: the delivery notice for the carpets was faxed to his
brother’s attention, not his; his brother testified to having altered the
invoices in good faith; and he and his brother both testified that they
did not know that any of the carpets were Iranian.

  We disagree. The Government produced evidence that Hassan-
zadeh actively managed the business and that he instructed Kaker to
mark the carpets’ "national origin" by size. Given this evidence, Has-
sanzadeh’s statements to agents at the search, his initial inability to
remember any identifying details about the person who eventually
confirmed his story of late discovery that the carpets were Iranian,
6                   UNITED STATES v. HASSANZADEH
and the implausibility of his explanation as to the use of Firoz Has-
sanzadeh’s address, certainly sufficient evidence supported his con-
viction under § 545.

                                  IV.

   Finally, Hassanzadeh attacks three factors that affected his sen-
tence: the method of calculating the loss figure on which his offense
level was based, the value assigned the carpets, and the inclusion in
the sentencing calculation of carpets made before the modern state of
Iran came into existence in 1935. We conduct a de novo review of the
district court’s interpretation of the language of the Sentencing Guide-
lines, United States v. Bailey, 975 F.2d 1028, 1030 (4th Cir. 1992);
we review the district court’s factual findings for clear error. United
States v. Ruhe, 191 F.3d 376, 390 (4th Cir. 1999).

                                   A.

   Ordinarily, the loss from illegal importation is the tax loss suffered
by the Government, the duty evaded. U.S. Sentencing Guidelines
Manual § 2T3.1 (2000). However, in the case of "items for which
entry is prohibited, limited, or restricted," and "[e]specially when such
items are harmful," the Sentencing Commission has emphasized that
the evaded duty "may not adequately reflect the harm to society or
protected industries." Id., cmt. n.2. In such cases, including that of
harm to a protected industry, one suggested alternative method for
calculating the loss is "25 percent of the items’ fair market value in
the United States." Id. The district court followed this approach.

   Hassanzadeh contends that none of the circumstances for which the
Guideline suggests alternative methods of calculating loss exists in
his case. He notes correctly that the carpet industry is not a protected
industry, and maintains that the duty he evaded adequately captures
the "harm to society" from his conduct. He ignores, however, the
parameters of the particular offense of which he was found guilty.
Hassanzadeh was indicted and convicted of violating § 545 by
importing goods specifically banned by an Executive Order and fed-
eral regulations promulgated pursuant to it. This Order bars importa-
tion of "goods or services of Iranian origin" in order "[t]o ensure that
the United States imports of Iranian goods and services will not con-
                    UNITED STATES v. HASSANZADEH                       7
tribute financial support to terrorism or to further aggressive actions
against non-belligerent shipping." See Exec. Order No. 12,613, 31
C.F.R. § 560.201 (1987). See also Exec. Order No. 13,059, 31 C.F.R.
§ 560.201 (1997); Exec. Order No. 12,959, 31 C.F.R. § 560.201
(1995). Contribution of financial support to terrorism constitutes a
greater harm to society than the harms usually associated with the
illegal importation of goods.

   Nevertheless, Hassanzadeh argues that even if aid to terrorism does
constitute harm to society not adequately captured by the duty
evaded, his importation of carpets did not aid terrorism. Because the
carpets were imported from Germany, not directly from Iran, he
asserts that any benefit they provided to Iran had previously occurred,
and that their import from Germany did not tend to promote terrorism.
Accordingly, he argues, the duty evaded is a fair measure of the harm
done in his case. Both the plain language of the Executive Order and
its purpose fatally undermine this contention.

   The text of Executive Order 12,613 generally bars the importation
into the United States of "goods or services of Iranian origin," not just
importation of goods directly from Iran. Moreover, the Order exempts
"[p]etroleum products refined from Iranian crude oil in a third coun-
try," a provision that would be superfluous if the Order itself permit-
ted importation of all Iranian goods that travelled via a third country.
Exec. Order No. 12,613, sec. 2(b). Finally, the Order also exempts
from the embargo goods that left Iran directly for the United States
before the Order took effect. Exec. Order No. 12,163, sec. 2(c). This
exemption clearly demonstrates that the Order’s general bar applies
to more than goods imported directly from Iran to the United States,
as Hassanzadeh maintains.

   Furthermore, a proscription broader than the limited one suggested
by Hassanzadeh most accords with the Order’s stated goal of ensuring
that United States imports do not further terrorism. Indeed, support of
Iranian terrorism could often result if we interpreted the Order, as
Hassanzadeh urges, to permit import of Iranian goods as long as they
traveled through a third country. We know of no court that has
applied such a restrictive interpretation. See United States v. Noush-
far, 78 F.3d 1442, 1444 (9th Cir. 1996) (reviewing a prosecution for
importation of Iranian-origin carpets from Canada to the United
8                    UNITED STATES v. HASSANZADEH
States); United States v. 863 Iranian Carpets, 981 F. Supp. 746, 747
(N.D.N.Y. 1997) (affirming the forfeiture of Iranian-origin carpets
smuggled to the United States from Canada); see also United States
v. Ehsan, 163 F.3d 855, 858-59 (4th Cir. 1998).

   Thus, the district court did not clearly err in finding that importa-
tion of the carpets was illegal despite their recent presence in Ger-
many.

                                    B.

   Nor did the district court clearly err in fixing a value on the carpets.
By the time the court sentenced Hassanzadeh, the record contained
several expert valuations of the carpets. The Government’s expert
assigned the carpets a retail value of $155,970. Hassanzadeh’s sen-
tencing expert gave the carpets a retail value of $57,000. The customs
inspector at the time of importation valued the carpets at $60,183.
Hassanzadeh’s trial expert gave a wholesale (not retail) value, cover-
ing only some of the carpets, of $27,000 to $29,000.

   Finding the Government’s expert "impressive," the district court
used that expert’s appraisal in determining the value of the rugs. The
court did not err in doing so; findings based on the credibility of wit-
nesses require "great[ ] deference to the trial court’s findings." Ander-
son v. Bessemer City, 470 U.S. 564, 575 (1985). Moreover, as the
court noted, the offense level Hassanzadeh received would have been
the same whether the court accepted the figure of the Government’s
expert outright or averaged the Government’s figure ($155,970) with
that of Hassanzadeh’s sentencing expert ($57,000).

                                    C.

   Finally, Hassanzadeh challenges the inclusion of 42 carpets made
before 1935 in the calculation of the loss amount for sentencing pur-
poses. The modern state of Iran was known as Persia until 1935, when
its name was changed to "Iran."2 According to Hassanzadeh, the pre-
    2
   The only evidence in the record relating to the status of "Iran" before
and after 1935 is testimony by the Government expert who appraised the
                    UNITED STATES v. HASSANZADEH                        9
1935 carpets were therefore not "of Iranian origin" when they were
made. They could have become goods "of Iranian origin" only if they
had left Iran or otherwise "entered into Iranian commerce" after 1935.
See 31 C.F.R. § 560.306 (2000). But nothing in the record indicates
when they left the country or otherwise "entered into Iranian com-
merce." Accordingly, if Hassanzadeh is correct as to the meaning of
"Iranian origin," the pre-1935 carpets should not have been included
in the loss amount.

   The 1935 change of the country’s name from Persia to Iran does
not, however, bear the weight Hassanzadeh seeks to place on it. We
note initially that common usage often applies the contemporary
name — Iran — to the country regardless of which period of its long
history is being discussed. Thus, a "country study" on Iran by the
Federal Research Division of the Library of Congress, completed in
1987 — the same year in which the Executive Order was issued —
refers to the country as "Iran," even when speaking of events long
before 1935. Federal Research Division of the Library of
Congress, Iran: a country study, (Helen Chapin Metz ed., 1987)
 (last visited Oct. 8, 2001). Similarly, the State Department’s
1994 background note on the country calls the country "Iran" in
describing its pre-1935 history. Bureau of Public Affairs of the U.S.
Department of State, Background Notes: Iran, (July 1994)
 (last vis-
ited Oct. 8, 2001). Hassanzadeh offers no reason why the Executive
Order’s use of the terms "Iran" and "Iranian" is not similar to that of
other official United States publications.

carpets in question. He agreed that "the country of Iran did not exist
before 1935" and that "the country wasn’t in existence when [some of]
these rugs were made." We can, however, take judicial notice that the
change in 1935 did not signal the formation of a new state but simply the
change of the state’s name to "Iran." Central Intelligence Agency
of the United States, World Factbook 2001,  (Iran) (last visited Oct. 10,
2001); Bureau of Public Affairs of the U.S. Department of State,
Background       Notes:    Iran,    (July    1994)      (last visited Oct. 8, 2001).
10                   UNITED STATES v. HASSANZADEH
   Having said that, we recognize that, standing alone, the language
of the Order might be interpreted as Hassanzadeh suggests. Arguably,
goods might be "of Iranian origin" either because they were made in
a country that denominated itself as Iran at the time the goods were
produced, or because they were made in the geographic territory now
known as Iran.3 Thus, this language in the Order, read in isolation,
might merely ban importation of rugs produced in Iran while it was
known as Iran (and thus ban only rugs made after 1935), as Hassan-
zadeh maintains, rather than prohibiting importation of all rugs pro-
duced in the geographic area now known as Iran, as the Government
contends.4 The relevant federal regulations that define "Iranian" and
"goods of Iranian origin" for purposes of the Order do little to elimi-
nate this ambiguity. They simply define "Iranian" as "pertaining to
Iran," 31 C.F.R. § 560.303 (2000), and "goods of Iranian origin" as
"includ[ing] goods grown, produced, manufactured, extracted, or pro-
cessed in Iran and goods which have entered into Iranian commerce."
31 C.F.R. § 560.306 (2000). Thus, they provide little assistance in
determining whether "Iranian origin" is a political limitation (Hassan-
zadeh’s argument) or a geographical one (the Government’s position).

   The regulatory definition of "Iran," however, does provide guid-
ance. That definition does not use the political name of the country,
which is, and since 1979 has been, the "Islamic Republic of Iran."
Instead, the regulation defines "Iran" as

      the territory of Iran, and any other territory or marine area,
      including the exclusive economic zone and continental
      shelf, over which the Government of Iran claims sover-
      eignty, sovereign rights or jurisdiction, provided that the
  3
     At least one federal court has enforced Executive Order 12,613’s
embargo on carpets "of Iranian origin" against carpets produced before
1935. 863 Iranian Carpets, 981 F. Supp. at 747-48. Another court has
approved a search warrant for "Iranian carpets" without reference to their
age. Noushfar, 78 F.3d at 1446-47. Neither court apparently confronted
Hassanzadeh’s argument, however.
   4
     The record indicates that in addition to the Department of Justice,
through the United States’s Attorney, the Department of the Treasury,
through the chief of the enforcement division of the Office of Foreign
Assets Control, also regards the prohibition in the Executive Order as
"made without reference to a particular era or political regime."
                    UNITED STATES v. HASSANZADEH                       11
     Government of Iran exercises partial or total de facto control
     over the area or derives a benefit from economic activity in
     the area pursuant to an international agreement. 31 C.F.R.
     § 560.303.

The principal portion of this definition, "the territory of Iran," is a
geographical, not a political, description, supporting the Govern-
ment’s interpretation of the Order. Although the second part of this
definition, expanding the term "Iran" beyond "the territory of Iran,"
does reference "the Government of Iran," if "Iran" were to be defined
purely politically, the first portion of the definition, "the territory of
Iran," would be superfluous. We construe a statute or regulation "so
that, when possible, no part . . . is superfluous." United States v. Chil-
dress, 104 F.3d 47, 52 (4th Cir. 1996).

   The history of the Executive Order’s embargo on Iranian carpets
also weighs in favor of the Government’s interpretation. As we have
said, the Executive Order exempts goods that left Iran, directly en
route to the United States, before the embargo took effect. Prior to
May 1995, even absent direct import, an importer could obtain a
license to import a non-fungible good, such as a carpet, by proving
that the good had left Iran before the embargo took effect and that "no
payment or other benefit has accrued or will accrue to Iran after the
effective date." 31 C.F.R. § 560.504(a) (1987-1995). The importer
needed "independent corroborating documentary evidence issued and
certified by a disinterested party," and could not obtain a license sim-
ply by providing "affidavits, statements, and other documents pre-
pared by the applicant or another interested party." 31 C.F.R.
§ 560.504(c). Under this licensing structure, importers, not federal
prosecutors, had the burden of proving when a carpet left Iran in order
to escape the embargo. See United States v. Ahangaran, 998 F.2d 521,
525 (7th Cir. 1993). President Clinton’s decision to rescind the licens-
ing provision in 1995 closed even this narrow avenue to pre-embargo
importation. Exec. Order Nos. 12,957 & 12,959, 60 Fed. Reg. 47061,
47062 (Sept. 11, 1995).

   The need for such a license, and the high standards required to
obtain one, demonstrate the breadth of the core ban on goods "of Ira-
nian origin." To establish a case that an importer had violated the
embargo, prosecutors did not need to prove that a carpet had left Iran
12                   UNITED STATES v. HASSANZADEH
after the embargo took place or that its sale had financially benefitted
Iran after that date. The regulations assumed that the sale of any car-
pet of Iranian origin would aid Iran, and provided importers only a
limited avenue to refute the point. Now, after the elimination of even
this limited avenue, Hassanzadeh’s interpretation of "goods of Iranian
origin" would place the burden on federal prosecutors to prove when
every carpet made before 1935 left Iran. Such a burden is at odds with
both the prior licensing structure and its elimination.

   Finally, a prohibition on carpets made before the country now
known as "Iran" called itself "Iran" furthers the purposes of the
embargo. As Hassanzadeh’s own sentencing expert testified, modern
carpet-makers can make excellent copies of antique carpets, and those
in other countries with major carpet industries, including Turkey,
India, China, Afghanistan, and Pakistan, have done so with increasing
frequency in the last ten years. To interpret the regulations as Hassan-
zadeh suggests would undoubtedly encourage Iranian carpet makers
to imitate pre-1935 carpets. These imitations might be taken for true
pre-1935 carpets and so would gain unlawful entry into the United
States. In any case, the increased legitimate availability of pre-1935
carpets in this country might well further stimulate the illegal market
for cheaper, newer carpets. Thus, permitting importation of pre-1935
Iranian carpets would do precisely what the Executive Order seeks to
avoid: encourage the illegal importation of similar carpets made more
recently in Iran, aiding Iran financially and so "contribut[ing] finan-
cial support to terrorism."

   In summary, given the language, history, and purpose of the Exec-
utive Order (and the regulations interpreting it), we conclude that rugs
made prior to 1935 in the area now known as Iran are goods "of Ira-
nian origin"; the Executive Order bans their importation. Accord-
ingly, the district court did not err when it included these rugs in
calculating the loss amount.

                                   V.

     For the foregoing reasons, the convictions and sentence are

                                                          AFFIRMED.