On Appeal from the United States District Court for the District of New Jersey, D.C. Criminal No. 87-00166-01.
Becker, Stapleton, and Greenberg, Circuit Judges.
GREENBERG, Circuit Judge.
This matter is before the court on appeal from a judgment of conviction entered on a jury verdict against appellant Leon Dicker for conspiring with Richard Koziuk and Henry Teja and others to export from the United States defense articles designated on the United States Munitions List, by means of untrue statements of material fact in connection with a license application contrary to 22 U.S.C. § 2778(b)(2) and (c) and 22 C.F.R. § § 121.1, 127.1(a), 127.2, and 127.3. Koziuk and Teja were tried with Dicker and were acquitted.*fn1 We conclude that evidence was improperly admitted against Dicker which substantially prejudiced him. Thus, we will reverse the judgment and remand the matter for a new trial.
The case can best be understood if the applicable statute and regulations are first explained. The statute, 22 U.S.C. § 2778(b)(2) and (c), provides, with exceptions not germane, that no defense articles on the United States Munitions List may be exported without a license issued in accordance with administrative regulations and that any person who does so or who makes a willfully untrue statement in a license application is guilty of a crime. Articles on the United States Munitions List are enumerated in 22 C.F.R. § 121.1. The weapons involved in this case are on the list. 22 C.F.R. § § 127.1(a), 127.2 and 127.3 further implement 22 U.S.C. § 2778(b)(2) and (c).
A person wishing to export significant military equipment, such as that involved in this case, must apply for a license from the Office of Munitions Control. His application is to be accompanied by a "nontransfer and use certificate," executed by the foreign consignee and foreign end user, which stipulates that, except as specifically authorized by prior written approval of the Department of State, the foreign consignee and foreign end user will not reexport, resell or otherwise dispose of the equipment outside of the country named as the location of the foreign end use. 22 C.F.R. § 123.10(a). This nontransfer certificate is informally referred to as an end user certificate. 22 C.F.R. § 127.2 specifically lists nontransfer and use certificates, i.e., end user certificates, as documents which must not contain misrepresentations.
In December 1986 or January 1987 Dicker asked an acquaintance, Abelardo Morua, who was also indicted for conspiracy but pleaded guilty and cooperated with the government, to find an arms dealer so that Dicker and persons he represented could obtain weapons for export. Thereafter, Morua contacted George Edelstein to whom he gave a list obtained from Dicker of weapons Dicker wanted to acquire. Edelstein advised Morua that export documents including an end user certificate showing the final destination for the weapons would be required for the transaction. Edelstein then reported the matter to the United States Customs Service and thereafter cooperated with the government throughout the affair. Subsequently, in recorded telephone conversations Morua asked Edelstein what it would cost for Edelstein to supply the export documents and was advised it would be $50,000. Morua testified that it was never his thought that the paperwork would be legal.
On March 2, 1987, Morua and Edelstein set up a meeting at the Glen Pointe Hotel in Teaneck, New Jersey, to discuss the terms of the transaction. Morua agreed to bring his "money man," Vicker, and Edelstein agreed to bring his licensing man, special agent Douglass Farrell of the United States Customs Service, who was working undercover, to the meeting. The conversations at the meeting were recorded and later transcribed. By coincidence Dicker and Edelstein were acquaintances as they had been involved in a prior, apparently legitimate transaction. Thus, Dicker seems to have been pleasantly surprised when he saw Edelstein, an attitude clearly reflected in the rather relaxed atmosphere at the meeting. Indeed, Dicker and Edelstein reminisced that the prior deal fell through because an Italian financier involved who "had more money than Heinz has pickles" got "hungry."
It was agreed at the meeting that Dicker and Morua would pay Edelstein $145,000 for the weapons and an additional $50,000 to Farrell for the licensing, a price Farrell justified by pointing to the time constraints for the transaction. While it may be reasonably inferred that Farrell represented that bribes would be necessary for the licensing, and Edelstein openly said so, there is no indication in the transcript that the documents to be obtained were not to be genuine.*fn2
At the meeting there was the following discussion of the destination of the weapons:
G. EDELSTEIN: Now, you need some information.
S/A FARRELL: I need . . .
A. MORUA: (Inaudible) information.
S/A FARRELL: I am, I am gonna need information, as you're well aware, for the EUC's [end user certificates], for the paperwork.
L. DICKER: But I can tell you . . .
L. DICKER: It's no problem.
S/A FARRELL: You can tell me.
S/A FARRELL: Terrific. That'll facilitate it. Okay. I'm gonna need the exporter.
L. DICKER: It's going . . .
G. EDELSTEIN: No, Who's the exporter?
S/A FARRELL: Who's the exporter?
L. DICKER: Who's the exporter? It's the Dominican Police Department.
L. DICKER: The importer's the Bangkok Police Department in Thailand.
S/A FARRELL: All right. So the Dominican Police Department will be the consignee also, right?
L. DICKER: That's right, because they have to ship ...