On Appeal From the United States District Court For the Eastern District of Pennsylvania. (D.C. Criminal Action Nos. 92-00096; 92-00096-01).
Before: Sloviter, Chief Judge, Greenberg and Roth, Circuit Judges.
On March 3, 1992, a grand jury sitting in the Eastern District of Pennsylvania indicted Amir Porat on two counts of making material false declarations before a 1989 grand jury investigating antitrust violations between Porat's company, IM, Inc. (IM), and Fraass Survival Systems, Inc. (Fraass).
Count One charged that Porat made a false statement when he denied receiving a $200,000 check issued by Fraass to Credit Suisse, a bank located in Switzerland. Count Two charged that Porat made a false statement when he denied ever having a personal bank account in Switzerland.
Following a one week trial in December, 1992, a jury convicted Porat on Count Two but was unable to reach a verdict on Count One. The district court declared a mistrial as to the first count and imposed a sentence on Count Two of five months imprisonment followed by five months supervised release, conditioned on home detention in Israel, and a $10,000 fine. Porat filed an appeal to this Court raising a number of issues relating to his trial. The government cross-appealed, objecting to the terms of Porat's sentence.
After reviewing the record, we uphold Porat's conviction.*fn1 On cross-appeal, the government asserts that the district court erred in failing to adjust Porat's base offense level upward by two levels pursuant to Sentencing Guidelines § 3C1.1 for obstruction of Justice. Second, the government asserts that the district court lacked authority to permit Porat to serve five months of his sentence in home detention in Israel. We disagree with the government's first contention. We agree, however, with the government's second contention and will therefore vacate the home detention portion of the district court's judgment of sentence and remand for resentencing.
Amir Porat is an Israeli national who moved to New Jersey in the early 1980s to establish IM, a medical supply company.*fn2 Prior to this time, Amir and his brother, Michael Porat, owned and operated H.G. Pollack, Ltd. (Pollack), which manufactured medical supplies in Israel. Amir Porat continued to have an interest in Pollack after his move to this country. At the time of IM's entry into the American market in the early 1980's, only a few companies bid on Department of Defense (DoD) contracts to supply certain types of military bandages. The major supplier was Fraass, headquartered in New York and owned and operated by Colin Offenhartz.
At trial, the government proved that Porat made a false material statement to the 1989 grand jury, in part by showing as background to the false statement that Offenhartz and Porat had allegedly conspired to rig bids on DoD contracts. Although Porat was a target of the 1989 grand jury investigation into alleged bid-rigging, no indictment was ever brought against him on antitrust violations.*fn3
As background evidence in support of its case, the government showed that Porat and Offenhartz agreed that Fraass would bid high on military contracts in which Pollack had established a market presence (Israel and other foreign markets), and Pollack would reciprocate by bidding high on federal government contracts or not bidding at all. According to government witnesses, this alleged agreement continued after IM entered the United States market for military bandage contracts awarded by DoD.
In 1984, the Israeli government contacted Fraass and solicited a bid for military bandages. The funds to pay for this contract were loans from the federal government to Israel. Israel, in turn, was required to use an American manufacturer. Deeming IM to be fundamentally connected to Pollack, the Israeli government would not accept IM's participation in the contract. Fraass agreed to supply Israel with 500,000 bandages but at a price that exceeded the bids submitted to the DoD. According to Offenhartz's testimony, he contacted Porat, and they agreed that Porat would receive 40 cents on each bandage, or $200,000. Offenhartz testified that he made this payment to maintain the goodwill between the two companies, so that IM would continue to bid high on DoD contracts. Offenhartz testified to the 1989 grand jury and at Porat's trial that he gave Porat the check for $200,000 in person, after Porat asked that the check be made out to a Swiss bank accounts.
Porat voluntarily testified before the 1989 grand jury after being notified that he was a target of the investigation. He denied all knowledge of the check and denied that he maintained a Swiss bank account, into which the alleged check was deposited. The grand jury continued its investigation beyond Porat's appearance but did not bring an indictment against him for antitrust violations.
In March, 1992, a second grand jury brought a two count indictment stemming from Porat's testimony to the 1989 grand jury. Count One charged that Porat made a material false statement when he denied receiving a $200,000 check issued by Fraass to Credit Suisse, a Swiss bank. Count Two charged that Porat made a material false statement when he denied ever having a personal Swiss bank account.
At trial, the government sought to prove the material false statements with evidence that Porat had opened three bank accounts in Switzerland. The government submitted evidence of Swiss bank records which indicated that Porat traveled to Switzerland to open bank accounts on three occasions.*fn4 The bank records contain two identification numbers from Porat's passport along with Porat's signature. Among the evidence offered by the government was a copy of Porat's passport, which was provided to the government by Porat's counsel, and testimony of a handwriting expert who had analyzed Porat's writing. The handwriting expert testified that the signatures on the Swiss bank records were Porat's. This testimony was based on the Credit Suisse bank documents, court records and affidavits containing Porat's signature, a United States customs declaration and fingerprint cards signed by Porat, and exemplars provided by Porat in a session with an agent of the Defense Criminal Investigative Service.
Porat, acting pro se, did not testify, but he did present a substantially different version of events. Porat presented evidence that IM and Fraass were fierce competitors and that Offenhartz had paid Porat's brother, Michael Porat, the $200,000 for Michael's help in Fraass' contract with Israel. Porat's defense centered on the theory that Michael Porat established the Swiss bank account under Amir Porat's name. Porat presented evidence that he frequently signed financial documents for Pollack in Israel without reading them; thus Michael Porat was able to open a Swiss bank account without Amir Porat's knowledge. Finally, Porat presented testimony that Offenhartz disliked him, thus establishing a motive for Offenhartz's alleged untruths, and that Porat and his brother had had a falling out since the late 1980's, stemming from the circumstances surrounding the Swiss bank account.
The jury found Porat guilty of making a material false statement on Count Two. On January 19, 1993, following his conviction, the district court sentenced Porat under the Sentencing Guidelines. The district court determined that under the Guidelines, Porat's conviction amounted to a total offense level of 12. Having no prior criminal record, this placed Porat in the Guidelines imprisonment range of 10 to 16 months. The district court sentenced Porat to 5 months imprisonment, 5 months home detention, and a $10,000 fine. The district court ordered that Porat surrender for service of sentence by March 1, 1993. On February 2, 1993, the court held a hearing and permitted Porat to remain free on bond, pending final Disposition of his appeal to this Court, with travel restricted to the United States and Israel.
The district court had jurisdiction in this criminal matter pursuant to 18 U.S.C. §§ 1623 and 3231. We have appellate jurisdiction over this appeal from the final decision of the district court pursuant to 28 U.S.C. § 1291 and over the government's cross-appeal from the sentence pursuant to 18 U.S.C. § 3742(b).
A district court's legal interpretation of the Sentencing Guidelines is reviewable de novo, but the court's factual determinations in applying the guidelines are reviewable for clear error. United States ...